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    News Notes No. 1
    News Notes No. 2
    News Notes No. 3
    News Notes No. 4
    News Notes No. 5
    News Notes No. 6
    News Notes No. 7
    News Notes No. 8
       
       
 
 News Notes No. 2
 

April 2002 Newsletter

A Modern Boat Show of a Bygone Era

One annual East Coast boat show deserves to be singled out from the rest. The show is miniscule in size compared to boot Düsseldorf, New York, and Miami, but much grander in scope than any of them. At the Maine Boat Builders Show, you’ll find salesmen who can whittle a piece of wood into a piece of floating furniture. The boats there are different, and the builders seem hewn from the same wood that is used to build the boats. It is a show so completely different from others, where you can see, touch, and feel the workmanship of a bygone era.

Please don’t misconstrue—this is not a classic or antique boat show. The high-tech processes are all there, from WEST SYSTEM® epoxy and honeycombed coring to the jet drives that seem to be taking the industry by storm. But using these modern products are dedicated traditional artisans reminiscent of fine boatbuilders from centuries ago.

We spoke with several students of a local boatbuilding school and asked why they chose to embark in the boatbuilding industry rather than, say, computers. They replied that it’s because they love boats and the ocean, the same way their parents did.

The show was conducted in an old wooden warehouse building converted to a boat building and repair facility, and run by Portland Yacht Services. For many exhibitors and attendees, the show is an annual gathering for regional boatbuilding enthusiasts to see each other again after a long winter. For others it is a chance to see “real boats” and meet “real people.” This show is a must for those who want to feel part of a bygone era and talk grassroots boatbuilding with modern traditionalists.

To the show crew: if it ain’t broke don’t fix it. You’re doing a great job—keep it up.

To learn more about the Maine Boat Builders Show go to their Web site at www.portlandcompany.com.

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MarineLiens introduced to consumer market

Following the introduction of MarineLiens Ltd. to the marine trade, the company is now entering the third and final phase of its launch with the introduction of its service to the recreational boating public, beginning with the crowds at the Sail Expo show in Oakland, California. For six months the company we have visited boat shows around the world introducing our service as a central clearinghouse for the industry to post claims of liens for open and unpaid invoices for products or services provided. We are now marketing the MarineLiens.com database of liens to the buyers, lenders, insurance companies, and boating public through the network of recreational and commercial shows around the world.

For those commercial and recreational industry stragglers who still have claims of liens to post, don’t be left behind in the industry while others are getting results with the site.

MarineLiens will also be exhibiting at the Power Expo in Oakland, April 25–28. Please stop by with any questions you may still have.

Other shows at which MarineLiens is tentatively planning to be exhibiting and promoting the lien database are:
  • Newport Spring Boat Show, May 31–June2, 2002, Newport, RI
  • Newport Boat Show, September 12–15, 2002, Newport, RI
  • Ft. Lauderdale International Boat Show, October 31–November 4, 2002, Ft. Lauderdale, FL
  • Fish Expo & WorkBoat Show Northwest, November 14–16, 2002, Seattle, WA
  • Marine Equipment Trade Show, November 19–21, 2002, Amsterdam, The Netherlands
  • International WorkBoat Show, December 4–6, 2002, New Orleans, LA
  • boot Düsseldorf International Boat Show, January 18–26, 2003, Düsseldorf, Germany
  • International BoatBuilders Exhibition & Conference, February 6–8, 2003, Ft. Lauderdale, FL
  • Miami International Boat Show/Strictly Sail February 14–19, 2003, Miami, FL
Other potential shows will be announced as opportunities arise.

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MarineLiens Volume Discounts

Marine Liens Ltd. would like to remind users of the discount for volume searches, for anyone who maintains a minimum of 10 searches per month. Please contact us at click here and request information on our volume discount program.

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Hot Issue: Propeller Guards

There is currently much ado in the industry surrounding propeller guards. Many vessels are already using propeller guards. Look in any boatyard and see lobster boats, fishing boats, work boats, recreational trawler yachts, and many others equipped with guards.

Advantages:
  • Help protect the propeller from submerged objects (insurance companies what do you think?)
  • Help prevent entanglement in buoy lines
  • Help prevent bodily injury to persons in the water
  • Creates revenues for the marine industry for fabrication, installation and service
Disadvantages:
  • Create frictional drag resulting in reduced fuel efficiency (Designers can this be made up elsewhere?)
  • Require additional cost to purchase and implement
Readers, what is your take on the issue? Please send any comments to click here

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Hot Issue: PWCs

What is the real issue with personal watercraft? Is it the speed, the noise, or the reckless use that is rousing the public to get aggressive against PWC? If it is all of the above, then what is the solution?

