Ülgener

Ulgener

Eurasian 2022/2
Eurasian 2022/2

EXCESS BUNKER LIABILITY
An Inconvenient Practice!


According to the Turkish Customs Regulations, vessels are obliged to declare the bunkers quantity on board to the customs authorities before entering to Turkish Ports. If more bunker is found on board during the random inspections carried our by the customs officers, the authorities may confiscate the excess bunker, they may charge taxes for the excess bunker and initiate criminal proceedings against the crew or owners. You may find below the consequences of excess bunkers in detail.

Introduction

In parallel with the practice all over the world, foreign-flag vessels calling at Turkish Ports are obliged to declare the items on board such as oils (fuel oil, diesel oil and lubricating oil) and bonded store(cigarettes, etc.) to the Customs Directorate in accordance with the Turkish Customs Regulations. Errors in fulfilling this these requirements will result in penalties in accordance with customs and criminal laws and regulations as excess bunker situations are associated with smuggling in Turkiye.

In this article, the processes of fuel measurement, declaration and inspection of fuel by customs officials will be explained in detail as well as the provisions of criminal law, tax law and administrative law to be applied as a consequence of under or over declaration of fuel as we have frequently witnessed in this period.

In order to examine the occurrence of bunker smuggling, the Turkish government takes strict precautions by conducting random inspections by the police force and customs officers on vessels calling at Turkish ports. A Presidential Circular about this topic, published in the Official Gazette dated 06.11.2021, serves as the reconfirmation of the Government’s determination for the continued enforcement of the anti-smuggling precautions against the crime of bunker smuggling. The new circular asserts that a board of ministers (consisting of the Ministers of Commerce, Energy and Natural Resources, Internal Affairs and Industry and Technology) is being setup to lead the operation against bunker smuggling and ensure a healthy coordination between different state departments. Article 8 under the circular also specifies that the Port Authority and the Coastal Safety will also provide maximum technical support for the operations to be conducted on board. This circular has to be interpreted as a supplementary resource to reference Anti-Smuggling Law No. 5607, law of criminal procedure no. 5271, customs law no. 4458, customs regulation and also tax procedural law no. 213.

The main purpose of mentioned circular is to detect attempted fuel smuggling events. In other words, it is obvious that the number of the random inspections on vessels and criminal investigations against crew members will increase.

Inspections that we mentioned above are based on the customs regulation Art. 9/2 which indicates “persons suspected of hiding smuggled goods in customs halls and customs gates may be searched by customs officers for customs control purposes.” In addition, Article 481/1 of the same regulation is a slightly more specialized article and explains the determining fuel quantities by saying “Since the amount of fuel purchased from foreign ports by the vessels to enter cabotage is shown in the vessels' logbooks and fuel logbooks, the amount to be taxed is determined by finding the difference between the amount purchased according to the logbook and the amount consumed according to the logbook and fuel logbook.”

Vessels are usually expected to inform the amount of the bunkers on board to the relevant Turkish port authority before calling at a Turkish port. Certain vessels make declarations through their agents and while the others submit the relevant vessel documents directly to the inspectors boarding the vessel in order to inspect upon her arrival to the relevant port. In case of the customs officers decide to conduct an inspection on board the vessel they will most likely carry out a proper bunker survey by sounding the bunker tanks. Thus, making declarations considering the electronic systems (without conducting an actual bunker survey with the sounding pipes) revealing information about the vessel’s daily bunker consumption is not safe since in most cases the results of the actual bunker surveys conducted with a sounding pipe and the figures obtained from the electronic systems contradict each other and this conflict forces the inspectors to consider the probability of an intentional misdeclaration and gives them an opportunity to report the incident to the Public Prosecutor for the initiation of a criminal investigation. As described in detail below, the relevant investigation will be initiated against the master and chief engineer and the excessive bunker will be confiscated as an administrative implication. The vessel is not allowed to depart during the undeclared fuel discharge procedures. This process; the arrangement of the road tankers, the discharge of the fuel causes a delay in the vessel's schedule. This period may take three days. In practice, it is determined that delays are experienced in some ports due to the supply of tanks or barges where the fuel will be discharged.

In addition, if excessive fuel is detected, the teams return to the vessel and take samples from the bunker tanks. The sample taken is transferred to the Scientific and Technological Research Council of Turkiye (TUBITAK) for analysis and it is investigated whether this sample complies with the values given for category ISO-F type RME, RMG and RMK grades in ISO 8217:2017 Fuel Standard for marine distillate fuels. In practice, the fact that the fuel does not comply with international fuel standards does not affect whether an investigation will be initiated or not since excess causes different breaches in tax and administrative law; however, if a case is opened after investigation, there will be a presumption that the fuel misdeclaration act was not malicious.

Without making further explanation about the custom fines and criminal proceedings, the club cover against the fines for smuggling and breach of the custom regulations needs to be addressed.

Fines issued by Turkish customs authorities as a consequence of ‘excess bunkers’ may be located in the category of ‘fines for smuggling and breach of customs regulation’ depending on how they are classified by the customs authorities. This could be a key difference-maker as fines concerning the misdeclarations may be covered as of right under related article of the rulebook that contains the expression of “failure to comply with regulations..”, save in respect of smuggling of goods or cargo, which would be interpreted as an exclusion in the following article of almost all rulebooks. Thus the indemnity of the loss by the P&I Club would be discretionary since the event may have a chance to be evaluated as a malicious act by the customs authorities. The club board will decide whether to compensate the loss according to the facts or not. On the other hand, it is even less likely that they will be able to afford the fine and/or expenses imposed as a result of the criminal proceedings.

Confiscation of Excess Bunker

According to the current practice, if more fuel is detected than declared in the inspection, the excess bunker will be confiscated.

The confiscation decision is implemented in accordance with the procedures set out in Article 127 of the Criminal Procedure Code (CPC). Pursuant to the aforementioned article, the decision to confiscate is given by the judge. As an exception (in cases where a delay is not acceptable) it can also be given by the Public Prosecutor or the Chief of Police. The decisions not taken by the judge must be submitted to the approval of the judge within 24 hours and it should be approved by the judge within the 48 hours after the decision is made. Otherwise, the confiscation decision will automatically be annulled.

After the confiscation decision is made, the excess bunker on the vessel must be discharged. The vessel will not be allowed to continue her voyage until excess bunker discharge is completed. After the discharge, the confiscated fuel will be transferred to the warehouses of the General Directorate Of National Real Estate.

