Cyber disruption in marine

Yesterday, one of our partners, Verónica Meana, took part in a practical conference organized by AON under the title “CYBER DISRUPTION IN MARINE” which was held in AON’s head office in Torre de Iberdrola in Bilbao. The conference was devoted to learning about and to sharing the risks and consequences that cyberattacks constitute in transportation and industry. 

Verónica had the opportunity to share the discussion panel with Max Bobys, Chris Bhatt and Nannette Wong, and in her presentation tackled administrative and civil responsibilities within transportation and logistics in the context of cyber threat, referring in particular to the maritime transportation sector and its agents. 

AIYON Abogados would like to thank AON for the opportunity we were given to participate in this event, which was greatly insightful in terms of better understanding of the new and future risks that the transportation sector is facing, the ways to deal with them and the insurance options available in the market of hull and machinery, civil liability and P&I insurance. 

The direct action of the carrier endorsed by The Supreme Court

In its Judgement nº 248/2019 dated 6th May ,  the Spanish Supreme Court has confirmed the right of the effective carrier to take direct action against the sender in case the freight for the transport has not been paid. The Supreme Court had previously ruled in favour of this direct action in its Judgement Nº 664/2017 of 24th November, after several conflicting second instance decisions (for example, of the Court of Appeals of Madrid, Zaragoza, Bilbao or Barcelona among others).

This way, the Supreme Court endorses for the second time one of the latest amendments related to the Spanish Land Transport Regime Act (LOTT) included in the Act 9/2013 of 4th July,   which in its Additional Provision Six establishes the following: “Direct legal action against the main sender in the event of intermediation. In the event of intermediation in a land transportation contract, the effective carrier can take a direct action for the unpaid part, against the principal sender and everyone who, when applicable, preceded them in the subcontracting chain, in case of non-payment of the freight for the transport by the contracting party, except in the case stipulated in article 227.8 of the restated text of the Public Sector Contracts Act, approved by Royal Legislative Decree  3/2011, of 14th November.” 

The Additional Provision Six does not limit this direct action to the sender who has not paid the contracted services. This direct action exists regardless of the relations established between the original parties to the contract and the effective carrier is entitled to claim the price of the transport not only against the main sender but also against the rest of the intervening parties (intermediaries) in the transport chain.      

The Supreme Court concludes in both judgments that: “The essential novelty that the amendment of the Act introduces is that the direct action can be exercised by the effective carrier regardless of whether the defendant (the sender or an intermediate subcontractor) has paid or not the price of the transport to his or her contracting party. In other words, The Additional Provision Six “LOTT” does not limit the exercise of the direct action to the case that the sender does not pay his contracting party. This direct action of the effective carrier exists even if the sender has paid its contractual carrier.” These clarifications are important and need to be taken into consideration since,  initially, the direct action in land transportation was assimilated to the direct action in a work contract set forth in article 1597 of the Civil Code (which was based in the concept of unjust enrichment) whereas the guarantee established in the Additional Provision Six of the “LOTT” has a broader scope and, undoubtedly, the right of effective carriers is protected in a more substantial way by interpreting that the purpose of the Act to protect the weakest part of the transport chain, i.e., the effective carrier.  

Therefore, although there can be no doubt that the position of the effective carrier remains protected by the Act and the Supreme Court interpretation of the same, the sender is placed in a complicated situation as, even if he complies with this obligation to pay the freight, he may still be involved in a third-party claim (actual carrier)  for the amounts already paid. If the sender were compelled to make double payment, he would have a recourse action against his contractual carrier and could demand the return of the amount payed to the effective carrier.  To protect the sender from such situation and to minimize this risk would to prohibit the contractual carrier to subcontract. In fact, the aforementioned 2017 Supreme Court Judgement advises the sender to have a control, insofar as it is possible, over this phenomenon, the risks of which were  already analyzed in our article dated July 10th, 2019, “A competitive but also a secure road transportation”.

Regarding the potential application of this provision to international land transport subject to the CMR Convention, there are contradictory positions. On one hand, some experts argue that the direct action should remain excluded from international transport under the above-mentioned convention because the convention does not include such possibility. On the other hand, other experts consider that the direct action should apply because the “LOTT” complies with the CMR Convention and because its text does not establish the geographical scope of application of the referred action. 

 

A competitive but also a secure road transportation

We received a new case in our law firm. Our good clients request that we protect their interests in a case of cargo that was stolen during a road transportation between Spain and Italy, a contract that was agreed under the terms of the CMR Convention (Convention relative au contrat de transport international de Marchandise par Route, Geneva 1956).

