WHAT IS NEW IN NEW YORK? Singapore March 27, 2006 William J. Honan Holland & Knight LLP

TRENDS IN NEW YORK 1.A few years ago, there were hardly any time charters being done. Rates were low and owners were disinclined to offer vessels for long terms at those low rates. 1.A few years ago, there were hardly any time charters being done. Rates were low and owners were disinclined to offer vessels for long terms at those low rates.

2.The forms haven't changed very much. For example, ASBATANKVOY dates back to 1977 and its predecessor Essovoy dates back to 1969, the year I started practicing law. At some point, disputed issues have to diminish.

3.Traders and other charterers have adopted special provisions which have been refined to reduce the risk of exposure and dispute.

4.Judges and arbitrators have shown a greater willingness to exercise their discretion in an effort to reach a just result.

S.M.A. RULE 30 “ The Panel, in its award, shall grant any remedy or relief which it deems just and equitable....”

ARBITRATORS’ POWER 1. Arbitrators, in many ways, have more power than courts of law. 2. Arbitrators have the power to fashion innovative remedies to resolve complex problems.

ARBITRATORS’ DISCRETION IS BROAD AND DEEP 1. Require Security for Claim. 2. Dismiss Claim That Lacks Merit. 3. Require Adequate Assurance. 4. Impose Conditions re Ongoing Performance. 5. Order Specific Performance. 6. Provide Injunctive Relief. 7. Provide an Expedited Award. 8. Award Legal Fees and Costs.

MARITIME CLAIM SECURITIZATION 1. Arbitrators Arbitrators have the power to require the defendant to post security in advance of the hearing(s) on the merits under circumstances they, in their discretion, deem just. Arbitrators have the power to require the defendant to post security in advance of the hearing(s) on the merits under circumstances they, in their discretion, deem just.

PRACTICE TIPS A claimant in arbitration is more likely to obtain an arbitration panel’s order requiring the other side to post security if: 1. The claim appears likely to succeed. 2. The claim is for an improper deduction or withholding of funds due to the claimant. 3. The defendant is not doing business in the U.S. and may be able to avoid paying an adverse award. 4. There are other circumstances that lead the arbitrators to believe that the defendant may not pay, e.g., a poor credit history or a pool of funds which may be disbursed to the defendant.

2. U.S. Federal Courts Under the Supplemental Rules to the F.R.C.P., a federal court, at the request of a claimant, has the power, without prior notice to the debtor, to cause a vessel, monies or other of the debtor’s assets to be seized and held pending a resolution of the underlying disputes. Under the Supplemental Rules to the F.R.C.P., a federal court, at the request of a claimant, has the power, without prior notice to the debtor, to cause a vessel, monies or other of the debtor’s assets to be seized and held pending a resolution of the underlying disputes.

RULE C: ARREST Need only a common law, statutory or contractual maritime lien Need only a common law, statutory or contractual maritime lien

RULE B: ATTACHMENT Two Requirements a) Plaintiff (i.e., the claimant) must have a maritime claim and b) Defendant (i.e., the “debtor”) must not be found within the district.

RULE B: FUNCTION a) To secure the plaintiff’s claim and b) To obtain jurisdiction over the defendant.

PREREQUISITES a) Is it a maritime claim? b) Can the defendant be found in the federal court district? c) Is the asset owned by the debtor?

RULE E: POST-ATTACHMENT/ARREST HEARING After the attachment or arrest, the defendant has the right to a “prompt hearing” After the attachment or arrest, the defendant has the right to a “prompt hearing” “[At the] prompt hearing the plaintiff shall be required to show why the arrest or attachment should not be vacated....” “[At the] prompt hearing the plaintiff shall be required to show why the arrest or attachment should not be vacated....”

WINTER STORM SHIPPING LTD. V. TPI, 301 F.3d 263 (2 nd Cir. 2002) Electronic funds transfers, in the hands of an intermediary bank, are subject to attachment.

SEAPLUS LINE CO. LTD. V. BULKHANDLING HANDYMAX AS, 2006 AMC 82 (S.D.N.Y. 2005)... Seaplus bears the burden of demonstrating, by a preponderance of the evidence, that the attachment is necessary to effectuate one of the two purposes of Supplemental Rule B: 1) Is it necessary to obtain jurisdiction over Bulkhandling? 2) Is it necessary to receive any award Seaplus may obtain in the Hong Kong arbitration?

PRACTICE TIP If you have a significant claim under a dollar denominated maritime contract and you desire security, you may wish to seek to attach assets owed by the other party to the contract even though the contract in question provides for arbitration elsewhere.

SIX ASPECTS WORTH REMEMBERING a) You can commence a law suit in the U.S. to attach (or arrest) the defendant’s assets without waiving your right to arbitrate in accordance with the charter party arbitration provision.

SIX ASPECTS WORTH REMEMBERING (continued) b) A foreign claimant can attach the property of a foreign defendant even if there is no connection with the U.S. except defendant’s asset(s) are located there.

SIX ASPECTS WORTH REMEMBERING (continued) c) The funds or other assets that are attached need not be related to the transaction in which the breach occurred.

SIX ASPECTS WORTH REMEMBERING (continued) d) You can seize the other party’s assets without any prior notice.

SIX ASPECTS WORTH REMEMBERING (continued) e) The court, in dealing with the attachment, almost never considers the merits of the underlying claim.

SIX ASPECTS WORTH REMEMBERING (continued) f) Usually, no bond is necessary to obtain the attachment.

TIME BAR CLAUSES

§6 OF COGSA, 46 U.S.C. §1303 In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered....