During the discharge process, technical difficulties are frequently encountered due to the fact that the tanks of the vessels are not usually suitable for discharging oils. Accordingly, it takes at least two days to get the oils off the vessel and to procure the barges that will carry the oils. In some cases, this process can even take a week. As you can imagine, the discharge process causes serious financial losses and incurs other costs such as an anchorage fee.

The only way for a vessel with excess bunker to continue her voyage without waiting for the bunker to be discharged is by depositing security. According to article 132/5 of the CPC, a security can be deposited for the return of the bunker for which the confiscation decision has been made. Of course, it’s important to deposit the security before the discharge process has been commenced. As for the deposit fee, the customs authorities determine the customs value of the excess bunker.

The customs value of the excess bunker is the CIF value of the goods plus Special Consumption Tax (ÖTV), Value Added Tax (KDV) and customs tax (according to the customs tariff). The relevant customs authority issues a letter titled "Identification Document for Smuggled Goods" showing the customs value of the good and how the calculation was made. If the amount specified in this letter is paid, the excess bunker will not be discharged from the vessel and the vessel will be allowed to carry on her voyage.

It is highly likely that criminal proceedings brought against the crew members simultaneously with the confiscation procedure. In that case, the final decision about the confiscation will be made by the criminal court. The judge may decide to liquidate the confiscated fuel at any stage of trial. The liquidation process is carried out according to the procedures determined in Article 16/A of the Anti-Smuggling Law No. 5607. Pursuant to this article, the confiscated fuel is liquidated free of charge for the use of public institutions and organizations or sold, provided that it complies with the technical regulations mentioned in the introduction part above. If the confiscated fuel does not comply with the technical regulations, it will be disposed of by being sold to the nearest refinery. Upon the request of the administrative institution where the fuel is stored, the judge may decide on the liquidation of the excess bunker. We must say that it is unusual for the fuel to be returned to the vessel and it is highly probable that the judge will decide to liquidate it after the criminal proceedings have commenced.

In case that the criminal proceedings are concluded in favor of the crew/owners the issue of returning the confiscated excess bunker will come up. In order to the confiscated fuel to be recovered or the deposit to be returned, the criminal proceedings must have concluded that the crime of smuggling had not been committed. In case where the criminal case ends in favor of the owners or the crew, either the deposit shall be returned or the value of the excess bunker shall be paid to the owners (if the bunker was liquidated as stated above). However, according to article 16/A-(4) of the Anti-Smuggling Code, the taxes will not be returned to the owners and only the CIF value of the excess bunker shall be paid to the owners together with the accrued legal interest.

Usually, in cases where excess bunker is physically confiscated (discharged from the vessel), the customs authorities ask the owners to pay the taxes for the excess bunker as it will be explained in detail below. Accordingly, if the excess bunker was discharged from the vessel and liquidated and the criminal proceedings concluded in favor of the crew/owners afterwards, the CIF value of the excess bunker will be paid to the owners, but not the taxes (see next chapter). In case that a security was provided by the owners and the excess bunker was not discharged from the vessel then the security will be returned to the owners after the taxes are deducted.

Customs Aspects

In the event that the Customs Officials detected excess bunkers in a vessel’s tanks, a concern arises about “possible customs fine”. Unlike the misdeclaration of cargo cases, the customs authorities do not impose customs fine in excess bunker situations. Misdeclaration of the bunker in vessels’ tanks are subject to different provisions of customs law than misdeclaration of vessels’ cargo (dry cargo or oil), as it’s associated with smuggling.

Therefore, the customs authorities do not impose a fine equivalent the CIF value or multiple values of the goods. However, they determine the CIF value of the excess bunker in any case in order to calculate its special consumption tax, value added tax, customs tax. Normally the bunkers purchased abroad by foreign flag vessels is not subject to tax in Turkiye. However, in excess bunker cases, the authorities usually ask ship owners to pay special consumption tax (OTV) , value added tax (KDV), customs tax of the excess bunker calculated on the CIF value of the goods.

As mentioned in the previous section, upon the notification of the customs authority/ public prosecutor, the court orders confiscation of the excess bunker. In cases where the customs authorities discharge the excess bunker from the vessel, the authorities usually require the owners to pay the above mentioned taxes of the excess bunker. If security is provided by the owners in order not to discharge the excess bunker from the vessel, it will consist of the CIF value of the excess bunker and plus the taxes. Even if the criminal proceedings ends in favor of the crew/owners, the taxes are not refunded to the owners.

Criminal Proceedings

Excess bunker on the vessels calling at Turkish Ports will also lead to criminal proceedings against the crew members (generally the master and the chief engineer) according to the Anti-Smuggling Law No. 5607 Article 3:

“The person who brings the goods into the country without going through proper customs procedures is punished by imprisonment from one year to five years and an additional court imposed sentence of judicial fine up to ten thousand days. If the goods are brought into the country from outside the customs gates, the penalty to be imposed is increased from one third to half.”

According to the sub-paragraph 10 and 11 of the same article:

“In cases the goods which constitutes the smuggling consist of fuel, tobacco, tobacco products, sheets of cigarette paper, ethyl alcohol, methanol and alcoholic beverages, penalties to be imposed according to the above paragraphs are increased from half to twice length. In any case the penalty to be imposed cannot be less than three years.”

“The person who produces, possesses, transports, offers for sale or sells the fuel that is subject to national marker application for commercial purposes, which contains national marker below the level determined by the Energy Market Regulatory Authority or does not contain national marker at all, and who purchases it for commercial purposes knowing this feature shall be sentenced to imprisonment from two to five years and a judicial fine up to twenty thousand days.”

If the value of the goods constituting the subject matter of the offenses defined in the paragraphs above is significant, the penalties to be imposed shall be increased by half to one times. If the value of the goods is not high, the penalties to be imposed shall be reduced by up to half, and if the value of the goods is very light, the penalties to be imposed shall be reduced by up to one third.

In case a criminal investigation is initiated by the public prosecutor, officials would proceed to take statements from the crew. If the prosecutor decides to prepare an indictment based on the above mentioned articles of Anti-Smuggling Law and the court decides to prosecute, the trial period begins.

Fuel smuggling is a public crime and not subject to a complaint. When the prosecutor's office learns that the crime has been committed in some way, an investigation will be automatically started. Although there is no complaint period for the investigation of the crime, the statute of limitations for the crime is 8 years.