Once we were acquainted with the details, we learned that several individuals had impersonated the identity of a Spanish freight forwarding company, as well as that of its manager, with the aim to conclude several business agreements by sending emails directly to potential Spanish shippers and offering them budget-friendly transportation from Italy. To our surprise, this plan involved phone conversations in which the fraudsters used the identity of real people, the issuance of false documents using names of real existing companies, the goods collection by the fraudsters themselves in broad daylight at the concerted warehouses, and many other circumstances fitting into an elaborated thriller.

This is not an isolated case. In fact, theft of goods transported by road by means of diverse subterfuges is a serious and a live issue given its high economic impact in Spain and in the rest of the European Union. This reality was noted by various national and international organizations and associations, and has been echoed by the international association TAPA – Transported Asset Protection Association – which has denounced that the resulting number of thefts of goods in 2018 is the highest ever recorded since its foundation 20 years ago and it continues increasing in 2019. Moreover, they point out that the crimes they record in their system represent only a part of the market reality.

All this requires reflecting on the risky situations and the lack of guarantees arising during road transportation, and particularly in international transportation, due to the current dynamics pursued in contracting and subcontracting, among other circumstances. It is a common practice to subcontract the same road transportation in an unlimited way which brings forth a creation of “a chain of subcontractors” which in many cases affects the quality of the service and in the worst cases goods are damaged or stolen.

It is quite frequently a case that an export/import company decides to contract a road transport and for that contracts a reputable carrier. From this very first contact between the two entities to the ultimate and effective realization of the transportation by a professional carrier a chain of subcontractors of the same transportation might be created, a fact that might be unknown to the shipper. At least, of course, until damages occur, and liability is claimed. And it is that the contracting carrier or the first carrier, due to internal organization or due to the lack of its own fleet, can subcontract the transportation agreed with the loader to another carrier that, at the same time, can choose to subcontract it to a third party and so on until a supply chain is crated, a chain which ends in the moment that the very last and effective carrier concludes the agreed transportation. This effective carrier might be located in the country where the business was originally agreed as well as in any other country. When a transportation contract is developed between the shipper/contracting party and the first carrier, it is common to agree a set of conditions and requirements but, when the realization of the transportation moves away from the sphere of the two parties that initially agreed it and it is forwarded to the subcontracted third parties, the conditions that were agreed originally in many occasions are not respected and consequently quality and guarantees are lost (lack of regulatory certifications and permits, non-compliance with the established hours of rest, lack of a valid transport insurance, lack of an insurance for the cargo, insufficient insurance coverages, etc. ).

In order to control this situation, and in particular the problematics presented here, that is, the continued growth of thefts during transportation, it should be seriously considered to implement greater control of road transportation from the moment of its contracting to its conclusion. This control could comprise of limiting the number of accepted subcontracts or by directly prohibiting them to the first carrier, requiring compliance with the initially agreed guarantees from the subsequent subcontracted carriers, establishing verifications of safety in case of subcontracting unknown carriers or requesting the safety standards in the modes of transport, among other options. We should remember that once damage has occurred the circumstances of each transportation and its agents will be scrutinized by the affected parties and their insurers. The result of this analysis might place the carriers and their insurance companies in a delicate situation if, in case of an intent or a serious negligence, limitations of the carrier’s liability exposed in the CMR Convention or in the Spanish Law 15/2009 Contract of Transportation of Goods cannot be applied.

Nowadays, the struggle between cost and quality is part of the reality of national and international road transportation. From our law firm, we urge that shippers and carriers focus on searching for the right balance when establishing a competitive and, at the same time, secure business framework.

PIRACY, A REALITY IN THE TWENTY-FIRST CENTURY

Piracy in the maritime world is a reality with a history of hundreds of years, being sometimes prosecuted and other times protected by the institutions of the countries present in the different maritime areas around the world. We have been currently witnessing the fact that this phenomenon is still alive and that it is a way of extorting not only companies and individuals, but also governments of those countries that have to address these unlawful actions in the most thorough manner taking always into consideration the vessels’ safety, but above all the welfare of their crews.

Focusing on our own most recent experience, we know that there have been several pirate attacks in waters of the Indian Ocean against Basque fishing vessels, in particular the “Txori Argi” and the “Haizea Lau”, which only demonstrates that, while the pirate attacks at sea do not attract the spotlight of the news worldwide as they used to some years ago, piracy is by no means eradicated. In fact, and talking here on global scale, the incidents associated with this phenomenon far from being diminishing on the contrary have been increasing according to the report of International Maritime Bureau (ICC) which signals that there were 201 incidents of maritime piracy recorded during 2018 compared with the 180 incidents recorded the year before.

