issue 1/2 017 lookout

ISSUE 1 / 2017

Rising crew claims

Work-related illnesses

Philippine legal frustration

Cyber security at sea

Technology and safety

Cargo liquefaction

LNGVOY charterparty

LOOKOUTNavigating the complex world of P&I insurance for Japanese Members

EDITORIAL

2 Lookout Issue 1 – 2017

LOOKOUTLookout is a bi-annual newsletter fromthe UK P&I Club that collates the mostrelevant and topical content fromacross the Club’s global network andshares it with our Japanese Members.It covers subjects such as peopleclaims, loss prevention, defence andindustry specific items.

The information in this newsletter isnot legal advice and should not berelied upon as such.

WelcomeA few words from the UK P&I Club JapanBranch on the special occasion of this firstedition. We are excited to bring you a flavourof some of the main industry issues the Clubhas been tackling, and to introduce you tosome of the talented people within the Clubwho advise and help find innovative and

creative solutions to some of the most challenging problems thatour Japanese Members face on a daily basis.

The UK P&I Club Japan Branch first started its insurance businessas a branch of the UK Bermuda Club in April 1989 upon receiptof its licence from the then Ministry of Finance. In 2013, weobtained a new licence from the Financial Services Agency,following the Club’s restructure, and we became the Branch ofthe UK Europe Club. We started off with only four staff membersat Marunouchi. Thanks to our Members’ understanding andcooperation, we have grown to an organisation with eleven staffin total: ten in Hamamatsucho, Tokyo, and one in Imabari, wherea local office was first opened in April 2016.

In conjunction with our London Head Office, we provide claimsand underwriting services to our Members as well as advisoryservices on a wide range of technical issues, includingdevelopments in the marine industry and loss prevention. Forclaims, we work alongside ISS P&I Japan, the UK Club’s localcorrespondents who have over 50 years of history andexperience of serving Japanese shipowners and operators.Together, we form an effective local partnership which is able toprovide rapid response to marine casualties and claims handlingsupport to our Members.

The UK P&I Club’s vision is to be the leading shipownercontrolled provider of P&I insurance and other services to theinternational shipping community through its publications andwebsite and we strive in all that we do to realise the Club’s visionfor its Members. We are very proud to be able to offer ourMembers its own Japanese website,

This first publication of Lookout is available in hard copy and onthe Club’s website, both English and Japanese, which we arevery proud to be able to offer. We hope you find this publicationinformative and helpful. As we continue to seek to improve onthe range and quality of services to our Members, we invite yourcomments and feedback.

Finally, we thank our Members for their continued support of theUK Club in Japan. �

Masaki OiwaThe Representative in Japan

CONTENTS

Welcome 2-3

Rising crew claims 4-5

Work-related illnesses 6-7

Philippine legal frustration 8-9

Cyber security at sea 10-11

Technology and safety 12-13

Cargo liquefaction 14-15

LNGVOY charterparty 16-17

Expertise and experience 18-19

Shipowners andoperators alikehave beensuffering fromsome of theworst economicconditions theindustry hasever endured

following the financial crash in 2008.

Freight rates have hit record lows incertain sectors and financial returnsbarely cover operating costs.Theeconomic future still looks uncertainand shipowners face no less challengingtimes ahead. It is hoped that marketconfidence will soon return as theshipping industry adjusts throughrationalisation, operator consolidations,scrapping and lay-ups.

In these difficult times, our Memberslook for certainty and stability fromtheir partners, and in the UK Club theycan have every confidence that theClub offers support and will focus onensuring that their interests are wellrepresented and fully protectedworldwide.

Braced to meet unforeseen challengeswhenever and wherever they mightarise, the Club assists its Membersthrough its multitude of loss preventioninitiatives, and to navigate the risks thatgive rise to claims and disruptcommercial activities.

As part of the Club’s continuinginitiatives, this new publication aims toshare some of the Club’s claimsexperience and flag industry issues anddevelopments.

In this edition, we will examine thecontinual rise in crew illness claims andreview how the Club is helping itsMembers meet today’s challenges.Sophia Bullard, Crew Health

Issue 1 – 2017 Lookout 3

Programme Director and JohnTurner,Syndicate Manager and Senior ClaimsDirector for the People Claims teamdiscuss the importance of the wellbeingof crew at sea; whileTony Nicholson,Senior Claims Director and StephenMichaels, Senior Claims Executiveprovide an update on recent legaldevelopments in the Philippines.

In common with other industries, thecyber threat on shipping raises newchallenges for the maritime securityindustry. Shipowners face the continualrisk to their business and financialoperations such as accounting,payments and banking. DavidThompson, Investigator at UK Club’sSignum Services consultancy arm,discusses the risks around cyber securityand maritime payment diversion fraud.

David Nichol, one of the UK Club’sRisk Assessors targets some of thecontributory causes behind shipgroundings and collisions, and suggestssteps to ensure navigational safety.

The carriage of inherently dangerouscargoes remains a major safety concernand the issue of liquefaction of cargoesremains high on the UK Club’s Loss

EDITORIAL

Prevention agenda. George Devereese,Loss Prevention Advisor, discusses theissues of liquefying cargoes.

Recent developments in the LNGindustry have seen BIMCO and theInternational Group of LiquefiedNatural Gas Importers (GIIGNL)jointly issue the first definitive voyagecharter party designed for theexpanding LNG spot market. SumitMadhu, Deputy Syndicate Manager,who has been involved in theconsultation and drafting process of theLNGVOY, assesses the key issues thathad to be addressed, including the useof cargo as fuel; heel; boil off; and howto deal with delays.

We hope that you find something ofinterest in this first publication, andyour feedback would be welcomed, aswell as suggestions for future editions.

Finally, we are pleased to announcehere first that UK P&I Club will behosting a seminar and reception for itsMembers in Japan in 2017.More detailsto follow.�

Paul SessionsUK P&I Club Regional Director for Japan

よよううここそそ

We would like to extend a warm welcome to all of our readers to this first edition ofLookout, a bi-annual publication for the UK Club’s Japanese Members.


CREW MATTERS

Rising crew claimsSophia Bullard, Crew Health Programme Director at UK P&I Club, looks at thecauses of rising crew illness claims and what can be done to mitigate the risks.

The P&I industry is estimated to deal with claims for personal injury,illness and death totalling more than$400 million a year. Nearly 64% ofthese claims are represented by crewillness claims.

The problem has become particularlyacute for Japanese ship operators overthe past ten years. Between 2002-2011,US$706 million was paid or estimatedfor people claims at five years’development. Crew injury and illnessclaims accounted for US$527,622million (74.71%) of this. As apercentage of the Club’s total paid andestimated claims, crew illness and injuryclaims alone constituted 31.27%,slightly more than cargo, whichaccounted for 27%. Crew illness claimsare complex and a claim can incursubstantial aggregations of costs from:

• Sickness wages

• Medical treatment

• Repatriation

• Compensation for longer-termdisability

Why the increase in claims?

