Maritime Law: Nature and Advantages of Proceeding in Rem - Coursework Example

MARITIME QUESTIONS By Date Question 1 Nature and Advantages of Proceeding in Rem A proceeding in rem is a legal term referring to an action directed towards a vessel lieu of a person (Bluesteinlawoffice.com, n.d.). In addition, an action can be taken upon against the defendant if he/she is within the state of the proceedings or if he/she submits to the state. Therefore, if a foreigner ship-owner of an arrested vessel presents him/herself before the court of proceedings and deposits a security to bail a vessel upon which an action in rem has been taken, he is deemed to have submitted himself to the jurisdiction and the proceedings can the continue now in personam (Shrikant and Binita, 2014). That notwithstanding, it is important to also note that an action in tem can only be taken by the plaintiff who has obtained a statutory or maritime lien against the ship and proceedings can only be instituted where a vessel is within/present in the jurisdiction of the state the proceedings are taking place (Bluesteinlawoffice.com, n.d.). Some of the advantages of proceeding in rem include: first the vessel is assumed to be the defendant, thus, eliminating the challenges of the owner being present within the jurisdiction. Thus, this allows the proceedings to continue even in the absence of the vessel owner (Okoli, 2010). Secondly, proceedings in rem require no prior notice as long as a vessel is within the jurisdiction by only the claimant taking an oath in a court. Thirdly, proceedings in rem allow a claimant to arrest a ship and continue with proceedings as in personam (Okoli, 2010). Fourthly, if proceedings in rem are successful, a court rule can dictate that the res be disposed and proceeds used to settle claimants, thus, providing a form of guarantee and security to the claimants (Shrikant and Binita, 2014). Arresting a Ship in Rem For admiralty courts to entertain applications for vessel arrests the following conditions must be satisfied: (1) the dispute must involve maritime claim implying that the claim must be connected to shipping; (2) the claimant must prove that the ship in question has connection with the claim; (3) granting of warranty of arrest is unconditional on the claimant to make all disclosures of any material facts during the application for warranty of arrest such no proceedings have been instituted in another country (Woollam, 2010). Thus, having satisfied the conditions above the process of arrest follows the following procedure: Issuance of writ in rem by commercial Registry and Admiralty in London or any District Registries within the UK. Arrest warrant is issued by High Court together with an affidavit leading warrant of claimant and is valid for 12 months. The arrest warrant and writ are served the moment the vessel is within the jurisdiction by an officer of the HM Customs who acts on instructions from the Admiralty. After arrest the vessel can, however, be released by letter of undertaking or issuance of a bail bond (Woollam, 2010). The proceedings continue while the vessel is under arrest. If the claim is permitted and claimant remains unpaid, the vessel then can be sold by judicial sale process and proceeds used to settle claimant (Woollam, 2010). Restrictions on Proceeding in Rem Restrictions on proceeding in rem demand that for a court to exercise jurisdiction over the proceedings: The ship (res) that is the subject matter of proceedings must be within the High Court’s jurisdiction during the time when the claim form is valid, which is six months (Nina, 2008). Therefore, this implies that the vessel in question must be within or present in the territorial waters of the UK to allow serving of the claim form on the ship itself meaning you cannot serve the form outside the UK jurisdiction (Nina, 2008). There must be statutory right as provided in section 21(4) of the court of supreme Act 1981 or a maritime lien on the vessel to allow proceedings in rem (Nina, 2008). Therefore, this explains why most cases involving claims are processed in rem because it simpler than following the case in personam basis. Different Circumstances in which the Proceeding in Rem can be pursued without a Claim Being Presented against the Vessel There are situations when rem actions can proceed without presentation of a claim against a ship. For instance, a defendant whose vessel is under arrest or is threatened with arrest can decide to offer an alternative security to the claimant to enable him continue using the ship or to avoid judicial selling of the ship (Shrikant and Binita, 2014). Therefore, this alternative forms of security can include the following; a letter of undertaking or bail bond, which are deemed valid and enforceable once a claimant has made acceptance. Thus, after acceptance, the proceedings in rem can continue without arrest of the ship. That notwithstanding, the ship-owner can deposit cash with a court, offer a bank guarantee or letter of guarantee as other alternative forms of security to avoid vessel arrest while proceedings continue in rem (Force, Yiannopoulos and Davies, 2004). On the