BOW WAVE 509

Bow Wave Issue 509--Pilot's Liability Edition

news and views on trade, insurance and risk

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(c)2009 WavyLine.com	Issue No 509 17 Aug 09
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome -- Guest Editor Sign Off
2. Responsibilities Between Pilot and Ship Master - A Risk Reexamination
3. Cargo Clarity
4. Big Risks & Costly Mistakes
5. The Misdirected Arrow
6. Getting Your Smokey On - The Original American Risk Manager
7. And Finally...

1. Welcome -- Guest Editor Sign Off

Your Editor Sam Ignarski continues to enjoy a well deserved vacation, but will be back at the helm next week.

This week we explore some different views on maritime risk, go under the sea with Frazer Hunt and learn how Walt Disney's Bambi battled against a marauding Japanese submarine in the North Pacific of WWII -- and then turned into a bear.

Knowing the remarkable work of Sam Ignarski and his staff as we do, the task of giving you Bow Wave for the past two weeks has been a singular honor.

Please visit our own Countryman & McDaniel e-zine - The Cargo Letter, our Cargo Law site, and our 24 Hour Vessel Casualties daily feature:-

http://www.cargolaw.com http://www.cargolaw.com/cl-archives.php

Your Guest Editor,

Michael McDaniel
Countryman & McDaniel

Poem of the Week

RISK

To laugh is to risk appearing the fool
To weep is to risk appearing sentimental
To reach out to others is to risk involvement
To expose feelings is to risk exposing your true self To place your ideas, your dreams before a crowd is to risk their loss To love is to risk not being loved in return
To live is to risk dying
To hope is to risk despair
To try is to risk failure
But risks must be taken,
because the greatest hazard in life is to do nothing. The person who risks nothing,
does nothing, has nothing, and is nothing.
They may avoid suffering and sorrow,
but they cannot learn, feel, change, grow, love, live. Chained by their attitudes, they are a slave,
they forfeited their freedom.
Only the person who risks can be free

Author unknown

New Readers this week include:-

Mike Thompson of Montpelier Syndicate 5151
D Sokolov in Russia
Nicolas Gelsi of the RSA
Wilhelmina Fernandes of Aldis Underwriting in Canada James Sleightholme of Solicitors Elbornes

News of Readers

Jeffrey Blum, the Director of Maritime Education & Training Limited (METL) tells us of evening classes in central London for the Professional Qualifying Examinations leading to membership of the Institute of Chartered Shipbrokers. The next new term will start on Monday, 14 Sept. 2008. Anyone interested in enrolling please contact METL:-

mailto:admin@metl.info

http://www.metl.info

2. Responsibilities Between Pilot and Ship Master - A Risk Reexamination

Thanks to the author for this analysis by Geoffrey Gill for the Law Offices of Countryman & McDaniel

On Nov. 7, 2007, COSCO BUSAN struck a tower of the Bay Bridge connecting San Francisco and Oakland, spilling some 50,000 gallons of fuel oil into the bay.

The recent sentencing of COSCO BUSAN’s pilot, John Cota, to ten months imprisonment has refocused attention upon several facets of what the COSCO BUSAN allision may portend for the maritime industry - particularly the respective responsibilities between pilot and ships master. There seems to be the suggestion that the "game has changed" as regards the formalization of that relation. I submit that the nuances and practicalities of the situation significantly undermine any attempt to regulate by statute or judicial decree that relation - notwithstanding the desirability of a black & white demarcation of responsibility.
I begin by acknowledging my prejudice against the media, politicians and others unfamiliar with the realities of the contemporary commercial maritime world imposing their regulatory will upon an industry already awash in regulations.

At first blush, the pilot-master relation historically has recognized that in pilotage waters, the pilot controls the vessel by conning her navigation, with the master having the duty to intervene as necessary (other than in the Panama Canal) due to his (her) overriding responsibility for the vessel, her personnel and goods on board.