There’s a lot of supposition when it comes to solutions. Do we teach our kids manners? Is it only kids? Do we give users sensitivity training on respect for others? Are users so out of control they need to vent their aggressions on coastal waters of the world? Should we ban the craft or should we license the user? Should there be a minimum age for the user? Should there be fines for using excess speed and noise within a distance of another boat? Is it the boat or the user with which we have the problem?

We want to hear your ideas. Direct any comments to click here.

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Hot Issue: SHARKS

In recent years, schools of sharks have been reported around beaches in the United States. Sidney Harbor, Australia is purported to be shark infested. Some scientists have assert sharks’ natural food chain is fished out and are they looking for new sources of nutrition. Others question whether the number of sharks is actually increasing, or whether our global lifestyle is just changing so dramatically that we are attracting them to our shores.

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Hot issue: Sunken Containers

Reports of vessels hitting submerged objects in the open oceans have provoked interesting solutions. Some think that with GPS and communication chip technology, we have the ability to locate, identify, and recover containers that have fallen or been discharged overboard. If an electronic chip can be attached to a container that enables tracking, then why not attach the chip to a float on the end of a 50’ line that is attached to the container lying so close to the surface.

Who wins and who looses with this scenario?

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Abandoned Crew

Recently we monitored an online chat revolving around the topic of an offshore registered megayacht that hired crew in the northeastern United States and then abruptly discharged them in Florida with no means to get home.

It was interesting to see how varied was the advice given these poor bewildered souls. What is more interesting is how little people know of their options when adversity hits them. Is there anyone in our legal resource group that might like to offer a few words on the topic?

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Cargo liens in the eyes of the turkish

By: Dr.M.Fehmi Ülgener

Under Turkish law, boat owners have a lien on any cargo for outstanding freight, including demurrage, deadfreight and distance freight. Therefore the owner has separate types of facilities for collecting outstanding debts by means of lien. First of all, in most charterparties a lien clause is present, secondly there is a special article in the Turkish Commercial Code regulating the owners right of lien (TTK.art.1077). There are important differences between those rights.

The scope of the contractual lien is dependent on the construction of the relevant clause. Therefore, the owners will have a lien for the type of outstanding debts set out in the lien clause. While in most cases freight, dead freight and demurrage create the lien, in some charterparties “damages for detention” (Gencon 76), and even “all other amounts due under the charterparty” (Gencon 94) are within the scope of the clause. Also in many instances, charterparties’ “subfreights” create this right as well.

The scope of the lien stemming from the TTK is rather different. The relevant article refers to TTK.art.1069, according to which freight and all other similar rights of the owners will be within the scope. Upon interpretation of the owner’s rights, demurrage, deadfreight, and distance freight are also included. On the other hand, any other outstanding debts that cannot be considered “a right of the owner” is not within the scope, on the grounds that TTK.art.1069 regulates only the amounts payable to the owner by means of remuneration in respect to the chartering of a vessel / carrying the cargo. Thereupon, any other amount payable to the owner will not create a lien on cargo. (For example all types of compensation in the nature of damages, including “damages for detention.”)

It is also important to state that according to TTK.art.1204, a lien will also arise in respect to the general average contribution of the cargo interests.

There is also an important difference in relation to the procedures of the above-mentioned rights of lien:
  • The contractual lien: In order to use this right, the owner must keep possession of the cargo on board, therefore the contractual lien becomes inoperable after the delivery of the cargo.
  • The lien as per TTK.art.1077: There is a special provision stating that the lien can be used within one month after the delivery of the cargo, provided that the receiver keeps possession.
For that reason, the owner can make use of the contractual lien for the type of the outstanding debts that are falling outside the scope of the lien as per art.1077 only when the cargo is onboard of the vessel. (For example under Gencon 94, “any other amount due under the charterparty.”) For the types of outstanding debts within art.1077, the owner can wait for the completion of discharging / delivery, even the arrival [or departure] of the vessel from the port. (With this, the owner also can avoid any counter proceedings of the receivers by means of arrest of the vessel.)

Dr.M.Fehmi Ülgener

ÜLGENER LEGAL CONSULTANTS:
Denizciler Is Merkezi,
A Blok,
Fahrettin Kerim Gökay Cd,
Altunizade,
81190, Istanbul,
Turkey,
Tel: +90 216 391 71 91,
Fax: +90 216 391 72 27,
Email: [email protected]

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Business Law 101: Insurance Pitfalls

By Nicholas Walsh, Attorney at Law

The challenge with your maritime insurance policy is to make sure your business's claim falls within the contract you sign. Here's a few ways to make sure you get the coverage you thought you had.

