PORT HARBOUR AND TERMINAL REGULATIONS by Anthony Jennings with a chapter by Roger Heward PORT HARBOUR AND TERMINAL REGULATIONS First Edition by Anthony Jennings with a chapter by Roger Heward First published 2005 ISBN 1 85609 304 2 eBook ISBN 978 1 85609 540 2 © Anthony Jennings 2005 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library. Notice of Terms of Use All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher and copyright owner. While the principles discussed and the details given in this book are the product of careful study, the author and publisher cannot in any way guarantee the suitability of recommendations made in this book for individual problems, and they shall not be under any legal liability of any kind in respect of or arising out of the form or contents of this book or any error therein, or the reliance of any person thereon. Printed and bound in Great Britain by Bell & Bain Ltd, Glasgow WITHERBY Published in 2010 by Witherby Seamanship International Ltd 4 Dunlop Square, Deans Estate Livingston, Edinburgh, EH54 8SB Scotland, UK Tel No: +44 (0) 1506 463 227 Fax No: +44 (0) 1506 468 999 Email: info@emailws.com www.witherbyseamanship.com v Preface In this age of air travel it is sobering to reflect that most international trade is still conducted in just the same way as it always has been. Ever since the Nubians brought oranges to the Egyptians, or the Phoenicians reputedly traded saffron for tin with the inhabitants of Cornwall, ships have been indispensable. Thousands of years ago people conducted their trade by means of their ports and harbours, from coast to coast or on their great waterways. It is still the same today. The United States is the world’s biggest economy and about 95% of all its international trade is still done by sea; the figure is little different for the United Kingdom and many other trading nations. About 90% of U.S. military equipment goes through its seaports. In recent years, world sea container trade has been growing rapidly. That is why ports and harbours have acquired a symbolic significance, which transcends their strict commercial use. If we think of the ancient Colossus of Rhodes, or the modern Statue of Liberty, we see that a harbour is the gateway to a country, or even a continent. Our seaports unlock the door; they are the key to a country’s way of life, its culture. The goods that pass through them, from cars to castors, from coffee to colanders, from guacamole to guano, from gypsum to gin, from marzipan to marsupials, from molasses to molluscs, from potatoes to plastic dolls, from rice to rifles, from roses to rosaries, from tealeaves to tepees, testify to the way of life in those countries that buy and sell them. The bustle and noise of those ports and docks, and the ships at berth, with their diverse shapes and gaudy colours, even the rich mix of aromas that accompanies them, from delightfully delicate spices to robustly pungent fuel oils, have a romance that the barren wastes of airport depots will never acquire. A great deal has been written about the law relating to sale of goods in general, and even about agreements for the sale and purchase of container cargoes, bulk goods, crude oil in the international markets, and oil and gas products. But of course, before goods can be sold, they need to be stored, transported to their destination, and then often stored again before they reach the customer. Cargo storage and transportation agreements are therefore an essential part of international trade, as well as being a key element in the business of ‘managing’ a company’s product supplies, that is to say, getting them in the right place at the right time for distribution to the customer. While these storage and transportation activities are normally ancillary to a company’s main commercial purposes, they are central and indispensable as a means to achieving that goal. They create a need for commercial contracts with suppliers of storage and transportation services. That is why the previously neglected study of storage, transportation and throughputting agreements was the subject of my last book, Fuel Storage Transportation and Supply Agreements (Witherbys, 2004). vi But we have just noted that there is a final link in the chain. Goods are transported to and collected from ports and terminals. Those who own and operate terminals therefore play a crucial role in international trade. They need to have regulations governing the use of their facilities, and their relationship with all those who use the terminal, as well as their other contractual relationships with the shipowners and customers who use their facilities. Those terminal regulations, their effect on the users of terminals, and their relationship with those associated contracts and the parties’ other contracts have not been studied in depth before. They are the final link in the supply chain. They are the subject of this book. Marine terminals are infinite in their variety, ranging from vast hectares of oil