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The Swedish Club

No. 1 - 2013 April

Be aware
clauses in
bills of lading
Page 7

Sign up for
the Mariner
Page 13


Page 16 -17

protect German-flagged vessels

Forum shopping in collision claims know your limits

Page 10-13

T H E S W E DI S H CLUB TR I TON 1- 2013

Content | No. 1 - 2013 April

Leader | Underlying drivers of casualty

| cost escalation 3

risk & operations | The off records renewal! 4-5

loss prevention | The Swedish Club's operations review


P&I | Be aware of RETLA clauses in bills of lading 7

FD&D | Re-defining the scope of an owner's

| obligation to repair The Kyla 8-9

Limitation | Forum shopping in collision claims know

| your limits 10-13

The Swedish Club | The Academy invites companies to sign up for
Academy | the Mariner Attitude Survey (MAS) 13

| New team member 13

| New MRM licensees 13

| Out and about with MRM 14-15

PIRACY | German-flagged vessels guarded by private

| security companies 16-17

| Somali piracy past, present and future 18-20

LEGAL | Update 21

FD&D | Irrecoverable costs in London arbitration:

| the solutions 22-23

Club information | Notice Board 24-25

| Hans Filipsson & Tord Nilsson

| Changing of the guard in Piraeus 26-27

| Staff presentation:

| Martyn Hughes new FD&D manager 28

| News from Gothenburg 29

| News from Piraeus 30

| News from Asia 31

| News from Norway 32

| Out and about 33

| Staff news 34

| Out and about 35

| In memoriam Anders Holmberg 35

| Club quiz 35

| Club calendar 36

The Swedish Club is a mutual marine insurance

company, owned and controlled by its members.
The Club writes Protection & Indemnity, Freight,
Demurrage & Defence, Charterers' Liability, Hull &
Machinery, War risks, Loss of Hire insurance and any
additional insurance required by shipowners.
The Club also writes Hull & Machinery, War risks and Loss
of Hire for Mobile offshore units and FPSO's.

Head Office Sweden

Visiting address Gullbergs Strandgata 6
411 04 Gothenburg
Postal address P.O. Box 171
SE-401 22 Gothenburg, Sweden

Tel +46 31 638 400

Fax +46 31 156 711

Emergency tel +46 31 151 328

Greece 5th Floor, 87 Akti Miaouli

GR-185 38 Piraeus, Greece

Tel +30 211 120 8400

Fax +30 210 452 5957

Emergency tel +30 6944 530 856

Hong Kong Suite 6306, Central Plaza

18 Harbour Road, Wanchai, Hong Kong

Tel +852 2598 6238

Fax +852 2845 9203

Emergency tel +852 2598 6464

Japan 2-14, 3 Chome, Oshima

Kawasaki-Ku, Kawasaki
Kanagawa 210-0834, Japan

Tel +81 44 222 0082 (24-hour tel)

Fax +81 44 222 0145

Emergency tel +81 44 222 0082
House of Business, 6th floor
Postal address Tjuvholmen All 17
N-0252, Oslo, Norway

Tel +47 9828 1822/9828 0514

Mobile +47 9058 6725/9486 1205

Emergency tel +46 31 151 328

The Swedish Club Triton is published three times a year
and distributed free of charge. The Swedish Club Triton
is an editorially independent newsletter and opinions
expressed by external contributors are not necessarily
those of The Swedish Club. Articles herein are not
intended to provide legal advice and the Club does not
accept responsibility for errors or omissions or their
consequences. For further information regarding any
issue raised herein, please contact our head office in
Editorial Advisory Board Maria Berndtsson, Susanne
Blomstrand, Hans Filipsson, Birgitta Hed, Johan Kahlmeter, Anders Leissner, Lars A. Malm, Lars Rhodin, Tony
Schrder, Carola Weidenholm.
Production co-ordinator Susanne Blomstrand.
PR-consultant TRS Public Relations Ltd., London.
Layout Eliasson Information, Gothenburg.
Cover photo iStockphoto.
Print PR Offset. 13055200B
The Swedish Club
Articles or extracts may be quoted provided that
The Swedish Club is credited as the source.

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Leader | MD Lars Rhodin

Dear members and associates

There is a lot of talk in the marine insurance industry
about major casualties and how underwriters respond to
such events. Small errors or omissions result in significant
incidents for shipowners and their insurance partners. The
consequences of casualties are taking on new proportions.
The public view is zero tolerance from an environmental
standpoint and a fix it approach, whatever the cost may
entail. The invisible shipping industry has come into the
limelight again.
Underwriters are concerned about cost escalation in
assessing severity and exposure. Traditionally we generally
follow inflation. Todays claims will be three to four per
cent more expensive next year, everything else being
equal. This is a known fact. But, there are so many more
elements driving the escalation, which takes severity to
new heights. The equation is more challenging to make
The International Group has looked into the main cost
drivers in casualties. It does not take rocket science to
determine that the geographical location of incidents
and the resources available to respond are absolutely
decisive. One should however not forget that government
intervention plays a vital role. It is often not how you
respond and how effective the actions taken are, it is a
matter of how you are seen to respond. There are plenty of
examples supporting this.
We will spend time on this subject at this years AGM,
during the members day part of the event. It is beneficial
for all concerned to get a feel for the drivers to understand
the magnitude of the exposure we are up against.
Studying root causes of casualties can be a complex
task. At first sight, it is easy to ascertain that things have
gone wrong. However, the more analysis carried out
about incidents, the more complicated matters get. Most
shipboard training programmes focus on behaviour.
Behaviour is determined by attitudes though. If mariners

PHoto: Jonas Ahlsn

Underlying drivers
of casualty cost escalation

Lars Rhodin

Managing Director

do not have the required attitude, skills are less relevant.

We have launched the Mariner Attitude Survey at The
Swedish Club Academy to supplement the Maritime
Resource Management training programme. It is well
worth looking at.
2013 will be a challenging year for both shipowners and
underwriters. Premium increases are unwelcome news for
anybody, in particular during tough trading conditions.
The Club was well served in 2012 by excellent investment
returns, however, we cannot ignore the underlying drivers
of claim severity that we need to factor in. Sustainable
underwriting of exposure is the only way forward.
We have spent a lot of time and effort recently
strengthening our organisation with competence at
all our offices. Running a members club is knowledge
management and a constant endeavour there is no
finishing line! Perception of service is to know ones
ability and have confidence. As a member and stakeholder
you should have confidence in that we are staffed to meet
all needs going forward. We are ready to act.

T H E S W E DI S H CLUB TR I TON 1- 2013

Risk & Operations | Renewal

The off records renewal!

As always the P&I renewal was challenging this year.
It was even more so because of the un-supportive
freight markets. To add further insult the effect
of the recent years catastrophic claims filtered
through the system in the form of significant
increases in the International Groups Excess Reinsurance cost. This is a cost which all clubs pass on
to their members. The features of this renewal were
all about the principle of mutuality and the impact
of large claims on the mutual system.
All Clubs were exposed to very difficult renewals this year.
Compared with previous years, the big difference with this
renewal was that even though some owners could rationally
appreciate the long-term benefits of mutuality, some of them
felt compelled to take action as they simply had no other way
of meeting their overall
financial goals.
Large claims between
USD 9-70 million are
treated differently than
other claims from a
records point of view. They are different in the sense that
we only take into account a maximum of USD 3 million
on members records. The additional off records exposure
(USD 67 million excess USD 3 million) is supposed to be
covered by P&I Pool Claim Allowance and P&I Abatement. The former is there to also cover the exposure of other
clubs larger claims.

...there is a lack of funds

to cover the cost of all
recent catastrophic claims.

Off records exposure

In a perfect world the charges applied by all clubs should suffice to cover the expected claims. The problem is that recently
the reality has been far worse than even the most conservative estimates in this respect. The unfortunate consequence
is that there is a lack of funds to cover the cost of all recent
catastrophic claims. They have outperformed expectations,
particularly in relation to severity.
This additional off records exposure is intellectually challenging to sell to those owners with a benign loss ratio. The

Lars A. Malm

Risk & Operations

majority of the Clubs members have a loss ratio below 70%.

Whilst this is considered in the renewals, the fact remains
that lucky guys need to contribute towards the misfortunes
of the unlucky guys. Its an important job that needs to
be done when we explain to our members that as far as the
Clubs large claims go the principle of mutuality works and
that everyone needs to contribute.
To argue that owners also need to approach other clubs
larger claims with the same open mind is equally important
but due to a perceived greater remoteness of those claims,
slightly more difficult.
The principle of mutuality
The fact of the matter, which most owners will appreciate
and accept, is that the International Groups pooling mechanism is a most cost-effective way of sharing risk and over time
the cost will be even between clubs. Its also a fact today that
many members place their business in different clubs and
to that end they are affected on a direct basis by more than
one clubs individual performance. The way to look at a large
claims exposure for members has less to do with the individual club entry and more to do with the overall level of large
claims in the International Group system. It is clear from
historic data that pool claims in their nature are random and
volatile. The short-term effect on a single club can therefore be
significant. The long-term effect will be less and as mentioned
previously will level out over time.
The Swedish Clubs P&I renewal
Turning to the Clubs own renewal this year you will appreciate, which is understandable, that most members wanted the
Club to give due consideration for long standing loyalty and

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Photo: iStockphoto

Supply vessel at drilling rig.

very good performance. The Club gave due consideration

but as you will appreciate we need to strike a balance between giving consideration and managing pricing against
It is also safe to say that when a member is a bit unlucky they do not wish to pay a disproportionally high
increase. This would, however, be the unfortunate logical
consequence of clubs giving too much consideration for
benign records.
Again, this renewal and renewals to come will, to a much
greater extent than before, be about the off records exposures. The International Group is the only viable alternative and mutuality works. It is understandable that members may be less interested to some extent in listening to
our arguments in this respect.
This is understandable because shipowners business is
not insurance. Shipowners business is to keep their freight
earning-machines doing good business. This is difficult in
todays markets. If the income is not sufficient one has to
look at cost savings in order to meet budget targets.
General reflection on the state of the Marine
insurance market
The market as a whole had expected some reaction from
re-insurers (due to some large claims in the market), which
in turn might have had some impact on the direct side.
No such effect has yet materialised. It has been said many
times before, but we can again simply acknowledge the fact
that there is still a lot of capacity willing to invest in Marine insurance.

We expect a lot more

to come from our
establishment in Norway
The Swedish Clubs Marine Renewal 1/1 2013
Our renewal at 1/1 was rather uneventful and as mentioned above we had perhaps expected some impact from
the large claims and that some capacity decided to withdraw. No real effect has materialised yet. We have to utilise
our strong position as a quality provider within this segment to a greater extent than before, but we also need to
adapt to the fact that in some cases we need to compete
with pure capacity providers. As long as we can do that
profitably, we will do so.
Team Norway more to come
We expect a lot more to come from our establishment in
Norway. Team Norway is slowly but surely building up a
firmer long-term presence in Oslo. In due course the office
will be doing all classes of insurance from Oslo, but meanwhile the Gothenburg office will support them. The Norwegian market has a lot of potential and to us it is still, to a
large extent, untapped. The core business of Team Norway
is Energy and associated with the Energy business is the
Off-Shore Supply Vessel (OSV) segment of shipping. It is a
natural step for us to make a proper assessment of whether
OSV is our next step in expansion for Team Norway.

T H E S W E DI S H CLUB TR I TON 1- 2013

Loss Prevention | SCORE

The Swedish Clubs

Review SCORE
Interactive root cause analysis (IRCA) has now been established for loss prevention and is crucial in identifying root causes.
Our hands-on loss prevention is effective at identifying problems
and recurring issues that we believe are not addressed or rectified
To assist our members, we think it is important to take this a
step further. We believe this can only be achieved by working even

SCORE will review the companys

processes and identify whether there
is an efficient safety culture in place.
closer with our members. This is why we are launching our new
service, called SCORE.
The purpose of SCORE is to identify risk areas, where preventive
measures need to be improved or implemented to minimise risks.
Proactive safety culture can prevent most casualties
We strongly believe that a company with a dedicated organisation to improve safety can prevent most casualties. This can be
addressed with a proactive safety culture instead of a reactive one.
Unfortunately, there is no easy solution for implementing an efficient safety culture, as it is a slow and complicated process.
SCORE will review the companys processes and identify whether there is an efficient safety culture in place. This will be done in
cooperation with the company, as it is essential that the suggested
improvements are tailored to the specific company.
The importance of identifying risks
Identifying risks and implementing preventive measures will be
beneficial not only for us as an insurer but also mainly for the company, as a casualty is so much more costly than the insured value.
Insurance will protect the member against financial disaster but
it cannot protect against all other negative effects such as loss of
reputation, loss of business, negative publicity, injuries, loss of life
and the resources that need to be allocated to handle the casualty.
This is what we want to help prevent.
Our goal is to assist the member/company in minimising the risk
of a serious casualty and to reduce the claim frequency.

