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THE ECONOMIC IMPACT OF THE RED SEA SHIPPING CRISIS
Following the outbreak of the Israel-Palestine war, Houthi militants have responded by raiding, attacking, and seizing cargo ships in the Suez Canal. Based on reports from Al Jazeera, the Houthis will continue to ambush and disturb trade along the Suez Canal until the Israeli offensive in Gaza is stopped.
Responding to this, the US and UK launched a joint special military operation (11th – 12th January 2024), with missile strikes on Houthi rebels across Yemen, with a reported number of 60 targets being hit so far. This has forced cargo ships to stop crossing the Suez Canal and reroute their journeys along the South African coast, resulting in significant delays that have disrupted logistics chains and the global economy.
Critical economic issues
- 12 major shipping companies have stopped their cargo ships from crossing the Suez Canal for fear of being caught in the crossfire. To put this into perspective, in 2021, the ‘Ever Given’ cargo ship was trapped in the Suez Canal for six days, causing delays of $10 billion per day. The costs of having dozens, if not hundreds, of ships in such a situation will be detrimental to global trade, damaging economies throughout many countries.
- The Suez Canal is one of the most important trade routes in the world, connecting Asia and Europe. Thirty percent of all cargo ship traffic crosses the canal. Rerouting shipping journeys along the South African coast will result in a 10-day delivery delay. After all, ships will have to travel an additional 13,000km, increasing costs by $ 1 million per journey.
- European countries will struggle to acquire natural resources such as crude oil, fuel, and ores, which would have been imported via the Suez Canal. With the ban on Russian imports, suppliers of such materials will be rare and expensive.
- US inflation has risen to 3.4% due to the Suez Canal Crisis, which decreased global trade by 1.3%.
- Each year, 17,000 ships cross the Suez Canal, carrying around $1 trillion worth of goods. However, if the shipping crisis continues, this number will drastically decrease by the end of 2024. As a result, the price of imported goods such as food, electronics, furniture, and clothes will likely increase, as the canal is currently operating at minimum capacity.
Societal and legal implications
Increased fuel usage will lead to environmental damage caused by pollution. The shipping industry is responsible for 2-3 % of global CO2 emissions. This number will increase exponentially if the Red Sea shipping crisis is not swiftly resolved.
Under normal conditions, a container vessel carrying 150,000 metric tonnes of freight via the Suez Canal from ports in Southern China, such as Shanghai to Rotterdam in the Netherlands, will produce 41,000 tonnes of CO2. However, based on the diversion, emissions will reach an estimated 55,000 tonnes, resulting in severe environmental damage.
Tourist agencies will suffer financial losses. MSC Cruises -the third largest cruise company in the world- has cancelled three cruises ranging from 21 to 24 days. The three ships will return to Europe without carrying passengers, rerouting to avoid the Red Sea.
The marine insurance market will be uncertain because it will have to manage an influx of different types of legal claims.
- H&M insurers will be responsible for dealing with claims relating to damaged ships caught in the Suez Canal crisis.
- The Suez Canal Authority can bring third-party claims for any damage to the canal’s infrastructure or obstruction by cargo ships belonging to different shipping companies.
The General Average notion may be imposed so that all losses incurred by damaged cargo on a ship as it crosses the Suez Canal will be equally divided between all the cargo’s owners to amortise the financial burden placed on the shipping company.
Under international maritime law, the Suez Canal Crisis is violating fundamental freedoms of trade and protection from war established under Article 1 of the Constantinople Convention. Following a resolution to this conflict, an international court must convene to analyse and conclude statutory breaches and the equivalent compensation to be imposed on those found liable.
Article was written by Stefan Iacobescu
BITCOIN ETF BREAKTHROUGH: SEC SIGNALS GREEN LIGHT FOR CRYPTO INVESTMENTS
The US Securities and Exchange Commission (SEC) has controversially approved new rules for trading Bitcoin exchange-traded funds (ETFs) on national securities exchanges. This decision aims to introduce competition and create a fairer market by evening the playing field.
Unveiling the evolution: recent developments in Bitcoin ETFs reshape the landscape
This approval comes after a decade-long odyssey marked by legal battles surrounding listing exchange-traded Bitcoin products and repeated refusals by regulators as Bitcoin markets were argued to be unregulated and unsafe for the average investor.
However, a recent court ruling in a lawsuit against Grayscale weakened the SEC’s arguments, leading to a revised stance. Blackrock, Fidelity, and others are authorised to launch Bitcoin ETFs, including Grayscale Bitcoin Trust and Bitwise Bitcoin ETF. The announcement ignited a wave of scrutiny and scepticism upon release, and the approval of the new rules was categorised as “unsound and ahistorical”.
Understanding Bitcoin ETFs and how they work
Bitcoin ETFs are publicly traded investment funds that allow traditional investors to participate in Bitcoin through a regulated investment vehicle such as the New York Stock Exchange.
When investing in Bitcoin, investors are not directly purchasing the digital currency but instead buying shares in a fund that holds Bitcoin. This simplifies navigating Bitcoin’s price fluctuations and eliminates the necessity for a secure method to acquire and store the digital currency.
Why is this significant?
It has been stated that this latest win for Bitcoin ETFs does not in any way, shape, or form mean the SEC is willing to approve further listing standards for crypto assets. However, even with its approval described as lukewarm at best, this landmark move is a significant win for the crypto industry.
Now that the dam has been beached, it will be more difficult for the SEC to refuse the crypto approach outright. This new approach makes investments more straightforward and secure, subtly changing the tone toward crypto.
The possibility of a future more regulated environment could potentially attract significant financial institutions that were hesitant due to concerns about volatility and unclear regulations.
This move is a first step towards making crypto more mainstream and accessible.
And how would law firms be involved?