Suspension of the Announcement of the Verdict

In Turkish Criminal Law Suspension of the Announcement of the Verdict is a criminal procedure institution that causes the case to be dismissed when certain conditions are fulfilled by the defendant within a certain period of supervision time. Unless the effective remorse provisions are applied[1], Decision for Suspension of the Announcement of the Verdict cannot be granted by the court for the crime of fuel smuggling.

In addition, prison sentence for the crime of fuel smuggling cannot be converted into a judicial fine. During the trial, It is necessary to prove that the difference between the declared amount of bunker and the amount of bunker on board is caused by negligence.

 

[1] Effective Remorse

Effective remorse is an institution of substantive criminal law that provides for a reduction in the penalty for the perpetrator if the perpetrator regrets the act committed and compensates for the damage caused by the offense. If a person who has participated in the crime of bunker smuggling informs the authorities about the act, the other perpetrators and the places where the smuggled fuel is hidden before being informed by the official authorities, he shall not be punished if the information provided leads to the arrest of the perpetrators or the seizure of the smuggled bunker. The penalty shall be reduced by two thirds for the person who, after being informed, serves and assists in the full discovery of the act.

According to the High Court, in order for the effective remorse provision to be applied, the following conditions must be met together:

-Payment to the State Treasury of a sum of money equal to twice the customs value of the goods subject to the offense until the end of the investigation phase,

-The perpetrator is not a repeat offender for smuggling,

-The act of smuggling was not committed within the framework of the activities of an organization.

Eurasian 2023/1 - Work Accidents on Foreign-Flagged Ships
Eurasian 2023/1 - Work Accidents on Foreign-Flagged Ships

Work Accidents on Foreign-Flagged Ships
Navigating Jurisdictional Complexities

 

-Gül Alpay

The Work Accident Concept in Turkish Law

Work accidents are an unfortunate reality in every workplace. These accidents can lead to injuries, disabilities, or even fatalities, leaving workers and their families devastated.

In Turkish Labour Law, work accidents are defined as events that occur in the workplace or during the course of work and cause the death or disability of the worker, either mentally or physically. According to the Turkish case law, diseases such as cerebral haemorrhage and heart attack are also accepted as work accidents when they occur at the workplace.

When such accidents occur, the labour courts in Turkey have the competency to hear appeals related to them. The files are forwarded to the specialized departments of the Court of Appeal that deal with labour cases.

The Competent Court for Turkish-Flagged Ships

In Turkey, ships that are registered under the Turkish flag are subject to the Labour Law, and the labour courts have competency to hear cases related to work accidents that occur on these ships. Therefore, when decisions related to work accidents on Turkish-flagged ships are appealed, the files are forwarded to the specialized departments of the Court of Appeal that deal with labour cases such as the 10th Civil Chamber of the Court of Appeal. According to the established precedents of these departments, a worker's death due to a heart attack while at work on a Turkish-flagged ship is considered a work accident.

The Competent Court for Foreign-Flagged Ships

In the case of foreign-flagged ships, the situation is more complex. These ships are subject to the Law of Obligations in Turkey, and the commercial courts have competency over cases related to work accidents that occur on these ships. When decisions related to work accidents on foreign-flagged ships are appealed, the files are forwarded to different departments of the Court of Appeal, usually the specialized departments of the Court of Appeal that deal with maritime cases such as the 11th Civil Chamber of the Court of Appeal. However, the issue arises from the conflict of laws in such cases.

Differences in Result

To better understand the complexities surrounding work accidents in Turkish maritime law, we need to examine a recent case study. In this case, a Turkish seaman who worked as a "master seaman" on a foreign-flagged ship died of a heart attack due to the intense working conditions and heat. The heirs of the deceased sailor launched a case against the shipowner, claiming material and moral compensation.

The commercial court first examined whether Turkish law could be applied to the incident that occurred on the foreign-flagged ship in question. The court referred to Article 27 of the Law on International Private Law and Procedure, which states that if there is a choice of law, the law chosen shall apply, and if not, the law of the habitual place of work of the employee shall apply. However, if the employee does not habitually perform their work in a single country but does so in several countries, the employment contract shall be governed by the law of the country where the employer's main place of business is located. On the other hand, if there is a law that is more closely related to the employment contract according to all the conditions of the case, that law can be applied to the contract.

Accordingly, the court decided that Turkish courts has jurisdiction over the case since both the employee and the employer were Turkish in the present case. However, upon examination on the merits, the Court decided that the incident that occurred on the foreign-flagged ship was not a work accident under the Law of Obligations. The court concluded that the worker's age and pre-existing conditions played a role in the heart attack, making it inevitable and not a work accident. Moreover, the court found that the employer had not acted negligently or failed to take safety precautions, and therefore, the incident did not constitute fault liability. This decision was upheld by the 11th Civil Chamber of the Court of Appeal, which deals with maritime cases.

On the other hand, in a decision made by the 10th Civil Chamber of the Court of Appeal, which is the specialized department for labour cases, a different ruling was made in a similar case involving a Turkish seaman who worked as a "master seaman" on a foreign-flagged ship and who also died of a heart attack. However, in this case, the 10th Civil Chamber of the Court of Appeal considered it a work accident, based on established precedents. The court reasoned that the worker's death was caused by a heart attack that occurred in the workplace and during the course of work, and therefore, it constituted a work accident.[1]

This decision contradicts the ruling made by the 11th Civil Chamber of the Court of Appeal, which found that a similar incident that occurred on a foreign-flagged ship was not a work accident under the Law of Obligations since the employer did not have a fault; whether the incident occurred at the workplace was not taken into account. The conflicting rulings highlight the complexity and ambiguity surrounding the work accident jurisdiction for foreign-flagged ships.

While the approach to work accidents may differ depending on the flag of the ship, it is essential to ensure fairness and consistency in the treatment of workers and to avoid jurisdictional conflicts.

A more consistent and clear legal framework regarding “work accidents on foreign-flagged ships” which can be set by the General Assembly of Civil Chambers of the Court of Appeal, is necessary to protect the rights of workers in the maritime industry and ensure that they receive adequate compensation and support in the event of a work accident.

[1] In cases of work accidents, the liability of the employer is eliminated only in case of force majeure, gross negligence of the injured party or third party; in case of joint fault, the liability is shared in proportion to the fault of the parties.