Joakim Enstrm

Loss Prevention Officer

Identified recurring issues:

The crew does not follow company procedures
The company has failed to implement procedures
Procedures were not sufficient in dealing with
associated risks
The Safety Management System (SMS) and other
procedures overlooked important issues
People do not recognise risks or believe it is acceptable
to take risks
There is a lack of training both onboard and ashore
SCORE will include:
Reviewing the companys claim statistics
Benchmarking the company against similar
Visiting the office and vessels
Verifying the SMS has been implemented correctly
onboard and in the office
Has the companys culture and goals been
implemented within the organisation?
Reviewing the companys loss prevention programme
Has the company implemented measures that address
the identified problems?
After a company has successfully completed SCORE, it will receive
a certificate that is valid for five years. This will include an intermediate review and if necessary an annual review. To be able to maintain a professional service there will be a nominal fee.
For more information, please contact Joakim Enstrm, Loss Prevention

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

P&I | RETLA clauses

Be aware of
RETLA clauses
in bills of lading

Clause made bill false

Notably, RETLA clauses sometimes appear on the face of a bill
of lading where the carriage involves iron, steel, metal products
or timber. The aim of the clause is to qualify the term apparent
good order and condition by clarifying that, when the cargo was
received for shipment, it was not necessarily free of visible rust or
moisture, staining, chaffing etc. As a result, the carrier would be
able to issue clean bills of lading even though the mates receipts
have been claused.
When the cargo of the Saga Explorer was discharged the pipes
were found to be heavily rusted and cargo interests brought in a
claim under the bills of lading. There was no suggestion that there
had been significant deterioration in the condition of the cargo
during the voyage, so the main issue was the nature of the representation as to the condition of the cargo made by the owners on
shipment. The owners sought to rely on the RETLA clause and

Corporate Legal

Photo: Bananastock

Can an owner rely on a clause in a bill of lading that states

that even if the bill provides that the goods were received in apparent good order and condition, the goods were necessarily not
received in apparent good order and condition? The answer to this
question is no according to a recent English court decision (Breffka & Hehnke GmbH & Co KG and others v. Navire Shipping Co.
Ltd and others (Saga Explorer) [2012] EWHC 3124 (Comm).
The case concerned a shipment of steel pipes loaded at Ulsan for
carriage to Los Angeles, San Francisco and Vancouver. The load
port survey contained a number of comments relating to rust staining and surface oxidisation of the steel pipes, and recommended
clausing the bills and mates receipts. However, neither the mates
receipts nor the bills of lading were claused. Instead, upon the shippers request, the owners agreed to issue clean bills of lading with
the usual statement that the goods were shipped in apparent good
order and condition and in addition the bills of lading contained a
so called RETLA clause (named after the US case, Tokio Marine &
Fire Insurance v. Retla Shipping), reading as follows:
If the goods as described by the Merchant are iron, steel [or]
metal..., the phrase apparent good order and condition set out in
the preceding paragraph does not mean the Goods were received
free of visible rust or moisture... If the Merchant so requests, a substitute Bill of Lading will be issued omitting this definition and
setting forth any notations which may appear on the mates or tally
clerks receipt.

Anders Leissner

argued that the clause should be interpreted as meaning that all

surface rust, of whatever degree and extent, was excluded from
their representation as to the apparent good order and condition of
the cargo. However, the English court held that the RETLA clause
could only be a qualification regarding superficial rust but not the
overall quality. Hence, since the loaded cargo at the loadport was in
worse condition than merely having superficial rust, the representation apparent good order and condition in the bills was held to be
fundamentally false and deceitful. The claim by cargo interests was
Unenforceable Letter of Indemnity
The decision highlights the masters duty to record the cargos
apparent order and condition accurately, based on his honest and
reasonable opinion. There is no real substitute for clausing the bills
where the condition of the cargo at the time of shipment requires
it. Failure to properly describe the condition of the cargo leaves the
owners open to allegations of being party to a misrepresentation.
There was yet another adverse implication for owners following
the courts decision. The owners had namely agreed not to clause
the bills of lading in return of an LOI (Letter of Indemnity) from
the shipper. At least under English law an LOI will provide no
recourse for owners where they knew, through the master, of the
actual condition of the cargo at the time the clean bills were issued
and the LOI given. In those circumstances, their actions will be
deemed wrongful and the LOI will consequently be unenforceable.

T H E S W E DI S H CLUB TR I TON 1- 2013

FD&D | Charterparties

Re-defining the scope of an

obligation to repair The K
Where an H&M (Hull & Machinery)
insured value is stipulated in a time charterparty, the English High Court has recently held that the charterparty cannot be
frustrated by damage to the chartered vessel which costs less than the H&M insured
value to repair. As a result of the case Bunge
S.A. v Kyla Shipping Company Limited [2012] EWHC 3522 (Comm) (The
Kyla), shipowners may be obliged to carry
out repairs which cost more than the vessel
would be worth once repaired.
The damage to The KYLA
On 4 May 2009, the 27 year old MV
Kyla was struck by another vessel while
berthed at Santos, Brazil. The Kyla was
not at fault for the collision. At the time of
the collision, the vessel was just over three
months into a 12-15 month time charter
to Bunge. The vessels owners obtained
surveyors reports following the collision
which indicated that the cost of repairing
the vessel would be in excess of both her
sound repaired value and her insured value.
On 3 July 2009, owners notified Bunge
that the charterparty had been frustrated
as a result of the collision. Owners also
declared the vessel a constructive total loss
and abandoned the vessel to hull and machinery underwriters. The vessels hull and
machinery insured value was USD 16 million. Bunge disputed that the charterparty
was frustrated and claimed against owners
for the losses they had suffered as a result
of owners declaring the charterparty to be
The arbitration charterparty frustrated by cost of repair
The claim went to arbitration in London
in February 2011. The arbitrator held that
the damage to the vessel caused by the collision would have taken approximately 180
days to repair, and that this was insufficient
to frustrate the charterparty. In relation
to cost of repair, the arbitrator held repairs
would have cost USD 9 million. The parties

agreed for the purposes of the arbitration

that the vessels sound market value at the
date of the collision was USD 5.75 million.
The arbitrator held that, in circumstances
such as these, where the cost of repair far
exceeded the value of the vessel, no prudent
owner would repair the vessel. Performance
of the charterparty after the casualty had
become radically different to that which
the owners had agreed, and the charterparty was frustrated as a result of the collision.
Charterers appealed the arbitrators decision to the English High Court.
The extent of owners obligation to
The charterparty between owners and
Bunge was on an amended NYPE (New
York Produce Exchange) 1946 form, which
included the usual obligation on owners at
Clause 1 to keep the vessel in a thoroughly
efficient state. The charterparty also included an express term at Clause 41 which
41.1 Owners warrant that throughout the
currency of this Charter Party the vessel shall
be fully covered by leading insurance companies/International P&I Clubs acceptable to
the Charterers against Hull and Machinery,
War and Protection and Indemnity Risk.
41.3 Insurance full style and value
Hull and machinery: USD16,000,000 London, Norway and USA Markets
Charterers argued before the High
Court that Clause 41 formed part of a
scheme in the charterparty requiring owners to repair any damage to the vessel during the currency of the charterparty which
it would cost less than or up to the vessels
insured value of USD 16 million to repair.
In this case, charterers argued, the charterparty obliged owners to carry out the USD
9 million repairs to the vessel and the arbitrator had been wrong to say that the charterparty had been frustrated.

Simon Chumas

Holman Fenwick Willan LLP, London

Jenny Salmon

Holman Fenwick Willan LLP, London

Simon Chumas and Jenny Salmon advise in relation to wet and dry shipping
and insurance disputes, acting principally for shipowners and their insurers.
They specialise in the investigation and
handling of all claims (wet and dry)
arising out of marine casualties. In addition, they deal with the various contractual disputes which regularly arise
from casualties. They also handle both
hull and P&I marine insurance coverage disputes.
Holman Fenwick Willan is an international law firm and one of the worlds
leading specialists in shipping, maritime transportation, insurance, reinsurance and trade. Holman Fenwick
Willans shipping lawyers provide a
comprehensive service to the global
maritime business community, with
over 200 lawyers worldwide specialising in maritime law.

Owners asserted that Clause 41 was not

intended as an allocation of risk which
would displace the principles of frustration.
Rather, the insured value was stated in the
charterparty for charterers information
to allow them to calculate the likely cost
of any additional insurance premiums for
which they were responsible.

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

The High Court allocation of risk of

damage to owners
The High Court approached the question
by reviewing the terms of the contract to
determine whether Clause 1 NYPE 1946
and Clause 41 of the Kyla charterparty
amounted to an allocation of the risk of
damage up to the vessels insured value
to owners. In its judgment issued in December 2012, the Court held that it did.
The Court held that the presence of the
warranty at Clause 41 made it impossible
for owners to say that what had occurred
(namely a casualty giving rise to repair costs
USD 7 million less than the vessels insured
value) amounted to something radically
different to the performance of the contract which had been contemplated when
the contract had been concluded. The usual
principle that insurance is irrelevant to the
charterparty contract had been displaced
by Clause 41.
In reaching this decision, the Court
said that the numerous practical difficulties which such an allocation of risk would
cause to owners (such as having to fund the
repairs themselves if insurers were slow to
pay or if the vessels mortgagee bank were
loss payee) were to be disregarded. It is
noteworthy that, in the case of the Kyla,
owners did not receive payment from hull
and machinery underwriters until over a
year after the incident. Owners should bear
in mind that other concerns, such as the
age of the vessel, should also now be considered irrelevant.
What does the decision mean for
It is likely to come as a surprise to shipowners that reference to a chartered vessels
hull and machinery insured value in the
charterparty could affect their obligations
to charterers in case of serious damage to
the vessel. Clauses containing a continuing
warranty to insure at a specified insured
value (like Clause 41 of the Kyla charterparty) are common. The Courts decision

PhotoS: By courtesy of Kyla Shipping Co Ltd


in this case makes clear that, where a charterparty contains such a clause, an owner
cannot declare a charterparty frustrated
where the cost of repair will be less than
the vessels insured value. Instead, the shipowner must repair the vessel and continue
to perform the balance of the charterparty,
even if the repairs cost more than the repaired vessel will be worth such that no
prudent owner would otherwise undertake
the repairs.
The decision creates uncertainty, as the
circumstances in which the vessels insured
value will be taken as the benchmark for
frustration are not clear. It is possible that
the Kyla principle will apply in every
case where there is a continuing warranty
to insure and charterers are aware that the
vessels H&M insurance is likely to be on
an insured value basis, even where the vessels insured value is not stated in the charterparty.
Shipowners should be cautious when they
see a continuing warranty to insure in a
proposed time charterparty which specifies the vessels hull and machinery insured
value. In the event of a casualty, an owner
might find that as a result of the warranty,
he has to carry out commercially uneconomical repairs to a vessel even one nearing the end of her trading life.
Concerned shipowners should take legal
advice on any such proposed clause and
consider with their lawyers whether the
wording of the clause can be amended to
avoid such an outcome. In any given case,
the question of whether a clause or clauses
amount to an allocation of the risk of damage to the vessel to an owner will depend
on the construction of the charterparty as
a whole.
The owners of the Kyla are seeking to
appeal the decision. Simon Chumas and
Jenny Salmon acted for the owners in this

T H E S W E DI S H CLUB TR I TON 1- 2013

Limitation | Forum shopping

Forum shopping in collision

After a major casualty, such as a
collision, you in most cases look
to bring the matter to a jurisdiction more favourable to you. This
is often a quick affair where each
side scrambles for an advantage.
The main reason being that there
are different limitation regimes
around the world capping the
amount of the overall losses. The
nature of each loss which is subject
to limitation is also different from
country to country. In this article,
to illustrate the dynamics of these
aspects, we present a somewhat
simplified voyage plan applied
to an imaginary scenario.

