Scope of the International Jurisdiction Clause in the Bill of Lading

THE COURT OF JUSTICE OF THE EUROPEAN UNION RULES THAT SPANISH LAW CANNOT IMPOSE GREATER REQUIREMENTS FOR THE VALIDITY OF INTERNATIONAL JURISDICTION CLAUSES INSERTED IN BILLS OF LADING IN FAVOUR OF EUROPEAN COURTS.

EXTRACT: The recent Judgment of the Court of Justice of the European Union (CJEU) rules that the Spanish Law requirement of a separate and individual negotiation of jurisdiction clauses in favour of European courts contained in a Bill of Lading contradicts European Regulations and adds that Spanish courts should not apply the Maritime Navigation Act in those cases as it would be in breach of the European Union Regulation 1215/2012, better known as the Brussels Ia Regulation.

CONTENTS:

The validity and application of jurisdiction clauses inserted in bills of lading has always been a subject of controversy in Spanish litigation relating to matters of carriage of goods by sea.

With regard to jurisdiction clauses that confer jurisdiction to courts of European Union member states, to which the European Union Regulation 1215/2012, better known as the Brussels I bis Regulation, applies, jurisdiction clauses were generally accepted by Spanish courts until the Maritime Navigation Act 14/2014 came into force.

Article 468 of the Maritime Navigation Act requires that, without prejudice to the provisions of the international conventions in force in Spain and the rules of the European Union, jurisdiction clauses must always be negotiated individually and separately for them to be considered valid. In addition, Article 251 of the Maritime Navigation Act provides that the acquiring part of a bill of lading acquires the document with all its rights and actions except for the international jurisdiction and arbitration clauses.

Having said that, the Brussels Ia Regulation regulates jurisdiction within the European framework without establishing the requirement of separate and individual negotiation, although it does establish that the effectiveness of the jurisdiction clause depends on the national law of the member state. Furthermore, it adds that jurisdiction clauses must be considered as an independent agreement to other clauses of the contract.

After a certain evolution of case law in Spain, in cases where the dispute was between the original parties to the Bill of Lading contract (generally the shipper and the carrier), the courts granted validity to those clauses in favour of courts in EU member states. The reason? Because the Brussels Ia Regulation prevailed over article 468 of the Maritime Navigation Act and therefore different requirements to those required by the supranational regulation were not required.

However, there have been several Spanish courts that have not given validity to jurisdiction clauses in favour of courts of the European Union member states when the dispute arose between the legal holder of the Bill of Lading, a non-originating party to the contract, and the carrier. The reason? This condition of independent and individual negotiation of jurisdiction clauses is not met when a third party acquires the Bill of Lading, not having been a contractual party to the original contract of carriage, and when acquiring the Bill of Lading does so without international jurisdiction or arbitration clauses as it is provided for by Art.251 Maritime Navigation Act.

These regulations and their provisions taken together have created several doubts for the Spanish courts which have been reflected in repeated lawsuits before the Courts. Consequently, on 16 November 2022, the Appeal Court of Pontevedra referred a question to the Court of Justice of the European Union (hereinafter referred to as CJEU) for a preliminary ruling in order to clarify the following aspects:

1) Whether the enforceability of the jurisdiction clauses to a third party, not party to the original contract, must be analysed in accordance with the law of the Member State to which the parties have conferred jurisdiction.

2) Whether inserting additional validity requirements for the effectiveness of jurisdiction clauses inserted in bills of lading is contrary to the Brussels Ia Regulation.

On 24 April 2024, the CJEU delivered its judgment on the questions referred to it.

As regards to the first question, the CJEU recalls that the Brussels Ia Regulation does not expressly stipulate whether a jurisdiction clause may be transferred to a third party who succeeds, in whole or in part, to one of the contracting parties. In fact, the enforceability of the jurisdiction clauses against the third party does not relate to the substantive validity of the clause, but to its effects. The CJEU concludes that “the enforceability of a jurisdiction clause against the third-party holder of the bill of lading containing that clause is not governed by the law of the Member State of the court or courts designated by that clause. That clause is enforceable against that third party if, on acquiring that bill of lading, it is subrogated to all of the rights and obligations of one of the original parties to the contract, which must be assessed in accordance with national substantive law as established by applying the rules of private international law of the Member State of the court seized of the dispute.”