Serving on Japanese ships is certainlynot the cause of this. Indeed, thesignificant increase in crew illnessclaims contrasts with a stable trend forinjury claims among the same group ofshipowners.

However, Japanese shipping hasundergone fundamental changes in thatperiod, one of which has been theinternationalisation of their operationalcontrol and establishment of overseasmanagement in Asia and elsewhere.

Sourcing and selection of crew hasbeen delegated to regional offices incountries of labour supply such as thePhilippines. Japanese operators are nowdependent on local crewing agencies

and clinics to scrutinise the health andfitness of seafarers for sea duty.

How can the UK Club help?

Investigations by the Club have foundsignificant inconsistencies in standardsamong clinics. The medical standardsapplied are usually the regulatoryminimum in the local country.Theselocal examinations were insufficient toscreen out the pre-existing medicalconditions that would impact on ashipowner’s liability. The inevitableconsequence for shipowners is anexposure that can easily extend into hundreds of thousands of dollars in costsand significant interruption to operations.

The UK Club has built a network ofspecialist clinics in more than thirty international locations including the key seafarer recruitment centres such as thePhilippines, India, Indonesia, Singapore and Thailand.These clinics have adopted an improved standard of medicalexamination under the Club’s guidance.

Clinics are directly accountable to theClub and maintain regular contact withthe Club’s specialist Crew Health Teamin London.All medical reports aresubmitted to the Crew Health Teamelectronically, and enable the Club tomaintain a confidential database of eachcrew member’s medical history.

The Club pays the examination feedirect to the clinic. It also stringentlyaccredits and audits every clinic inconjunction with an independentauditor to ensure quality control.

The Crew Health Team handles theadministration of the examinationscheme and provides useful reports and insight into the quality of seafarerrecruitment. Members currently usingthe scheme range from tanker and dry bulk operators through to majorcruise lines. �

More information on the Crew Health programme in Japan is available in the Club’s specialist ‘Crew Health in Japan’ brochure.


CREW MATTERS

PEME EXAMINATION CONTENT COMPARISON

Philippines DOH UK P&I Club Notes / Illness screenedAO 2013-0006

Complete physical examination and Yes Yes Physical appearancemedical history

Visual acuity (far and near vision) Yes Yes Eyesight

Ishihara Yes Yes Colour blindness

Audiometry Yes Yes Physical Exam only

ECG* Yes Yes Heart function

Dental examination* Yes Yes Physical Exam only

Urinalysis (10 parameters)** Yes Yes Protein/sugars

Complete blood count and blood typing Yes Yes Blood count/type

Chest X-ray (digital)* Yes Yes Chest X-ray / TB

TPHA Yes Yes Sexual health

Fecalysis for food handlers Yes Yes Stool analysis parasites

Serum pregnancy test for female applicants Yes No

Hepatitis A/B/C No Yes Hepatitis A B or C

HIV No Yes# AIDS/HIV

Psychological examination No Yes

DAAT – 5 No Yes Drug and alcohol presence

PFT No Yes Lung function

Blood chemistry No Yes Major organ function

FBS No Yes Diabetes

Cholesterol/triglycerides No Yes High cholesterol

SGPT No Yes Liver/kidney function

SGOT No Yes Liver/kidney function

Bilirubin No Yes Kidney disease

Alkaline phosphatase No Yes Liver disease

BUN No Yes Liver/kidney function

Creatinine No Yes Kidney disease

* Additional item for testing or further referral, if clinically indicated** Urine test for albumin, glucose and blood only performed# Where permitted by law


CREW MATTERS

Reducing the risk of work-related illnesses John Turner, Syndicate Manager for the People Claims team at the UK P&I Club,looks at one element of crew illness claims – work-related illnesses.

The International Chamber ofShipping reports that there arecurrently around 1.2 million seafarersactively serving on ships in the worldmerchant fleet. Given the financialexposure that crew claims pose forMembers, work-related illness shouldbe an area in which Members are clearon their liabilities and aware of actionsto take to mitigate their exposure.

What is work-related illness?

There is no uniform definition forwork-related illness worldwide,meaning jurisdictional interpretationshave to be examined.The InternationalLabour Organisation (ILO) usesdefinitions for work-related illness setout in the 2002 Protocol to theOccupational Safety and HealthConvention 1981, and the ILOEmployment Injury BenefitsRecommendation, 1964 (neither ofwhich apply to the maritime sector).

These require a causal relationshipbetween exposure in a specific workingenvironment/activity and the illness inquestion.

The POEA-SEC

According to the Philippines OverseasEmployment Agency (POEA), 401,826Filipino sea-based workers weredeployed in 2014. All of these workerswere deployed under POEA standardemployment agreements (POEA-SEC).As one of the most widely-usedcontracts, examining its provisionsrelating to work-related illness is a veryuseful point of reference.

Unlike most other employmentcontracts or Collective BargainingAgreements (CBAs), the POEA SECprovides detailed guidance on whatconstitutes a work-related illness.Section 32A offers a comprehensive list,ranging from infections, such as

tuberculosis, to peptic ulcers andhypertension. At first glance, this list isvery wide ranging, however, in orderfor an illness to be deemed work-related under the POEA-SEC, certainconditions must be met. These are:

1. The seafarer’s work must involve therisks described in the POEA-SECfor that illness. Cardio-vascularevents, such as heart attacks (that arenot linked to pre-existing heartdiseases) are considered work-related,provided that the seafarer wasexposed to severe strain 24 hoursprior to the attack.

2. The illness was contracted as a resultof the seafarer’s exposure to thedescribed risks. For example, if aseafarer is known to be hypertensiveor diabetic, has failed to take hismedication or comply with doctorrecommended lifestyle changes, and suffers a heart attack as a result, this will not be deemed to be work-related.

3. The illness was contracted within aperiod of exposure and under suchother factors necessary to contract it.This would usually be determined by a medical expert referring to dataon the subject and the seafarer’sservice history.

4. There was no notorious negligenceon the part of the seafarer. Inaccordance with Section 20 (D) ofthe POEA SEC, illness or injuryresulting from the seafarer’s ownwilful act is not compensable. Forexample, if a seafarer is tasked withcleaning a hold and fails to wear theappropriate facemask, despite thisbeing available onboard withprocedure dictating that it must beworn. If the seafarer subsequentlydevelops a respiratory condition,

All seafarers must undergo a PEMEscreening in advance of joining a ship;however, the quality of these medicalexaminations varies greatly. Dependingon the flag state, minimal informationmay be required, and the likelihood ofdetection of problems is limited.Requiring more detailed PEMEs willlikely highlight risk factors and pre-existing conditions, such ashypertension and diabetes.

Whilst these pre-existing conditions donot necessarily exclude someone fromsea service, knowledge of them doesgive the Member the opportunity toremind the seafarer to comply with therecommended medication regime andlifestyle changes. It should, however, bemade clear that the onus to complywith medical recommendations is onthe seafarer, not on the Member.

UK P&I Club has run a successfulenhanced PEME programme since1996 and, to date, has screened morethan 340,000 seafarers.

