Barnacle billing

Newcastle’s shipbuilding days may be a thing of the past, but the region’s emergence as a centre of excellence for maritime insurance promises a bright future. Eamon Moloney reports

The industrial and commercial foundations of the North East were built on shipbuilding and the coal trade. Both of these industries are long dead, but for more than 100 years Newcastle upon Tyne has also been a centre of excellence for marine insurance and marine law – and today these sectors are thriving.

The region is also attracting leading ship managers. The Overseas Shipholding Group of New York, a major independent tanker owner, manages more than 40 of the world’s largest and newest oil tankers from its Newcastle upon Tyne office. In November 2006 Maersk-Moller of Copenhagen, the world’s largest shipowner, is relocating its UK operation from Canary Wharf to Newcastle’s resurgent Quayside. There is talk of more inward investment to come, from both North Europe and from the Mediterranean.

These world-class ship managers do not just come to Newcastle because it is a pleasant city with lower living and operating costs than those in London or New York; they come because the region offers the core skills they need, with Europe’s largest nautical training college at South Shields, the UK’s leading marine engineering faculty at Newcastle University and the UK’s second-busiest port on Teesside.

Insurance specialism

The North East is developing a marine hub that, in terms of the full service it can offer, challenges the best in Europe and the US. Marine insurance and marine law are inextricably linked, both to each other and to ship management, and the region has always offered both of these specialist service industries. After consolidation through M&A, the North East is still home to three of the world’s leading mutual marine insurers. The North of England P&I Club on Newcastle’s Quayside provides liability and legal cost insurance to more than 65-million tonnes of shipping – the equivalent to a fleet of more than 900 ships, each the size of the QE2.

Its sister company, Marine Shipping Mutual Insurance Company provides hull and machinery (ie property) insurance to a select fleet. Meanwhile, Sunderland Marine Insurance Limited, the world’s largest fishing industy insurer, recently relocated its global headquarters to County Durham. Sunderland Marine specialises in insuring all the risks associated with the world’s largest fishing fleets, with offices in North Australia, New Zealand, Alaska, Canada and the Netherlands.

These three marine insurance companies form a formidable, regional bloc of expertise and they each rank among the best in the world. Claims are handled by a mix of insurance, marine and legal expertise; indeed, the North of England’s in-house legal team has been described, perhaps mischievously, as the largest marine law practice outside London.

Leading the way

Newcastle upon Tyne is also home to four firms offering specialist marine law work, all of which originate from the Sunderland-based practice of Botterell Roche & Temperley, which was founded in the 1860s and which spread to Hartlepool, Newcastle, Cardiff and London, where the original names survived until the Millennium.

Over time the Newcastle upon Tyne office dominated marine law in the region and it was this firm that became part of Eversheds in 1989. From 1992 the Eversheds Ingledew Botterell shipping team divided and sub-divided into the present practices of Eversheds, Rayfield Mills, Mills & Co and Marine Solutions. Each of these four firms has a distinct style and this variety adds yet another attraction to Newcastle’s developing marine hub.

Individually and together, these four firms are at the forefront of developments in marine law and are tackling the key issues facing shipping practitioners in the UK and across the world.

Expensive litigation

One of these challenges is the spiralling cost and the uncertain outcome of marine litigation and arbitration. Despite efforts to simplify and streamline legal procedures, specialist litigation in England is becoming more complex and more expensive – to the extent that several of the world’s leading marine insurers are now actively encouraging shipowners to take their disputes elsewhere.

In another challenge to the UK’s primacy in marine and commercial law, Dubai is establishing an international commercial court within its free-trade zone, where parties can have their disputes heard under common-law principles and procedures, but more quickly and with no restrictions on rights of audience, thereby avoiding chains of instructions through different lawyers in different countries.

Disputes go overseas

Newcastle’s specialist marine lawyers are addressing this challenge in two ways.

The first is by advocating mediation as an alternative to litigation or arbitration. If proper preparation has been made, the parties to a dispute can enter mediation in the reasonable expectation of a mutually satisfactory outcome, quite unlike the winner-takes-all result of most trials, where one party at least will be bitterly disappointed and both will be out of pocket. The second is by project management and cost control of litigation.

The Woolf reforms introduced these concepts to English court procedures, but it is true to say that the Admiralty and Commercial Courts have been slow to apply these principles in their specialist jurisdictions, which is to their cost if these disputes are now being driven out of the UK courts and into places such as Singapore and Dubai. Informed observers believe that greatly improved cost control and budgeting is the next ‘big thing’ in marine insurance.

Newcastle’s marine lawyers and insurers also work together to promote their region, with the biannual Mariner and the Maritime Law seminar series as their showcase. The fourteenth in the series takes place in November with the title ‘Controlling the Chaos – Support for the Master After a Collision’. Speakers will discuss the technical, legal and even spiritual support needed by seafarers following traumatic marine casualties.

London remains at the centre of marine insurance and marine law – notwithstanding constant pressure from alternative jurisdictions, including the nascent China and a resurgent Singapore. In the face of this domestic and international competition, Newcastle is developing steadily and surely, and while not a direct competitor to London or New York, it is recognised as a serious contender and a real alternative centre of marine insurance and marine law excellence.

Eamon Moloney leads the Newcastle-based admiralty law practice at Eversheds