Connect with us

Bunker Fuel

Law firm Reed Smith on UK Supreme Court: The “Polar” and Red Sea war risks

Reed Smith shares takeaways of the court’s judgement of case involving “MT Polar” which was chartered for a voyage from St Petersburg to Singapore laden with a cargo of fuel oil when it was seized by Somali pirates.

Admin

Published

1 year ago

on

RESIZED CHUTTERSNAP on Unsplash

Global law firm Reed Smith on Tuesday (30 January) shared key takeaways of the UK Supreme Court’s judgement of a case involving vessel “MT Polar” which was chartered for a voyage from St Petersburg to Singapore laden with a cargo of fuel oil when it was seized by Somali pirates in 2010 until ransom was paid. Cargo interests disputed liability for their share of the ransom payment:

Key takeaways

  • The UK Supreme Court recently gave judgement in The Polar, ruling that the cargo interests were liable for their share of a ransom payment claimed in general average.
  • Shipowners may need to consider the specific wording of their charters, including any war risks clauses, when assessing their rights and liabilities in war-affected areas.
  • The judgement has a limited impact on shipowners’ right to deviate in the face of potential Houthi attacks in the Red Sea, as the decision is largely based on the construction of terms.

On 17 January 2024, the UK Supreme Court handed down judgement in The Polar [2024] UKSC 2. The judgement addresses an issue of current relevance given the ongoing war risks issues in the Red Sea area. 

Key facts

The vessel MT Polar was chartered for a voyage from St Petersburg to Singapore laden with a cargo of fuel oil.

The voyage charter contained a specific agreement that the voyage would take place via the Suez Canal, with the wording “All above via Suez with the Suez costs to be for Owners account”.

This necessarily required that the vessel would transit the Gulf of Aden, a known piracy risk area at the time. The charter incorporated the amended BPVOY 4 form, including a revised clause 39, “War Risks” (Clause 39) and various additional provisions, including a “Gulf of Aden” clause. Clause 39 gave the Owners considerable liberties to cancel or vary the performance of the charter if performance would expose the vessel to war risks.

On 30 October 2010, while transiting the Gulf of Aden, the vessel was seized by Somali pirates and held captive for 10 months until a ransom of US$7.7 million was paid. General average was declared by the Owners, including the ransom payment. Eventually the adjustment found that over US$5.9 million was due from cargo interests. Cargo interests disputed liability for their share of the ransom payment. The present appeal is an appeal brought by the cargo interests against the Owners.

The Supreme Court judgement addresses several issues, the most important of which (as a threshold) is whether, on the proper interpretation of the charter, there was an insurance code or insurance fund agreed between the Owners and Charterers to compensate the Owners. If there is such an insurance code or fund, it means the parties have agreed to look to the insurers (rather than to each other) for indemnification.

The Owners’ right to refuse the Charterers’ order

When dealing with this threshold issue, the court considered whether the Owners would have been entitled to refuse to transit Suez and the Gulf of Aden on the basis that this transit represented a war risk which exposed the vessel to danger.

In this regard, the court distinguished the case Kodros Shipping Corp of Monrovia v. Empresa Cubana de Fletes (The Evia (No 2)) [1983] 1 AC 736 [HL], where a complete insurance code to similar effect was held to exist under a time charter, a decision that was not without its critics. The complete code was held to exist based on four particular features of the charter identified by Lord Roskill, the first of which was that Clause 21 (A) gave the owner an unqualified right to refuse to accept orders for the ship to go or to continue to any place which would subject her to any danger arising as a result of war.

However, in The Polar, although Clause 39 was also expressed in comprehensive and unqualified terms, it had to be construed in its contractual context and against the background of the circumstances existing at the date of the charter.

The relevant background included 1) the well-known piracy risks in transiting the Gulf of Aden, 2) the agreement between the Charterers and the Owners that the contractual voyage would be “via Suez”, and 3) the detailed arrangements as to the parties’ rights and obligations when the vessel transited the Gulf of Aden. Considering these factors, the court said it was unacceptable for the Owners to refuse to take on the known piracy risk of transiting the Gulf of Aden on the terms they had agreed.

The court went on to say that the Owners may have been able to rely on the ”War Risks” clause and refuse to proceed if there had been “a change in the nature of the piracy risk, or a change in its degree sufficient to make it qualitatively different”. In this case, the court did not consider that the piracy risk changed “at any time from that known and contemplated at the time that the charter was agreed”, and the Owners were therefore not entitled to refuse a route through Suez and the Gulf of Aden.