To mitigate the impact of claims,Members should make use of theClub’s services as often as is required. Inparticular, they should:

• Get the Club involved early on. Donot wait until a claim has turned legalor the crew member is approachingthe end of his/her contractualentitlements

• Be aware that the People Claimsteam is on hand to provide advice atany stage of a claim. Even if a claimlooks likely to be below theapplicable deductible, the Club is ableto offer assistance

• Remember that the decisions takenat the outset of a case are likely toimpact on how the claim isultimately resolved. Early action canmake a huge difference

• Ensure you have investigated theclaim as fully as possible.This isespecially important in the event ofwork-related illness. Provide the Clubwith any past PEMEs and any historyof past medical repatriation.Theremay be contractual defences available,for example, on the grounds ofconcealment. �


CREW MATTERS

which could have been avoided if hehad complied with the safetyrequirements, meaning that hisnegligence has contributed to hisillness. The burden of proof for thiswould lie with the shipowner.

If any of these conditions are not met,then the Member should have anadequate defence against a work-relatedillness claim.Additionally, the POEAalso provides for defences if a crewmember knowingly conceals any pre-existing illnesses.

Although the Philippines as a jurisdiction can prove challenging, the POEA-SECis more detailed than many otheremployment contracts and CBAs.

Jurisdictional challenges

Particular challenges are faced when contracts make reference to work-related illness yet provide no definition. Wherecontracts are silent on definitions ofwork-related illness, it is often left to national law to clarify the situation.This can result in liberal interpretations ofwhat can be considered work-related.

In certain jurisdictions, such as Turkey

and Korea, the Club has seen the viewtaken that any illness that manifests itself onboard is considered work-related, thereby entitling the crew member to contractual benefits. By way of example, the Club has seen a case of Guillain-Barre Syndrome, a condition of theperipheral nervous system with anunknown cause, result in full disability benefits under the employment contract.

A similar problem is encountered underGreek law, where many illnesses,especially those that are stress-related,are considered to be “accidents” andtherefore compensable under Law551/1915.This is especially likely to bethe case where there has been a failureto provide prompt treatment, oftenthrough no fault of the Member, butdue to the remote location of the shipat the time of the incident.

How can Members mitigatetheir claims exposure?

There are practical steps a Member cantake in order to mitigate their exposurefor these types of claims.

The Pre-Employment MedicalExamination (PEME) is a key element.


PHILIPPINE FOCUS

Frustrations within thePhilippine legal system About a third of the world’s 1.2 million seafarers are Filipinos, so developments inPhilippine employment laws are of key importance to shipowners. UK Club SeniorClaims Director Tony Nicholson, who also chairs the Philippine working group of theInternational Group of P&I Clubs’ personal injury subcommittee, and Senior ClaimsExecutive Stephen Michaels provide an update.

Filipino seafarers make an immense contribution to the world’s ocean-going merchant shipping fleet and their homecountry, contributing around US$6 billion a year to the Philippine economy. Unfortunately, this is somewhat overshadowed by continuing frustrations within the Philippine legal system.

The frustrations are primarily due to arelatively small number of seafarerswho, aided by ‘ambulance-chasing’lawyers, succeed with spuriousarbitration claims against employersbefore the National Labor RelationsCommission and National Conciliationand Mediation Board.

Furthermore, due to a quirk in thePhilippine legal system, arbitrationawards must be paid by employers,regardless of whether they wish tocontest them. Over the past eight years,more than 250 arbitration decisionshave been successfully appealed byemployers. However, and perhaps notsurprisingly, very little of the £18million they have unjustly paid out hasyet to be recovered.

Fortunately, things are beginning tochange – starting with new legislationagainst “ambulance-chasing” lawyers.

Seafarers’ Protection Act

Generous no-fault contractualobligations have long been available toFilipino seafarers under the terms ofeither the Philippine OverseasEmployment Administration standardemployment agreement or a collective bargaining agreement. However, seafarersand their families are being exploited by a growing number of claimant lawyerscharging fees up to 60% of the awardvalue. Many of these lawyers rely on ‘runners’, some of whom are ex-seafarers themselves, to find potential clients –often by targeting relatives visiting aseafarer in hospital.


PHILIPPINE FOCUS

Under the 2010 amendments to theAct, overseas Filipino workers withcollective bargaining agreements arerequired to submit their claims tovoluntary arbitration – which meansbringing them before the NationalConciliation and Mediation Board.

A review of 178 cases before the boardup to 2012 found that only two of 64cases resolved by the board resulted infavourable decisions for employers(3.13%). Fortunately, the more impartialNational Labor Relations Commissionretains jurisdiction in cases where thecomplainant has chosen not toimplement the grievance procedureprovided for within the collectivebargaining agreement.

Conclusions

The new Seafarers’ Protection Act means Filipino seafarers and their families arenow protected from losing up to 60%of their contractual compensationentitlements to the unscrupulouspractices of ‘ambulance-chasing’lawyers.The new law should alsoreduce the number of spurious claimsbeing encouraged by such lawyers.

However, given the lack of impartialityof the arbitration bodies, particularlythe National Conciliation andMediation Board, and the risingnumber of maritime cases beingreferred to them, it seems likely that thequantifiable damage suffered byemployers will continue to rise. Thequantifiable damage noted is only the“tip of the iceberg” given thesignificant and unquantifiable damagesuffered through settlements concludedunder duress, which results in the casepending before the higher courts beingwithdrawn.

The significant frustrations felt byemployers, and the damage suffered as aconsequence, will only be overcome ifthe Escrow proposal is adopted andenacted into law.The Escrow solutionaligns with former President BenignoAquino’s policy to reform employmentarbitration and adjudication, tostrengthen integrity and fairness in thesystem, and to eliminate the perceptionof corruption. �

If seafarers are encouraged to pursue aclaim in arbitration, they potentiallyprejudiced their entitlement tocontractual benefits. For example, arecent Supreme Court decision in aclaim handled by the UK P&I Club,again made it clear that failure to followthe advice of an employer’s doctorregarding treatment results in non-entitlement to disability benefits.

While Philippine arbitration bodiesoften resolve cases in a manneremployers find frustrating, they neveraward more than the maximumcontractual benefit available.

Unfortunately, some claimant lawyershave persuaded seafarers or theirfamilies that more money was available– but this only led to claimantsreceiving less than their contractualentitlement after the lawyers took asignificant proportion of what wouldhave been paid in any event.

The new Seafarers’ Protection Act(Republic Act No. 10706) is designedto protect Filipino seafarers and their families from the unscrupulous practices of such lawyers. Sponsored by the maritime political party Angkla, it finally came into force on 21 May 2016.

Under the new law, any individual orgroup, whether lawyers or not, found tobe soliciting directly or via agents, willbe imprisoned for 1-2 years and/orfined PHP50,000-100,000(approximately US$1-2,000). Inaddition, legal fees are now capped at10% of the total amount awarded.