tankage, wharfage or container terminalling such as those at Rotterdam, Los Angeles or Felixstowe to the modest fuel depots for coastal vessels to be found dotted around most shores; from the expanse of foreshore administered by the Sydney Harbour authority to the tiny wooden jetty with its creaking boards and vintage rusting diesel pump to be found in the western isles of Scotland. But they all have one thing in common: they are all bound by international and government regulations, and their operators in their turn seek to bind their users with regulations of their own. I need to thank a number of people for their part in the production of this book. Barbara Dyer in the London legal department of ChevronTexaco gave some invaluable input, and, together with John Dolman and Keith Bowie, both formerly commercial managers at the same company, also supplied some useful preliminary comments on my original synopsis for the book and areas that should be covered. John Dolman again, yielding to the lure of an evening sampling the cuisine of Covent Garden, also offered some invaluable (and, he has asked me to stress, entirely non-confidential) advice and suggestions on the commercial aspects of oil terminal regulations. Roger Heward is an expert in shipping litigation, and a partner at Norton Rose, the international law firm. I am even more indebted to Roger, who not only provided his preliminary comments and read the entire draft manuscript but is my special guest writer. He very kindly agreed to contribute Chapter 7, which deals with the question of the enforceability of terminal regulations – a subject of vital importance to the whole study, for if regulations cannot be enforced, they have no teeth. I would also like to thank Scott McCabe of Norton Rose for his advice on a specific point. Finally, I must thank my wife Jennifer, a professional editor, who read many pages of manuscript and pronounced them comprehensible, and my son Felix, who enthusiastically took the photographs with his new digital camera. Anthony Jennings London January 2005 vii ABOUT THE AUTHOR Anthony Jennings was educated at Trinity College, Oxford. For many years he was a senior lawyer with Texaco, later with ChevronTexaco in London, specialising in oil and gas and marine and shipping law, and a member of the United Kingdom Energy Lawyers Group. He was at various times a member of the legal committees of the United Kingdom Petroleum Industry Association (UKPIA), the United Kingdom Offshore Operators’ Association (UKOOA) and the Oil Companies International Marine Forum (OCIMF). He is a member of the Law Society. He was a contributor to Oil and Gas Infrastructure and Midstream Agreements (Langham Legal Publishing 1999) and Natural Gas Agreements (Sweet & Maxwell 2001). He also wrote Oil and Gas Exploration Contracts (Sweet & Maxwell 2002) and Fuel Storage Transportation and Supply Agreements (Witherbys 2004). ix Contents Preface v About the Author vii Chapter 1 Scope and Background (including Definitions) 1 Chapter 2 Ports, Harbours and Terminals 11 Chapter 3 Port and Harbour Authorities 27 Chapter 4 Terminal Owners and Operators 41 Chapter 5 Port and Terminal Bye-laws and Regulations 51 Chapter 6 Legal Status and Drafting Aspects of Bye-laws and Regulations 63 Chapter 7 Enforceability by Roger Heward 75 Chapter 8 Analysis – Port and Harbour Bye-laws 83 Chapter 9 Analysis – Private Terminal Regulations 91 x Chapter 10 Analysis – Commercial Terminal Regulations 99 Chapter 11 Analysis – Project Terminal Regulations 145 Chapter 12 Practical, Commercial and Political Considerations 159 Chapter 13 Interface Between Terminal Regulations and Terminal User’s other Contracts 169 Chapter 14 Interface Between Terminal Regulations and Terminal Owner’s other Contracts 193 Chapter 15 Interface with Uncontracted Third Parties and Other Potential Disputes 197 Index 203 83 CHAPTER 8 ANALYSIS: PORT AND HARBOUR BYE-LAWS We discussed the constitution, status and functions, and powers and duties of port and harbour authorities in general terms in Chapter 3. Most port authorities are set up by statute, and derive their powers from statute, including their powers to enact bye-laws. We must now consider a typical set of port bye-laws in more detail. The following review is based loosely on the Harbour Bye-laws of the Milford Haven Port Authority. While it summarises their general content, it does so for illustrative purposes rather than as a specific examination of those particular bye-laws. It therefore only quotes precise wording from a bye-law where thought illuminating, as indicated by quotation marks; nor do the subheadings here necessarily represent the actual headings of specific bye-laws. It should in any case be borne in mind that the detailed wording of bye-laws is regularly redrafted or reissued in the form of new or supplementary bye-laws, and indeed this particular authority is engaged in that process at the time of writing. The purpose here is simply to give a broad understanding