In a perfect world, this demarcation makes sense, the only iffy part (and it’s a mighty big "IF") being: when does the duty to intervene kick in? - how dangerous may or should the situation be allowed to become before the master must intervene. But as we know, today’s commercial maritime world is far from a perfect world.
Perhaps the first "speed bump" is the ambiguity over who determines whether the vessel will even get underway. In years passed, commercial pressures were less intense and a weather/visibility delayed sailing more economically justified when weighed against the risk of accident. Today’s reality suggests the pilot, less subject to the ship owning company’s economic induced pressures, should be an arbiter of whether the vessel gets underway. In fact, COSCO BUSAN’s master apparently deferred to Captain Cota’s judgment as the master asked him "...can go?" But Captain Cota passed the decision back to the master by saying "single up, if you want." This exchange begs the question whether a controlling authority, such as VTS or the Coast Guard, should make the decision.

And here may be introduced the role between a controlling or advisory authority such as VTS and the bridge team aboard the vessel. This appears an open issue as at the NTSB hearing, COSCO BUSAN’s manager’s question of whether VTS can be expected to direct a vessel from danger was characterized as "leading and argumentative," and went unanswered.
Another under appreciated issue is "power distance" that has been shown to influence the way different nationality groups will, or may be reluctant to, challenge questionable orders. Studies, particularly in the aviation domain, validated by numerous maritime casualty reports, have shown that many third world nationals hesitate or decline to questions practices, procedures, or performance by Western nationals. By example, I discussed this phenomenon with a major Asian vessel owner’s port captain, who was sufficiently interested to recommend that I address this issue within the fleet, but he was chastised because his recommendation had not passed through the fleet training department. Ironically, this conversation occurred only two months before the COSCO BUSAN allision.
More to the point, there appears to have been recognition of "power distance" on COSCO BUSAN’s bridge as the vessel data recorder recorded a crew member commenting "...American ships under such conditions, they would not be underway" as the vessel departed her berth.
The rationale underlying the pilot-master relation is the master’s trust in the pilot’s competence, which the master is unlikely to have sufficient opportunity independently to verify. Similarly, the pilot should be able to trust the competence of the master and the vessel’s bridge team to complement his or her local knowledge. As all humans are capable of error, the pilot should welcome a proactive bridge team. One can too easily imagine an in extremis situation in which trust is absent and countermanding orders create a CAINE mutiny-"Mr. Keith, you’re the OOD here, what the hell should I do?" - situation. The trust factor highlights the importance of the pilot-master exchange, when initial influential impressions will be formed.

While the COSCO BUSAN incident invites comment in many areas, a final observation is appropriate to the increasing criminalization of simple negligent acts or omissions, which should be judged less by their consequences than by their culpability. One can only wonder how many competent experienced senior officers are thereby deterred from staying at sea, so opening the door for less experienced personnel and so increasing the risk factor.

The COSCO BUSAN incident has the potential for robust review of many important issues. One can only hope that the right questions will be knowledgeably asked in the right way to elicit realistic objective and appropriate answers.

GEOFFREY W. GILL , ESQ is a graduate of Fordham University School of Law, United States Merchant Marine Academy, and United States Naval War College. He practices maritime hull & yacht litigation in California, Florida & New York at Countryman & McDaniel.

3. Cargo Clarity

Thanks to Christoph Wahner of the Law Offices of Countryman & McDaniel for contributing this item from Lloyd's List

"Shipowners have long been aware that delivery of cargo without production of an original bill of lading by the person to whom delivery is made takes them outside their P&I cover. As Lord Denning put it in Sze Hai Tong v Rambler Cycle [1959] AC 57 : "It is perfectly clear law that a shipowner who delivers without production of the bill of lading does so at his peril." The International Group of P&I clubs has sought to alleviate the dilemma faced by owners under pressure to depart from this "presentation rule" by creating a standard form of Letter of Indemnity (LOI). However, the actual use of the forms will not displace the club cover exclusion in the event of delivery of cargo without production of the bill of lading.

