Tetley (2002) introduction to conflict of laws 5

Tort & Depecage

1. 
   law of responsibility between ships
   
2. 
   law of damages, including pure economic loss and division of damages
   
3. 
   law governing presumptions of fault or causation
   
4. 
   law of contract between passengers and ship
   
5. 
   the law between the cargo on one ship and that ship
   
6. 
   law between cargo and passengers of one ship and the other ship
   
7. 
   law of right to limit liability of each ship-owner
   
8. 
   law of calculation of limitation fund of each ship
   
9. 
   law of distribution and marshalling of the fund
   

• 
  The Titanic decision is in error for finding or trying to fin only one or perhaps two laws applicable to almost all obligations arising from the fateful collision.
  
• 
  Depeçage in tort, despite the foregoing is, unfortunately, less accepted than in contract.
  

4. Tort & Contract

• 
  Option to sue in either contract, tort. or in both, but what about when different laws in contract or tort characterize the claims differently (i.e. product liability as tort in UK and K in France).
  
• 
  What is contract defense is involved in claim of tort? UK has said that proper law of contract would govern validity of the contract defense and double actionability would determine the effectiveness of the defense in the UK. This was opposed to the view of Lord Denning in Sayers v. International Drilling (1971) CA – we should look at most closely connected law as between tort and contract and not apply both. The Law Commission has left it up to the courts.
  

• 
  Prohibits choice in contract or tort. CCQ prohibits combination (cumul) of contractual and extra-contractual recourses (CCQ Art.1458).
  
• 
  CCQ Art. 1458: every person must honor contractual undertakings and can be liable for bodily, moral or material injury he causes and is liable to reparation (can't opt out).
  
• 
  CCQ Art. 3127: conflicts rule to ensure that law of contract controls claims for reparation arising from breach of contract, so claims arising out of contractual violations are deemed contractual for conflicts purposes and the problem of characterization encountered in the common law is avoided.
  
• 
  Claims arising out of contractual violations are deemed contractual for conflicts purposes, thereby overcoming the whole problem of characterization in the ComL.
  
• 
  Tetley – to solve problems of contractual defenses to delictual claim apply closest and most real connection as it will avoid danger of artificial depecage on the claim and defense.
  

All of the above have defects which result in uncertainty and a lack of uniformity in the choice of law. The proper law of tort, being the most significant relationship, is a much better single rule and is clearer then that proposes in U.K. and Australia. Whatever the rule, it must be employed with evasion/fraude a la loi, international public order/policy and the mandatory rules in national law and international conventions. We require a consistent methodology, common to all jurisdictions.

See page 21 CB…

5. Maritime Torts/Delicts & Collision

1. 
   the lex loci delicti
   
2. 
   the law of the flag
   
3. 
   the double actionability rule
   
4. 
   the law of the forum
   
5. 
   the closest and most real connection
   

1. Torts/Delicts & Ships

• 
  In the past when a tort occurred on a ship on the High Seas the lex loci delicti was not applied. Rather, the traditional solution was to adopt the law of the flag.
  
• 
  Today, when a tort occurs on board a ship on the High Seas, where a ship bears the flag of a unitary state, the law of that flag has been applied by most nations of both common law and civilian traditions. When the flag is of a federal state, the law of the place of registry has been applied. English courts have applied law of the flag to torts on the High Seas to English Ships and couble actionability to those on non-British ships.
  
• 
  Klinghoffer v. SNC Achille Lauro, 1993 – an American citizen was murdered on the High Seas on an Italian ship owned by an Italian. The passenger ticket was entered into in the US. The court assessed/weighed all of the Lauritzen factors and found that it was clear that Italian rather then US federal law applied. Otherwise would have different laws for different claimants, which would be undesirable.
  

2. Torts/Delicts on a single ship in territorial waters

• 
  Torts in territorial waters have been treated differently from torts on the High Seas
  
• 
  Chung Chi Cheung v. the King, 1939 – A crime committed on a Chinese flag ship in Hong Kong territorial waters was tried under the law of Hong Kong on the grounds that, at least in criminal matters, “a public ship in foreign waters is not and is not treated as, territory of her own nation.”
  
