Hong Kong Maritime Awareness Week, 12th-18th November 2016, was jointly organized by the Hong Kong Shipowners Association and the Hong Kong Maritime Museum, arranging various activities and functions with a view to introducing and promoting the development of the HK maritime industry to the younger generation. A few members of the Institute of Seatransport (IST), including Ms. Karen Cheung, Mr. Thomas Cheung and the Editor of this AA Talk column (here below referred to as “I” and “me”), gave talk to secondary school students on maritime careers (shipping lawyer, insurance broker and average adjuster respectively).
Hong Kong Maritime Industry Week (HKMIW 2016), 20th-27th November 2016, was organized by the Hong Kong Maritime and Port Board to “propel Hong Kong” as a renowned international maritime centre. The objectives were to make Hong Kong a preferred based for operating maritime business, and to foster interest and professionalism in various port and maritime services.
During the HKMIW 2016, to celebrate Hong Kong as an international maritime centre that provides superb maritime and port facilities and services, international and local industry luminaries and practitioners came together for a myriad of diversified and fun-filled activities ranging from industry briefings, seminars and conferences, corporate functions, maritime- themed sports to networking events.
The IST was joint organizer of the “Maritime Law Seminar” and “An Interactive Workshop on Marine Insurance and Average”.
Maritime Law Seminar – On Monday evening, 21st November 2016, Ms. Rosita Lau, who was awarded the individual prize at the Lloyd’s List Asia Awards winning the Asia Maritime Lawyer of the Year Award, gave a superb bilingual presentation to over 80 participants at the venue in the China Taiping Tower, highlighting the effect of three recent judgments, namely:
The “Res Cogitans” (2016)
Grand China Logistics Holding (Group) v. Spar Shipping (2016)
Volcafe Ltd. & Others v. Compania Sud Americana De Vapores (2016).
Hopefully the commentary on these law cases will be published in future issue(s) of “SEAVIEW”.
An Interactive Workshop on Marine Insurance and Average – On Friday evening, 25th November 2016, a panel consisting of Messrs. Jon Zinke, Rohan Bray, Stephen Cheng, Thomas Cheung, Richard Oakley and I presented to an audience of exactly 80 at the same venue provided by China Taiping Insurance Co., Ltd. (a) Game Plan for Procurement of Marine Insurance and (b) a hypothetical collision between a container vessel and tanker off the China coast; various aspects were examined, including liability, salvage, pollution, limitation, jurisdiction, cargo claims and general average; also the scope of shipowners’ needs and the interplay between hull and P&I underwriters were discussed.
Readers are requested to visit http://www.hkmiw.hk/english/index.html for more information about the HKMIW 2016.
50 Years in Average Adjusting
I joined the profession of Average Adjusting in November 1966. It was excitingly co-incidental that I was spending my 50th anniversary during the Hong Kong Maritime Industry Week.
On the 9th November I received unexpectedly an email from Mr. D John Wilson, the popular Editor of the 10th, 11th & 12th editions of Lowndes and Rudolf on the Law of General Average and The York Antwerp Rules, advising that his old friend and partner is now 88 years of age! The email reminded me of having burnt the midnight oil for 5 evenings in Tokyo in 1984 reading carefully the draft analysis prepared by John Wilson (who was then based in Tokyo) on the ITC HULLS 1.10.83. The book was for internal use of Richards Hogg International, the world leading average adjusting firm and has never been published to the public though arrangements were made to have the book translated into Chinese and published in Taiwan in 1988. John kindly granted me the copy right to produce the second edition to which I did not pay much attention since I never imagined that after 30+ years, the ITC-Hulls 1/10/83 remains being the most popular standard clauses!
Another prominent average adjuster, Mr. Christopher J Barstow who spent some 8 years working in Hong Kong, 1975/82, visited Hong Kong during November and a small get together lunch with few old colleagues and clients (with large complicated claims) was full of joy and laughter – those were the days!
A question was raised – What is the most interesting case I have ever had?
In 1984, a 2-year old tanker whilst proceeding in ballast under a time charter in the Arabian Gulf to load cargo for the Far East, was hit by a missile in the accommodation, followed by fire.
The crew failing to fight the fire abandoned the ship and was picked up by Royal Saudi Navy ships with the injured ones being sent to hospital. The fire was subsequently extinguished and the vessel towed to a safe place in Bahrain waters by salvage tugs under LOF. Inspection revealed severe damage to the vessel’s wheelhouse/ accommodation. Specification for repairs was drawn up and tenders for repairs invited from shipyards. The quotations ranged from US$2.45m requiring 100 days (Dubai) to US$4.50m requiring 60 days (Singapore) whilst a shipyard in Japan quoted US$3.40m requiring 45 days. The Shipowners decided to tow the damaged vessel from Bahrain waters to Japan for repairs!
The professionals assisting the Shipowners included mainly the Insurance Brokers, the Solicitors (for the salvage proceedings and possible legal action against the time charterers) and the Average Adjusters. We attended frequent meetings in the early stages to follow up closely on the progress of the casualty. We did not have mobile phones and we had to standby at home after the office. Over the very first weekend, these professionals arranged to standby together playing mahjong at my home, which was quite relaxing though, as anticipated, intermittently.
The most interesting and exciting adjusting aspect in this case was to consider the choice of repair yard which was most material in determining the “reasonable cost of repairs” in terms of the policy of insurance. The investigations on this topic involved considerable correspondence and meetings with various parties concerned, also third parties (other independent ship- owners, technical consultants, etc.) focusing on quality of repair work, war risk, the Dubai Dockyard and time on repairs. After giving due consideration to the outcome of the investigations, I set out a comparison of the overall financial position had repairs been effected at Dubai as against Japan taking into account repairs etc. necessary for towage, towage cost and insurance premiums, tender price for repairs, cost of repairs additional to the original specification, spares used on additional repairs, superintendence on permanent repairs, additional insurance premiums on war risks, loss of hire and the likely effect on the ship’s value, resulting in it being in favour of the Shipowners’ choice. Obviously the last two items are conjectural and are taken in to account to test the Shipowners’ argument that on commercial grounds alone repair at a Japanese yard was to them the prudent choice.
The test that seems to be closest to what the Courts have held is “What would the prudent uninsured owner have done?” It was believed that in this case two paramount considerations led to the Shipowners avoiding the use of the Dubai Dockyard, namely its geographical position, unhealthily close to the war zone, and its then unproven ability to repair the particular type of damage in a satisfactory and timely manner.
The claim on policy of insurance was satisfactorily approved and settled by London Underwriters. I would stress that the claim was successful only under the prevailing circumstances in 1984.
Before November 2016 ended, I received an excellent gift to mark my 50- year average adjusting career, which was an extract from a message of a Lloyd’s syndicate to an Insurance Broker:
“…we are hopeful that the assured will take on board the helpful comments and observations from TCW in their draft adjustment as well as the various adjusting scenarios that TCW has presented. The figures presented by TCW in the draft adjustment represent the professional assessment of a respected and very experienced average adjuster who has reviewed the presented sue & labour claim on a completely impartial basis. The TCW adjustment carries considerable weight and is a credible assessment of those costs which would be considered reasonable in all the circumstances.”
(Mr. Raymond T C Wong: Average Adjuster)