Mats Segolson

Senior Claims Executive,

Team Piraeus


Lucky A

Happy B

USD 5 million (repair costs,

loss of hire and other consequential losses)

USD 15 million (for a total

loss of ship and other consequential losses)
USD 50 million (costs for
wreck removal)

USD 5 million

USD 65 million

Table 1.





Lucky A

2,333,450 SDR
(about USD 3.5 M)

5,718,500 SDR
(about USD 8.6 M)

13,700,000 SDR
(about USD 20.5 M)

Happy B

1,133,390 SDR
(about USD 1.7 M)

2,922,500 SDR
(about USD 4.4 M)

7,000,000 SDR
(about USD 11.5 M)

Table 2.

The case scenario

Two ships, Lucky A and Happy B, collide
while both in ballast. Both ships suffer
substantial damage and Happy B sinks as a
result of the collision, ultimately becoming
subject to a wreck removal order. Fortunately, all crew members are unharmed and
there is no apparent pollution.
The claims
It is important in collision claims to get an
early assessment of the nature and quantum of your claims. By the same token, and
leaving aside liability for the moment, you
should make a similar assessment of the
other ships claims.
It should also be considered whether
there could be any other potential claimants. In the above scenario, there was no
cargo on either ship and no pollution. However, the authorities will normally require
Happy B to remove the wreck rather than
removing it themselves. As a result, the
claim for the costs of the wreck removal will
likely be in the form of an indemnity claim
from Happy B against Lucky A in proportion to the latter ships liability in the collision. There may also be an order to remove
any remaining bunkers and other pollutants
on board (which can translate into considerable costs, perhaps under SCOPIC) but this
will not be considered further in this article.
Let us assume the above, very much simplified, claim figures. (table 1).
Limitation of liability
Once there is a rough idea of the likely
claim amounts you should be conscious of
whether limitation of liability will come
into play. There will probably be a first look
at this before any further detailed assessment on the collision liability between the
ships is carried out.
The concept of limitation is an important aspect of maritime law. The limitation regimes are based on Conventions on
Limitation of Liability for Maritime Claims
(LLMC), which are mainly the 1957
LLMC and the 1976 LLMC or the 1996

Photo: TSC

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3


Protocol to LLMC 1976. The conventions

can be acceded to, and implemented into
national law, differently from state to state.
IMO provides a general overview on its
website of the status of the conventions in
individual countries. There will also be an
increase of the limits under the 1996 Protocol but this increase is not yet in force.
The Conventions list what types of
claims are capable of being subject to limitation (limitable claims). In principle,
limitation applies to all limitable claims
arising in connection with one particular
incident. Some claim items, however, typically claims for pollution and salvage are
usually not subject to this limitation. Limitation is calculated on the basis of a vessels
gross tonnage (GT) but be wary of using
the correct GT figure as it varies depending whether you apply the 1957 or the 1976
Convention. The amount of limitation is
expressed in special drawing rights (SDR)
where presently 1 SDR equals roughly
USD 1.50.
Limitation can be used as a defence to
the claim on another party (where there
are just the two parties involved) but it can
also be used in a global sense, i.e. to limit
an owners liability to all claims that might
arise from multiple claimants in cases involving, for example, damage to another

ship and her cargo. The size of the limitation fund is calculated in the same way but
with global limitation, of course, the fund
is actually established in court and administered by the applicable procedures of that
In the above scenario, there are no personal injury claims and the calculation
would be for property claims only. In case
there had been personal injury claims those
claims would have been treated separately
and calculated differently for the purpose
of limitation. Assuming that Lucky A
has a GT of 35,000 and Happy B a GT of
17,000, the limitation amounts would, respectively, for each ship and for the three
above limitation regimes, be as illustrated
above (table 2).
Liability for the collision
Who is likely to be the receiving party and
the paying party of the two ships? It is important to remember that in many cases
the collision liability between the ships
will often have a significant impact on who
will be on the paying and receiving end, in
particular when the claim amounts on each
side are more comparable.
An assessment of the collision liability is
made based on the facts and circumstances
of the collision. A study of the vessels voy-

age data recorder (VDR) and other contemporaneous evidence should give a relatively good idea of this liability.
Let us assume that liability is 60/40 in
favour of Happy B. The liability apportionment is applied to the claim amounts of
each ship. In the above example Happy B
is liable for 40% of Lucky As loss of USD
5 million, i.e. USD 2 million. Lucky A, on
the other hand, is liable for 60% of Happy
Bs loss of USD 65 million, i.e. USD 39
million. The two claims are then set-off
leaving a balance of USD 37 million to
Happy B. Of course that sum would be
capped by any limitation Lucky A may rely
on. This is how liability and limitation are
normally allocated and applied but it is advisable to be aware that under some legal
regimes there may be a somewhat different
approach, so do not always assume that the
process will always be the same.
It should also be considered whether
limitation against either party can be broken but suffice here to say that in the vast
majority of cases you cannot break limitation. Therefore, it is clear that Lucky A will
be the paying party and the question is just
how much Lucky A has to pay given limitation.

continues on page 12


T H E S W E DI S H CLUB TR I TON 1- 2013

Limitation | Forum shopping

continues from page 11

The preferred limitation regime

Lucky A will be on the paying end and will,
therefore, attempt to limit its liability to
Happy B to a smaller amount in a country applying the 1957 LLMC or the 1976
LLMC. Lucky A will also attempt to find a
jurisdiction that allows for limitation of the
wreck removal claim and together with all
other property claims.
Happy B, on the other hand, will look
for the exact reverse position. Happy B will
consider a limitation regime preferably in a
1996 LLMC country, which would allow it
to recover as much of its claim as possible.
Happy B will preferably also look to combine this with a jurisdiction where either
limitation does not apply to its indemnity
claim for the wreck removal costs, or where
such limitation is treated in a separate category with, in effect access, to an additional
fund for the same amount.
Had cargo been on board and damaged
that may, suffice here to say, also have influenced the choice of jurisdiction to an
extent. The same may apply in case of any
personal injuries. The race to establish jurisdiction is now on.
Identify suitable jurisdictions
a checklist
Now you have a good idea of what limitation you are looking for, you should next
consider accessing such limitation in an appropriate jurisdiction. A claim arising from
a collision normally creates a maritime
lien for which you can arrest a ship and,
thereby, also create jurisdiction. You may
also consider constituting a limitation fund
accordingly. Unless security has, or can be
agreed on separately, a ship arrest will also
give access to security for your claim.
It is important to remember that the
preferred choice of jurisdiction depends on
the unique circumstances of each case, each
with its own factual matrix.
18 way points to consider

Where is your own ship currently berthed

or anchored? If its position immediately
after the collision puts it in a position
where it can be arrested in an unfavourable
jurisdiction then consideration needs to
be given whether she can be moved, even a
short distance, to remove that risk.

Where will the ships call next?


Will either ship call at an intermediate port

for repairs?

Will your ship call at a suitable jurisdiction

where a third party (like cargo interests)
may or may be induced to arrest your ship?

If you cannot, or prefer not to arrest at the

next port of call, what is the future schedule or trading pattern of either ship?

Consider a sister ship arrest or associated

ship arrest (e.g. in South Africa) if possible.

Consider filing a writ in rem against the

opposing ship in a suitable jurisdiction before its arrival there. This may give you an
advantage on the basis of first come, first

Is there a natural forum for the collision

claims? Did the collision occur in territorial waters of any state and what nationality
are the parties are obvious questions?

What is the quality of the legal system

where you consider obtaining jurisdiction?
You also need to consider foreseeability,
costs and time in this respect.

If you are likely to be the paying party you

could seek to secure jurisdictions which are
known to be slow in progressing litigation
for obvious tactical reasons but, at the same
time, consider how they assess collision liability - not all countries apportion on a percentage basis in increments of say 5%. In
some countries the division is much more
crude i.e. 50 / 50 or 100 / 0 which could,
ultimately, end up being a poor option.

Are there any grounds for breaking limitation and if so where is this best tried? It is
generally very difficult, if not virtually impossible, to break limitation but it may be
slightly easier under the 1957 regime.


Consider attempting to establish jurisdiction by other means than a ship arrest, for
example where the owning company is registered or where you already have dispute
with say a cargo interest or a sub-charterer.

If the other side has already purported to

establish jurisdiction do you need to make
an appearance in that jurisdiction to preserve your rights and/or can you file an
appearance under reservation to keep your
other options open?

Even if the other side has already obtained

jurisdiction, and constituted a limitation
fund in a certain country, is this recognised
in other jurisdictions? Some countries
(e.g. China) have not signed up to any of
the limitation conventions but have only
adopted their own version of the convention limits. As a result, other states may not
be bound to recognise a limitation fund in
China, as they otherwise would under the
Conventions (compare with Article 13 of
LLMC 1976).

If the other side has started an action already in one country and you are contemplating starting proceedings elsewhere, will
the other country likely refuse jurisdiction
in these circumstances as matter of international comity (i.e. the desire to avoid conflicting decisions of the courts of different
countries)? Clearly, there is little point in
spending time and costs pursuing an alternative action in such jurisdictions.

When considering another jurisdiction in

points (14) and (15) above, assess the inherent risks in parallel, or concurrent, proceedings. In addition to the challenges of forum
non-conveniens arguments, proceedings in
one jurisdiction may be stayed in favour of
the other jurisdiction. Findings in either
jurisdiction may potentially, but not necessarily, also create estoppels in the other

Are the likely competing jurisdictions in

EU countries? If so, consider obtaining a
limitation decree or constituting a fund in

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

The Swedish Club Academy | MRM

the preferred EU country since between
EU countries, and under EC law, the
other EU member states are in principle
obliged to recognise each others judgements (see the Seawheel Rhine, a Dutch
Supreme Court case dated 29 September

As an alternative, should you amicably

agree law and jurisdiction and the terms
of limitation with the other side? Amicable means to resolve a dispute is often
preferred and may save substantial sums
in costs. However, when negotiating law
and jurisdiction do keep in mind that, in
most common law countries, limitation is
regarded as being part of the procedural
law as opposed to the substantive law.
Procedural law is considered to be subject
to the lex fori or the law of the Court. So,
if you agreed for the case to be heard in
say jurisdiction A but subject to the law
of country B then you would have potentially agreed to the limitation regime
of country A. That would be a problem
for you if you were expecting to be the
receiving party and country A applied the
LLMC 1957 limits instead of country
Bs LLMC 1976 or 1996 Protocol limits
which would be much higher.
Concluding remarks
Do not lose sight of the bigger picture
when assessing limitation and suitable
jurisdictions for your collision claim. A
successful outcome may depend on more
than limitation and jurisdiction. If the
early indications on claims and liability
bring limitation into play then it is a driving factor and you need to consider your
options early. However, very often it is the
case that the options in terms of securing
a favourable jurisdiction are limited (by
trading patterns and the like) and there
are inherent risks in pursuing actions in
multiple jurisdictions. Thus, races for limitation and suitable jurisdictions can easily become a lawyers paradise and it makes
sense to explore at an early stage with the
other side an amicable agreement on law
and jurisdiction. If appropriate, perhaps
this can be coupled with some variation
on applicable limitation. In any event,
know your limits as you plan ahead!

The Academy invites

companies to sign up
for the Mariner Attitude
Survey (MAS)
Martin Hernqvist

Managing Director
The Swedish Club Academy AB

Following the first MAS seminar

conducted in Hamburg, Germany on 6 November, 2012, the Mariner Attitude Survey
will soon be in full swing as more companies are becoming interested in knowing
more about the survey. Adding to that, two
companies from Northern Europe have already expressed their interest in taking part
in the MAS project, and one company has
already signed up.
An important feature of the survey is the
opportunity for participating companies
to suggest additional questions that are
relevant to the company and its operations,

which will then be integrated into the survey. The Swedish Club Academy ensures
that taking part in the survey will require
minimal effort from the shipping company,
as it is our belief that having an anonymous
survey conducted by a third party will
ensure far more honest answers from the
respondents than an internal survey can.
After the survey is completed, there will be
a data evaluation with recommendations of
the appropriate measures to be taken.
There have been two seminars already
conducted on the survey this year, the first
on 28 February in Manila, and the second
in Singapore on 6 March. Both seminars
were enthusiastically received by representatives of the attending shipping companies.
For more information about the Mariner Attitude
Survey, please contact the Academys Project
Coordinator Lorraine M. Hager on +46 31 638 492
or email

The Swedish Club Academys new team member

Yuqi Yao
Age: 24
Title: Project Assistant

Yuqi comes from the city

of Wuhan in central China. She came to Sweden in
2010 to study at Blekinge
Institute of Technology and graduated
with an M.Sc. in Industrial Economics and
Management, in the summer of 2012. Yuqi
also has a BA in Economics and Arts from
Hubei University, Wuhan.
In her spare time, she likes to translate
Japanese manga to Chinese and to edit

videos. She also loves travelling as she

believes that walking on the road can give
a person more knowledge than simply
reading in a room.
As Project Assistant, Yuqis main tasks
will include translating texts from English
to Chinese, establishing new contacts and
relationships in the Chinese maritime industry and assisting with the production
and editing of videos for the Academy. She
will play a very important role as contact
person and interpreter between the company and its Chinese contacts.

