Exclusive Q&A on Shipping Law with David Henderson
Posted: 31st October 2016 08:21What are the laws and procedures for ship arrests in your jurisdiction?
As is well known to the industry, the arrest of a vessel is a desperate maneuver aimed at seeking collateral to guarantee payment of a claim. Naturally the consequences of detaining a vessel escalate exponentially affecting various interests other than just those of the claimant and shipowner. If the claim is well addressed and the jurisdiction friendly, the arrest can result in having the collateral represented by the detained ship substituted for a reputable guarantee or, at best, full settlement of the alleged debt, otherwise, if defending lawyers find a loophole, a counter claim for a wrongful arrest can ensue. Depending on the circumstances, Brazil might well be thought of as an unfriendly jurisdiction for ship arrests involving foreign interests, because an arrest, or urgent measure to detain a vessel, in Brazil, must necessarily be part and parcel of a main claim which could be originating from an alleged breach of contract which might not necessarily have Brazilian courts as competent to rule on. However, a recent development in local legislation may well see a change in the scenario, as, since May 2015, a foreign party to a contract with an arbitration clause can file in court for an urgent measure, such as the detention of a vessel’s sailing pass, demonstrating evidence of the contractual relationship, the arbitration clause, the alleged breach of contract, its consequences and the immediate necessity of the requested urgent measure. The claimant, however and in order to maintain the effects of the court order must initiate arbitration proceedings within thirty days as from the effectiveness of the granted decision and file evidence to this effect in the civil court proceedings. Once arbitration has been initiated, it shall be up to the arbitrators to maintain, modify or revoke the urgent measure granted by the civil court (Law 9307/1996 articles 22-A and 22-B – included by Law 13.129/2015).
What are the main regulators and legislations that apply to shipping & maritime in your jurisdiction?
The Brazilian Commercial Code (Law 556/1850) and Decree-Law 116/1967 are the main rules applicable to shipping. The Civil Code (Law 10406/2002) includes general rules on transport that are also applicable and the Civil Code of Procedure has rulings on General Average and the Court Ratification of Sea Protests.
With regard to ship registration, Law 7652/1988 covers maritime property registration and Law 9432/1997 regulates Brazilian Special Registration. With regards to ship finance, Law 10893/2004 covers the AFRMM (Additional Freight for Renewal of the Merchant Marine) which was created to increase the national fleet and employ local shipyards.
ANTAQ is the National Regulatory Agency for Waterborne Transport and is linked to the Secretary of Ports under the Presidency of the Republic. Its objective is to regulate and supervise service providers in waterborne transport and entities that explore port infrastructure, seeking to implement efficiency, safety, punctuality and moderation in order to harmonize the interests of the market with those of the consumers.
How can you overcome conflict of laws and conflict of jurisdictions in shipping litigation?
Specifically in relation to subrogated insurer cargo claims based on bills of lading, it has been common practice for local courts in Brazil to not comply with the law and jurisdiction clauses contained therein, even if the BL incorporates the terms of a charter party. The main argument put up by claimants to attract jurisdiction to local courts is to allege that the BL terms are unilaterally imposed on the shipper and do not bind the subrogated insurer of the receiver. Thus if, for example, the parties to a Voyage Charter have chosen to submit any claims to arbitration in London under English law and if cargo is damaged whilst in the care of the carrier, the subrogated insurer of the holder of the bill of lading can and most probably will claim against the carrier through the courts of the place of delivery and under Brazilian law regardless of the terms of the VCP. With the advent of the new Civil Code of Procedure which came into force March this year, it is possible that this scenario will change as a lot more emphasis has been given to alternative dispute resolution and limitation of Brazilian court jurisdiction when a foreign jurisdiction clause is evidenced by the defendant at the first opportunity in litigation. In other words, conflict of laws and conflict of jurisdictions is possible through the adoption of arbitration for dispute resolution due to the overall acceptance of the New York Convention and the tendency for local laws to streamline local procedural legislation to facilitate its application.
What key trends do you expect to see over the coming year and in an ideal world, what would you like to see implemented or changed?
It would appear that there is no longer doubt that global warming is bringing about change in weather patterns and that a rise in temperature shall result in the diminishing of polar ice caps and consequential raising of water levels to the extent that land contours as we know them now might well be changed. Ports would then no longer exist and ships will not be able to reach shores in order to land or discharge cargo and take on supplies. This apocalyptic scenario might not exactly happen this coming year, but what could be changed in order to be ready for this would be a return to wooden ships and sails. Unfortunately what we presence today is a tendency to loose the knowledge that exists or existed for manufacturing craft that can be made out of what can be available naturally. Our dependency on petrochemicals makes it necessary for a fisherman to get a loan and buy a fiberglass motor boat rather than use the tools his forefathers had in order to build a boat from scratch. In a perfect world, it would be good to see the implementation of procedures that allow us to become less dependent on petrochemicals.
David is a qualified lawyer registered with the local bar association, he has collected vast experience in handling many different types of claims for all p&i clubs in the international group. Hands on involvement has given him the opportunity to accompany incidents from onset to finalization. His knowledge is derived from practical experience. Professional activities have ranged from steel preshipment surveys, to accompanying repatriated stowaways; from outturn surveys to negotiating settlements; from investigating and collecting evidence in collisions, explosions and oil spills, to litigation in the Maritime Court and Civil Courts; from accompanying the carriage of bauxite and groundings in the Amazon region to filing for the homologation of sea protests in many different ports of Brazil. He has spoken on stowaway repatriation at the XIX International IIDM Congress in Lisbon and lectured on P&I Clubs to the ESA and IMAPOR
David can be contacted on +55 (21) 3550-4070 or by email at email@example.com