Case Summaries

July - September 2011

Duty-free forum shopping on Cruise Ships – Lindo v NCL (Bahamas) Ltd

In a recent case in the United States, the 11th Circuit Appellate Division, by split decision, upheld a clause in a cruise liner employee’s contract compelling the injured seaman to arbitrate his claim, and forego a jury-trial under the Jones Act.

Mr Lindo, a Nicaraguan citizen, was employed onboard a Bahamanian flagged, but US operated cruise liner, the Norwegian Dawn. He sustained injuries to his back as a result of being ordered to move heavy trash bags to the ship and sought to claim in negligence against the vessel owning company NCL under the Jones Act.

In essence, the Jones Act provides US nationals and ‘foreign’ seafarers with the right to claim compensation for injuries and dangerous work conditions aboard vessels operating in the US. The threshold for a Jones Act based negligence claim (which was the basis for Mr Lindo’s claim) is much lower than under the tort of negligence to which most common law countries would be familiar with. The lower threshold when combined with the right to a jury trial in the US meant a US based action would have resulted in a far greater level of compensation to Mr Lindo for his injuries.

The employment agreement governing the relationship between Mr Lindo and NCL contained an arbitration clause that provided that any issues would be referred to arbitration in Nicaragua (Mr Lindo’s country of citizenship) with Bahamanian law to apply (the law of the flag state). Mr Lindo argued that arbitration would result in his statutory rights and remedies under the Jones Act being denied and would be contra to public policy.

The Court said that the US having acceded to the New York Convention (United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards) was bound to adhere to it, in the absence of any explicit exclusion in US legislation. In a nutshell what this meant for Mr Lindo was that, in the absence of any vitiating factors i.e. mistake, fraud etc, there was a presumption in favour of enforcing arbitration provisions including the choice of forum (Nicaragua) and choice of law (Bahamas). The Court went on to say that the Convention only provides for a public policy defence at the time of enforcement of the arbitral award, and not when deciding whether to compel arbitration. The gist of this is that Mr Lindo would have to engage in the arbitration process, and if the result was that his Jones Act claim was not given the credence it deserved, he would be required to enter into a further round of litigation to mount an argument that enforcement of the award would be against public policy.

The decision of the US Court is bound to either comfort or enrage, dependant on which side of the crew vs owner table you are sitting at. Even though in the instant case Mr Lindo’s employer was US based, the analysis of the Court is likely to extend to those not ‘operating’ in US as that term is generally accepted to mean, but also to those operations employing US crew and entering US waters in any extent.

Whilst it is completely legal and in the vast majority of cases highly recommended and legitimate to ensure that you choose a jurisdiction that is most ‘sympathetic’ to your chosen endeavour, one must question whether at least in the context of employment matters, whether a choice of law or forum clause will ever be fair, given the generally unequal bargaining position between an arguably unsophisticated employee and a corporation (an argument that unfortunately found limited favour with the US Court).

July - September 2009

Independant Fisheries Ltd v Altair II 

In the recent case of Independent Fisheries Ltd v the fishing vessel Altair II (2 July 2009) the vessel Altair was arrested by Independent Fisheries Ltd (IFL) and an application was brought by Dalmor to set aside the arrest and obtain the release of the vessel on the grounds that the court lacked jurisdiction under the Admiralty Act 1973 to maintain the proceeding in REM.

During the course of the dealings between the two companies, Dalmor provided a letter of guarantee to IFL securing all outstanding debts owed by Dalmor to IFL and it was argued that the guarantee constituted a “charge” over the vessel, within the meaning of section 4(1)(c) of the Admiralty Act 1973 which allows an applicant to utilise the court’s admiralty jurisdiction if a claim is “in respect of a mortgage of or charge on a ship”. The court found that the guarantee constituted an equitable charge over the vessel. The court quoted Professor Jackson in his book on ‘Enforcement of Maritime Claims’ saying that a charge is simply an interest in an asset held as security for a claim. The court had some difficulty in defining an equitable charge, but noted that whether a transaction gives rise to an equitable charge depends on the intention of the parties ascertained from what they have done in the then existing circumstances.