New Licensees since last Triton

Harren & Partner Ship Management GmbH & Co. KG, Bremen, Germany
NTTA Nautical Technical Training Academy BV, Groningen, Netherlands
SAMAJU Academy, storp, Sweden
Shanghai Costamare, Shanghai, China


T H E S W E DI S H CLUB TR I TON 1- 2013

The Swedish Club Academy | Out and About with MRM

Piraeus, 23-24 October 2012

An international Workshop
Leader training event in
Piraeus, Greece at the end of
October. Participants from
left to right: Zhang Hongnan
of Shanghai Costamare Ship
Management, Bernd Ulbricht of HPS
Hamburg, Theodora Stavropoulou
of C.M.M. Inc., Elias Andersson of
Chalmers University of Technology,
Martin Hernqvist of The Swedish
Club Academy and Konstantinos
Bourliaskos also from C.M.M. Inc.

Hamburg, 6 november 2012

The Mariner Attitude Survey was launched in
Hamburg, Germany with a 3-hour seminar. In this photo,

Fifteen new MRM Workshop

Leaders and one previously
certified Workshop Leader
attended the seminar in
Manila hosted by Wallem
Ship Management.
Participating companies
represented in the photo with
Martin Hernqvist are Wallem
Ship Management, Anglo-Eastern
Ship Management, APL Co Pte Ltd,
BSM Crew Service Center, C-Man
Manila, 12-13 November 2012
Maritime Inc., Consolidated Training
Systems Inc., GPN International
Maritime Training Center Inc., Marlow
Navigation Training Center, OSG Ship Management, Wavelink Maritime Institute, ABB Marine Academy, IDESS Maritime Centre (Subic) Inc., Wrtsila Land and Sea Academy, Pacific Basin Shipping,
Besiktas Likit Tas. A.S, European Training & Competence Centre, Louis Dreyfus Armateurs, OSM Crew Management, OSM ROHQ, and Rickmers Reederi GmbH & Cie. KG

Participants of the first MRM

WSL training for 2013, in
Gothenburg carefully listened
to the presentations being given
during a session. The participating
organisations were Harren & Partner
GmBh & Co. KG, Northern Crewing Services
GmbH & Co. KG, Nova Contract, Norwegian
Maritime Officers Association, NTTA Nautical
Technical Training Academy BV, Star Cruises,
SAMAJU Academy and Vestfold University

Gothenburg, 12-13 February 2013

Subsequent to the MRM WSL training, the afternoon of March 6th

was dedicated to a MAS seminar with many representatives of
the Singaporean shipping community. The following companies
attended: AET Shipmanagement Singapore Pte Ltd, Apex Ship Management

Singapore, 5 March 2013

Closely following the MRM WSL training in Manila the week before, a
trip to Singapore meant another MRM event for the Academy. Here, Martin
Hernqvist (far right), is accompanied by representatives from Wallenius Marine,
Wallenius Wilhelmsen Logistics, Wavelink, STET, Singapore Maritime Officers Union and AET


Pte Ltd, Bourbon Offshore Asia Pte Ltd, BW Fleet Management, China Navigation
Pte Ltd, Columbia Shipmanagement (Singapore) Pte Ltd, DDW-PaxOcean Shipyard
Pte Ltd, Epic Ship Management Pte Ltd, Executive Ship Management Pte Ltd,
Goodwood Ship Management Pte Ltd, Hong Lam Marine, IMC Industrial Group, JR
Orion Services Pte Ltd, Maritime Education and Training Services Pte Ltd, MOL Ship
Management (Singapore) Pte. Ltd, MSI Ship Management Pte Ltd, Norgas Carriers
Pte Ltd, NYK Shipmanagement Pte Ltd, Sentek Marine & Trading Pte Ltd, Singapore
Maritime Officers' Union, STET Maritime and Wavelink, Toll Logistics (Asia) Pte Ltd,
Wallenius Marine Singapore, Wallenius Wilhelmsen Logistics, Wavelink Maritime
Institute, Western Shipping Pte Ltd, VLK Traders (S) Pte Ltd, World Tankers
Management Pte Ltd.

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Buxtehude, 7 november 2012

Managing Director Martin Hernqvist addresses the gathered
representatives of Hamburgs maritime industry.

The Swedish Club Academy team was hosted by NSB Academy at their headquarters in Buxtehude, to give a Workshop Leader Seminar. NSB is now Germanys fifth training provider of the Maritime Resource Management course. Following the seminar, NSB
now have six qualified MRM Workshop Leaders.

Mumbai, 20-21 November 2012

Gijn, 11-12 December 2012

The MRM WSL network in India has expanded with an additional 14 new
MRM WSL licensees who participated in the 2-day seminar at the Holiday Inn
Hotel, Mumbai International Airport. A refresher course on the second day
was attended by one of the licensed MRM Workshop Leaders based in India.
The participating companies were: Bibby Ship Management, Fleet Management Training
Institute, Kuwait Oil Tanker Company and SEASPAN Crew Management India Pvt Ltd.

To conclude 2012, Spains first MRM training provider held a Workshop

Leader training event. Ten new MRM Workshop Leaders from Centro
Jovellanos completed the 3-day MRM WSL training under the supervision of
Martin Hernqvist at Gijn, Spain.

Another successful MRM WSL training

was conducted in the Philippines just after
3 months from the last run in November
2012. Martin Hernqvist (centre) is joined
by the participants coming from Bernhard
Schulte Shipmanagement, OSM, ST Education &
Training Pte Ltd, Veritas Maritime Training Center
Inc, IDESS Maritime Centre (Subic) Inc., Pacific Basin
Shipping (HK) Limited and Southfield Maritimes
Training Foundation Inc.

Manila, 27-28 February 2013

Singapore, 6 March 2013


T H E S W E DI S H CLUB TR I TON 1- 2013

Piracy | Armed guards

vessels guarded
by private security
The International Maritime
Bureau Piracy Reporting Centre
(IMBPRC) reported worldwide incidents
of more than 300 attacks or hijackings of
seagoing vessels as of December 2012
( These figures show the
continuous threat to the shipping industry
by piracy and the need for shipping nations
to protect their shipping community. This
has been acknowledged by the German
government, and the German parliament
(Bundestag) resolved an Act on 13December 2012 to permit armed guards on
board German-flagged vessels that have
been licenced in a specific approval procedure. Whereas originally the new Act
would have become effective from 1 August 2013, this date will now be suspended
to January 2014. The delay has resulted
from difficulties in agreeing on the specific
requirements that the security companies
must fulfil. These requirements will be
published in a separate regulation prior to
the effective date of the Act.
Two aspects of the law
The new law contains two aspects, one
covering the conditions and procedures
which have to be followed in order to
permit armed guards on board Germanflagged vessels and the other one dealing
with an amendment to the German law
on weapons. The first aspect, the licensing procedure, required an amendment
of the German Trade, Commerce and Industry Regulation Act (Gewerbeordnung
(GewO)). The Federal Authority for Eco-


Dr Jan-Erik Ptschke

Ahlers & Vogel, Hamburg

Jan-Erik Ptschke joined Ahlers & Vogel in

1999 and has been a partner since 2002. He
is a member of the German Association for
International Maritime Law (Deutscher Verein
fr Internationales Seerecht), the German
Association for Transport Law (Deutsche
Gesellschaft fr Transportrecht e.V.), the German/Singapore Legal Association (Deutsch
Singapurische Juristenvereinigung e.V.) and
the Transport Law Commission of the International Association of Young Lawyers (AIJA).

nomics and Export Control (Bundesamt

fr Wirtschaft und Ausfuhrkontrolle
(BAFA)) in corporation with the Federal
Police (Bundespolizei) is in charge for the
licensing procedure. The specific provision
dealing with the licensing of security companies is 31 GewO.
The requirements which a security company has to comply with will focus on
the companys profile and structure. The
company has to show that its personnel
have the knowledge and skills to act as
armed guards on board a vessel. This in-

cludes nautical and technical knowledge,

identifying and evaluating risk situations,
de-escalation techniques, fire fighting
knowledge and to a certain extent legal
It is not expected that the training or
examination of the personnel will be verified by the German authorities. The focus
will be on disclosure of documents and
information about the internal organization and manuals of its procedure regarding planning, implementation and conduct
of operations at sea in case a vessel is attacked. Further details will be known once
the regulations are published, which is expected to be in April 2013.
The security company must have third
party liability insurance cover, covering claims for personnel injury, damages
and consequential damages which the
shipowner or third parties, in connection
with the implementation of the security
measures, may sustain. Once the licence is
granted by the BAFA and the Federal Police, the Bundesamt fr Seeschiffahrt und
Hydrographie (BSH) will be informed
and, upon application by the shipowner,
will approve an amendment to the best
management practices on board and the
manning of the vessel.
The licence will be valid for two years only.
The reason for the time limit is the lack
of factual possibilities for the BAFA to
check the services of the armed guards on
board seagoing vessels. Hence, the govern-

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

ment has decided to

limit permission to two
years and will then,
if requested, evaluate
the situation before
extending the licence
for another two-year

What is the new

of German Law?

Application for a
Since only very few
security companies of the 160 -180
companies worldwide are domiciled
in Germany, it is expected that nonGerman companies will apply for a
licence with the BAFA and that the
documentation required by the BAFA
will mostly be filed in using English.
The authorities will be prepared to deal
with this, however they may insist on
some of the documents being translated
into German.
Another interesting renewal is that,
provided the security company consents
to it, the BAFA will list its name on
its website. The intention is to create
transparency and support the shipping
industry with a list of licenced security

Permission for weapons

The German law on weapons (Waffengesetz (WaffG) had to be amended to
provide for an unanimous procedure for
granting permission for weapons to be
used on board German-flagged vessels,

independently of the domicile of the security company. The WaffG is also applicable
to weapons and ammunition used for protecting seagoing German-flagged vessels
( 28 para 1 WaffG). It has also been ruled
that the permit required by the German
weapons law is linked to the validity of the
licence of the security company.
Furthermore, there is no longer a requirement to obtain a separate permit to
bring weapons or ammunition into the
territory of Germany, i.e. weapons and ammunition which will be used on board a
German-flagged vessel can be brought on
board that vessel without an additional
separate permit. The local law in the port
states where the weapons are brought on
board has, however, to be followed by the
security companies.
The authority for weapons in Hamburg
will be in charge of the permits for the use
and possession of weapons and ammunition on board. The kinds of weapons which
are not allowed to be used are weapons of

war. This means that, for example, machine guns, full and
semi-automatic guns or hand
grenades are excluded.
The piracy problem will not
be resolved by this
The amendments to the German
GewO and WaffG do not deal
with the question of what kind
of action is legal to defend an attacked ship. According to German
criminal law (StGB), the scope of
activities of armed guards on board
is limited to the general rules on self-defence and help in need. Armed guards do
not have more legal rights in defending attacks of pirates than any other crew member, although they have different means.
The attack on a vessel by pirates is a
self-defence situation, which would allow
armed guards to use their weapons but
they need to choose the mildest available
remedy to stop the attack, which will be a
decision made about the individual case.
Hence, the licence for armed guards is not
a licence to kill but one to effectively
protect the crew and shipowner against piracy and other attacks by qualified experts.
The piracy problem as such, however, will
not be resolved by this.