These incidents experienced last year, hijackings and kidnappings committed by pirates, whose target were not only cargo and container vessels, including the vessels of the UN organization involved in international aid programs for countries in specific critical situation, but also, to a larger extent, fishing vessels.

Piracy actions that have been recently concentrated on a mayor scale in waters of the Gulf of Guinea, an area that seems to have taken over what happened in the previous years on the Somalia coastline as the recorded incidents dabbled there in 2018 compared with the year before. In fact, waters of Somalia are enjoying a “relative peace”, at least in comparison with the situation in previous years, basically due to two circumstances. On the one hand, the massive deployment of the so-called “Operation Atalanta”, in which Spain is an active participant, and whose main objective is to protect the maritime traffic in the Indian Ocean against the acts of piracy  and, on the other hand, due to the own security measures taken by the vessels, such as the established operating procedures in case of a piracy attack and the presence of private security companies on board. Yet, the navigation close to the Somalian coastline still requires extreme caution on the part of the shipowners and their crews, as demonstrated by what happened with the fishing vessels “Txori Argi” and “Haizea Lau” this year, and which prevents us from excluding Somalia from the areas of risk.

If we look to the future, we can foresee that piracy, as we know it today, will gradually disappear as the navigation of autonomous vessels and vessels piloted by a remote control from a ground base (unmanned vessels) will become a reality on our seas and oceans, developing thus a new way of maritime navigation.

If we focus on this hypothetical scenario, it might be concluded that new cyber pirates could operate from any place around the globe without any need to be on-site and even without need to be a member of an organization, so that military deployments and private security companies on board, which are nowadays common means of deterrence and protection, could not be used as the main guarantors of a nonviolent navigation. The fight against piracy, which will, one way or another, continue being a present and future threat, will have to be adjusted to the scenarios that may evolve, as well as it should be the legal systems of the countries affected by this reality.

Accordingly, it should be noted that if the control system of an unmanned vessel were intercepted from distance by means of technology and for illicit purposes, it is certain that such situation would not fit in with the provisions of the United Nations Convention on the Law of the Sea (Montego Bay) related to piracy, since the convention specifies that such acts should be committed through the intervention of the crew or the passengers of a vessel and directed against another vessel. Furthermore, if we examine the crime of piracy after the amendment introduced by the Organic Law 15/2003 of 25th November, the current Criminal Code requires that a seizure of a vessel be preceded by an act o violence, intimidation or deceit and therefore the above mentioned situation (with no violence, intimidation or deceit due to the use of virtual means) would remain, at least at the beginning, out of the current criminal penalization.

To sum up, in accordance with the current regulation, it could be concluded that the possible future acts of piracy that were mentioned above would not be considered but cyberattacks with the application of the provisions for cybercrime and other common criminal definitions provided for in the Criminal Code in accordance with the particular circumstances of each case (misappropriation, damages, etc.). This is, however, insufficient since the future acts of piracy might involve, beside a cyberattack for specific purposes, an offence against the safety at the sea and navigation, a legal interest that the crime of piracy aims to protect.

Thus, we find it necessary to review the concept of piracy, so that it encompasses other scenarios that are currently not covered, such as cyberattacks against unmanned vessels, and that these cases remain not restricted to the category of computer specific crime and other offences. We, from our law firm as a team of professionals of the sector and due to our experience, consider that it is convenient, from now on, to be aware of the new forms of piracy, which might already be a reality, and hence to adjust the regulation and the strategies to be followed without delay in order to stay ahead and protect adequately vessels and their crews.

Judgement of the Spanish Supreme Court in the “SPANAIR crash case”

The recent Judgement of the Supreme Court (The Civil Chamber) nº 1513/2019, of 17th of May 2019, brings to a close the issue on the assessment of personal injuries in aviation accidents as it states that, in the absence of assessment standards for personal injuries caused in aircraft accidents a compensation based on the existing legal scale for personal injuries caused in motor vehicle accidents is considered more appropriate.