The intentions of the parties were clearly to all the vessels sale monies and as such constituted a charge within the meaning of section 4(1)(c) of the Admiralty Act 1973.

 As a consequence, the application to set aside the arrest of the Altair II through lack of jurisdiction was dismissed.
 

 January-March 2009

Vero Insurance NZ Ltd v Posa – (2008) 3 NZLR 701
Marine insurers should take extra care when formulating their policies and the choice of words used to indicate whether the policy is valued or unvalued.

In a recent High Court Judgment the Court had to consider whether a policy was an “agreed value policy”. The insured lodged a claim under a marine policy with his insurance company for the loss of a boat through fire. In its assessment the Court pointed out that a valued policy sets in advance the agreed value on a claim. An unvalued policy leaves the value to be ascertained in the event of a claim.

Whether a policy is an agreed value policy depends on the interpretation of the insurance contract.

The policy examined by the Court had no reference to an agreed value. It rather used terms such as “sum insured” and “not exceed the amount specified”. Rather than stating that the agreed value is conclusive it is expressed to be a “help” in measuring loss. Accordingly the Court ruled that it was an unvalued policy emphasizing the need to be unambiguous in its definitions of valued and unvalued policies.

October-December 2008

Birchall v Maritime New Zealand
The matter of Birchall v Maritime New Zealand has been set down for hearing in the Court of Appeal on 11 February 2009.

July-September 2008

Birchall v Maritime New Zealand
Mr Birchall was charged in the District Court in Wellington with three charges under the Maritime Transport Act arising from an incident aboard the ferry Santa Regina in the Tory Channel on 9 June 2005. He was acquitted on two counts of operating a ship in a manner causing unnecessary risk to property but charged under s31(1) of the Maritime Transport Act for failing to notify Maritime New Zealand as soon as practicable of the incident. He advanced a technical defence stating that he was not the ‘master’ of the vessel at the time, and was merely a watchkeeper. The court examined the facts and found that the arrangement aboard the Santa Regina did not constitute a dual master system and Mr Birchall was a mate/relief officer and did not have the reporting obligation.

In our view this represents an overly technical finding of what constitutes a ‘master’ and establishes an unhealthy precedent. The judgment also creates confusion as to the status of pilot’s exemptions. We understand leave to appeal is being sought.

Omunkete Fishing (Pty) Ltd v The Ministry of Fisheries
New Zealand Fisheries officers carried out an inspection of the vessel and examined computer records they obtained from the vessel during the inspection. The Ministry concluded that there was evidence that the fishing vessel the Paloma V had been engaged in activities that breached conservation measures agreed to by a number of countries including New Zealand and Namibia.

Omunkete Fishing (Pty) Ltd brought an application to Court to decide whether the conditions of the approval imposed by the Ministry, the search of the Paloma V and the subsequent actions taken and which are proposed to be undertaken were or are unlawful.

The Applicant contended that the purpose of the inspection was to establish whether the applicant complied with CCAMLR and accordingly the inspection had to be performed Part 6A. The Court held that the officers were empowered to inspect the vessel “in the course of the enforcement and administration of” the Fisheries Act. Similarly they were exercising their power under s199 and they were able to take possession of the computer records under s206.

The Court further expressed that Part 6A does not have the power to override other sections of the Act and neither are SS199 and 206 subject to Part 6A.

The Court held that Section 113(2) permits the Ministry to impose “any” conditions on an approval.

The first respondent failed to follow the process laid down in section 305A to revoke the permit. The Court held that even though the process was not strictly followed it was not going to quash the revocation since the Paloma V has left and the revocation had no on-going effect.

The applicant submitted that they had no opportunity to comment on the report to CCAML and that the second respondent owed them a duty to comment on the information contained in the report. The Court held that the first respondent will have an opportunity to comment under the process set out in CCAML and that there was no breach of natural justice or the Bill of Rights in this respect.

