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November 1991
Vol. 2, No. 2
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of Contents
Contents
An Oil Pollution Check List
John
C. Koster
INTRODUCTION
With this issue you will find an oil spill check list, setting out the steps which must be taken promptly in the event of an oil spill in United States waters. While sizeable amounts of literature have been published concerning the Oil Pollution Act of 1990 (OPA '90) [n. 1], in the immediate circumstances surrounding an actual spill, there will not be time to sift through it all at leisure to determine the numerous steps that have to be taken. We have composed a list of those which ought to be followed within the first few hours after notification of a spill and a further list of options which should be considered within the first few days. It is assumed that salvage efforts and other emergency vessel operations will proceed concurrently with all anti-pollution efforts.
We should caution that these lists are necessarily simplified and may require modification as experience is gained under the provisions of OPA '90. It is also obvious that in the case of catastrophic spills measures may have to be taken and options considered for which no check list prepared in advance could possibly be adequate. There may also be a spill so minor in quantity or occurring in a location so remote from population and natural resource centers that the urgency may be reduced and not all of the steps included in the check list need to be taken. Between those extremes, however, fall the greatest number of possible oil spill "incidents" for which we offer this check list.
Shortly before this issue was to go to press, the U.S. Coast Guard issued a "Notice of Proposed Rule Making" regarding (1) Vessel Response Plans; Carriage and Inspection of Discharge - Removal Equipment (8/30) and (2) Evidence of Financial Responsibility for Water Pollution (Vessels) (9/26) under OPA 1990. Anyone wishing a copy of the proposed regulations should telephone or write to Gordon W. Paulsen of Healy & Baillie.
THE CHECK LIST
A. IMMEDIATE STEPS
1. ACTIVATE CONTINGENCY PLAN.
Following promulgation of the regulations, all companies with vessels trading to the United States will be required to file contingency plans with the Coast Guard by February 18, 1993. (33 USC § 1321(j)(5)). It is imperative, therefore, that a contingency plan be prepared in written form, and that it be kept on board the vessel and available for immediate use. With the passage of time and changes in personnel, the plan may require updating or other modification. In the event of a spill, the plan should be activated promptly and the vessel's operator should make sure that the existence of the plan has not been overlooked by the vessel's master.*
A plan will require, inter alia, the designation of a "qualified individual having full authority to implement removal actions."
2. NOTIFY THE VESSEL'S P. & I. CLUB.
Ultimate financial responsibility may fall to the Club, and it is therefore essential that the Club, or its local representatives, be promptly notified of any spill. If TOVALOP and/or CRISTAL are concerned, their representatives should also be notified.
3. ENGAGE ATTORNEYS.
Since complex litigation and the risk of sizeable liabilities may follow a spill, it is well to have a law firm engaged from the outset. If the vessel is entered with a P. & I. Club, this should, of course, be done in consultation with the Club's representatives.
4. NOTIFY THE COAST GUARD.
OPA '90 requires that notice of the spill be given to the National Response Center in Washington, D.C., whose telephone number is:
1-800-424-8802.
The address is:
U.S. Coast Guard Headquarters
Room 2611
2100 Second Street, S.W.
Washington, D.C. 20593
Attention: NRC
Fax No.: 202-479-7181
Care should be taken that all details of the call, including the time, the names of the individual parties and the substance of the conversation are logged and memorialized. Telephone notice should be followed promptly by written notice, preferably by fax.
A record of all subsequent activities and communications relating to the spill should be maintained.
The appropriate Coast Guard district office should also be notified.
A list of applicable telephone numbers is set out in the insert accompanying this issue.
5. NOTIFY ALL APPROPRIATE STATE AND MUNICIPAL AUTHORITIES.
States and municipalities may also have notification requirements and we have set out in the insert a significant number of these, although it is virtually impossible to assure their accuracy other than at the very time they were obtained. OPA '90 requires that the federal agencies notify the appropriate state agencies and in the event locally appointed attorneys cannot immediately notify the appropriate state authorities, assurance should be obtained from the federal agencies that they have notified them.
6. RETAIN A CLEAN-UP COMPANY.
While the Act contains provisions granting the Federal Government authority over oil spills, in many cases the Government may permit a privately retained contractor to do the clean-up work, assuming it is accomplishing the job. Even where later events overtake the situation and the Government assumes direct charge, it may nonetheless have been worth the effort to have the loyalty and input of at least one portion of the clean-up team in the first instance. It cannot be emphasized enough that the first order of business -- subject only to matters of safety and guarding against the possibility of greater ecological damage -- should be to stop the outflow of oil and commence the clean-up process. It may therefore be advisable to retain a private clean-up company at the outset. If the vessel is entered with a P. & I. Club, the selection of the company should be left to the Club's local representatives.