In other words, as the Court ruled in Coreck Maritime GmbH v Handelsveem BV and others (C-387/98), in order to determine whether the third-party holder of the bill of lading succeeds to the contract, the law of the State which is applicable according to the laws of conflict shall be applied. In Spain, the rules of private international law are set forth in EU Regulation 593/2008, known as Rome I. This determines that the applicable law according to which subrogation (and the rest of the merits of the case) will be assessed will be the law agreed by the parties, or in the absence thereof, by the law of the country where the carrier has its habitual residence, provided that the place of receipt or the place of delivery, or the habitual residence of the sender, is also located in that country. If these requirements are not met, the law of the country where the place of delivery agreed by the parties is situated applies. Therefore, in most cases, where the Bill of Lading contains an applicable law clause, it will be necessary to look to that law to ascertain whether the acquirer of the Bill of Lading acquires it with or without the jurisdiction clause. This applicable law is rarely Spanish law, although the circumstances of each case will have to be considered.

However, even if Spanish law were the applicable law, in the answer to the second question raised regarding the consistency between European law and the national law requiring that jurisdiction clauses must be individually and separately negotiated as a prerequisite for them to be considered valid, the CJEU agreed with the Advocate General’s conclusions. This is, that the Spanish law “has the effect of circumventing Article 25(1) of the Brussels Ia Regulation, as interpreted by the case-law of the Court of Justice”.

Taking this statement into account, the Court inevitably holds that Article 25(1) of the Brussels Ia Regulation is not compatible with the national legislation which declares jurisdiction clauses null and void t when they have not been individually and separately negotiated by the third party legal holder of the Bill of Lading. Therefore, following the principle of primacy and in order to guarantee the effectiveness of the European Union rules, even in the event that Spanish law is the substantive law applicable to the substance of the dispute, when the Brussels Ia Regulation is applicable, the Spanish Courts must refrain from applying the provisions of the Maritime Navigation Act that require individual and separate negotiation of the rules of jurisdiction in order to consider them validly enforceable against third parties legal holder of the Bill of Lading.

In conclusion, when it is agreed that the competent Court to hear the dispute will be a Court of the European Union, this jurisdiction clause will be directly applicable before third party holders of the bill of lading, regardless of whether or not there has been an individual and separate negotiation of these jurisdiction clauses.

It should also be noted that, although the cases which gave rise to the questions referred for a preliminary ruling contained clauses in favour of the London courts, these cases were subject to European law. The fact is that the cases under consideration in the question referred for a preliminary ruling correspond to those in which the plaintiffs brought their actions during the transitional period of Brexit, and prior to the definitive separation of the United Kingdom, before 31 December 2020. Currently, a jurisdiction clause in favour of the courts of the United Kingdom is no longer a clause in favour of the courts of a member state of the European Union, and therefore the Brussels I Regulation does not apply. Consequently, in those cases where Spanish law is applicable to hear the merits of the case, all the provisions of the Maritime Navigation Act would apply and jurisdiction clauses that have not been individually and separately negotiated may be considered null and void.

In short, in order to determine whether jurisdiction clauses in favour of the courts of a member state of the European Union are applicable in Spain, the laws of the state that will rule on the merits of the case must be applied. Therefore, if Spanish law were to be applied to the resolution of the merits of the case, this same rule would also apply to determine the enforceability of the jurisdiction clauses of a bill of lading against third parties. However, this statement must be understood with all due caution since, even if Spanish law were applicable, by prevalence of the Brussels Ia Regulation the requirement that the jurisdiction clauses have to be individually and separately negotiated in order to be enforceable against a third party would not apply and therefore the jurisdiction clauses agreed in the bill of lading would be valid, even if there had been no such negotiation, as long as they comply with the requirements of formal and material validity demanded by the Brussels I bis Regulation.

Damages in Maritime Project Contracts: The “Knock for Knock” RULE; when negligence does not matter

In both project cargo shipping and offshore installation projects (offshore wind, oil & gas) it is crucial to understand the rules governing liability in the event of damage, the fundamental principle being the “Knock for Knock” (“KFK”) rule.

While in some contracts (HEAVYLIFT) the negligent party is liable for damages, in other contracts – HEAVYCON, PROJECTCON, SUPPLYTIME – the rule is that each party to the contract is liable for its own damage to its property and/or its personnel, even if caused by the negligence of the other party. Negligence does not matter; this is what the KFK rule summarises.