A few days after I broke my leg, I got the nicest call from an insurance adjuster. She asked me, in the kindest way, how I was feeling (not great), what I was up to when I fell (walking the dog), and whether, by the way, the injury had anything to do with my employment (no). Having satisfied itself that the injury wasn't compensable under workers’ compensation—a common exclusion in health insurance policies—the company paid the claim.

When an insurance company gets a claim, it sets about determining if it can avoid paying it. There's nothing wrong with that; insurance is a contract between the insured and the carrier, and if the claim doesn't fall within the contract, the company shouldn't pay. Insurance companies answer to their shareholders, and humanitarian concerns play little role in the decision to honor a claim.

The challenge is to make sure your business's claim falls within the contract. Here's a few ways to make sure you get the coverage you thought you had.
  1. Read the Policy Endorsements and Warranties. Endorsements and warranties are attachments or paragraphs that modify the policy. "Endorsements" are generally used on auto, home, business and life-type polices, while "warranties" are usually seen in marine insurance, but they're essentially the same thing. On the marine side, a typical warranty is a geographic or calendar limitation. For example, your policy covers the boat from various perils of the sea, but a warranty attached to the policy says coverage exists only from Eastport to Cape Cod to 100 miles offshore, or requires the boat to be hauled by November 1. Violate any warranty and your coverage is gone, at least until you are again in compliance with the warranty.

    A Captain Warranty is common in commercial boat policies. This warranty identifies the master of the ship, and requires as a condition of coverage that the insurance company approve any master. The insurer of a Hawaiian longliner declined coverage because the insurer had not approved the captain who was on board when the boat sank. There was no proof that any other captain—such as the one the company had approved—could have prevented the sinking, yet the court had little difficulty in letting the insurance company off the hook. There wasn't even a trial. Marine insurers have a hard time assessing risk, the court said, and they are entitled to strict enforcement of their warranties. Bottom line: read and comply with your endorsements and warranties.
  2. Keep Your Agent in the Loop. Let’s say you are going to do something a little different: rent boats, sell reconditioned outboards, or teach new boat owners how to operate.

    First, read your policy and make sure what you want to do won't void your coverage. Second, and perhaps more importantly, give your agent a call. Tell him or her exactly what you're up to and make sure coverage will exist. For example, if you've always rented boats but now you're going to give lessons before the rental, tell your agent. If the agent says no problem, write or e-mail the agent confirming the conversation. Remember, often an inexpensive special endorsement can cover new operations, but it's up to you to tell the agent what you need covered.

    If running a boat is part of your operation, give your agent the details. You will get an endorsement or policy protecting the business against a Jones Act or similar claim. The policy or endorsement may well restrict, perhaps by name, the persons who can run the boat. A similar exclusion may state how many employees can be on the boat at any time. Read these exclusions carefully.
  3. Don't Lie to the Carrier. If you lie on the insurance application, alter a vessel survey, or otherwise lie to the carrier, don't expect to be covered.
  4. Take Care of Your Physical Plant. If your boat sinks because a seacock rusts away, or the boat shed collapses because the sills rotted, you may be out of luck. Policies do not generally protect against loss due to normal deterioration and wear and tear. Check with a lawyer if you're denied on this basis.
  5. Know your theft coverage. Theft of cash or valuables is often not covered under the standard business policy. Many marine policies claim to protect against "assailing thieves," in their quaint and ancient language, but the policy may not cover a crook making off with the electronics. Don't count on coverage for electronics, cash, or valuables unless you have specifically asked your agent for it. This is one to watch out for.
If you are denied coverage, go to a lawyer who knows insurance coverage. Many times a good argument can be made that coverage exists, and the legal work to make the case—or to confirm that the denial is correct—is cheap compared with the loss.

—Nicholas (Nico) Walsh is a maritime and business attorney at 111 Commercial Street in Portland, Maine. A former commercial fisherman, merchant mariner, and Coast Guard officer, he has served waterfront businesses since 1988. 207-772-2191, or [email protected].

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Maritime Liens: An Overview

By Thomas A. Russell

Find out what makes maritime liens unique among other liens, such as possessory liens and ship mortgages.

Maritime liens in the United States are derived from ancient English admiralty law. Historically, maritime liens have provided financial security for those who furnished the goods and services that helped a vessel to continue on its voyage. One court said they enable a vessel to become the equivalent of a "floating credit card."

Maritime liens allow one who has a contract to which a vessel is bound, or who has suffered loss or damage through the instrumentality of a vessel, to seek redress directly from the vessel. Maritime law "personifies" the vessel, allowing it to be sued as if it caused the breach or tortious act.

