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November 2018
hilldickinson.com/commodities
Revisions to FOSFA and GAFTA terms
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‘No oral modification’ clauses are binding
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Electronic signatures: are they enforceable?
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Exceptions clauses and causation‘But for’ test applies to exceptions clauses - Classic Maritime Inc -v- (1) Limbungan Makmur and (2) Lion Diversified Holdings [2018] EWHC 2389 (Comm)
A commodities update
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Trade Advantage
Welcome to the season edition of Hill Dickinson’s title here newsletter, which we hope you will find of interest.
Kind regards,
Name Here Partner, Sector [email protected]
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A warm welcome to the November 2018 edition of Hill Dickinson’s commodities team’s Trade Advantage, which aims to keep our commercial clients up to date with recent legal developments in the area of trade in a relevant way.
It is natural to feel alarm and despondency in these worrying days of Brexit and Trump and a cold wind blowing through some of the commodities markets, but some things remain stable and unchanging. The Special Relationship, for example. Hill Dickinson’s global head of shipping, Julian Clark, recently led the UK delegation to a one-day event in New York to lay the foundations for a possible future UK-US trade deal. And the prospects for a EU/UK deal look brighter than they have for some time. So, we remain optimistic about the future at Hill Dickinson. As Alfred Lord Tennyson once wrote: ‘Hope smiles from the threshold of the year to come, whispering “it will be happier”...’
We include in this edition eight articles, six of which deal with recent reported decisions of the English Courts, including two where Hill Dickinson acted for the successful party. I hope you find them relevant and of interest.
Please tell us if Trade Advantage is useful for you. Alternatively, please do let us know how you would like to see it improved. Your feedback would be very welcome.
Jeff Isaacs Partner
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Welcome
ContentsExceptions clauses and causation - Classic Maritime -v- Limbungan
Revisions to FOSFA and GAFTA terms
Correction of arbitration awards
The scope of arbitration clauses
The “BALTIC STRAIT” - recoverable loss under COGSA 1992
‘No oral modification’ clauses
The “ALHANI” - misdelivery under the Hague Rules?
Electronic signatures
Commodities news
Key contacts
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10-11
12-14
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The successful defendant in Classic Maritime Inc -v- (1) Limbungan Makmur and (2) Lion Diversified Holdings [2018] EWHC 2389 (Comm) was represented by Hill Dickinson’s shipping team.
The claimant sued Limbungan in the English court for Limbungan’s failure to perform five shipments under a contract of affreightment (COA) after the Fundao dam in Brazil burst on 5 November 2015. The court ruled that Limbungan could not rely on an exceptions clause in the COA as the ‘but for’ test was not satisfied. The compensatory principle meant, however, that the claimant was not entitled to substantial damages.
The factsClassic Maritime and Limbungan entered into a COA under which Limbungan, as charterers, was to provide shipments of iron ore pellets from either Ponta Ubu or Tubarao in Brazil to Malaysia.
The COA contained an exceptions clause which excluded liability of the parties for loss or damage to, or failure to supply load discharge or deliver cargo as a result of (amongst other things) act of God, floods, accidents at the mine or production facility, provided that such an event directly affected performance.
Although it had no legally binding agreement to, Limbungan ordinarily loaded cargo under the COA for its associated steel producing companies, Antara Steel Mills SDN BHD and Lion DRI STN, who in turn sourced their iron ore pellets from Samarco Minercao SA (who shipped from Ponta Ubu).
On 5 November 2015 the Fundao dam burst, causing catastrophic flooding and environmental damage. Samarco suspended its production at Ponta Ubu and ceased to be a source of cargo. In so doing, Samarco reduced the global supply of iron ore pellets by some 20%.
Subsequently, Limbungan was unable to perform under the COA: it could not provide cargo from Ponta Ubu and argued it could not obtain cargo to ship from Vale SA ex-Tubarao, being the only other potential supplier under the COA. Limbungan sought to rely on the exceptions clause in the COA (clause 32), arguing that the burst dam was a force majeure type event that prevented its performance.
Classic Maritime, however, alleged that the burst dam had no causative effect in circumstances where Limbungan would not have performed even had the dam not collapsed - therefore clause 32 could not apply.
Alternative modes of performanceClassic Maritime submitted that Limbungan had an absolute duty to provide cargo but had made no arrangements to actually do so. They argued that Limbungan had no contracts in place with Antara or Lion DRI and therefore could not compel them to provide cargo in order for Limbungan to be able to perform the COA. They also argued that although the dam burst explains why Samarco could not provide cargo, it was irrelevant as it was the lack of arrangement with Vale or Vale’s refusal to provide cargo which caused Limbungan to fail in its duties.
Limbungan countered that the COA provided alternative modes of performance: if an event of force majeure prevented one mode of performance that was settled practice (i.e. the supply of iron ore pellets from Ponta Ubu), clause 32 could still be relied on provided that reasonable steps were taken to perform under the alternative mode (in this case, to provide a shipment from Tubarao).
Mr Justice Teare found in favour of Limbungan, accepting the general principle of alternative modes of performance. He held that there was no requirement that the party seeking relief must have legally binding arrangements to perform the contract by one of two alternative modes of performance. It was, however, commented that if, as a matter of fact, no arrangements had been made it would make it more difficult to establish that failure to perform was a result of the force majeure event. This matter of fact was said to be bound up with the ‘but for’ issue.
The ‘but for’ testClassic Maritime submitted that clause 32 had the effect of creating a ‘but for’ test – to rely on it, Limbungan must show that it would have performed its obligations but for that event. Limbungan rejected this, likening clause 32 to a contractual frustration
clause where the ‘but for’ test need not be satisfied. Limbungan asserted that the only relevant element of causation was that the burst dam rendered performance impossible.
Teare J held that there were differences between a contractual frustration clause (which operates to bring future performance of a contract to an end) and an exceptions clause (which provides a defence to liability for damages in circumstances where the contract remains in existence and therefore still subject to contractual obligations). In the latter case, the ‘but for’ test was applicable.
The court having considered the factual matrix, doubted that Limbungan would have performed even had the dam not burst, and it therefore followed that Limbungan could not rely on clause 32.
However, Teare J also found, in relation to Limbungan’s attempts to source cargo out of Tubarao following the dam burst, that it was more likely than not that Vale would have declined to supply a cargo, even on a long term contract.
Damages and the compensatory principleAlthough it was established that Limbungan could not rely on clause 32 to exclude liability for their default, Teare J held that Classic Maritime was unable to recover substantial damages in respect of that default.
It was held that the correct comparison to be made was that between the position Classic Maritime found themselves in and the position that they would have been in had Limbungan been able and willing (but for the burst dam) to perform.
Teare J found that even if Limbungan had been able and willing to ship the five cargoes, no cargoes could have been shipped as a result of the burst dam. Limbungan would then have been able to rely on clause 32 and liability would have been excluded. Applying the compensatory principle, Classic Maritime should not be entitled to substantial damages because it
could not be put in a better position than it would have been in had Limbungan been able and willing to perform.
