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The Third Man

Posted on: 05-02-07 07:14:48
Back Issue - 7 - April 99
The Third Man
Open conference, closed list
"FANTASTIC, better than I could imagine." "A positive, constructive and unanimous conference." "A better text than the draft." "The UK and the US very positive and hope to sign up soon."

What could all this refer to? Think of the least likely occasion for such comments. You've got it. UNCTAD's diplomatic conference to adopt a new ship arrest convention. Those were the comments of Mahin Faghfouri, head of the legal department of UNCTAD, and the organiser of the conference. She would say that, wouldn't she? But, in fact, it does seem to have been an unusually useful event. Useful, that is, if you are part of the world minority that sees a need for a new Convention on the Arrest of Ships.

On March 12, one hundred nations and twenty interested bodies unanimously adopted the International Convention on the Arrest of Ships. It will now be open for signature from September 1, 1999 to August 31, 2000, and will enter force when ten states have signed up.

Will that happen? Almost certainly, yes. Will it change much in practical terms? Not much at first, but there are two key provisions which will affect judicial thinking, even in countries which turn their backs on the convention.

The first is the issue of green power. The new convention has adopted a closed list which defines those maritime claims which can give rise to arrest. In that way, it follows, albeit after a tough fight, the simplicity and clarity of present practice. But it adds a paragraph which permits arrest for claims for environmental damage and consequential costs, including preventative measures. Look for ports and coastal states to make extensive use of that one. It is a powerful incentive for governments to sign up, so the convention may well enter into force sooner than a lot of people would like. The second issue is the piercing of the corporate veil. Attempts to overturn current thinking and allow the arrest of associated ships were talked out. The sistership situation remains unchanged on paper but, in the minds of judges, there will be even less incentive than ever to allow people to pierce the corporate veil.

You can find the full text of the convention on the UNCTAD website at www.unctad.org. Look for the little but important points. The new convention covers all ships, not just seagoing ships, as at present. It changes jurisdiction for lifting arrest and it clarifies the grounds for re-arrest. There is more in there. It is a little short of fantastic, but it is an unusually workmanlike revision of current practice. Arresting stuff.


Well met in Auckland
ONE of the arriving delegates to the recent International Congress of Maritime Arbitrators meeting in New Zealand apparently asked an airport official what time he should set his watch for. He was told, "Just set it back fifteen years." New Zealand is supposed to be behind the times in most things, but arguably not in anything that really matters.

Auckland in March was an exotic setting for ICMA 99. And it seems to have lived up to expectations. As to the attendees - 147 in all, from 23 countries - it was the same hard core of delegates who usually frequent ICMA, with the customary strong support from London and New York. The big surprise, though, was the fact that the largest contingent was from China.

There was certainly plenty going on. Watching the Americas Cup presentation sounds hi-tech. And driving through the unchanged countryside and meeting the Kiwis must have been comfortable and pleasant, like seeing old friends. There was a dinner-dance, and a home-based dinner experience. And there was the Maori challenge.

There was also a splendid dinner at the Royal New Zealand Yacht Squadron, with a good emcee, who provided something of a first - at least on the record - by explaining that London dislikes New York and New York dislikes London and the rest of the world dislikes London and New York. He also questioned the ICMA acronym, and suggested an alternative - the Conference Of Maritime Arbitrators. It just wouldn't work. How could you tell the taxman you had just spent five days in a COMA in New Zealand?

The papers were learned and plentiful, and the mock arbitration could have been less catholic. But it was entertaining, even if those who lacked the necessary sense of humour, or who missed the subtlety of the language, may have been confused by the plot.

ICMA XIV will be in New York, from October 15 to 19, 2001. New York doesn't do subtle, but it will be eventful.


Woolf whistle
THE whistle has blown. The English legal system is changing, with the advent of the new Civil Procedure Rules. The revolutionary regime envisaged in Lord Woolf's Access to Justice report came into effect on April 26. The preparation period is over, and shipping will not be exempt.