Time Bars According to Turkish Maritime Law
Time Bars According to Turkish Maritime Law

Unravelling the Legal Framework

To grasp the nuances of the Time Bar system in Turkish Law and explore the potential for parties to modify time bar periods through agreements, it is essential to first understand the distinctive dual framework, which diverges from the principles found in English Law.

Types of Time Bar Periods in Turkish Law

Turkish Law outlines two distinct types of time bar periods in legal statutes, namely; prescription periods and extinction periods. The differences between these two types of periods lie primarily in when they can be claimed during the trial phase and whether the judge would consider them ex officio.

a) Prescription Periods

The prescription period refers to the period during which a right ceases to be actionable after the expiration of the time specified in the law. The prescription period functions as a defense, the parties can raise an objection regarding the prescription period until the end of the preliminary examination stage. The judge can not initiate an ex officio investigation on this matter, also can not alert the parties about the prescription period, and does not have the right to remind them of its impending expiration. Failure by the defendant (debtor) to raise an objection regarding prescription period compels payment of a debt that could have been avoided due to being time-barred.

b) Extinction Periods

The concept of extinction period, is used for the periods in which the existence of the right ceases to exist after the expiration of the time specified in the law.

Extinction periods are generally envisaged in cases where a legal situation is desired to be resolved more quickly. Therefore, the extinction periods stipulated in the law do not cover very long periods of time.

The objection regarding the extinction period can be raised at any stage of the proceedings. Even if parties neglect to assert it, the judge must ex officio examine it and determine that the right launch a case ceases to exist if the extinction period has lapsed.

Modification of Time Bar Periods

Having clarified the types of the time bar periods in Turkish Law, the following review explores whether the parties can modify time bar periods and, if so, which of them can be modified.

In accordance with the principle of freedom of contract, which is one of the fundamental principles of Turkish Law of Obligations, individuals possess the right to form contracts as they see fit. However, this freedom is subject to some limitations imposed by law. Article 6 of the Turkish Commercial Code (“TCC”) stipulates that the statute of limitations governing commercial provisions may not be amended by contract unless expressly allowed by law.

To draw a comparison with English Law, the Limitation Act 1980 functions as the legal framework regulating time bars in English Law; however, commercial contracts typically reference specific conventions, rendering the 6-year limitation period outlined in this Act irrelevant. In other words, The Limitation Act 1980 in English Law does not apply if a different time frame is specified in the contract, or if another Act or Convention with a distinct time bar is incorporated into the contract. If the limitation period is referenced in a convention to which UK is a party of, the parties may or may not alter the limitation period to the extent permitted by that convention. (e.g. Hague-Visby Rules)

The modification prohibition regulated under Turkish Law applies to both extension and reduction of the time bar periods. The prohibition against extension of the time bar period aims to protect the defendant (debtor) and to prevent the courts from being overloaded with long-standing cases due to the potential extension of time bar through contract. The prohibition against reduction of time bar period through contract on the other hand, aims to prevent the claimant (creditor) from incurring losses and to protect against events that were unforeseen at the time of the conclusion of the contract.

There are some exceptions to the prohibition on modifying the time bars in Turkish Law as set out in article 6 of the TCC. The time bars for the claims which are specified in the law can be amended by the parties. The table below illustrates the time bars that can be modified through contractual agreement and those that can not:

Type of the Claim

Type of the Period

Regulation

Time Bar

Modifiability

Charter party or B/L claims including claims for freight and demurrage

Prescription period.

 TCC Article 1246

1 year

Commencing from the due date of the claim.

Can not be modified.

Claims against the carrier due to loss or damage to cargo

Extinction period

TCC Article 1188 

1 year

Commencing from the date of delivery.

Can be modified.

Recourse action with regards to claims due to loss or damage to cargo

Extinction period

TCC Article 1188

TCC Article 855

90 days

Commencing from the date of payment to the claimant or from the notice received regarding the court/arbitration  case commenced against such party.

Can be modified.

Maritime liens

Extinction period

TCC Article1326

1 year

Commencing from the creation of the obligation.

Can not be modified.

General average Contributions claims

Prescription period

TCC Article 1285

1 year

Commencing from the time of unloading at the discharge port or at the port where the voyage ended.

Can not be modified.

Collision claims

Prescription period

TCC Article 1297

2 years

Commencing from the occurrence of the collision.

Can not be modified.

Recourse action between the owners for collision claims

Prescription period

TCC Article 1297

1 year

Commencing from the occurrence of the collision.

Can not be modified.

Salvage claims

Prescription period

TCC Article 1319

2 years

Commencing from the completion of services.

Can be modified.

Wreck removal claims

Prescription period

TCC Article 1319

2 years

Commencing from the completion of the removal services.

Can be modified.

Passenger injury or death claims

Prescription period

TCC Article 1270

10 years

Commencing from the date of occurrence. 

Can be modified.

Insurance claims

Prescription period

TCC Article 1420

2 years

Commencing from the date on which the claim is due and in any case after 6 years from the date of the occurrence of the risk.

Can not be modified.

Liability insurance claims

Prescription period

TCC Article 1482

10 years

Commencing from the date of the occurrence of the event.

Can not be modified.

2024 Pollution Fine Amounts
2024 Pollution Fine Amounts

Pollution Fine Tariff
(January 1st 2024 – December 31st 2024)

CATEGORY A: PETROLEUM PRODUCTS AND DERIVATIVES DISCHARGED BY TANKERS

2024 TARIFF

Up to 1,000 GT

TRY 3,184.81 per Gross Ton
(TRY 9,554.43 per Gross Ton for legal entitites)

Between 1,001 and 5,000 GT

An additional TRY 796,23 per Gross Ton
(TRY 2,388.69 per Gross Ton for legal entitites)

Over 5,000 GT

An additional TRY 79,59 per Gross Ton
(TRY 238.77 per Gross Ton for legal entitites)

CATEGORY B: DIRTY BALLAST DISCHARGED BY TANKERS

2024 TARIFF

Up to 1,000 GT

TRY 580,25 per Gross Ton
(TRY 1,740.75  per Gross Ton for legal entitites)

Between 1,001 and 5,000 GT

An additional TRY 115,76 per Gross Ton
(TRY 347,28 per Gross Ton for legal entitites)

Over 5,000 GT

An additional TRY 18,37 per Gross Ton
(TRY 55,11 per Gross Ton for legal entitites)

CATEGORY C: PETROLEUM PRODUCTS, PETROLEUM DERIVATIVES AND DIRTY BALLAST WATER DISCHARGED BY SHIPS OR OTHER VESSELS

2024 TARIFF

Up to 1,000 GT

TRY 1,592.40 per Gross Ton
(TRY 4,777.2  per Gross Ton for legal entitites)

