The fifth issue of the journal “Maritime Law” covers the calendar period from October to December 2021. As it was before, we summarise the quarterly statistics on ‘maritime’ disputes heard by commercial courts. The most significant cases have been reviewed and commented on in the journal. As a summary of the year’s results, this Foreword also provides a brief overview of those “maritime” disputes that have been commented on in previous issues of the journal for 2021.

Disputes heard in the courts of first instance

In the Archive of commercial courts judgments (ras.arbitr.ru) on the request of the keywords “MSC RF” (Merchant Shipping Code of the Russian Fede ration), “pilotage”, “time charter”, “bareboat charter” and “harbour master”, there are 131 “maritime cases” in the courts of first instance for the period under review. 65 cases of these were related to maritime private law issues, and 66 to public ones.

Among private law disputes, the vast majority are disputes to recover under time and bareboat charters, maritime agency agreements and agreements for berthing and bunkering services. In addition, there are cases on damage to cargo and other cases on non-monetary obligations, including cases to recover the value of lost cargo from the carrier, freight forwarder and less frequently shipping agent. Compared to the previous period, the number of demurrage and unjust enrichment cases was significantly lower. It should also be noted that there are private law disputes with public authorities which mainly involve recovery of the storage costs of property confiscated by the state (for example, see Judgment of the Commercial Court of Sakhalin Oblast dated 28 October 2021 in case No. A59-3029/2021). As in previous periods, one can also encounter several pilotage cases and claims against seaports for unlawful removal of a vessel from the register.

In the field of maritime public law, the most significant part of the cases (26 out of 66) is related to illegal crossing of the state border. The second typical categories of disputes are those over the various types of customs violations related to illegal export of declared goods or failure to declare cargo onboard (Articles 16.1 and 16.2 of the Code of Administrative Offences of the Russian Federation, hereinafter – CAO). In addition, there are cases on contesting the results of maritime accident investigations, decisions on technical violations in the operation of seaports and vessels, contesting refusal to register a vessel, refusal to issue a permission to conduct certain activities (mainly fishing), and bringing persons to administrative liability for violating the rules of passing checkpoints established by the federal law.

Disputes heard in the courts of appeal

Appellate commercial courts heard 36 cases in which the MSC RF was mentioned during the period under review. 16 of these cases referred to private maritime law and 6 referred to the public one. In the other cases, the MSC RF was mentioned with no connection to the maritime law.

As in first instance parties in the appellate courts dispute mainly over the performance of the monetary obligations. There are fewer cases involving non-monetary “maritime” obligations. The only some disputes are in respect of the cargo and crew insurance, as well as the reimbursement of salvage costs.

Public law cases involved customs and administrative violations. Customs authorities prosecute for violation of declaration rules and for illegal export of declared goods. Administrative violations were connected to border crossings and the requirements of technical regulations due to operating a vessel. Special attention should be paid to the dispute on compelling the shipowner to lift the sunken vessel heard by the 13th CCA (see its Ruling dated 18 October 2021 in case No. A42-1899/2021).

On p. 43–44 above, there is a table showing the distribution of private law disputes between the appellate courts. We note that the bankruptcy case heard by the 9th CCA because the court ruled on the issue of shortened limitation period for maritime claims. Therefore, it was also considered as a maritime case.

Cases heard in the cassation instance (courts of districts)

13 cases, referred to the MSC RF, were heard by the cassation courts for the period from October to December 2021. Among these, 9 cases involved private law disputes and 3 cases involved public law disputes. Only one Resolution contained an irrelevant reference to the MSC RF. Compared to the previous period, there are significantly fewer Resolutions of the Commercial Court of the Far Eastern District.

In maritime private law, parties disputed mainly regarding monetary obligations, but there are also cases involving damage to cargo and improper provision of services. Public law disputes relate to customs violations, e.g., improper completion or failure to complete a customs declaration.

Аbove there is a visual table similar to the one for the appellate instance.