• 
  France still uses law of the flag, provided that there are no effects outside the ship…otherwise the lex loci delicti has been used.
  
• 
  We need to consider every contact in these cases.
  

3. Torts/Delicts outside a ship on the High Seas

• 
  For example where a ship negligently damages a submarine cable, the law applicable is the one which the negligent act has its closest and most real connection. The flag is only one contact.
  

4. Ship collisions on the High Seas

• 
  Where ships collide on the High Seas, the approach in England and other Commonwealth jurisdictions is to apply “the general maritime law as administered in England.”
  
• 
  In France and the US, the law of the flag governs if both ships involved fly a common flag or if they belong to states party to the Collision Convention 1910.
  
• 
  If not the same, the US (Restatement First, 1934) and France (Vigouroux) have applied the lex fori
  

5. Allisions on the High Seas

• 
  Titanic – When a ship collided with an iceberg on the High Seas, the law of the flag was held to govern in respect to matters of substantive law.
  

6. Collision and Allision in foreign territorial waters

• 
  UK and Commonwealth courts will apply the double actionability rule, in such cases the lex loci delicti is the law of the littoral state (where the tort occurs).
  
• 
  French courts will apply the law of the foreign state even if proceedings in French Court to all aspects of substantive law, including limitation of liability.
  
• 
  In the US, collisions have usually been governed by the law of the place of the collision.
  
• 
  Also, US has made a distinction between normal “blue water vessels” and stationary drilling rigs in “brown water” – Lauritzen factors have been deemed more important in some situations then in others – Chiazor (added significance in oil rigs for lex loci delicti – for moving ships can’t be changing laws as ships change seas)
  

2. Reports & Rules on Maritime Collision

• 
  Recommended the elimination of the double actionability rule
  
• 
  Recommended that the law applicable to maritime torts on a single ship in foreign waters be the lex loci delicti unless another law is substantially more appropriate.
  
• 
  Return to a one-of-a-kind rule is problematic and need consistent methodology.
  

• 
  Ship collision will follow the normal rules of the general provisions.
  

• 
  With respect to choice of law, requires the lex loci delicti (law of the littoral State) to govern collision in internal or territorial waters and the lex fori to apply to High Seas collision. If all ships are registers or owned in same State the law of that State applies, regardless of the place of collision (or if all States involved have given effect to the same collision convention.
  

• 
  Major change has resulted from the Rome Convention, to which Britain is bound – basic rule is choice of the parties followed by closest and most real connection (in Halcyon Isle – Singapore law or law of the flag, definitely not British Law)
  
• 
  The whole dichotomy of rights vs. procedure or remedies or lex fori has been debunked and been proven false – the only way to get around it is with international conventions. Eventually we are going to have international conflicts of law convention. Another way to get around it – have an international conflicts statute or Tetley’s methodology, or an international liens convention.
  
• 
  One country that has made fools of themselves is New Zealand that has created a statute to recognize foreign mortgages.
  

• 
  Liens, etc. lend themselves to problems because they are attached to ships which travel from jurisdiction to jurisdictions and those jurisdictions rank and define the various rights, liens, mortgages, etc. differently.
  
• 
  There are five basic levels of ranking of liens, mortgages and claims against ships:
  
  • 
    special legislative rights – benefits for the state itself or state corporations (dues, wreck removal, pollution, narcotics offences) – often given first priority
    
  • 
    costs of arrest, judicial sale, custodia legis – expenses necessary to keep ship in custody after arrest and before its sale
    
  • 
    maritime liens – wages, salvage, damage, sums expended for the benefit of the sip, bottomry and arise at the time of the contract or tort (time of the claim…no registration or notice required)…they follow the ship even after a bona fide sale, but terminate by judicial sale – found in the codes of civilian jurisdictions
    
  • 
    ship mortgages
    
  • 
    general maritime claims – repairs, supplies and bunkers (necessaries), which give right to arrest but only arise at the time of arrest (statutory rights in rem – many have lien status in US)
    
• 
  Some jurisdictions grant possessory liens to ship repairers, who have a right of possession but nor disposal and do not raise conflict problems because they do not travel with the ship.
  

