Shipping 2023 - A Year in Review

As we come to the end of 2023, I look back at the key legal and commercial developments of the last 12 months and look forward to what 2024 might bring.

Key cases

Several significant judgments were handed down by the English courts in 2023, including:

• The Thorco Lineage [2023] EWHC 26 dealt with the construction and application of Art IV r.5(a) of the Hague Visby Rules, limiting the carrier's liability based on the weight of "goods lost or damaged". The Court held that the relevant package limitation was to be calculated by reference to physical and economic loss, in a departure from the findings in The Limnos.

• In Rhine Shipping DMCC v Vitol S.A. [2023] EWHC 1265 (Comm) the Court was asked to decide several issues, including whether gains made by Vitol in its general hedging programme could be brought into account when assessing Vitol's losses arising from delay due to a third party arrest. The Court held that such gains were irrelevant and could not be brought in to reduce the damages payable to Vitol for the breach. The judgment has been appealed and we await the decision of the Court of Appeal.

• The Court of Appeal handed down judgment in Unicredit Bank AG v Euronav NV [2023] EWCA Civ 471, a claim by the bank for misdelivery. The Court held that the evidence demonstrated that the bank would have permitted discharge without the production of the original bills of lading, such that the loss would have occurred in any event. Consequently, the bank's claim failed, as it had been unable to prove the necessary causal link between the carrier's alleged breach and the loss of its right to enforce its security. The application for permission to appeal was refused in November, so this appears to be the final word on this case.

• In another claim by a bank for misdelivery, the Giant Ace [2023] EWCA Civ 569 dealt with time bars under the Hague Visby Rules. The Court of Appeal held that the one-year time bar under Art. III r.6 of the Hague Visby Rules does apply to claims for misdelivery after discharge of the goods from the vessel.

• In The Star Antares [2023] EWHC 2784, the High Court was asked to consider whether the York Antwerp Rules 1996 applied to a contract which incorporated the "York-Antwerp Rules 1994, or any subsequent modification thereof". The Court held that the 1996 Rules came within the meaning of "modification" and therefore the 1996 Rules applied.

Key statutory developments

BIMCO adopted several new or revised standard form contracts and clauses, including contracts of affreightment (COAs) for dry bulk, a Carbon Intensity Indicator (CII) Clause for voyage charters, and LNG Bunker Terms.? Work continues on Emission Trading Scheme (ETS) clauses for voyage charters and for SHIPMAN, with clauses expected to be released imminently.

The UK signed up to the Singapore Convention on mediation in May 2023 and I anticipate this will receive formal ratification during 2024.? The Convention allows for direct enforcement between signatory states of settlements resulting from mediation, mirroring the enforcement of international arbitration awards under the New York Convention.

As I covered in my previous article here, in July the UK Government passed the Electronic Trade Documents Act, enabling the widespread use of electronic bills of lading and other documents without the need to rely on complex, private contractual arrangements.

Also in July, the IMO agreed a new GHG Strategy, with an upgraded ambition to achieve net zero in or around 2050, with several indicative checkpoints along the way.? This followed in the footsteps of the EU which passed a flurry of new regulations including bringing shipping into the EU ETS, introducing FuelEU Maritime, and a new Carbon Border Adjustment Mechanism.

In September, the International Group of P&I Clubs issued revised standard letter of indemnity wordings, for delivery of cargo without production of the original bill of lading and / or at a port other than that stated in the bill of lading.? The changes include a note alerting recipients to the financial risk of accepting a LOI, the addition of an express obligation to provide substitute security in the event of the recipient's vessel being arrested, and a stipulation to provide for clearer identification of the signatory and their authority to issue the LOI.

In October, the EU announced that it would not be renewing the block exemption for liner shipping, such that from 25 April 2024 container lines will have to assess the compliance of their cooperation agreements against the general EU antitrust rules. The UK's Competition and Markets Authority followed with a provisional decision not to recommend replacement of the block exemption which exists under transitional Brexit legislation.

In November, two Codes were issues in the UK dealing with autonomous vessels.? The UK Maritime and Coastguard Agency published the third edition of the Workboat Code, providing specific guidance for remotely operated unmanned vessels. Maritime UK published version 7 of its voluntary "Principles and Code of Practice" for maritime autonomous ship systems.? The UK government also published its ?response to its consultation on maritime autonomy and remote operations, emphasising its continued ambition for the UK to play a leading role in the MASS industry, and to become the "destination of choice" for companies pursuing innovative maritime technologies.