Conclusion

Therefore, in the final quarter of 2021, commercial courts heard 180 maritime disputes. 91 of these were maritime private law cases and 89 were maritime public law cases. Most of the disputes were related to the failure to perform monetary obligations under various contracts: time charter, bareboat charter, carriage of cargo by sea, maritime agency, etc. In the area of public law, cases concerning violations of the procedure for crossing the state border and the procedure for filing tax declarations dominated throughout the whole year.

Review of “maritime” disputes commented on in the journal issues for 2021

In addition to the current issue, 4 issues of the journal “Maritime law” were published in 2021. Each of them covered October 2020 to January 2021, January to March, April to June, July to September 2021 respectively. During these periods, authors commented on 18 important cases, 3 of which were heard abroad.

Issue 1/2021

In first issue of the journal, 5 judgments on maritime disputes for 2021 were reviewed.

Ruling of the Fifth Commercial Court of Appeal No. 05AP-7848/2020 dated 20 January 2021 in case No. A59-1512/2020 (FSBI Rosmorport v LLC Sakhmorflot) states that charges for berth use must be paid even if there is no agreement between the shipowner and the port, and the rates for the berth usage are not determined. In support of its position, the court referred to the carrier’s obligations to ensure embarkation and disembarkation of passengers under the contract of carriage of passengers by sea. The cost of using the berth in the absence of a fixed tariff must be determined by forensic examination. Otherwise, it would be contrary to the compensatory nature of the civil obligation.

Ruling of the same Fifth Commercial Court of Appeal No. 05AP-7234/2020 dated 18 January 2020 in case No. А51-3969/2020 (LLC Far Eastern Shipping v LLC Vostok-Mor-Stroy) is no less interesting. In that case the court stated that notices or applications provided for in the contract could be submitted verbally by telephone, if the parties had already established that way of communication. The court also pointed out that if it is inadvisable for the service provider to fulfil its obligations, the one is not only entitled to withdraw from the contract but is obliged to do so in certain circumstances. This is the case where the continuation of the contractual relationship puts the client at such a disadvantage that the transaction becomes too burdensome.

The Ninth Commercial Court of Appeal issued Ruling No. 09AP-69250/2020 dated 18 January 2021 in case No. A40-40-40737/2020 (FSBI Northern UGMS v Rosmorrechflot) over the exclusion of vessels of a budgetary institution from the rules on merchant shipping. The Court found that the fact that a vessel was used in government service itself did not mean that such a vessel was not covered by the merchant shipping rules. In this regard, the court took into account not only the fact that the vessel was engaged in commercial activities but rather the possibility of such activities being carried out as set out in the Charter of the Institution. The court also pointed out that the satisfaction of the relevant claim would result in any vessel belonging to the Russian Federation not being subject to the merchant shipping rules, which would be contrary to § 2 of Art. 3 of the MSC RF.

An interesting dispute was also heard by the Thirteenth Arbitration Court of Appeal in Ruling No. 13AP-33576/2020 dated 18 January 2020 in case No. A56-11369/2020 (LLC Mortrans v LLC Detotex). The case concerned a claim by a freight forwarder against a customer for demurrage in container transportation. The court held that (a) there was no provision for demurrage in the bill of lading or the contract of carriage and (b) the freight forwarder was not in fact the carrier or the shipping agent and therefore could not claim payment of demurrage in its favour. Furthermore, the court took into account the professional nature of the freight forwarder’s business and the lack of evidence that freight forwarder paid the relevant demurrage to the actual carrier.

2021 marked the commencement of the application of the 2001 Bunker Convention in Russia. Such an application can hardly be considered as a successful one. The Commercial Court of the Northwestern District in its Resolution dated 21 January 2021 in case No. A56-79050/2019 heard the case of FSBI AMP Baltic Sea, LLC Kontur SPb v Marathi Shipping Ltd., The Standard P&I Club, relating to a bunker fuel spill in the Bolshoy Port of St. Petersburg. It was a claim against the shipowner and its insurer on jointly recovery of approximately RUB 103,000,000 for port water area clean-up services.