T H E S W E DI S H CLUB TR I TON 1- 2013

PIRACY | Somali Piracy today

Somali piracy

past, present and future

Hans Tino Hansen

Managing Director & CEO

Risk Intelligence, Vedbaek, Denmark

Somali piracy has been the major threat to international shipping since 2007, but it can be traced back to 1994,
when the first hijacking for ransom took place. The hijacked
vessels and the ransoms paid have been an almost daily part
of shipping life and in even in the international media it has
played a significant role. At one point almost 1,000 seafarers
were held for ransom on the coast of Somalia.
2012 saw a dramatic reduction in Somali pirate activity
with attacks dropping from 214 in 2011 to 50 during 2012.
Of these 50 the vast majority (46) occurred during the first
part of 2012, while in the second half only four incidents
took place. By the end of 2012 Somali piracy was back to
2007s levels.
So what is the explanation for this drastic reduction?
Some people have suggested that it was due to the merchant
ships arming themselves with private armed guards. As we
will see below, it is not quite as simple and there are not one
or two single decisive factors, but actually a range of parameters that together have decided the levels of Somali piracy.
These can be formulated as follows:
1. Capabilities. Vessels and equipment as well as the
overall infrastructure of pirates.
2. Intentions. Tactics, strategy and business objective
of the pirates.
3. Opportunities. Chances for taking advantage of
merchant vessels vulnerabilities. Return on investment for Somali pirate investors and alternative investments and business options. Politico-economic
developments in Somalia that are shaping the situation on land and thereby the opportunities.


Merchant marine:
1. Capabilities. In this case elements such as hardening,
speed, vessel type, use of PMSCs
2. Intentions and opportunities, such as market rates,
charter, freight and fuel cost.
3. Trading routes defined from (2) and (1).
1. Capabilities. Number of vessels and helicopters deployed. Sensor effectiveness.
2. Intentions. Types of operations, ranging from showing the flag to offensive onshore attacks.
3. Opportunities. Options for exploiting pirate vulnerabilities as well as political and military signalling.
Rules of engagement.
4. Political and financial realities and the limitations
they impose.
1. Geography, ocean currents, weather.
2. Local patterns of maritime activity.
The Somali pirates level of activity has declined since early
2011. This is mainly due to the increasing difficulty in hijacking ships they have encountered and less due to onshore
changes in their operating environment. The number of pirates intercepted, captured or lost at sea has increased.
The number of ships being hijacked has fallen, making
the venture less tempting for the rank-and-file, leaders and
financiers. There are, however, still active syndicates. These
groups have seen a fall in their success rates, capturing fewer

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Photo: US Navy

Incidents per sea zone, 2008-2011

Mozambique C

Arabian Sea/Go Oman

Somali Basin

Gulf of Aden

Indian Ocean

Red Sea/BAM

ships per attack and facing disruption by Naval operations

quicker than previously. The main component in the falling success rate has been the shipping business and Naval
counter-piracy strategy. The low-tech capabilities of the pirates are still there and when pirates have faced a poorly protected ship in the right circumstances, they are successful in
employing their tried and tested, low-cost methods. Where

pirates have successfully hijacked a vessel, the outcome (in

terms of ransom) has been equal or higher to what has been
previously obtained.
The pirates investors have seen their return of investment
fall, both in actual cases and in potential return of investment. This fall and relatively increasing returns on other
more secure criminal or legal investment has had a profound
effect on investment in piracy. Since the cost of entry into
piracy is low and all the resources are easily available along
the Somali coast, the pirate investors can quite quickly return to piracy should the situation again change in their
In summary, pirate activity has declined, reducing the
overall likelihood of occurrence. Their capabilities are intact particularly because they do not need much to carry
out attacks but they are currently facing a more adverse
operating environment and have not adapted their tactics to
overcome this.
Merchant marine
Since 2008, merchant vessels have increasingly deployed
better security measures, including both toughening these
up and procedures through Best Management Practices
(BMP). Finally, the use of armed guards has been common
since late 2010.
The most pressing issue for shipping companies recently

continues on page 20

T H E S W E DI S H CLUB TR I TON 1- 2013

PIRACY | Somali Piracy today

continues from page 19

has been cutting costs. Faced with an historically long spell of depressed freight rates and increasing bunker rates, companies are
increasingly looking to improve operating margins. This is done
increasingly by slow steaming and by reducing deviation around
areas of known pirate activity, when an armed team is onboard.
The Gulf of Aden is well covered by Naval assets, whereas the Arabian Sea and Indian Ocean are less covered. Naval operations directly against pirate assets in the area are arguably one of the most
influential factors in the decline of pirate attack occurrences. The
counter-piracy operations have taken pirate attack groups out of
the equation before they could even enter the attack areas. With
a force level of approximately 25-40 Naval vessels in the area at
any given time, only a handful of ships are actually available for
counter-piracy operations along the Somali coast. The rest are being
replenished, doing national or World Food Program escorts and
monitoring the IRTC. It appears that Naval forces have become
more effective in monitoring and cutting off active pirate attack
groups after their first attack. This entails shorter life spans of
PAGs and a reduction in total attacks carried out.
Budget cuts in European countries have already led to some Navies scaling back. It is likely that more will follow and since the
escorting and monitoring of the IRTC has priority, the counterpiracy operations against the Somali east coast will suffer.
Geography is a fixed parameter, but various areas provide different
natural boundaries or opportunities to the pirates and the level of
their impact on pirate operations will depend on pirate capabilities

Incidents off India December 2011-12

(MaRisk by Risk Intelligence)


and tactics. The

weather and currents are
largely stable and change according to
monsoon and transitions periods. In general, weather and currents
can be seen as everything equal, but sometimes the monsoon periods are less harsh in certain areas and therefore give better opportunities for small boat operations.
Local traffic patterns play a role in as much these may include
other armed criminals such as smugglers or fishermen that are
armed due to fishing area disputes, where both types may not be
positive to having pirate skiffs in the middle of their operations. At
the other end, small boat traffic may be favourable to pirate operations as it increases the possibility of blending in and hiding. Even
the use of hijacked dhows as motherships provides an opportunity
to hide at dhow anchorages, which may lead to opportunities for
attacking merchant ships at anchor such as the hijacking of the
Fairchem Bogey in 2011.
As outlined above Somali piracy can be described via a number
of parameters. These impact on the general level of threat and are
dynamic over time. What contributes to a high risk today might
gradually change. Three things in particular is interesting in this
case: the societal situation in Somalia, the use of vessel protection
and the naval presence.
Mogadishu, the capital of Somalia, currently experiences a bettered security situation. In the case that an economic and political
improvement should also take place in Puntland and Galmudug
State, piracy might be impacted. There is unfortunately no current
signs of this happening in any significant way.
The use of BMP and armed guards have played a significant role
in reducing the pirates likelihood of success. Although it has greatly reduced the risk for the individual ships that have correct BMP
measures and armed guards embarked, the use of vessel protection
has not in itself lowered the likelihood of running into a pirate attack group. The pirates are being deterred over time by encountering resistance and hardened ships and it has reduced the number of
attacks in a gradual way. But it must be understood that there are
still plenty of targets that are available to the Somali pirates.
So in that way, the naval presence has been the real important
parameter for reducing piracy. By attacking pirate staging areas and
intercepting pirate attack groups off the coast of Somalia, the naval
presence has played a large role in reducing piracy close to its roots.
Followingly, if the political decision makers look back at relatively
peaceful 2012 and 2013 when making budget decisions, there is a
risk that a reduction in naval forces will leave room for pirate expansions once again.
Therefore, at least until the situation on land has improved, it is
the task of the shipping community to maintain proper levels of
security measures as well as making sure that politicians and naval
commanders understand the importance of continued naval counter-piracy operations in the Horn of Africa Area.

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Legal | Update
Ph o

to: iS

o ck p

The long arm

of the law

stretches for pirates

the Arrest of Vessels has been substantially amended with Dutch
Earlier this year Japan became the latest country to proslaw being used as the role model and it will no longer be required a
ecute pirates. There has, however, been notable disinterest amongst
submit evidence of a claim to carry out an arrest. Presumably, Gerstates in bringing pirates to justice. Almost two-thirds of the
many should now be added to the list of arrest-friendly places, for
overall prosecutions (185) have taken place in two countries only,
good or bad depending on whose side you are on.
Kenya and the Seychelles. On the occasions when other states
have taken the lead, there is often a link
Sweden publishes shipping action plan
between the vessel and the country, as in
The Swedish government has published a
the case of Japan when the attacked vessel
shipping industry plan in response to growwas a Mitsui OSK Lines tanker. There is
ing demands to save the countrys struggling
however no legal obstacle for states to take
maritime sector. Reportedly, the plan is short
Anders Leissner
action. International law treats pirates on
of substance but long on visions and it remains
the high seas as hostis humani generis an
Corporate Legal
to be seen what concrete outcomes there will
enemy of all mankind and as such they
be. One contentious point is the tonnage tax
are prosecutable and punishable in any
that the government has refused to introduce to date in contrast to
country. It is to be hoped that ongoing efforts made by the UN
many European states, although the door has not been completely
Office on Drugs and Crime to improve prisons in Somalia, Kenya,
shut. A solid (political) document in other words.
the Seychelles and Mauritius will facilitate the law enforcement of
these ghastly acts.
More sanctions...
Both the EU and the US have imposed a new round of sanctions
Pirate attacks are declining
against Iran (see Notice Board page 27). For us as an insurer there
On the same topic there was good news from the International
seem to be a particularly cumbersome provision in Section 1246
Maritime Bureau the other week. Piracy on the worlds seas has
of the US Iran Freedom and Counter-Proliferation Act of 2012,
fallen to a five-year low, with 297 ships attacked in 2012 compared
imposing sanctions on any person (including non-US persons) that
to 439 in 2011. Worldwide figures were brought down by a huge
knowingly provide insurance for any activity that violates any US
reduction in Somali piracy in 2012 compared to 2011. No doubt
sanctions on Iran. The implications of this provision are, of course,
the presence of armed guards onboard vessels, coupled with other
very difficult to foresee, but clearly this is not an area where one
measures, has contributed towards this positive trend, although it
should try to cut corners and we therefore constantly need to refine
should not be forgotten there are still 585 mariners being held hosour procedures for control and compliance.
tage at gunpoint worldwide.
Makeover of German Maritime Law
Germany is in the process of updating its 150 year-old Maritime
Code. Reportedly, the leading concept in the new Code, which
at the time of writing is expected to become law any day, remains
the Hague-Visby Rules, although there are influences from both
the Hamburg and Rotterdam Rules. One novel feature is that the
concept of mandatory liability provisions has been abandoned so
the parties will have greater possibilities of making their own agreements. Needless to say, the new German Code is a sign that Germany does not believe in a universal acceptance and application of
the Rotterdam Rules and it is therefore a hard blow against the supporters of those Rules generally. In addition, the German Law on

Maritime Labour Convention revisited

We have previously reported that the question about whether
costs for repatriating crew in cases of the shipowners insolvency
should be included in P&I cover, was discussed by the boards of
the P&I clubs. The position has now been clarified the costs from
2013/14-policy year are included in P&I up to the clubs retention
USD 9 million, but on a loan basis. The boards obviously found an
elegant solution that addresses both state requirements for financial backing and the concern for mutualising this controversial risk.


T H E S W E DI S H CLUB TR I TON 1- 2013

FD&D | London arbitration

Photo: Morguefile

Irrecoverable costs in London arbitration:


When a dispute breaks out over the

performance of a charter the natural tendency is to focus on whos at fault. This
might take place in circumstances where
the member is in the middle of a chain the innocent bystander so to speak. Thankfully the majority of disputes settle before
they get into arbitration and everyone
walks away paying their own costs. On the
other hand, back-to-back maritime arbitrations in London can last for years and the
implications of costs awards can become
just as serious as the underlying amounts
at stake.
The belief that parties in the middle
of a chain are neutral is a dangerous assumption insofar as litigation costs are
concerned. Yes neutrality might apply to
the substantive issues but it is not the same
with costs.A neutral middle party can potentially be faced with a huge costs liability
and with no recourse action to make him
whole. This article will focus on how to
avoid ones exposure to such irrecoverable

Furthermore, as many readers will already know, the costs payable to ones representatives (lawyers and the technical experts) is not ordered to be paid up 100% by
the losing party. The reason is explained in
section 63: the paying party is given benefit of the doubt as to whether those actual
costs are reasonable and proportionate.
The conduct of the successful party can
lead to a tribunal curtailing or, alternatively, enhancing the costs award. For example
wrongly pleading part of a case, leading
to wasted costs both sides; or denying any
costs for two failed claims out of, say, five
(known as issue based assessment).

