Tag Archive for: aiyonabogados

AIYON present at SMM HAMBURG 2024

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Our colleagues in charge of the Algeciras and Cadiz offices, José Dominguez and Enrique Ortiz, represent AIYON at the ‘SMM Hamburg 2024’ fair, which is held in the Hamburg Messe congress hall in Hamburg (Germany).

The ‘SMM Hamburg’ is considered the largest trade fair for the maritime industry, specialising in shipbuilding, machinery and marine technology. This biennial fair has a great international impact, bringing together a wide and varied public (shipowners such as shipping companies, shipyards, auxiliary industry and also the offshore wind sector, etc.), which has been growing in recent years, bringing together this year in the city of Hamburg 40,000 participants from more than 120 countries.

From 3 to 6 September, more than 2,000 companies will be presenting state-of-the-art technologies and services, with workshops, symposia and conferences covering all types of topics related to the maritime industry.

We look forward to seeing you in Hamburg!

The Relationship between “Extraordinary Circumstances” and Travel Cancellation/Delay in Air Law

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It is not an opinion, but a fact, that air transport is the safest means of travel, allowing the movement of cargo and passengers in a short space of time, and this on the basis of the significant distances that are travelled.

That said, the experience of frequent air travellers is subject to the very constraints of this mode of travel, which means that they are exposed to delays, most of them short but sometimes significant, as well as to unforeseen cancellations of their journey.

Except for certain, proven and weighty reasons that can be alleged (for example, notably adverse and public weather conditions at an airport), when airlines are complained about by passengers due to a delay or cancellation, it is not unusual for them to use as an excuse a brief argument of rejection alleging having suffered “extraordinary circumstances”, even when the affected parties do not know what these alleged circumstances are, of which they have had no notice or, simply, were received at the time as mere rumours in the boarding lounge, without coming from any reliable source whatsoever.

As a general rule, the applicable rules for compensating European passengers are those set out in the European Regulation 261/2004 establishing common rules on compensation and assistance to air passengers in the event of denied boarding and of cancellation or long delay of flights and Regulation (EC) No 1107/2006 of the European Parliament and of the Council of 5 July 2006 concerning the rights of disabled persons and persons with reduced mobility when travelling by air.

Regulations that affect Spain, as well as the rulings that are issued in the study and resolution of each case of claims for delay/cancellation that have as their source the national courts, as well as those issued by the Court of Justice of the European Union (CJEU).

In principle, “extraordinary circumstances” are defined as unforeseeable, unavoidable situations due to external factors on the flight, which exempt airlines from paying compensation as force majeure. For its part, the European Regulation 261/2004 considers extraordinary circumstances to be situations that could not have been avoided even if the airline had taken all reasonable measures to avoid them.

This concept is undoubtedly subject to interpretation by the law and jurisprudence that develop it, and must be nuanced, which is why the application or not of this inconclusive concept has been studied case by case, assessing whether it was applicable to the rejection put forward by the airline in question. The onus is on the carrier to prove that these extraordinary circumstances were unavoidable, even if reasonable measures were taken, and that, once they arose, the actions taken were adequate to avoid, as far as possible, the cancellation or delay (both preventive and reactive actions).

Clearly, the reasonable measures to be taken by an air carrier must be technically and economically feasible, based on the fact that routes and flights have been planned to reduce the risks of delay and cancellation.

In short, we must bear in mind that when a passenger is offered a rejection of his right to compensation on the grounds of “extraordinary circumstances” alleged by the airline, the implications behind this allegation are greater than just sending the passenger a catch phrase, without the passenger being able to object to anything in defence of his right.

Therefore, three requirements are necessary: (i) the disruptive event must be qualified as an “extraordinary circumstance”; (ii) there must be a direct causal link between the event and the cancellation/delay; (iii) the event became unavoidable, even if reasonable measures had been taken, and the carrier must take action to avoid the cancellation/delay.