Example: Under HEAVYCON, the project cargo suffers serious damage due to the negligence of the shipowner, and an operator of the charterer is injured. Under the KFK rule, the charterer cannot claim damages from the shipowner. Moreover, if the charterer’s operator sues the shipowner, the charterer must indemnify him, even if the shipowner was negligent. This rule is reciprocal, if the damage was to the ship due to the charterer’s negligence, the shipowner should bear the cost of the damage.

The “KFK” rule was developed in London during World War II when, in response to the threat of German U-boats, British ships sailing in the dark with all lights off increased the incidence of collisions between ships. To avoid costly and protracted litigation for damages, operators accepted the KFK principle. This rule has been taken up by the offshore and project cargo shipping industry.

To cover these damages, each party must take out own damage and/or liability insurance. High excesses expose the operator to a high risk, therefore we recommend negotiating to exclude the KFK rule for the first tranche of damages, the equivalent of the excess.

In conclusion, operators in the maritime project sector should be aware of this KFK rule by taking advice to cover their risks.

The LEGAL 500″ and “CHAMBERS & PARTNERS” guides endorse AIYON Abogados’ good work

Once again, Aiyon Abogados has been highlighted as one of the best maritime law firms in the Spanish market by both Chambers and Partners  and The Legal 500 in their respective 2024 Guides. Our clients have recognised the adaptability and efficiency of the team and its extensive experience in dispute resolution, contract drafting, maritime accidents, pollution, shipbuilding, maritime claims, etc.

During direct client surveys, our clients have highlighted that Aiyon’s lawyers “are client-oriented with a service that goes beyond the legal advice” offering “quick responses and analytical advice and guidance”. The broad knowledge and set of different personalities at the law firm maintain a solid basis for sharp and tailor-made legal advice“.

On an individual level, Verónica Meana and Mikel Garteiz-goxeaskoa have also been included, once again, in the rankings of the 2024 Guide of both publications as outstanding professionals for their recognised experience and prestige, in which they have been appearing for years, highlighting that Verónica “is very reactive, available and efficient” and Mikel “is a great professional with deep knowledge of the subject matter“.

We would like to thank all our customers for their comments and trust. It is our customers who make us want to improve every day.

The Abandonment of Containers in Maritime Traffic

A recurring problem in maritime transport is the abandonment of containers loaded with goods.

When the consignee of the goods does not come to collect them after having been requested to do so as the authorised party, shipping companies are faced with a series of costs such as delays due to the occupation of the container with other people’s goods, the storage of the container or the internal transport costs of the container.

In this situation, there are two possible solutions: to initiate a procedure for abandonment and auction of the cargo by the competent customs office, or to initiate a notarial procedure for the deposit and sale of the goods.

Abandonment proceedings initiated by the Customs Department

In order to initiate this procedure, a declaration of abandonment must first be issued by the competent customs administrator and the following rules must be complied with.

As soon as the goods are in a situation of abandonment, in accordance with the provisions of Article 316 of the Decree of 17 October 1947 approving the revised and amended text of the General Customs Regulations, a file is opened, headed by the written declaration of the interested party or by a statement of the facts justifying the abandonment. Within a maximum of 5 days from the opening of the file, the goods shall be examined and, after hearing the second head of customs, the administrator shall decide whether or not the abandonment is admissible.

This decision shall be notified to the person concerned with the goods, if known, and he shall be given a period of 5 days in which to accept or contest it.

If the person concerned is not known, the decision is published in the BOP and on the notice board of the customs office, and a further period of 5 days is granted for the submission of any objections. At the end of this period, the file is sent to the General Directorate of Customs for a decision.

If abandonment is finally declared, the administrator seizes the goods on behalf of the Treasury, which sells them by public auction.

From the proceeds of the sale, customs duties, fines, storage and warehousing costs and any other costs relating to the goods shall be deducted in order. Freight and the costs of loading and unloading the goods may then be deducted and, after the above deductions have been made, the balance, if any, shall be paid tothe Public Treasury as abandoned goods.

Notarial Deposit and Sale of Goods Procedure, regulated in Law 14/2014 on Maritime Navigation (Article 513 ff.)