In light of the above the applicant’s claim was unsuccessful.

We support the judgment made by Judge Mallon. In our view this represents an overly technical finding of what constitutes a 'master' and establishes an unhealthy precedent. The judgment also creates confusion as to the status of pilot's exemptions. We understand leave to appeal is being sought.

Department of Labour v Wallace Investment Ltd
Employers will be relieved to know that although they have uncompromising and onerous obligations under the New Zealand Health and Safety in Employment Act (HSEA), these are not absolute. This was confirmed in a recent unreported judgment in the District Court at Auckland where an employer was charged with failing to take “all practicable steps” to ensure the safety of its employees.

A stevedore employed by Wallace Investments Ltd (Wallace), fell 2.6 metres from the top of a shipping container at Freyberg Wharf sustaining severe injuries to his leg. He was in the process of removing hooks from the top of the container when the container tilted causing him to lose his balance and fall.

Approximately 6 months prior to the incident, another employee fell from a container. As a result of this incident Mr Van Aalst, the sole director of Wallace, put comprehensive measures into place to “isolate and remove” the risk. He prepared guidelines for his employees and ensured that they were properly briefed.

The Honourable Judge McElrea was impressed by the way Mr van Aalst informed and demonstrated the procedures to be followed. The Judge commented that he is a very conscientious employer and pointed out that he presented a three-dimensional briefing with a visual element to it and did not solely rely on people reading notices or on people hearing briefings.

The Court held that “it is not humanly possible for an employer to ensure (that is, make certain) that all employees do what they are told… unless there is supervision of every single person and perhaps even supervision of supervisors.” To place a burden on employers to ensure that employees follow procedures is akin to asking employers to guarantee that there will be no workplace accidents.

This finding is a welcome departure from a string of judgments holding employers liable for breaches of the HSEA.

April-June 2008

The last three cases listed on the NZ Maritime Law website were matters litigated by our firm. These involved an opposed application for the sale of our client’s vessel, and an interesting jurisdictional argument surrounding the right to re-arrest.

UAB Garant v the Ship Aleksandr Ksenofontov
The first case (UAB Garant v the Ship Aleksandr Ksenofontov) 21 December 2007 was taken by our client to the Court of Appeal and judgement is expected by the end of the month.

January-March 2008

Heilbrunn v Lightwood PLC (Australia) October 2007
In this case Judge Allsop of the Federal Court examined the meaning of “a claim arising out of an agreement that relates to carriage of goods by sea”. The court took an expansive view of the jurisdiction of the Australian courts to deal with a cargo claim, notwithstanding the existence of an exclusive jurisdiction clause.

October-December 2007
 

Two recent cases have been decided in the High Court of New Zealand, namely New Zealand China Clays Limited and Others v Tasman Orient Line CV, and Birkenfield v Kendall.

New Zealand China Clays Limited and Others v Tasman Orient Line CV
In the former case, cargo owners were entitled to judgement against the defendant charterer for breach of bailment and breach of contract. The claim arose from the grounding of a Tasman Orient vessel off Japan, resulting in loss and damage to cargo. The court implied into the Hague Visby Rules a requirement of good faith on the part of the Master in order to allow the carrier to rely upon an exemption of liability contained in the Hague Visby Rules.

Birkenfield v Kendall
In the latter case, the High Court stayed proceedings against Yachting New Zealand for a claim arising out of serious injuries incurred by the Plaintiff in a collision between Miss Birkenfield’s windsurfer and a Rigid Inflatable Boat (RIB) owned by Yachting New Zealand and driven by Mr Kendall. Miss Birkenfield was given six weeks from the date of the judgement to decide whether she would accept a settlement figure of NZ$734,003.00 plus interest. For further details on these matters, please email peter@dawsonlaw.co.nz.
Copies of these judgements can be obtained at www.maritimelaw.orcon.net.nz .

Disclaimer

This information is of a general nature only and should not be used as a substitute for detailed professional advice.