This issue, like many others inherent to the world of transport, highlights the main need in the case of events occurring that disrupt the agreed transport, and that is that a fair balance must always be sought between avoiding airlines being forced to make an evidentiary effort in the course of their daily business when a cancellation/delay event occurs, together with the duty to adequately protect passengers’ rights.

Resolution of 22 May 2023 of the Directorate General for Land Transport – Systems and Requirements to Be Met by Electronic Administrative Control Documents in Road Transport

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In this article we would like to highlight the content of the Resolution of 22 May 2023, issued by the Directorate General for Land Transport, which establishes the requirements and systems that must be met by administrative control documents in electronic format for road transport in Spain, derived from Article 222.2 of the Regulation of the Land Transport Law. Article which, in accordance with Royal Decree 1211/1990, of 28 September, and its subsequent modifications, establishes the essential characteristics that the supports and computer applications used for the completion and management of this transport documentation must have.

Previously, in order to ensure that control documentation in electronic format meets the characteristics of availability, integrity, inalterability and inviolability of its content, as well as to determine the way in which copies of this control documentation must be obtained by the personnel of the Inspection Services and the agents of the transport surveillance forces when they are issued using electronic means, the Directorate General issued the Resolution of 13 February 2020, which established the characteristics that the administrative control documents in electronic format required in road transport must meet, which has now been repealed.

Thus, having established a new method of communication of the data collected in the various control documents, it was considered necessary to extend the new methods of communication to facilitate the activity of the hauliers themselves, reducing the administrative burden for drivers and companies.

The main requirements highlighted in the Resolution of 22 May 2023 include:

a) Characteristics of Computer Supports and Applications:

  • Accessibility for all eligible parties.
  • Ensuring secure storage and effective transmission of documents.
  • Specific requirements for electronic signatures: ensuring their binding to the signatory, identification, exclusive control and detection of modifications.

b) Systems and Requirements for Control by Inspection Services:

  • Implementation of two modalities: via numerical code with subsequent electronic delivery, or via QR code leading to a PDF repository.
  • Technical standards such as PDF/A format and size limitations (up to 4 MB).
  • Prior obligation to communicate the domain of storage and exclusive use of HTTPS connections by companies.

In any case, we must emphasise that the main objective of this regulation is to optimise the administrative management of road transport, ensuring the integrity, inalterability, inviolability of its content and availability of the required documentation.

The explicit repeal of the previous Resolution of 13 February 2020 only underlines the continuous updating and adaptation of sectoral regulations to technological developments and the operational needs of land transport. This sector is continuously evolving in order to facilitate trade between countries when it requires an agile and efficient means of transport, such as land transport.

The Nature of the Time Limit for the Exercise of Claims for Loss or Damage to Goods under the Hague-Visby Rules – Limitation or Expiry?

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The recent judgement no. 185/2024 of the 4th Section of the Murcia Provincial Court dated 8 February 2024, reviewing the case law referring to the nature of the one (1) year period for the exercise of claims for loss or damage during carriage by sea under a bill of lading established by the International Convention for the Unification of Certain Rules Relating to Bills of Lading signed on 25 August 1924, as amended by the Protocols of 23 February 1968 and 21 December 1979, the Hague-Visby Rules, has taken a position in favour of the figure of expiry of time.

The aforementioned ruling therefore joins other rulings in favour of expiry of time, such as, for example, No. 269/2023 of 26 January 2023 of the 1st Section of the Provincial Court of Pontevedra, to which it refers to summarise the controversy. The latter, in turn, cites Supreme Court judgments No 328/1983 of 7 June 1983, No 43/1984 of 31 January 1984, No 339/1984 of 30 May 1984, No 56/1985 of 29 January 1985 and No 583/1985 of 11 October 1985, which declare that the time limit provided for in Article 3.6 of the Hague-Visby Rules is one of limitation.