The Arbitration Act

The power of arbitrators to award costs is
contained in section 61 of the UK Arbitration Act 1996. They have power to award
costs of the arbitration, which represents
the successful partys legal costs and the
tribunals (and the institutions) fees. It
probably does not include the cost of obtaining security, for example arresting a
ship in a foreign jurisdiction.

Costs dont carry over

Based on the principles outlined above
the tribunal may determine the recoverable costs of the arbitration as it thinks
fit. However it is not open to an arbitrator to make an order that a party in one
arbitration must pay the costs of a party in
another arbitration. Whilst the Arbitration Act provides that the parties are free
to agree otherwise (typically agreements

Andrew Bates

Senior FD&D Claims Manager

Team Asia


to consolidate two arbitrations, which are

rare), in the absence of such agreement the
tribunal only has power to award costs of
the arbitration.
This was confirmed in the 1981 case of
The Antaios, which is still good law today.
That involved four concurrent arbitrations
arising out of back-to-back charters. Each
party who had been successful in one arbitration, but unsuccessful in the other,
could not pass on liability for the costs he
had to pay his successful opponent.

The implications
Taking the familiar setting of two maritime arbitrations based on back-to-back
charters: an unsuccessful claimant head
owner will only have to pay the nominal
cost incurred by his head charterer in defending the claim since the head charterer
has simply passed submissions up and
down the line.
The true cost of defending the head
owners claim has been incurred by the
sub charterers, and they will be awarded
substantial costs against the innocent head
charterer. Yet the head charterer cannot
pass that cost liability on the head owner,
nor can he recover his costs of pursuing
the sub charterers even though, but for the
head owners actions, neither set of costs
would have been incurred.
The solution
The element of prejudice is obvious. So
what can be done? The answer is for the

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

the line of charters and the same breach

gave rise to the same liability for costs as
Other scenarios
There are other situations where costs can
be claimed as damages and where good tactics can pay dividends.
Same parties, different deal: one instance is where the same parties are involved but the claimant is relying on a different cause of action in a different forum.
This arises for instance where a claimant
incurs cost defending a claim brought
in breach of an exclusive jurisdiction
agreement. In Union Discount v Zoller
a New York suit allegedly in breach
of such an agreement was struck out. The
general approach to costs in New York is
that each pays his own costs. The claimant
therefore went on to claim these costs in
English proceedings based on breach of the
jurisdiction agreement and the Court of
Appeal duly awarded damages.
Members management time: costs as
damages can also include managerial expenses incurred by a party in dealing with
the problems caused by a breach. The main
consideration is the dominant purpose: if
the purpose was preparation for litigation
then the expenses can only be recovered as
litigation costs, not as damages. If say on
the other hand management commissioned
an experts report for the purpose of maintaining the vessels class, without a view to
litigation, then both management time,
and the cost of the report, may be recoverable as damages. The line between costs and
damages can be hard to draw but, nonetheless, it might pay off if members record
their management activities for appraisal
further down the track.

e solutions
party in the middle to plead a separate
cause of action in damages against (using
the example above) the head owners for the
sub charterers costs plus his own costs of
pursing his claim. The general rule is that
damages will be recoverable if a claimant
establishes a breach of contract or duty
(The Sargasso) and such losses (costs) were
within the reasonable contemplation of the
parties. Terms in a fixture recap containing express warranties coupled with BTB
head charter with XYZ might satisfy the
reasonable contemplation test.
It is important to remember that the
ordinary rules on damages apply. Looking
at another litigation scenario: did party
As (the defendant head owner) breach (a)
cause party Bs (the middle party) costs
liability to party C (the claimant sub charterer)? (b) was the type of loss too remote?
and (c) has party B properly mitigated?
These three rules interact and overlap.
For example, the costs of an application by
party B for security for costs against party
C may be deemed to have not been caused
by party As breach; or that it is not the
type of loss which party A can reasonably
contemplate because party C is a substantial entity who should not have to pay security for costs in the first place. The loss is
too remote.
What, when and why?
Your lawyer should provide sound advice
on tactics because they need careful consideration. Instead of defending a claim

should a party in the middle simply have

paid it and avoided the cost liability in
the first place? Or should that party have
defended it without passing it on? In The
Vakis T the claimant owners brought an
unsafe port claim against the head charterers, which the latter defended.
The head charterers also passed the
claim on to their sub charterers. The head
owners claim was however spurious. The
arbitrators found that the true cause of the
damage to the ship was in fact unseaworthiness, and in the High Court Langley J
rejected the head charterers claim for costs
liabilities to the sub charterers because the
commonsense conclusion was that the effective or dominant cause of the loss was
their decision to pass on a spurious claim.
Another example of a contested damages
claim is seen in the 2012 case The Chada
Naree. The arbitrators decided that a
party in the middle was not entitled to
recover damages for his own liability for
costs in the arbitration above because he
was not party to any arbitration with the
head owners. He was merely party to an
internal contract with another company in
the same group, and that other company
was party to the head charter. The tribunal
held that there was no costs liability
capable of being claimed as damages. The
High Court reversed that decision on the
grounds that all litigants in the chain had
treated these two group companies as one,
i.e. as the disponent owners; liability for
the breach of the contract flowed down

The above shows us that there are many
permutations of litigation and the cost
consequences which can result informs users of London arbitration to think ahead
carefully about those consequences as they
examine the underlying merits of the dispute. The rewards and savings are there but
achieving them owes everything to good
case management.


T H E S W E DI S H CLUB TR I TON 1- 2013

Club Information | Notice Board

Photo: Manuel Hernndez Lafuente

The Eider case

a satisfactory outcome

Environmental salvage
Over the past ten years, the International Salvage
Union (ISU) has pursued that salvors should be entitled to
greater remuneration to better reflect the efforts made by them
to minimise damage to the environment.
Discussions have been between the industry stakeholders
via the offices at Lloyds Salvage Group, but have not led to a
consensus to amend the current Lloyds Open Form (LOF)


Onerous port conditions and P&I cover

There are an increasing number of ports Conditions of Use wordings being submitted to us and other clubs
for consideration. These conditions occasionally contain onerous, not to say unreasonable, provisions imposing unlimited
liability upon the arriving vessel. The conditions of the port of
Abu Dhabi is one example which contains unusually burdensome provisions. Members are encouraged to always contact
the Club when faced with a request to sign similar conditions.
Failure to use best endeavours to avoid signing a contract imposing onerous terms on the member can result in prejudiced
P&I cover.

Iran sanctions
On 2 January, President
Obama signed into law the
Iran Freedom and CounterProliferation Act (IFCPA) of
2012, which entails an expansion of the extra territorial reach of US-Iran sanctions
that now extend to the shipping industry. As an example,
entities in the Iranian shipping sector have been labelled
as entities of proliferation concern whose assets should be
blocked and it is prohibited to provide significant support and
services to these entities. IFCPA also provides a ban against insurance of any activities that violates any US sanctions on Iran.
In addition, the EU has issued Council Regulation 1263/2012
essentially prohibiting (1) the purchase and transport into the
EU of Iranian natural gas (2) the storage of Iranian petroleum
products (3) the proviso of a wide range of services to Iranian
vessels and vessels owned or operated by Iranian entities (4)
dealings with Iranian financial institutions.

Photo: iStockphoto

The Club insured the vessel, the Eider, a bulk carrier, for
P&I insurance. The Eider went aground at the port of Antofagasta in Chile on 31 October 2005 and spilled about 127 tons
of oil, including heavy fuel oil and diesel oil and caused pollution stretching for 7 miles along the coastline. A Pool claim
was made.
An extensive clean-up operation followed and took over
three weeks to complete. The Club paid clean-up costs of
around USD 5,000,000. Numerous groups of people associated with marine interests in the regionfiled claims against the
ship and the shipowner. The ship was arrested and the owner
and master ofthe ship were fined.
The Club set up a limitation fund pursuant to Chilean law
of USD 26,000,000 in local currency by way of a Club Letter
of Undertaking in the Court of Antofagasta against all the
claims and settled the fines on behalf of the owners to release
the vessel from the arrest.
The Eider sailed from Antofagasta after some temporary
underwater repairs were carried out. The total gross claims
amounted to USD 238 million.
After long, hard settlement negotiations and protracted
court proceedings for seven years through the Court of Antofagasta, the court of first instance, Court of Appeals and the
Supreme Court, the last claim for environmental damages was
finally dismissed by the Supreme Court of Chile, the highest
court in the country.
This case came to an end with the landmark ruling of
theSupreme Court. The Clubs local lawyer and correspondents worked hard and effectively, and achieved a satisfactory
outcome. The case cost the Club about USD 9,000,000.

regime. Another level of discussion has taken place to make a

change to the 1989 salvage convention, which was up for review at the Comite Maritime International (CMI) conference
at Beijing in October 2012.
The outcome of the discussions at the conferencedid not
support the proposed changes to the 1989 salvage convention
as put forward by the ISU, except for widening the geographical definition of damage to the environment in article 1 (d).
Bearing in mind the recent discussions about exposure to
the insurance industry following the two recent marine casualties, Costa Concordia and Rena, it is likely that the debate
about SCOPIC funding and wreck removal may have an adverse effect on future discussions about enhanced compensation under LOF or changes to the convention.

For detailed information about the Iran sanctions please see

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Germany modernises
maritime law
DNV and GL to merge
On 20 December 2012, Det Norske Veritas (DNV) and
Germanischer Lloyd (GL) announced that they have signed an
agreement to merge. The new entity will be called DNV GL
Group. It will be one of the worlds leading classification societies and risk experts. The global headquarters for all business segments will be located in Hvik, Oslo. The maritime business unit
will be in Hamburg, Germany. The merger will require approval
from different competition authorities around the world before
the actual merger can take place.

The International Labour Organization (ILO)

Maritime Labour Convention, 2006 (MLC) will come into force
on 20 August 2013 with the purpose of providing protection and
fair working conditions for seafarers. A problem which has been
highlighted by the effects of the financial crisis is abandoned
seafarers and the right to repatriation in cases involving a shipowners insolvency.
As a consequence of the implications the Convention has on
owners, the P&I Rules have been revised as of 20 February to
reflect the requirements under the MLC. With the aim of satisfying the unspecified requirement under the MLC to provide
financial security, Rule 3 section 1 (g) has been introduced and
we are thus hopeful that the Certificate of Entry will satisfy the
MLC financial security provisions. The IG Secretariat is in close
contact with the parties involved including the States that have
ratified the MLC to assist and safeguard the interests of owners.
Rule 3 section 4 has also been revised to confirm that the Pay
to be Paid Rule is not applied in relation to crew claims, although
that has long been the agreed position.
More information on the MLC can be found in our P&I Circular
2559/2013 dated 6 March 2013.

The Swedish Club AGM

and events
The Annual General Meeting
will be held in Gothenburg on Tuesday
18 June 2013 and adjacent activities on
17-19 June.

Photo: Stefan Eliasson

Maritime Labour Convention

The reform bill has been approved by Parliament and

is supposed to come into force around April 2013.
In general, the revised law establishes a contemporary
body of law by reducing the amount of provisions by
half and installing a systemized structure. Detailed rules on charter parties and practiceorientated provisions on different
forms of freight contracts,
as well as the introduction of electronic bills of
lading, are just examples
of the amendments being
The central modifications of the revised law affect
rules on liability of the parties involved in the transport
chain. The abolishment of the exclusion of liability for
nautical errors, which was considered to be an anachronism with regard to the modern engineered shipping
industry next to deleting the fire defence are some of
the key aspects.
In addition the new law introduces a legal concept of liability of the performing carrier. This rule aims to synchronise liability between shipper and performing carrier
without the latter being a contractual party.
Finally, the revised law facilitates and accelerates the arrest of ships. Whereas arresting a vessel used to be a complex
procedure that has rarely been made use of the new regulations in principle require a money claim against the vessel
For details contact Dr. Marco Remiorz at Dabelstein & Passehl in

New chairman of IUMIs

Ocean Hull Committee
Lars Rhodin has been appointed
chairman of IUMIs Ocean Hull
Committee. The International Union
of Marine Insurers is the main worldwide body for marine insurers addressing issues relevant to the industry, such as exposure trends,
legislation, statistics and loss prevention. Ocean hull in particular is the essential forum to discuss and exchange ideas
of common interest to hull underwriters identifying challenges and opportunities in the marketplace and, not least,
safety issues in shipping.


