THE PHANTOM OF THE OPERA – THE P&I CLUB CORRESPONDENT

By January 15, 2019 January 29th, 2019 Maritime Law, News

In the field of Maritime Law, there are many important protagonists.

There is the Owner of the vessel, the Charterers (Demise, Voyage, Time), the Crew of the vessel, the Marine Surveyors, whether acting for the Vessel interests or Cargo interests, the maritime lawyers and, behind the scenes as phantoms, there is the P&I Club correspondent.

In fact P&I Clubs usually appoint the same lawyers to act for their interests at a given port, but, in addition, we all know that behind these lawyers, there is the P&I Club correspondent.

In the last couple of years, I have had the pleasure to deal with these P&I Club correspondents, giving rise to excellent results which in the long run decreased expenses and enabled the solution of claims which otherwise would be dragged through the courts ad vitam aeternam with basically the same result or worse.

In the case of the ZEALAND BEATRIX, dealing with the flooding of Hold No. 3 containing cocoa beans from Abidjan, Ivory Coast and Lagos, Nigeria to the Port of Trois-Rivières in the Province of Quebec, Canada, once we were seized of the matter for cargo interests, we immediately contacted the P&I Club correspondent. It would have been easy to arrest the vessel, but not to inconvenience the Master, mobilize the Bailiff, notify the Pilotage and Customs Authorities, we directed our communications directly to the P&I Club correspondent in the City of Montreal, Quebec, Canada.

This particular correspondent on behalf of the Club that it represented started to negotiate the Letter of Undertaking whilst the ZEALAND BEATRIX was in the Port of Trois-Rivières.

Special emphasis was placed in the introductory words of the Letter of Undertaking, namely:

“In consideration of your agreeing to REFRAIN FROM SEIZING, ARRESTING OR OTHERWISE DETAINING THE SHIP”

These words enabled the P&I correspondent to issue the Letter of Undertaking without touching the vessel with a Warrant of Arrest.

In addition, it was agreed between our client, the cargo claimant, and the P&I Club correspondent that the marine surveyors of each side would work hand in hand and come up with a joint survey.

Once this was achieved, without the necessity of hiring lawyers, the P&I Club correspondent sat with us, and after two days of negotiations, the claim was settled.

This meant that the P&I Club correspondent resolved the claim with a minimum of expense and without the necessity to hire the usual P&I Club lawyers.

Obviously, there must be a relationship of complete trust between the claimant lawyers and the P&I Club correspondent, as well as impeccable cooperation between the marine surveyors acting for their respective interests.

This trust relationship often comes after several years of dealing with the P&I correspondent, where each side has realized that negotiations can take place in a congenial manner avoiding any double dealing.

In the case of the M.V. WHISTLER, dealing with the damage to a crane, building, pier and other installations caused by the vessel, the same cooperation was established with the P&I Club correspondent.

One important clause was negotiated, whereby in consideration of the issuance of the Letter of Undertaking, the beneficiaries of the Letter of Undertaking and its Underwriters agreed to surrender the Letter of Undertaking for replacement by a new Letter of Undertaking with the same wording except for a lesser amount as agreed between the P&I Club and the beneficiaries of the Letter of Undertaking.

This clause is very important in situations where the vessel is in the jurisdiction of the claimant, but no amount of the claim or quantum has as yet been established. This clause allows the claimant to claim the higher estimate of the loss or the reserve that an Underwriter might set up for a claim, but subject to a decrease with a new Letter of Undertaking once the quantum of the claim has been adequately established.

In the case of the WHISTLER this reduction and replacement of the Letter of Undertaking for one of a lesser amount was negotiated between ourselves, as claimants, and the P&I Club correspondent.

As in the ZEALAND BEATRIX case, no arrest proceedings were instituted as the agreement to refrain from seizing and arresting clause of the Letter of Undertaking was invoked, and the claim was settled, after the P&I Club correspondent retained the P&I Club lawyers to negotiate with us the quantum of damages, which led to an expeditious settlement of the claim.

Lately, the same approach was taken in relation to the M.V. PACIFIC HURON. She discharged galvanized steel coils pursuant to ten bills of lading from Ravena, Italy to the Port of Hamilton, Ontario, Canada. There was condensation/sweat and water damage after a prolonged voyage.

In this claim, the P&I Club correspondent was instrumental in reducing somewhat the amount necessary to establish the Letter of Undertaking.

The above illustrates that the P&I Club correspondent carries out a very important function in the ship arrest process. The relationship of trust between claimant and the P&I Club correspondent is critical. If this exists, many steps in the arrest process and subsequently to arrive at a settlement of the claim may be eliminated. Arrests may be avoided, joint surveys may be introduced which would simplify and clarify the cause of the loss and the quantum of the loss. Finally, the P&I Club correspondent could be instrumental in arriving at a fair settlement with the claimant.

Generally, the P&I Club correspondent is not a member of the legal profession, but in many ways it acts in a more expeditious manner than the lawyer. It can avoid procedural delays and reach results sooner and with less expense than those achieved by lawyers.

The P&I Club correspondent is really the Phantom behind every arrest claim, and deserves respect. It carries out a fundamental role in the recovery of claims that may be subjected to arrest proceedings.

Marc de Man
Senior Partner
DE MAN PILLET
2020 Boulevard Robert-Bourassa, Suite 1920
Montreal, Quebec
H3A 2A5 CANADA
E-mail:mdeman@demanpillet.com
Telephone : (514) 985-2262
Fax: (514) 844-0371