Referring to other judgments which, on the contrary, have declared that this period is a limitation period and not an expiry period, the aforementioned judgment no. 185/2024 of the Murcia Provincial Court, which is the subject of this article, also agrees with the judgment of the Pontevedra Provincial Court of 26 January 2023 in that, although article 278. 4 and Article 286 of the Maritime Navigation Act, when regulating the contractual carrier’s recourse actions against the actual carrier and the actions arising from the charterparty, use the expression “limitation” not “expiry”, this should not lead to error since the Hague-Visby Rules are of preferential application to national regulations and their interpretation must be made in accordance with them. Hence, coinciding with the criterion of the judgement of the 28th Section of the Madrid Provincial Court nº 357/2021 of 14 October, the analysed judgement of the Murcia Provincial Court states that the scope of application of articles 278 and 286 of the Maritime Navigation Act must be redirected to the contract of carriage of goods by sea, excluding that which takes place under the bill of lading regime, which is subject to a limitation period.

AIYON participates in Piraeus (Greece) in the symposium on “Geopolitics, Climate Change and Regulations: The importance of Shipping Straits in the Global Maritime Activities and Markets”

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On their recent trip to Piraeus (Greece), our colleagues from the Algeciras and Cadiz offices had the pleasure of taking part in the symposium entitled “Geopolitics, Climate Change and Regulations: The importance of Shipping Straits in the Global Maritime Activities and Markets”, organised by the companies DINO THEO ATLANTIS M.C., SL and MARGI MARINE.

At the event, José Antonio Domínguez and Enrique Ortiz not only had the opportunity to share experiences and knowledge with the many attendees and speakers, all of them operators in the maritime sector in Piraeus, including shipowners and P&I clubs, but also, on behalf of our firm, José Antonio Domínguez had the honour of participating in the event as a speaker.

Together with Ms. Marilena Orfanides, founding partner of Coventinay and responsible for analysing the main consequences of the geopolitical events, Mr. John Ghio, CEO and Captain at Gibraltar Port Authority, and the directors of the organising companies, Mr. Dino Dritsakis CEO of Dino Theo Atlantis, and Mr. Evangelos Georgoulis, Managing Director of Margi Marine, our colleague José took part in the presentations, explaining to the large audience the Spanish perspective in relation to the Paris MoU, as well as the ship inspections or “Port State Control” carried out in Spain. We are well acquainted with the scope of this matter due to the many matters we handle in the firm related to ship inspections carried out by the Spanish maritime authorities, as well as for handling the varied and always complex administrative sanctioning proceedings that are brought against ships and their owners.

The panel in which we were honoured to take part, coordinated by Ms. Anastasia Vamvaka of Forbes magazine, was part of the “Posidonia International Shipping Exhibition 2024”, and featured a special performance by the renowned Greek singer Peggy Zina (https://event.dtatlantis.com/).

AIYON would like to thank the organisers and the attendees for the warm welcome our colleagues received at this interesting and relevant event, which has helped us to strengthen our ties with the Greek maritime community, as well as to meet new operators in the sector.

Mechanisms to Protect Against the Risk of Non-Payment by Shipyards and Shiprepairers

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I. Introduction

In any commercial or industrial activity involving the exchange of goods or services, there is a risk for the supplier that he will not be paid for his goods or services. To avoid these risks, market operators can take appropriate contractual measures or assert the rights that the legal system, the law, grants them.

The risks of non-payment are not particularly higher in the shipbuilding or ship repair sector than in any other sector under consideration. However, due to the type of asset on which the entire maritime shipbuilding or ship repair business is based, the ship, sometimes under foreign flag and ownership, protection against such risks of non-payment deserves special attention.

Many shipowners are organised under single-ship corporate structures, which means that with the vessel gone, the shipping company is undercapitalised and collection of claims against it becomes impossible.  The mobility of ships, which can easily change jurisdiction, can also add complexity to the recovery of claims in cases where there are no other known assets of the shipping company in the jurisdiction where the shipbuilder or ship repairer operates.

In order to protect their interests, both shipbuilders and ship repairers can implement contractual mechanisms that best protect their claims. There are also legal mechanisms that the legislation provides to these operators with the same protective purpose. In this article we will try to explain some of these mechanisms.

