Newsletter

In our September ’18 Newsletter about the Sulphur Directive and sanctioning proceedings in Spain, we informed, as per our experience in previous cases, that the penalties for the non-compliance of the limits ranged between Eur. 5,000 and 10,000. Legally, fines could yield to a maximum of Eur. 180,000.

We know that the Spanish General Directorate of Merchant Marine is setting each specific fine based on the following facts:

– The percentage of Sulphur detected over the maximum.
– The period of time that the off-spec fuel was used in Spanish waters.

It seems the intention is also to standardize fines with the rest of EU countries. Our assumption is that this adjustment would mean an actual increase in the amount of the sanction.

Shall keep you duly abreast in this regard and we will be ready to assist in case needed.

On 25^th September 2014 Spanish Shipping Act 14/2014 came into effect.

The Act incorporates 524 articles which, in remarkable detail, regulate nearly all aspects related to the maritime navigation and the shipping industry.

It refers to Private Law issues (such as bareboat charter, time and voyage charter and bills of lading, terminal cargo handling contracts, contract of pilotage, insurance, etc.), Public Law (regulating the registration of ships, their nationality, vessel’s clearance, maritime safety, stowaways, the right of innocent passage, civil and criminal jurisdiction on foreign vessels, sea pollution, etc.), and lastly to Procedural Law (time-limits for different actions, provisions on jurisdiction clause, specific proceedings for a forced sale of a ship, among other issues).

Another characteristic to be highlighted is that the Spanish Shipping Act definitely updates shipping regulations in Spain, which were still based in our Code of Commerce dd. 1885.

Main novelties

Attention should be given to the new approach to the ship’s agent liability for cargo damages sustained while the goods are being transported. Where the carrier can be identified in the B/L or other contract of carriage, the ship’s agent will not be held liable, as he previously was under the Code of Commerce provisions and Supreme Court’s uniform judgements.

We have to welcome the new procedural rules which will help to implement some international Conventions that were ratified by Spain years ago. A good example is the Convention on Limitation of Liability for Maritime Claims (LLMC 76/96). The Act lays down “ad hoc” procedure to establish and distribute the fund, what did not exist before; and tackles the crucial points on jurisdiction and specific time-limits to invoke limitation.

The Act introduces some novelties as it deals with different issues that have not previously been regulated in our country, and had only been interpreted by the Doctrine and Case Law. For instance, it refers to: i) the towage contract on its various sorts (towage transport, manoeuvre, “fortune towage”), ii) construction/building contract of ships, iii) ship management contracts, iv) Classification Societies’ liabilities, and v)nautical charter.

Handling contract with terminals are also ruled in the new shipping act for the first time in Spain. In liner terms, a direct action in tort is established in favour of the shipper/receiver against the terminal. Likewise it foresees time-limits for instituting actions in court and a particular limitation of liability for the terminal benefit. Such limitation is more advantageous than the carrier’s one, this might well lead to the latter’s greater exposure in case of joint liability vis-à-vis third parties.

Other remarkable topics

We think worth mentioning three more novelties:

– According to article 11, where a stowaway has been disembarked the Authorities will be entitled to seek security from the shipowner and vessel’s agent to cover costs for his maintenance, legal assistance, translations and repatriation. The vessel will be detained until such security is posted.

– Arrest of sea-going ships not flying a flag of an State party of the Geneva Convention of 1999 shall be arrested in respect of any claim, not limited to those maritime claims listed in art. 1 of the Convention

– Previous voluntary/non-contentious actions will now be handled by public notaries, for instance: deposit and sale of undelivered goods, replacement of lost / stolen bills of lading, general average, etc. We have reasonable expectations of a quicker and more efficient way of solving these matters.

Cargo interests protection

It should also be highlighted that the Spanish Shipping Act 14/2014 shows the firm intention to protect cargo interests in some of its provisions, for instance:

1.-Jurisdiction clauses on Bs/L shall not be valid unless they have been singularly negotiated and accepted by the Shipper and/or Cnee. Council Regulation (EC) 44/2001 on jurisdiction shall certainly prevail when: i) the jurisdiction clause refers to EU Courts (e.g. High Court of London) and, ii) it is raised against the contracting party. Referred Council Regulation does not require said singular/separate negotiation of the jurisdiction clause.

