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The Boxship
A tale worth telling!

Skegness

Answer
• b. is the right answer.
• (The current maximum recorded bollard pull according to Guinness World Records is by
“Far Samson” at 423 tons)

Initial / Formal Caution
• Outlines seriousness of situation + explains that UK Govt Intervention Powers may be exercised;
• Insists Master employs tug of suitable capability;
• If fail to make adequate arrangements then they will be made for you and cost of tug(s) + other assets will be recovered from Owners;
• Failure to comply criminal offence;
• CG offer any assistance.

SHIPS: POWER TO INTERVENE AND ISSUE DIRECTIONS
For purposes of preventing / reducing risk to safety or of pollution by a hazardous substance
• Directions to take any action of any kind whatsoever - includes destruction of a vessel
– Safety – applies in UK Waters (12nm)
– Pollution - applies up to 200 miles from UK coast or international median line

POWER TO REQUIRE SHIPS TO BE MOVED
For purpose of securing safety of a ship, other ships, any persons or property, or reducing such risk
Directions that ship is / is not to be moved from a specific place, or over a specific route
• Can direct a ship to be removed from UK
Waters
• Directions to owners / master /person in possession of ship
• Applies in UK waters only (12 nm)

DIRECTION TO PERSONS IN CONTROL OF
COASTAL LAND OR PREMISES
For purpose of removing, or reducing a risk to safety or of pollution following an accident
Direction to grant access or facilities in relation to any ship, anything which is or was on the ship including any person
Includes:
* Permitting persons to land
* Making facilities available for undertaking repairs or other works
* Making facilities available for the landing, storage and disposal of cargo or of other things

SOSREP Considerations
• Risk to safety primacy;
• Actions taken to date;
• Damage Assessment/structural integrity;
• Threat from bunkers & cargo
• Future intentions;
• Potential place of refuge –
Resolution A.949(23) GUIDELINES ON PLACES
OF REFUGE FOR SHIPS IN NEED OF ASSISTANCE

The drama continues…

SCOPIC OVERVIEW
• Safety net
• Limit for property insurers
• Established basis of calculation
• Role of the SCR

The drama continues…

Email to brokers
Dear Gordon and Gavin,
Latest news is that the ship has split completely with the forward part having sunk in reasonably shallow water. Salvors are holding the aft part on station but there appears to be fuel leakage so SOSREP is refusing permission to go into Skegness until this is brought under control. Salvors have invoked SCOPIC at this point. We also seem to have some questions about containers which may not have been correctly declared as the salvors are reporting some odd hissing and chemical smell.
Can you advise all insurers and obtain their comments and instructions please.

The drama continues…

Quick recap
• Vessel has split
• Stern afloat
• Forward section not
• SCOPIC invoked
• SOSREP involved

Answer
• Correct answer is B
• To be an ATL she needs to cease to be a thing of the kind insured
• Which is more than just breaking up

The drama continues…

Place of Refuge / Public & Media perception & expectations
• Need for all parties, in particular Svitzer, IMCC, the Environment Group and the SOSREP to be seen to be working together;
• SOSREP decision making free from political interference but beneficial to be open and proactive with media, public & other parties re potential threats, mitigation measures in place and future plans;
• SOSREP will request media strategy group and will address media.

Command and Control
SOSREP will establish a Salvage Control Unit
(SCU) and will invite core members:
• SOSREP + personal specialist advisor(s)
• Salvage Manager
• Owners/ Insurers Representative
• Port
• Environment Group Liaison Officer
• MCA CPSO and/or Coastguard Liaison Officer

The drama continues…

Answer

The drama continues…

TEU values
• a. Very unlikely to find such low values on a main line trade.
• b. Probable – slightly higher than the accepted average of US$26k per TEU.
• c. Unlikely for an Eastbound service, subject to review of manifest

Uninsured cargo
• C is most likely figure for this trade

SALVAGE SECURITY
• Calculating the demand
– Costs incurred
– Likely award
– Estimating values
– How much do salvors hope to get

The drama continues…

NOA required?
• ITCH is subject to MIA 1906 and s62 says NOA must be given in most circumstances.
• The Nordic Plan says:
“Clause 11-5. Request for condemnation
If the assured wishes the ship to be condemned, he must submit a request to the insurer without undue delay after the ship has been salvaged and he has had an opportunity to survey the damage. This request may be withdrawn as long as it has not been accepted by the insurer.”