II. Contractual Mechanisms:

When we talk about contractual mechanisms, we refer to preventive measures that can be agreed in shipbuilding or ship repair contracts. There is no legal limitation to adopt this type of contractual covenants, so the will of the parties and the creativity of their legal advisors are the limit. The most common mechanisms that shipbuilders or ship repairers usually adopt are:

(a) Advance payments:

The provision of funds by the shipowner prior to the execution of the work is a common preventive solution to ensure that the shipbuilder or repairer has the necessary resources during the shipbuilding or repair process.

Most commonly, milestone payments are agreed. Through this mechanism, the shipowner makes advance payments based on the achievement of milestones during the construction or repair process, ensuring that the operator receives funds as the work progresses.

This system usually involves the issuing of refund guarantees by the builder/repairer in favour of the shipowner in case the work for which the latter has made the advance payment is not executed as agreed.  The mechanism therefore has a banking/financial cost for the shipbuilder/repairer.

(b) Requiring Sureties or Enforceable Guarantees:

Payment guarantees are another effective form of protection for shipbuilders and ship repairers.  Through this mechanism, the shipowner provides the shipbuilder/repairer with a separate payment guarantee, so that in the event of non-payment by the shipowner, the guarantor, under the guarantee contract, is obliged to make payment on first demand. The most common guarantees are:

  • Bank Guarantee: In this case the guarantor is a bank that will issue a guarantee on first demand in the event of non-payment and up to the agreed monetary limit.

If certain requirements are met, this type of bank document is directly enforceable before the Spanish courts.  The cost of this banking instrument is generally borne by the shipowner.

  • Personal Executive Payment Guarantee: With due formalities, this instrument functions in a similar way to a bank guarantee. In this case the guarantor is a natural or legal person whose solvency is known to the constructor/repairer. By means of this guarantee this person guarantees with his present and future assets the non-fulfilment of the payment obligation by the shipowner.

(c) Retention of Ownership of the Ship.

Finally, we would like to comment on this mechanism of retention of ownership of the ship until the shipowner pays the price. Due to its nature and operation, this contractual solution is reserved for shipbuilders, as it will be difficult or impossible for ship repairers to implement.

It involves retaining ownership of the vessel built until full payment by the shipowner. So that in the event of non-payment the shipbuilder can sell the ship to the highest bidder in order to collect the amount owed. If the market value of the ship is less than the price owed by the shipowner, the contractual arrangement should provide that the shipbuilder will continue to have a claim against the shipowner for the remainder.

In order to guarantee its effectiveness and proper operation, it is advisable to register the construction project in the name of the builder. In this way, if the shipowner’s non-payments are widespread, the registration of the ownership of the project in favour of the builder will prevent third party creditors of the shipowner from enforcing their claims against the vessel.

III. Legal Measures.

Spanish legislation provides shipbuilders and ship repairers with additional mechanisms that they can articulate without having to expressly agree on them. These mechanisms are mainly the following:

(a) Retention of possession of the vessel.

Article 7 of the International Convention on Ship Mortgages and Privileged Maritime Claims 1993 together with section 139 of the Shipping Act 2014 enables the builder and repairer of a ship to retain possession of the ship until they are paid what is due to them in respect of its construction or repair.

Certain requirements must be met:

  • In order to be retained, the ship must be in the possession of the shipbuilder or repairer. That is, the detention must operate prior to delivery and as long as the ship is on the premises or in the possessory custody of the shipbuilder’s or repairer’s personnel.
  • Retention is to be exercised for claims arising from the shipbuilding or ship repair contract, not for other claims.
  • The vessel that has generated these unpaid claims should be retained, not against another vessel.

It is important that all these requirements are scrupulously respected, otherwise there is a risk of improperly exercising the retention, which could lead to civil and even criminal liability.

Certain rules of the Civil Code apply to this lien which result in a lien on the ship. Some authors therefore argue that the shipbuilder or repairer of the ship can ask for the ship to be sold at public auction once the shipowner’s obligation to pay has expired. Thus the measure is sufficiently effective to persuade a shipowner to pay.

