From Russia without a ship
Russian legal practice is seeing the creation of a dangerous precedent with a potential negative impact on the attractiveness of domestic ports for foreign vessels. It is related to the case of the Aframax tanker Delta Pioneer which allided with a pier at Primorsk port on 20 November 2016. Russia rejected guarantees of international P&I Clubs and refused to release the arrested tanker while the amount of the claimed damage conflicts with international instruments.
On 20 November 2016, the Aframax tanker Delta Pioneer (flag of Greece) allided with dolphin No 6 at Berth No 1 in Primorsk port (Leningrad Region). The vessel was maneuvering to the berth when the stern towing line given to the tanker from Rosnefteflot’s towing tug RN Poseidon broke up. According to the State Maritime Rescue and Coordination Center of RF Transport Ministry, the tanker damaged two sections of the berth catwalk.
The investigation performed by the Federal Agency for Transport Supervision found that the key factor that caused the incident was the high speed of the vessel approaching the berth because of spontaneous release of the towing line. Involvement of Rosnefteflot’s tugboats is obligatory for ships calling at Primorsk. Since the tanker is a source of special danger the court acknowledged the ship which allided with the berth responsible for the damage, not the tugboat, which caused the incident.
In July 2017, the Arbitrage Court of Saint-Petersburg and the Leningrad Region passed a judgment on claiming more than RUB 3 bln from the tanker owner and operator including RUB 2.3 bln awarded to Transneft-Port Primorsk and RUB 713.5 mln – to Commercial Sea Port of Primorsk.
Ship owner Pontoporos Special Maritime and ship operator Delta Tankers filed an appeal which is to be considered on 17 October 2017 at the 13th Arbitration Court of Saint-Petersburg.
According to the estimates provided by the defendants, the damage is between RUB 0.35 bln and RUB 1.1 bln. According to the estimates of claimants (Transneft), the damage is RUB 2.3 bln. However, despite the difference between the estimated amount of damage provided by the sides, the court of the first instance rejected the legal expertise.
The case has already overgrown with scandals. A crime incident report has been filed to accuse the judge of the Arbitrage Court of Saint-Petersburg involved in the case of judicial decisions substitution (forgery by an official, Article 292, Criminal Code of the Russian Federation).
The defendants also appeal against the decision to divide the responsibility between them.
Legally, only a ship owner should be responsible for the damage while the court of the first instance acknowledged both the ship owner and its manager responsible for the damage.
This story can cause a long-term negative impact on the port industry of Russia as vessels calling at Russian ports face jurisdiction risk. The case materials show that that the court repeatedly rejected to lift the arrest under a guarantee by The West of England, a leading marine insurer. Meanwhile such guarantees are accepted as a security worldwide. 90% of the global commercial fleet is insured by P&I Clubs. The guarantees of P&I Clubs are accepted all over the world. Until recently that was also a practice of Russia. However, when Saint-Petersburg court accepted the guarantee of a P&I Club and lifted the arrest, the court’s decision on lifting the arrest weirdly disappeared from the court case file.
Among the jurisdictions not accepting such guarantees as a security are Papua New Guinea and Somalia. Even in the USSR, guarantees of foreign P&I Clubs were to be accepted by a direct order of the USSR Ministry of Marine Fleet. Under the issued guarantees, P&I Clubs pay in all jurisdictions, comments Konstantin Krasnokutsky, Executive Partner at the legal firm Navicus.
Rejection of P&I Clubs’ guarantee will be finally reflected on the cost of goods since carriers should take into consideration additional risks in the Russian Federation.
Besides, according to the Convention on limitation of liability for maritime claims (1976), claims on ship owners are limited by RUB 2.7 bln even if the damage exceeds this amount.