Blank Rome Represents Flame S.A. against Freight Bulk Ltd. and Vista Shipping

Mainbrace | January 2016 (No. 1)

Blank Rome LLP successfully represented Flame S.A. in an ongoing maritime litigation case against Freight Bulk Ltd. and Vista Shipping.

Industrial Carriers, Inc., a shipping company based in Ukraine, became insolvent in October 2008 and defaulted on four forward freight agreements (“FFAs”) with Flame. Flame secured a judgment of approximately $19 million in England. In 2010, Flame had its English judgment recognized in the Southern District of New York. In 2013, the vessel M/V CAPE VIEWER arrived in Norfolk, Virginia.

Blank Rome’s maritime litigation team filed a writ of attachment against the vessel and a complaint alleging that its owner and operator, Freight Bulk and Vista, were alter egos of Industrial

Carriers. After lengthy pre-trial proceedings, a bench trial began in August 2014 wherein Blank Rome established that Industrial Carriers fraudulently transferred hundreds of millions of dollars of assets to Vista. The court awarded judgment in excess of $8M (the value of the CAPE VIEWER) to Flame. Freight Bulk appealed and the Fourth Circuit unanimously affirmed the judgment of the district court. Last week, a request for an en banc review was denied. In addition to this successful outcome, Flame was able to seize additional bank accounts overseas in an effort to collect the rest of its judgment.

A Note from the Vice-Chair, and Co-Chair of the Maritime Industry Team

Mainbrace | January 2016 (No. 1)

Jeanne M. Grasso

First, I want to take the opportunity to wish everyone a very Happy New Year and an exciting and prosperous 2016! Second, I want to give a special shout-out to our maritime partner, Tom Belknap, who has kept Mainbrace going for more than a decade now, since Blank Rome’s combination with Healy & Baillie back in 2006. Because of Tom’s hard work, Mainbrace keeps getting better and, because of your support, our readership continues to grow.

2015 was an interesting year for the shipping industry. The dry bulk market had a very challenging 2015, with the Baltic Dry Index hitting new all-time lows. Based on various reports, the outlook for 2016 is not very positive, either. Yet, the tanker market had a very strong year—the best since 2008— largely because of the drop in oil prices. On the other hand, the low oil prices had a negative effect on the offshore sec- tor, causing charter rates to fall and many vessels to go into layup. These trends are likely to continue into 2016.

There have also been significant legislative and regulatory developments: the crude export ban was lifted; Cuba sanctions were eased, thus creating new opportunities for travel and transport; the .01% sulfur requirements went into effect in the North American and Caribbean Emissions Control Areas; and ballast water challenges continue. The ballast water conundrum will become even more of a conundrum when IMO’s Ballast Water Management Convention goes into effect, very likely in late 2016.

And, sadly, criminal prosecutions for MARPOL violations continue apace, with more than a dozen investigations, indictments, and convictions last year. That said, some voluntary disclosures to the U.S. Coast Guard have helped ship owners and operators avoid criminal prosecution—in large part based on the strength of the environmental compliance systems that they have in place. To assist our clients, we’ve developed a Maritime Compliance Audit Program to help owners and operators manage their environmental and safety risks, which is tailored to an owner and operator’s particular needs.

2015 was also a good year for Blank Rome’s maritime group, having been selected as the winner of the Lloyd’s List 2015 North American Award for “Maritime Services – Legal”; ranked number one nationally for litigation and regulatory matters by Chambers USA, with seven of our attorneys also ranked and recognized as leaders in their field; ranked top-tier in Chambers Global for shipping litigation, with John Kimball being recognized as a leading shipping attorney; and ranked top-tier both nationally and regionally by U.S. News & World Report – Best Lawyers® for admiralty and maritime law. For additional 2015 maritime recognitions and rankings, please click here.

So, looking into my crystal ball, I think 2016 will be another exciting and interesting year for our maritime industry, and we at Blank Rome look forward to working with you and helping you navigate the inevitable challenges that a new year brings.

Major Shipping Associations Issue Cybersecurity Guidelines for Shipowners and Operators

Mainbrace | January 2016 (No. 1)

Kate B. Belmont

BIMCO and its international shipping association partners CLIA, ICS, Intercargo, and Intertanko, recently released the first set of cybersecurity guidelines targeted to shipowners and operators, “The Guidelines on Cyber Security Onboard Ships.” Recognizing the maritime industry’s over-reliance on information technology (“IT”) and operational technology (“OT”), and the risks associated with unauthorized access or malicious attacks to ships’ systems and networks, BIMCO and its partners created these guidelines specifically for the maritime industry. The guidelines provide direction, awareness, and “guidance to shipowners and operators on how to assess their operations and put in place the necessary procedures and actions to maintain the security of cyber systems onboard their ships.” Continue reading “Major Shipping Associations Issue Cybersecurity Guidelines for Shipowners and Operators”

Consider “Privileges” When Conducting Investigations

Mainbrace | January 2016 (No. 1)

Jeffrey S. Moller

Whether voluntarily or as required by the International Safety Management Code, the American Waterways Operators’ (“AWO”) Responsible Carrier Program, or some other rule or regulation, investigations of accidents and near-miss situations are routinely conducted by companies in the maritime industry. This is due to the widespread recognition that careful examination of the root causes of such incidents can help to prevent future occurrences. Faulty procedures, defective equipment, and inadequate training can all be identified in the investigation exercise. Conducting investigations is now a critical part of the job for vessel officers, shoreside safety managers, and company executives. Continue reading “Consider “Privileges” When Conducting Investigations”

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