Having considered the above factors and various other aspects, the court concluded that there was no insurance code or fund between the parties. Since the existence of the insurance code or fund was the foundation of the cargo interests’ appeal, the court dismissed the appeal.

Implications for Red Sea issues

This decision of the Supreme Court is relevant to charterparties for passage via the Gulf of Aden and Red Sea, because it affects shipowners’ rights to deviate to avoid potential Houthi attacks. However, the application of this judgement to current Red Sea issues is arguably limited because:

  • Many charterparties will not contain an express obligation to proceed via Suez and the Red Sea, giving shipowners greater freedom to navigate by a usual or customary route.
  • Most charterparties for ships presently in the area may pre-date the outbreak of the current hostilities, meaning that a shipowner can usually rely on a change in the nature of the risk since the charter was concluded.

Of course, every charter will need to be considered on its own terms, taking into account the specific wording and context of the relevant clauses. Reed Smith is advising on a range of issues related to war risks and Red Sea transit.

 

Photo credit: CHUTTERSNAP from Unsplash
Published: 1 February, 2024

Related Topics:
Continue Reading

Methanol

CMA CGM, SIPG and Shanghai Electric Group join forces on green methanol bunkering

Companies signed a long term supply cooperation deal to develop a fully integrated green methanol value chain, which is expected to propel Shanghai into a regional green methanol bunkering hub.

Admin

Published

16 hours ago

on

March 21, 2025

By

CMA CGM, SIPG and Shanghai Electric Group join forces on green methanol bunkering

French shipping giant CMA CGM on Friday (21 March) said it has signed a green methanol long term supply cooperation agreement with SIPG Energy and Shanghai Electric Group on 20 March to develop a fully integrated green methanol value chain. 

The agreement is expected to accelerate Shanghai Port's development into a regional green methanol bunkering hub, securing its first-mover advantage in the low-carbon transformation of shipping and further consolidating Shanghai's leadership in global maritime trade.

“This collaboration underscores CMA CGM's leadership in maritime decarbonisation and strengthens our partnership with major Chinese partners,” the company said. 

Under the agreement, Shanghai Electric Group will provide mid-to-long-term green methanol fuel supply for CMA CGM. In partnership with SIPG, green methanol will be transported via land-sea combined logistics from Shanghai Electric’s production base in Taonan to Shanghai Port, the world's largest container port. 

Shanghai Electric said the agreement will form a complete “production-transportation-bunkering” chain. The company further elaborated that its Taonan project is an important foundation for it in the field of hydrogen-based green fuels. 

CMA CGM, SIPG and Shanghai Electric Group join forces on green methanol bunkering

Firmly committed to the energy transition in shipping and  its use of alternative marine fuels, CMA CGM said it has set a Net Zero-Carbon target for 2050.

Last month, CMA CGM IRON, the group's first dual-fuel methanol made its maiden call in Singapore. With a container capacity of 13,000 TEUs, it is the first in a series of 12 new dual-fuel methanol vessels for CMA CGM.

“At CMA CGM, we address the challenges related to the availability of clean fuels. Our partnership strategy drives us to implement innovative and sustainable solutions to achieve our energy transition objectives,” said Farid Trad, Vice President of Bunkering & Energy Transition of CMA CGM Group. 

“Our landmark collaboration with SIPG and Shanghai Electric Group marks a new milestone and shows our commitment to Net Zero-Carbon by 2050.”

 

Photo credit: CMA CGM
Published: 21 March, 2025

Continue Reading

Digital platform

Singapore-based Hafnia and Studio 30 50 to launch digital bunker platform FuelSure

Platform – set to debut at Singapore Maritime Week – has been developed to combat ‘hidden costs’ in the global bunker supply, bringing greater transparency, accountability, and cost savings to the market.
Admin

Published

16 hours ago

on

March 21, 2025

By

Singapore-based Hafnia and Studio 30 50 to launch digital bunkering platform FuelSure

Singapore-headquartered tanker operator Hafnia on Thursday (20 March) said it is set to launch FuelSure – a digital platform to combat ‘hidden costs’ in the global bunker supply, bringing greater transparency, accountability, and cost savings to the maritime bunker fuel market.

The platform has been developed in collaboration with Studio 30 50, a Venture Growth Team for maritime innovation.