Accordingly, any LOI that the carrier agrees to accept in lieu of the original bill of lading will represent the measure of his insurance. The High Court decision in Bremen Max [2009] 1 LL 81 illustrates the cover limits. In that case, the time charterparty imposed a contractual obligation on the owner to accept an LOI in lieu of the bill of lading to enable discharge of the cargo."

Lloyd's List, 22 July 2009

Guest Editor:- The largest single E&O risk for NVOCCs is misdelivery -- the release of cargo without taking up the original bill of lading.

4. Big Risks & Costly Mistakes

Guest Editor:- We are all too familiar with the maritime risks which brought us costly losses for M/V APL Panama & M/V MSC Napoli in recent times. Where the vesels which protect us are concerned, the risk calculus is somewhat different. This week the U.S. Navy released specifics of the rather enormous expense which followed from a rather minor mistake in early 2009. Military or civilian, the margin for risk avoidance at sea can be slender.

Thanks to the Strategy Page for a different view of maritime risk:-

Sloppy leadership by the captain, and the senior chief petty officer of a nuclear submarine earlier this year, will apparently cost the U.S. Navy over US$100M for repairs. The American SSN (nuclear attack submarine), the USS Hartford (SSN 768), had a minor collision with an American amphibious ship earlier in the year. Now that it's in an American shipyard, and been thoroughly examined, it's been determined that the boat needs a hull patch, plus extensive repairs to the sail (that structure on top of the hull) and one of the retractable bow planes (a wing like device). It will take about a year to complete all the work. The captain and chief of the boat (senior NCO) were dismissed shortly after the collision.

The Hartford arrived back in Groton, Connecticut, from the Persian Gulf on May 21st. The Hartford took over a month to make the trip, because it has to do it all on the surface (SSNs move faster underwater, than on the surface.) This was because of the damage to the subs sail, after a collision last March 20th. Back then, a U.S. 24,000 ton amphibious ship (the USS New Orleans, LPD 18) collided with the submerged Hartford (a 7,000 ton Lost Angeles class boat), in the narrow Straits of Hormuz. Fifteen sailors aboard the sub were injured, while a fuel tank on the LPD was torn open, and 25,000 gallons of fuel oil got into the water. Both vessels returned to port under their own power. The accident happened at 1 AM, local time.

The Hartford rolled 85 degrees right after the collision, and substantial damage was done to the sail, including a leak. The Hartford went to a Persian Gulf shipyard for emergency repairs (a metal brace for the sail, which was twisted so that it leaned to the right). Temporary decking, railing and antennas were added to the topside of the sub, to make it easier for the surface ride home. Nuclear subs rarely spend this much time on the surface. This is not the first time the Hartford has had an underwater misadventure. Six years ago the Hartford grounded itself while training off the Spanish coast. It was only after the sub was dry docked, that it was discovered how serious the damage was. The bottom half of the rudder was torn off, and the gouges in the hull were deeper than first thought. Although the sub was able to steam back to dry dock facilities at Groton, Connecticut, it had to do so at half speed, taking a month for a trip that normally is made in two weeks.

The cause of the accident was sloppiness by the six sailors in the navigation team. Too much time was allowed to elapse between position updates and the sub went aground while navigating shallow coastal waters. All six sailors in the "navigation party" were punished for dereliction of duty. The captain of the sub, and his boss (the commander of Submarine Squadron 22, based in Spain), were both relieved of duty. The implication here is that the training and discipline of the navigation party were not up to standard, and the ship's captain and the squadron commander are responsible for training and discipline. The damage to the Hartford required expensive repairs to the hull and kept the sub out of service for nearly a year. The same thing is happening again.

The Hartford repairs are more than what it cost to replace the front end of the SSN San Francisco, which ran into a sea mount four years ago and stove in its sonar space (the front of the boat). A front end from a retiring SSN was taken and fitted on the San Francisco, costing about US$80M.

http://www.strategypage.com

5. The Misdirected Arrow

Thanks to the author & valued colleague for contributing this report by Vincent M. DeOrchis for the "Client Alert" published byPartners LLP, New York

Have you ever heard of a "Misdirected Arrow Clause" in a Protection and Indemnity Policy?