The Escrow alternative

In addition to the new ambulance-chasing legislation, steps are also beingtaken to put an end to problem ofenforced payment of arbitration awards– referred to as ‘garnishment’ – in theevent the employer wishes to appeal.The UK P&I Club has been leadingthe International Group of P&I Clubs’efforts over recent years to resolve this.

Current practice is that when anarbitration body makes its final andexecutory decision on a claim, it issuesa ‘writ of execution’. This can be

enforced against the assets and bankaccounts of the employer’s manningagent as well as a letter of undertakingfrom the employer’s P&I club, regardlessof whether an appeal is intended.

The International Group has recorded252 cases over the past eight years, inwhich arbitration awards totalling £18million have been overturned ormodified in favour of the employer by the Court of Appeals or Supreme Court. Less than US$40,000 has so far beenrecovered through the process of restitution. If the recent pattern of awards and appeals continues, the total to berecovered could reach over US$40million within the next five years.

In 2013, the International Groupformally proposed an alternativeEscrow system to replace thegarnishment process. When anemployer wishes to dispute anarbitration decision, the judgementamount would be deposited in anEscrow account pending the decisionof a higher court. This would also leavethe door open to an amicablesettlement being agreed at any timeduring the pendency of the case beforethe higher court. Legal title to themoney in the Escrow account wouldrest with the employer but the claimantwould hold beneficial title.

The proposal supports what is alreadystrongly encouraged within thePhilippine legal system, namelyconciliation and mediation and activehigher courts, and it has gainedsignificant support locally andinternationally. In February 2015,Angkla filed a bill to introduce theEscrow proposal via changes to theLabour Code of the Philippines.Adecision is still pending.

Impartiality of the NationalConciliation and MediationBoard

In the meantime, there are growingconcerns about the pro-labour bias of the National Conciliation and Mediation Board, which is now handling manymore maritime personal injury claimsfollowing changes to the MigrantWorkers and Overseas Filipinos Act.


CRIME PREVENTION

Cyber security at seaDavid Thompson, Investigator at UK P&I Club’s Signum Services consultancy arm,discusses the risks around cyber security and maritime payment diversion fraud.

There is concern in the maritime worldabout the possibility of criminals orterrorists using a virtual attack throughcyberspace to seize control of a ship,and either steal it, hold it for ransom oreven use it as a weapon of deadlyintent. Currently, the biggest task ishow to combat the huge increase ininternet enabled fraud.

‘Cybercrime’ is a catch all term thatencompasses a myriad of differentoffences such as identity theft, hacking,blackmail, copyright infringement and the trade in illicit goods.There are severaldistinct groups at play in the cybercrimearena. From the computer whiz kid who breaks into the secure NASA system from his bedroom to ‘Hacktivists’ groups such as ‘Anonymous’ who break intowebsites to achieve a political aim, and,of course, nation states engaging in highlevel industrial espionage. Organisedcrime has found its home on the ‘darknet’ where criminals can anonymouslytrade in illegal goods using the ‘Bitcoin’ crypto currency, and buy guns, drugs and counterfeit currency with relative ease.

Unfortunately, the maritime industry is aparticularly attractive target for fraudsters because of the global nature of thebusiness and the numbers of peopleinvolved. In any one single shipment ofcargo there are multiple players andoften many legal jurisdictions covered.Face to face dealings are not possibleand consequently, documents and emailcorrespondence must be relied upon.Web-based platforms facilitate easiertrading, and electronic bills of ladinginterface with compatible systems. Portshave become personnel-free zoneswhere computers dictate what is to beloaded or discharged, and in the future,we can expect to see autonomous shipsoperated remotely without a singlecrew member.

It is fair to say that cybercrime is thebiggest criminal threat in the worldtoday, and Lloyds of London recently

estimated that cyber-attacks costbusiness as much as US$400bn per year.Anecdotally, it is suggested that profitsfrom cybercrime in Europe nowexceed the earnings from the traffickingof every type of drug combined.

Payment diversion fraud

Signum Services see more reports ofpayment diversion fraud than any othertype.Typically, a ship manager or ownerwill arrange for their ship to call at aparticular port, and contract with aship’s agent for supplies. Everything willgo to plan and the agent willsubsequently email the paymentmandate or invoice to the managementcompany.The bank information will beincluded in the email – name, accountnumber, swift code, etc.

At this point, the criminal fraudsterintervenes.They will have done theirresearch and prepared the ground, bankaccounts will have been opened andwaiting, bogus email addresses will havebeen created. The false email will lookalmost identical to the genuine one,with often only the odd letter havingbeen changed.

The criminal will have already hackedthe network of the agent or themanagement company (at either end),and will be monitoring the email traffic.

A short time after the genuine email issent, the fraudster sends a second one,under the guise of being the agent andclaiming that there is a problem with their bank account.They will request that the funds be paid into their subsidiaryaccount and include the bank details.

The genuine email will have been copied and so the layout and terminology willlook identical. The unsuspectingoperative at the management companywill not notice anything untoward andpay the money as requested into thefraudster’s bank account, from where itwill be immediately transferred onthrough a network of further accounts.

A week or two later, the agent willquestion what happened to the moneyowed, and the fraud will becomeknown. In most cases, attempts torecover the funds fail because they havealready gone from the account and thebanks refuse to supply details of theaccount holders.


CRIME PREVENTION

Additional risks occur from personalcommunication devices having accessto the systems onboard, for example, byintroducing viruses via smartphones,etc.The safety, environmental andcommercial consequences of not beingprepared for a cyber-incident are significant.The culture of cyber security will be company (and ship) specific, butshould be guided by appropriatestandards and the requirements ofrelevant national regulations.

In many ways, the safeguards requiredfor effective maritime cyber riskmanagement are no different to thosethat should be followed in all instances. Up-to-date IT security is essential, but in reality, it’s people who are the problem.The HM Government InformationSecurity Breach survey indicated that in2015, 75% of large organisationssuffered staff related security breaches,and that 50% of the worst breacheswere human error. Therefore,encouraging a culture of awarenessthroughout all organisations is essential.

EducateTell staff about fraud and how it canoccur.

Be Aware Be vigilant and avoid complacency.Don’t be paranoid, but always besuspicious, and have the potential forfraud at the forefront of your mind.Make sure you check out newcustomers or suppliers. If someonecontradicts an instruction aboutpayment, then ask questions.

ProtectEnsure computer software and securityis up-to-date. Don’t give out personaldetails, and definitely don’t givepersonal financial information over thetelephone. Be candid on social media.Always ensure passwords are strong andchanged on a regular basis.

Organised crime has moved ‘on line’and criminals know that there are hugeprofits to be made with very littlechance of being caught.

In the cyber world, the mantra isdefinitely ‘Prevention Is Better Than Cure’. �

These are very difficult cases to dealwith. Often the criminal will have bank accounts in various countries around theglobe. These are cunning individuals who have in-depth knowledge about theirsubject, and who spend time engagedin research on methods and targets toprepare ahead of committing the fraud.