Commentary This case illustrates that in the context of contractual exceptions clauses, a party wishing to rely on such clause to avoid liability will need to be able to demonstrate that, “but for” that event, it would have been able and willing to perform its obligations. A party may be able to establish this even where it has not made legally binding agreements to ensure performance provided it has made reasonable and well established arrangements for performance.
The conclusion of the judge shows the importance still placed on the compensatory principle by the court - even where a party cannot establish that it would have performed but for the event it may be able to avoid substantial damages where it instead shows that performance would ultimately be rendered impossible by the force majeure event. This judgment illustrates the importance of the compensatory principle in the context of contractual exceptions clauses. Also see the Supreme Court judgment in Bunge -v- Nidera, which illustrates the importance of such principle in the context of contractual frustration clauses (the clause in the latter case being the Gafta Prohibition clause that is now part of the Gafta Prevention of Shipment clause).
This case is also a good illustration of the fact that one size does not necessarily fit all; when looking at the operation of contractual force majeure clauses (whether an exceptions type clause or frustration type clause) it is of paramount importance to judge each case on its particular facts.
Amy Walmsley [email protected]
Darren Wall [email protected]
TRADE ADVANTAGE NOVEMBER 2018
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The starting point is that if an arbitration award is to be appealed to the High Court pursuant to the Arbitration Act 1996, section 70(3) of the Act provides that the appeal must be lodged either:
1. Within 28 days of the date of the award; or
2. If there has been any arbitral process of appeal or review, within 28 days of the date when the appellant is notified of the result of the process.
In this case, the claimant alleged that a section 57 application for correction of the award was an arbitral process of appeal or review and would result in the 28 day appeal window running from the date on which the tribunal notified the parties of the result of that application - not from the date of the award. The particular application made by the claimant consisted of corrections of clerical errors only.
The court held that the process for correction or clarification of an award under section 57 was not an ‘arbitral process of appeal or review’ under section 70(3) and therefore an application for such a correction will not extend the window in which an appeal to the High Court can be made. However, if the correction or clarification requested is a material correction (i.e. one which is necessary to allow the award to be challenged) then the 28 day deadline will run from the date of the correction or clarification. For instance, an application requesting an additional award for an issue not decided by the tribunal but put to it by one of the parties is an illustration of a material correction for these purposes.
Mr Justice Bryan held that a section 57 application could not be a process of appeal or review for the purposes of section 70(3) for three reasons:
1. The ordinary and natural meaning of section 70 as a whole clearly differentiated between an appeal or review and a correction. Bryan J held that a reference to a ‘relevant process’ must be one by which an award is subject to appeal or review by another arbitral body;
2. There was recent authority which held the same outcome; and
3. The fundamental principles of the Arbitration Act 1996 are to ensure arbitration obtains fair resolution without unnecessary delay or expense. Bryan J held that the principles of finality and speed would be undermined if an application for any correction had the outcome of extending the time in which an appeal may be lodged.
However, where a clarification of the award is a necessary prerequisite of challenging the award, section 70(2) requires that all arbitral recourse to the tribunal is sought before making an appeal to the High Court. In these circumstances, as illustrated in the earlier example where an award does not deal with an issue put to the tribunal by one of the parties, the deadline for bringing an appeal will be 28 days from the date of the correction - the judge held ‘the purpose is to ensure that before there is any challenge, any arbitral procedure that is relevant to that challenge has first been exhausted. Thus if there is a material ambiguity that is relevant to the application or appeal you must first go back to the arbitrators, whereas if you are seeking to correct typos then that is not a bar to you pursuing your application. It is only where a matter is material that you first have to exhaust the available remedies specified in section 70(2), so that it is only in those circumstances that it is necessary for
time only to run after those available remedies have been exhausted. The judge in the case considered that a section 57 correction which is material to any application to appeal should be easy to identify. However if ever there is uncertainty as to the materiality of a section 57 correction being sought, we recommend that either an appeal is lodged within the 28-days of the original award, with liberty to amend at a later date if necessary; alternatively that an application is issued to obtain an extension of time in which to lodge an appeal beyond the 28 days from the date of the original award.
In closing, the judge was not attracted by the claimant’s secondary argument seeking excusal for its 24 day delay in circumstances where the period for bringing the application ought to have been 28 days. In dismissing this argument, the judge drew from previous authority in expressing his view that a delay measured in days is significant, whilst a delay of weeks and months is substantial. Furthermore, the granting of an extension of time does not arise as a matter of right; rather, reasons for the extension are required. In this case, no explanation was provided by the claimant as to why an extension was being sought.
This case demonstrates the importance that the court gives to the principles of speed and finality, and serves as a reminder to parties of the need to adhere to deadlines and to bring applications in a timely manner.
Amy Walmsley [email protected]
Darren Wall [email protected]
Correction of arbitration awards: when a slip becomes a trip!An arbitration award has been handed down - but what is the deadline to appeal the award to the English courts? And when does time start running where there is an application for correction of the award? The recent case of Daewoo Shipbuilding & Marine Engineering Company Ltd -v- Songa Offshore Endurance Ltd [2018] EWHC 538 (Comm) provides useful clarification and guidance on the running of time for appeals in the context of applications under the slip rule.
Changes to the FOSFA Arbitration Rules from 1 April 2018
The Federation of Oils, Seeds and Fats Association (FOSFA) has published revised Rules of Arbitration that apply to disputes arising under contracts concluded on or after 1 April 2018. The previous Rules of Arbitration, published in January 2012, will continue to apply to contracts entered into prior to April 2018.
The main changes in the new rules are:
• Time limit for commencement of arbitration
For disputes relating to quality and/or condition the time limit for commencement of arbitration has been extended to 90 days from either (i) the completion of discharge in CIF, CFR and similar contracts; or (ii) the completion of delivery in FOB, ex-tank, ex-mill and ex-store contracts.
Meanwhile, a respondent now has 30 days from the notice of commencement of arbitration to appoint an arbitrator and notify the claimant and FOSFA of that appointment.
Also note that the new rules make no distinction between claims that are supported by certificates of contractual analysis and those that are not, which distinction caused problems under the previous rules.
• Claims for ‘monies due’
Under the new rules FOSFA no longer treats ‘monies due’ claims as a separate category of dispute. The time limit for commencement of arbitration in respect of such claims will be that which applies to non-quality and/or condition claims, namely 120 days from the relevant starting point under each category of contract (unchanged from the previous rules).
• First tier arbitration procedure
In arbitrations in respect of quality and/or condition claims the time limit for service of claim submissions has been extended to 30 consecutive
days following the appointment of the respondent’s arbitrator, instead of 10 consecutive days from the notice of commencement of arbitration under the previous rules.
Likewise, under the new rules the respondent has a period of 30 consecutive days from the receipt of the claimant’s submissions to file its submissions in response.
The procedure for the exchange of submissions in arbitrations for claims other than for quality and/or condition remains unchanged under the new rules, both parties having to file their respective submissions ‘without delay’.
For all types of claim, the claimant is now required to pay to FOSFA a deposit on account of the fees, costs and expenses of the arbitration. The amount of the deposit is currently set at £5,000, although the tribunal may request further deposits at its discretion.