Such a clause is included to cover situations where, for example, a claim is made against a concessionaire on a cruise ship where it should have been made against the shipowner or operator who is a member of the P&I Club. In such cases, the Club will take over the defense of the claim. But read carefully, it does not cover claims that are the responsibility of the concessionaire.

In a recent case, a food and drinks concessionaire on a cruise ship claimed it paid a time-charterer cruise operator over US$300,000 per year to procure liability coverage for the concessionaire under an indemnity policy issued by a P&I Club to its members, the cruise operator, and the shipowners.

The concessionaire paid medical bills (maintenance and cure) relating to the hospitalization of a crew member who was in its employment. It then sought reimbursement from the P&I Club. The Club declined to pay because the policy contained a "Misdirected Arrow Clause" which limited coverage afforded to the shipowner only to instances wherein a third party "may be found liable to pay in the first instance for loss or damage which is properly the responsibility of the shipowner."

The Trial Court granted summary judgment to the Club, and the Court of Appeals in New York affirmed because the seaman was employed by the concessionaire and so maintenance and cure was its responsibility and not that of the cruise operator or shipowner.

The Circuit Court noted that its affirmance was without prejudice to whatever remedies the concessionaire may have against the cruise ship operator (time charterer) who allegedly received US$300,000 in billings for the "extended cover."

Trident Int'l., Ltd. V. Am. S.S. Mut. Prot. & Indem. Ass'n, 2009 U.S. App. LEXIS 13297 (2d Cir., June 22, 2009).

6. Getting Your Smokey On - The Original American Risk Manager Turns 65

Smokey Bear turned 65 this month, but who knew that America's oldest risk icon has a direct maritime connection -- fighting marauding submarines?

Though the U.S. Forest Service fought wildfires long before World War II, the war brought a new importance and urgency to the effort. The forest service began using colorful posters as a way to educate Americans about the dangers of forest fires. Since most able-bodied men were already serving in the armed forces, none could be spared to fight fires on the West Coast. The hope was that local communities, educated about the danger of forest fires, could prevent them from starting in the first place.

The Japanese, on the other hand, saw wildfires as a possible weapon. Forest fires could drain U.S. manpower, destroy valuable natural resources, and cause general havoc. In the "Lookout Air Raids" of 1942, the Japanese attempted to set southeast Oregon's coastal forests ablaze.

In separate maritime attacks on 9 & 29 Sept. 1942, the Japanese submarine I-25 surfaced & launched a Yokosuka E14Y floatplane loaded with incendiary bombs. Neither attempt was successful, thanks primarily to weather conditions, and the actions of two quick-acting fire lookouts. U.S. planners also hoped that if Americans knew how wildfires would harm the war effort, they would be better able to cooperate with the Forest Service to eliminate fires, whether caused by Japan or otherwise. Interestingly, the Japanese renewed their maritime wildfire strategy late in the war: from Nov. 1944 to April 1945, some 9,000 fire balloons were launched into the jet stream, with an estimated 10% making it to the U.S. Nonetheless, fire balloons only killed six Americans--at a church picnic, when a 13 year old girl tried to pull the balloon down from a tree.

America needed to fight back against the fire attacks on her western forests. An icon was needed. How about a forest creature?

On August 13, 1942, Disney's 5th full-length animated motion picture Bambi premiered in New York City. Soon after, Walt Disney allowed his characters to appear in fire prevention public service campaigns in the western U.S. -- to alert citizens to the fire attack danger & enlist their help. However, Bambi was only loaned to the government for a year, so a new symbol was needed.

Sticking with the popular animal theme, a bear was chosen. His name was inspired by "Smoky" Joe Martin, a New York City Fire Dept. hero who shrugged off burns and blindness in a bold 1922 rescue. Smokey's debut poster was released on August 9, 1944, which is considered his birthday. His motto: "Only You Can Prevent Forest Fires" remins today. Upon his death on Nov. 9, 1976, Smokey's remains were returned by the government to Capitan, New Mexico, and buried at what is now the Smokey Bear Historical Park.

