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Getting The Deal Through

Shipping in
The United Kingdom

An interview with Kevin Cooper

MFB Solicitors

With a broad commercial shipping, superyacht and marine insurance practice, Kevin Cooper’s clients include major international shipowners and builders, charterers, cargo owners, salvors and shipyards, and their respective insurers. After Oxford University, Kevin served in the British Navy for 10 years. Having previously worked at another firm in its London, Shanghai and Monaco offices, he joined MFB in June 2018.

Kevin’s admiralty practice involves high-value multi-jurisdictional cases such as the collision between the container vessel MSC Joanna and the hopper dredger W D Fairway in Tianjin, the grounding and subsequent collision of the Khalijia 3 in Mumbai, the Altantik Confidence sinking and the Norman Atlantic ferry fire. He also handles a wide range of charter party, cargo claim and shipbuilding matters.

Kevin’s earlier experience as a criminal court advocate in the navy is now employed acting as an advocate in arbitration and mediation proceedings. He also advises on corporate ethics, crime and regulatory matters, especially anti-corruption policies and procedures.

Kevin is dual-qualified as a solicitor and a barrister, regularly chairs and speaks at shipping sector events and has particular industry contacts in the passenger vessel sector and, regionally, in Norway, Italy, Spain, Portugal, Turkey and the Americas. He speaks French, German, Swedish and Mandarin Chinese.

1 What is the current state of the shipping industry in your country?

The UK is one of the leading maritime centres in the world. Its shipping industry contributes approximately £14.5 billion to the UK’s GDP and directly supports about 186,000 jobs.

The UK maritime industry extends beyond the pure shipping sector to include ports, marine equipment and business services (eg, brokers, financiers, insurers, lawyers and consultants). As a whole, the UK maritime industry contributes about £37.4 billion to the UK’s economy and supports around 957,000 employees.

Specifically, the UK ports industry is the second largest in Europe, handling almost 500 million tonnes of freight each year, as well as over 60 million international and domestic passenger journeys. There are about 120 commercial ports in the UK, including major all-purpose ports, ferry ports, specialised container ports and ports catering for specialised bulk traffic, such as coal or oil. There are also a large number of smaller ports catering for local traffic or specialising in particular sectors, such as fishing and leisure boating. The UK ports industry handles over 95 per cent of UK import and export, including 25 per cent of the UK’s energy supply and almost half of the country’s food supplies by volume and 75 per cent by value, and directly employs about 101,000 people.

The UK marine industry’s key market sectors include leisure, military, commercial and offshore renewable energy. Marine systems and equipment form an important element of the UK’s exports.

While the military equipment sector is important, the global merchant shipping industry provides a massive potential market for commercial systems and equipment. The UK also has a growing super-yacht industry, which in 2017 posted its fifth consecutive year of growth, with a turnover of around £615 million a year and over 4,000 employees. Many leading international yacht designers are based in the UK. The leisure marine sector mixes service and manufacturing, from surveyors and charterers to specialist equipment manufacturers. There is also a fast-growing cruise industry.

The UK leads the world in respect of marine insurance, writing about a third of global marine insurance premiums, and 60 per cent of protection and indemnity insurance. Twenty-six per cent of global ship-broking is undertaken in the UK.

The UK government is committed to the training of seafarers. The UK’s maritime education and training infrastructure are important in producing the next generation of maritime professionals. It is estimated that just over 25,750 UK seafarers were active at sea during 2018.

The UK is home to leading maritime regulatory bodies, such as the International Maritime Organization (IMO) and the International Association of Classification Societies.

The Baltic Exchange, an independent source of maritime market information for the trading and settlement of physical and derivative contracts, is also based here. The following influential maritime business service provider bodies are also located in the UK: the UK Chamber of Shipping, Maritime London, UK Major Ports Group, British Ports Association, British Marine, the Society of Maritime Industries, the Admiralty Solicitors Group, and the Shipbuilders and Shiprepairers Association. These all help to support and promote the UK marine industry.