Between 1,001 and 5,000 GT

An additional TRY 318,49 per Gross Ton
(TRY 955,47 per Gross Ton for legal entitites)

Over 5,000 GT

An additional TRY 79,59 per Gross Ton
(TRY 238,77 per Gross Ton for legal entitites)

CATEGORY D: GARBAGE, SEWAGE AND GRAY WATER DISCHARGED BY ALL SHIPS, TANKERS OR OTHER VESSELS

2024 TARIFF

Up to 18 GT

TRY 17,661
(TRY 52.983 for legal entitites)

Between 18 and 50 GT

TRY 35,325
(TRY 105.975  for legal entitites)

Between 50 and 100 GT 

TRY 70,650
(TRY 211.950  for legal entitites)

Between 100 and 150 GT 

TRY 105,976
(TRY  317,928 for legal entitites)

Between 150 and 1,000 GT

An additional TRY 796,23 per Gross Ton
(TRY 2,388.69 per Gross Ton for legal entitites)

Between 1,000 and 5,000 GT

An additional TRY 159,25 per Gross Ton
(TRY 477,75 per Gross Ton for legal entitites)

Over 5,000 GT

An additional TRY 18,37 per Gross Ton
(TRY 55,11  per Gross Ton for legal entitites)

FINES REGARDING THE SULPHUR CONTENT IN BUNKERS

2024 TARIFF

Up to 1,000 GT

TRY 706,51 TL per Gross Ton

Between 1,001 and 5,000 GT

An additional TRY 88,31 per Gross Ton

Over 5,000 GT

An additional TRY 17,67 per Gross Ton

Ulgener LC/LO, based in Istanbul, with its office right in the Shipping Center, where the most major Turkish ship holding groups have their headquarters, is a law firm dedicated mainly to shipping matters, with a wide scope including all kind of related issues, such as: P&I matters, such as cargo claims - disputes arising from bills of lading, crew claims, pollution, liens on vessels; as well as accidents, such as collisions, salvage, wreck removal and general average matters, etc. FD&D matters, such as disputes arising from voyage and time charterparties, i.e. forced freight & demurrage collection, liens on cargoes, etc. H&M, war and strike clauses and cargo insurance matters, such as salvage, general average adjustment, etc., also representing underwriters and providing legal advice regarding local and international law, collection of outstanding premiums on behalf of P&I Associations, Ship Finance - Sale & Purchase, as well as assisting foreign banks and other financial institutions, covering also mortgages and disputes arising out of mortgages, Enforcement of foreign arbitration and court awards, Advising shipowners and P&I Clubs regarding issues arising from Turkish as well as International maritime law, (legal correspondent of a P&I Club within International Pool) Also assisting owners for protection of their interests and avoiding conflicts on drafting charterparties, bills of lading, MOA's and other documentation, advising leading Turkish steel manufacturers for shipping related issues, Serving as legal advisers to Turkish Chamber of Shipping, also representing the Chamber at the Bimco Documentary Committee.

Reckless Behavior
Reckless Behavior

Meaning under Turkish Maritime Law

Recently we came across a case where the terms “recklessness” was under scrutiny and we had to delve into the subject in detail. The case is that we, as the owners’ lawyers, launched a case to limit the liability as per 1976 LLMC (with 1996 protocol and 2012 Amendment), and the opponent parties were arguing that the right to limit the liability does not attach because the conduct of the crew during the incident was reckless.

Legal Framework

LLMC Article 4 states that “a person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.”

The Turkish Commercial Code (“TCC”) goes one step further by referring to this article of the Convention and lists in Article 1343 that whose fault must be taken into consideration while evaluating the right to limit liability. The Article regulates that;

“In applying Article 4 of the 1976 Convention and the second paragraph of Article V of the 1992 Liability Convention, the negligence of the following persons shall be taken into account

In the case of persons, the negligence of each person.

In the case of legal entities, the negligence of the organs and the negligence of the persons constituting the organs, which by their acts put the legal entity under obligation pursuant to Article 50 of the Turkish Civil Code.

In companies, the negligence of the partners of the company.

The negligence of the shareholders and the manager in the case of a simple ship owning.

The negligence of the persons legally representing the above-mentioned persons based on a general or special authorization.”

Sub-article “e” of 1343 raises the question of whether the master should also be considered within this scope.

Whose Reckless Behaviour?

Interpreting Article 1343 of the Turkish Commercial Code

The sub-article “e” of the article 1343 which states "The negligence of the persons legally representing the above-mentioned persons based on a general or special authorization." poses a significant risk for the shipowner.

The Turkish Commercial Code regulates in another article that the master has the authority to represent the shipowner when the ship is outside of her Port of Registry;

“When the ship is outside her Port of Registry, the master, is authorized to carry out all actions and dispositions on behalf of the shipowner regarding the ship's outfitting, fuel and provisions, crew members, and maintaining the ship in a condition suitable for the sea and cargo, and generally to ensure the safe continuation of the voyage with third parties.”

When these two articles are evaluated together, there is a risk of the Turkish Courts considering the master within the scope of Article 1343/e of the TCC on the grounds that the master has the authority to represent the shipowner outside of her Port of Registry, and consider the master among the persons who will prevent the limitation of the shipowner's liability with his reckless behaviour.

Alignment with IMO Resolution

IMO which is the organizer of LLMC, has put this issue on its agenda in order to prevent the unfair outcomes in practice due to the different interpretations of the Convention and a resolution numbered A.1164 and dated 15.12.2021 was adopted by the member states. This resolution states that;

“The states parties to the protocol of 1996 to amend the convention on limitation of liability for maritime claims, 1976, present at the thirty-second session of the assembly of the international maritime organization,…

AFFIRM that the test for breaking the right to limit liability as contained in article 4 of the 1976 LLMC Convention is to be interpreted:

(a) as virtually unbreakable in nature i.e. breakable only in very limited circumstances and based on the principle of unbreakability;

(b) to mean a level of culpability analogous to wilful misconduct, namely:

a level higher than the concept of gross negligence, since that concept was rejected by the 1976 International Conference on Limitation of Liability for Maritime Claims;

a level that would deprive the shipowner of the right to be indemnified under their marine insurance policy; and

a level that provides that the loss of entitlement to limit liability should begin where the level of culpability is such that insurability ends;

(c) that the term "recklessly" is to be accompanied by "knowledge" that such pollution damage, damage or loss would probably result, and that the two terms establish a level of culpability that must be met in their combined totality and should not be considered in isolation of each other; and

(d) that the conduct of parties other than the shipowner, for example the master, crew or servants of the shipowner, is irrelevant and should not be taken into account when seeking to establish whether the test has been met;”

Given that Turkey, as a member of the International Maritime Organization, was present and accepted the resolution at the aforementioned 32nd session, it is essential that Turkish courts align with the international standards outlined in IMO Resolution A.1164.

