Nick Austin’s Post

Trading companies that seek to insulate their shipping risk by allocating their chartering activities to a separate entity will be reassured by a recent judgment of the English Court, in which it was decided that a letter of indemnity was enforceable only against the entity which had issued it, and not against a connected entity (or their exporter clients) as supposed undisclosed principals. Read more in our latest blog from Nick Austin and Monty Birley. #ReedSmith #Shipping #ShippingCaseLaw https://lnkd.in/dZEQcHJS

🚢 Keeping Risk at Arm’s Length – A Legal Insight from The Xing Zhi Hai [2024] EWHC 2371 (Comm) ⚖️ In the world of international shipping, trading companies often seek to limit their risk exposure by structuring chartering activities through separate entities. A recent judgment by the English Court sheds light on how such strategies work, especially regarding the enforceability of letters of indemnity (LOIs). In The Xing Zhi Hai case, the Court ruled that a letter of indemnity is only enforceable against the entity that issued it, not against its connected entities or their clients. This case involved a complex dispute between Shipowners, Charterers, Agents, and Exporters under LOIs issued for the shipment of logs from New Zealand to India. The Shipowners sought to extend liability to the Shippers, arguing they were the undisclosed principals under the LOIs, but the Court disagreed. Key takeaways for legal and compliance professionals: 🔑 Risk Mitigation: The judgment is reassuring for companies using separate chartering entities to shield themselves from liability. However, businesses should ensure that their chartering entities behave as principals to ensure that insulation from risk is upheld. 📑 LOI Limitations: This case serves as a reminder that an LOI’s value is only as strong as the solvency of the party behind it. Proper due diligence and securing additional guarantees are essential for protecting against potential claims. For anyone involved in chartering, shipping contracts, or risk management, this decision emphasizes the importance of clear structuring and robust due diligence to prevent costly legal challenges. #LegalCompliance #ShippingLaw #RiskManagement #Chartering #BusinessStrategy #LOI #LegalInsights

RTI Ltd v MUR Shipping BV: The Supreme Court has reached a verdict on the force majeure case, addressing a "fundamental point of principle." This decision holds significant importance within the legal realm. 15 May 2024 OVERVIEW The Supreme Court, in its ruling on RTI Ltd v MUR Shipping BV [2024] UKSC 18, which was delivered on Wednesday, May 15, 2024, has granted MUR's appeal, thereby reinstating the verdict of Jacobs J. The court, in complete agreement, has determined that the force majeure clause contained within the parties' Charter Party Agreement (COA) allows MUR to temporarily halt its selection of vessels for performance due to anticipated delays in RTI's payment of freight in US dollars, as stipulated by the COA. These delays are a direct result of the sanctions imposed on RTI's parent company. The primary matter presented to the Supreme Court concerned the correctness of the Court of Appeal's decision to support the tribunal's ruling in the underlying arbitration. The tribunal has come to a conclusion that MUR is unable to invoke force majeure as it has failed to meet the requirements outlined in clause 36.3(d). According to this clause, an event or situation can only be deemed force majeure if it cannot be "overcome by reasonable endeavors (sic)." The Court of Appeal, in line with the tribunal, contended that a problem or situation is deemed resolved only when all its adverse effects have been completely averted. Nevertheless, the Supreme Court adopted a distinct perspective, acknowledging the appeal as a profoundly significant principle with the potential to be universally applicable to all force majeure clauses. The central issue being considered is whether the existence of an informal solution to a contractual deadlock might impede a party from invoking force majeure. The court raised concerns about the potential consequences of non-contractual solutions, as they could weaken the importance of the parties' contractual rights and overlook the essential role of certainty in commercial agreements. #arbitration. #Force_Majeure

Did you know the difference between C.I.F. and F.O.B. shipping? #internationallaw #trasportationlaw #maritimelaw #commerciallaw #shipping #privatelaw

Recent development in the 'Carriage of Goods by Sea law' The claimant argued that the shipowner failed to deliver the cargo to the port of destination as stipulated in the contract of carriage concluded between the claimant and the defendant, further alleging that the Defendant deceived the claimant by not using his own vessel for transport. The shipowner was obligated to transport the cargo from Vladivostok to Nikolskoye on the Nerey. The defendant informed the claimant that due to the failure of one of the charterers to pay for carriage on the Nerey, the shipowner decided to discharge the whole cargo in Petropavlovsk-Kamchatskiy. The defendant, offered to offload the goods at another port. The claimant demanded that the cargo be transported to the destination agreed. The defendant refused. The claimant submitted a claim. The Courts of first and appellate instances found in favour of the defendants. The claimant submitted a cassation appeal which came to be dismissed. The Court held that the contract between the claimant and the defendant was a time charter. The Court cited the relevant rules. However, to establish liability, the Court actually applied the provisions on the contract of carriage of goods by sea. The carrier is the person who concluded the contract of carriage, the bill of lading signed by the master of the ship is considered to be signed on behalf of the carrier. The shipper, in turn, is obligated to pay for the carriage. Kindly reach out to us for any further queries. Extract incorporated from: https://lnkd.in/d8i967Zx #Shippinglaw #carriageofgoodsact #COGSA #ship #vessel #russia #law #maritimelaw #QuadraantLegal