London is a leading centre for maritime financing. It also provides leading arbitration and mediation services to the global industry, from the London Maritime Arbitrators Association, the London Court of International Arbitration and the International Dispute Resolution Centre.

The figures stated above are taken from the UK government’s own statistics and a CEBR report commissioned by Maritime UK, published in September 2017 (which is the most up-to-date report available). Maritime UK is an association of shipping, ports and maritime business services sectors in the UK.

2 What are the prevailing shipping market trends affecting your country?

The global shipping market has experienced challenging times in recent years, following the 2008 financial crash. A slump in the shipping market, with deflated oil and commodity prices, together with overcapacity in some sectors, has affected shipping worldwide, not just the UK.

The effects have been seen in the reduced amount of ship finance transactions and the amount of finance available to the shipping market, but also in the amount of business being placed in the London insurance market. That said, UK lawyers, courts, and arbitration and mediation bodies have been involved in a large number of disputes that have arisen as a result of adverse market conditions, either because UK-based parties are involved or because the relevant contracts are governed by English law or submission to the jurisdiction of the English courts or arbitration in London, as the common jurisdiction of choice for companies in the shipping sector. There have been a number of major insolvencies among international shipping companies, which have often led to domestic rehabilitation proceedings, the impacts of which have been felt worldwide.

The increasing digitalisation of the shipping market has also played a significant part in changing the way the market does business. The digital revolution that has taken place across many sectors is revolutionising shipping processes and has brought with it benefits in security, efficiency and energy savings.

GPS navigation, real-time weather data feeds and smart containers are just some of the technologies redefining the movement of goods. The IMO has actively supported the implementation of automated electronic data exchange from ship-to-ship and ship-to-shore to increase the efficiency, safety and security of navigation and communications. Ship operation and maintenance have also been affected by these technological advances. On-board machinery and equipment have become highly advanced. Digitalisation has opened up a huge market and brought with it many new business opportunities, but the use of digital navigation systems and interconnected data leaves ships potentially exposed to cyberattacks and accidental data leakage. Major shipping organisations continue to raise awareness of cybersecurity risks. For example, in 2017, the IMO had sought to address concerns surrounding cyberattacks on ships through the adoption of the IMO Resolution MSC.428(98) on Maritime Cyber Risk Management in Safety Management Systems, which provides that an approved SMS should take in account cyber risk management in accordance with the objectives and functional requirements of the ISM Code. The IMO has also developed guidelines, the IMO Guidelines on Maritime Cyber Risk Management, that provide high-level recommendations on maritime cyber risk management to safeguard shipping from current and merging cyber threats and vulnerabilities. Finally, BIMCO developed Guidelines on Cyber Security on board Ships, which provide practical recommendations on maritime cyber risk management covering both cyber security and cyber safety. The UK government, as part of its national cybersecurity strategy, published a Cyber Security Regulation and Incentives Review in 2016. The UK’s strategy included a five-year plan estimated to cost £1.9 billion aimed at making the United Kingdom a safe place to live and to do business online. More recently, the UK implemented the EU Network and Information Security Directive into domestic law on 10 May 2018. Also, the recent implementation of the General Data Protection Regulation (GDPR) has cybersecurity implications, increasing pressure on shipping companies to tighten their cybersecurity and to adopt improved practices. According to Lloyd’s Register CEO Alastair Marsh ‘a good approach is to start by gaining a better understanding of the threats and the vulnerabilities to the wider supply chain.  Once an organisation has sufficient knowledge, on who is likely to attack and what they will be targeting, they can then build a scalable security posture that can be continuously adapted to meet the changing threat landscape.’

Maritime piracy, which has posed a significant threat to the shipping market for many years, including taking a significant financial toll, is generally in decline. The number of piracy incidents is at its lowest level since the late 1990s, according to the IMO. Modern maritime piracy reached its peak around 2011, off the east coast of Africa. Since then, counter-piracy operations, including military intervention, have largely successfully suppressed these incidents. According to Oceans Beyond Piracy, the total economic costs of Somali piracy in 2017 was US$1.4 billion, compared to US$7 billion in 2010. Nonetheless, a spike in piracy events in the Horn of Africa in the spring of 2017, including the hijacking of Aris-13, indicates that Somali criminal networks are still capable of sophisticated attacks.