The Maritime Navigation Act 2014 only states that, if the compulsory sale occurs while the ship is retained by the shipbuilder or repairer, ‘the latter shall deliver possession of the ship to the buyer, but may obtain payment of his claim with the proceeds of the sale after satisfying those of the holders of maritime privileges… and before mortgage claims and other registered or noted encumbrances’. Thus, the shipbuilder or ship repairer will have preference of collection over ship mortgages and ordinary creditors, but not over privileged maritime claims (accruals in favour of the crew, compensation for death or personal injury caused by the ship, prizes for maritime salvage, port and pilotage fees and material damage caused by the ship due to non-contractual fault).

Since possession of the ship is a prerequisite for the lien, once the ship is delivered the lien and its collection preferences are extinguished.

(b) The Preventive Vessel Attachment:

The freezing of ships is a legal tool that enables the shipbuilder or repairer to secure the immobilisation of a ship wherever it is located in order to guarantee the collection of his claim.

This precautionary, preventive and urgent judicial measure can also be qualified as a burdensome measure due to the economic damage it can cause to the operator of the vessel, such as delays in its navigation, unforeseen costs due to its stay in a port, etc. It can also be a costly measure for the person requesting the seizure if it is wrongly or improperly proposed.

This measure is regulated by the International Convention on Arrest of Ships (Geneva 1999), the LNM and the Spanish Civil Procedure Act.

The immobilisation of the ship may be replaced by the provision of security by the shipowner/shipowner to the seizing court, since the ultimate objective of the attachment is to ensure the effectiveness of a subsequent judgment on the merits of the claim (‘maritime claim’) and thus to guarantee the creditor/shipper the possibility of enforcement.

In the event that the lien is unjustifiably or improperly applied for, the shipowner/shipowner of the vessel is entitled to claim any damages resulting from the lien.

The requirements are as follows:

  • Allegation of a ‘maritime claim’: The list of so-called ‘maritime claims’ is contained in Article 1(1) of the 1999 Geneva Convention, which includes, in paragraph (m), shipbuilders‘ or ship repairers’ claims;
  • attachment of the ‘offending ship’: attachment of the ship causing the claim is permitted provided that the person who was the owner/bareboat lessor of the ship at the time when the claim arose is still the owner/bareboat lessor at the time the attachment is requested. Under certain conditions it also provides for the possibility to seize other vessels owned by the person liable to pay (‘sister ships’).
  • the obligation for the attaching creditor to deposit a security: its purpose is to guarantee that in the event that the attachment is improperly requested, the damage caused to the shipowner/shipowner can be economically alleviated. At present, the minimum amount for this security is 15% of the alleged claim.
  • Where the application for attachment is made as an interim measure prior to the filing of the claim on the merits, it will lapse if the builder/repairer fails to commence proceedings on the merits before the competent court within the time limit set by the attaching court.

In short, this is a very effective precautionary measure that allows the builder or repairer to obtain sufficient security for his claims.

IV. Conclusions

It is a fact that shipbuilders and ship repairers face risks of non-payment by shipowners in their day-to-day business.

To protect against this risk there are a variety of solutions, both contractual and legal, which it is always and in any case advisable to bear in mind in order to minimise the risks to which builders and repairers are subject, all the more so when we are talking about foreign vessels and shipowners without a presence in our territory with complex corporate structures.

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Scope of the International Jurisdiction Clause in the Bill of Lading

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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 25 April 2024, the CJEU delivered its judgment in the cases C-345/22 to C-347/22 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 -which is arguably not applicable to negotiable instruments to the extent that the obligations arise out of their negotiable nature – and in article 10 of the Spanish Civil Code. The latter establishes 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 Bill of Lading was issued, or, should Rome I be considered applicable, 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 or the law of the country where the place of delivery agreed by the parties is situated. Therefore, in most cases, the applicable law will rarely be 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

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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

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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

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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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