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What can an owner do when concerned about the legal safety of the nominated port?

Freezing injunctions – what is needed to show risk of dissipation| BDM Blog | BDM Law

We’ve had a number of enquiries recently from clients concerned at the risks of proceeding to certain ports. Those who read Tradewinds will note that GNMTC are challenging what they say is a fraudulent detention of their ship The Badr by a Bulgarian claimant [click here]. One of the big problems faced by shipowners is the risk of their ship being caught up in a fraud which may well involve port officials and/or the local courts. It’s always a difficult decision for a ship owner to make as to whether to refuse to enter a port that they may suspect is subject to corruption. A wrong decision can expose the ship owner to legal claims from the charterers. In many cases they need to balance this against the very substantial losses that they might face if they do proceed.

Having good insurance cover in place is one way for the ship owner to protect themselves. However, this will not necessarily help the ship owner to get the ship out if it is subject to a suspected corrupt claim. The insurance cover may reimburse the ship owner for their losses but they still face the risk and expense of having to secure the claim and fight it locally as GNMTC are doing in Bulgaria.

Although the case of The Badr at Burgas is in the news at the moment, there are many other ports where clients are exposed to bogus claims. The issue of legal safety often comes up and the leading case on this is The Greek Fighter (Ullises Shipping Corporation v FAL Shipping Co Ltd [2006] EWHC 1729 QBD (Com Ct) – 14 July 2006) [click here]. The problem with this case however is that there is a substantial burden on the ship owner when it comes to establishing that there is no effective legal remedy to an unjustified arrest or detention. The Courts in the place where a ship is detained if they are also corrupt are unlikely to make such a finding. That leaves open the question as to whether a court in another EU country has jurisdiction to make such a ruling or whether one can resort to the law and jurisdiction clause in the CP? Just how does one go about establishing that there is a corrupt system in place in a port and that this extends to the local judiciary?

These are just some of the problems that ship owners face on a day to day basis. It is easy to say that they are not obliged to follow an order that exposes the ship to danger but it is difficult for them to ignore such orders in practice. Many of our more recent enquiries have involved a stand-off while we help the ship owners and their insurers sort out a compromise with charterers so that the ship can go in and load or discharge notwithstanding the concerns.

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