The Judgement of the Supreme Court confirms the criterion of the Province (High) Court of Barcelona regarding the absence of two payable compensations accumulated for the same injury, an objective one and a subjective one. Nonetheless, the Supreme Court, disagreeing with the Province Court, considers that the Regulation nº 785/2004 does not pursue the quantification of damage to the victim nor it establishes the criteria of quantification. Its sole objective is to establish a minimum insurance coverage for a risky operation such as that of an air carrier. This damage should be evaluated in each Member State in accordance with their own criteria for assessment of damage since there are no Community rules that would provide a frame of assessment. This is consistent with the doctrine of case of law of the First Chamber of the Supreme Court that determines that recoverable damage is a damage that was suffered. Yet the judgement points out that the indicative use of the scale for car accidents for the quantification of the compensation of personal injuries does not prevent the application of corrective mechanisms depending on the circumstances involved in the sector of the activity to which this application is related. In case of death of a passenger in an aviation accident, its catastrophic nature and all other surrounding circumstances are such that it is reasonable that the compensation resulting from the application of the scale be increased by an additional percentage, which was set at 50% in this particular case.

Finally, the Supreme Court considered that the payment of interests of the article 20 of the Insurance Contract Act should be applicable to the insurance company of the airline since they were not contemplated as punitive damages but as delay interests, consequence of an action brought by the injured party directly against the insurer of the carrier.

This Judgement, in principle applicable to air transport, establishes criteria that are applicable by analogy to personal injuries in maritime transport.

THE NEW CODE OF ETHICS

On March 6th 2019, the General Council of the Spanish Bar approved the new Code of Ethics which came into force on May 9th 2019. This Code encompasses a set of principles of conduct that should govern the professional activities of lawyers and derogates the Code which was in force since 2002. These norms amend shortcomings that were detected since 2002 in order to make them applicable to every Autonomous region and in the areas of the Bar Associations. Moreover, these norms constitute the basis and their development and adaptation should be provided by the Autonomous Councils and the Bar Associations.

The new Code of Ethics considers essential values such as: independence, freedom, dignity, integrity, services, professional secrecy, transparency and collegiality.

The independence of a lawyer, with regard to any influence and against personal interests and external pressures, is an essential requirement of the system of the Rule of Law and of the effective defence of the citizens and is therefore established as a right and a duty.

The freedom of defence and to advise clients on freedom basis is protected and the right to freedom of expression is guaranteed without legitimizing insulting and discreditation.

Lawyers’ conduct should feature honesty, probity, rectitude, loyalty, diligence and veracity. This obliges the lawyer to waive any intervention that might result contrary to the mentioned principles or that might involve any conflict of interest with the clients of other lawyers of the firm.

The right and duty of the professional secrecy is established as a crucial rule and includes all secrets and proposals of the client, those of the opponent and colleagues, as well as all the facts and documents they may have knowledge about or may have received due to the professional intervention. The duties of professional secrecy will remain even after the provision of services has ceased.

The new Code of Ethics allows for publicity of the provided professional services as long as it is in accordance with the values that are essential for the profession.

The professional fees will be agreed on free basis between the client and the lawyer who shall inform the client on the approximate amount or on the bases used to determine it. The new Code of Ethics regulates the content of the order forms (“hoja de encargo”). The lawyer has the obligation to verify the identity of the person who is depositing the funds in order to prevent from money laundering. The lawyer will issue a receipt of the funds which shall be refunded and certified by the relevant accountability. Compensation and reverse charge mechanisms are expressly forbidden.

For the first time in the history, the use of information and communication technology is regulated in the new Code of Ethics and enforces to a responsible and diligent use in order to preserve confidence and professional secrecy.

In conclusion, the new Code of Ethics represents an effort to update and adapt the rules that should govern the professional activity of lawyers.

Royal Decree 257/2019, of April 12th – Rules Governing the Granting of Special Aids for the Adaptation of Port Stevedoring Services

In our article dated May 29th 2017 and entitled “Stevedore Service Regulation Eventually Settled in Spain”, we already mentioned the regulation enacted in the Royal Decree-Act 8/2017, of May 12th , which modifies the regulation of workers that provide port cargo handling services, which has been recently supplemented by the Royal Decree – Act 9/2019, of March 29th, which modifies the Act 14/1994, of June 1st, by means of which temporary employment agencies are governed, so that these can adapt to the requirements of the port stevedoring services.

Now, by means of the Royal Decree 257/2019 of April 12th, after intense negotiations between the Government and the affected parties, and in the pursuit of a mediation focused on stabilizing the employment in the sector and on increasing productivity in general, it has been decided to develop an aid plan for those older workers who request voluntary termination of their employment contract with the pertinent Stevedoring Collectives (the so-called “SAGEPs”) or with the company licensed for port cargo handling services or with the Port Employment Centre where they have been employed, provided, of course, that they comply with the requirements established in the this Royal Decree. The nature and the application and payment terms of these aids are specified in the articles 2 to 13 of this RD.