Despite the general decline in piracy, there has been a recent spike in Asia, Latin America and the Caribbean, with yachts being the primary target in the latter. Piracy also remains a persistent threat in the Gulf of Guinea, where reports of incidents more than doubled in 2018.

Finally, we are seeing a change in trading patterns as the economic centre of gravity shifts further eastwards, driven by emerging markets such as China and India.

3 Are there any recent domestic or international political or legislative developments that may have an impact on your country’s shipping market?

Brexit is the key political development of recent years for the UK shipping market.  The UK was due to leave the EU on 29 March 2019 but has been granted an extension until 31 October 2019. Considering that the EU is the UK’s largest trading partner, and that post-Brexit, the UK would no longer benefit from EU internal trade access without a bilateral agreement between the UK and the EU, or the network of EU bilateral and multilateral external trade agreements with other countries, there may be a temporary slowdown in UK maritime traffic and more muted growth, at least in the short term.

In the long term, however, Brexit is not expected to have a dramatic effect on total UK maritime volume, particularly once new trade agreements between the UK and other EU and non-EU countries have been concluded.

London’s prominence as a major insurance, legal, broking and general shipping services hub means that many businesses that are currently based in the UK, or that do significant business with the UK, will not move or take their business elsewhere.  Indeed, some businesses that currently operate abroad may choose to move to the UK once EU laws cease to be applicable.

One area in which we are likely to see a major shift is in the application of EU law, in the form of Treaties, Regulations and Directives. These affect a wide number of commercial issues including trade, insurance, environmental regulation, international sanctions, contract terms, competition law, employment law and dispute resolution, and unless the UK continues to adopt the EU approach, which is highly unlikely, we will begin to see variations between UK and EU practice.

Irrespective of the outcome of the UK’s trade discussions with both EU and non-EU countries, English law is likely to continue to be chosen to govern international contracts and transactions. The Lord Chief Justice supported this view in a speech at Beijing in 2017, in which he offered the opinion that Brexit will have no significant adverse impact on English law and on London’s thriving arbitration and litigation services. English court jurisdiction and London arbitration institutions are also likely to remain the preferred choices for dispute resolution among international contracting parties: there are more arbitration proceedings seated in London each year than in Singapore, Paris, Stockholm, Geneva, Dubai and Hong Kong combined.  This is supported by a recent survey that concluded that London has an 80 per cent share of international arbitration referrals in respect of maritime disputes, with the LMAA handling approximately 1,500 maritime arbitrations in 2017 (the last year for which firm statistics are available).

We are, unfortunately, seeing shipowners leaving the UK’s shipping registry due to uncertainty over the UK’s departure from the EU. As of 31 May 2019, there were 1,229 vessels registered with the British flag, representing 10.5 million GT, down from 1,315 vessels or 16.5 million GT at the end of May 2018. This could have a detrimental effect on taxation revenues.

The Trump presidency, with a potential second term beginning in 2020, is another significant international political development. However, while the United States is the largest economy in the world, it is only the sixth-largest shipping nation and owns less than 7 per cent of the world merchant fleet. Nonetheless, increased protectionism on the part of the US and more trade barriers, as proposed by President Trump, may impact on global trade generally.

We are seeing a hardening of US sanctions against Iran, following the withdrawal of the US from the Joint Comprehensive Plan of Action. The EU has responded to the US’s withdrawal by amending the EU Blocking Regulation, Council Regulation (EC) No 2271/96 which counteracts the effect of the extra-territorial application of laws of third countries to EU persons where such application affects their engagement in international trade. Further to this, France, Germany and the UK have launched a special purpose vehicle, INSTEX, to facilitate international commerce with Iran.

