• Bunker Arrest – post Res Cogitans Early Contract and Charterparty Review (Part 7 of Economic Crisis Series)

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    Bunker arrests   This is Part 7 of our series on how to deal with an economic crisis – a guide for international businesses.   In 2016, the Supreme Court handed down its judgment in the Res Cogitans, the leading case arising out of the OW Bunkers insolvency. That case had a profound effect on the shipping market, with many ship operators left with debts to the physical suppliers of the bunkers, and to OW Bunkers’ liquidators.    We are now entering the most serious economic downturn since that judgment. In that economic climate, it is fair to expect parties seeking security by ever more creative means, including an uptick in bunker arrests against time charterers. In the spirit of being prepared, we take a look at what the Res Cogitans means for bunker arrests.    In particular, in the Res Cogitans the Supreme Court held that where bunker supply agreements are made on credit terms, with a retention of title clause pending payment, title to the bunkers remained in the bunker supplier. We look at whether charterers can rely on that judgment to defeat the attachment – after all, if charterers don’t actually own the bunkers, how can the arrest succeed? Contact Calum, or your normal ZFZ, for more.

  • Pre-action discovery – s. 1782 and others Early Contract and Charterparty Review (Part 6 of Economic Crisis Series)

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    Pre-action discovery   This is Part 6 of our series on the tools and strategies that international companies can use to protect their positions in the current economic situation.    Eva-Maria Mayer explains a useful tool to gain access to the often much broader reel of discoverable evidence under the U.S. Federal Rules of Civil Procedure while litigating abroad.    28 U.S.C. 1782 provides parties in a foreign proceeding with a tool to gain access to the U.S. discovery rules. Such an application can be brought by a party to a foreign litigation against another party in such litigation or against a third-party in the district of the federal court where the application is being brought.    The significant aspect of such an application is that it is not required that the discovery sought be admissible in the foreign tribunal – such determination is left to be made by such a foreign tribunal. This leads to parties gaining access to a much vaster array of discoverable materials than would often be the case in the jurisdiction where the foreign proceedings are taking place.   Keeping in mind certain restrictions, and of course, meeting all required elements this can be a very useful tool in the age over globalization and ever growing international commercial agreements and disputes. For further information please contact Eva-Maria Mayer or anyone from the ZFZ team to discuss this, or any of the other topics in the video series.

  • Shipowner’s Liens over Cargo Early Contract and Charterparty Review (Part 5 of Economic Crisis Series)

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    Shipowner’s lien over cargo.   Part 5 of our series on how to deal with an economic crisis – a guide for international businesses.   Luke Zadkovich unpacks the fundamental differences between the US and English approaches to shipowner’s liens over cargo.  This has been a hot topic for a few years now, most recently with the English liquidation of British Steel in 2019 and prior to that, the collapse Hanjin Shipping and others.   One of the unfortunate business realities of an economic crisis is that it typically results in more bankruptcies and insolvencies.  Edward Floyd discusses bankruptcy proceedings in detail later in this series.   In this talk, we assess what a shipowner can do to secure its payments under a charterparty or bill of lading through the exercise of its cargo lien rights and other measures.  Charterers/cargo interests will also be interested to navigate through these tricky scenarios.   ps. look out for the Athos 1 unsafe berth analogy at 17:00mins – especially given the US Supreme Court’s decision came out yesterday.  If you have any further questions on this topic, please contact Luke Zadkovich.
  • Demanding Assurances of Performance Early Contract and Charterparty Review (Part 4 of Economic Crisis Series)

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    Obtaining performance assurances in contracts.   This is Part 4 of our series on the tools and strategies that international companies can use to protect their positions in the current economic situation.   Luke Zadkovich explains a useful tool to flush out whether a contractual counterparty is in a position to up hold their end of the bargain. The United States UCC procedure of ‘demanding adequate assurances of performance’ is particularly relevant in economic uncertainty.   The underlying principles of this approach go beyond US contract law and can inform strategies in dealing with counterparties internationally and in contracts subject to other governing laws. Early dialogue is recommended. As is assessing counterparty risk closely and using information gathered to manage that risk.   This talk addresses strategies to employ during contract performance. In a later talk in this series, we will look at what you can do pre-contract to limit your exposure in this current market. We will also assess more serious action to obtain security and protect assets, where dialogue does not work or is inadvisable, in other upcoming talks. For further details, please contact Luke Zadkovich, or your usual contact at ZFZ.
  • Pre-Contract Protection and Damages Early Contract and Charterparty Review (Part 3 of Economic Crisis Series)

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    Pre-contract protection – securing useful representations and creating contemplated damages.   Part 3 of our series on how to deal with an economic crisis, Shannen Trout discusses what international businesses can do pre-contract.   Obviously many deals now will be off the table in this market. Contraction is already happening. The price of oil has collapsed. As liquidity dries up, this situation might well get worse.   However, there will be those in a position to continue deal-making. At this time, it is even more important to consider carefully what kind of representations or guarantees you can obtain before entering into contracts. An air-tight bank performance guarantee is the strongest, yet hardest to obtain.   In this talk, we look at other options and assess what can be done in the context of representations and special damages awareness. These strategies are to be employed during commercial negotiations and put parties in a better position if things go wrong. For further information please contact Shannen Trout or anyone from the ZFZ team to discuss this, or any of the other topics in the video series.
  • Early Contract and Charterparty Review (Part 2 of Economic Crisis Series)

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    Contractual levers and measures   Part 2 of our series on how to deal with an economic crisis – a guide for international businesses.   Damon Thompson discusses the importance of reviewing your contracts and charterparties at an early stage in an economic downturn, as well as some key provisions to look out for following the outbreak of COVID-19.   As liquidity tightens across the economy, parties will increasingly look to tighten the belt. Being on top of your charterparty provisions and understanding exactly where you stand is the first step for a company being ready to combat any speculative claims.    Damon has years of experience in the legal industry, including eight years at a major energy trading company, so is well aware of what practical steps a company can take to protect its position. Damon looks at standard form exclusion clauses, safe port warranties and what parties can do now to protect their position over the coming weeks and months.   If you have any questions, or would like someone to have a close look at your charterparty/contractual terms, please speak to Damon or your usual ZFZ contact.