Several issues are of interest in this dispute. First, the court confirmed the joint and several liability of the shipowner and the insurer. Regarding this, the Russian-language version of the Bunker Convention states that the insurer joins the proceedings as a co-defendant while the English and French versions establish that the insurer joins the proceedings as a third party. However, all texts of the Convention are equivalent. Secondly, the court gave its opinion on the manner in which the costs of port cleaning shall be calculated. Under international conventions and their implementing guidelines, the calculation of the cost of waterway clean-up shall be supported by evidence of actual costs incurred and shall not be based on abstract theoretical models. Russian regulation, on the other hand, is based on the abstract calculations of the likely cost of cleaning up water bodies and other infrastructure. The court applied the Russian metho dology. Moreover, the court did not assess the conclusions of ITOPF and external experts that the claimant had clearly overestimated its costs.

Issue 2/2021

The second issue of the journal opens with a commentary on Ruling of the Commercial Court of Krasnodarskiy Krai dated 12 March 2021 in case No. A32-9548/2021 (FSBI “Morspassluzhba” v April

Shipping Company) to grant a provisional remedy in form of arrest of the vessel. Several crew members of the seagoing vessel had been poisoned by an unknown substance and were unable to control the vessel and, as a result, the Morspassluzhba conducted a rescue of the vessel, its cargo and crew. Filing a maritime claim in the amount of USD 200,000 and in view of the refusal of the shipowner and the master of the vessel to sign the salvage agreement and the act of completing the salvage operation, Morspassluzhba sued to the Commercial Court of Krasnodarskiy Krai. The court’s judgment is of interest for several reasons. First, the court described the costs of the rescue operation as disbursements. Secondly, it was almost the first time in Russian judicial practice that the court accepted a classification certificate for a vessel as one of the documents proving its ownership. Thirdly, the court regarded geographical coordinates as sufficient proof of the vessel’s location without comparing it with the seaport boundaries. Finally, the text of the judicial act did not specify a time limit for filing a claim against the shipowner.

Another judicial act reviewed in the journal is Resolution of the Arbitration Court of the North-West District dated 3 March 2021 in case No. A21- 1117/2020 (Fishing Collective Farm “Truzhenik Morya” v FSUE “National Fish Resources”, FSBI “AMP Baltic Sea”, LLC “Severnye Morskoe Tekhnologii”). The case was on the vessel’s collapse in the port, which was caused by increased wind, storm, heavy rain and waves. The claim was filed against the owner of the berthing facilities for providing an inadequate berth, against the seaport for failing to issue a storm warning and against the owner of the leaned vessel for failing to ensure safe mooring. The claim was dismissed in its entirety because the fault of the defendants could not be established due to a lack of investigation into the accident.

The Commercial Court of the Far-Eastern District by Resolution No. F03-104/2021, dated 17 February 2021 (FSI Border Department of the Federal Security Service of the Russian Federation in Primorskiy Krai v. Korea Surim Trading Company) resolved the issue of arresting the vessel for causing damage to marine biological resources. The Court heard in detail the ratio of maritime claims under the MSC RF and the Brussels Convention Relating to the Arrest of Sea-Going Ships and concluded that the Border Department claims were not maritime.

Within the foreign judicial practice review, Ever green Marine (UK) Ltd. v Nautical Challenge Ltd.

[2021] UKSC 6 (19 February 2021) was commented on. It was the first maritime collision case to be heard by the UK Supreme Court in 50 years. There were two main issues before the court in the case – (1) whether the course-crossing rules applied to narrowboats and how such requirements related to the narrowboat rules and (2) whether a vessel giving way needed to maintain its course for the course-crossing rules to work. Each of these problems was discussed in detail in the court’s decision.

Another significant judicial act was the judgment of the US District Court for the Ninth Circuit, Oregon in Pacific Gulf Shipping Co. v Vigorous Shipping & Trading S.A. case, No. 20-35159 (9th Cir. 2021). The claimant sued to arrest the defendant’s ship pursuant to an arbitration award against another company controlled by the same people as the defendant. The court’s decision is interesting mainly from the point of view of the doctrine of alter ego and the piercing of the “corporate veil” in maritime disputes. The district court found the stricter standard of piercing the corporate veil to be applicable and concluded that a range of circumstances shall be proven in order to do so.

