The Impact Of Brexit On Maritime Conflict Of Laws

The Impact Of Brexit On Maritime Conflict Of Laws Date: 9 December 2020 Presented by: Professor Yvonne Baatz Brexit – The Challenges Of Writing A Book In A Time Of Uncertainty - The United Kingdom is no longer a Member State of the European Union as of 31 January 2020. See the European Union (Withdrawal Agreement) Act 2020 which amends the European Union (Withdrawal) Act 2018. - Much EU legislation, such as the Regulations on applicable law and jurisdiction, is retained legislation and continues to apply during the transition period which ends at 11 pm on 31 December 2020. Today - We have 23 days to go (www.gov.uk) until the end of the transition period. - On 20 September 2020 Peter Hardwick, Trade Policy Adviser at the British Meat Processors' Association wrote on that Association's website "Mr. "oven ready" [aka Boris Johnson] also said "...we're going to make a Titanic success of it." (the capital T is my addition) with, "There is no plan for no deal, because we are going to get a great deal" coming from the same confident lips." - Does Mr. "oven ready" know what became of the Titanic? • Mr. "oven ready" is in Brussels today with no deal so far and continuing uncertainty. What is however certain is that there will be no deal by the end of the transition period on jurisdiction as civil justice including private international law is not even on the current agenda. Current outstanding issues include  Fishing rights  Competition  Enforcement of any deal Chapter 1 Of The Book - Conflict of Laws - Why chapter 1? • At the outset of any maritime dispute it is imperative to determine  The law applicable to the dispute  Which tribunal - arbitration tribunal or court - has jurisdiction to decide the dispute  Whether any time bar applies to the claim so that proceedings can be commenced in the right jurisdiction within that time bar  Whether the claimant can obtain security for its claim No Substantive Change Brought By Brexit To Applicable Law - Brexit does not change the rules that the English court will apply to determine what law is applicable to an international dispute. During the transition period the EU Regulations on applicable law, Rome I and Rome II, are retained legislation and continue to apply and will continue to apply after the transition period ends at 11 pm on 31 December 2020. Some maritime disputes (eg in relation to bills of lading fall outside the scope of Rome I and then our common law rules will apply as they always have done. The problem of reciprocity which applies to the Jurisdiction Regulations and Conventions does not apply to Rome I and Rome II. The Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU Exit) Regulations 2019 are still in draft but are expected to come into force after 11pm on 31 December 2020. Changes to Jurisdiction - Brexit does change the position on jurisdiction. - Maritime contracts often provide for English jurisdiction. I will consider three types of maritime contract where English jurisdiction clauses are very commonly used: - • Ship finance contracts; • Bills of lading; and • Marine insurance contracts. In relation to each contract, I will consider the current position and the likely position after Brexit The Recast Regulation - Ship Finance - The EU Regulations on jurisdiction apply to ship finance agreements such as loan agreements, bills of lading and marine insurance contracts. - Although ship finance agreements usually provide for asymmetric jurisdiction clauses i.e. which typically provide that if the Borrower brings proceedings it may only do so in England, whereas the Bank may bring proceedings against the Borrower in any competent court, the English courts have held that an asymmetric jurisdiction clause is an exclusive jurisdiction agreement within the scope of the EU Regulations - Article 31(2) of Brussels Recast does apply to asymmetric clauses. See eg. Etihad Airways PJSC v FL other [2019] EWHC 3107 (Comm); [2020] 2 WLR 333. In Etihad Jacob J did not refer the issue on Article 31(2) to the Court of Justice of the European Union. The decision is under appeal. - Article 31(2) • Dexia Crediop SPA v Provinica Di Brescia [2016] EWHC 3261 (Comm) • Generali Italia SPA v Pelagic Fisheries Corporation (The Kapitan Velekov) [2020] EWHC 1228 (Comm); [2020] 1 WLR 4211 The Recast Regulation - Bills of Lading - Both the Recast Regulation and the 2007 Lugano Convention apply to bills of lading as between the original carrier and the shipper. Once the bill of lading is transferred by the shipper to a third party, a consignee or endorsee of the bill of lading national law applies to determine whether that third party is bound. • Case 71/83 Partenreederei Ms Tilly Russ v Haven & Vervoebedrijf Nova NV [1984] ECR 2417; [1985] 1 Q.B. 931 • Case C-159/97 Trasporti Castelletti Spedizioni Internazionali SpA v Hugo Trumpy SpA [1999] I.L.Pr. 492 • Case C-387/98 Coreck Maritime GmbH v Handelsveem BV [2000] ECR 19337, [2001] I.L.Pr. 39 - Under English national law a third party consignee or indorsee is bound by an exclusive jurisdiction clause see the Carriage of Goods by Sea Act 1992. The Recast Regulation - Marine Insurance - Firm C-Trade SA v Newcastle Protection & Indemnity Association (The Fanti) and Socony Mobil Oil Inc and others v West of England Shipowners Mutual Insurance Association (London) Ltd (No.2) (The Padre Island) [1990] 2 Lloyd's Rep 191 2 • Suppose that the party to a bill of lading (who may be a third party to the bill of lading) claims from its cargo insurer, the question arises whether the cargo insurer is bound by the jurisdiction agreement in the insurance contract. Marine Insurance also raises complex third party issues. For example, if the cargo insurer pays the cargo claimant and can exercise subrogated rights but the carrier has become insolvent the cargo insurer may be able to bring a direct action against the carrier's liability insurer, usually a P & I Club, and the question will be whether the claimant is bound by the jurisdiction agreement in the marine insurance contract (e.g. the P & I Club Rules) in the direct action. • Many States permit a claimant who has suffered damage to bring a direct action against a liability insurer even though they have no contract with the liability insurer as the insurance contract is between the insurer and the insured who has caused the damage. Under