The above mentioned resolution explicitly states that the conduct of the master, crew, or other servants of the owner should not influence the determination of a shipowner's ability to limit liability. Aligning with these standards not only ensures consistency with global maritime practices but also promotes uniformity and predictability in handling maritime liability issues.

We will continue to keep you updated on this matter.

Eurasian 2025/1
Eurasian 2025/1

DIRECT ACTION IN TURKEY
Is it possible ?

Fehmi Ülgener
Duygu Yazıcı
Gül Alpay
Ceren Doğdu
Aybike Kopuz
Emre Ülgener

INTRODUCTION

This time we bring you a subject that is probably a bit controversial and has caused some debate.

A direct action against P&I clubs is indeed a challenge to the global third party insurance system and should of course be treated with utmost care. Clubs naturally only want to be sued under the terms of the insurance contract, including the choice of law and jurisdiction they have agreed with the member (the “preferred system”). On the other hand, there are cases where a different law and jurisdiction may take precedence over the terms of the contracts and this is where things get complicated. You will see that, at least from a Turkish law perspective, there are cases where P&I clubs can protect themselves against a breach of the preferred system, but there are also cases where local (in this case Turkish) law does not give way to this system, resulting in having to apply local law and jurisdiction. As demonstrated below, sometimes it is the preferred system that wins, sometimes it is the local law and jurisdiction; this depends on the factors that will be evaluated below.

DIRECT ACTION IN TURKISH LAW

The Turkish Commercial Code (“TCC”), which came into force in 2012, has granted third parties who have suffered damages the right to apply directly to the liability insurers (protection and indemnity – P&I clubs) with Article 1478. According to this article:

The injured party may claim compensation for the damage they have suffered directly from the insurer up to the insured amount, provided that it remains within the statute of limitations applicable to the insurance contract.”

The reasoning of this article states that the main purpose of liability insurance is to compensate the damages of the injured third parties and to protect them against insolvency. According to the reasoning, "...the main purpose of liability insurance is to compensate the decrease in the insured's assets due to the compensation to be paid by the insured because of the damage caused to the third party, and as a side effect, to ensure that the injured party's damage is remedied as soon as possible and to protect third parties against the insured's insolvency...".

A number of international conventions such as the 1969 and 1992 CLC, the 2001 Bunker Convention, the HNS Convention, the 1974 Athens Convention and the 2007 Nairobi Convention have already developed systems that allow the injured parties to apply directly to the insurer. In addition to these, the TCC also allows the injured third parties to apply directly to the liability insurer with the regulation mentioned above.

However, in our opinion, in order to examine the issue more comprehensively, it is necessary to separate the source of the legal relationship (debt/claim) that causes the damage into two as contractual relations and tort.

a.
Claims Based on Contractual Relations

In cases where there is a contractual relationship between the injured party and the insured (such as charter party), in order for the article 1478 of the TCC to be applied, the insurance policy should be subject to Turkish Law and/or the insurer should be based in Turkey.

For instance, in cases filed against the shipowner due to damages to the cargo, the Turkish Courts reject the cases filed directly against the P&I insurer if the insurance contract is subject to English Law, on the grounds of the existence of the “pay to be paid” rule[1] and/or the Turkish Courts not having jurisdiction over the dispute. As will be explained in more detail under other headings of this article, in English Law, third parties do not have the right to file a lawsuit directly against the P&I clubs, except for some exceptions.

Although the courts previously rejected cases filed against the foreign P&I insurers due to the existence of the pay to be paid rule in the insurance contracts, they have recently cited Article 46 of the Turkish Private International and Procedural Law (“International Procedural Law”) as the reason for rejecting these claims.

Article 46 of the International Procedural Law is a special article for cases related to insurance contracts. According to it, “In disputes arising from insurance contracts, the court of the place where the insurer's actual headquarters or its branch or the agency that concluded the insurance contract is located in Turkey is competent. However, in cases that are filed against the insured or the beneficiary, the competent court is the court of the place where they are domicile or resident in Turkey.”

While Turkish Courts have been rejecting cases filed for cargo damages against insurers that do not have a residence or agency in Turkey based on this article in recent years, it is not yet clear whether the Turkish Labour Courts will apply this article when it comes to crew claims (labour accidents) or whether they will consider this article to conflict with the social state or public order since there is no precedent on this issue yet.

Undoubtedly, if the insurer is based in Turkey, it is possible for the third party who has suffered damage (whether due to cargo damage or a work accident) to apply directly to the insurer, but it should be noted that this application is limited to compensation payments only. To give an example, while it is possible to claim compensation from the insurer due to a work accident, it is not possible to claim severance pay, notice pay, leave pay, etc. from the insurer.

b.
Claims Based on Tort

While the “pay to be paid” rule is generally upheld by Turkish courts in contractual disputes, its enforceability is called into question when the underlying dispute arises from a tort. Under Turkish law, the distinction between contractual and tortious liability is crucial in determining whether the “pay to be paid” rule can be invoked. Courts tend to respect the terms of the insurance contract — including the “pay to be paid” rule — when the claim is based on a contractual relationship. However, in cases based on tort, the claimant (injured party) cannot be bound by the terms of the insurance contract.

Article 34 of the International Procedural Law governs the applicable law in tort cases. 

Tort
Article 34 –  

(1) Obligations arising from torts shall be governed by the law of the country where the tort was committed.         
(2) If the place where the tort was committed and the place where the damage occurred are in different countries, the law of the country where the damage occurred shall apply.

(3) If the obligation arising from the tort is more closely connected with another country, the law of that country shall apply.     
(4) If the law applicable to the tort or to the insurance contract permits, the injured party may assert their claim directly against the insurer of the liable party.
(5) The parties may explicitly choose the applicable law after the tort has occurred. 