The drama continues…

The Nancy
• [2013] EWHC 2116
• Failure to disclose past PSC detentions unlikely to be non-disclosure per MIA 18 – test of inducement applied.
• On-line information (Sea-web) does not necessarily give rise to a presumption of knowledge for the insurer.
• “Warranted vessels ISM Compliant” is a documentary requirement

The drama continues…

How many lawyers?
• Likely Lawyers may be acting for
– Boxship
– Hull insurers
– Time Charterers
– 6 different Slot Charterers
– Dublin September
– Windfarm Owners
– Skegness Port Authority
– Owners of vessels delayed at Skegness
– Local oyster beds
– Cargo interests (10+)
– Wife of deceased MEP
25 at least!

SECURITY COLLECTION
• Security collection issues
– Quality
– Maintaining the lien
– Avoiding loss of value
– Abandoned cargo

The drama continues…

Smelly cargo

The drama continues…

• Poland
• Portugal
• Germany
• Romania
• Turkey
• Singapore
• Dubai
• China
Steel prices
Price per Kilo (US$)
4.00
9.00
12.00
2.50
3.00
3.50/4.00
3.50/4.00
0.95

Repair quotes
• Poland US$55m 175 days
• Portugal US$65m 150 days
• Turkey US$45m 200 days
• RomaniaUS$40m 250 days

Claims Rus Email
• Thanks yours regarding the CTL position. The quotes will need further analysis but it would be reasonable to take a figure of say US$60m to cover repair costs and all incidentals.
• This falls well below the Insured Value of
US$100m which is the benchmark according to Clause 19 of ITC Hulls.

Claims Rus email
• We can of course bring in ship’s proportion of
GA and salvage but given the values this does not help! Assuming a figure of USD 40M
• Ship
• Cargo
USD 10M pays USD 2.08M
USD 182M pays USD 37.92M
USD 192M pays USD 40M
This only gives USD 62.08M

Claims RUs
• The Nordic Plan says:-
• “Clause 11-3 Condemnation
• The assured may claim compensation for a total loss if the conditions for condemnation of the ship are met.
• The conditions for the condemnation are met when casualty damage is so extensive that the cost of repairing the ship will amount to at least 80% of the insurable value, or of the value of the ship after repairs of the latter is higher than the insurable value
• Unless the figures are way out we cannot presently see a CTL on either policy.

The drama continues…

Repair cost reality check

The drama continues…

Claims Rus email
To IMCC (Tristan)
Thanks yours. These are complex issues you will need to also talk to your club about, but in outline:-
1.The vessel is still under LOF so it is likely that ship and cargo remain in peril until all or most of the cargo comes off. In that case the cost of discharge will be GA.

Claims Rus email
2.If the voyage is frustrated because the vessel is a commercial total loss, all GA allowances stop on the date the voyage is abandoned or completion of discharge of cargo – whichever is the later.
3.After that, further storage and transhipment to destination becomes cargo’s problem – or rather their insurers under the Forwarding
Charges Clause in the Institute Cargo Clauses.

Claims RUs
• These are just the initial positions – ultimately where the costs end up depends on whether there has been an actionable fault on the part of the carrier – that’s where the Club comes in.
Best regards
Claims RUs

The drama continues…

Unrepaired damage
Clause 18 says it is the reasonable depreciation in the market value, not exceeding the reasonable cost of repairs.
SMV
DMV (scrap)
US$50m
10m
US$40m = claim

Norplan position
Norplan Clause 12-2 says:-
“Compensation is calculated on the basis of the estimated reduction in the market value of the ship due to the damage at the time of expiry, but shall not exceed the estimated costs of repairs.
Estimated common expenses are not recoverable, except for 50% of estimated dock and quay hire.” c.
About the same

Bit more on SCOPIC

SCOPIC calculations
SCOPIC falls below the Article 13 award so there is no liability for the
Club. Salvors incur a penalty of 25% of the difference. Property pays:-
Article 13 award
Less 25% of the difference US$25m – US$20m
US$25,000,000
1,250,000
Property pays net US$23,750,000

SCOPIC calculations c. Both
SCOPIC expenses
Property pay ART 13
Club pays balance
US$20,000,000
15,000,000
US$5,000,000

If only we had more time… a. Limitation of liability by shipowner and/or time charterer.
b.
Handling of dangerous goods or “ordinary” goods that become dangerous; treatment of enhanced costs.
c.
Recovery actions – where next?
d.
Access to and inspection of cargo e.
Disposal of worthless cargo and debris in holds e.
Funding for repairs

What does everyone want?

Megabox person

Skegness person

Cargo receiver

To do list
• Megabox and charterers have to co-operate over:-
– discharging and forwarding cargo.
– Providing ISU2 to salvors and arranging collection of security and destination.
• Salvors need to agree ISU2 and arrange lien insurance on the cargo.
• H&M and LOH insurers need to review the repair options with owners and Braemar to come up with a sensible compromise.

The end, or is it?

• The IMCC players
• The RHL team
Credits