Mexican salvage heads to arbitration
Published 22 June 2006
One of the largest commercial salvage operations in maritime history has been completed. The APL Panama, an 835-foot container vessel, ran aground off Mexico on Christmas day. It had 1,800 containers onboard. Salvage operations concluded on 12 March.
The salvors, Florida-based Titan Maritime, took 75 days to move the ship. They used 20 truckloads of salvage gear, five hydraulic pullers, seven tugboats, and a skycrane helicopter.
"All sort of permits and authorisations were required, and time was of the essence due to the emergency," says David Enriquez, who is in charge of the maritime practice group of Goodrich Riquelme & Asociados, who represented the salvors in Mexico.
Completion is good news for Mexican automotive workers, thousands of whom no longer face redundancy. "The automotive industry depended on the delivery of the cargo,” says Carlos Morán, an associate from Goodrich, who worked for Ensenada. Morán was on-site in for almost three months, dealing with day to day legal issues as they arose.
“The threat of environmental damage to a tourist town meant numerous authorities of all levels and nature were involved," he says, "Titan had to strictly comply with all these requirements during the salvage operations."
Titan also exercised a right to retain salved cargo pending either a salvage reward or guarantee. "Exercising such rights in practice was very complicated because there were over 1,800 containers onboard the vessel, but the storage room available in the port was very limited," he says. “Also, Mexico does not have Admiralty Courts and the relevant courts are normally unfamiliar with maritime matters.”
Although the physical side of the salvage is over, the legal aspects of it are not. Titan has begun arbitration proceedings in London over its fee, asserting it is owed more under a Lloyd's Open Form salvage agreement. Such agreements calculate the payment on various of factors including the total value of property salvaged.
Michael Mallin, from Hill Taylor Dickinson, representing Titan in London, puts the total value for the vessel and cargo combined at well over US$150 million, although Titan has yet to finalise its exact figure.
Titan's out-of-pocket expenses are also likely to be a bone of contention. Alistair Johnston, from Holman Fenwick & Willan, representing the shipowners in London, notes: "the salvors are most likely going to be asking for around US$30 million out of pocket expenses, and if they succeed in that allegation, then this will be the largest ever out of pocket expenses claim in a Lloyd's Open Form arbitration."
Bob Deering, partner at Ince & Co, who advised the container transporters APL, adds: "This ship was aground for a very long time. Doubtless any salvor in such circumstances would tell you that it was a difficult job, but the other side would claim that this amount is excessive, and that everybody has lost out by having a ship aground for so long."
26 July has been set for the exchange of evidence.
Counsel to the Salvors (Titan Maritime LLC)
Mexico
- Goodrich Riquelme & Asociados
Senior Partner David Brill, of counsel Jorge León, partners Ricardo Lan and David Enriquez, and associates Carlos Moran and Tatiana Ortega
UK
Partner Michael Mallin, and solicitors Alexandra Tytheridge and Andrew Lee
Counsel to the shipowners (MS Mare Britannicum Schiffahrtsges Mbh & Co., KG) and the London, Hull and Machinery underwriters
- Holman, Fenwick and Willan
Partners Alistair Johnston and Jim Cashman and associate Toby Stevens
Counsel to time charterers (APL)
Mexico
- Murillo, Maldonado, Arredondo & Asociados, SC
Partners Rafael Murillo and Ricardo Arredondo
UK
Partner Bob Deering and associate Chris Sacré (Partner Oliver Weiss has now taken over the case from Bob Deering in London)
Counsel to slot charterers (CP ships)
Partner Jonny Duval
Counsel to cargo interests
Senior Marine Manager Martin Pollard
*The members of our firm who participated in this matter are the following:
- David Brill
- Jorge León
- Ricardo Lan
- David Enríquez
- Teresa Gómez
- Tatiana Ortega
- Jorge Pineda
- Jhacob Hinojosa
- Waldo Bonilla
- Roberto Ortiz
- Francisco Gómez
- Carlos Morán