Fraudsters can open bank accounts inseveral ways, and there is a wealth ofinformation on the ‘dark web’ advisingcriminals on how to do this. Sometimescorrupt employees are recruited byorganised crime gangs to open accountsusing fake identification. Even honestbank staff may be unable to carry outchecks of identification from overseas,because they simply do not know whatto look for. For example, a UKemployee is likely to spot a forged UKpassport, but may struggle with aRomanian one.

This type of crime is easier to commitbecause there is no need for fraudstersto go through the process of openingan account. It is easy to obtain or makea utility bill, or to intercept one in thepost. Once the criminal has stolenenough information about a person’sidentity and financial affairs, he is ableto take over their account or toimpersonate them. The fraudster willgain access to his or her account aftergetting through security online, at abank branch or call centre, or byteaming up with someone inside theorganisation that holds the account.One recent case involved a Romanian

based shipping agency who were dupedinto paying several thousand pounds toa bank in Birmingham, UK. Signuminvestigators liaised with contacts in thebank’s fraud prevention department,and were able to discover somebackground information concerningthe account. CCTV showing one ofthe culprits making a number ofsubstantial withdrawals was obtained.Using ‘Open Source Intelligence’,Signum was able to construct a clearpicture of those involved, includingphotographs and employmentinformation.A package of evidence wascollated and submitted to the police.This resulted in several arrests and theunearthing of a UK-wide organisedcrime network dedicated to onlinefraud.A number of prosecutions arecurrently ongoing in relation to thisand associated crimes.

Protection in cyberspace?

Cyberspace is a rapidly changingenvironment and all organisations workdifferently, hence, guidance to reduce ormitigate risk must be broad. Companiesand individuals should take a holisticapproach to security that can respondto evolving risks.

Information technology and operational technology onboard ships are beingnetworked together – and morefrequently, connected to the worldwideweb.This brings the greater risk ofunauthorised access or malicious attacksto the ship’s systems and networks.


LOSS PREVENTION

Technology alone will notensure safety at seaShip groundings and collisions still occur with depressing regularity, and are often attributed to errors in navigation. UK P&I Club Risk Assessor, David Nichol, highlights some of the contributory factors and suggests steps to ensure navigational safety.

A modern ship’s navigational bridge, with its integrated consoles, displays, state of the art technology and comfortablearmchairs is very different from theequipment that was available in the1970s. Yet accidents continue to occurdespite the subsequent advances innavigational equipment design andtechnology, as well as the statutoryintroduction of uniform minimumstandards of ship management, andseafarer training and education.

It is notable that these accidents involveships operated by long-establishedquality shipping companies.Apart fromthe disastrous effects of any loss of lifeand pollution, these casualties can proveto be financially burdensome, both tothe shipowners directly concerned andthe wider shipping community by wayof increased insurance premiums. Highprofile casualties also have a damagingeffect upon the public perception of amarine industry, which has, over theyears, made real progress in improvingthe safety of marine transport andreducing its impact upon the marineenvironment.

Keeping a proper lookout

Failure to maintain a suitable lookout isoften cited in marine casualty reports.The basic principles of keeping a safenavigational watch, as enshrined in theInternational Convention for the Safetyof Life at Sea (SOLAS) and theInternational Convention on Standardsof Training, Certification andWatchkeeping for Seafarers (STCW)have not changed following the nowuniversal carriage of GPS and the welladvanced mandatory introduction ofElectronic Chart Display andInformation Systems (ECDIS) on seagoing ships. Fundamentally, a properlookout must still be kept by sight andhearing, as well as by all available meansappropriate to the prevailingcircumstances and conditions. Similarly,the essential role of radar as anindividual aid to navigation and acollision avoidance tool remains asimportant as ever.

Keeping a proper lookout and using allavailable aids to navigation will assistthe officer of the watch (OOW) in

acquiring an appreciation of the currentand expected navigational situation, theproximity of navigational hazards andrisk of collision, often referred to assituational awareness.Although thereare numerous available definitions,situational awareness basically meansknowing what is going on around theship, enhancing the ability of the OOWto quickly recognise any ambiguitiesthat develop in the navigationalsituation, and to take necessarycorrective action before a hazardoussituation develops.

The impact of technology

GPS is an invaluable aid to navigationthat has taken a lot of the guessworkout of establishing a ship’s position ondeep sea ocean passages and offshoreareas. However, the exclusive use ofGPS in coastal or confined waters maynot be appropriate, and is often acontributory factor in ship groundings.In these circumstances, full use of radar ranges and bearings, visualbearings and transits should also beused as a primary means of fixing theship’s position.

The advantage of cross checking theposition using these alternative methodsis that it will give the OOW a bettersituational awareness and sense oforientation of where the ship is locatedrelative to the topography of thecoastline and the proximity of hazards.GPS is not infallible.The OOW shouldbe aware of the equipment’s limitationsand potential for signal degradation,interference from external sources, aswell as the possibility of differencesexisting between the GPS data and thedata of the chart in use, causing plottedpositions to be discrepant. GPS should


LOSS PREVENTION

carefully controlled. Playing music onthe bridge or the use of iPods or similarpersonal devices has also been knownto distract the attention of watchkeepers and inhibit their ability to keepa fully effective lookout. Performanceof any other duties not essential tokeeping a safe navigational watchshould be kept to a minimum and anyother tasks should not compromise thecore duties of the OOW.

A fatigued or overworked watch keeperwill eventually make mistakes or fallasleep on duty, with potentially seriousconsequences.The bridge navigationalwatch alarm system (BNWAS) is notthere for continuously prodding an insufficiently rested watch keeper awake. Whilst the inherently unpredictablenature of ship and port operations candisrupt planned periods of duty,commercial considerations cannot beused as an excuse for breaches ofSTCW requirements governing periodsof work and rest. Where practicalcompliance with STCW is not possibledue to the demands of the tradingpattern of the ship, additional crewshould be engaged as appropriate.

There have been instances wheremasters, under real or perceivedpressure to arrive at a port in time tomake a tide or preserve the ship’sitinerary, have taken unacceptable risksby cutting corners or not proceeding ata safe speed in areas of high trafficdensity or restricted visibility. It istherefore imperative that it is madeclear to ship’s masters that the over-riding priority is the safe navigation ofthe ship, not commercial expediency.

Technological progress has producednumerous benefits to seamen andshould be embraced. However, there aremany aspects of navigating the seas andoceans that remain constant.The sea isjust as hostile an environment as it everwas and the challenge of safelynavigating a ship to its destinationcannot yet be overcome by theapplication of technology alone.Thatstill requires the presence of intelligent,well educated, motivated and properlytrained people with a solid groundingin the principles of good seamanshipand traditional seafaring skills. �

be regarded as an aid to navigation, nota single means of navigation.

ECDIS has now largely supersededtraditional paper navigational charts that have served navigators forcenturies. Essentially, it is able to displayon a monitor selected electronicnavigational charts, having similar visualcharacteristics to a paper chart but with additional functions, including theability to automatically display the ship’sGPS-derived position and to overlay orsuperimpose information from other inputs such as radar and AIS(Automatic Identification System). Inproperly trained hands, ECDIS shouldmake a valuable contribution to safernavigation and assist in reducing theworkload as compared to use of a paper chart.