Despite the EU’s efforts to relax sanctions on Iran, we are seeing an increase in the risk of military conflict in the region, with the Iranian government suggesting that it may ‘close’ the Strait of Hormuz. This would have a detrimental effect on the global shipping industry, specifically the oil industry, with 35 per cent of the world’s seaborne oil shipments passing through the Strait.

In addition, the imposition of US tariffs against Chinese imports and the risk of a US-China tariff war have had an effect on the global economy and international shipping market.

Domestically, the Department of Transport has recently developed a long-term strategy, Maritime 2050 – Navigating the Future, which aims to ensure that the UK remains one of the world’s leading maritime nations.

4 What are the key regulatory and compliance issues for your country’s shipping market? What’s coming up in the near future?

The UK is subject to a wide range of regulatory legislation under domestic, regional (at least until the implications of Brexit become clear) and international law.

International Law

This includes resolutions and conventions sponsored by various UN agencies, such as the International Maritime Organization (IMO) and the International Labour Organization (ILO).

In recent years, the IMO and the EU have been particularly active on environmental regulation, reflecting the global initiative to reduce ship emissions and pollution of the marine environment. From an international point of view, the IMO periodically proposes and adopts amendments to revise the key convention in this area – the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78). The revised Annex VI to MARPOL (and the associated NOx Technical Code 2008) came into force on 1 July 2010 and imposed more stringent limits on sulphur content in fuel. In particular, the revisions provided for a reduction in the sulphur content of any fuel oil used on board ships outside the ECAs (the global sulphur cap) to 3.5 per cent (from the previous 4.5 per cent) from 1 January 2012, followed by a further reduction to 0.5 per cent from 1 January 2020. 

To bring sulphur limits applicable within the EU in line with IMO-imposed levels, EU Directive 2005/32/EC came into force on 1 January 2010. The Directive applies to all vessels, irrespective of flag, ship type, age or tonnage, and requires EU member states to take all necessary steps to ensure that ships berthed or anchored within their ports for longer than two hours do not consume marine fuel with a sulphur content exceeding 0.1 per cent by mass. The Directive was implemented into domestic law by the Merchant Shipping (Prevention of Air Pollution from Ships) (Amendment) Regulations 2010 and the UK has been enforcing the Directive since 20 April 2010.

In addition, the Ballast Water Management Convention came into force in September 2017. This Convention addresses the unintended transportation of marine organisms in ships’ ballast tanks and the damaging effect which this is having on local ecosystems. Under the Convention, ships are required to manage their ballast water to remove, render harmless or avoid the uptake or discharge of, aquatic organisms and pathogens in ballast water and sediments.

International standards as to ship recycling are addressed in the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships 2009 (the HKC). Although the HKC is not yet in force, the EU incorporated elements of the HKC regime into EU law through Regulation (EU) No 1257/2013 (the 2013 Regulation) on 30 December 2013.

The 2013 Regulation sets out requirements for European ships and European shipowners, as well as ship recycling facilities, and the relevant competent authorities or administrations. In 2016, the European Commission provided an official list of ship recycling facilities, which was later updated on 6 December 2018. As of 1 January 2019, EU flagged vessels can only be scrapped at an EU approved yard (which now includes certain yards outside EU states).

Regional Law

As of May 2018, the GDPR came into effect throughout the EU (including the UK). This regulation applies throughout the EU and is aimed to ensure adequate security measures are in place in handling, processing and storing of data of all individuals.  Failure to comply with this regulation could see companies facing fines in the range of €20 million or four per cent of the company’s annual global turnover (whichever is the greater). This regulation impacts on the shipping industry as a whole, particularly where a large volume of sensitive and personal data may be held or where it is likely, for operational purposes, used beyond international borders.

Domestic Law

The UK’s Modern Slavery Act 2015 came into force on 31 July 2015 and addresses the rise of new forms of slavery by imposing an obligation on companies with a turnover of over £36 million or greater to disclose what they are doing to eradicate slavery within their supply chains. Shipowners, particularly those with links to the UK, need to ensure that they have adequate anti-slavery and anti-trafficking policies in place, as the legislation provides for the forfeiture of vessels that have been used (or were intended to be used) for such trafficking, in certain circumstances and it is unlikely that the shipowner’s insurance would cover such forfeiture. 