This procedure for the deposit and sale of goods, regulated in Law 14/2014 on Maritime Navigation (articles 513 et seq.), may be initiated when the law applicable to the charter party of the vessel authorises the carrier to request the deposit and sale of the goods in cases where the consignee does not pay the freight or does not appear to collect the goods transported (containers and their contents).

In order to initiate the procedure, the interested party must indicate the transport in question and provide a copy of the Bill of Lading (B/L); it is also necessary to identify the consignee, the freight or expenses claimed, the type and quantity of goods and an approximate value of the same.

Once the application has been accepted, the Notary will request payment from the addressee, unless the title is not nominative, in which case payment will only be requested if the applicant so wishes and designates a person to do so.

If the addressee is not found within 48 hours, or if the addressee does not pay, the notary will order the goods to be deposited.

Once the goods have been deposited and the depositee has been appointed,

the notary shall authorise their valuation and sale by a specialised person or body or by public auction; the amount obtained from the sale shall be used first to pay the deposit and the costs of the auction, and the remainder shall be delivered to the applicant to pay the freight, or expenses claimed, and only up to that limit.

However, if the holder of the goods objects to payment at the time of the summons or within 48 hours thereafter, the remainder of the sale proceeds shall be deposited pending the outcome of the case. In this case, the holder must initiate legal or arbitration proceedings before the competent court. If the action is not brought within the time limit set, the Notary will return the balance to the claimant in payment of the freight or expenses claimed and up to that limit.

Finally, if the deposit has been avoided or cancelled by the provision of sufficient security by the addressee, the latter must file an action within the time limit. If he fails to do so, the notary will order payment of the claim from the security provided.

Since the notarial procedure involves costs (notary, expert opinions, etc.), it is not advisable for goods of low value, in which case it is preferable to use the customs abandonment procedure.

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UNIPORTBILBAO highlights in its Newsletter the article by AIYON on the Sanctioning Power of the DGMM

We would like to thank UNIPORTBILBAO – Port Community for including in its April Newsletter our article on the sanctioning power of the Directorate General of the Merchant Navy (DGMM), content that we published last February on our website.

AIYON Abogados, as a member of UNIPORTBILBAO, has been collaborating for several years with this multimodal logistics cluster founded in 1994, which was born from a group of public and private companies in the Basque Country whose objective is to promote, through cooperation, the competitive improvement and promotion of the PORT OF BILBAO and the companies and services related or linked to the port and its daily operations.

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“GREEN SHIPPPING”, 2050

Like so many other industries, the maritime industry is heading or at least intends to head towards a gradual decarbonisation in this century. While it is true that, as published in the report of the United Nations Conference on Trade and Development (UNCTAD) on the analysis of maritime transport in 2023 (1), greenhouse gas emissions from the maritime sector have increased by 20% in the last decade, and that the sector operates a largely older fleet powered almost exclusively by fossil fuels, it is no less true that at the recent United Nations Climate Conference (COP28) in December 2023, numerous milestones were set in the interests of the longed-for decarbonisation.

In principle, the year 2050 has been set as the target date for the total decarbonisation of the sector according to the new strategy published by the IMO, which will undoubtedly require massive capital investment that could lead to a rise in the costs of maritime transport, and the consequent concern for all those island developing countries that are highly dependent on maritime trade.

The UNCTAD report stressed how environmental objectives will need to be balanced against economic needs, but in any case, the cost of inaction far outweighs the investment required. Similarly, it outlined how factors such as cleaner and more efficient fuels, and digital solutions such as AI or blockchain, are sure to play a key role in improving the sustainability and efficiency of maritime transport.

However, the question of who should be responsible for the transition to full decarbonisation is a complex one.

Well, it appears that the major flag states such as Liberia, Panama and the Marshall Islands will be responsible for meeting and enforcing the new green shipping standards, but in turn, the burden of making investments in alternative fuels, facilities to supply such fuels and more efficient and greener ships, falls on maritime operators in general, ports and the energy industry.

Some of the COP 28 milestones that may have the most potential to help achieve full decarbonisation in maritime transport are:

IN RELATION TO GREEN MARITIME CORRIDORS:
The US announced its partnership with the UK, Canada and Korea to form green shipping corridors for major shipping lanes.  In parallel, the US and Korea also announced that they are undertaking feasibility studies on the use of green ethanol or ammonia to power ships on selected routes.