• Arbitrators and the ‘two tier’ system
Under the new rules, in situations where two arbitrators have been appointed by or on behalf of the parties, FOSFA will appoint a third arbitrator who will act as chair of the tribunal.
However the parties remain able to agree to appoint a sole arbitrator instead a panel of three arbitrators.
As was the case under the previous rules FOSFA continues to operate a two tier arbitration system with an automatic right to appeal against a first tier award.
Importantly, under the new rules if a party wishes to make a cross-appeal against the award (after the other party has notified its intention to appeal against the first tier award), it will have to serve a notice of cross-appeal within seven days of receipt of the other party’s notice of appeal and will have to pay to FOSFA a further deposit on account of the fees, costs and expenses of the cross-appeal.
Changes to GAFTA terms from 1 September 2018There are also important changes to The Grain and Feed Trade Association (GAFTA) Arbitration Rules No. 125 (GAFTA 125) and to the widely-used FOB contract form GAFTA 49.
Importantly, under the new GAFTA 125 effective for contracts entered into as from 1 September 2018, the separate category of claims for ‘amount payable’ has been removed. The relevant time bar applicable to those claims will now be defined on the basis of the parity terms of the contract (FOB, CIF, etc.), as provided under the ‘other disputes’ section of GAFTA 125. The time bars based on the parity of the contract remain unchanged.
The corresponding clauses in the payment section of the standard contract forms have accordingly been removed.
As regards the new GAFTA 49 form, also effective as from 1 September 2018, the provision that required the sellers to have the goods ready ‘at any time within the contract period of delivery’ has been removed. This marks a significant change in that, as per the House of Lords’ judgment in The “NAXOS”, such a term was a condition of the contract.
It remains the case that delivery of the goods will be at ‘buyers’ call’ which requires that the goods be ready for loading when the vessel is presented at the loading port in readiness for the loading operation. That latter obligation is regarded as an intermediate term of the contract which, depending on the circumstances, may give rise to a right to terminate.
Jean-Francois Van Hollebeke [email protected]
Fred Konynenburg [email protected]
Revisions to FOSFA and GAFTA terms
TRADE ADVANTAGE NOVEMBER 2018
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The “BALTIC STRAIT” - the extent of recoverable loss under COGSA 1992Sevylor Shipping and Trading Corporation -v- Altfadul Company and another [2018] EWHC 629 (Comm) (The “BALTIC STRAIT”) is an instructive case for practitioners, traders, charterers, owners and operators when considering the extent to which bill of lading claims for losses to goods may be recoverable. It deals with principles under the Carriage of Goods by Sea Act 1992 (‘COGSA’).
CoMaCo SpA, a seller, voyage charterer and shipper under the relevant bills of lading, procured the carriage of a cargo of bananas on board the vessel “BALTIC STrAIT” from Ecuador to Libya. The cargo was found to be damaged at discharge giving rise to a loss in the commercial value of the cargo of about US$ 4.5 million.
CoMaCo settled claims made by the consignee buyer of the bananas, Altfadul, by discounting the purchase price by around US$ 2.5 million.
Altfadul, being the holder of the bills of lading, took delivery of the cargo and assigned its rights under the bills of lading to CoMaCo who in turn assigned Altfadul’s rights to SIAT, the cargo insurers.
Altfadul and SIAT brought an arbitration claim against the carrier for breach of the contracts of carriage as evidenced by the bills of lading seeking to recover the full loss to the cargo.
In that arbitration, the carrier contended that when assessing damages, credit should be given for the US$ 2.5 million discount agreed as between the shipper and consignee. The tribunal dismissed the carrier’s arguments that the buyer should be limited in its claim to the sum of its own loss on the basis that section 2(4) of COGSA entitles the holder of the bill of lading to bring claims for the entire loss for any other party interested in the cargo.
On appeal by the carrier from the arbitration award to the High Court, Mr Justice Andrew Baker in a judgment on 23 March 2018 upheld the tribunal’s findings and went on to find that under English common law a carrier is liable to a party with title to sue for full damages irrespective of any credit given as between buyer and seller of the goods.
Andrew Baker J considered the following questions.
(i) Whether, on the facts, Altfadul was entitled to damages equal to the full value of the cargo damage irrespective of any recovery or entitlement to recover from its seller, CoMaCo?
The judge decided that at common law, the carrier is liable to pay full damages to the receiver who, by reason of the carrier’s breach of the bill of lading contract, receives damaged rather than sound goods, irrespective of how the financial loss resulting from the cargo damage is thereafter allocated in the sale of goods chain. Andrew Baker J stated that this was also the case for a claimant who did not receive the damaged goods but who owned them at the time of the carrier’s breach of contract because, in either situation, it is the property in the goods that carries the right to sue to recover full damages. Although this determination was sufficient to dispose of the appeal, the judge went on to consider two further questions.
(ii) Whether the lawful holder of the bill of lading can claim loss suffered by the voyage charterer of the vessel by virtue of section 2(4) of COGSA?
The judge answered this question in the negative. In the hands of a voyage charterer whose charter is with the bill of lading carrier, the bill of lading is a mere receipt whilst the contract of carriage is the voyage charterparty.
It follows that the charterer’s entitlement to recover losses from the carrier is governed by the charterparty alone: he has no right to claim under the bill of lading, even if he is the lawful holder of that bill.
Whether section 2(4) of COGSA operates only in situations where the rights of action under the bill of lading were previously vested in the party who suffered a loss but who has lost those rights by virtue of the operation of section 1 of the 1992 Act (where rights of action against the carrier are transferred with the bill of lading)?
The question asks if COGSA intends to limit the right to claim full losses to a successive transferee of a bill of lading (i.e. the buyer) rather than allowing a seller who is still holding the bill to bring claims against the carrier for losses which include the buyer’s losses. Andrew Baker J again answered this question in the negative. He found nothing in the language of the Act to support such a narrow interpretation. If that had been its meaning section 2(4) would have solved only ‘half the problem it was meant to address’.
This is an important and helpful judgment for bill of lading claimants clarifying the operation of COGSA, which is a short and yet complex piece of legislation.
Paul Taylor [email protected]
Jean-Francois Van Hollebeke [email protected]
TRADE ADVANTAGE NOVEMBER 2018
This was an appeal by Uttam Galva Steels Ltd from a US$ 28 million interim payment award in LME arbitration in favour of Gunvor Singapore Pte Ltd on the grounds of want of jurisdiction.
The arbitrator had made his award pursuant to bills of exchange which did not contain LME arbitration clauses.
The parties had entered into a sale contract which contained an arbitration clause. They were also the parties to the bills of exchange which were the means of payment under the sale contract. The bills of exchange did not contain any jurisdiction clause.
The question before the judge was whether the words ‘all disputes arising out of or in connection with’ in the sale contract were wide enough to incorporate disputes under the bills of exchange.
Mr Justice Picken dismissed the appeal first of all on the ground that, according to LME arbitration regulation 10.3, the jurisdiction of the tribunal should have been disputed no later than when defence submissions were filed. Uttam Galva had failed to raise a lack of jurisdiction arguments by this time in the underlying arbitration and the arbitrator had rejected jurisdiction arguments raised before him in previous interlocutory hearings because of that failure. Picken J then considered whether the arbitration clause in the sale contract extended to disputes under the bills of exchange.