However, the Act plainly establishes that the jurisdiction clause will have no effect if not expressly accepted by third parties, such as the rightful holders of negotiable bills of lading, what will likely prove impossible.

2.-Other provisions are given a mandatory regime. The parties shall not be able to rule them out even by contract or choice of a different law. These mandatory rules can be found in carrier’s liability clauses or in a DIRECT ACTION which is now established against civil liability underwriters of maritime risks.

Some months will necessarily lapse until obtaining the first court decisions on the Act. This shall be in term of years if we think of case law to be rendered by the Appeal courts and the Supreme Court. We shall keep you informed of these experiences.

The Supreme Court in a decision dd. 18th December 2014, made it clear the proper construction to be given to the regulations contained in article 107 of the Spanish Act about Spanish Ports and Merchant Marine on the auction of ships held or deposited within the service area of ports and the capacity of the Port Authority to conduct these auctions.

Facts in dispute

That judgment analyses a factual situation in which the Port Authority of Las Palmas de Gran Canaria, after obtaining a Court order for the detention of a vessel to secure a credit, sold the vessel in public auction after having sought and obtained the Court authorization to do so. The public auction was carried by the Port Authority under its own unilateral fixed conditions and without the Court intervention or control of the legality of the conditions in which the auction was conducted.

Challenged the validity of the auction, the Superior Court of the Canary Islands declared that the Port Authority had no capacity to deal with that auction and that the Court that ordered the detention of the vessel should have controlled its legality. Therefore because this was not done, the auction was declared null and void as being contrary to the provisions set out in article 107 of the Spanish Act about Spanish Ports and Merchant Marine.

Applicable regulation

The Spanish Shipping Act 14/2014, when ruling on forcible sale of ships, states in its Article 480:

“Forced sale of the ship shall be according to the terms set forth in the Civil Procedure Act, or in the administrative regulations that may be applicable for auction of moveable assets subject to public registration in all matters not provided in the International Convention on Maritime Liens and Mortgages, done at Geneva on 6th May 1993, and this Act.”

This new law envisages the possibility that the procedure set forth in the Code of Civil Procedure will apply in the event that the Spanish Courts are the ones effecting the public auction. However, unlike the previous regulation, it adds the novelty that the auction might be carried out in accordance with the administrative rules, which implies “de facto” a legalization of the auctions made by Port Authorities out of the scope of those under the control of the Spanish Courts.

Notwithstanding the above mentioned, it remains the judicial control “a posteriori” of the legality of the auctions conducted by Port Authorities.

The judgment rendered by the Spanish Supreme Court on the 14th January 2016 revokes the former judgement by the Court of Appeal and convicts the Captain for a criminal offence against the environment. The Spanish top court finds that the Captain acted recklessly both before and after the casualty, based on the following proven facts:

Proven facts

– The Captain was aware of some operative deficiencies before the voyage (the autopilot was not operative; failure of several heating coils used to heat the fuel).

– Navigating in severe weather conditions.

– The tanker was overloaded, with an overdraft of 0.30 meters (meaning 2.150 tons of excess cargo) above her loading lines.

– The Captain loaded ballast water to right the vessel. This ballast increased the draught (which impeded access to a port of refuge) and affected the fatigue of the hull. Had the heating coils worked properly the cargo could have been transferred to correct the listing.

– The Captain took two hours and thirty minutes to accept to take tugs, alleging he was waiting for Owners instructions.

– All the crew, except the three officers, were evacuated following the Captain’s request, in spite of the fact that the aft towing system was obsolete and needed four persons to operate it.

Our comments

In our view the response in these catastrophes should be to ensure that the tankers navigate in adequate conditions, and therefore, to increase the controls and the liability of Class Societies, cargo owners and those ones responsible of the vessel’s technical maintenance. Blaming the Captains is a mistake and only defocuses the true point of attention.

The Supreme Court analysis on economic liability deserves thorough attention. The Captain and the Owner are found fully liable without possibility to limit liability. Allegedly the Captain should have foreseen the possibility of a severe casualty happening and such predictability is enough to lose the benefit of limitation set out in the CLC92. We cannot share such line of argument. The need of willful negligence (demanding an increased degree of predictability) is unanimous on specialized jurists to lose the right to limit liability.