Peter Martin Grünwaldt, VP Head of Bunkers at Hafnia, said: “Hidden costs in bunker supply have plagued the maritime world for decades, with unreliable fuel quality that can cause mechanical breakdowns or even vessel detentions and delivery discrepancies that can prove both costly and imply foul play somewhere in the delivery chain.”

“While bunkers themselves remain costly, these additional factors create significant losses on both a short-term and industry-wide scale. FuelSure addresses these issues head-on by centralising supplier reviews and performance metrics, empowering our crews and trading teams to make data-driven decisions that reduce risks and ultimately benefit the entire global supply chain.”

By integrating real-time vessel feedback, lab analyses, and financial loss data, FuelSure aims to quantify the “value of trust” for shipowners and traders navigating one of the shipping industry’s most opaque sectors – where quantity shortages alone can cost up to USD 5.2 billion annually.

FuelSure collects critical data points each time a vessel takes on fuel, such as barge condition, delivery accuracy, and overall supplier performance—and blends them with lab-verified chemical analyses of the fuel itself. The platform also tracks the downstream financial impact of bad bunkers, from engine damage to operational delays, to provide a comprehensive performance score for every supplier.

FuelSure is currently in beta testing with a select group of industry experts. The platform is set to debut at Singapore Maritime Week on 24 March, where the team will demonstrate its features and gather additional feedback before its wider release.

Hafnia and Studio 30 50 believe this early engagement will ensure the solution meets the rigorous demands of global shipping and paves the way for broader industry adoption. FuelSure’s go-to-market will involve strategic pilots with select fleets, partnerships with testing labs and classification societies, and phased rollouts in major global ports. This is set to lay the groundwork for a more transparent and efficient bunkering ecosystem worldwide.

Shanker Pillai, Head of Studio 30 50, said: “Through our collaboration with Hafnia, we discovered that industry players often have no clear way to evaluate the long-term cost of subpar bunkering. With FuelSure, we are not only shining a light on hidden costs; but also driving a culture of accountability and transparency that could reshape the maritime sector’s approach to fuel procurement.”

Studio 30 50 was launched by Hafnia in collaboration with Hafnia, Microsoft, DNV, IMC Ventures and Wilhelmsen in 2023. The studio’s objective is to identify new solutions which can address a broad range of ESG topics concerning the maritime industry, while also funding innovative proposals (built by startups) which seek to improve efficiencies across the whole maritime supply chain.

 

Photo credit: Hafnia
Published: 21 March, 2025

Continue Reading

Events

China: Speaker lineup revealed for Green ShipTech Innovation Asia Summit 2025

Key issues that will be discussed at event include low-carbon ship construction and transformation, latest green technology equipment, alternative marine fuel selections and supply status.
Admin

Published

16 hours ago

on

March 21, 2025

By

Green ShipTech Innovation Asia Summit 2025 to be held in Shanghai on 16 May

Shine Consultant, the organiser of Green ShipTech Innovation Asia Summit 2025, on Thursday (20 March) announced the line-up of speakers for the event to explore the new trends in the shipping industry. 

With over 300 attendees expected to attend, the Green ShipTech Innovation Asia Summit 2025 will be held in Shanghai, China, on 16 May. 

Themed Diversified Innovation for Sustainable Green Transformation, the summit will host a main forum called Green Development Strategies and Pioneer Practices Towards Zero Carbon Goals and two sub-forums, Green Shipbuilding and Retrofitting Forum and Green Shipping Ecosystem Cooperation Forum. 

It will focus on key issues such as low-carbon ship construction and transformation, the latest green technology equipment, alternative marine fuel selections and supply status and digital ship management technology. 

Speakers for the summit include:

