Shipping

In a nutshell

Shipping lawyers deal with the carriage of goods or people by sea, plus any and every matter related to the financing, construction, use, insurance and decommissioning of the ships that carry them (or are arrested, sunk or salvaged while carrying them). Despite being the preserve of specialist firms, or relatively self-contained practice groups within larger firms, the discipline offers varied challenges. The major division is between 'wet' work relating to accidents or misadventure at sea, and 'dry' work involving the land-based, commercial and contractual side. In extension, disputes or litigation relating to contracts mean there is also a contentious side to dry work. While some lawyers in the area may be generalists, it is more common to specialise.

 

What lawyers do

 

Wet lawyers

  • Act swiftly and decisively at a moment’s notice to protect a client’s interests and minimise any loss.
  • Travel the world to assess the condition of ships, interview crew or witnesses and prepare cases.
  • Take witness statements and advise clients on the merits of and strategy for cases.
  • Handle court and arbitration appearances, conferences with barristers and client meetings.

Dry lawyers

  • Negotiate and draft contracts for ship finance and shipbuilding, crew employment, sale and purchase agreements, affreightment contracts and the registration and re-flagging of ships.
  • May specialise in niche areas such as yachts or fishing, an area in which regulatory issues feature prominently.
  • Handle similar tasks to wet lawyers in relation to contractual disputes but are less likely to jet off around the world at the drop of a hat.

The realities of the job

  • Wet work offers the excitement of international assignments and clients, so lawyers need to react coolly to sudden emergencies and travel to far-flung places to offer practical and pragmatic analysis and advice.
  • Despite the perils and pleasures of dealing with clients and instructions on the other side of the world, the hours are likely to be steady beyond those international rescue moments.
  • Non-contentious work touches on the intricacies of international trade, so it’s as important to keep up with sector knowledge as legal developments.
  • Dealing with a mixed clientele from all points on the social compass, you’ll need to be just as comfortable extracting a comprehensible statement from a Norwegian merchant seaman as conducting negotiations with major financiers.
  • Contentious cases are driven by the procedural rules and timetable of the court or arbitration forum to which the matter has been referred. A solid grasp of procedure is as important as a strong foundation in tort and contract law.
  • Some shipping lawyers do come from a naval background or are ex-mariners, but you won’t be becalmed if the closest comparable experience you’ve had is steering Tommy Tugboat in the bath as long as you can show a credible interest in the discipline.
  • Though not an all-boys club, parts of the shipping world are still male dominated. Women lawyers and clients are more commonly found on the dry side.
  • In the UK, shipping law is centred around London and a few other port cities. Major international centres include Piraeus in Greece, Hong Kong and Singapore. Some trainees even get to work in these locations.

Current issues

  • The global shipping market remains volatile. Some areas are slowly recovering, but tanker and dry bulk rates are still dire and the industry has been hit again by China's economic hard landing and slow growth in emerging markets. However, 2015 saw the UK's trading fleet grow for the first time in four years, increasing its tonnage by 8%.
  • The shipping industry is pretty cumbersome and inflexible. It takes almost three years for a ship to be launched after it's been ordered. Ship orders were increased in 2013 when China raised its demand for coal imports; since then the state's need for the fossil fuel has dropped, leading to an oversupply of vessels in the current market.
  • Decreased demand for raw materials and the oversupply of vessels has hit the industry hard and the cost of shipping raw materials, measured by the Baltic Dry Index, hit a record low in late 2015 before dropping even further in early 2016. The recent fall in oil prices, however, has enabled shipping companies to operate more profitably.
  • Prior to the Brexit vote, Europe's slow economic recovery was already detrimental to the shipping industry. Post EU referendum, the delay in enacting Article 50 and commencing two years worth of exit negotiations has prolonged the potential period of uncertainty. A worst case scenario for UK companies would likely include long negotiations resulting in tariffs on trade with the EU. Brexit could also give rise to disputes if contracts drafted pre-Brexit make vague reference to the EU or presume the existence of UK membership in the EU.
  • Globally, the tonnage on order at shipyards has decreased over the past year in every area except for oil tankers. Similarly, Europe's largest port, Rotterdam, saw an increase in the volume of goods it handled, but this was largely due to a boom in trading oil and oil products driven by a drop in prices; container volumes and agricultural bulk passing through Rotterdam fell by 1.1% and 3.8% respectively.
  • The downturn in the market has bumped up shipping related insolvencies: South Korea's STX Group has now filed for receivership while Hyundai Merchant Marine is fighting to avoid insolvency, as is Winland Ocean in the US.
  • Piracy remains a significant concern. International efforts have dramatically decreased piracy in East Africa, but piracy off the coast of West Africa is on the rise. The drop in the value of oil has also caused pirates to shift their focus from stealing oil to kidnapping and ransoming crew members. In practice, shipping law tends to focus on the ships themselves rather than the pirates, and as yet, no pirates have been brought to trial in the UK (although this could happen in the future).
  • While the trade of liquefied natural gas (LNG) has typically flowed from China to the US in the past, the proliferation of the shale gas industry in the US and China's efforts to decrease its coal usage in favour of gas, is turning the relationship on its head.
  • The expansion of the Panama Canal was completed in June 2016 and should increase trade between China and the Americas. However, concerns have been raised that the newly built locks may not be wide enough for the New Panamax vessels they were designed to accommodate.
  • A study led by scientists from China found that pollution caused by shipping has led to an estimated 24,000 premature deaths per annum in East Asia. North America and parts of Europe require ships operating near land to use fuel with a sulphur content under 0.1% but the UN's International Maritime Organization currently sets the global limit at 3.5%. The IMO plans to cut this down to 0.5% by 2020, but this could be delayed until 2025 as refineries are given time to adapt production.