For a greater concern, the P&I Club is also found liable in excess of the limit of liability arising out of the CLC92. Without much reasoning the Supreme Court forgets about the clear wording of the CLC92 and orders the P&I to settle one thousand million USA dollars, corresponding to the maximum limit of insurance under the vessel’s entry. The Supreme Court even tries to hold the P&I Club responsible for this increased liability for not having appeared in the proceedings, as if this was a valid reason for not applying the Convention in its own terms.

The possibility to enforce the judgment and get full settlement from the Captain, Owner and P&I is very limited. On the opposite, the legal uncertainty and distrust on the Spanish judicial system will surely have wide reference.

A great debate is currently ongoing about the wide consequences the “Brexit” might bring, both for the UE and the UK. In this newsletter, we would like to draw your attention on “Brexit” effects in the validity of the jurisdiction clauses in favour of the High Court of London, already foreseen by some Spanish High Courts of Justice.

Should the Brexit be “enforced strictly”, the UK would not be part to the UE and thus European Regulations would not be applicable when dealing with our British neighbours.

Then, talking about Spain and jurisdiction clauses to London, their validity will not be analysed under the Council Regulation 1215/2012 but under the Spanish Shipping Act 14/2014. As advised in previous Newsletters, according to art. 468 of the referred Act, jurisdiction clauses on Bs/L shall not be valid unless they have been singularly negotiated and accepted by the Shipper and/or Consignee, what in practice will be a “probatio diabolica”.

Recent resolutions rendered by the High Court of Justice of Valencia admit the jurisdiction clauses in favor of the High Court of Justice in London inserted in liner Bs/L relying on the Council Regulation 1215/2012. But, it is expressly mentioned that European regulations will be applicable as long as the UK is still part to the UE.

Only time will tell ….

The answer is yes.

The enactment of the Spanish Public Sector Regime Act 40/2015 in October 2015 is intended to make a deep review of the Public Sector in Spain and is bound to improve its effectiveness by clarifying some remarkable aspects such as its functioning, purposes and obligations, which were haphazardly regulated in different laws.

This law applies to all the levels of the Spanish Administration, both to the national organisms and those autonomous or local, as well as to any entity, body or agency irrespectively they are subject to public or private law, but linked or dependant of the Public Administration whilst exercising administrative powers.

For example, the areas of responsibility of the Ministry of Development include the control, organization and regulation of the services and the infrastructures within the scope of the maritime transport. Harbour Master’s offices all around Spain as well as the Safety and Rescue Agency (SASEMAR) are subordinated to this Ministry. Ports of the Estate Agency, which include the local Port Authorities, depend on this Ministry, which also has the competency to organize the Pilot’s service.

In Article 3 of this law the main principles that governs its activity are detailed and highlighted the responsibility for the public management of these services and the obligation to compensate for the damages that may be caused as a consequence of the public service provided.

The precedent Act and the one currently in force, Act 40/2015 recognizes the right of the individuals to be compensated for any damage suffered in their rights or assets always on the assumption that those damages were caused as a consequence of the normal or abnormal functioning of the public service, excluded those damages caused by force majeure or those that should be normally borne by the individuals according to the applicable regulation.

The most outstanding change introduced by this Act, is the recognition as a compensable event the damages caused as a consequence of the derogation of an internal law declared as being contrary to the EU regulations or contrary to the Spanish Constitution. Spanish Courts had already accepted in some case law this compensation, however it was not specifically included nor mentioned in any specific law. There was some controversy about the possibility to claim for compensation after the EU High Court of Justice by resolution dated 4th February 2010 that declared that some articles in the Spanish Law 48/2003 about Ports Financing regime, which granted some privileges or reductions to some maritime trades, were against the EU regulations. Now the situation has changed thanks to this law, which opens a door onto claims for this type of damages.

The term to sue the administration is one year counting as from the date the harmful event occurred or the damages were reported.

Thus, based on this Act, any private individual or company acting in the shipping industry which had suffered damages as a consequence of the normal or abnormal functioning of the maritime administration, may institute an action for compensation, always on the assumption that the prejudice suffered was the result of an unlawful, individually considered, effective and economically quantified damage, the concurrence of negligence on the party of the administration not being required.