The new rules represent the most fundamental overhaul of the legal system in England and Wales for fifty or a hundred years, depending on which legal journals you subscribe to. Either way, life will never be the same again for any of the parties involved. Everybody will be affected.

The new rules involve a complete change of culture. They will apply to all proceedings begun on or after April 26. In most cases, too, pending proceedings will be subject to the new regime. With certain exceptions, the new rules will apply to all proceedings in the county courts, the high court and the civil division of the Court of Appeal.

The scope of the reforms is enormous, but there are some salient points. Litigation should be seen as a last resort, and other, quicker commercial solutions - for example ADR - should take precedence. The courts should have much greater control of case management. Parties to litigation should help to encourage earlier settlement of disputes by revealing their hand much sooner than under the old system. Legal costs should be more affordable and more relevant to the circumstances of the case and of the parties.

It will take time for the effect of the changes to be felt in shipping. But read our feature in this issue on the use of expert witnesses in legal proceedings, and you will get a glimpse of the extent to which maritime litigation will be affected.

Lord Woolf appears not to think much of experts, or rather the way in which they have come to be used in legal proceedings over the years. Woolf was very critical of the practical application of the system of expert evidence. He noted the tendency for experts to be wrongly viewed as advocates of the parties, for experts to be over-used, and for experts to be used when there was no justification for involving them in the first place. He was right.

The new rules make a number of provisions with regard to the use of experts and assessors. Experts can't be called, or their reports put into evidence, without the permission of the court. Expert evidence is usually to be given in written form, and the court can limit the amount of expert witness fees that can be recovered from another party.
Expert evidence is restricted to that which is reasonably required to resolve the proceedings, and this definition can be expected to apply to the length and complexity of reports.

Most importantly, the court now has the power to insist on the appointment of a single expert, an impartial arbiter of technical issues for both parties, almost fulfilling the role of a judge in some respects. There may be serious doubts about the availability of sufficient numbers of such experts to cope with the expected workload, but what is for sure is that there will be a significant shift towards the appointment of single experts in the short term.

Not everybody is enamoured of the new rules. Not everybody, for example, thinks it a good idea to place constraints on access to documents, even if it is in the interests of persuading parties to settle their differences as quickly as possible. Add to this the greater procedural flexibility ushered in by the 1996 Arbitration Act, and you have a measure of the extent to which the civil justice system in England is changing.

Parties to shipping disputes will want the best parts of the new rules to be used to resolve their particular dispute. That is only natural. If , as has been suggested, some of the new rules dealing with summary judgment are used indiscriminately, it will be the fault of those who apply the rules, not the rules themselves. Shipping should regard the new rules as a window of opportunity, and a chance to reduce the cost of claims handling.

Parties to disputes will doubtless learn more about the new rules as they go along, but the time for study is over. Battle is about to be joined in what should be a leaner, more equitable and more affordable dispute resolution process. It is to be hoped that it will ensure greater access to justice, and not just greater access to dispute resolution.


By any other name
SOME familiar terms have disappeared along with the advent of Lord Woolf's changes. Plaintiffs are now to be referred to as claimants in the English courts. Fair enough. The writ becomes the claim form. No argument there. Discovery becomes disclosure. I don't care. A pleading becomes a statement of case. Ha! But there are some changes which I am not too happy about.

Why, for example, change a wonderful word like 'subpoena' for the plainly inferior 'witness summons'? And what did Woolf have against proper names? Is a Part 36 offer really any substitute for the romance of a Calderbank offer? Gone, too, is dear old Anton Piller, thrown over for the mundane 'search order'. And, saddest of all for shipping interests, the Mareva injunction has been frozen out in favour of - you've guessed it - a freezing injunction. Henceforth, we must protect our Himalaya clauses and our bumbershoots from judicial meddling. If we don't, life will become unbearably literal.