other hand, proceedings in rem can also continue without serving of a claim form to the ship in personam implying that a claimant takes action against the ship-owner in person lieu of the res in rem (Shrikant and Binita, 2014). Therefore, proceedings in personam allow a claimant to continue with proceedings without presentation of a claim form against the vessel. However, it is imperative to note that in personam proceedings are riskier than proceedings in rem because in this situation there is no security that is provided to the claimant as a guarantee that the defendant will settle the claim if it is allowed (Shrikant and Binita, 2014). Question 4 Limitation of Liability The LLMC 1976 was finalized in London in November 1976 replacing the International Convention related to Limited liability of Owners of Seagoing Ships that was signed in 1957 in Brussels and started been enforced in 1968 (LLMC, 1976). As of June of the year 2013, the convention had 54 state parties that are signatories to the convention. That notwithstanding, under the convention a limitation to liability claims that are covered was considerably increased by about 250-300 percent in some cases (LLMC, 1976). However, the convention set limits for two types of liability claims namely a claim for personal injuries or loss of life and property claims such as damage to harbour works, property or other ships, which were set at 333,000SDR for personal claims for vessels not exceeding 500 tonnes, in addition to, additional amounts based on ship tonnage. Further, for other liability claims, the limit was at 167, 000SDR, in addition to, additional amounts based on ship tonnage not exceeding 500 tonnes (LLMC, 1976). Therefore, the convention helped create a virtually unbreakable method of limiting arising liability claims against ship-owners and salvors except for instances where it is provable that a loss occurred due to intentional personal acts or omissions (Bluesteinlawoffice.com, n.d.). Rights and Responsibilities of Claimants Claimants have a rights and responsibilities under these conventions that include the following: during limitation trial proceedings claimants have the responsibility to prove that a loss or injury suffered arose out of negligence of the ship-owner or due to unseaworthiness of the vessel. Therefore, it is the duty of the claimant to prove the existence of negligence and unseaworthiness of the vessel from which the shipowner is liable to the claimant for the loss or injury suffered while it is the duty of the ship-owner to prove that he/she did not act negligent or the vessel was seaworthy and, therefore, he/she was not neither privy nor had knowledge of facts of negligence or unseaworthiness as was held in the case of “Papera Traders Co. Ltd. & Others v. Hyundai Merchant Marine Co. Ltd. & Another-The “Eurasian Dream 2002” (Rarea, 2008). Moreover, it is the responsibility of the claimant to file a complaint in court upon which the court will serve the ship-owner with a stay of all the proceedings against the ship in regard to the incident in question. That notwithstanding, after a claimant has filed a suit and proved that the ship-owner acted negligently or the ship was unseaworthiness, the claimant has right to damages for the loss or injury suffered up to the limitation liability levels as the court will determine (Bluesteinlawoffice.com, n.d.). Conversely, a claimant has other rights such as right to file a suit before the limitation courts for loss or injury suffered; right to fair compensation; right to litigate the claims before a limitation court; right to damages up to the liability limit among many other rights. Rights and Responsibilities of Ship-owners According the convention ship-owners have the responsibility of shouldering the liability brought against the ship itself as provided in Article 1(5); have a duty to ensure their vessels are seaworthy and that they exercise due diligence always to avoid acts of negligence and omission, which can result to loss or injury to claimants; have the duty to ensure they limit liability according to the rules of the conventions as provided for in Article 2 under claims that are only subject to limitation to the exclusion of Article 3 claims, which are exempted from limitation (LLMC, 1976). Moreover, ship-owners have a duty to establish a limitation fund subject to Article 11 (1) of the Convention within a court in member states in which a legal suit has been filed for the purpose of settling claims although in consideration that liability can be invoked (LLMC, 1976). Nonetheless, a ship-owner also has a right to limited liability to provide a counterclaim against a claim related to the same incident that will consequently offset a claimant’s claim leaving the balance to be subjected to the Article 5 rules of the Convention (LLMC, 1976). In addition, subject to this Convention, ship-owners have a right to limited liability in event a risk occurs for which it is proved that they did not act negligently or their vessels were seaworthy, thus, the incident was not an act of omission (LLMC, 1976). Other rights and duties of ship-owners even though are not