Key commercial developments

In line with the drive to decarbonisation, the order book for new container vessels reached a record high, with reports that just over half of all orders are for methanol-powered ships, with LNG accounting for almost one third of the remainder.? Maersk became the first line to launch a methanol-fuelled ship, with Laura Maersk making her maiden voyage in September. The past 12 months have also seen the commercial deployment of wind propulsion in dry bulk, with the Pyxis Ocean trialling the use of BARtech's WindWings. The "S" of ESG also continued to attract greater attention, with a focus on a just transition for crew in light of concerns around the safety of alternative fuels.

Geopolitical risks continued to provide plenty of headaches, with continued sanctions against Russia and its crude oil exports, as well as the outbreak of conflict in the Middle East.

On the technology side, 2023 saw a significant uptake of Starlink Maritime, with MOL, NYK, Carnival, Costamare, Anglo Eastern and Columbia Shipmanagement all reporting the trial or deployment of the low earth orbit service.?

BIMCO launched its "25 by 25" campaign, aimed at accelerating the uptake of e-bills of lading and attracting big name sponsors such as BHP, Rio Tinto, Vale and Anglo American.

Classification societies were active in supporting the twin transition, with DNV publishing new guidelines for the safe installation of onboard carbon capture and storage systems and several approvals-in-principle being issued for autonomous navigation systems, cyber resilient IT and OT vessel network architecture, and hydrogen dual-fuelled engines.

Development and proof of concept testing of autonomous vessels also continued apace. The Meguri2040 programme started 2023 by successfully testing the world's first fully autonomous navigation system on a large car ferry, followed by a further successful test on a coastal ro-ro shipping route.? DNV and Samsung Heavy Industries committed to establishing a remote operation centre for MASS, and ABS issued an approval in principle to the fully autonomous ship framework developed within the Meguri2040 programme.

The industry experienced several disruptive cyber-attacks, with victims including DP World in Australia, and software providers such as DNV's ShipManager system. Trade routes also experienced disruption from extreme weather events, with drought affecting river ports in Brazil and Germany, and low water levels continuing to impact movements through the Panama Canal.

What can we expect from 2024?

Decarbonisation will remain high on the agenda through 2024 and beyond, but what else can we expect from 2024??I take a look at key dates in the below timeline.

• 1 January 2024: FAL Convention amendments come into force requiring maritime single windows to be adopted by ports. EU ETS to be extended to maritime transport emissions from this date. First annual calculation of attained annual CII to take place for year 2023.

• March 2024: The IMO MEPC and Inter-Sessional Working Group on the Reduction of GHG Emissions from Ships will meet. They are expected to discuss the basket of mid-term measures left over from MEPC 80, including a marine fuel standard and a GHG emissions pricing mechanism, and the interim results of the impact assessment of the proposed measures.

• 1 April 2024: Shipping companies must submit updated monitoring plans for the purposes of EU ETS.

• 25 April 2024: EU block exemption for liner shipping consortia will expire. BIMCO is expected to release a revised suite of SHIPMAN agreements.

• 1 May 2024: New Mediterranean Sea Emission Control Area comes into force, with a 12-month grace period. BIMCO is expected to release a revised version of the Asbatankvoy charter.

• 8 May 2024: Third session of the IMO working group on autonomous ships due to take place.

• 1 July 2024: IACS UR 26 and 27 on cyber-resilience apply to all new builds contracted for construction on and after this date. HFO ban comes into force in Arctic Sea.

• 31 August 2024: FuelEU Maritime: Companies shall submit to the verifiers a monitoring plan for each of their ships, indicating the method chosen for monitoring and reporting the amount, type and emission factor of energy used on board by ships and other relevant information.

• Autumn 2024: IMO to begin gathering data for review of CII regulations.

In addition, several countries include the USA, Germany, and France are expected to adopt legislation that is aligned with the UN Model Law on Electronic Transferable Records, and I expect the UK government will pass amendments to the Arbitration Act 1996, following recommendations made by the Law Commission.? I also expect the IMO to finalise interim guidelines on the use of hydrogen and ammonia as fuels.