B. ALMOST IMMEDIATE STEPS
1. ESTABLISH A COMMAND POST WITH RELIABLE LINES OF COMMUNICATION WITH ALL PARTIES IN THE "NEED-TO-KNOW" NETWORK.
In the early stages of a casualty it might not be possible to determine the best composition of, and the best location for (1) the casualty control net, (2) the pollution clean-up net, (3) the fact-gathering operation, and (4) the decision-making channel relating to all facets. There will be different personnel involved in these operations (although some may be common to one or more or all of them). These should, however, be sorted out as soon as possible so that (particularly when there are time zone differences) there will be frequent exchanges among those who have the information, those who must be consulted, if necessary, to interpret the information, and those who need the information to make decisions.
2. CONSIDER POSSIBLE DEFENSES TO CLAIMS.
The range of defenses has been narrowed by OPA '90, basically to the intervention of outside events: (1) an act of God, (2) an act of war, (3) an act or omission of a third party, and (4) gross negligence or willful misconduct of a particular claimant.
The "responsible party" bears the burden of proof and must report the spill and assist with removal efforts if requested, in order to qualify for the defenses. Assistance may be declined only for sufficient cause -- which is not further defined in the act.
Limits of liability (the greater of $1,200 per GT or $10M for a tank vessel over 3,000 gross tons) are similarly conditioned on notice and assistance. Gross negligence, willful misconduct and the violation of federal safety regulations negate limitation.
3. CONSIDER THE POSSIBLE NEED FOR SEPARATE REPRESENTATION FOR MASTER OR CREW.
Separate legal representation may be required for the master, crew members, or anyone else connected with the owning organization, due to the exposure to fines or penalties such individuals may have under various statutes. This must be balanced against the need to maintain control of the situation. If individual crew members are dragged off to jail or subjected to drug or alcohol tests, it may be necessary to provide them with counsel on an almost immediate basis. As soon as possible, however, the potential for conflict should be reevaluated and resolved.
4. CONSIDER PUBLIC RELATIONS ASPECTS.
Depending upon the magnitude of the casualty, the amount of in-house expertise, and the utility of having a positive impact on the publicity surrounding a casualty, it may be advisable to secure the services of a public relations organization so as to divorce this function from the operational and legal activities which will necessarily be in high gear in the early stages following a casualty. Public relations specialists may also be useful in attending local area ecology meetings, etc., in order to keep the shipowner up-to-date.
5. PROVIDE FOR QUICK SETTLEMENTS OF SMALL CLAIMS.
In highly popular and therefore heavily populated recreational areas during the on-season, considerable advantage may be gained by obtaining the services of adjusters authorized to settle small claims of a minor nature -- for boat cleaning, replacement of soiled bathing suits, towels, etc. -- on an almost immediate basis. This has proved very effective in a number of oil pollution cases.
6. CONSIDER ENGAGING EXPERTS.
In the nature of things, the sooner experts are provided with access to the physical evidence involved in a casualty the more accurate their analysis is likely to be. It may be important to appoint experts as soon as the general areas in which their services are required become reasonably clear. Preservation of physical and documentary evidence is especially important. In busy harbors it is advisable to obtain samples of the oil in question periodically, for "fingerprinting," to insure that only casualty related oil is included in the clean-up for which the owner or his P. & I. Club is paying.
7. COAST GUARD HEARINGS.
In some cases the U.S. Coast Guard will have conducted an informal on-the-scene investigation before the vessel owner even learns of the incident. In many cases a formal investigation will follow. Necessary preparation should begin immediately.
8. SECURITY.
While government entities will look to the security provided them under various statutes, private parties may nonetheless seek to arrest or attach the vessel, even though they are also given protection under the new federal statute. The cargo owner (or charterer) may seek security in any event. Preliminary attention should be given to the mechanics of providing security if this becomes necessary.
RESPONSE PLAN NOTE:
All vessels should now have a response plan on board, whether or not it is presently mandated by statute. Regulations governing statutory response plans are still being considered, but all such plans must be designed to cover a "worst case" discharge and must include, inter alia, the following:
Emergency notification procedures.
Vessel-specific information.
Name of response coordinator [qualified individual].
List/location of spill response/fire extinguishing equipment (including on board equipment).