As an example, Spanish Courts have reviewed the Administration damage liability in several resolution which condemned the State to compensate a ship-owner for the damages suffered as a consequence of the deficiencies reported in a ramp which caused the failure of some equipment during the loading operations, or declared the Terminal right to be compensated for the damages suffered as a consequence of the holes, cracks and flaws on the Terminal area due to the lack of maintenance by the Port Authorities.

In conclusion, this regulation protects the individuals vis a vis the Administration, but as any other civil liability it requires full evidence of the causal link between the harmful conduct and the damages suffered.

Muñoz & Montañés, law firm specialized in maritime law, transport and international trade, with offices in Valencia and Bilbao, providing services throughout Spain.

We all are fully aware of the migration avalanche in Europe. Thousands, or, better, hundred of thousands emigrants try to reach Europe by sea, using even fragile inflatable boats. Obviously, a lot of persons are in distress and in need of being rescued.

Shipmasters obligation is to proceed to the assistance of those persons that are in danger at sea. (See UNCLOS 1982 and SOLAS 1974).

Further, states parties to above Conventions have the duty to guarantee that persons rescued at sea will be provided a place of safety, regardless of their nationality, status and the circumstances in which they are found.

A place of safety: “… is a location where rescue operations are considered to terminate. It is also a place where the survivors` safety of life is no longer threatened and where their basic human needs (such as food, shelter and medical needs) can be met. Further, it is a place from which transportation arrangements can be made for the survivors´ next or final destination”.

An assisting ship: “…should not be considered a place of safety based solely on the fact that the survivors are no longer in immediate danger once aboard the ship…. Even if the ship is capable of safely accommodating the survivors and may serve as a temporary place of safety, it should be relieved of this responsibility as soon as alternative arrangements can be made.” See Annex to the 1979 SAR Convention.

Protracted, lengthy disembarkation procedures must be avoided so that the vessel will be free to sail and comply with her owner’s commitments, avoiding by so doing financial damages.

Muñoz & Montañes provide regular assistance to P&I Clubs, Shipowners and Charterers to allow disembarkation of illegal immigrants onboard.

Muñoz & Montañés, law firm specialized in maritime law, transport and international trade, with offices in Valencia and Bilbao, providing services throughout Spain.

As from few years ago the export of wastes from EU to third States has dramatically increased. Presently, one of the main importers is China and, in general, the Southern Far East.

Applicable regulation

The procedure to effect said exports is stated in the Regulation (EC) 1013/2006 of the European Parliament and of the Council of 14th June, on shipment of waste.

Above mentioned Regulation establishes procedures and control regimes for the shipment of waste depending on the origin, destination and route of the shipment, the type of waste shipped and the type of treatment to be applied to the waste at its destination. It shall apply to shipments of waste:

– Between EU Member States within the European territory or with transit through third countries.
– Imported into the Community from third countries.

– Exported from the Community to third Countries.

– In transit through the Community on the way from and to third countries.

Risks and precautions

To determine the procedure to be followed by the parties in each case it is essential to learn of the class of the waste (green or amber list) depending on its hazardousness, type of product and the way it is going to be treated at destination (recovery or disposal).

The shipment of this waste is very often carried out with a failure to comply with the procedures established in the Regulation, either because of lack of control by the authorities of the export country or by lack of information on the part of the shipper. The result of said negligence can cause serious problems to the shipper, the forwarder and the shipping company involved in the operation.

Sometimes, upon arrival of the cargo at destination the authorities of the country of import can reject it compelling its return to the port of origin, where the shipper is bound to arrange for it assuming the costs of the carriage.

These sorts of transactions can easily imply fraudulent activities, such as, for instance, forged import authorizations, which in most of the cases give rise to the refusal of the entry into the country by the import authorities.

To try and avoid damages to the shipping company as a consequence of the above, it would be advisable to undertake some steps prior to the loading on board: i) The shipper ought to assure/guarantee vis a vis the carrier the authenticity of the authorization at destination, ii) The shipper ought to take upon itself any damages and expensed related to the prohibition to import the cargo. 

Muñoz & Montañés, law firm specialized in maritime law, transport and international trade, with offices in Valencia and Bilbao, providing services throughout Spain.