T H E S W E DI S H CLUB TR I TON 1- 2013

Club Information | Staff

Changing of the guar

An early midday in May 1980 Hans
Filipsson set foot in Greece for the first
time. He arrived as a seaman onboard the
Swedish Orient Line vessel Bardaland.
The cargo consisted of various forestry
products from Scandinavia, like timber
and paper, and the unloading took about
ten days. Already the first weekend, when
visiting the island of Aegina, Hans was
hooked. Since, he has returned several
times, both on business and holiday.
Now, 33 years later, 1 April 2013, he will
return by air this time to settle down to
take over the rudder as General and Area
Manager of our Piraeus team and office.
After his seagoing career, Hans turned
to insurance and has been working on
both the claims and underwriting side for
more than 20 years.
I guess I have both shipping and insur-

ance in my blood; my father was responsible for P&I claims at the shipowner Brostrms in Gothenburg, he explains.
Hans joined The Swedish Club as an
Underwriter in 2010. In September 2011
he was appointed Deputy Area Manager
for Team Gothenburg and now it is time
to embrace Greece and Team Piraeus with
his energy and drive. At first he will work
alongside of Tord Nilsson to get into the
routines. (You can read more about Tord
on the next page.)
I am happy to see him staying with the
organisation in a new role as Senior Manager for Underwriting and Special Risks at
the head office in Gothenburg; that will be
a welcome support for me and the team to
further develop our business in Greece.
Developing relationships
Hans is a keen sailor and has been sailing
in the Mediterranean several
times. His preferences have been
in the south west
coast of Turkey
and the Greek
Greece is one of my favorite places, so
when I was asked to succeed Tord as General and Area Manager, there was only one
answer: YES in capital letters!
The family was easy to persuade and in
August his wife Christina, son Marcus
and daughter Elin will follow his example.
They are all planning to study in their new
home country.
I have never been living abroad before;
the closest I came was my three years at
sea with the Singapore-based Thome Ship
Management, so I am really looking forward to moving to Greece, doing what I like
the best: working in the shipping market.
The Swedish Club has always had a
strong commitment to Greece and Greek
My mission will be to further build our
business and to develop long-term relationships in the market, but also see to that the
team continues to deliver at the high level
which The Swedish Club is known for.
Irrespective of which company you

Back again
after 33 years

Arrival at Piraeus May 23, 1980
End of Sea passage: 12:10
Pilot on board
2 Tugs connected 13:00
First line
All fast
13:30 June 3, 1980
Bound for Thessaloniki


work for, there is a big difference between

being at the head office and a local branch
office. To make a comparison, you can look
at the head office as the shipowners office
and the local branch office as one of their
ships; and I have to admit, I think it suits
me the best to be on board.

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

d in Piraeus
The peculiarity of saying yes
has taken Tord Nilsson to many
places and jobs over the years.
This time it has brought him
from Area Manager for Team Piraeus in Greece back to Gothenburg and the head office, but in a
quite new role as Senior Manager, Underwriting & Special Risks.
When Tord said yes to the post of
Assistant Underwriter at The Swedish
Club in -96 he didnt know it would
take him around the world. In one year
he was promoted to Underwriter and
in 2000 the yes in him took him to
the post as Managing Director of our
Hong Kong office, where he stayed for
five years. Back in Gothenburg and
Team Gteborg I, as Area Manager
and Senior Underwriter, he sat tight
for four
more years
until it
was time
for another yes,
when he
was offered a position in Greece.
Before moving to Greece, Tord had
only been there once on a four-day
business trip in 1998.
But I have always been curious
about new things and been looking for
new experiences, so it feels natural to
me to take on a challenge like a new job
in a new culture, says Tord.

I like
saying yes!

Photo: Anders Hultman, TSC

Cradle of shipping
He describes his years at the Piraeus office as an interesting, fun, fruitful and
rewarding experience.
The worlds biggest merchant
navy is managed and controlled from
Greece, and Piraeus is loaded with a
variety of shipping companies. There
is no place like this in the world this
is where it happens in our line of business!, Tord explains.
We have great members in Greece
and the team has created a good environment for delivering the expected

service, which characterises of The

Swedish Club. The office and staff
and even some of our members have
become like an extended family to me
that I will miss very much when I go
back to Sweden. We have been working
closely together as a team and developed the business as well as each other,
says Tord.
Hans Filipsson, who will succeed
me in Piraeus (see previous page),
will arrive to a well-functioning and
service-minded team. I am sure he and
his family will feel at home in the new
country, new office and new culture.
And dont forget the beautiful environment, good food and the best climate
in the world!
Developing underwriting
On 1 July it is time to say goodbye and
move back home to Sweden and the
new position as Senior Manager for
Underwriting & Special Risks. His
almost 20 years of underwriting experience from different parts of the world
will stand him in good stead to structure the business process and make us
work in a smarter way, to benefit both
the Club and the members. Another
important task is to evaluate the need
for further training amongst the underwriters. The market moves fast and
to stay in the front-line we need to develop our knowledge at the same pace.
I really like underwriting and the
whole process that surrounds it. The
plan is for me to take an overall perspective on underwriting, develop new
insurance products and support the
business activities. I like to create new
solutions and look for innovations
there is always another way of looking
at things!

Carola Weidenholm


T H E S W E DI S H CLUB TR I TON 1- 2013

Club Information | Staff

New FD&D Manager

Wherever I lay
my hat thats
my home

Martyn in brief
Name: Martyn Hughes

England, France, Australia, Greece

and now Sweden Martyn Hughes
likes not only to visit new countries
but also to live in them! I think I am
pretty flexible and have always appreciated a challenge, he says. I
am also very interested in different
cultures as well as learning new languages and what better way than
to stay abroad for some years.

Age: 50
Hometown before Gothenburg:
London, UK
Family: two daughters; Zo 20 and
Sin 18 who live and study in the UK
Spare time: likes reading, cooking,
running and bike riding when he has
time off. He is also into music and listens to everything from Beethoven to
ABBA and even some Greek bouzouki
which he got from his years in Greece.
At one time he sang in the school
choir and even got to perform at the
Royal Albert Hall a couple of times.
Background: Martyn graduated from
Birmingham University (UK) in 1984
with a degree in Law. He qualified as a
Solicitor in England with Holman Fenwick & Willan, then spent 13 years with
the London P&I Club, including 5 and
half years in their Piraeus office, handling a mix of P&I and FD&D claims. In
2003-07 he joined the correspondent
Aus Ship in Sydney before returning to
the London Club for another six years.
He has worked continuously in Maritime Law since 1987.
Of current interest: our new FD&D
Manager in Team Gothenburg since 7


Carola Weidenholm

It started already before university when he

went to Paris to work at Marks & Spencer
for a year. During the summer vacation the
following year, he worked for an English
law firm in the same city. He did the same
the year after at Holman Fenwick & Willans Paris office, which was his first encounter with marine law. He later trained
with that firm and stayed on for three years
as a qualified solicitor.
A secondment for six months to the London P&I Club ended with him joining
them in 1990. After two years he was
offered a post in their Piraeus office in
Greece, where he stayed until 1997 the
last two years as Manager. Back at the Club
in England, he got the next interesting offer
six years later to go and work for the Australian correspondent Aus Ship. This was
too good to resist, so in 2003 he, his wife

and two daughters packed their bags and

boarded the plane for Sydney to stay for
almost four years. In 2007 they were back
in the UK and Martyn returned to the
London P&I Clubs head office again.
23 years of P&I and FD&D
Last year Martyn was informed of an open
post as FD&D Manager at The Swedish
Clubs head office in Gothenburg. At first
he had no plans to switch to another job
but in the end he couldnt resist the challenge of a new culture in a country he had
never visited before.
This is an opportunity for me to do
stuff I know well but in a new environment, and at the same time it is nice to
live in a city like Gothenburg where the
pace and work-life balance are different
from London, says Martyn and continues:
The job also brings new experiences as
The Swedish Club is a hull mutual and it is
interesting to see how that interacts with
P&I and FD&D first hand.
Martyn is a welcome addition to the
Club staff with his long experience of a
variety of claims and his international experience of handling both P&I and FD&D
cases. The Swedish Club and he have
known each other for a long time and have,
over the years, worked on the same cases
from time to time.
The Swedish Club has a good reputation in the marine business for its excellent service. And the staff I have been in
contact with have always been professional
and considerate, which were two other reasons for me to want to join the Club he

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Club Information | News from Gothenburg

Tony Schrder

Area Manager
Team Gothenburg

The fat tail of probability

Another renewal has passed. The 2013/14 renewal
prompted more concern than in many years. Article after article in various shipping papers forewarned owners and clubs
about a predicted clash of wills. The state of the shipping market pointed south and claims too. In the aftermath we can now
see that whilst it was an extraordinary prolonged and tough
renewal, the result is satisfactory and we should all be pleased
members and the Club alike.
There sometimes seems to be a misconception that underwriters are fat cats (an impolite way of referring to someone
who is very rich and powerful). This could not be more wrong.
We are mutuals. We are governed by our members for our
members. Our task is to handle the randomness of risk. To be
able to pay claims running into millions of dollars. Some members might ask themselves more so during the P&I renewals
than the rest of the year is there a benefit in moving your vessels to a new club to avoid the increases levied? There might be,
if you do not have the confidence that your present club is doing a good enough job managing members claims and premiums, in the volatile world of marine insurance.
The history of insurance is a long tail. Insurance is longtailed. And volatile. It is a story about paying premium for
a risk. Claims happen, and over time they happen to most
shipowners. But do I need to contribute? Could a large claim
happen to me? Like the black swan theory most people
today know that it is quite likely that something unlikely will
happen. *
*The black swan theory,
The term metamorphoses to
or theory of black swan
suggest that a perceived imposevents, is a metaphor that
sibility might later be disproven.
describes an event that is a
It lies outside the realm of regular
surprise (to the observer),
has a major effect, and after
expectations. Costa Concordia
the fact is often inappropribeing just one such event. Titanic
ately rationalised with the
another. But for the observer, the
benefit of hindsight. Such
shipowner, even a medium-seized
events, considered extreme
outliers, collectively play
casualty might be that surprise
vastly larger roles than
regular occurrences. In EngThe philosophical problem is
lish, when the phrase was
that rare events are not visible in
coined, the black swan was
presumed not to exist.
past cases. Almost all consequen-

tial events in history come from the unexpected yet human

beings later convince themselves that these events are explainable, in hindsight. But underwriters know it can happen. **
**A black swan event
Hence we have a task to build robusdepends on the obness and durability against these large
server. For example,
what may be a black
However, in recent years not only large
swan surprise for a
turkey is not a black
claims have increased, but also attritional
swan surprise to its
claims. In particular, liabilities for cargo
butcher; hence the
and personal injury, both in terms of freobjective should be
quency and in terms of severity. All these
to "avoid being the
turkey" by identifying
factors have caused mutual underwriters
areas of vulnerability
to ask their good members for larger conin order to "turn the
tributions to be able to assist shipownBlack Swans white".
ers in the rainy days - and they do come!
Albeit sometimes as scattered showers. There is always a risk of
a particular event occurring that is so unlikely to happen and
difficult to predict that many choose to ignore its possibility. Is
there a fat chance that frequency, severity and volatility could
happen to me? That the fat tail of probability can hit me?***
The answer is yes!
***Fat tails are basically a statistical disThe Clubs are just instruments to try
tribution phenomena.
to help members with handling risk, and
Most people who
right now premium increases have been
are familiar with the
a necessity to handle that risk. We need
well-known bell
curve will be able to
to be robust, for our members sake, to
visualise the fat tails
handle that impulsive and obnoxious fat
as a bell curve with
tail of probability!
the opening of the
Speaking of robustness, Team
bell stretched out
making the opening
Gothenburg has been further reinforced
fatter. The fat tails
with Martyn Hughes, FDD Manager,
phenomenon is most
Martin Birgersson, Senior Claims
often an unexpected
Executive, P&I, Fredrik Bergqvist,
Claims Executive, P&I and Daniel
Kilgren, Underwriter. Martyn is an English solicitor joining
us from London. Martin, Fredrik and Daniel are all Master
Mariners, albeit with different and diversified backgrounds.
Four people who bring a lot of new strength, energy and vigour
to our team.
A warm welcome to you all!