Unfortunately, inadequate training, arushed transition period over to thenew system and variations in thequality of some of the equipment onthe market mean that ECDIS is notalways being used properly or to its fullpotential. An inability to properlyconfigure the ECDIS or any lack ofconfidence the OOW has in theequipment is potentially dangerous.

In particular, continuously overlayingthe display with radar imagery, AIS andother navigational input may clutter thedisplay and cause the OOW difficultyin processing or assimilating information.Too much information can be as dangerous as too little, and it isimportant for the operator to maintainthe distinct functions of the chart, radarand other aids to navigation.

Alternatively, the apparenttechnological competence of ECDIScan lull the unwary navigator into afalse sense of security and engenderoverconfidence in its abilities. Forexample, it is not unusual to find thatnavigating officers have neglected toplot the ship’s position on the ECDISusing alternative GPS independentmethods. Such uncritical acceptance ofthe displayed ECDIS own ship’sposition is not only dangerous, butconstitutes a potential breach ofSOLAS and STCW requirements.

Engagement and motivation of crew

When ships are engaged on regularliner services, a particular problememerges where familiarity and lowlevels of stimulation may induceboredom and foster a lack of attentionto detail in performing requirednavigational duties, which in othercircumstances would not be neglected.This can erode the ability of an OOWto recognise or react to a changingsituation. Complacency can also affectthe master, who may fail to appreciatethe need to adapt standing orders tosuit the prevailing conditions or whoseown judgement may be impaired byrepetitive performance of tasks.

Accidents have occurred in circumstances where the presence of the Master onthe bridge has resulted in confusion asto who has assumed responsibility forthe navigation of the ship.The guidingprinciple is that the OOW mustcontinue to execute his duties normallyuntil such time as the Master positivelydeclares that he has the conn (i.e.,control of the engines and rudder).

It is only at that time that the OOWmoves into a supportive role. Wherethere is an effective system of bridgeresource management in place, juniorofficers should have the confidence toexpress any doubts as to the decisionmaking or actions of more senior rankswithout the fear of being reprimanded.However, with multinational crews onboard ships being the norm, cultural aswell as linguistic barriers to questioningauthority may have to be overcome.

Mobile phones have had a mostlybeneficial influence on the ability ofseafarers to keep in closer contact withtheir families, not to mention theoperational advantage of managers, shipagents, etc. being able to communicatedirectly with the Master. However,inappropriate use of mobile phones candistract the attention of the master, pilotand watch keepers at critical momentsand may also have an adverse effectupon sensitive navigational equipment.

Use of mobile phones by persons onduty should therefore be prohibited or


BULK MATTERS

Tackling cargo liquefactionGeorge Devereese, Loss Prevention Advisor at UK P&I Club, looks at the dangersof cargo liquefaction and the steps Members can take to mitigate the risk.

Carrying solid bulk cargoes involvesserious risk, which must be managedcarefully to safeguard the crew and theship.These risks include reduced shipstability (even capsizing) due to cargoliquefaction; fire or explosion due tochemical hazard; and damage to shipstructures due to poor loadingprocedures.

The UK P&I Club in conjunction withINTERCARGO has produced a newpocket guide named “Carrying solidbulk cargoes safely” to address thedangers of carrying bulk cargo and themain legislation covering the safecarriage of bulk cargo, namely theInternational Maritime Solid BulkCargo (IMSBC) Code.

A, B or C?

The IMSBC Code classifies cargo intoGroup A, B and C cargoes.

Group A Cargo: cargo that mayliquefy if shipped at a moisture contentin excess of its transportable moisturelimit (TML), such as mineral ores andmineral concentrates

Group B Cargo: cargo that maypossess chemical hazards

Group C Cargo: cargo that is neitherliable to liquefy nor does it possesschemical hazards.

Group C cargoes have been known toexhibit Group A cargo characteristics –especially when wet. Nickel ore, iron

ore fines and bauxite for instance, haveall exhibited liquefaction propertiesdespite being originally unclassified orlisted as Group C cargoes. Under thenew revision of the IMSBC Code thesecargos will now be reclassified as GroupA cargoes.The new revision of thecode comes into force as of 1 Jan 2017.

What can be done toprevent liquefaction?

Sampling and testingThe TML test of any cargo to be loaded should be conducted within six monthsto the date of loading for homogenousmaterial where no change in physicalcharacteristics would be expected.Moisture Content (MC) testing and sampling should not be carried out more than seven days prior to the date of loading.These timings are the mandatory intervals between sampling and loadingand must be strictly adhered to. If it hasrained during these periods, further re-sampling/testing is required.

However, there are no mandatoryprocedures for carrying out TML tests.The IMSBC Code details a number of tests to obtain the flow meter point (FMP)of a cargo, dependant on its characteristics as described in Appendix 2, from whichthe TML is calculated as a percentage ofFMP. Furthermore, the most widelyused method for determining FMP, theflow table test, is not always suitable.

How are these issuesaddressed?

Section 4 of the Code states that:

• Signed certificates of TML and MC must be issued by an entity recognised by the Competent Authority (CA) whois to be independent from the shipper.

• The shipper should facilitate access tothe stockpiles for sampling andinspection of the cargo including access to the full depth of the stockpile.


BULK MATTERS

iv. Master to consider taking measuresto reduce ship’s vibration/motion;

v. Consider whether it is possible todischarge or dry out the cargo (this can,however, take months and lead to apossible hire dispute); and

vi. Consider the use of third party cargostabilisation specialists.

Where next?

Ship masters should ensure that they arefully satisfied with the condition of thecargo prior to accepting it for loading,and that all conditions as per theIMSBC Code are duly met at all times.Members should be aware that it is notthe role of the Club to formalise astandard for approved or rejectedcargoes. It is the Members’responsibility to comply with theirobligations under the IMSBC Codeand to also take any necessary measuresto ensure the safe carriage of the cargo.

As such, Members should remain extravigilant when loading any cargo that issusceptible to liquefaction, payingparticular attention to any possibleinaccurate cargo declarations andmoisture content certificates. Given thepotentially disastrous ramifications ofloading a liquefied cargo, if in doubt, donot load it. �

The UK P&I Club’s Loss Preventionsection of the website contains furtherinformation on cargo liquefaction and therevision of the IMSBC Code along withvideos on the can test method atwww.ukpandi.com/loss-prevention/article/can-test-can-save-lives-135594/. Thisshould be Member’s first port of call forfurther information, failing that, they maycontact the Loss Prevention Department [email protected].

Section 4 of the Code also provides anexample of the cargo declaration form which should be provided to the shipper so full details of the cargo are known.

Precautionary measurespre-loadingloading

Potential disasters could be prevented ifthe risks associated with transportingmineral ores and concentrates areproperly appreciated and mitigated.Thelack of understanding of the problemby the parties involved, and incorrect orinconsistent implementation of theIMSBC Code in load ports, hascontributed to significant loss of life inthe past.