The iconic fire prevention figure, known to nature & animal lovers of all ages around the world, has changed little since first gracing U.S. Forest Service posters in 1944. The living symbol of Smokey Bear was an American black bear cub who in the spring of 1950 was caught in the Capitan Gap fire, a wildfire that burned 17,000 acres (69 km2) of the Lincoln National Forest in the Capitan Mountains of New Mexico, near where your Guest Editor attended high school. Smokey had climbed a tree to escape the blaze, but his paws & hind legs had been burned. He was rescued by a Game Warden after the fire. Upon his death on Nov. 9, 1976, Smokey's remains were returned to Capitan, New Mexico, and buried at what is now the Smokey Bear Historical Park.

So .... the longest running & most successful public service & risk advertising campaign in U.S. history was inspired by a Japanese submarine in the North Pacific! But there are entirely different risk management considerations this month, given that Smokey's 65th birthday coincides with the opening weekend of bear hunting season here in California.

Your Guest Editor.

http://www.smokeybear.com/ http://www.smokeybear.com/kids/default.asp?js=1

7. And Finally...

Many Thanks To Stephanie Warren Calabasas, CA:-

A blind cowboy wanders into an all-girl biker bar by mistake. He finally finds his way to a stool and orders a cup of coffee. He sips his coffee for a minute or two then hollers "Hey, anybody wanna hear a blonde joke?"

The bar falls quiet but then in a husky voice, the woman next to him says, "Before you tell that joke, Cowboy, I think it is only fair, given that you are blind, that you should know something. The bartender is a blonde girl with a baseball bat and the bouncer is a blonde girl. Not only that, but I'm a 6-foot, 165-pound blonde woman with a black belt in karate and the woman sitting on the other side of you is blonde and a professional weightlifter. The lady sitting at the table right behind you is a blonde and she drives a truck. Now, think about it. Do you really want to tell that joke?"

The blind cowboy thinks for a second, shakes his head, and mutters, "No... not if I'm gonna have to explain it five times."

P.S.

Thanks To The House of Frazer

Children Writing About the Ocean...

1) - This is a picture of an octopus. It has eight testicles. (Kelly, age 6)

2) - Oysters' balls are called pearls. (Jerry, age 6)

3) - If you are surrounded by ocean, you are an island. If you don't have ocean all round you, you are incontinent. (, age 7)

4) - Sharks are ugly and mean, and have big teeth, just like Emily Richardson. She's not my friend any more. (Kylie, age 6)

5) - A dolphin breathes through a bottom on the top of its head. (Billy, age 8)

6) - My uncle goes out in his boat with 2 other men and a woman and pots and comes back with crabs. (Millie, age 6)

7) - When ships had sails, they used to use the trade winds to cross the ocean. Sometimes when the wind didn't blow the sailors would whistle to make the wind come. My brother said they would have been better off eating beans. (William, age 7)

8) - Mermaids live in the ocean. I like mermaids. They are beautiful and I like their shiny tails, but how on earth do mermaids get pregnant? Like, really? (Helen, age 6)

9) - I'm not going to write about the ocean. My baby brother is always crying, my Dad keeps yelling at my Mom, and my big sister has just got pregnant, so I can't think what to write. (Amy, age 6)

10)- Some fish are dangerous. Jellyfish can sting. Electric eels can give you a shock. They have to live in caves under the sea where I think they have to plug themselves in to chargers. (Christopher, age 7)

11)- When you go swimming in the ocean, it is very cold, and it makes my willy small. (Kevin, age 6)

12)- The ocean is made up of water and fish. Why the fish don't drown I don't know. (Bobby, age 6)

13)- My dad was a sailor on the ocean. He knows all about the ocean. What he doesn't know is why he quit being a sailor and married my mom. (James, age 7)

(with thanks to our colleague Frazer Hunt in Sydney)

BOW WAVE is published each week to over 15 000 Readers in the transport,insurance,shipping and finance industries.

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