According to this provision, the law of the place where the tort occurred (Turkey) — or, if different, the place where the damage was sustained — shall apply. Most importantly, paragraph 4 of Article 34 expressly provides that, if the applicable law governing either the tort or the insurance contract permits, the claimant may bring a direct action against the insurer.

Article 1478 of the TCC, grants the injured party a statutory right to claim compensation directly from the liability insurer. Therefore, where Turkish law governs the tortious dispute, the claimant is entitled to bypass the insured and proceed directly against the P&I club, regardless of any “pay to be paid” provision in the policy. Turkish courts have consistently recognised this right.

In practice, courts have refused to apply the “pay to be paid” rule in tort-based claims involving casualties such as pollution incidents and collisions. The rationale is rooted in the protection of the injured party, who should not be prejudiced by the internal arrangements between the insured and their insurer and to ensure that the injured party of a tort is able to seek compensation from the financially solvent insurer.

Accordingly, where the claim arises from tort and Turkish Law is applicable pursuant to International Procedural Law Article 34, the P&I club cannot rely on the “pay to be paid” clause to avoid direct liability.

 DIRECT ACTION IN OTHER JURISDICTIONS

a. English Law

Under English law, the exception to the “pay to be paid” rule is personal injury and loss of life.

Pursuant to the Third Parties (Rights Against Insurers) Act 1930 (“Third Parties Act”), if the insured/ shipowner becomes insolvent, the injured party may bring a direct action against the club in case of personal injury and loss of life.

The Third Parties Act was amended in 2010, where the revised provisions came into force in 2016. According to the revised Third Parties Act, the “pay to be paid” rule does not apply to compensation claims arising from loss of life or personal injury where the owner is insolvent. This amendment was introduced following the judgments delivered by the House of Lords in the consolidated cases of The Fanti and The Padre Island.

According to the Third Parties Act 1930;

Section 9- Conditions Affecting Transferred Rights:

9.1: "This section applies where transferred rights are subject to a condition (whether under the contract of insurance from which the transferred rights are derived or otherwise) that the insured has to fulfil."

9.5: "The transferred rights are not subject to a condition requiring the prior discharge by the insured of the insured's liability to the third party."

9.6: "In the case of a contract of marine insurance, subsection (5) applies only to the extent that the liability of the insured is a liability in respect of death and personal injury."

In both cases mentioned above, the cargo interests, who were unable to recover their losses from the insolvent owners, brought claims against the clubs under the Third Parties Act. In the Fanti case, the court held that the liability amount imposed on the owner under the Third Parties Act had transferred to the third party, meaning the “pay to be paid” rule could not be enforced against the injured party. However, in the Padre Island case, the court ruled that the “pay to be paid” rule applies and that the club’s obligation to indemnify cannot arise before the compensation determined by the court has been paid by the owner to the injured party.

Both cases were appealed and eventually heard together by the House of Lords. The House of Lords ruled that the “pay to be paid” rule applies, in line with the decision in the Padre Island case, on the following grounds:

  • There was no provision or wording in the Third Parties Act that eliminate the “pay to be paid” rule in the event of the insured’s insolvency,
  • The transfer of rights under section 1.1 of the Third Parties Act places the injured party in an advantageous position, which was considered unlawful, and,
  • Even if it was accepted that a right is transferred to the injured party, such right is merely the insured’s right of recourse against the club, subject to the necessary conditions, and would therefore have no legal effect in the hands of anyone other than the insured, rendering it meaningless for the injured party.

As a consequence of this decision, in 2010 the law maker made an amendment to ensure that claims arising from loss of life or personal injury are exempt from the “pay to be paid” rule where the owner is insolvent.

Under the amended Third Parties Act, "insolvency" is defined as the following:

  • For individuals: (i) Debt Relief Order, (ii) Administration Order, (iii) Individual Voluntary Arrangement, and (iv) Bankruptcy Order.
  • For corporate bodies: (i) Administration Order, (ii) Voluntary Arrangement, (iii) Provisional Liquidator, (iv) Commencement of liquidation either by itself or by court order, resulting in removal from the Companies Register, and (v) Dissolved company.

According to the general provisions concerning the application of the Third Parties Act,

  1. The right to bring a claim against the P&I clubs is subject to a six-year limitation period, which begins: for tort claims, from the date the wrongful act occurred, and for contract claims, from the date of the breach.
  2. The injured party acquires the same rights against the P&I club as the insured. The club may still raise any defences it would have had against the insured. Furthermore, the club may deduct unpaid premiums from any indemnity payable and reduce compensation proportionally in cases where the injured is partially at fault.

The clubs within the International Group, on the other hand, exercise their discretionary right to make payment directly to a third party. They have considered it fair and reasonable that injured third party receive compensation directly from the club without applying any policy defences such as “pay to be paid” or withdrawal of cover for non-payment of premiums and calls if there is no enforceable right of recovery against any other party and the seaman or defendant would otherwise remain uncompensated

b. EU Law

The Assens Havn” Case

The Court of Justice of the European Union (“CJEU”) orders that the right of an injured party to bring a direct action against the insurer is not restricted to the jurisdiction specified in the choice of law clause of the insurance contract (13 July 2017). According to this decision, the following courts are deemed competent to hear such a claim:

  • the court of the place where the damage occurred, or
  • the court of the insurer’s headquarters within the EU, or
  • the court of the place where the injured party is domiciled within the EU.

The dispute arose when the tug Endevour I, operated by a Swedish company as owner, collided with a quay at Assens Port in Denmark in November 2007, causing damage. Before legal action could be initiated, the tug owner declared bankruptcy and liquidation proceedings were commenced. Consequently, the port authority launched a case in Denmark against the tug owner’s P&I club, relying on Section 95(2) of the 1930 Insurance Act, which grants injured parties the right to bring direct claims against the liability insurer of an insolvent debtor.

The Danish court of first instance ruled in favor of the P&I club, declaring itself lacking jurisdiction and dismissing the case. This decision was appealed by the claimant, and the appellate court referred the matter to the CJEU, suspending its own proceedings until the CJEU issued its judgment.