Follow these steps when carryingGroup A cargoes to reduce the risk ofliquefaction:

• Ensure the shipper has supplied therequired cargo information, includingthe TML and the actual moisturecontent in advance of loading

• Carefully check shipper’s cargo declaration and stated moisture content

• Consider appointing a surveyor inadvance of loading, to check thestockpile, take samples and arrangetests prior to loading

• Obtain access to lab testing, if possible

• Only accept the cargo if the actualmoisture content is less than its TML

• Carry out visual monitoring duringloading. If there are any indications ofhigh moisture content (surface water, cargo splatter on bulkheads and so on), stop loading and seek further advice

• Consider trimming the cargo toreduce the likelihood of cargo shift asrequired by the IMSBC Code (thatis, when there is a risk of a wet basedeveloping

• Take measures to prevent water orother liquids entering the cargo spaceduring loading (and throughout thevoyage) e.g. hatch cover tightness

• Conduct can tests of samples atregular intervals at loading.

However, Members should be awarethat a negative can test result does notnecessarily mean the cargo is safe for

shipment as stipulated in s.8.4.2IMSBC Code Amendment 02-13which states: ‘If samples remain dryfollowing a can test, the moisturecontent of the material may still exceedthe Transportable Moisture Limit’

As such, it is recommended that if thecan test fails or there is a suspectedfailure, Members should:

i. Stop loading;

ii. Issue a Letter of Protest; and

iii. Seek further advice from P&I Club.May require surveyor/reputable cargo expert involvement and furtherlab testing.

Precautionary measuresduring the voyage

Even when Members are satisfied ofthe condition of the cargo having beenloaded, it is still recommended that thefollowing measures are taken in orderto minimise any potential liquefactionduring the voyage:

• Regular visual checks of the cargosurface to check for accumulation offree water in the cargo.This shouldonly be done if it is safe to enter thehold as mineral concentrates willdeplete oxygen levels

• Daily cargo hold bilge soundings

• Ventilation of cargo, as and whenappropriate (depending on whatcargo and what is advised in theIMSBC Schedule).

However, regular visual cargo surfaceinspections may not provide a truerepresentation of the cargo condition.In addition, if there is free water,though the cargo might be expected todrain, it can hold the moisture towardsthe bottom of the hold and develop awet base.

If when following the above steps the cargo appears to be liquefying during the voyage, Members are recommended to:

i. Contact the P&I Club;

ii. Contact nearest Coastal StateAuthority;

iii. Consider calling at the nearest portor place of refuge;

LNG spot market – LNGVOY charterpartySumit Madhu, Deputy Syndicate Manager, who has been involved in the consultation and drafting process of the LNGVOY issued jointly by BIMCO and GIIGNL, assessesthe key issues that had to be addressed.

Until now, single voyages for LNGcargoes have been fixed on trip timecharter terms, but the LNGVOY formwill allow owners and charterers to fixon voyage charter terms. In this article,we look at the key provisions of thenew voyage charter form, as well assome of the corresponding provisionsin ShellLNGtime1.

Voyage charter v. trip time charter: allocating riskfor delay

One of the most fundamental differences between voyage and trip time charterparties is how the risk of delay to the voyage is shared. Under a voyage charter, the charterer pays freight, and his costsare generally fixed – the owner takesthe risk of delays, except those that leadto demurrage being incurred at theports of loading or discharge. However,under a time charter, the charterer payshire until the ship is redelivered, takingthe risk of delays unless he is entitled tomake a deduction from hire (for off-hire or other reasons).

The relative certainty of voyage costs isan important reason for charterers toprefer a voyage charter. In principle, asfar as delays to the ship are concerned,the risk for the owner under LNGVOYis similar to any other voyage charter. However, for LNG there is an additional and important factor – the risk of delayto the cargo. Since LNG is constantlyboiling-off, a delay to the voyage meansa reduced volume of cargo for deliveryat the discharge port (unless the shipcan reliquary boil-off gas).

A voyage charter for LNG cargo musttherefore address how the risk of boil-off during delays is shared.The

starting point is that under LNG timecharter parties, owners have alreadyagreed to bear the risk of boil-off forsome types of delay (i.e when the shipis off-hire). It is therefore not a newstep for owners to accept the risk ofboil-off during delays, but rather aquestion of how far this should gounder a voyage charter, where greaterrisk for delay is assumed by the owner.

Under LNGVOY, the parties negotiatea ‘boil-off cap’ at the time of the fixture,which applies to the sea passage.Theowner agrees to pay for any excess boil-off over the agreed cap (subject tosome limited exceptions). For time inport, the risk of boil-off during delay isallocated based on the cause of thedelay, along the lines of the laytime anddemurrage exceptions.

Arrival condition

LNGVOY (clause 4) requires that onarrival at the load port, the ship’s cargotanks are either:

(i) cooled down and ready to load (withsufficient heel to maintain this condition for an agreed number of hours, but nomore than an agreed maximum heel);

(ii) warm under natural gas vapours; or

(iii) warm and inerted.

These options are similar toShellLNGtime1 (clause 5), but with theaddition of an upper limit for heel inoption (i).

In scenario (i), if the ship does not arrivein the required condition, or delays after arrival mean that there is not enoughheel to keep the tanks ready to load, thecost of LNG and time lost is allocatedaccording to who is responsible for this. If caused by owners’ breach, then owners pay for additional LNG and time lostloading it / cooling down is also forowners’ account; if charterers’ breachhas caused this, then the LNG and timelost for cooling are for their account. If neither party is at fault, there are different provisions depending on whether thetime and LNG for cooling down isneeded because of the ship’s failure toarrive in the required condition, orbecause of delays after arrival.

In scenarios (ii) and (iii), the cost ofLNG and time needed to cool downare for owners’ account.

In any case, however, it is the chartererswho must arrange to supply anyadditional LNG (even if they do notpay for it under the charter), since thiswill be within charterers’ rather thanowners’ control.


LNG FOCUS


LNG FOCUS

available free of charge to the owner both under ShellLNGtime1 and LNGVOY,to be used for propulsion, assuming theship’s main engine(s) can burn it. For avoyage under LNGVOY, where onlynatural boil-off is required, the ownerwill have no fuel costs for the mainengine(s) and there would be no fuel component in the freight being charged.

However, what happens if the agreed delivery window means that the ship will have to proceed more quickly than canbe achieved with natural boil-off? Fueloil will need to be burned or additionalboil-off will need to be forced. UnderShellLNGtime1, assuming the ship canburn both boil-off gas and fuel oil, thecharterer will control what quantities ofeach are to be used since he owns andhas paid for both the LNG and fuel oil.He may prefer one or the other forcommercial / pricing reasons.

Under LNGVOY, if additional fuel isneeded beyond natural boil-off, thedefault position is that fuel oil will beprovided by the owners. Owners maynot force boil-off without thecharterers’ consent. However, it is quitepossible that at the time of fixing –depending on the relative costs of fueloil v. forcing additional boil-off – acharterer may prefer to allow the shipto force boil-off, leading to a reducedfreight cost. This can be agreed withthe owner, in which case, the agreedboil-off cap would include theanticipated forced boil-off required toachieve the required speed.