The UK, for its part, also announced that agreements have been reached on green maritime corridors, including the creation of an International Green Corridors Fund hand in hand with the Netherlands, Norway and Denmark.

The pre-feasibility study of the Chilean Green Corridor has been completed and feasibility studies are underway.

ON ALTERNATIVE FUELS AND THE PROGRESS OF SHIPS:
The Pacific Blue Shipping Partnership (Fiji, Marshall Islands, Kiribati, Solomon Islands, Tonga, Tuvalu, and Vanuatu) – committed to the retrofitting/replacement of more than 11,000 vessels among the 7 member countries.

France announced a USD 800 million investment in green shipping innovations, as well as the creation of a USD 1.2 billion public-private investment fund as part of its national maritime decarbonisation plan, including already USD 500 million in public investment and USD 200 million from CMA CGM for investments in port infrastructure, sustainable marine fuel production, retrofitting and replacement of existing vessels and decarbonisation of the government fleet.

The US Department of Energy invested $7 billion in hydrogen hubs across the country, working in conjunction with several of its ports.

In light of this, together with the other milestones achieved at COP28, it is clear that the outlook for the maritime sector has changed significantly. Maritime transport maintains the lowest level of CO2 emissions per tonne/mile compared to all other types of transport, and the sector is certainly keen to maintain this position as other transport sectors decarbonise as well, having demonstrated at COP28 that shipping is making efforts to invest in and take advantage of the opportunities offered by the energy transition.

(1) Review of Maritime Transport 2023 | UNCTAD

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Sanctioning Powers of the Directorate General of the Merchant Navy (DGMN)

Receiving notification of the initiation of an Administrative Disciplinary Proceedings is something that leaves no one indifferent, not only because of the final amount of the sanction, but also because of the general lack of knowledge that exists about the particularities of this administrative procedure.

Specifically, in this article we will analyse the characteristics of the Administrative Sanctioning Proceedings in the maritime field, as well as the sanctioning discretion of the Directorate General of the Merchant Navy (DGMN) in this regard.

COMPETENCE

The competence for the processing of a maritime Administrative Sanctioning Proceedings is stipulated in Annex II, article two of Royal Decree 1772/1994, of 5 August, which adapts certain administrative procedures in matters of transport and roads to Law 30/1992, of 26 November, on the Legal Regime of the Public Administrations and Common Administrative Procedure.

In accordance with this regulation, the Directorate General of the Merchant Navy, and the corresponding Maritime Harbour Master’s Office where applicable, will be responsible for the investigation and processing of an Administrative Sanctioning Proceedings.

PROCEDURE

The Administrative Sanctioning Proceedings of the Spanish maritime administration is generally governed by the same provisions that regulate such procedures for any other Spanish administration, i.e. by Law 39/2015 of 1 October, on the Common Administrative Proceedings of Public Administrations.

The Sanctioning Proceedings will be initiated once the irregularity has been noticed by the Administration, generally after an ocular inspection of the vessel or by a complaint from another competent authority, and the interested party or affected party must be notified of this Agreement to initiate the Administrative Sanctioning Procedure.

In the case in question, the competent body for sending this notification will be the competent Maritime Harbours Master’s Office of the place where the ship is located. In this communication, in addition to advising the parties concerned of the irregularity(ies) or deficiency(ies) identified and the possible rule(s) infringed, they shall also be required to provide a financial guarantee to terminate the detention of the vessel subject to the sanction, where this is stipulated. The guarantee shall remain deposited while the administrative procedure is being processed and at the expense of its outcome.

Following notification of the Agreement, interested parties shall have 15 working days to submit any observations they may wish to make. This period may be extended for a maximum period of 7 days beyond the expiry date, provided that the interested parties so request, and the Harbour Master’s Office authorises it.

Once the allegations of the interested parties have been reviewed, the Harbour Master’s Office will issue a Resolution Proposal, in which, in addition to identifying the precepts it considers having been infringed, it must also quantify them, thus determining the amount of the proposed sanction.

Interested parties shall have a further period of 15 days to make representations, should they consider it appropriate.