In the world of business, contracts are still king. Dive into our analysis of the Supreme Court's ruling in RTI Ltd v. Mur Shipping BV to understand the implications for your organization. #LegalInsights #Trade #TradeLaw

⚖️ FMC Allows Class Action Complaints Breaking news from the Federal Maritime Commission (FMC): The FMC has announced that class action complaints are now allowed. This means that groups of people can combine their resources to file complaints together, making it easier to address unfair practices in the maritime industry. The FMC believes this will help ensure fair treatment and compliance with regulations. At John S. James Co., we are dedicated to providing exceptional customs brokerage and freight forwarding services. Our expertise ensures that your shipments are handled efficiently and securely, even as industry regulations evolve. Stay informed and trust us to manage the complexities of the logistics landscape. Visit johnsjames.com to learn more about our services and how we can support your business. #Logistics #FreightForwarding #CustomsBrokerage #FMC #ClassAction #MaritimeLaw #JohnSJamesCo #SupplyChain #ShippingIndustry #LegalUpdates

A View from the Exchange: Force majeure and non-contractual performance - RTI Limited v MUR Shipping BV Your contract requires you to be paid in USD. US sanctions against one of your counterparties means they are unable to pay you in USD. You invoke force majeure, on the basis that the counterparty is no longer able to make payments in accordance with the terms of the contract.  You point to the force majeure clause in the contract and say that it excuses your non-performance. Your counterparty points to the part of the force majeure clause that says that you must use "reasonable endeavours" to overcome the force majeure event, and offers to make an equivalent payment in EUR (and cover your costs of converting the EUR payment into USD) – a non-contractual solution, but one which would leave you whole. The counterparty argues that accepting payments in EUR amounts to using "reasonable endeavours" to overcome the force majeure event. Are you obliged to accept? This was the question in RTI Limited v MUR Shipping BV [2024] UKSC18. You could be forgiven for losing track of the answer. First decided in arbitration, it was a "Yes"; then the High Court reversed that to a "No"; then the Court of Appeal re-reversed that back to a "Yes"; and finally, last week, the Supreme Court re-re-reversed that back to a "No".  (If you have lost track even within this paragraph, the Supreme Court's final "No" means that "'reasonable endeavours' to overcome a force majeure event do not include accepting an offer of non-contractual performance absent clear wording to that effect").  It all turns on the language of your force majeure clause (spoiler alert – it always did). If you want acceptance (or the making of an offer) of non-contractual performance to be able to overcome a force majeure event, say so. Conversely, if you don't want to be required to have to seek to use reasonable endeavours to overcome a force majeure event, expressly say so (or such term will likely be implied into the contract under English law). And, if you don't bring clarity to your force majeure clauses, strap in: it can be a long and bumpy ride. https://lnkd.in/ejmc4vhM

The shipping industry is grappling with major challenges due to economic fluctuations, geopolitical tensions, and evolving trade policies, all of which affect chartering. A particularly pressing concern is the unilateral termination of contracts, where one party ends an agreement without mutual consent. This can create substantial financial and operational risks for all involved, leading to disputes that can escalate quickly. #anhisa #vietnameselaw #law #lawfirm #shipping #aviation #arbitration #international_arbitration #vietnam #vietnamlaw #Mediation #Negotiation #ANHISALawFirm #ANHISALLC #lawfirminVietnam #VietNamLawFirm #legal For more detailed information about the program, please access: https://lnkd.in/gw2zDkUp

UK Judgment update on application of Hague Visby Rules: The Supreme Court has ruled that the Hague-Visby Rules' one-year time limit for misdelivery claims after discharge is applicable. The case involved Fimbank Plc, who claimed that 85,510 metric tons of coal was misdelivered to unauthorized recipients. The court ruled that the rules apply to all liabilities related to goods, extending beyond discharge to delivery. The court also emphasized the fact that the time bar ensures commercial certainty by limiting disputes after a set period. The ruling reinforces the Hague-Visby Rules as governing delivery obligations until final handover, ensuring clarity and predictability in international shipping. Fimbank argued that the rules only apply until discharge, while KCH Shipping argued that the rules extend to delivery, not just discharge. The case focuses on whether the one-year time limit under Article III, Rule 6 of the Hague-Visby Rules applies to claims for cargo misdelivery after discharge. Fimbank Plc argued that the Rules ceased to apply post-discharge, making the claim fall under the six-year Limitation Act. KCH Shipping countered that the Rules apply until delivery, including after discharge. The Supreme Court upheld the lower courts' rulings, confirming the time bar applies post-discharge, supporting contractual finality under the Rules. Extract prepared by Nihal Kumar for Quadraant Legal For assistance in maritime related issues kindly reach out to us on socials. #MaritimeLaw #ShippingLaw #CommercialLaw #InternationalLaw #LegalNews #LawFirm #LegalUpdate #HagueVisbyRules #CarriageOfGoodsBySea #COGSA #BillOfLading #MaritimeClaims #ShippingLiability #MarineInsurance #LegalInsights #LegalKnowledge #LegalCommunity #LawyersOfTwitter #LegalProfession #QuadraantLegal