In practice, owners and charterers willpresumably negotiate on the basis oflumpsum figures for freight and boil-offcap, based on the required speed toarrive within the delivery window. Butthey will no doubt also have in mindthe factors underlying this figures,including the expected voyage duration,whether the required speed means thatadditional fuel beyond natural boil-offwill be needed, etc.

LNGVOY therefore provides ownersand charterers not only with a newoption for single voyages, but withconsiderable commercial flexibility. It ishoped that it will prove attractive toowners and charterers alike. �

Heel

LNGVOY addresses three key issues inconnection with heel: who owns theheel, with how much heel should theship arrive, and how much heel canowners retain at the discharge port.

Under LNGVOY (clause 5), the heelbelongs to owners at all times.ShellLNGtime1 provides that charterersare to buy heel at delivery from owners(clause 5), heel is then treated as cargo(clause 50), and owners buy it back atredelivery (clause 5). However, inpractice, for trip time charters, this is often amended so that charterers do not actually become owners of heel, butthere is merely a balancing payment forthe difference between the quantitieson delivery and redelivery – which issimilar to the approach in LNGVOY.

The quantity on arrival at the load portis dealt with in clause 4 (discussedabove).As for the quantity of heel to beretained following discharge, in practicethis will almost always be different to thetime of loading – charterers may want todischarge as much LNG as possible, orowners may need a greater quantity ofheel to reach their next loadport.LNGVOY (clause 5) therefore providesfor the parties to agree at the time offixing how much heel can be retained.This may be zero (if charterers need toheel out), or up to a maximum quantity,which owners need to declare by anagreed date during the voyage.The aimis to give flexibility where possible,taking into account that the charter isfor a single voyage, and owners may notknow until well into their next voyagewhere the next load port will be and,therefore, how much heel is needed toarrive cold and ready to load. Abalancing payment is then made toaccount for the difference compared tothe heel at commencement of loading.

Boil-off

As mentioned above, LNGVOY providesfor a boil-off cap to apply during the sea passage (clause 22).The boil-off cap isnegotiated at the time of fixing, and owners pay at the charter party price for any LNG lost in excess of the boil-offcap, subject to some limited exceptions (clause 22(b)).For boil-off in port (clauses

22(e) and 16), the charterer bears the risk unless boil-off is caused by the owner’s breach of charter or by those exceptions to laytime and demurrage that relate tothe ship or crew (breakdown, lack ofcertificates, crew problems, etc).Thereis also a daily natural boil-off warranty,as in ShellLNGtime1.This is a daily rate and relates to the physical condition of the ship, rather than boil-off causedby delay, so it is unlikely to give rise todisputes in practice.

Arrival time

The ship’s arrival time at the discharge port is very important in the LNG trade, and ShellLNGtime1 contains elaborate provisions as to the consequences of delay.

The approach taken in LNGVOY(clause 17) is that the parties may (andin practice, presumably will) insert adelivery window, in which case:

(i) owners must proceed at suchspeed(s) as may be required to arrivewithin the window, up to the servicespeed stated in Annex A (Gas Form B);

(ii) if owners do not proceed at therequired speed(s), then so far as this wasbeyond their reasonable control, ownersare not liable for the reduction in speedas such; but

(iii) owners have a separate obligation,which applies whenever natural boil-offis insufficient to arrive within thedelivery window, to use fuel oil to increase speed up to whatever is required to arrive within the window. Clause 17also provides for the possibility thatcharterers may agree to force boil-off to achieve this. If a speed increase is needed during the voyage, then forcing boil-offis something that owners might requestif the cost of fuel oil is greater than thecharterparty price for LNG. Owners would pay for the forced boil-off since it would mean exceeding the boil-off cap.

(iv) if the ship arrives late at thedischarge port because of the owner’sbreach of charter, laytime does notcommence until the ship is in berth.

Fuel costs

Another key issue is who provides and pays for fuel. Natural boil-off gas is made

CONTACT JAPAN


Expertise and experienceP&I claims are often complex incidents involving a range of stakeholders from valued customers and trade partners to regulatory authorities. Quick and equitable resolution is key if those relationships are to be preserved. The Club’s global network of localoffices enables the delivery of Club service in a Member’s own language and timezone. Our team are here to help you navigate the complex world of P&I insurance.

UNDERWRITING

Matthew Bayman Underwriting Director +44 20 7204 2076 [email protected]

Claire Adams Senior Underwriting Technician +44 20 7204 2260 [email protected]

LOSS PREVENTION

Stuart Edmonston Loss Prevention Director +44 20 7204 2341 [email protected]

Petar Modev Senior Loss Prevention Executive +44 20 7204 2329 [email protected]

George Devereese Senior Loss Prevention Executive +44 20 7204 2342 [email protected]

SINGAPORE

Yiah Soon Ng Director +65 6309 9681 [email protected]

Kenneth Lie Director +65 6309 9682 [email protected]

Capt Anuj Velankar Senior Loss Prevention Advisor +65 6309 9687 [email protected]

Lee Wai Pong Regional Advisor +65 6309 9689 [email protected]

Luke Lane Senior Claims Executive +65 6309 9680 [email protected]

JAPAN – TOKYO

Masaki Oiwa Representative in Japan +81 3 5442 6114 [email protected]

Masato Nishizawa General Manager +81 3 5442 6106 [email protected]

Motohiro Sugiura Advisor +81 3 5442 6100 [email protected]

Fumiaki Izawa Senior Claims Executive +81 3 5442 6101 [email protected]

Masaaki Hishiki Claims Executive +81 3 5442 6106 [email protected]

Yoshinari Ishii Underwriting Advisor +81 3 5442 6105 [email protected]

Masako Kodaki Manager, Finance and Admin +81 3 5442 6102 [email protected]

Yuzuki Aihara Underwriting Assistant +81 3 5442 6113 [email protected]

JAPAN – IMABARI

Hironobu Bekku Manager +81 898 34 3586 [email protected]

LONDON – J1

Paul Sessions Japan Regional Director +44 20 7204 2211 [email protected]

Aki Tsukui Syndicate Manager +44 20 7204 2136 [email protected]

Lance Hebert Senior Claims Director +44 20 7204 2490 [email protected]

Philippa Langton Senior Claims Executive +44 20 7204 2524 [email protected]

Jacqueline Tan Senior Claims Executive +44 20 7204 2118 [email protected]

David Perks Senior Claims Executive +44 20 7204 2209 [email protected]

Yvonne Vail Senior Claims Executive +44 20 7204 2501 [email protected]

Caroline Coutts Claims Executive +44 20 7204 2240 [email protected]

Alexander Geoghegan Trainee Claims Executive +44 20 7204 2409 [email protected]

Debbie Wood Administrator +44 20 7204 2517 [email protected]

CREW HEALTH

Sophia Bullard Programme Director +44 20 7204 2417 [email protected]


CONTACT JAPAN

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