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Business is the name of profit making activities in which entrepreneurs invest capital, take calculated risk and create wealth for themselves as well as for society. Unlike services, business is not known for fix income and fortune can be turned into misfortune overnight. Owners of vessels also face such kind of risk/ situation when theirs golden goose become source of their miseries.
In common or customary practice, maritime activities are divided in two parts i.e. wet and dry. The wet refers solely to the activities of vessels while dry refers to cargo and charter party claims.
The liabilities arise out of wet activities are mainly due to:
There are various international conventions and laws related to Maritime to monitor such liabilities arising from the said cause. At the time of litigation, the court is vigilant regarding the intention of the parties that caused the legal suit to limit the liabilities or indemnify the third parties etc.
Liability due to collision between ships arising out due collision of two or more vessels. It is obvious that the collisions between the ships will inevitably lead to claims, and eventually to litigation. The liability arising from the collision are governed by various international regulations like 1910 Collision Convention or 1972 International Maritime Organization (IMO) COLREGs Convention which mainly forms the basis for conduct to avoid collision between ships, and where they fail in that regard (i.e. place of the collision) for the assessment of blame for the collision.
At the time of litigation, the choice of jurisdiction will depend on the agreement if made or else the parties have to prove it on the basis of facts or documents. The claim under the collision can also be settled by the insurer if insured and there are types of insurance to cover such claim arising under the meaning of the collision and insurance interest concerned are l Hull underwriters, P&I Club, Defence (FD&D) club and ship owner.
Salvage as name suggests rescue of a wrecked or disabled ship or its cargo from loss at sea. Basically, there is no general duty of anyone to preserve or save the property at sea. In fact, the coastal states also doesn’t are not under any obligation to preserve the vessel of beyond their jurisdiction and the responsibility of the coastal states is non-existent when it comes to the duty to preserve the ship beyond their jurisdiction and without any interest in it. Therefore, to facilitate and encourage the practice of preserving such endangered sea properties, the public policy is developed. Under such policy, the salvors of the property as a right to salvage are entitled for salvage rewards and such rewards to be entitled regardless of any contract.
International Salvage convention 1989, this applies in all cases where salvage matters are brought in court or arbitration. One of the most extensively used salvage contract form is the Llyod’s open form 1980- “No cure-No pay”.
General Average (“GA”) as name suggests, is the sharing the financial consequences of an unexpected casualty between the commercial parties which have financial interest in seeing the “adventure” completed. The expenses which fall within this definition are borne by those parties in proportion to the value of their respective interest at the time when and place where the adventure ends. General average forms part of maritime law of every state of maritime jurisdiction. It arises by operation of law, independently of contract or statute. Not every expenditure are treated as general expenditure for e.g. during the Piracy attack, the payment of substantial sums made by way of ransom to secure the release of ship , cargo and crew is admissible as general average expenditure. The rule and international conventions like York-Antwerp Rules are generally incorporated into contracts of carriage, so are contractually binding on the parties. The contract of carriage may also provide specifications like –where the adjustment shall be drawn up, the currency to be used for the adjustment, and the security which may be required.
Towage means employment of one vessel to expedite the voyage of another when nothing more is required than accelerating of her progress. However, Tugs can be employed for many more tasks than defined like towing dead ships or unmanned barges between places and supply of services and assistance to the offshore industry. There are various standard forms of contract in which the exclusion of liabilities and indemnities are also incorporated which is protected under the Unfair Contract Terms Act 1977 and easier to establish the proportion of the liabilities and indemnities in the court. The popular types of forms used are UK standard towing conditions 1986, TOWHIRE 2008, TOWCON.
Wrecked ships are a form of pollution of the marine environment; therefore, it is a necessity of the wreck removal. To remove such wrecks, the authorities like coast guard, port, or light house are empowered by the provisions of Maritime laws for e.g. Merchant Shipping Act 1995 of UK which not only empower the relevant agency to remove the wreck, but also to recover the cost of doing so from the owner.
There is not much legal legislation to establish the port authorities as it’s largely administrative. There are few codes and acts like Ports Act 1991 of England to regulate port and harbor authorities and sec 74 of the Harbors Docks and Piers Clauses Act 1874 which creates strict liability on the owner of any vessel causing damage to the harbour dock or pier.
Any person not belonging to a ship who has the conduct thereof. The statutory provisions related to pilotage are like Pilotage Act 1987 of UK. In a situation where a ship which is under the command of a pilot causes damage the question can be raised on who would be responsible for the damage. The pilot himself, the owner as well as the authorizing harbor authority have to be considered.
It is not possible to avoid accidents or activities but owners can avoid misfortune by taking adequate insurance. The International convention which provided the ship owners and other to limit their liability is 1924 Limitation Convention; International Convention relating to the limitation of owners of sea going ships (Brussels 1957). It is very important to note that the attorney has to be well versed with the International conventions related to the liabilities and indemnities to defend its client in the capacity of the ship owner or others under maritime.
Pradeep K Jain is the Managing Partner at Singhania & Co., Mumbai Office, and an expert in Maritime and Corporate Law.
Nalini Mishra - Senior Associate
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