English law the Third Parties (Rights against Insurers) Act 2010 gives such a right of direct action, subject to specific conditions. However, the liability insurer is entitled to rely on any pay to be paid provision in the liability insurance. The Recast Regulation - The Recast Regulation allows a jurisdiction agreement in a marine insurance contract. See Section 3 "in matters relating to insurance" in Chapter II of the Recast Jurisdiction Regulation which applies to protect a weaker party who seeks to sue an insurer or its branch, agency or other establishment in an EU Member State (Recital 18), but permits jurisdiction clauses in some circumstances - Articles 15 and 16 - such as marine insurance. - Article 13 provides for direct action. In C-368/16 Assens Havn v Navigators Management (UK) Ltd (The Sea Endeavour I) EU:C:2017:546 the Court of Justice of the European Union held that the victim of insured damage who brings a direct action against the liability insurer is not bound by a jurisdiction agreement between the insured and its insurer, but may bring a direct action against the insurer where the harmful event occurred or before the court of the place where the victim is domiciled. The Position After 11 Pm On 31 December 2020 In Relation To Ship Finance Contracts - The Recast Regulation and the 2007 Lugano Convention will not apply. If list pendens or related action in the court of a Lugano Contracting State, would that court have a discretion to stay its proceedings in favor of the English court if Article 2, 5 etc. apply? Reflexive effect? Owusu v Jackson. No equivalent of Articles 33 and 34 of the Recast Regulation in the 2007 Lugano Convention. - The 2005 Hague Convention would apply to ship finance contracts but there is doubt as to whether it applies to asymmetric jurisdiction clauses which are common in those contracts, although Cranston J in Liquimar and Jacob J in Etihad have indicated obiter that it should. If a court of an EU Member State held that the 2005 Hague Convention did not apply to such a clause it would not be bound to stay its proceedings in favors of the English court if chosen or enforce any English judgment. • Could the English court grant an anti-suit injunction? Damages for breach of the English jurisdiction clause? - At common law such an agreement would be valid in the English courts but • Would it bind the court of other States • Enforcement elsewhere? Security? Arrest of the ship? Arrest Conventions 1952 and 1999. The Position After 11 PM On 31 December 2020 In Relation To Bills Of Lading - The Recast Regulation and the 2007 Lugano Convention will not apply. - Bills of lading fall outside the scope of the 2005 Hague Convention (art 2(2)(f)), which therefore does not apply to them. - Therefore the common law rules will apply to a bill of lading providing for English court jurisdiction. The English court will uphold an exclusive English jurisdiction clause which will be binding on a third party consignee or indorse of the bill of lading • Compania Sud Americana De Vapores SA v Hin-Pro International Logistics Ltd [2015] EWCA • Civ 401; [2015] 2 Lloyd's Rep 1 • Subject to a discretion - Donohue v Armco Inc [2001] UKHL 64; [2002] 1 Lloyd's Rep 425 • A Lugano Contracting State would not be obliged to stay in favors of the English court even though there is an English jurisdiction agreement in a bill of lading. • Anti suit injunction and damages for breach. • Enforcement of the English judgment? • Security. Arrest of the ship? Arrest Conventions 1952 and 1999. The Position After 11 Pm On 31 December 2020 In Relation To Marine Insurance - The Recast Regulation and the 2007 Lugano Convention will not apply. Assens will not apply after 31 December 2020, unless the UK ratifies the 2007 Lugano Convention. - • The 2005 Hague Convention will apply to claims on a marine insurance contract by the insured against the insurer. However, it has no provisions dealing with direct, action, so the English courts would apply their national law, the common law rules, and might well recognize the jurisdiction agreement (see below). - If the 2005 Hague Convention does not apply, the English common law rules would. At common law the jurisdiction agreement, would probably be, binding, depending on whether the statutory right of direct action is based on contract. Compare the position where there is a London arbitration clause. - Arbitration becomes even more popular, as Assens does not apply to arbitration. Where there is a London arbitration clause in the insurance contract the English courts have held that this binds the third party claimant in a direct action if the statutory right of direct action is based on contract. • Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Co Ltd (The Hari Bhum) [2004] EWCA (Civ) 1598; [2005] 1 Lloyd's Rep 67; • London Steam Ship Owners Mutual v Spain (The Prestige) [2015] EWCA Civ 333; [2015] 2 Lloyd's Rep 33; and • Shipowners' Mutual Protection and Indemnity Association (Luxembourg) v Containerships Denizcilik Nakliyat ve Ticaret AS (The Yusuf Cepnioglu) [2016] EWCA Civ 386; [2016] 1 Lloyd's Rep 641 • In all three cases it was held that a claimant who brings a direct action (under a Finnish statute, a Spanish statute and a Turkish statute respectively) is bound by the arbitration clause in the insurance contract with the shipowner's P & I Club when sued by the subrogated cargo insurers, the States of France and Spain (whose coastline was polluted as a result of the sinking of the Prestige) and the charterers of a vessel respectively. In all three cases the English court found that the direct action was founded in contract rather than an independent statutory right and therefore the arbitration clause formed part of that contract. In the latter case the English court granted an anti-suit injunction to restrain the claimant from pursuing proceedings in Turkey in breach of the London arbitration clause. Conclusion - The Recast Regulation will no longer apply from 11pm on 31 December 2020. - The 2005 Hague Convention will apply to ship finance contracts (but possibly not to asymmetric jurisdiction clauses), and marine insurance contracts, but not to bills of lading (therefore the common law rules will apply). There is uncertainty as to third party situations such as subrogation and direct action. Each Contracting State will apply its national law.