Response personnel and their training.
Cargo hazard identification.
Emergency response procedures, i.e., containment, countermeasures and cleanup.
Emergency response scenarios, i.e., large/small, fires/explosions, collision, grounding, salvage operations, spills in sensitive populated areas, offshore/shoreside spills, etc.
Salvage operations.
Lightering capabilities.
Waste disposal.
Worker health safety.
Threat to environment/public health
and safety.
********
1 See e.g., Highlights of the United States Oil Pollution Act of 1990, which appeared in Mainbrace, Vol. 1, No. 3, (October 1990).
* See the "Response Plan Note" at the conclusion of this article.
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W. Cameron Beard joined the firm as an associate on June 17, 1991. A native of Connecticut, he received his secondary education at the Taft School in Watertown, Connecticut and was graduated cum laude from Georgetown University, Washington, D.C. in 1983, with a B.A. degree. That summer, as an exchange student, he undertook intensive Russian language studies at Leningrad State University. In 1986 he received his law degree from the University of Connecticut School of Law, where he was the Founder and Co-Editor-in-Chief of the Journal of International Law. He had the distinction of having a case note he wrote for the Connecticut Law Review (17 Conn. L. Rev. 595, 597-598 (1985)) on the subject of admiralty jurisdiction of general agency agreements cited by the Supreme Court. See Exxon Corp. v. Central Gulf Lines, Inc., 111 S.Ct. 2071, at 2075, 1991 AMC 1817, at 1822 (1991), overruling Minturn v. Maynard, 58 U.S. (17 How.) 477 (1855), and other cases holding that agency agreements were not within the admiralty jurisdiction.
Mr. Beard served as a research assistant to Professor Geoffrey Hazard of Yale Law School in 1985, and was law clerk to the Hon. B. Edenfield, Judge of the U.S. District Court for the Southern District Georgia in 1986-87. Before coming to Healy & Baillie, he was an associate at Burlingham, Underwood & Lord, and at Windels, Marx, Davies & Ives. He is admitted to practice in Connecticut and New York.
* * *
Evanthia ("Eve") Coffee joined the Firm as an associate on September 23, 1991. She received her B.A. degree from Barnard College of Columbia University, New York in 1987 and her Juris Doctor degree from the Columbus School of Law of the Catholic University of America, Washington, D.C. in 1991. Prior to attending law school, she was a legal assistant in New Jersey and while in law school took part in moot court competitions and was a moot court associate. During the past few years she worked part-time for World Wide Marine Services Inc., assisting her father, Captain James Spiliotes, on several marine surveys and in preparing survey reports. Foreign languages in which she is proficient include Norwegian, Swedish, and Greek.
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Gordon W. Paulsen was one of five maritime law specialists sent by the Ford Foundation to Beijing, The People's Republic of China, in June of this year, to assist Chinese experts in the drafting of a new Maritime Code. The Chairman of the week-long consultative meeting was Sun Wanzung, the Director General, Bureau of Legislative Affairs of the State Council. Others from the People's Republic of China were Guo Riqi, Special Consultant, Bureau of Legislative Affairs of the State Council; Wei Yaorong, Director, Economic Law Dept., Commission of Legislative Affairs; Gao Sunlai, Director of China Global Law Office and Director, China Maritime Law Ass'n; Zhu Zengjie, Legal Consultant, China Ocean Shipping Company; Zhao Hongzun, Professor, University of Foreign Economic Relations and Trade; Zhang Changlin, Legal Consultant, China Ocean Shipping Company; Zhang Yuejiao, Division Chief, Dept. of Legislative Affairs, Ministry of Foreign Economic Relations and Trade; Li Shishi, Division Chief, Bureau of Legislative Affairs of the State Council; Yang Wengui, Deputy Division Chief, Policy and Law Dep't, Ministry of Communications; Ye Anming, Deputy Division Chief, Bureau of Legislative Affairs of the State Council; Wu Hau, Secretary, Maritime Law Studying Group of the State Council, and Du Dachang, Senior Translator, Foreign Affairs Dept. In addition to Mr. Paulsen, who is a Past President of the Maritime Law Association of the United States (MLA), the U.S. Delegation included past MLA Presidents Herbert M. Lord and Richard W. Palmer, Prof. David J. Sharpe of George Washington University Law School and Prof. Robert Force of Tulane Law School.
It is anticipated that the new code, (which has been under consideration for many years), will come into effect about the end of 1991.
