The Hidden Dangers Lessons to be learned in dealing with major casualties.

1. The Hidden Dangers Lessons to be learned in dealing with major casualties. Presented by Julian J Clark & Filippo Lorenzon 8 October 2012

2. The Aconcagua Size: 2226 TEU 2nd Maiden voyage Liner service Far East to USA and South America

3. The Aconcagua • 28 November 1998, a cargo of 334 kegs of calcium hypochlorite in a container shipped on board at Busan, South Korea, to San Antonio, Chile. • The bill described the cargo as “one container said to contain Calcium Hypochlorite 65 per cent” and stated: “IMO: 5.1. UN: 1748 PG: 5137”. The bill incorporated the Hague Rules. • The box was stowed in No 3 hold surrounded on three sides by a bunker tank. • The vessel carried out cargo operations at Keelung, Hong Kong and LA. • On 30 December 1998:

4. The Aconcagua • The bunker tank in No 3 hold had been heated during the voyage in order to allow a transfer of bunkers for fuel oil. • What next? 1. Arbitration: Owners-Charterers Owners commenced arbitration against charterers under the charterparty. The arbitrators made an interim award, after which charterers reached a settlement with the shipowners and paid US$27,750,000.

5. The Aconcagua 2. Court proceedings: Charterers-Shippers in the High Court Charterers claimed against the shippers of the CH, for breach of the contract contained in or evidenced by the bill of lading in respect of the container. • Charterers claimed the CH had, unknown to it, an abnormally high thermal instability, being prone to self-heat at ordinary carriage temperatures. As a result it exploded on board the Aconcagua at temperatures which were ordinarily to be expected onboard that vessel during the voyage. • Shippers contended that the cargo shipped was not abnormal or, at least, had not been shown to be so. In stowing the container in a position where it was surrounded on three sides by a bunker tank, charterers was in breach of its duty under Article III, Rule 2. Christopher Clarke J: Charterers were entitled to indemnity!

6. The Aconcagua 3. Court proceedings: Shippers-Charterers in the Court of Appeal Shippers appealed. But Christopher Clarke J was upheld by Longmore LJ in the Court of Appeal @ [2010] EWCA Civ 1403; [2011] 1 Lloyd’s Rep 683.

7. As a result… • Over 10 years of litigation • Arbitration lasting 6 weeks • 2 High Court decisions • 1 Court of Appeal decision • New Law/First ever Limitation Fund in Chile • Complex enforcement proceedings

8. Lessons to be learned… • While for the purposes of this presentation we are dealing with a Dangerous Goods case, which are often the most complex and expensive to run, the lessons apply equally to all major casualty cases.

9. Lessons to be learned… • Collation and presentation of evidence is crucial • Selection and control of experts and legal team • 200% attention to detail • A ‘weather eye’ on tactical position

10. The Casualty Management Check List

11. Collation and Preservation of Evidence • Physical Evidence - Cargo samples • Electronic Evidence – Email, Bapli and Electronic files • Safety management system (SMS) • ECDIS, DAGO • Crew evidence (look in unusual places/fuel gauges) • Word on disclosure

12. Selection and Control of legal team • Do not re-invent the wheel • Out of box thinking on expert selection • Value of experimentation (Holland v Wolfe/Australian explosions) • Experts duties / 2 + 2 = 5 • Tail wagging the DOG

13. 200% ATTENTION on detail & Weather Eye on tactical position • Casualties gather their own momentum • Beware insider fighting • Use of contractual inconsistencies as a defence • Costs as an incentive to settle • Evidence is King • Forum Shopping • Mediation & ADR

14. CONCLUSION • Expensive Complex and can easily run wild! • Key issue: Evidence/ Teams / Analysis – E.T.A • Protection of rights of re-course (Art IV Rule 6)

15. The Hidden Dangers THANK YOU Julian J Clark julian@cjcmarinelaw.com Filippo Lorenzon Filippo@cjcmarinelaw.com