provided in this Convention include right to lien on goods until shipper pays for freight charges, duty to ensure goo are safe to port of discharge among many others. Discussion on effectiveness of the Convention The Limitation Act in the modern shipping industry has been a matter of controversy and concern that has made it easier for ship-owners to communicate instantly with the vessels. The convention is like a personal weapon that ship-owners continue to use against claimants who have suffered a loss or personal injuries. For instance, during a limitation proceeding in which a claimant is facing opposition from a ship-owners side, it has become imperative that the lawyer of the claimant must understand the Limitation Convention and its treacherous currents to avoid incidences of frustration (Bluesteinlawoffice.com, n.d.). Therefore, from the aforementioned it is evident that the Limitation Convention is a one-way traffic system, which primarily aims at benefiting and protecting ship-owners from claimants. Thus, it is justifiable to conclude that the convention is in tandem with its core objectives of protecting ship-owners against paying exorbitant claims to encourage investment in the shipping industry by setting liability limitations upon which payment can only be made (LLMC, 1976). Question 5 A Maritime Lien A maritime lien refers to a secured claim against a sea vessel for a service done to it or damage done by the vessel or a maritime lien can also refer to “a non-possessory right to property in a vessel” (Raia, 2010). That notwithstanding, in civil and common law the term has also been defined as a maritime privilege. Conversely, Sir John Jarvis in the “The Bold Buccleugh 1951” of the English law also defines the term as a proprietary right contained in a vessel (Daniel Harmer v. William Errington Bell and Others, 1851). However, to give a succinct meaning of the term, drawing from the rule of civil law, Lord Tenterden defined a maritime lien as a privilege or claim upon a thing carried into effect by the legal processes and that this privilege or claim travels with it into whosever possession it may come. He went to say that, it inchoate the moment the privilege or claim attaches & when it is carried into effect by the legal processes by proceedings in rem that relate back to the time when the first attachment occurred (Force, Yiannopoulos and Davies, 2004). Therefore, from the definitions it is evident that a lien comes automatically into existence immediately with the cause of action and without any antecedent formalities as was articulated by Scott L.J. in The Tolten case. Conditions for a Maritime Lien Maritime liens arise when the following conditions are present: when a person supplies certain services or goods (necessaries) to a vessel he/she has a maritime lien against the vessel; when there are civil wrongs such as collisions or personal injuries arising from operating a vessel (Jackson, 2013). However, this brings about a maritime lien against the offending vessel; when there is breach or violation of a certain contractual obligation by an owner of a vessel in relation to a particular vessel (Raia, 2010). For instance, this can include breach of contract for carriage of goods, payment of wages and salaries, charters, towage agreements, reward for salvaging the vessel or port, waterways and canal dues (Admiraltylawguide.com, 1993). Other conditions can include claim against the ship for a tort arising from damage or physical loss caused due to operation of the ship except for damage or loss occurring to cargo, passengers’ effects and containers carried on the ship (Admiraltylawguide.com, 1993). A Maritime Lien Exceptions According to the maritime law, damage or loss occurring to cargo, passengers’ effects and containers carried on the ship are not subjected to maritime law and, therefore, cannot give rise to claim for a maritime lien (Admiraltylawguide.com, 1993). This is because for maritime liens only arise when a service has been to a vessel or when there are non-possession rights to properties in a vessel. Therefore, this implies that for something to be subjective to maritime, it must arise directly from the ship or operation of the ship. Moreover, for such property that is carried on ship, international conventions or national laws require that they are insured against damage or loss with 3rd part marine insurers such that in event of an insured risk occurring, the owners can get compensation from the insurers (Charpentier, n.d.). That notwithstanding, according to maritime and admiralty law conventions, no maritime liens shall attach to a ship for secured claims such as personal injury or loss of life resulting from an operation of a vessel whether on land or water or for a tort arising from damage or physical loss caused due to operation of the ship except for damage or loss occurring to cargo, passengers’ effects and containers carried on the ship; if the damaged is caused by a vessel carrying oil, noxious or hazardous substances for which damages are payable to claimants cognizant to national law or international conventions that provide for compulsory