Picken J said that ‘in agreeing an arbitration clause, reasonable… businessmen would not contemplate fragmentation as regards dispute resolution’. Reasonable businessmen would not envisage that disputes
relating to a sale contract would be dealt with in English arbitration whereas disputes under bills of exchange used as part of performance of that sale contract would have to be resolved before a court in another country.
The words ‘all disputes arising out of or in connection with’ in the sale contract were wide enough to incorporate disputes under the bills of exchange in the judge’s view.
The judge followed the general principle set out in the House of Lords case Fiona Trust & Holding Corp. & Ors -v- Privalov & Ors [2007] UKHL 40 that ‘the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the[ir] relationship…decided by the same tribunal.’
The judge reached this conclusion in spite of the House of Lords case of Nova (Jersey) Knit -v- Kammgarn Spinnerei [1977] 1 WLR 713 relied upon by Uttam Galva where Lord Fraser had said ‘a very plain manifestation of intention to extend an arbitration clause to claims under bills of exchange is needed to rebut the presumption that businessmen neither wish nor expect bills of exchange to be taken into arbitration.’ Picken J though noted that this case was concerned with German law rather than any English law principle and the case significantly pre-dated the Fiona Trust.
Uttam Galva also relied upon a Singapore case of rals International Pte Ltd -v- Cassa di risparmio di Parma e Piacenza SpA [2016] SGCA 53 where a similarly worded arbitration clause in a sale contract was held not to extend to disputes under promissory notes which were considered ‘separate and autonomous’. Mr Justice Picken recognised in his judgment however that the concern of the Singapore Court appeared to be that indorsees of the promissory notes, who were not parties to the original sale contract, would not have knowledge of its terms. This is the multi-party contract situation where, as with negotiable instruments such as bills of lading, to incorporate arbitration clauses in charter parties, express words of incorporation are required.
But the judge pointed out that was not the situation here: ‘it seems to me that it is entirely appropriate to conclude that the parties to that sale contract intended that disputes between them under a related promissory note or bill of exchange are to be governed by the arbitration agreement even if those same parties…are to be regarded as not having the same intention as regards disputes where a third party indorsee has become involved.’
Thus, in a modern context, there is a presumption of non-fragmentation of dispute resolution jurisdictions when it comes to interpreting the scope of an arbitration clause which will bind parties in disputes as between them under related payment documents.
Paul Taylor [email protected]
The scope of arbitration clausesIn Uttam Galva Steels Ltd -v- Gunvor Singapore Pte Ltd [2018] EWHC 1098 (Comm) the English High Court considered whether an arbitration clause in a sale contract extended to disputes under bills of exchange. Hill Dickinson acted for the successful defendant.
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No oral modification clauses: the verdict is in‘No oral modification’ clauses (in short, ‘NOM clauses’) require that any changes to a contract are set out in writing (or, sometimes, set out in writing and signed by both parties) in order to be binding. In other words, parties cannot agree verbally to any contractual modifications – even if they want to.
However, whether or not NOM clauses are effective with imposing such requirements has always been a moot point in English law. Until now. Although several recent Court of Appeal decisions have suggested that such clauses do not bind, the Supreme Court has now moved decisively in the other direction.
The Supreme Court has finally had the last word on NOM clauses in rock Advertising Ltd -v- MWB Business Exchange Centres Ltd [2018] UKSC 24. In short, the answer is yes: they are effective, they are enforceable and if your contract contains such a clause, any amendments or changes, however small, that are made orally or otherwise than in accordance with the clause will be ineffective.
Case factsMWB and Rock Advertising were parties to a licensing agreement for the occupation of office space. Clause 7.6 (a NOM clause) of this agreement required that all variations to the license ‘must be agreed, set out in writing and signed on behalf of both parties before they take effect’.
Rock Advertising became unable to pay their licensing fees under the agreement. Upon accumulating arrears of about £12,000 it proposed a revised payment schedule to MWB. According to Rock Advertising, this revised payment schedule was subsequently agreed during a telephone call between its director and a credit controller employed by MWB.
MWB disagreed that such agreement took place. It locked Rock Advertising out of the premises and sued for arrears. In turn, Rock Advertising counterclaimed for wrongful exclusion.
Legal proceedingsIn the ensuing legal proceedings before the Central London County Court, Judge Moloney QC found that the oral agreement to vary the payment schedule did in fact take place. However, because the requirements of clause 7.6 were not met, this agreement was not binding on the parties.
Consequently, Judge Moloney ordered that Rock Advertising’s exclusion from the premises was lawful and that MWB may proceed in pursuing the former for arrears.
Rock Advertising appealed.
The Court of Appeal overturned the decision made at first instance. It held that parties can informally agree to dispense with an existing clause which imposes requirements of form and that such informal agreement can be implied from the parties’ words or conduct.
The effect of this reasoning was that the oral agreement between Rock Advertising and MWB to amend the payment schedule dispensed, by implication, with the requirements of clause 7.6. and was thus binding on the parties.
Consequently, the Court of Appeal held that the revised payment schedule was valid and MWB had no right to exclude Rock Advertising from the premises.
The Supreme Court disagreed.
To put it simply, the Supreme Court held that the requirements expressed in a NOM clause must be given effect. Any other conclusion would override the parties’ intentions at the time that the contract is entered into. The ‘full autonomy’ afforded to parties under English Law also includes being able to contract to be bound as to the form of any future variation.
Accordingly the Supreme Court restored the order of Judge Moloney QC.
Case commentNow that the full effects of NOM clauses have been confirmed, their impact should not be underestimated.
A NOM clause which is present in a contract could undermine even small contractual changes agreed between the parties if formal requirements are not met. For example, a laycan extension or change of loading quantity agreed over the phone could turn out not to be binding.
Some parties may view NOM clauses as an obstacle to business relationships where flexibility is essential. However, these clauses also provide protection from impromptu changes to a contract taking effect before these have been properly considered and counterchecked with other parties involved.
Room for exceptions?Importantly, the court made it absolutely clear that ignorance of the existence of a NOM clause, whether by one or both parties, does not safeguard against its effects.
The only clear exception to this rule is if both parties proceed to perform the contract amendment as verbally agreed to the point that one of the parties comes to rely on that amendment. In that case the doctrine of estoppel might be available in limited circumstances to prevent the other party from using the NOM clause to renege on the oral amendment.
Notably Lord Briggs, delivering the only dissenting judgment, believed that a NOM clause and its requirements could also be halted if both parties expressly (or by strict necessary implication) agreed to abandon it – even if such agreement was orally concluded. This did not strictly reflect the majority view point. However, it leaves some scope for further development in the law should a case with different facts come before the courts.
The question of considerationThe Court of Appeal, having found that the NOM clause was dispensed with, was faced with another question.
English Law treats a contractual variation as a separate or additional contract and in order to form a binding contract under English law, some form of consideration needs to be exchanged. This must not always be money, but it must be something of value.
There are no precise guidelines as to what ‘something of value’ means.