The CJEU ruled in favour of the claimant. The key reasons provided were as follows:

  • The applicable legislation should aim to protect third parties, which necessitates granting jurisdiction to the courts of the place where the damage occurred.
  • The insurance contract should not bind an injured party who has no knowledge of or involvement in that contract.

c. Norwegian Law

MV Stolt Commitment v. MV Thorco Cloud” Case

The reason why we decided to review Norwegian law under a separate heading (though it is not a member of the EU) is because there are two Norway-based P&I clubs within the International Group (IG). These clubs issue insurance policies governed by Norwegian law. Two recent decisions under Norwegian law are of particular relevance:

  • According to a 2018 judgment of the Norwegian Supreme Court, Norwegian courts (subject to the fulfillment of certain conditions) have jurisdiction to hear claims brought against Norwegian-based P&I clubs and liability insurers.
  • In an April 2020 decision, the Norwegian Court of Appeal held that, where the insured is legally insolvent, injured parties have a right to bring direct claims against Norwegian P&I clubs.

The reasoning provided in the 2020 decision includes the following points:

  • The collision occurred in Indonesian territorial waters; neither vessel was owned by a Norwegian party.
  • Under Norwegian law, if the insured is legally insolvent, a statutory provision grants injured parties the right to bring a direct action against the insurer.
  • The Norwegian-based P&I club is subject to Norwegian law, and the insurance contract itself refers to Norwegian law and jurisdiction. Therefore, the P&I club should be aware of the risk that direct claims may be brought against it.

However, in order for the right of direct action to be validly exercised, the injured party must prove that the insured is legally insolvent. This requirement essentially constitutes a precondition for exercising the right. In this context, the provisions of Norwegian bankruptcy and insolvency law become particularly relevant — which naturally goes beyond the scope of this article and our area of specialisation.
 

ANTI-SUIT INJUNCTION

An anti-suit injunction (“ASI”) (a method used in English law) is a court order that restrains a party from initiating or continuing proceedings in a foreign jurisdiction, typically to uphold an arbitration agreement or exclusive jurisdiction clause. In the context of marine insurance, ASI’s are often sought by P&I clubs in UK to prevent direct claims in other jurisdictions.

From the perspective of English law, ASI’s serve as a critical tool to protect the contractual dispute resolution framework agreed between the club and the member. English courts may grant such orders against the parties who initiate proceedings in foreign courts because according to English law this is not only against the conditions of the contract but also vexatious or oppressive. There is no need to explain it but, the insurer must act promptly and must not participate in any way in such proceedings. 

As explained above, Turkish Law permits direct actions against third party insurers in certain circumstances particularly where the claim is based on tort and Turkish law is the applicable law pursuant to Article 34 of the International Procedural Law. In such cases, Turkish courts allow the claimant to bypass contractual limitations, including the ‘pay to be paid’ rule and exclusive jurisdiction agreements.

Such injunctions obviously do not have any effect on Turkish proceedings. The main reason for this is that ASI decisions are seen as restricting the “freedom to seek legal remedies”. Therefore, an injunction that prevents an injured party from bringing an action before Turkish courts is deemed to be contrary to public order and thus cannot be recognized.

However, this does not mean that ASI decisions are without effect. Even if the Turkish court does not recognise such a decision, a party that fails to comply with an ASI may face a series of sanctions under English law. In particular, if the claimant initiating proceedings in Turkey holds assets in the United Kingdom, conducts commercial activities there, or has a presence in a country that recognises ASI’s, the following sanctions may be imposed under English law:

  • Fines or imprisonment for failure to comply with a court order.
  • Seizure or freezing of assets located in the United Kingdom or in jurisdictions that recognize ASI’s.
  • Reputational and financial obstacles such as the cancellation of insurance cover or an increased credit risk in commercial dealings.
  • As a consequence, an exposure to high legal costs and compensation liabilities before English courts.

Therefore, the fact that Turkish courts do not recognise injunctions does not eliminate their power. In practice, these sanctions may adversely affect the claimant’s economic, commercial, psychological and legal standing, effectively pressuring them to withdraw the case in Turkey.

A concrete example of this situation occurred in the Yusuf Cepnioglu case. After a vessel ran aground and was deemed a total loss off the coast of Greece, the injured party initiated direct proceedings in Turkey under Article 1478 of TCC against the P&I club.

The club argued that the lawsuit violated the terms of the insurance policy, which required arbitration under English law, and obtained an ASI from the English courts. The English court found that the Turkish proceedings imposed additional obligations on the club outside the contractual framework and characterised the lawsuit as “vexatious and oppressive.” As a result, the English court granted ASI.

Although the Turkish court continued with the proceedings, the injunction had a practical impact due to the charterer’s commercial presence and assets in United Kingdom. Under the threat of sanctions as described above, the claimant left without an alternative but to withdraw the case.

This example clearly demonstrates that ASI decisions, while not recognised under Turkish law, can nonetheless exert significant deterrent and practical effects at the international level.

Therefore, this issue, raises the following question: If the injured party brings a direct action against the club before the Turkish courts, and the court accepts its jurisdiction, hears the case and renders a judgment in favour of the injured party, how can the injured party enforce such a judgment? A judgment rendered by a Turkish court would not be recognised or enforced in UK as an English court would not enforce a judgment which is considered to be a “contempt to an English court”. However, does this mean that an injured party holding such a judgment would be left entirely without recourse?

According to the Article 89/1 of the Enforcement and Bankruptcy Law No. 2004:

“If a claim or other right that does not belong to the bearer or is not supported by a negotiable instrument or a movable property of the debtor in the possession of a third party is seized, the enforcement officer shall notify the debtor (whether a natural or legal person) that from that point onward, the debt must be paid only to the enforcement office, and that any payment made to the enforcement debtor shall not be valid or that the third party holding the movable property shall be instructed to deliver the asset only to the enforcement office and not to the enforcement debtor; otherwise, the third party will be held liable to pay the equivalent value of the asset to the enforcement office. (Notification of seizure)”

Without going into a detailed legal discussion, it would seem that the above mentioned clause has a potential use against P&I clubs.

CONCLUSION

As a result, if the incident causing the damage (whether material or loss of life/personal injury) occurred in Turkey and is based on tort, the injured party can bring a direct action against the P&I clubs according to Article 1478 of the Turkish Commercial Code. On the other hand, for the claims arising out of contract (such us cargo damage) tendency of Turkish courts is to dismiss such cases due to lack of jurisdiction.

As for the ASI, although it has no direct effect on Turkish proceedings, a claimant who fails to comply with an ASI may face a series of sanctions under English law including but not limited to fines or imprisonment or seizure or freezing of assets located in the United Kingdom or in other jurisdictions that recognize ASI’s.


[1] In P&I insurance policies, the “pay to be paid” rule stipulates that the insurer’s liability is conditional primarily upon the insured having paid the third-party/claimant.

 

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