Those to whom the Act does not apply directly are well advised to investigate their supply chains anyway, to enable their contractual counterparties in the UK to satisfy their own obligations under the Act.

In October 2017, the UK government released updated guidance on, among other things, section 54 (the Transparency in supply chains and reporting obligations). It is not meant to change the law but serves as important guidance and encourages organisations with turnovers below the £36 million mark to produce a section 54 statement voluntarily. The Act may also have future additional compliance implications; there is proposed legislation currently under consideration by Parliament to amend the Act, which includes requiring commercial organisations and public bodies to (mandatorily) include a statement on slavery and human trafficking in their annual report and accounts.

5 What are the shipping industry’s current sources of finance? How do you predict they will develop, and what are the advantages and challenges to financing a vessel in your country?

In the years following the 2008 financial crisis, ship financing has changed considerably, with long-standing conventional financiers cutting back and new alternative sources of finance emerging in their wake.

For more than a century, traditional ship finance has been based on financiers (banks largely in Europe and the US) taking a first priority mortgage on the ship. This proved to be a good way of lending to the sector, providing security in case the shipowner could not pay back. As successive financial crises struck, the banks that historically dominated the shipping market, particularly the European banks, began to withdraw from shipping, either closing their books to new business or, in some cases, running down their portfolios and exiting the industry altogether (eg, the Royal Bank of Scotland and Commerzbank). The Scandinavian bond market closed its doors, and the speculative short-term investors comprising of hedge funds and VC trusts found immediate losses to be at odds with their short-term investment strategies, and so they too began to withdraw from the industry. Although this has been triggered by the financial crisis, other factors include the increasing regulation and scrutiny faced by the European banks, particularly as a result of the Basel Regulations and following the significant losses in recent years by those banks from financing the shipping industry.

As the western banks struggle to meet capital ratio criteria and other banking regulatory requirements, some have been altering their departmental structures. For example, the likes of DNB, ABN Amro and BNP have incorporated their independent shipping departments into a larger internal corporate structure.

The retreat of the western banks has provided an opportunity for East Asian players, particularly the Chinese banks, with an abundance of capital, to step in and build new shipping portfolios or expand existing ones. At the time of the financial crisis, the top 15 global shipping lenders did not include a single East Asian bank. Skip to 2017, and two Chinese banks (the Bank of China and China Eximbank) top the market, knocking DnB off the top spot, with Korea Eximbank occupying sixth place. 

While, historically, opportunistic investors have exited the market in the face of large losses, there are now potential opportunities to acquire cheap vessels as the various sub-industry markets (tankers, chemical carriers, oil carriers, bulkers, containers) rise and fall on the market, providing ‘prospectors’ with opportunities to bet on vessel values and charter rates. Traditionally, relationship banking was key but, as economic pressures dominate, the need for finance by owners, and the reduction in the appetite of banks (through sub-participation or otherwise), has seen an increase in alternative sources of funding. In particular, the small to medium-sized owners are becoming increasingly interested in alternative structures, such as high-yield bonds, convertible debt, capital and operating leases, and preferred equity structures.

The UK is well placed in its continued service of this industry, with a wealth of experience and advisers with established international offices headquartered in London. English law is particularly well suited to ship finance, being one of the oldest and most stable of legal systems; it is predictable, being based upon precedent, much of which is rooted in the country’s maritime tradition and supported by specialist law firms that have grown with the industry. Although traditional Western shipping banks are withdrawing from the sector, in light of the international nature of the service providers who have fostered this industry, London still remains a core hub for the facilitation of transactions, even though the source of the finance may originate from more easterly shores.

6 Have there been any recent significant domestic or foreign court decisions or arbitration awards that impact on your country’s shipping market?

Parties to international shipping contracts commonly choose English law to govern their contracts because it is predictable and commercial.