This point of the procedure is very important, not only because it is the procedural moment in which the Administrative Sanctioning File is transferred from the Harbour Master’s Office to the DGMN, which is ultimately responsible for issuing the Resolution, but also because it gives the interested parties the possibility of ending the process, by voluntarily acknowledging their liability and making prompt payment of the proposed amounts, in compliance with the provisions of Article 85 of Law 39/2015. Thus:

  • Voluntary acknowledgement of liability grants the interested party the benefit of a discount of 20% of the amount of the proposed penalty. However, on the other hand, it also obliges the interested party to renounce any subsequent administrative action or appeal.

In short, whoever acknowledges his or her responsibility for the alleged facts will lose the possibility of denying them in the future or appeal them.

  • Prompt payment of the penalty, before the Resolution was issued, entitles the interested party to a discount of 20% of the amount of the proposed penalty.

Both discounts are cumulative, and the interested party may therefore obtain a discount of at least 40% on the amount of the proposed penalty.

LIMITATION PERIOD

The Administration shall have a maximum period of 12 months from the date of issue of the Agreement to Initiate the Sanctioning Proceedings, to resolve the proceedings (1).

The lack of an express decision will result in the proceedings lapsing and they will be closed, which does not prevent a new one from being initiated if the possible infringements are not time-barred.

EFFECTS OF PROMPT PAYMENT ON THE DGMN’S DISCRETION TO IMPOSE PENALTIES

The power to impose penalties in the maritime field lies with the Ministry of Public Works, and more specifically in the hands of the DGMN, articles 263.k and 315.1.d of the Consolidated Text of the Law on State Ports and the Merchant Navy. There is an express obligation for the DGMN to resolve the procedure before the end of the one-year period granted for this purpose (art. 21 of Law 39/2015).

In fact, the jurisprudence of the Supreme Court (Judgment of 6 October 2022) is well known, confirming that until the competent Administration has issued an express resolution for the procedure, it will not have imposed any sanction, and may even incur the expiry of the actions when the time comes.

We highlight this fact, since the obligation to resolve provided for by law, together with the provisions of article 315.1.d. of the Consolidated Text of the Law on State Ports and the Merchant Navy, clashes with the usual practice of the sector, and more specifically with the right to prompt payment recognised by article 85 of Law 39/2015, which could turn the DGMN’s power into a merely declaratory power lacking any real power to impose a sanction.

Article 85 of Law 39/2015 on the Common Procedure of Public Administrations is clear in stating that “voluntary payment by the allegedly liable party, at any time prior to the resolution, will imply the termination of the procedure”. What is discussed in this case is the effect that article 85.2 of Law 39/2015 could have on the sanctioning power of the DGMN, according to article 315.1.d of Consolidated Text of the Law on State Ports and the Merchant Navy.

What we consider clear is that payment by the interested party should entail the Administration’s commitment to terminate the Sanctioning Proceedings, as is the case in other administrative sanctioning areas. The question to be asked is, how will the proceedings be terminated?

  • The first of the criteria shared by some of the professionals of the sector argues that, in those cases in which the interested party proceeds to make prompt payment of the proposed penalty and to recognise their responsibility, the DGMN may only terminate the procedure without modifying the Resolution Proposed by the Harbour Master’s Office in charge of the investigation of the proceedings.

The main argument defended by this current is that the fact that the DGMN retains the discretion to modify the amount of the sanction, once the interested party has acknowledged his liability and renounced his actions, having thus lost all possible means of defence, would place him in a situation of absolute vulnerability, due to defencelessness, incompatible with the Fundamental Right to effective judicial protection of article 24 of the Constitution. This trend is supported not only by the wording of Article 85 of Law 39/2015, but also by the Supreme Court’s Ruling 1830/2018, which was handed down on 19 February 2018, which interpreted Article 8 of Royal Decree 1398/1993 of 4 August 1993, which has the same content as the current Article 85 of Law 39/2015.

  • On the other hand, the DGMN and other professionals in the sector consider that the Consolidated Text of the Law on State Ports and the Merchant Navy, as a specific regulation of the maritime sector, should prevail over the general provisions contained in Law 39/2015, as the sanctioning power of the administration is an inalienable right of that body. This trend bases this power of the DGMN on Article 90(2) of Law 39/2015, which allows the decision-making body to deviate from what was proposed by the investigating body when it considers the infringement to be more serious. Therefore, they argue that limiting the DGMN’s ability to freely issue the resolution of the case it deems appropriate would be an unjustified limitation of its powers, transferring part of them directly to the Harbour Master’s Office.