  • Li Zhengjian, Chief Expert/Senior Engineer, the Chinese Society of Naval Architects and Marine Engineers
  • Karim Fahssis, Decarbonization China Head, Maersk
  • Lu Yanhui, Vice President, COSCO Shipping Heavy Industry Co., Ltd
  • Liu Jianfeng, Chief Technologist, Shanghai Waigaoqiao Shipbuilding Co., LTD.
  • Li Zhonggang, Vice President, China Ship Design & Research Center Com.,Ltd.(CSDC)
  • Bo Cerup-Simonsen, CEO, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping
  • Keiichiro Nakanishi, Managing Executive Officer, MOL(Mitsui O.S.K. Lines, Ltd.)
  • Sun Haihua, Deputy Director of Shanghai Arbitration Commission, Deputy Chairman and Secretary-General of Shanghai International Shipping Center Development and Promotion Organization
  • Yan Wei, Vice President, Shanghai Maritime University
  • Ye Mao, Deputy President of the Design Research Institute, Wuchang Shipbuilding Industry Group Co., LTD.
  • Wee Meng Tan, Chief Projects Officer, Global Centre for Maritime Decarbonisation
  • Yuan Chao, General Manager of Equipment, CSSC (Hong Kong) Shipping Company Limited
  • Zhang Yunxing, Head of the Ballast Water Convention Research Office, Hebei Maritime Safety Administration
  • Zhang Yong, Vice President, Shanghai Academy of Development & Reform
  • Gou Yingdi, Director of Sustainable Development and General Manager of the Technology and Development (Innovation) Center, Seacon Shipping Group
  • Zhao Cuiyun, Deputy Director of the Institute for the Construction of the Shipping Center and Director of the Green Shipping Research Office, Shanghai International Shipping Institute
  • Cao Xianfeng, Deputy Chief Digital Planner, COSCO Shipping (Qidong) Offshore Co., Ltd

Conference Framework

May 16 (am) 

Plenary Session: Green Development Strategies and Pioneer Practices Towards Zero Carbon Goals

May 16 (pm)

Sub-Forum I: Green Shipbuilding and Retrofitting Forum
Sub-Forum II: Green Shipping Ecosystem Cooperation Forum

Key Topics

  • Maritime regulatory focus under policy guidance towards zero-carbon goals
  • Global green ship type product key technologies and applications
  • Analysis of paths to improve the efficiency of existing ships
  • How shipping companies can achieve sustainable green transformation
  • Innovative design methods for green ship types
  • Development and design of methanol dual-fuel ship types
  • Innovation and application of ship engines and propulsion systems
  • Technological application and outlook of wind energy as auxiliary power for ships
  • Prospects and challenges of ammonia fuel application
  • Innovation in new marine fuels and supply systems
  • Upgrading of ship battery systems to meet shipping emission reduction
  • Fluid power energy-saving technology and practice to promote the green and low-carbon development of the shipping industry
  • Green ship repair, intelligent painting and VOCs management in ship and marine engineering
  • Exploration and practice in digital transformation and intelligent upgrading of the ship repair and modification industry
  • Practice of ship energy consumption data analysis and carbon intensity management
  • SCR technology innovation for NOx reduction in ship diesel engines
  • The latest technological applications of "carbon capture" in the shipping industry
  • Ballast water management systems in line with international standards
  • Shore power systems combined with green electricity to assist shipping decarbonization
  • Supply status and choice analysis of the marine green fuel market

Host:

  • Shanghai International Shipping Center Development and Promotion Organization

Co-organisers:

  • Shanghai Maritime University 
  • Shanghai Institute of Navigation
  • Jiangsu Association of Shipbuilding Industry
  • Jiangsu Society of Naval Architects And Marine Engineers

Supporting Organisations:

  • Shanghai Port Association
  • Hubei Association of Shipbuilding Industry
  • Shanghai International Shipping institute

Interested parties may contact:

Yulia Zhang
T: (+8621) 6095 7179
M:(+86) 158 3615 6079 (Also on WeChat）
E-mail: [email protected] 

Note: More information on the summit, including registration, can be found here. 

 

Photo credit: Shine Consultant
Published: 21 March, 2025

Continue Reading
Advertisement
  • Aderco Manifold Website Advert EN
  • Consort advertisement v2
  • EMF banner 400x330 slogan
  • v4Helmsman Gif Banner 01
  • RE 05 Lighthouse GIF
  • SBF2
  • Sea Trader & Sea Splendor
  • Zhoushan Bunker

OUR INDUSTRY PARTNERS

  • HL 2022 adv v1
  • Singfar advertisement final
  • Triton Bunkering advertisement v2
  • MFT 25 01 E Marine Logo Animation
  • SEAOIL 3+5 GIF


  • Auramarine 01
  • CNC Logo Rev Manifold Times
  • Synergy Asia Bunkering logo MT
  • Mokara Final
  • 300 300
  • PSP Marine logo
  • Central Star logo
  • pro liquid
  • NW Logo advertisement
  • Trillion Energy
  • Advert Shipping Manifold resized1
  • VPS 2021 advertisement
  • LabTechnic

Trending