of the principles that need to be covered. The current Milford Haven bye-laws are divided into seven main parts and a schedule. These divisions reflect broad subject groupings. They are numbered Parts I to VII and cover the following: preliminary matters; lights and signals; harbourmaster; navigation; mooring and anchoring; premises; and miscellaneous. The bye-laws (by contrast with commercial terminal regulations), broadly follow the format of a British statute or regulation. Thus, Part 1 contains the ‘citation’ (the full title of the bye-laws) and the commencement date, a summary of the division of the parts, a statement of the application of the bye-laws, and the interpretation section. In the customary manner of a statute or regulation, the individual bye-laws are consecutively numbered, 1 to 61, throughout the document, notwithstanding the seven-part grouping. The ‘application’ section needs to define the geographical area within which the bye-laws are applicable. To do this, it refers to the schedule, which defines the extent of Milford Haven, a substantial deepwater inlet from the far western coast of PORT HARBOUR AND TERMINAL REGULATIONS 84 Wales. The description in the schedule defines its extent by reference to its limits. It does this, first, by reference to the seaward boundary, an imaginary line defined by latitude and longitude and the extremities of prominent physical features, namely headlands, and secondly by reference to the high water mark in Milford Haven and its approaches within the line first defined, ‘including all bays, creeks, pools, inlets and rivers as far as the tide flows other than a creek, pool or inlet into which the tide flows only through a culvert or pipe and other than a dock which is normally tidally enclosed.’ The area bounded by these two separate methods of definition is thus the complete area of water within the Haven. From that definition, there are then excluded any waters which are not within territorial waters (which seems purely formal and unnecessary). The ‘interpretation’ section defines various key terms, including ‘Harbourmaster’, ‘Master’, ‘Mooring’, ‘Owner’, ‘the Premises of the Board’ and ‘Vessel’. We have previously observed the importance of the definition of the terminal user for the purposes of this book. Here in the bye-laws the user is called ‘Owner’, and the term is used with reference to any vessel entering the Haven. The definition includes ‘any part-owner, any charterer (including but not limited to a charterer by demise) or any mortgagee in possession of the vessel and any agent or broker acting for or on behalf of any such owner, part-owner or mortgagee in possession.’ The intent is to catch part-owners, charterers, mortgagees and their agents as well as legal owners of vessels, for the reasons we discussed in Chapter 1. It is all too easy for users of a harbour to avoid their liabilities as a matter of technicality. From that definition is excluded, however, an agent or broker providing services to the vessel or its cargo in U.K. ports, and also a charterer for a single voyage. This is because a voyage charterer is not conventionally considered a shipowner, unlike the owner or disponent owner from which the vessel is chartered, whereas a time charterer or a demise charterer has a long term interest in the vessel. The definition of ‘vessel’ is even lengthier. It includes every description of a vessel used in navigation, however propelled, any kind of rig or production platform which floats or is capable of floating, any dracone or floating dock, crane or floating plant, a vessel designed to be supported on foils, a hovercraft (as separately defined in the Hovercraft Act 1968) and ‘any aircraft which is not airborne’ (a phrase that conjures rather disturbing images). The intent, again, is to ensure that anything conceivably like a ship or even floating on water is brought within the ambit of the bye-laws. Finally in Part 1, there is a requirement that (subject to the bye-laws) all vessel Masters obey the ‘Collision Regulations’, as defined by statute We talked about the Collision Regulations in Chapter 2. Part II begins with a requirement for power-driven vessels under tow to comply with the Collision Regulations in relation to marks and lights. It continues ANALYSIS: PORT AND HARBOUR BYE-LAWS 85 with various obligations on anchored vessels and vessels aground in relation to lighting and marking, exemptions for smaller vessels moored to larger vessels, and obligations in relation to signals from vessels turning round when underway. It continues with obligations in relation to sound signals from vessels which cannot give way to an approaching vessel, and whistle signals to be used between a towing vessel and a vessel under tow. Part III describes the powers of the harbourmaster. The basic powers are to give directions for regulating the use of the Haven, including the movement of vessels therein, and the time, manner and condition in which vessels shall enter or leave the Haven or any installation therein, the speed of vessels in the Haven, and the laying down of moorings and anchoring, mooring, unmooring and placing of vessels in the Haven. The secondary powers are to give directions for regulating the loading and unloading of goods, the embarkation and disembarkation of passengers, or the loading, removal and disposal of ballast within the Haven ‘otherwise than at a dock or pier save where such dock or pier is owned or operated by the Board.’ The last phrase shows that these powers do not extend to berthing facilities owned or operated by third parties in the Haven, such as the oil refineries and power stations. We discussed in Chapter 3 the importance of clarifying the delineation of any division of powers between the port authority and the commercial owner. The following paragraphs in this Part III set out the duties of Masters of vessels in relation to the harbourmaster. These include the obligation to signal any vessel’s arrival in the Haven, the duty in relation to endangered vessels to give details of their circumstances before entering the Haven, the obligation on such vessels not to enter the Haven without the harbourmaster’s permission, and the harbourmaster’s right to require vessels in such condition to leave the Haven or to allow them to remain in the Haven subject to ‘such conditions as he may think fit.’ A vessel in this category is described as one ‘which is in danger of foundering, or sinking, or is leaking, or which has been in collision, has stranded, or has been on fire, or has suffered damage to her hull, machinery or equipment which might make the vessel a danger or a nuisance to other users of the Haven’. The next paragraph in this Part deals with mooring, and requires the consent of the harbourmaster for any laying down or keeping of a mooring. The harbourmaster has the right to direct the removal of a mooring, and if the owner is non-compliant, may remove the mooring on giving, where reasonably practicable, seven days’ notice. The next paragraph relates to the harbourmaster’s default powers in relation to non-compliance with his directions and enables him to take such reasonable steps as he may think fit for the purpose of securing compliance, including mooring, unmooring, weighing anchor, and moving the vessel, subject to the need to ensure that there are sufficient persons onboard to attend the vessel. PORT HARBOUR AND TERMINAL REGULATIONS 86 The next paragraph relates to obstruction, and provides that unauthorised obstructions or impediments are prohibited and may be removed by the Board, subject to the harbourmaster’s directions. The final paragraph in this Part III provides that any unserviceable vessel shall not be permitted to be laid by or lie neglected as unfit, or set on fire, or broken up, without the harbourmaster’s permission, and such a vessel may be disposed of by the Board, subject to the harbourmaster’s directions. Part IV lays down certain principles of navigation. A vessel shall not be navigated or manoeuvred in such a manner or at such a speed as to cause damage to any property within the Haven, like a sea wall or a jetty, nor cause damage, inconvenience or interruption to dredgers or other craft, nor damage, danger or inconvenience to other users of the Haven. Vessels navigating against the tidal stream are required to give way to other vessels when approaching bends or other congested areas, except where restricted in manoeuvring ability and displaying signals required by the Collision Regulations, or if they cannot otherwise safely navigate. A vessel is obliged not to cross the ‘fairway’ (which is undefined) at a time or in a manner as to cause danger or inconvenience to vessels passing up and down the Haven in the fairway. A vessel that is not confined to a particular channel by its draught shall not obstruct any other vessel that is so confined. A vessel is not permitted to drift in that part of the fairway that is defined as being seawards of a particular line, subject to the defence that such drifting was not caused wilfully or by neglect or default, and the Master of a drifting vessel in that area must take all reasonable steps to remove the vessel from the fairway. • A vessel must not obstruct or interfere with any recognised landing place. • The Master of a vessel must forthwith report any collision. • The Master of a vessel which has sunk or grounded must forthwith give the harbourmaster notice thereof and of the vessel’s position and all relevant particulars. • The Master of a towing vessel must comply with these requirements in relation to the sinking, grounding or stranding of the vessel under tow. The next paragraph in Part IV deals specifically with the petroleum berths in the Haven. It provides that, except with the harbourmaster’s permission, no vessel other than a petroleum ship or vessel assisting it or supplying or servicing it shall enter or navigate within 100 metres of a petroleum berth or ship moored thereto. The terms