Similarly, they often choose to have their disputes resolved in the English courts because English courts and judges have a reputation for offering quality and experience. As a result, many significant shipping decisions are heard in the English courts, and the past year has been no exception. London also continues to be the most popular international arbitration centre in the world. Although, in the UK, arbitration awards are confidential to the parties, any English arbitration award that goes to appeal will be heard by the English courts, and that judgment will be made public. There is, therefore, an impressive body of English shipping case law to guide the market in its day-to-day commercial and contractual activities.

It is not possible to do justice to all the significant case law that has been generated by the English courts in recent years, but it is worth highlighting the following:

  • Maersk Tangier: A Court of Appeal decision concerning the compulsory application of the Hague Visby Rules where no bill of lading is issued, and application of the package limitation provision;
  • Alkyon: The Court of Appeal upheld the Admiralty Court’s decision not to order an arresting party to provide a cross-undertaking in damages.
  • Sur: a High Court decision providing guidance on time bars and for strike out applications under s41(3) of the Arbitration Act 1996 and in circumstances where there has been a geographical deviation from a contractually prescribed route;
  • Aconcagua Bay: Determined the meaning of the warranty ‘always accessible’, which is often found in voyage charter parties. The High Court held that the warranty applies both when attempting to reach the berth and when departing from it;
  • DC Merwestone: A Supreme Court decision regarding misrepresentations in a marine insurance case, namely where they had no effect on the underwriters’ decision, they are irrelevant to the claim being valid;
  • Res Cogitans: The Supreme Court confirmed that bunker suppliers who were unable to transfer property in bunkers supplied to a ship were nonetheless entitled to the price of the bunkers from the shipowners; 
  • Spar Shipping v Grand China Logistics: The Court of Appeal provided clarity on the obligation to pay hire punctually.

Outlined below are some brief summaries of highly noteworthy decisions over the past year. The first is a 2018 decision by the Supreme Court in Volcafe Ltd v Compania Sud Americana De Vapores SA (2018). This decision provided authoritative analysis on the burden of proof for cargo claims under the Hague-Visby Rules. In reversing the Court of Appeal, it held that under the Hague-Visby Rules, the legal burden of disproving a claim for negligence when cargo is lost or damaged at sea rests with the carrier of the goods. If it cannot, then it is liable to the cargo owner for its losses.

The Supreme Court also handed down a decision in a marine insurance case, Sveriges Angfartygs Assurans Forening (The Swedish Club) and others v Connect Shipping Inc and another (MV Renos) (2019). The insurers appealed against a finding that the insured vessel was a constructive total loss (CTL). There were two grounds of appeal: that costs incurred before the assured tendered notice of abandonment (NoA) should be excluded from the CTL calculation, and that SCOPIC remuneration payable to the salvors should also be excluded from that calculation. The Court ruled that costs incurred prior to the date of the NoA, with the notable exception of SCOPIC costs, should be taken into account in determining whether a vessel is a CTL. The Court’s reasoning on the SCOPIC exception appears to have been influenced by the fact that environmental pollution is a P&I, not H&M, risk, and that the ‘objective purpose’ of the SCOPIC payment was, in the court’s view, to minimise the owners’ liability for environmental pollution.

An important collision case was Evergreen Marine (UK) Limited v Nautical Challenge Limited in October 2018, which was the first appeal on liability in a collision case to reach the Court of Appeal since 2004. In a collision between two vessels, the Court upheld the first instance judgment of Mr Justice Teare, namely that in circumstances where one vessel is transiting a narrow channel and another vessel is waiting at the entrance of that channel to enter it, it is the narrow channel rule and not the crossing rule that applies. The crossing rule does not automatically apply simply because two vessels are crossing one another in or near a narrow channel. The case came before the High Court in January 2019 to consider damages. The main issue centred on whether the owner of the damaged vessel, whose impecuniosity has increased the cost or period of repairs, could claim in respect of any enhanced loss and damage arising from such impecuniosity. The High Court in fact did not rule on this issue as this was resolved as a matter of causation, but it did tentatively suggest that the full extent of the loss could be recovered provided that the relevant impecuniosity was reasonably foreseeable. The Supreme Court granted permission to appeal against the Court of Appeal’s decision on the liability issue, namely the relationship between the narrow channel rule and the crossing rules and, at the time of writing, it is understood that the Supreme Court will hear the case in February 2020.