In Noble Chartering Inc. v Priminds Shipping Hong King Co Ltd (“Tai Prize”) [2021] EWCA Civ 27 (28 January 2021) the court dealt with the acceptance of cargo by the master of the vessel and the consequences of the issue of a bill of lading for all parties to the relationship. This dispute is also important as a rare example of interpretation of the 1924 Hague Rules which will serve as a reference for many other jurisdictions.

Issue 3/2021

In the third issue of the journal, four comments were made by experts on maritime disputes.

In the first case, No. A40-127542/2020 (JSC “Belomortrans” v LLC “Neva-Charter”), the commercial court held that the reconsideration of the case by the arbitral tribunal after its first award had been overruled for violation of Russian public policy also violates public policy. In addition, the arbitral tribunal had been found to be illegitimate since the arbitrator appointed specifically to decide on the competence proceed to an examination of the merits of the case. The dispute was also complicated by the risk of expiry of the limitation period if the arbitral award would be overruled.

Case No. A73-7921/2020 (LLC “Alliance-DV Kamchatka” v LLC “Ventura”) involved a dispute over a consignee changing instructions to the carrier which resulted in a change of the port of discharge from that provided for in the contract of carriage. Following successful unloading in accordance with the instructions, the carrier sought reimbursement of the disbursement costs, despite the existence of provisions in the contract stating that the unloading should be carried out at the carrier’s expense. Eventually, the court found in favour of the carrier.

Resolution of the Commercial Court of the North Caucasus District dated 13 May 2021 in case No. A53-42452/2019 (LLC “Managing Company Reka-More” v LLC “Prostory”) dismissed the claim for lost profit in connection with the breach of the chartering agreement due to the arrest of the vessel. The court held that the arrest of the vessel was erroneous due to unlawful conduct of third parties and that the vessel was in fact ready for chartering and was seaworthy and manned.

Case No. A24-3915/2020 (LLC “Kamchatskenergo” v LLC “NIKO”) is interesting from the point of view of exclusive jurisdiction over claims arising from a contract of carriage. This issue is particularly relevant when a tort claim is filed against a carrier, which formally allows exclude the application of the relevant provision of the Commercial Procedure Code of the Russian Federation. Nevertheless, the practice on this issue is ambiguous and sometimes the rules on exclusive jurisdiction do not apply due to the tort nature claim against a carrier.

Issue 4/2021

The fourth issue of the Journal is opened with the commentary of M. Erohova to Resolution of the

Supreme Court of the Russian Federation No. 305- ES21-10216 dated 20 August 2021 in the case No. A40-328885/2019. The main issue before the Supreme Court was the problem of qualification of the “take or pay” contract clause under Russian law. According to the Supreme Court, a waiver of the customer’s ‘take’ obligation itself do not exempt the customer from the ‘pay’ obligation. At the same time, the obligation to “pay” was qualified as a fee for withdrawal from the contract (§ 1 Art. 6, § 3 of Art. 310 of the Civil Code of the Russian Federation).

R. Zhirnov reviewed the case No. A51-1055/2016 (SL Marine Co., Ltd. v LLC “Ostrov”). In this case, the carrier’s employees on their own initiative changed the vessel course and unloaded cargo in a port which differed from that agreed in the contract. They were later found guilty of defalcation and theft of other people’s property. However, the court rejected the claim against the carrier because there was no contractual relationship between the claimant and the carrier. In addition, the court stated that the carrier was exempt from liability for the acts of its employees when those acts fell outside the scope of their employment.

Finally, A. Matveev discissed the case No. A51- 9022/2020 (LLC “Fesco-Service” v LLC “Avers”) in which the claim ground was a refusal of the defendant, agent of the shipowner, to pay the claimant for bunkering services. The courts of all instances found in favour of the defendant because the request for bunkering had been made by the master of the vessel, not by the agent, the customer under the service contract. Consequently, the request made by the master of the vessel, which bypassed the principle of relativity of obligation, shall not create an obligation for the defendant. ■