* * *
John D. Kimball and Robert G. Shaw lectured at the Japan Shipping Exchange in Tokyo on June 25, 1991. Mr. Kimball spoke on "Some Current Topics of Interest in New York Arbitration." Mr. Shaw's lecture was on the topic of "Exercising Liens on Cargo and Subfreights Under American Law."
The lectures were attended by over 60 members of the Japan Shipping Exchange, including representatives of the Britannia Steam Ship Insurance Association, Dodwell & Co., Dowa Line, Far East Shipping & Trading, Far East Transport, Hinode Kisen, Hoko Shipping, the Japan P&I Association, Kawaski Kisen, Kyoei Mutual Fire & Marine Insurance Co., Mitsui O.S.K. Line, Navix Line, Nippon Salvage, Nippon Yusen Kaisha, Nissan Motor Car Carriers, Oceanroutes, Petroleum Industry Marine Association, Shinko Kaiun, Shinwa Kaiun, Showa Line, Toho Shipping, Tokyo Marine & Fire Insurance Company, Toko Kaiun, Tokumaru Kaiun, Tokyo Average Adjusting, Tsurumi Yuso, Waseda University and several maritime law firms.
* * *
Howard M. McCormack was a member of the Ad Hoc Topics Committee for the Xth International Congress of Maritime Arbitrators, held in Vancouver September 10-13, 1991. He was also a participant and speaker at the Congress, delivering a paper on "An Overview of the Oil Pollution Act of 1990." A copy of the paper was published in the documentation furnished to the more than 215 registrants.
He will also be a speaker at the
December 11, 1991 meeting of the Society of Maritime Arbitrators in New
York. His talk will consider liability of ship builders and repairers.
Mr. McCormack was for some years Maritime Counsel of Bethlehem Steel Corporation
and has had extensive experience in legal matters relating to shipbuilding,
ship repair contracts and shipyard activities.
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Brian McGovern, who was a trainee
with Healy & Baillie during the summer of 1972, after receiving his
law degree from University College, Dublin, recently became a Senior Counsel
(S.C.), the Irish equivalent of Queen's Counsel (Q.C.) in England and other
Commonwealth countries.
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Navigation
Recent Decisions of Interest
Jeremy
J.O. Harwood **
1. INCORPORATION OF CHARTER PARTY ARBITRATION CLAUSES IN BILLS OF LADING.
In a case argued before the United States District Court for the District of Maryland, Office of Cereales of the Republic of Tunisia v. Coastal Carriers Corp., the district judge followed a recent English decision on the incorporation of charter party arbitration clauses in bills of lading, rather than decisions on the same issue rendered by the District Court for the Southern District of New York ("Southern District"). The issue involved an old chestnut -- a bill of lading provision specifically incorporating a charter party arbitration clause, which was in the standard "narrow" language of the New York Produce Exchange form, and referred only to arbitration of disputes between "Owners and the Charterers". Coastal, the charterer, asserted that it was only required to arbitrate with the "Owner" under the charter party arbitration clause and could not be compelled to arbitrate with the bill of lading holder, irrespective of the incorporation of the charter's terms in the bill. Coastal cited a number of Southern District cases supporting its position.
Petitioner Tunisia referred the court to Pride Shipping Corp. v. Chung Hwa Pulp Corp., [1991] 1 Lloyd's Rep. 126, for the proposition that the express reference in the bill of lading to the arbitration clause of the charter manifested a clear intention to bind the parties to arbitration in accordance with the charter's terms, and that the language of the arbitration clause should be reformed to give effect to that intention. Judge Motz agreed. Referring to Coastal's argument for a contrary result he stated:
As a matter of abstract logic, this argument may have some appeal but in this factual context it makes little sense. If it were accepted, it would mean that the parties committed the wholly nugatory act of specifically incorporating into the bill of lading a clause from the charter which by its own terms could not be binding upon them. It is unreasonable to infer that this was their intent. (citing Pride Shipping, supra)
The decision is significant because of the rejection of the prior contrary decisions on the same issue by the Southern District and because of the clear endorsement of arbitration. The United States Supreme Court has stated in a number of recent decisions upholding arbitration clauses that arbitration is to be encouraged. It appears that its lessons are reaching the district courts. Indeed, the Southern District's strict construction approach, denying arbitration by or against a third party because of the limited "disputes" language, not only appears to reflect more of an outmoded hostility to arbitration than a concern to implement the parties' intentions but also contradicts its own related decisions.