SCANPORTS Demurrage Claims. Charterer shall be discharged and released from all liability in respect of any claim for demurrage owner may have under this charter party unless a written invoice for the claimed demurrage and copies of ETA notices sent in compliance with voyage orders, notices of readiness at each port, pumping logs, and port logs/statements of fact for each port as well as all other supporting documents have been received by charterer within ninety (90) days after completion of discharge of the cargo covered buy this charter party or after other termination of the voyage, whichever first occurs Demurrage Claims. Charterer shall be discharged and released from all liability in respect of any claim for demurrage owner may have under this charter party unless a written invoice for the claimed demurrage and copies of ETA notices sent in compliance with voyage orders, notices of readiness at each port, pumping logs, and port logs/statements of fact for each port as well as all other supporting documents have been received by charterer within ninety (90) days after completion of discharge of the cargo covered buy this charter party or after other termination of the voyage, whichever first occurs....

BPVOY Any other claim against charterers for any and all other amounts which are alleged to be for charterers' account under this charter shall be extinguished, and charterers shall be discharged from all liability whatsoever in respect thereof, unless such claim is presented to charterers, together with full supporting documentation substantiating each and every constituent part of the claim, within one hundred and eighty (180) days of the completion of discharge of the cargo carried hereunder.

PRACTICE TIPS 1.If the Owner: a) seek to eliminate altogether b) make the clauses mutually applicable c) provide as long a period as possible d) provide training to the persons handling claims 2.If the Charter: a) include all claims not just demurrage and detention b) draft the clause so as to avoid obvious loopholes

BACK-LOADING CLAUSES

EXXON MOBILVOY BACK LOADING. Charterer shall have the option of loading Vessel with a part cargo at any discharging port or place to which Vessel may have been ordered,.... Owner shall discharge such part cargo at any other discharging port(s) or place(s) previously nominated, provided such port(s) or place(s) lie within the rotation of the discharging ports or places previously nominated. If this option is exercised, additional time consumed awaiting berth and/or cargo and/or tank preparation and/or loading and discharging such part cargo shall count as laytime or, if Vessel is on demurrage, as time on demurrage....

SHELLVOY 5 Back Loading 38.Charterers may order the vessel to load a part cargo at any nominated discharging port, and to discharge such part cargo at a port(s) to be nominated by Charterers within the range specified in Part I(E) and within the rotation of the discharging ports previously nominated, provided that such part cargo is of the description specified in Part I(F) and that the master in his absolute discretion determines that this cargo can be loaded, segregated and discharged without risk of contamination by, or of, any other cargo remaining on board. Charterers shall pay a lump sum freight in respect of such part cargo calculated at the demurrage rate specified in Part I(J) on any additional time used by the vessel as a result of loading, carrying or discharging such part cargo.

27.KOCH DISCHARGE/RELOAD 27.1Charterer has the option to discharge all or part cargo at one safe port or lighterage location and reload same or different cargo in same or different port or place for final discharge on the same voyage within agreed ranges as specified in Part I of this Charter Party.

PRACTICE TIPS If Owner If Owner Exclude if possible Exclude if possible Make sure the new discharge port is in the same rotation Make sure the new discharge port is in the same rotation Make sure WS is the applicable freight Make sure WS is the applicable freight Insert deadline for exercise of charterer’s right to reload Insert deadline for exercise of charterer’s right to reload If Charterer If Charterer Include if possible Include if possible Draft as widely as possible (see Koch clause) Draft as widely as possible (see Koch clause) Use demurrage rate as the measure of compensation Use demurrage rate as the measure of compensation

ARREST OFF-HIRE CLAUSE

RIDER CLAUSE 94 “SCM Mexico” S.M.A (2005) “SCM Mexico” S.M.A (2005) Should the vessel be delayed, detained or arrested during the currency of this charter at the suit of any party having or purporting to have a claim against or any interest in the vessel, Master, crew or owners, hire under this charter party shall not be payable in respect of any period during which the vessel is not at charterer’s full disposal and the consequential time and expenses resulting from same which the charterers incur are to be for owners account. Should the vessel be delayed, detained or arrested during the currency of this charter at the suit of any party having or purporting to have a claim against or any interest in the vessel, Master, crew or owners, hire under this charter party shall not be payable in respect of any period during which the vessel is not at charterer’s full disposal and the consequential time and expenses resulting from same which the charterers incur are to be for owners account.

CAPTURE, SEIZURE, ARREST CLAUSE The Doric Pride [2006] All ER(D) 173 Should the vessel be captured or seized or detained or arrested by any authority or by any legal process... the payment of hire shall be suspended until the time of her release,..., unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the charterers or their agents or by reason of cargo carried or calling port of trading under this charter. Should the vessel be captured or seized or detained or arrested by any authority or by any legal process... the payment of hire shall be suspended until the time of her release,..., unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the charterers or their agents or by reason of cargo carried or calling port of trading under this charter.

DEADFREIGHT OFFSETS

(2006) LLOYD’S MARITIME NEWS LETTER 685 (Feb. 23, 2006 ) Arbitrators’ Checklist 1. Charterer is to pay full dead freight. 2. Laytime is calculated on bill of lading cargo. 3. A separate laytime calculation is performed for bill of lading cargo plus deadfreight. 4. Owner is to concede any benefits. 5. Charterer is to concede any benefits. 6. A deadfreight balance is produced and incorporated into the final freight account.

OWNER’S BENEFITS 1. Savings in Time - demurrage rate - market rate 2. Bunkers - bunkers in port 3. Port Charges

WHAT IS NEW IN NEW YORK? Singapore March 27, 2006 William J. Honan Holland & Knight LLP