T H E S W E DI S H CLUB TR I TON 1- 2013

Club information | News from Piraeus

18 19






The magical date has passed

We have once again passed 20 February, the magical
date for P&I insurance. These renewals have been more difficult than renewals in recent years. The reason for this is that we
have a convergence of the worst shipping market since the late
70s and early 80s, affecting shipowners and a large number of
huge claims affecting insurers. P&I results for all of the clubs
in the International Group (IG) have been hit by major claims
over the past few years which have had an impact not only
on retentions but also on the IG Pool, which we share with
the other P&I clubs, as well as the Excess of Loss reinsurance
programme that we also share with the other IG clubs. The increases of premiums of the Excess of Loss programme seem to
have come as a bit of a shock to many owners.
We feel that we have talked about the impact of the major
claims with our members and what impact they would have on
reinsurance, but it seems as though there were many that had
not braced themselves for the impact. Historically, Excess of
Loss reinsurance increases or reductions are very small with a
very limited impact on overall premiums, so the big increase
for this year was a bit of a shock to many owners. Given the fact
that any increase in the cost of insurance is bad news for owners, the combination of General Increases, although modest,
combined with major Excess of Loss increases was really bad
The International Group clubs have had to pay for a number
of high profile and extremely costly claims incurred by its
members over the past few years. Due to the fact that shipping
has been suffering quite a lot since 2008/2009, most clubs have
tried to keep premiums to a minimum. Major claims coupled
with relatively low premiums and a lot of new tonnage flowing
in at low premiums, has led to quite a few IG clubs feeling
the impact and having to substantially raise their General
The Swedish Club has not been spared from these P&I
effects. We do however try to spare our members as much as we
can from increases as we need to look after their best interests
while looking after our own best interests.
This will be my last letter from Greece as I will be moving
back to Sweden soon. I have really enjoyed and cherished my
four years in Greece. It is a wonderful country with the best cli-


mate in the world, mountains and seasides that are extraordinarily beautiful, food that is to die for and wonderful hospitality. Unfortunately the economic woes have severely impacted
the country and its people during my years here and I hope my
departure coincides with a turnaround for the Greek people
and their businesses.
Hans Filipsson will take over from me and will be starting
in early April. Hans has been an acquaintance of mine for the
past 20 years, after he married one of my former colleagues
best friends, and in the past six month I have got to know him
better. I think he will take over where I left off and that there
will be a seamless transition between the two of us. You will
not notice much of a difference as Hans is perfectly capable for
the role of General Manager of The Swedish Club in Greece.
Best of luck Hans!
The members of the Club in Greece include some of our longest standing members and they, together with the rest of the
membership, have always showed great support to us and I will
miss you all. The staff in the office are incredible and their commitment to the Club, to me, and its members is second to none.
Leaving Greece feels a bit like leaving my family but I am sure
that I will continue to be involved in the Greek business going
forward and that I will still be around and even come to see
you all from time to him. So thanks a lot for all your support
and see you soon!

Tord Nilsson

General Manager/Area Manager

Team Piraeus


TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Club Information | News from Asia

Photo: iStockphoto


Time to focus on future progress

P&I renewal for 2013/14 is over. Thanks to our members
support we did well in Asia. We managed to achieve the renewal target on premium increase and we came out of the renewal
with a slight increase in both number of entered ships and gross
tonnage. In addition we received over half a million gross tons
of committed new tonnage over the year. We renewed all the
existing charterers P&I insurance contracts, and added three
new accounts. Given all the circumstances, in particular the
bad freight market, we should be happy with the outcome.
When renewal is over it is time to focus on future progress.
When members renew insurance contracts with the Club it is
up to us to keep our promise to our members and provide good
service in return. This of course is a continued effort.
Last year we lost two senior staff member from our Hong
Kong office. We filled in these vacancies by employing two
qualified solicitors from well-known shipping firms in Hong
Kong; and we also boosted our resources in marketing and
business development. We will be adding more staff at our office over the course of the year. We will soon have 15 people at
our Hong Kong office with a very wide spectrum of expertise,

lawyers, master mariners, and marine engineers. Adequate

resources provide an important foundation for efficient, effective and quality services. We are aiming to build up one of the
strongest teams among our peers in Hong Kong and provide
better service to our members.
I would like to take this opportunity of informing you that
we will be holding a Marine Insurance Seminar in the autumn
this year in close proximity to Hong Kong. We have done this
four times, once every three years. It proves to be a popular
event. Many of our members in Asia send representatives to attend and we look forward to seeing you this autumn.

Ruizong Wang

Managing Director/Area Manager

Team Asia


T H E S W E DI S H CLUB TR I TON 1- 2013

Club Information | News from Norway

Photo: Finn Stle Felberg Tjuvholmen KS

Establishing a stronger presence in Norway

Main renewals of our Energy business (MOU/FPSO)
started in early February. The market has been and still is, more
or less flat, with some pressure on rates for larger fleets with
good loss records. Deductible levels remain unchanged but
with some upward adjustments for accounts with claims. The
new Nordic Plan has been applied on all 2013 renewals led by
the Norwegian market.
Norwegian shipowners have endured the global financial
difficulties somewhat better than many of their international
peers. A diversified overall fleet structure combined with
strong balance sheets, and in some cases major restructuring
of operations and finances, have put many in a position to now
exploit market opportunities. According to Clarkson Research,
Norwegian shipowners placed orders for 134 newbuildings
representing some USD 17.4 billion, in 2012. This constitutes
half of all European orders and more than twenty per cent of
the world order book.
A rapidly expanding offshore oil and gas sector is a major
contributor to this and more than fifty per cent of the Norwegian order books are offshore service vessels (OSVs). The Norwegian controlled OSV fleet is the most modern in the world
and represents some 600 vessels. The Swedish Club has histori-


cally not targeted this market. By establishing of a stronger

presence in Norway and our entry into energy insurance two
years ago, we are now exploiting further possibilities as far as
diversification is concerned in the Norwegian market.
At the same time, our presence in the traditional Norwegian
deep sea segment has also been strengthened over the course of
the past few months and we aim to further increase our visibility and share of the market. By recruiting more local staff this
year, especially on the claims side, we will soon be a full service
Swedish Club office. We will be moving to new offices further
out on Tjuvholmen in May and if youre in the vicinity then,
or perhaps during Nor-Shipping, which is in the first week of
June, please come and see us.

Tore Forsmo
Area Manager
Team Norway

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Club Information | Out and About

Photo: Roman Koshkin

Seminar in Odessa, November 2012

Marlow NAVIGATION ran a Full Management Seminar for
two days in November 2012 at Odessa, Ukraine. The seminar was
well attended and the participants included senior officers from
both Marlow Navigation Cyprus and Germany together with office
A number of interesting and importanttopics were presented
for the participants and The Swedish Club Loss Prevention Officer

Joakim Enstrm and P&I Claims Executive Karoline Alfredsson,

were invited to hold a half-day seminar concerning loss prevention
as well as give the officers greater insight to the elements of P&I
insurance. Following the seminar, some of the officers went on to
do an MRM course. Judging from the participants comments, the
event was greatly appreciated and the Club is happy to have been a
part of such a great initiative by our member.

Christmas Dinner in Piraeus, 13 December 2012

The Clubs Lucia Dinner, held once again at the Yacht Club of
Greece, opened the festive season with traditional Swedish food
and lots of smiles.The Scandinavian Church Choir, together with
Swedish Club staff members, helped to create a warm, festive environment for all our guests, who really look forward to attending
our dinner each year.
More pictures can be found on and Out and About

From left: Mr Nick Ghiouzelakis (Arion Enterprises Inc.) his daughter Valina
Ghiouzelakis and Dionysios Valaveris (Grecomar Shipping Agency Ltd.)

Mr George Agathokleous in the middle, his son Andrianos Agathokleous to

the left (British Bulkers Inc) and Tord Nilsson (The Swedish Club).


T H E S W E DI S H CLUB TR I TON 1- 2013

Club information | Staff News

Staff News
Head office Gothenburg
Fredrik Bergqvist, Claims Executive P&I,
joined Team Gothenburg on 3 December
2012. He is a Master Mariner with seven years
seagoing experience and previously worked for
Damen Shiprepair Gtaverken in Gothenburg.

Daniel Kilgren, Underwriter, joined Team

Martin Birgersson, Senior Claims Executive

Tord Nilsson will return to the head office in

Gothenburg on 1 July 2013 and take up the
position of Senior Manager, Underwriting &
Special Risks.

Oscar Holmqvist, Assistant Claims Executive,

Jacob Vier, Director, Marketing & Business

Development, joined the Club on 22 February
2013. He has a solid background in sales and
marketing on the international scene. For the
past five years he has been employed by Kuka
Nordic AB as Sales and Marketing Director for
the Nordic and Baltic region. There will be a
more detailed presentation of him in our next
issue of Triton.

Gothenburg on 17 January 2013. He has a

degree from the Master Mariner Programme
at Chalmers University of Technology in
Gothenburg and seagoing experience as a deck
officer. He previously worked for Codan Marine
in Gothenburg.

P&I, joined Team Gothenburg on 14 January

2013. He is a Master Mariner with more than
ten years seagoing experience and holds a B.Sc
in Business Administration specialised in
Shipping & Logistics. He previously worked for
the Port of Gothenburg.
joined Team Gothenburg on 10 December 2012
on a one-year traineeship. He holds a B.Sc in
Shipping & Logistics from Chalmers University
of Technology in Gothenburg.

Martyn Hughes, FD&D Manager, joined

Team Gothenburg on 7 January 2013. He is
a qualified Solicitor and prior to joining The
Swedish Club, was employed at the London
Club. He has worked continuously in Maritime
Law since 1987.

Hans Filipsson has been appointed Area
Manager at Team Piraeus with effect from
1 April 2013.

Erik Johansson has been appointed Head of

Underwriting at Team Gothenburg with effect

from 1 April 2013.
hong Kong


Lansee Man, Claims Manager, FD&D and

P&I, joined Team Asia on 1 March 2013. She
is a Solicitor, qualified in England, Wales and
Hong Kong. She previously worked for Ince &
Co in Hong Kong.

TH E SWE D ISH CLU B T R I TO N 1 - 2 0 1 3

Club information | Out and About / In Memoriam / Club Quiz

and Godmother,
Cilla Rhodin.

Naming ceremony of the

Nordlotus, January 2013
At the naming ceremony at Sumitomo Heavy Industries shipyard in Tokyo Bay on 19 January this year, Cilla Rhodin, our Managing
Director Lars Rhodins wife, had the honour of being Godmother of the
Aframax tanker Nordlotus, entered with the Club. The ship is owned
by REEDEREI NORD Ltd, Limassol, Cyprus, which is a long standing
member of the Club.

Qu i z

is the term radar coined from?

1 Acronym for Radio Detection
and Ranging
X It is just a Reflective
2 Acronym for Random
Detecting and Arching


many Liberty ships were built

between 1941 and 1945?

1 2.710
X 999
2 1.776


Anders Holmberg
In Memoriam

It is with great sadness that we have to inform you of the passing of our dear friend
and colleague Anders Holmberg.
As a fully qualified Master Mariner, Anders served on tank ships and RoRos before starting with the Club in 1987. He focused primarily on P&I claims throughout his career at the Club. In particular, he developed great skills and talents in the
field of environmental claims where his interest in nature and wildlife played an
important role.
Anders was known for his direct approach to matters where yes was yes and
no was no. This strong feeling of justice was often combined with his own particular sense of humour.
Anders was highly valued in his endeavours, not only by us but also by the whole
P&I community. He will be sadly missed by all of us who had the good fortune of
working with him.

is the name of the first ship

entered for P&I risks with The
Swedish Club?
1 Stavros
X Hkan
2 Gteborg

Mail your answer to

The first right answer will be awarded a
Club give-away.

Winner of Club Quiz 3-2012

Winner of Club Quiz in
Triton No 3-2012 is Mr
Baris Savci of Kaptanoglu
Holding, Istanbul, who will
be awarded a Club giveaway.
The right answers to the
questions are:
2 Republic of Guinea
X 6
X 1982

T H E S W E DI S H CLUB TR I TON 1- 2013

Club calendAr
For further upcoming events, please refer to Calendar


22-26 April Marine Insurance Course Gothenburg

7 May Lunch Seminar
15 May Club Evening Hamburg
16 May Club Evening Bremen
17-19 June AGM events

17 June Board Meeting

18 June Annual General Meeting Gothenburg