Moreover, the present regulation establishes a transitional period of adaptation for the workers of the “SAGEPs”, derogates the Order FOM 2297/2013 of October 23rd which determines the required vocational training qualification, as well as any provisions of equal or lower rank that oppose the provisions of this RD, and modifies and updates certain certificates of professional competence related to cargo operations and stevedoring.

This Royal Decree will enter into force the day after its publication in the Official State Gazette (BOE), except for the regulation on processing and granting of aids, which will enter into force two months after the date of its publication.

Development of ship agency duties by the Royal Decree number 131/2019, of March 8th

On March 23rd, 2019, the Spanish official gazette published the Royal Decree 131/2019, of March 8th, whereby ship agents’ duties were developed.

This new regulation complements the provisions of the State Ports and the Merchant Navy Act – Royal Decree 2/2011 of September 5, and the Spanish Shipping Act 14/2047 of July 24, regarding the figure of the ship agent.

The Royal Decree 131/2019 has a total of ten articles that develop the conditions for the establishment and exercise of the activity of ship agents in Spanish ports, both state and autonomous. These ten articles are arranged in two Chapters, one establishing a series of “General Provisions” and another, entitled “Relations of the ship agents with the Marine Administration and the Port Authorities” establishing the functions of this highly relevant figure in the world of maritime transport.

This last Chapter regulates, among other issues: (i) that communications between the ship agent and the maritime authorities will be carried out through electronic means and the national single window; (ii) the obligation to provide continuous attention to the ship and to pay the outstanding debts owed to the Harbor Master or Port Authority until the termination of the agency, termination that must be notified through electronic means; (iii) the creation of a public Registry of ship agents that will facilitate an adequate control of the persons or companies that perform as ship agents.

We would also want to highlight the definition of ship agent contained in the Royal Decree and that describes the agent as “the natural or legal person who deals, on behalf of the owner or shipowner, in whose name and representation he or she acts, with the material and legal steps necessary for the dispatch of and other needs of the ship in port“. This definition is similar although slightly broader than the one contained in art. 319 of the Spanish Shipping Act of Maritime Navigation.

The R.D. 131/2019 of March 8 will come into force on July 1st, 2019.

The legal regime of civil liability in the Prestige case

The Faculty of Law of the University of Deusto, within the framework of the Master in Maritime Law, organised yesterday a workshop to analyse the “Prestige case”. It was a special event because took part on it part of the direct protagonists of the procedure. 
 
The workshop was attended by the environmental prosecutor of Galicia, Mr. Álvaro García Ortiz, with a conference titled “Prestige case, spills of hydrocarbons in the criminal jurisdiction”; the Captain and surveyor Mr. Fernando Cayuela who was nominated at the time by the Basque Government to intervene in the technical-judicial actions; the lawyer Luis Figaredo, who could not be present for reasons beyond his control but sent his presentation in writing under the heading “Legal strategy in the PRESTIGE case in the courts of the United States”; and our partner and colleague of Bilbao Mikel Garteiz-goxeaskoa, who developed an interesting talk about the “Legal regime of civil liability in the Prestige case”.
 
From AIYON Abogados we want to thank those responsible for the Master and the University of Deusto for their invitation to take part in this interesting dissertation.

National Civil Aviation Security Programme, February 1st 2019

The objective of the National Civil Aviation Security Programme (NCASP) is to establish general guidelines to comply with the basic standards of the civil aviation safety, in particular with regard to the organization, practices and procedures necessary for the protection and safeguarding of the passengers, crew, general public, ground personnel, aircrafts, airports and their facilities, preserving the regularity and efficiency of the national and international air traffic.

By means of the Resolution of 1st of February 2019, published on 27th of February 2019, the update of the public part of the National Aviation Security Programme has been adopted. This resolution approves the amendments and updates of the public part of the National Aviation Security Programme, which complies with the standards and recommended practices of the ICAO Annex 17 to the Convention on the International Civil Aviation and the Regulation (EC) No 300/2008 of the European Parliament and of the Council and the implemented Regulations.

The authority responsible for the civil aviation security will ensure the compliance with the measures contained in it at:

  1. All national airports, heliports and air navigation facilities, both those included and not included in the airport premises.
  2. All operators, including air carriers, providing services at the airports mentioned in point a).
  3. All entities applying aviation security standards that operate from premises situated inside or outside airport premises and provide goods and/or services to or through airports referred to in point a).

When the application of certain measures is not possible at some airports or heliports, alternative measures will be applied in order to ensure an adequate level of safety in accordance with additional provisions. In any case, these airports and/or heliports will submit a Security Programme for its approval by the appropriate authority.