The revised payment schedule proposed by Rock Advertising to MWB mean that, overall, MWB would recover less money. Given that this contractual variation would have been financially less advantageous for MWB, the question was whether there was sufficient consideration for a binding contract.
The Court of Appeal found that the commercial and practical benefits afforded to MWB were sufficient consideration for a binding contract. This included the fact that the revised payment schedule would have made it more likely that MWB would recover the arrears from Rock Advertising.
The Supreme Court declined to consider whether the revised payment schedule would have amounted to sufficient consideration. The Court of Appeal’s judgment on this issue has therefore not been confirmed. However, the indication is that the judiciary is not opposed to see value in practical arrangements, notwithstanding any financial detriment that might come with them.
ConclusionPerhaps the most obvious lesson to learn from rock Advertising is to check the terms of a contract carefully. If a NOM clause is present, parties must insist on the required formalities being complied with. If this is not done, any contractual variation agreed will run the risk of not being binding.
On the other hand, counterparties may want to consider including NOM clauses in their contracts. The requirement for contractual changes to be in writing will help to avoid misunderstandings during negotiations and provide a written record which both parties can look back on at a later point.
Saskia Scharnowski [email protected]
Jeff Isaacs [email protected]
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TRADE ADVANTAGE NOVEMBER 2018
The “ALHANI” - misdelivery under the Hague Rules?In Deep Sea Maritime Ltd -v- Monjasa A/S The “ALHANI” [2018] EWHC 1495 (Comm) owners applied for summary judgment in their claim before the High Court for a declaration that they were not liable to the defendant shippers for wrongful delivery of the cargo without surrender of the bill of lading. The case raised important questions for the court as to the scope of Article III Rule 6 of the Hague Rules.
Factual background Deep Sea Maritime (Deep Sea) were owners and operators of the “ALHANI”, an oil product tanker.
In November 2011, Deep Sea agreed to transport 4,345.901mt of bunker fuel under a bill of lading issued dated 12 November 2011. Monjasa was the shipper of the bunkers for carriage from Lome, Togo to Cotonou, Benin.
Clause I of the bill incorporated the terms and conditions of a time charterparty dated 7 July 2011, including the law and arbitration clause (which was an exclusive law and jurisdiction clause that provided for English Law with all disputes to be referred to the High Court in London). Because neither Benin nor Togo were parties to the Hague or Hague-Visby Conventions, the Hague Rules were incorporated into the bill as a matter of contract.
The Hague and Hague-Visby Rules impose minimum duties on the ship-owner for carrying cargo which cannot be lessened or excluded by contract. The main duties under the Hague Rules are to ‘…exercise due diligence to…make the ship seaworthy’ (Article III Rule 1) and to ‘…properly load, handle, stow, carry, keep, care for, and discharge the goods carried…’ (Article III Rule 2).
Of direct relevance to Deep Sea’s claim was the time bar in Article III Rule 6 (Rule 6) of the Hague Rules which provides: ‘…In any event the carrier and the ship shall be discharged from all liability in respect
of loss or damage unless suit is brought within one year after delivery of the goods or the date when goods should have been delivered’.
On 18 November 2011 Deep Sea subsequently discharged the cargo by a ship-to-ship transfer, without production of the bill, which Deep Sea said was in accordance with instructions given under the charterparty. Monjasa eventually brought a total of four sets of proceedings in relation to the alleged non-delivery of the cargo: (i) a ship arrest in Tunisia in April 2012, together with proceedings in the Tunisian courts against the master as well as the vessel owners; (ii) proceedings against the vessel owners in Wuhan PRC; (iii) another ship arrest in Le Havre, France; and finally the English High Court on 17 March 2017, subsequent to vessel owners having commenced proceedings in the English High Court for declaratory relief.
Deep Sea accepted that there was an arguable case that the cargo was not delivered to Monjasa.
Legal issuesThe court had to consider two important issues in relation to the law of carriage of goods by sea. First, did the time bar in Rule 6 apply to claims for misdelivery? Second, could Monjasa rely on the proceedings brought in Tunisia, in breach of the exclusive jurisdiction clause, as constituting the bringing of suit within one year under Rule 6?
The Court answered yes to the first question. When considering the purpose and language used in the Hague Rules, the wording ‘in any event’ and ‘all liability’ used in Rule 6 were general and all-embracing, and thus wide enough to encompass liability for delivering the goods to someone not entitled to take delivery. Such a construction was supported by previous case-law addressing the ambit of the additional word ‘whatsoever’ in the Hague-Visby Rules (namely, The “NEW YOrK STAr” [1980] and The “CAPTAIN GrEGOS” [1990]), which made the language ‘…even more emphatic…’ to the Hague Rules.
It was the Court’s view that misdelivery of the cargo was a clear breach of owners’ central obligation under Rule 2 to ‘...properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.’ In coming to this decision, Judge David Foxton QC considered extracts from the travaux préparatoires to the Visby amendments and found that there was no consensus on the issue of how far, if at all, the Hague Rules applied to cases of misdelivery: in fact, the travaux préparatoires appeared to have been more about whether the rule should apply to misdelivery occurring after the period of the Hague Rules responsibility rather than whether it applied to misdelivery at all.
Importantly in this case, the very act of misdelivery to a third party via transhipment was also the means by which the cargo was discharged from the vessel, and resulted in the plainest breach of Rule 2. Furthermore, the object of finality which Rule 6 is intended to achieve would be seriously undermined if the time-bar did not apply to misdelivery claims.
Thus, provided the breach of a non-Hague Rules obligation, such as misdelivery, occurred during the period of responsibility under the Hague Rules, Rule 6 applied, and there was no fixed or settled interpretation of the Hague Rules to contrary effect which required an alternative conclusion.
In respect of the second issue, the Tunisian proceedings, in which the vessel had been arrested, were in fact the only proceedings commenced within the 12 month limitation period. Nevertheless, the Court held that they
did not constitute proceedings before a competent court in satisfaction of the time limit in Rule 6.
Where proceedings were brought in a particular court in breach of an (exclusive) agreement to bring claims in another forum, then, save in exceptional circumstances, a party could not rely on those proceedings as bringing suit. There were no such exceptional circumstances in this case. As a result, Monjasa’s claims were time-barred save to the extent that its appeal, already lodged in the Tunisian proceedings, continued to judgment.
Case commentThis is a significant decision which confirms that Article III Rule 6 of the Hague Rules applies to claims for misdelivery without production of a bill of lading. However, it should be noted that this conclusion was qualified on the basis that delivery and discharge were concurrent acts
in this case, and therefore the breach fell within the Hague Rules’ period of responsibility. The outcome may well have been different if the misdelivery took place outside of that period (for example, where delivery occurs inland at a terminal or warehouse following discharge from a vessel which was the situation that arose in the “MSC AMSTErDAM”). It will be interesting to see if the point is considered obiter if the defendant’s recently-lodged appeal proceeds.
This case also acts as a warning to ensure strict compliance with an exclusive jurisdiction clause by ensuring that proceedings are lodged in the correct jurisdiction and in a timely fashion.