Where the charter party arbitration clause incorporated in a bill of lading provides for arbitration of "[a]ny dispute arising in any way under this Charter-Party" by arbitrators appointed by the owner and the charterer, the Southern district has reformed the clause so as to require arbitration, if demanded by (or of) the bill of lading holder. In Midland Tar Distillers Inc. v. M/T Lotos, 362 F.Supp. 1311, 1314 (S.D.N.Y. 1973), the Court rejected the bill of lading holder's argument that, despite the incorporation of the charter's arbitration clause in the bill, it could not be compelled to arbitrate, because the clause provided only for arbitration of disputes between the owner and the charterer since only they had the power to select arbitrators. Judge Cannella found an intent by the parties to the charter to arbitrate all disputes, which intent was "carried forward into the bill of lading". Id. at 1315. Accordingly, the court decided:
The incorporation of the arbitration clause by the bill of lading, and thereby, by the plaintiff's contract of carriage, expands the scope of that clause to embrace persons other than the two parties extant at the time of its drafting. The court finds implicit in this expanded usage, a concomitant expansion in the provision for selection of arbitrators. 362 F. Supp. at 1315.
Judge Mukasey followed the logic of the M.V. Lotos in reforming an identical arbitration clause in Keystone Chemical, Inc. v. M.V. Bow-Sun, 1989 A.M.C. 2976 (S.D.N.Y. 1989). The reasoning behind the reformation of the "appointment" language cannot be faulted.
But, unlike the Maryland court, the Southern District and the U.S. Court of Appeals for the Second Circuit, to which appeals from the Southern District are brought, have thus far declined to reach the same result where the arbitration clause is more narrowly worded, and is limited to disputes "between the***Owner and the Charterers". Export Steel Corp. v. Mississippi Valley Barge Line Co., 351 F.2d 503 (2d Cir. 1965).
2. ATTORNEYS' FEES AND COSTS.
The traditional American Rule is that attorneys' fees are not awardable to the successful party unless statutorily or contractually authorized. Such a contractual authorization is found in Clauses 23 and 24 of the standard form ASBATANKVOY charter. Clause 23 provides that damages for breach of charter shall include "all costs of suit and attorney [sic] fees ...". Clause 24 states that arbitration awards "may include costs, including a reasonable allowance for attorney's fees". In two recent cases, New York arbitral panels have treated such contractual authorization of awards of attorneys' fees as discretionary, even in the most egregious circumstances. In The Nicopolis, S.M.A. No. 2745 (1991) and The Demetra (November 8, 1991), both involving charters on the ASBATANKVOY form, the panels declined to award attorneys' fees, despite the fact that the owner's demurrage claim was admitted in part, and that the balance was disputed manifestly for the purpose of delay. The panels, without explanation, declined to follow The Trinity Navigator, S.M.A. No. 2600 (1989), in which owners were awarded in excess of $100,000 in legal fees, on the ground that such an award was mandatory under Clause 23 of the ASBATANKVOY form.
On confirmation of The Nicopolis
award as a judgment, however, the district court had no such qualms. Pursuant
to Clause 24 it awarded the owner its attorneys' fees and costs in petitioning
to confirm the award and also agreed to owner's request that the judgment
provide for recovery of any court costs and attorneys' fees incurred in
the event of further litigation in respect of the award, following Trans-Asiatic
Oil, Ltd. v. UCO Marine Intern, Ltd., 618 F.Supp. 132 (S.D.N.Y. 1985).
********
** Associate, Healy & Baillie, who represented a petitioner to compel arbitration in the Maryland action and owners in the two recent New York arbitrations which are the subject of this note.
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FLASH: Just as this issue of "Mainbrace" was going to press,
official word was received that associates Simon Harter and Evanthia ("Eve")
Coffee had passed the New York State bar examination, which had been administered
on July 30th and 31st, and August 1st, 1991. It is expected that they will
be admitted to the bar within the next few months. Congratulations and
best wishes to both of them.
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MAINBRACE is intended to provide general information. The articles contained in MAINBRACE do not constitute legal advice. An analysis of the facts relating to a particular issue must be accomplished before legal advice can be given.
NOTE: "Mainbrace," our Firm's cable address, in nautical terminology means the brace or rope sustaining the main yard on a ship. The Staff of "Mainbrace" consists of Nicholas J. Healy, Gordon W. Paulsen, John C. Koster, Matthew A. Marion, Betty M. Waterman and Renee Kintzer.
New York Office: 29 Broadway New York, NY 10006-3293 Telephone: (212) 943-3980 Telecopier: (212) 425-0131 |
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