Phone cool
I AM indebted to the excellent and informative East African newspaper for news that mobile phones have become so commonplace in Uganda that the really cool people don't let on that they have one, and the really affluent people have assistants to answer them.




It is not every day that the rest of the world can take an etiquette feed from Kampala, but I may say I have my own code of conduct on mobile phones. I only use my mobile when it is really necessary. I never, for example, ring the kitchen from the front room, as they seem to do in Uganda. I never use my mobile on the train, or anywhere else where it might annoy people. I never turn my mobile on unless I am expecting a truly urgent message. I use my mobile answerphone service to pick up messages when I am in a desolate area, away from other human beings. And I have worked really hard at not knowing my mobile number. How cool is that?

Culture change
ASK anyone involved in London arbitration if they think it should be speedier and simpler. They will say yes. Ask anyone using the system if arbitrators should take a more robust role. They will say yes. There is a consensus that it is time for a change of culture. Yet ask Patrick O'Donovan, current president of the LMAA, if he is willing to lead the culture change, and the answer is, "The LMAA doesn't tell its members what to do." Not much leadership there.

London arbitrators can be forgiven for not rushing to change. They dominate the market. Peter Morgan, now a consultant to Clyde & Co, told the LMAA Seminar in February that London had over three thousand appointments last year. That compares to a few hundred in New York, less than one hundred in Paris and only a handful in other centres. There were over nine hundred awards in London, one hundred in New York and handfuls elsewhere. So London is ten times bigger than its nearest rival, and many times bigger than all the rest of the world put together. So why change?

London arbitration should change because there are still too many horror stories of delays, and because the full court-like procedures cost more than the courts. And because, although London dominates, other centres are slowly but surely growing. The LMAA seminar attracted a full house of lawyers and arbitration users, who heard Francis Sarre, of CMB International, say that he prefers to insert a commercial court dispute clause in his charter parties. He outlined the problems with London arbitration, basically concluding that, as it looked like the courts, you might just as well use the courts, as they are cheaper and quicker.

Sarre's plea was for arbitrators to limit discovery and nip interlocutaries in the bud. Tim Young, a rather pompous barrister from 20 Essex Street, pointed out that arbitrators can set their own rules of evidence. "Cast off the procedural chains which bind you," he urged. "Discovery is a tool of oppression and unjust enrichment." Katherine Stovring, BP's in-house shipping team lawyer, said solicitors hate discovery as much as clients and arbitrators do. "We need active arbitrators who set rules to curb solicitors who are just playing games," she said.

The calls for action went on. John Morris, director of Thomas Miller Defence, said the new arbitration act had not had the effect users wished. "Some of you may think it has brought in a breath of fresh air," he said, referring to Bill Packard's earlier upbeat presentation on small claims. "But I think there are still too many cobwebs." He went on to say that the costs of arbitration are the same as - or more than - before the act, tactical games still go on, arbitrators wait until the final award to complain that there were too many submissions, tribunals are deluged with interlocutaries, and there is no discretion on costs. "Arbitrators should read the pleadings and be energetic," he insisted. "Cut out the posturing, make people meet early and impose early cost capping." He ended with a clarion call. "We have a new act, but we need a change of culture. If there is no culture change then the act cannot achieve anything."

Ken Rokison made the point that it was difficult for arbitrators to drive a wedge between lawyers and their clients. And he highlighted the real problem. "Busy arbitrators have no time to be proactive. They can only react."

That is the real problem, plus the fact that less busy arbitrators lack confidence. "It takes a brave arbitrator to go against the big guns of law
firms," said Ken Rokison.

All of which led to Rob Walker, of Lawrence Graham, asking Patrick O'Donovan if he would lead the required cultural change. Good question, but not the answer people wanted to hear.

All this passion was summed up in one paragraph of the LMAA newsletter, followed by a promise that, "The committee of the LMAA are considering and reviewing these matters." That's alright then.