7 What is the outlook for your country’s shipping market? Which sectors are likely to grow, and which not?

The UK government is highly committed to maintaining the UK as a leading maritime centre and promoting its growth. In recognition of the UK maritime industry’s significant contribution both to the UK economy and to the global shipping market, the UK Department of Transport has published a series of maritime reports and studies in recent years.

The most recent, and arguably prominent, is the Maritime 2050 strategy report, launched in January 2019 by the UK government in close partnership with Maritime UK, the body for the UK maritime sector. This long-term strategy details the UK’s long term ambitions for developing its core strengths across seven sectors in the maritime industry, as follows:

  • UK competitive advantage: maximise the UK’s strength in maritime professional services, maritime law, finance, insurance, management and brokering and develop new services such as green finance;
  • environment: lead the way in taking action on clean maritime growth enjoying economic benefits from being an early adopter or fast mover;
  • people: grow the UK’s maritime workforce and transform its diversity, reinforcing the UKs reputation as the world leader in the provision of maritime education and training;
  • trade: promote a liberalised trading regime that delivers maximum benefit for its maritime sector;
  • infrastructure: support the continued multi-billion pound commercial investment in maritime infrastructure that makes the UK a globally attractive destination for all maritime business; 
  • security and resilience: continue to be recognised as the global leader in maritime safety and security standards and expertise worldwide; and 
  • technology: strengthen the UK’s reputation for maritime innovation, maximising benefits to the UK from new maritime technology through its world leading universities, maritime small and medium-sized enterprises and global companies.

Although the UK seeks to embrace emerging technologies, such technologies have been a contributory factor in the decline in the number of the UK workforce out at sea. In addition to the wider historical trend of larger ships having fewer staff, the impact of modest wages being suppressed by an international labour supply has resulted in a shortage of British seafarers. While the UK has introduced initiatives in an attempt to boost the numbers in training, the latest figures continue to pale in comparison to historical levels. With the growing demand for digital talent, it is likely that such technological advance will change the nature of seafaring as the workforce will become shore-based rather than being at sea.

The Inside Track

What are the particular skills that clients are looking for in an effective shipping lawyer?

An effective shipping lawyer needs to combine solid knowledge of the law with a grasp of technical issues and sound commercial judgment. Commercial acumen is particularly important in the challenging market conditions that we have witnessed in recent years, because a value judgment often has to be made as to whether a case is worth pursuing. The work is truly international in nature and a shipping lawyer must be fully aware of global market and other relevant developments. They must be available around the clock and must also be able to communicate advice clearly and simply.

What are the key considerations for clients and their lawyers when arranging finance for a shipping transaction?

One key consideration for the borrower and the lender is flexibility, but their respective approaches will likely be opposing. Borrowers look for supportive, long-term relationship-driven financial partners, and expect to be supported when times are tough. However, financiers are no longer able to weather every storm and need the flexibility to be able to exit transactions through sub-participations or sales.

Parties and their advisers must strike a balance between robust protection for a lender and freedom to operate in a commercially viable manner for the borrower. This requires industry experts, familiar with the nature of the assets and the industry in which they operate, and a spirit of cooperative, relationship-driven transaction management.

What are the most interesting and challenging cases you have dealt with in the past year?

The Atlantik Confidence has continued to keep me busy. It is a case that led to the Court of Appeal ruling on whether it is possible to establish a tonnage limitation fund by means of a P&I Club Letter of Undertaking (it is possible). This is also the first case, since the introduction of the 1976 tonnage Limitation Convention into UK law, in which the right to limit has been denied, the judge having found that the bulk carrier was intentionally scuttled. This year has seen me advising on a number of interesting shipbuilding issues, both non-contentious and disputes.

Kevin Cooper

MFB Solicitors - London -

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