Elaine Carter [email protected]
Darren Wall [email protected]
TRADE ADVANTAGE NOVEMBER 2018
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TRADE ADVANTAGE NOVEMBER 2018
Parties involved in international trade are eager to use technology to conclude and execute contracts more efficiently, hoping to save resources and accelerate trade flows. Electronic signatures are a key means of doing this (blockchain being the other major opportunity).
The term ‘electronic signature’ encompasses all of the following:-
• Typing a name: Typing one’s name, initials or another identifier at the bottom of an electronic document.
• Scanned manuscript signature: Pasting a scanned copy of a manuscript signature into an electronic document.
• Digital signatures: Using public key cryptography (also known as asymmetric cryptography) to produce a signature. The signature maker encrypts a document with a private key which can be decrypted by a counterparty using a public key. Each key consists of a very large, computer-generated number.
• Stylus: Physically signing using a stylus or fingernail on a touchscreen.
• PINs and contactless: Using a PIN or contactless technology to authenticate a transaction.
• Clicking on ‘I accept’: Clicking on an ‘I accept’ or ‘Submit’ button on a website.
• Biometrics: Attaching information about a physical characteristic (e.g. fingerprint, iris, face) to an electronic document to verify the signatory’s identity.
The position on legal validity of electronic signatures is not straightforward as it depends on a combination of regulations, statute and case law, and it varies from country to country. The comparison table below summarises the position under the laws of Brazil, England and Wales, Hong Kong, People’s Republic of China, the Russian Federation, Turkey and the United States of America – all popular choices of governing law in international trade contracts. The guidance is based on input received from colleagues practising in those jurisdictions.
Electronic signatures: are they valid and enforceable?
As can be seen from the comparison table, in jurisdictions with relaxed validity requirements (e.g. England and Wales, and the USA) the courts will take into account the alleged signatory’s intention (or not) to authenticate the subject contract. This being so, we recommend investing in electronic signing technologies which provide a high level of assurance as to identification of the signatory and his/her intention to authenticate the document. Such technologies generally involve encryption and third party certification.
Jeff Isaacs [email protected]
Miranda [email protected]
Georgina [email protected]
Are electronic signatures legally valid? Where a contract is governed by a foreign law and electronic signatures
are valid under that foreign law, will local courts enforce
an arbitration award determining a dispute
arising under the contract?
Are there any limitations on the use of electronic signatures?
England and WalesBy: Jeff Isaacs, Miranda Hearn and Georgina Benson, Hill Dickinson LLP (London)
Yes. The common law takes a pragmatic approach to the execution of contracts. Save where required by statute or agreement, contracts can be made without signature or other formality. They can even be made orally.In a number of cases the courts have found that where execution formalities are required by statute, electronic signatures will in certain circumstances satisfy the requirements:-• In WS Tankship II BV -v- Kwangju Bank Ltd [2011] EWHC 3103 (Comm) the
Commercial Court held that the appearance of the defendant bank’s name in the header of a SWIFT message constituted a signature within the meaning of Section 4 of the Statute of Frauds 1677. Critically, the bank had accepted that the guarantee set out in the SWIFT had been issued properly and therefore there was an intention to authenticate the guarantee by sending the SWIFT.
• In Golden Ocean Group -v- Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265 the Court of Appeal held that an exchange of e-mails satisfied the requirement under Section 4 of the Statute of Frauds 1677 for a contract of guarantee to be in writing.
• In Bassano -v- Toft [2014] EWHC 377 (QB) it was held that clicking on an ‘I Accept’ button was a signature for the purposes of the Consumer Credit Act 1974.
The common law position is supplemented by legislation as follows:-• Section 7 of the Electronic Communications Act 2000 provides for the
admissibility of electronic signatures as evidence in legal proceedings in relation to any question regarding the authenticity or integrity of a document.
• The Electronic Identification, Authentication and Trust Services Regulation (EU) No. 910/2014 (‘eIDAS’) distinguishes electronic signatures generally from (i) ‘advanced electronic signatures’ and (ii) ‘qualified electronic signatures’, and provides that qualified electronic signatures shall have the equivalent legal effect of a handwritten signature (Article 25).
Definitions:‘Advanced electronic signatures’ are electronic signatures which meet the following requirements (Article 26):
(a) Uniquely linked to the signatory.(b) Capable of identifying the signatory.(c) Created using electronic signature creation data which the signatory can
use under his sole control.(d) Linked to the data signed in such a way that any subsequent change is
detectable.‘Qualified electronic signatures’ are advanced electronic signatures (see above) which meet the following additional requirements (Article 3(12)):
(a) Created by a qualified electronic signature creation device.(b) Based on a qualified certificate for electronic signatures. eIDAS applies directly in all EU member states without the need for national implementation. eIDAS will remain part of English law after Brexit as it will be incorporated therein pursuant to Section 3(1) of the European Union (Withdrawal) Act 2018 upon the UK’s withdrawal from the EU.
The UK is a contracting state to the New York Convention and will therefore recognise and enforce awards made in other contracting states unless one of the exceptions in Section 103(2) of the Arbitration Act 1996 applies. The exception in Section 103(2)(b) provides that an award shall not be recognised or enforced if the arbitration agreement was not valid.
The following documents are subject to statutory execution formalities and this means it may not be possible to execute them validly using an electronic signature:-• Guarantees• Power of attorney• Deed• Contract for sale of land• Transfer of registered securities under the
Stock Transfer Act 1963• Credit agreements regulated by the
Consumer Credit Act 1974
Hong KongBy: Damien Laracy, PY Leung, Felix Cheung, Hailey Lam and Timmy Lam, Hill Dickinson Hong Kong
Yes, as long as the contract is governed by the laws of Hong Kong and the information contained in the electronic record is accessible so as to be usable for subsequent reference.‘Electronic signature’ is defined under Section 2 of the Electronic Transactions Ordinance (Cap 553) (‘ETO’) as ‘any letters, characters, numbers or other symbols in digital form attached to or logically associated with an electronic record, and executed or adopted for the purpose of authenticating or approving the electronic record”.For an electronic signature to be valid, three requirements must be satisfied (Section 6(1) of the ETO):(1) The person who gives the signature must use a method to attach the
electronic signature or associate it with an electronic record to identify himself and indicate his authentication of the information in the electronic record.
(2) The method indicated in (1) must be reliable and appropriate for the purpose for which the information in the electronic record is communicated.
(3) The person to whom the signature is given must consent to the method used by the signature maker.
Note that Section 6(1) does not apply to transactions involving government entities, for which additional requirements must be satisfied.
Hong Kong adopts a pro-arbitration approach, whereby a final arbitration award rendered in a foreign jurisdiction is enforceable without regard to the substantive dispute or rulings. Further, the validity of the underlying arbitration agreement is governed by the law of the seat of the arbitration. Hence, for example, if the seat of the arbitration is England, and the electronic signature relating to the underlying substantive agreement is valid under English law, then the arbitration award will be enforceable in Hong Kong (subject always to the usual New York Convention caveats).For the avoidance of doubt we should emphasise that in Hong Kong, an arbitration clause need not be accompanied by a signature in order to be binding.