insurance and strict liability or other means of securing claims (Admiraltylawguide.com, 1993). The conventions goes on to say that no maritime liens shall arise from “The radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive products or waste” (Admiraltylawguide.com, 1993). The elements aforementioned are excluded from because the international conventions or national laws prescribe the necessary requirements that must be complied with to secure the vessels from claims arising from operations of the ships (Admiraltylawguide.com, 1993). Insights on Degree of Fit for Purpose In my own opinion I do not believe if maritime liens are hundred percent fit for purpose in the modern shipping industry despite the fact they provide some guarantee or security to persons privy to such undertakings because: firstly, issues arising from conflict of law, which stem from the ranking/rating of maritime liens inter se in relation to other classes of maritime claims differ from one nation to another in the shipping industry. For instance, the traditional ranking/rating of maritime liens in the UK and Canada differs from that of the United States that has its own system that is unique and different from the rest of the world for ranking of maritime claims (Jackson, 2013). Therefore, because of this differences courts find it hard to decide when they are confronted with claims that would be regarded as maritime liens under their proper laws but is not maritime liens under other different forums forcing them to first deliberate whether to accept such claims as maritime liens and the priority of ranking the claims (Jackson, 2013). That notwithstanding, the controversy over the idea of liability of ownership in my opinion renders maritime liens an ineffective force because they invoke liability on the vessel and its equipment; an aspect of marine law that is sometimes presumed to be in an opposing position to ‘the entire world’ (Sharda, 2011). Moreover, some aspects and attributes of maritime liens often can frustrate lienholders from pursuing their claims. Some of these aspects include destruction of the vessel and lapse of time in enforcing maritime lien (Sharda, 2011). Therefore, because these aspects are inevitable especially where a lienholder is injured consequently, resulting in late filing of a maritime lien suit, the lienholder can get frustrated, thus, rendering a maritime lien an ineffective force (Sharda, 2011). Other aspects that could render maritime liens ineffective include; sometimes can be a length filing a suit and can also be costly especially where multiple maritime liens are involved (Sharda, 2011). Bibliography Admiraltylawguide.com, 1993. International Convention on Maritime Liens and Mortgages (Geneva, 6 May 1993). Available at: http://www.admiraltylawguide.com/conven/liens1993.html [Accessed 7 Jan. 2015]. Bluesteinlawoffice.com, n.d. Maritime Accidents and Injury: The Limitation Conventions. Available at: http://www.bluesteinlawoffice.com/Articles/Limitation-of-Liability.shtml [Accessed 7 Jan. 2015]. Charpentier, W., n.d. Required Insurance for Cargo Vessels. Available at: http://smallbusiness.chron.com/required-insurance-cargo-vessels-65311.html [Accessed 7 Jan. 2015]. Daniel Harmer v William Errington Bell and Others ("In Rem Jurisdiction of English Admiralty Courts") 13 E.R. 884 (1851). Available at: http://www.trans-lex.org/311380/ [Accessed 7 Jan. 2015]. Force, R., Yiannopoulos, A. N., & Davies, M., 2004. Admiralty and maritime law (p. 91). Federal Judicial Center. Jackson, D. C., 2013. Enforcement of maritime claims. CRC Press. LLMC, 1976. Convention on Limitation of Liability for Maritime Claims, 1976 (London, 19 November 1976). Available at: http://www.admiraltylawguide.com/conven/limitation1976.html [Accessed 7 Jan. 2015]. Mason, M., 2003. Civil liability for oil pollution damage: examining the evolving scope for environmental compensation in the international regime. Marine Policy, 27(1), 1-12. Nina, S., 2008. Collision Actions under English Law. London: Bentleys, Stokes and Lowless, pp. 3. Okoli, S. O., 2010. Arrest of Ships: Impact of the Law on Maritime Claimants. Raia, M., 2010. Maritime Liens for Necessaries 101: Pacific Maritime Magazine. Available at: http://www.bullivant.com/maritime-liens-for-necessaries-101 [Accessed 7 Jan. 2015]. Rares, S., 2008. The onus of proof in a cargo claim – articles III and IV of the Hague-Visby Rules and the UNCITRAL Draft Convention. Available at: http://www.austlii.edu.au/au/journals/FedJSchol/2008/20.html [Accessed 7 Jan. 2015]. Sharda, 2011. Is Maritime Lien an Important Aspect of Maritime Law?. Available at: http://www.marineinsight.com/misc/maritime-law/is-maritime-lien-an-important-aspect-of-maritime-law/ [Accessed 7 Jan. 2015]. Shrikant, P.H., and Binita, H., 2014. Ship Arrest in India and Admiralty Laws of India Partners, Brus Chambers, Advocates & Solicitors. Available at: http://admiraltypractice.com/chapters/41.htm [Accessed 7 Jan. 2015]. Woollam, L., 2010. Maritime Arrest Under English Law. Available at: http://www.mondaq.com/x/97606/Marine+Shipping/Maritime+Arrest+Under+English+Law [Accessed 7 Jan. 2015]. Read More