This second criterion is the one followed and shared to date by the Spanish Administration, so that all parties involved in a Maritime Administrative Sanctioning proceedings should take this competence of the DGMN into account when assessing whether or not to assume their responsibility and make prompt payment, thus waiving any possible future action to defend their position. In practice, prompt payment and the assumption of responsibility do not guarantee the termination of the procedure, and there is a risk that the DGMN will increase the penalty paid and acknowledged by the defendant.

In any case, as we always advise, each case and scenario should be assessed individually, and be advised by professionals such as the team that makes up AIYON, since relations with the handling of these files and relations with the administrations are part of our day-to-day work.

(1) This is stipulated in Annex 1 of Additional Provision 29 of Law 14/2000 of 29 December on fiscal, administrative and social measures, amended by Article 69 of Law 24/2001 of 27 December on fiscal, administrative and social measures, applicable by virtue of the provisions of the Sole Repealing Provision, section 3 of Law 39/2015 of 1 October.

“ESTRATEGIA EMPRESARIAL”, echoes our almost 9 years of experience in the market

As a firm founded in 2015 in Bilbao, the publication highlights our multidisciplinary team of eight expert lawyers, valuing our comprehensive 360º legal advice. 

With a proven impact at national level acting from our four offices located in Bilbao, Cadiz, Madrid and Algeciras, with which we cover strategic areas for the transport and logistics sector, ESTRETAGIA EMPRESARIAL also highlights the fact that we have all kinds of collaborators at national and international level that help us to cover all the demands for advice and assistance that our clients may have anywhere in the world.

Likewise, the publication points out our commitment to disseminate all kinds of legislative and jurisprudential developments related to the logistics sector, both in terms of maritime law, transport law in general, insurance and national and international trade via our conferences, talks to clients or the two corporate websites: www.aiyon.es and shiparrestrelease.com.

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Notes to the Judgments of the CJEU and the High Court KBD of England on the Prestige Case

The English Court does not apply the doctrine of the CJEU which confirmed the possibility of recognising the Spanish conviction in the Prestige case in England.

The environmental tragedy of the M/T Prestige initiated a long-running legal dispute between the insurer of the M/T Prestige (The London Steam-Ship Owners’ Mutual Insurance Association Limited, hereinafter “the Club”) and Spain, through two different proceedings in two Member States at the time, the United Kingdom and Spain.

This article is based on Spain’s application to the UK courts in 2019 under Article 33 of “Regulation 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters” to recognise and enforce the Spanish court’s judgment. This decision was the Enforcement Order of 1 March 2019 of the Provincial Court of A Coruña enforcing its previous judgment, confirmed in cassation by the SC on 19 December 2018. It condemned the Master, the owners of the Prestige and the Club against the Spanish State and more than 200 other parties. As far as the Club was concerned, up to the contractual limit of USD 1 billion on the basis of the insurance policy.

The High Court of Justice Business and Property Courts of England and Wales Commercial Court (hereinafter High Court KBD) granted that application in May 2019, which was ultimately appealed by the Club on the basis of two main arguments under art. 34 of Regulation No 44/2001: (i) argument of incompatibility with the English judgment (ii) recognition of the Spanish judgment would be contrary to English public policy principles for violation of the res judicata rule.

At this procedural stage, the High Court KBD referred a question to the CJEU for a preliminary ruling, in relation to the interpretation of Regulation 44/2001, as to whether the recognition and enforcement in the UK of the sentence imposed in Spain could be refused, due to the existence in the UK of an award and a subsequent judgment upholding it, the effects of which were irreconcilable with the Spanish judgment.

The CJEU ruled on 20 June 2022 that a judgment given by a court of one Member State (UK) on the terms of an arbitral award cannot prevent the recognition, in that Member State, of a decision given by a court of another Member State (Spain), where provisions or objectives of Regulation 44/2001 have been contravened.