• 
  United States is out of step with the rest of the world – they put their mortgages and necessaries ahead of foreign mortgages. Foreign ship mortgages are given lesser priority then US ship mortgages. Also, there is a distinction between necessaries provided in the US and elsewhere.
  
  • 
    1) Special legislative rights (of governments) (wreck removal; St. Lawrence Seaway and Panama Canal tolls and damages; rights of detention, removal and destruction for pollution; rights of forfeiture and sale for various federal statutory offences (e.g. drug trafficking, illegal immigration, etc.)
    
  • 
    2) Custodia legis and some court costs (e.g. costs of seizure and judicial sale and attorney's fees);
    
  • 
    3) Preferred maritime liens:
    
    • 
      a) Wages of master and crew (including maintenance and cure),
      
    • 
      b) Salvage (including contract salvage) and general average (cargo against the ship)
      
    • 
      c) Maritime torts (e.g. collision), including personal injury and death, property damage and cargo tort liens;
      
    • 
      d) Longshoremen (individual stevedores, not stevedore company).
      
    • 
      e) U.S. contract maritime liens (necessaries) entered into before the filing of a U.S. preferred mortgage. This includes repairs, supply of bunkers, supplies, stevedores, towage, contract cargo damage liens and charterer's liens, etc. (and also including statutory maritime liens, e.g. for civil penalties);
      
  • 
    4) Preferred U.S. ship mortgage liens, as of the date of filing, as well as preferred ship mortgages on foreign ships whose mortgages have been guaranteed under Title XI of the Merchant Marine Act, 1936 (46 U.S. Code Appx. sect. 1101 et seq. at sect. 1271 et seq.);
    
  • 
    5) U.S. contract liens (necessaries) arising after the filing of the U.S. preferred ship mortgage (these are not preferred maritime liens);
    
  • 
    6) Foreign ship mortgages (not guaranteed under Title XI of the Merchant Marine Act, 1936);
    
  • 
    7) U.S. contract liens (other than necessaries) (e.g. contract cargo damage liens and charterers' liens) accruing after foreign ship mortgages;
    
  • 
    8) Unregistered (i.e. non-preferred) mortgages and perfected, non-maritime liens (including tax liens and other Government claims which are subordinate to maritime liens); state chattel mortgages and liens and liens for maritime attachment; and foreign contract liens (e.g. U.K. or Canadian statutory rights in rem).
    

• 
  Under US law, a charterer is presumed to have contracted for supplies with the authority or the owner and the supplier is not required to enquire as to this.
  
• 
  In the UK and Canada as well as most other jurisdictions, the charterer never binds the ship unless is has actual authority of the ship-owner. There is no presumption of authority and there is no maritime lien for supplies in the UK and Canada, only a statutory right in rem, which expires with the conventional sale of the ship to new owners and which ranks after the mortgage.
  
• 
  The US has both the attachment (saisie conservatoire) and write in rem or arrest.
  

• 
  Similar to general ranking first mentioned but with some local variations.
  

• 
  A Greek ship owned by a Panamanian company with a Greek mortgage was repaired in the United States and left without paying the cost of repairs. American law grants a maritime lien to an American ship repairer which ranks ahead of even an earlier foreign mortgage.
  
• 
  The ship was arrested in Vancouver and the SCC recognize the US maritime lien under US law, which it applied because it held the lien was a right and therefore substantive. The SCC used its own ranking (of the forum) and ranked the lien ahead of the ship mortgage.
  
• 
  This decision was equitable, because the repairs added value to the object mortgaged so that the payment of repairs did not reduce the right sof the mortgagee who had value added to his equity. The repairs also allowed the ship toe sails and earn profits necessary to pay off the mortgage. The mortgagee also knew that the ship would sail around and enter into contract which is would be obliged to fulfill (potentially in different jurisdictions).
  
• 
  Result of the above in which the SCC said that they recognize necessaries over liens
  

• 
  A British ship, subject to a mortgage, repaired after in United States and sailed without paying repairs. The mortgage was not registered until after the repairs had been done (no notice given to supplier). Mortgagees ordered the ship to Singapore to be arrested, which is subject to English law.
  