Maritime liens can attach to a vessel regardless of whether it is federally documented with the Coast Guard or titled under state law. Unlike a state law lien, which generally confers no property right in the collateral, a maritime lien constitutes a right of property in the vessel. It travels with the vessel wherever it may go.

Maritime liens may be secret and unrecorded. They are not required by either state or federal law to be filed in order to attach to a vessel and become perfected. The Coast Guard may allow a lien claimant to file a notice of claim of lien against a federally documented vessel, but filing is not required and does not prove the claim is valid. Nonetheless, Coast Guard filing may be a cost effective way to encourage payment of lien claims, and is useful where the amount in controversy is not sufficient to justify a lawsuit to foreclose the lien.

Not every breach of contract relating to a vessel is secured by a maritime lien. Breach of a vessel construction contract does not give rise to a maritime lien—the vessel is not yet capable of navigation, so liens cannot attach. After the vessel is completed, maritime liens can attach for a wide variety of goods and services. Maritime liens arise from repairs, slip fees, fuel, crew wages, supplies, documentation services, and other "necessaries" for keeping the vessel in operation. Maritime liens also arise from torts involving the vessel, including those related to collision and personal injury, to the extent of the vessel's liability.

Maritime liens are non-possessory. They can only be enforced through the judicial process of the federal courts, not the claimant's taking possession of the vessel. Although some claims may give rise both to maritime liens and possessory state law liens, a court has the power to take possession of the vessel from a self-help lien claimant.

Maritime liens are enforced by the arrest and sale of the vessel by a U.S. Marshal under the authority of a federal court. Under court supervision, a Marshal may seize a vessel wherever it is located in the United States. Many foreign countries also allow vessels to be arrested and sold to satisfy maritime liens. Nonetheless, the cost of arrest often discourages the enforcement of smaller claims.

A favorite security device of marine lenders is the federal preferred ship mortgage. Congress created preferred ship mortgages in 1920 because maritime liens had the capacity to render state law security interests in vessels "practically worthless," in the words of one court. Maritime liens have priority over state law liens, including state law security interests.

Preferred ship mortgages are only available for federally documented vessels, not state-titled vessels. Preferred mortgages are exempt from state usury laws and may bear any interest rate agreed by the parties. They are similar to maritime liens in some respects, and different in others. Unlike a traditional maritime lien, a preferred mortgage must be filed with the Coast Guard in order to be perfected, and may be enforced out-of-court. Lenders often use self-help to repossess and sell a vessel whose preferred mortgage is in default. If this cannot be done peacefully the lender can have the vessel arrested by the U.S. Marshal.

Maritime liens are governed by special rules of priority. Maritime liens for seamen's wages rank highly—as do those for salvage and torts. These types of maritime liens outrank preferred mortgage liens, which is one reason why marine lenders often require borrowers to have insurance.

Preferred mortgage liens typically outrank all contract liens (including liens for costs of repair, maintenance, and operation of the vessel) that arise after the mortgage is filed with the Coast Guard. Like maritime liens, preferred mortgage liens outrank all state law liens and tax liens on the vessel. Superiority over these other types of liens is one reason why marine lenders typically favor preferred mortgages over UCC security interests and state title liens, whenever a vessel can be documented with the Coast Guard.

Maritime liens may be extinguished by payment of the underlying claim, maritime foreclosure sale of the vessel by the U.S. Marshal, waiver of the claim by the lien holder, and laches—the judicial time bar resulting from an unreasonably long delay in enforcement. Until extinguished, a maritime lien travels with the vessel wherever it may go, and remains an effective security device.

—Russell & Associates,
Long Beach, California.
Contact Tom Russell at Email: [email protected]

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Regulations of the PRC on Int’l Marine Shipping: Effective on January 1, 2002

By Wang Xuanjun, Attorney at Law

Regulations of the People’s Republic of China on International Marine Shipping ( the “Regulations”), effective on January 1, 2002, applies to operation activities and related auxiliary business of international marine shipping incoming into and/or outgoing from the ports of the People’s Republic of China.

The Regulations, containing 61 articles, mainly includes general principles, operator of international marine shipping and its auxiliary business, operation activities of international marine shipping and its auxiliary business, special provisions on foreign investment operating international marine shipping and its auxiliary business, investigation and punishment, legal liabilities, supplementary provisions, etc.

Management Provisions of the People’s Republic of China on International Marine Container Shipping, promulgated on April 18, 1998, was abolished when the Regulations came into force.

—Wang Xuanjun,
Attorney at Law,
Beacon Law Firm,
Beijing,
Tel: 86-10-84984678,
Fax: 86-10-84978968,
Email: [email protected], [email protected],
Web: www.sino-laws.com

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