The approval of Bitcoin ETFs is expected to draw new clients for law firms, particularly in sectors such as corporate law, securities law, and fintech. The potential entry of major industrial players into the Bitcoin ETF arena is set to elevate the demand for law firms, making them sought-after advisors for handling compliance with financial regulations and structuring strategic ETF investments.
These firms can leverage their expertise in financial regulations to provide critical regulatory guidance, ensuring that clients comply with evolving rules. Furthermore, firms that relate their work to the emerging crypto landscape can develop more innovative ways of serving their clients.
In summary, approving Bitcoin ETFs demands legal expertise in navigating the regulatory complexities and ensuring a secure and compliant environment for investors. Law firms can position themselves to provide more innovative solutions to clients involved in or looking to enter the cryptocurrency market.
Article was written by Natalia Mileva
THE ROYAL PREROGATIVE OF MERCY AND CRIMINAL LAW: AN OVERVIEW
When one refers to the criminal justice system, the Royal Prerogative of Mercy (RPM) is not the first thing that springs to mind; however, the criminal justice system has long been closely associated with this capability.
Royal or Crown Prerogatives, as many may well know, are powers ‘held by the Monarch or by Government ministers that may be used without the consent of the Commons or Lords’.
They are executive, judicial and legislative powers previously only exercised by monarchs since the Middle Ages. However, many are now dormant, diluted or not solely associated with the Crown owing to abolishment, statute alternatives or the powers of delegation transferring those capabilities to government ministers.
The powers which remain with the Monarch are personal prerogatives or reserved, with the RPM being one of those.
Operation in criminal law
It must be established that the RPM is exercisable by the King on advice or recommendation from several ministers, including the Secretaries of State for Defence and of Justice for England and Wales and appointed ministers in the Isle of Man, Northern Ireland, and Scotland. This power is also employed similarly, with the allowance of slight jurisdictional nuances, in other Commonwealth countries.
The circumstances under which the RPM may be used are not intransigent; as per the general characteristics of prerogative powers, it is flexible. However, as with other reserved powers, it is not subject to wanton application nor concomitant to overturning a conviction. The RPM applies to criminal cases or instances where an eventual criminal conviction incurs a penalty or sentence.
Arguably, its most well-known use concerns Alan Turing. Mr Turing is widely acclaimed as a ‘maths prodigy’, further praised as having ‘pioneered mathematics and computer science’, and, among his many other accomplishments, notably broke the Enigma code during World War Two.
Nonetheless, he was convicted of gross indecency in 1952 due to his sexuality and a consensual relationship with an adult male, consequently due to homosexuality being defined as a criminal offence at the time. Over half a century later, he was pardoned by Queen Elizabeth II using the RPM in 2013.
As previously alluded to, the RPM does not apply to all criminal cases. It is engaged in rare occurrences whereby the convicted or alleged perpetrator is proven innocent of the crime convicted of, where new evidence exonerating the convicted comes to light (so long as the standard of proof required in criminal law is reached), or a convict’s case, owing to procedural issues or otherwise, cannot be appealed or heard in an appellate court, with the latter, especially in instances where the courts’ justiciability is somewhat limited.
There are two types of RPMs: a Free Pardon and a Conditional Pardon. As the names suggest, the former is ‘absolute and unconditional’, akin to a complete vindication. Thus, it is as if the convicted did not commit the crime in the first place. A Free Pardon is also granted in cases of miscarriages of justice, such as in the case of Alan Turing. The latter commutes an original sentence to a lesser one, for example, from capital punishment to a life sentence.
One of the recent examples of the latter in operation would be the conditional pardon of Mr Steven Gallant. Mr Gallant was convicted in 2005 in the revenge killing of a man and was sentenced to life imprisonment, with a stipulated minimum term of 17 years.
He was released on licence, and on his first day on release, he chased and helped restrain the Fishmongers’ Hall terrorist, Usman Khan, following his fatal stabbing of two Cambridge graduates in the 2019 London Bridge attack. For his bravery, his sentence was reduced, and he was made a free man sometime before serving the minimum term.
Nonetheless, there has been a general decline in the use of royal pardons, arguably owing to the expansion of the rights of appeal and corresponding courts under criminal law. Additionally, securing inroads into appellate courts proves challenging, especially given the courts’ increasing workload, backlogs, and expenses. These obstacles were further worsened by the Covid–19 pandemic and the effects of LASPO 2012.
Therefore, the RPM, which could help those eligible under the described terms, is stagnant due to its increasingly uncharitable use.
The RPM’s effect on the legal sector
Ordinarily, reaching the standard of proof in criminal law is difficult all on its own without the added encumbrance of attempting to gain either Pardon. To acquire a Free Pardon, the burden of proof is even greater than in usual criminal proceedings. Therefore, the expertise of criminal and public law practitioners is an absolute requirement, especially in the attempt to gain a Free Pardon.
Moreover, except ex gratia payments (payments made for damages without the admittance of liability), those granted Free Pardons are not automatically entitled to compensation. However, a client may seek additional compensation, depending on the facts and intricacies of their case, for either a wrongful conviction, wrongfully serving a prison term or both. In such instances, they may require the services of legal professionals specialising in complex matters, such as a multi-disciplined or cross-sectional qualified lawyer.
Having said all of the above, although the RPM serves as one way to right some legal wrongs, its use, however sparse, demonstrates a need for the continuing refinement of the English criminal justice system, from getting the convictions right to making appellate courts more accessible to the convicted.
The irony is that one cannot currently exist without the other, and it looks unlikely that this will change.
For an in-depth analysis of the ambit of the RPM, please see: R (Shields) v Secretary of State for Justice  EWHC 3102 (Admin);  WLR (D) 398
Article was written by Aqua Koroma