Therefore, the English courts had indeed to recognise and enforce the said Order of Enforcement of the AP de A Coruña, since the arbitration award on the terms of which the English judgment was rendered would have infringed certain provisions of Regulation No 44/2001, namely (i) the effect of the arbitration clause inserted in an insurance contract since, according to the CJEU’s own case law, an agreement conferring jurisdiction concluded between an insurer and a policyholder cannot bind the person injured by the insured damage and (ii) the rules of lis pendens since, when the arbitration award was entered into, the insured person cannot be bound by the arbitration award, an agreement conferring jurisdiction concluded between an insurer and a policyholder cannot bind the person injured by the insured damage and (ii) the rules of lis pendens since when the arbitration proceedings were brought in the UK (16 January 2012), proceedings between the Spanish State and the Club were already pending before the Spanish courts. Therefore, in accordance with Article 27 of Regulation 44/2001, the English courts should have suspended the proceedings ex officio until the Spanish courts had declared themselves to have jurisdiction and, if they did so, as was the case, they should have declined jurisdiction in favour of the Spanish courts.

Following the preliminary ruling, the High Court KBD decided on 06 October 2023 on the appeal lodged by the Club:

i). That they were irreconcilable judgments, given that the English judgment declared that under the “pay to be paid” clause, as the shipowners had not paid any amount, the Club was not liable to Spain and the Spanish judgment maintains that the Club is liable to Spain. These positions cannot coexist and therefore, both judgments are irreconcilable and thus, in accordance with art. 34 of Regulation 44/2001, the Spanish judgment can neither be recognised nor enforced in England.

ii). The English judgment in line with the arbitral award is res judicata and as Regulation 44/2001 excludes arbitration from its regulation, the existence of potentially inconsistent decisions and lack of coordination with future arbitral awards is assumed by the Regulation. Furthermore, it understood that since the Regulation does not apply to arbitration, the English court’s decision to ratify the arbitral award did not alter the provisions of the European Regulation.

It also considers that the CJEU, in its ruling on the question referred for a preliminary ruling, exceeded the scope of the questions referred for a preliminary ruling, and purported to apply the law to the facts, which is outside its competence (reserved to the Member States). Considering that the CJEU had exceeded its powers, the High Court KBD considered that it was not bound by its decision.

In conclusion, we must remember that the interpretation issued by the CJEU is binding on the court that asked the question for a preliminary ruling, which may not, under any circumstances, depart from it or ignore it, either on its own initiative or because it is instructed to do so by a hierarchically superior court, and that in the future, this interpretation of the CJEU will be the one that will be applied in the EU. However, the English judgment may be seen as opening a small door to legal uncertainty if it allows a Member State to unilaterally consider that the CJEU has exceeded its powers and that its decision is therefore not binding on it, without prejudice to any liability it may incur for breach of Community law.

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AIYON Abogados Moves to New Office in Algeciras

AIYON Abogados recently gathered in Algeciras part of its team of eight professionals from its offices in Madrid, Bilbao, Cadiz and Algeciras to inaugurate its new location in Algeciras and to share with its customers in the Algeciras enclave the good news that always comes with the opening of new facilities and the incorporation of a new professional to the team, as is the case of Rocío López.

Along with local lawyers Jose Antonio Domínguez and Rocío López, the event was attended by partners Mikel Garteiz-goxeaskoa and Zuberoa Elorriaga, from the Bilbao office; Madrid partner Verónica Meana; and partner and head of Cádiz, Enrique Ortiz, with his colleague Pablo Sánchez.

José Antonio Domínguez, director of the Algeciras office, frames these new developments in the firm’s commitment to improve the service provided to its clients in the area of influence of the Port of Algeciras, among which are shipowners, insurance companies, inland hauliers, forwarding agents, shipping agents, logistics operators, stevedores, shippers and, in general, all types of companies dedicated to international trade and the transport of goods.

“The strategic importance of Algeciras, where our clients have a very important presence, justifies the growth of our team and the improvement of our facilities,” says José Antonio Domínguez, partner in charge of the office.

Algeciras, a strategic location
As one of the most important ports in Spain and located on one of the strategic routes for international trade, the Port of Algeciras is key both for North-South traffic, with an abundant flow of goods to and from Morocco on the various ro-ro shipping lines operating in the Strait of Gibraltar, and for East-West traffic on the major containerised goods traffic routes, being an important hub port.

Algeciras is, on the other hand, a very important bunker or bunkering port in the Mediterranean, with shipyards and an anchorage where ships can make provisions or carry out repairs of all kinds.

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