Under Schedule 1 of the ETO certain types of document require handwritten signatures. These include:• Wills and codicils• Trusts• Powers of attorney• Documents for land transactions and
floating charges• Negotiable instruments• Court orders/judgments• Court warrants• Oaths and affidavits• Statutory declarationsAdditionally, Schedule 2 to the ETO sets out types of legal proceedings (including proceedings before the Court of Final Appeal, the Court of Appeal, Court of First Instance, the District Court and the Magistrates Court) where electronic signatures cannot apply.Further, Section 14 of the ETO states that if any other applicable piece of legislation specifies further requirements for a signature to be valid, then those requirements will supersede Section 6(1).
Are electronic signatures legally valid? Where a contract is governed by a foreign law and electronic signatures are valid under that foreign law, will local courts enforce an arbitration
award determining a dispute arising under the contract?
Are there any limitations on the use of electronic signatures?
BrazilBy: Godofredo Mendes Vianna,Livia Sancio, Tarik Bergallo, Jessica Antunes, Kincaid, Mendes, Vianna Advogados
Under Provisional Measure 2.200/2001, digital signatures which have an ‘ICP-Brasil’ Certificate only are treated as legally equivalent to a handwritten signature in Brazil. The validity of such electronic signatures was confirmed by the Superior Court of Justice of Brazil in Special Appeal case 1.495.920/DF.
Yes. The claimant would have to satisfy the Brazilian court that the electronic signature meets the validity requirements of the governing foreign law.
Also, the arbitration would have to be ratified by the Brazil Superior Court of Justice in order to be enforced.
Generally, no. However specific laws regulating certain types of contract may limit the use of electronic signatures and/or require that a signature be witnessed.
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TRADE ADVANTAGE NOVEMBER 2018
Commodities team news
Tier 1 ranking in Legal 500 – October 2018The commodities team has once again been placed in tier 1 of the Legal 500 rankings. Legal 500 published this year’s rankings in October, saying: ‘…Soft commodities expert and practice head Jeff Isaacs is ‘a market leader in advice in the commodities sector’. Other key figures include Fred Konynenburg, who is ‘a brilliant legal mind and a real tactical player’; litigator Darren Wall, who is ‘the guy you want to have next to you when going into battle’; Paul Taylor, who has ‘rich experience in and knowledge of the trading business, with a well-thought and tactical approach’; and litigator Andrew Buchmann, who is ‘very creative, practical and commercial and can second guess what you want…’
MS Amlin 2018 Classic Sailing RegattaClaire Messer and Saskia Scharnowski were proudly on the winning team in MS Amlin’s 2018 Classic Sailing Regatta on 6 September 2018 in Sneek, Netherlands. Contestants were required to go around the Stadsgracht canal on a Frisian skûtsje, a traditional wooden vessel with no engine. Congratulations to Claire and Saskia and well done to all of the contestants. Thanks go to MS Amlin for organising this event and the excellent barbecue afterwards!
The Ed Hicks Hill Dickinson ScholarsIn August 2018 the team chose to honour Ed Hicks – our cherished senior associate who tragically died unexpectedly in October 2015 - by funding places for 12 South African students from disadvantaged backgrounds at the Maritime Law Association of South Africa Annual Conference held between 31 August and 2 September 2018 in Cape Town. The team used prize monies awarded by the firm in recognition of its excellence to fund this scholarship. We believe that this was a fitting way to memorialise Ed, who we know would have approved wholeheartedly of the initiative.
Women in Law SummitOn 25 September 2018 Georgina Benson participated in the Women in Law Summit. Georgina says: ‘Out of all of the inspiring advice shared at the Summit, the following really stuck with me: (1) Perfectionists often suffer from ‘imposter syndrome’ – when a person believes that they do not deserve to be in the position that they are. We should suppress our perfectionist tendencies, which does not mean lowering standards, if we want to be more self-confident. (2) Get a mentor or sponsor within your organisation or industry – someone who can help remove barriers for you. If you are a more senior member of the firm, consider being a mentor or sponsor for someone who is just starting out. (3) Flexible working is often more profitable for businesses. Both men and women should be able to work flexibly.’
Are electronic signatures legally valid? Where a contract is governed by a foreign law and electronic signatures
are valid under that foreign law, will local courts enforce
an arbitration award determining a dispute
arising under the contract?
Are there any limitations on the use of electronic signatures?
United States of AmericaBy: Lauren B. Wilgus, Noe Hamra and Bill Bennett, Blank Rome
Yes.Under United States law, a contract for the sale of goods in excess of US$ 500 must be in writing and signed in order to be to enforceable under the Uniform Commercial Code’s (‘UCC’) statute of frauds. The United States Electronic Signatures in Global and National Commerce Act (‘ESIGN’), 15 U.S.C.A. § 7001, et seq., is a federal law that gives electronic signatures the same legal effect as traditional handwritten signatures under the statute of frauds in every state and US territory where federal law applies. An electronic signature under Section 7006(5) of ESIGN requires that ‘an electronic sound, symbol, or process, attached to or logically associated with a contract or other record’ be ‘executed or adopted by a person with the intent to sign the record.’ 15 U.S.C. § 7006(5).ESIGN, as a federal law, generally pre-empts state laws on electronic signatures that are inconsistent with it. However states are entitled to adopt the Uniform Electronic Transactions Act (‘UETA’) in place of the federal law. States can modify the federal requirements by specifying an alternative procedure if it is consistent with the federal law and does not require or favour a particular technology.UETA has been adopted by 47 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. The three states which have not adopted the UETA (New York, Illinois and Washington) have all adopted similar laws making electronic signatures legally enforceable. Each state’s laws vary with respect to electronic signature laws. Some state laws validate any type of electronic signature, others require some form of security, and others only validate digital signatures (i.e. a type of electronic signature that uses encryption). These laws also vary with respect to the types of transactions that are covered. An individual must consult with each state’s specific UETA or equivalent electronic recording statute to determine exactly which transactions can be conducted electronically.The key consideration when determining the enforceability of an electronic signature is the parties’ intent to be bound. Courts in some jurisdictions have found that merely placing a name at the bottom of an email in a signature block may constitute a binding signature, while other courts have held an electronic signature in an e-mail message does not necessarily evidence intent to electronically sign a document attached to the e-mail.
US courts ‘shall confirm’ a New York Convention award unless a ground to refuse enforcement or recognition specified in the Convention applies. The Convention specifies that an arbitration agreement must be ‘signed by the parties or contained in an exchange of letters or telegrams.’ Courts have expanded the meaning of ‘telegrams’ to include more modern means of electronic communication. The FAA is even more permissive and only requires the agreement to be in writing. Thus, a U.S. court would have no difficulty enforcing an arbitration award made pursuant to an agreement that met these criteria, even without any signature at all.
ESIGN does not apply to contracts or records governed by laws on the creation and execution of wills, codicils, or testamentary trusts; laws on adoption, divorce, and family matters.The UCC (with a few exceptions including Article 2 which governs the sale of goods) does not apply to court papers; notices cancelling or terminating utility services; certain notices in credit agreements or residential rental agreements; cancellation or termination of health or life insurance or benefits; certain product recall notices; and certain documents for hazardous, toxic, or dangerous materials. The UETA similarly only applies in certain types of transactions and only when the parties have agreed to conduct the transaction electronically. The UETA excludes wills, codicils and testamentary trusts.
