The lasting impact of the COVID-19 pandemic, ongoing geopolitical conflict, a challenging economic climate, and ever-growing environmental concerns have made 2023 a challenging year in the shipping industry. The legal landscape, much like the political one, has also seen many important changes since the end of 2022 including a commercial settlement in 2023, which permitted the Court of Appeal the last word in The Eternal Bliss litigation holding that demurrage liquidates the whole of the damages arising from a charterer's failure to complete cargo operations within the laytime allowed. These changes have been marked by regulatory changes in the environmental, social and governance sector, developments in case law concerning international conventions such as the Hague Visby Rules and procedural changes in Admiralty Court practices.
As the push towards transparency, clarity, and consistency in the environmental, social and governance space gathers momentum, there have been a number of key regulatory and legislative developments in the area. The International Maritime Organisation sees two new regulations come into effect this year with the MARPOL 2023 regulation developed with the goal of minimising pollution of the oceans and seas, including dumping, oil and air pollution and the IMO 2023 regulation which requires both new and existing ships to report on emissions in pursuit of the goal to reduce such emissions by 40% by 2030.
The trend set in 2022 that saw freight rates continuing to rise and then decline significantly during the second half of the year has continued into 2023, with January having seen the largest decrease in sea freight rates since the COVID-19 pandemic. However, in light of the mandate issued by the IMO in relation to carbon emissions as discussed above, it is expected that these freight rates will begin to increase once more over the next few years as the industry investigates and begins its investment into dual fuel vessels and more sustainable sources of energy. These new regulations have and will undoubtably disrupt the market, creating challenges and opportunities for shipowners and operators moving forwards but it remains to be seen exactly how this new legal framework will be dealt with by the courts and how the regulations will be used and enforced in practice. Some have criticised the new regulations suggesting that they are lacking in clarity and/or may be out of touch with the way in which the market actually operates which begs the question; plus ça change?
There is also clearly a key interrelation between the ESG considerations and other priority topics for actors in the maritime arena many of which have seen their fair share of the spotlight over the past twelve months; the geopolitical landscape, which continues to be focused around the ongoing war in Ukraine, has led to an inevitable increase in disputes. Such disputes have mainly focused on the vessels trapped in Russian and Ukrainian ports and it is anticipated that claims will only continue to increase as February 2023 saw the passing of the twelve-month period since the outbreak of the war in Ukraine and, therefore, also marked the first time at which a notice of abandonment under war risks policies could be validly tendered and used to declare the vessels still trapped as constructive total losses.
Adding to the significant developments in the regulatory and political spheres, there have been a considerable number of decisions this year which mark departures from established case law in the shipping sector. One such decision is that in The Thorco Lineage [2023] EWHC 26 (Comm) whereby Sir Nigel Teare declined to follow the decision of Burton J in The Limnos [2008] 2 Lloyd's Rep 166, in holding that Article IV(5)(a) of the Hague Visby Rules did not limit claims for economic loss by reference only to the weight of cargo which suffers physical damage. Teare J held that the limit for such claims was to be calculated by reference to the weight of cargo physically or economically damaged.
The Giant Ace [2023] EWCA Civ 568 was another matter concerning the Hague Visby Rules heard before the Court of Appeal in which Males, Popplewell and Nugee LJJ found that the time bar under Article III Rule 6 of the Hague Visby Rules would apply to claims in relation to misdelivery after discharge. That decision confirmed the closing of the gap left by the previous decision concerning the Hague Rules time bar in which it was held that misdelivery occurring before or simultaneously with discharge was covered by Article III Rule 6 but where the court specifically left open the question of its application to misdelivery occurring after discharge (see The Alhani [2018] EWHC 1495 (Comm)).
Adding to the plethora of case law in the maritime sector are the numerous arbitral decisions that have been published this year which have kept arbitrators, practitioners and experts busy on matters such as safe port warranties, over and under supply of bunker issues and of course on the continuing disputes arising out of the sanctions regime implemented following the outbreak of hostilities in Ukraine. In London Arbitration 2/23 (2023) 1129 LMLN 2 an arbitral tribunal rejected the owners' claim for damages for breach of a safe port warranty in a time charterparty on the basis that a ‘one-off' pilot error did not render a port unsafe. The decision was focused on the dictum of Leggatt LJ in The Star Sea [1997] 1 Lloyd's Rep 360 which emphasised that anyone could make a mistake and that mistake should not necessarily render an individual incompetent.
The limitation actions arising out of the catastrophes on the MSC Flaminia, Maersk Honam and Ever Given continue to make their ways through the Admiralty Court, which has itself seen a revamp in the rules regarding collision claims. New rules dealing with such claims came into force on 6 April 2023 and for the most part have been well received. The changed requirements for early disclosure of navigational data appear to have been welcomed as parties can no longer refuse to release their VDR data because other vessels do not have it in a move towards greater transparency and data sharing. Similarly, the new requirement to explain what data is available should streamline discussions about disclosure and reduce costs of applications for specific disclosure. The rules also mark a change in the way parties prepare their statements of case; parties will need to formulate their case strategy, legal submissions, and evidence earlier such as to enable them to prepare proper and fuller pleadings. Such changes, whilst welcome from a transparency and clarity point of view, will inevitably mean a front loading of time and costs and reality checks on the strength of the parties' respective positions at a much earlier stage in the litigation.
In an increasingly uncertain world with ever changing regulatory frameworks, case law and practice, never have the words of Heraclitus held greater weight; change, is the only constant. As can be seen though, practitioners and market actors alike have embraced the ever-changing landscape in which we all operate, and it is hoped that such progress continues as we look towards and wish our fellow practitioners and colleagues the best for the upcoming year.
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