Dinner time
One of the more elegant scrums of the year is the LMAA dinner, traditionally at the Carpenter's Hall in London. Tradition means too may people crammed into a room far too small, so you can hardly see your friends, never mind talk to them. But your friends are there, which is nice. Long tables and a somewhat arbitrary seating plan make for mixed company. But the food is good, and the speeches are normally better. Jonathan Hirst QC rather dented that tradition this year with a turgid speech in which he mentioned dead sheep, while simultaneously sounding like one. The meal was roast lamb.


Flight of fancy
OUR piece in the last issue about Ambrose Bierce aroused some interest among readers. I am encouraged to offer you another slice of Bierce, my absolute favourite. It has no direct relevance to shipping or the law, except by implication.

An ingenious man who had built a flying machine invited a great concourse of people to see it go up. At the appointed moment, everything being ready, he boarded the car and turned on the power. The machine immediately broke through the massive superstructure upon which it was built, and sank out of sight into the earth, the aeronaut springing out barely in time to save himself.

"Well," said he, "I have done enough to demonstrate the correctness of my details. The defects," he added with a look at the ruined brickwork, "are merely basic and fundamental."

On this assurance, the people came forward with subscriptions to build a second machine.


Laughing matter
WE don't have enough jokes in shipping. Most of those that we do have come from Jim Davis, chairman of the International Maritime Industries Forum and of most other organisations beginning with a letter of the alphabet. But it was not Jim himself who was the jokemeister at the most recent IMIF annual dinner. It was BIMCO's Ronald Bergman, who related the story of a Swedish government official who told his Swiss counterpart that he was greatly amused by the fact that Sweden did not have a shipping minister, while little old landlocked Switzerland did. The Swiss replied that this was not nearly as funny as Sweden having a minister of finance.

Neither, I suggest, is as funny as the recent news item that Intercargo is to form a panel of experts whose remit will include making pronouncements on the quality of junk bond issues. 'Appalling' is one of the best adjectives attributed to industry commentators on hearing the news. 'Risible' would be my own word of choice. I have never divined a reason for Intercargo to exist, unless you count making videos as a raison d'etre. Now I have one. To make us laugh.


Getting started
THIS is supposedly a true story, sent to me on the internet. It probably isn't true because it wouldn't be funny if the central character was a man and not a woman. As such it is unfair to women, but funny all the same.

Last summer, down on Lake Isabella, located in the high desert, an hour east of Bakersfield in the United States, a woman, who happened to be blonde, and new to boating, was having a problem. No matter how hard she tried, she just couldn't get her brand new 22ft Bayliner to perform.

The boat wouldn't get moving at all. It was very sluggish in almost every manoeuvre, no matter how much power the woman applied. After about an hour of trying to make it go, she putted over to a nearby marina. A thorough topside check revealed that everything was in perfect working order. So one of the marina employees jumped in the water to check underneath. Under the boat, still strapped securely in place, he found the trailer.


Why 2k?
I HAVE tried very hard not to worry about the Year 2000, or the millennium bug. In fact, I have succeeded rather admirably. I am, on balance, more worried about trying to remember whether it is stalactites or stalagmites that grow upwards, and why. I felt vindicated anew in this brazenly flippant attitude to what may or may not be a technological time-bomb when I received a letter from a computer specialist asking me whether I had checked if my RTC could change to the Year 2000 with a reboot. Please be sensible.


Headlines
I GET a lot from reading the law reports in The Times, but sometimes I enjoy the headlines even more. Was there a hint of mischief in the sub-editor's mind recently when he penned, "Litigant has no right to lay adviser in chambers." I do hope so.

This, I think, is a good headline. But I would quibble with another headline, published the same week, which claimed, "Children must be returned". Not necessarily, they mustn't.
The LMAA points out that "this is by no means an isolated case, which shows what can be achieved with the right approach and an element of goodwill." It is absolutely right to be pleased with itself. A pity, then, that, in the same newsletter, the main concern of the LMAA supporting members liaison committee should be recorded as "delay in some awards being published."

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