People’s Republic of ChinaBy: Dai Yi, Chen Xiangyong Wang Jing & Co
Yes. Under Article 14 of the Electronic Signature Law, a reliable electronic signature shall have equal legal force as a handwritten signature or seal if it meets the requirements set out in Article 13, which are as follows:-(1) The creation data associated with the electronic signature must belong
exclusively to the signatory.(2) The creation data must be controlled only by the signatory.(3) Any alteration made to the electronic signature after it has been created must
be detectable.(4) Any alteration made to the contents and form of a document after the signature
has been created must be detectable.
Under Chinese conflict of laws, the parties are free to choose the governing law of the contract. Note, how-ever, that the competency of the business entity and/or its authorised personnel in concluding the sales contract may arguably be determined by the law of the country where the business entity is registered rather than the agreed law of the contract.
Article 3 of the Electronic Signature Law prohibits the use of electronic signatures in the following contexts:• Documents relating to personal relations such
as marriage, adoption and succession.• Documents relating to the transfer of real
estate rights and interests.• Documents relating to the termination of
public utility services such as water supply, heat supply, gas supply and power supply.
• Situations where electronic signature is specifically prohibited by law.
Russian FederationBy: Elena Popova, Sokolov, Maslov & Partners
The following categories of electronic signature are recognised: (1) Simple(2) Enhanced encrypted and non-certified(3) Enhanced encrypted and certified Electronic signatures falling into category (3) (‘enhanced encrypted and certified’) are deemed to have value equal to a handwritten signature unless a specific law applicable to the particular document requires execution in paper form. However, parties to a contract are free to agree that electronic signatures falling into categories (1) and (2) above shall be treated as valid and have equal status as a handwritten signature. Such agreement should stipulate the method by which the electronic signature and identity of the signatory may be verified, and should set out details of any confidentiality obligations regarding encryption keys. The following laws are relevant:• Federal Law ‘On electronic signature’ 6 April 2011 No 63-FZ.• Federal Law ‘On information, information technologies and on protection of
information’ 27 July 2006 No 149-FZ.• The Civil Code of the Russian Federation. • Numerous by-laws.
Yes. The procedure for recognition and enforcement of arbitration awards is regulated by the New York Convention and the Arbitrazh Procedural Code of the Russian Federation. In accordance with these provisions, the Russian court is not entitled to reconsider the award on the merits. If the electronic signature is valid under the governing foreign law, the use of an electronic signature shall not constitute a basis on which to refuse enforcement.
Russian law may limit the use of electronic signatures in certain contexts.
TurkeyBy: Feyzi Erçin and Aslihan Asman, Ercin Bilgin Bektasoglu (EBB Law Firm)
Under Article 5 of the Electronic Signature Law and Article 15 of the Turkish Code of Obligations (‘TCO’), generally a secure electronic signature will bear the same legal consequences of a handwritten signature. A secure electronic signature is defined by Article 4 of the E-Signature Law as an electronic signature which meets the following requirements:-• Is specifically designated to the signatory. • Is created with a secure electronic signature tool (defined in Article 6), which is at
the disposal of only the signatory.• Has a qualified electronic certificate (defined in Article 9) which verifies the
identity of the signatory. • Is capable of indicating whether any alterations have been made to the
document after the creation of the electronic signature
Yes. Note, however, that under Article 504 of the TCO a company representative must have special authorisation in order to conclude an arbitra-tion agreement validly. This often creates an obstacle to enforcement in Turkey.
Under Art. 5/2 of the E-Signature Law the following contracts may not be signed electronically:• Guarantee letters (save for bank guarantees)
and sureties.• Contracts for the sale of real estate.• Contracts for the sale of motor vehicles.• Any contracts required by law to be on an
official form or concluded pursuant to a formal procedure.
Ed Cheyney and Toby Miller join the teamThe team is delighted to announce that litigators Ed Cheyney and Toby Miller have joined the commodities team with effect from October 2018. Ed is a partner with over 30 years’ experience and Toby a senior associate with 10 years’ experience. Ed and Toby have been with Hill Dickinson LLP for many years and following increased involvement by them in the team’s larger litigation and arbitration matters, the decision was made that they should join the team officially.
BrexitOn 7 November 2018 Claire Messer, along with Tony McDonach in our ports and terminals team, attended the UK Chamber of Shipping’s latest event on Brexit. Claire heard from government and key business representatives, and exchanged views on contingency planning for the short sea trade in case of a ‘no deal’ scenario. Matters are moving quickly as we head towards the March 2019 deadline.
The information and any commentary contained in this newsletter are for general purposes only and do not con-stitute legal or any other type of professional advice. We do not accept and, to the extent permitted by law, exclude liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. Whilst every effort has been made when producing this newsletter, no liability is accepted for any error or omission. If you have a particular query or issue, we would strongly advise you to contact a member of the commodities team, who will be happy to provide specific advice, rather than relying on the information or com-ments in this newsletter.
About Hill DickinsonThe Hill Dickinson Group offers a comprehensive range of legal services from offices in Liverpool, Manchester, London, Leeds, Piraeus, Singapore, Monaco and Hong Kong. Collectively the firms have more than 850 people including 175 partners and legal directors.
For further information about our services, please contact any member of our dedicated commodities team.
hilldickinson.com/commodities
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TRADE ADVANTAGE NOVEMBER 2018
Key contactsJeff Isaacs Partner and Head of Commodities +44 (0)20 7280 9125 [email protected]
Edwin Cheyney Partner +44 (0)20 7280 9133 [email protected]
Fred Konynenburg Partner +44 (0)20 7280 9250 [email protected]
Paul Taylor Partner +44 (0)20 7280 9261 [email protected]
Andrew Buchmann Partner +44 (0)20 7280 9283 [email protected]
Darren Wall Partner +44 (0)20 7280 9265 [email protected]
Kamal Mukhi Legal Director +44 (0)20 7280 9258 [email protected]
Claire Messer Legal Director +44 (0)20 7280 9129 [email protected]
Toby Miller Senior Associate +44 (0)20 7280 9126 [email protected]
Gordon Campbell Senior Associate +44 (0)20 7280 9126 [email protected]
Saskia Scharnowski Associate +44 (0)20 7280 9126 [email protected]
Sumeet Malhotra Partner - Singapore +44 (0)20 7280 9126 [email protected]
Miranda Hearn Senior Associate +44 (0)20 7280 9136 [email protected]
Jean-Francois Van Hollebeke Senior Associate +44 (0)20 7280 9279 [email protected]
Amy Walmsley Trainee Solicitor +44 (0)20 7280 9278 [email protected]
Elaine CarterAssociate +44 (0)20 7280 9320 [email protected]
Conor O’Brien Associate +44 (0)20 7280 9349 conor.o’[email protected]
Georgina Benson Paralegal +44 (0)20 7280 9151 [email protected]
Katia Tsidemidi Paralegal +44 (0)20 7280 9140 [email protected]