• 
  JCPC held that maritime lien is a remedy and subject to the law of the forum and thus English law. Lien holder was granted only a statutory right in rem which ranked after the mortgage.
  
• 
  In defining liens as procedural, it must be logically accepted that any foreign courts should classify similar claims in the same way. To do so is to adopt the lex fori as the solution in every conflict case and to reject private international law. Furthermore, this misconstrues the idea of a lien, which is a privilege and a substantive right. This decision promotes forum shopping because a lien will not depend on the law of the place of the contract but that chosen for the ships arrest.
  
• 
  This decision is also contrary to the best interests of justice – the ship repairers, if knowing this would never have let the ship leave without paying for its repairs. In the name of comity, natural justice, and private international law, this maritime lien must be recognized.
  

• 
  Recognized Canadian law in respect of a maritime claim in Canada, and noted that no right of maritime lien and no right to arrest existed in the circumstances under Canadian law and concluded in consequence that no lien should be recognized by an American court. The Court noted that had American law applied, a lien and a right of arrest would have existed.
  
• 
  Relied on both the lex loci contractus and the closest and most real connection in finding that Canadian law applied. Other decisions have also recognized foreign liens under foreign law by applying the same rules.
  

• 
  Bunkers were supplied in Los Angeles to a time charter vessel flying an Indian flag. The bunkers were ordered by the time charterer, who had no authority to do so and the supplier did not know of this lack of authority and under US law was presumed not to know…so under maritime law a lien existed (not under Canadian law, though). The vessel was arrested in Canada and the Federal Court held that American law applied to that right and a lien was recognized…thus, once again a foreign right was upheld.
  

• 
  The Ship Registration Act, 1992 has acknowledged the absurdity of the Halcyon Isle decision, but even this legislation was troublesome because it essentially made foreign liens and claims equivalent to their domestic counterparts and thus does a disservice to international conflict of laws. All foreign rights and the like will still continue to be ranked by the lex fori.
  

• 
  Australia – Legislation gives jurisdiction over foreign maritime claims whether similar or dissimilar to domestic ones. It does not mention whether they are recognized but simply that they are covered. Law Reform Commission has left this open for the courts to decide.
  
• 
  South Africa – Has had difficulty recognizing jurisdiction over foreign claims. While on one case the foreign law was recognized as the proper law, there was still difficulty in recognized liens from that jurisdiction. Contrary to come of above cases. Troubled interpretation of Halcyon Isle.
  
• 
  Cyprus – Questionable decision of Halcyon again imported into another state to refuse the recognition of foreign liens.
  
• 
  Israel – Has held that the foreign maritime lien for necessaries was a substantive right, not procedural, and should be governed by the law of the place where supplied (lex situs) or the place of the contract – priorities should be by the lex fori…other judges argued differently but in the end it was held that foreign necessaries were recognized and priorities followed the lex fori. Israel, like the US, recognizes liens for necessaries but ranks it after the mortgage (much more logical).
  
• 
  Greece – Invokes law of the flag…seems pointless in light of flags of convenience, shell corporations etc.
  
• 
  China – Subjects mortgages to laws of the original ship’s registry, but maritime liens are subject to the law of the forum, which is unfortunate.
  
• 
  Netherlands – law of claim invoked for questions of existence of claims but whether protected by a lien is governed by law of the flag of the ship. Can this still work under the Rome Convention, 1980, to which Netherlands is a party to, where the law applicable to a necessaries contract is that stipulated by the parties? Also may violate this convention because of its reference to consequences of breach in article 10(1)(c). Ranking is also subject to a double test: the ship’s flag and forum law.
  

Would seem to modify Halycon precedent that all foreign contractual liens are remedies and of the forum and oblige an English court to recognize a foreign contractual maritime lien:

3 – must recognizes express choice of the parties

4 – must recognize even if there is no express choice

This is because the contractual lien is an integral part of the necessaries contract…

10(1)(c) – consequences of breach, to which the Convention applies and of which a lien clearly is

Need a proper convention on international maritime liens and mortgages as well as proper international convention on conflicts of laws. Sometimes better to use forum non conveniens or to use the law of the proper forum when considering the closest connection for the ranking of liens and mortgages.

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