In its judgment in Alize 1954 v Allianz Elementar Versicherungs A G (the CGM LIBRA)[1], the UK Supreme Court has considered the obligation of a carrier under the Hague Rules to exercise due diligence to make a vessel seaworthy. The seaworthiness obligation is fundamental to all contract of carriage. This case concerned a contract that incorporated the terms of the Hague Rules but the relevant parts of the Hague Visby Rules are in identical terms. This conclusions of this judgment are thus of wide application as the terms of either Hague or Hague Visby Rules are incorporated in most contracts for the carriage of goods by sea.
This case concerned loss resulting from a grounding caused by a defective passage plan. The issues before the court were
(i) Seaworthiness. Did a defective passage plan render the vessel unseaworthy for the purposes of Article III Rule 1 of the Hague Rules?
(ii) Carrier’s due diligence. Did the failure of the master and his officers to exercise appropriate skill in preparing the passage plan constitute a want of due diligence on the part of the carrier to make the vessel seaworthy?
Passage planning obligation
In 1999 the International Maritime Organisation (“IMO”) adopted Guidelines for Voyage Planning. The guidelines identify four components of passage planning: appraisal, planning, execution and monitoring. The appraisal stage requires consideration of all available information including up to date charts and the ascertaining of all areas of danger and of those areas where it will be possible to navigate safely. The planning stage requires the making of a berth to berth passage plan on the basis of the appraisal and the marking of the intended route or track and identification of any areas of danger on the chart.
The court recognised that prudent passage planning would require due regard to these guidelines.
The factual background
On 18 May 2011 the vessel CGM LIBRA ran aground on a shoal whilst leaving the port of Xiamen, China. According to the passage plan the vessel was to have proceeded along the buoyed fairway. However the master took the decision to pass outside buoy 14.1 and leave the fairway resulting in the grounding.
The vessel had on board the latest chart and notices to mariners. However the latest applicable notice to mariners included the following warning:
“Numerous depths less than the charted exist within, and in the approaches to Xiamen Gang.”
This warning was not noted on the chart or included in the written passage plan. It was later found that had this warning been on the chart the master would have been unlikely to have navigated outside the fairway. The passage plan was thus defective and causative of the grounding.
The claim
The grounding led to the vessel being the subject of salvage. This in turn led to General Average being declared with the vessel owners seeking a contribution from cargo interests amounting to some US$13 million. Certain cargo interests resisted on the grounds that a ship owner is not entitled to recover general average contributions from the owners of the cargo where the loss or expenditure was caused by its “actionable fault” which includes any causative breach of the terms of the relevant contract of carriage. In the present case it was argued that the vessel owners were in breach by failing to exercise due diligence to make the vessel seaworthy by virtue of the defective passage plan.
Hague Rules
The contract of carriage was subject to the Hague Rules. Article III sets out the responsibilities and liabilities of the carrier:
“1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:
(a) Make the ship seaworthy.
(b) Properly man, equip and supply the ship…Subject to the provisions of article 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.”
Article IV sets out the rights and immunities of the carrier. In relation to the obligation of seaworthiness under article III rule 1, the relevant provision is article IV rule 1 which provides as follows:
“1. Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, … in accordance with the provisions of paragraph 1 of article III. Whenever loss or damage has resulted from unseaworthiness the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this article.”
In relation to the obligation properly and carefully to care for the goods under article III rule 2, the relevant provision is article IV rule 2 which provides as follows:
“2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship.”
Held
The court held as follows:
ISSUE 1 – DID THE DEFECTIVE PASSAGE PLAN RENDER THE VESSEL UNSEAWORTHY FOR THE PURPOSES OF ARTICLE III RULE 1 OF THE HAGUE RULES?
The court held that the defective passage plan did render the vessel unseaworthy for the purposes of Hague Rules Article III Rule 1.
Negligent navigation. The court accepted that the preparation of a passage plan was a matter of navigation and also accepted that the failure to note or mark the uncharted depths warning in the passage plan and on the working chart could be regarded as an “act, neglect, or default” in “the navigation … of the ship” within the article IV rule 2(a) exception.
Seaworthiness an overriding obligation. However it held that Article III, rule 1, is an overriding obligation[2] and thus rejected owner’s attempt to rely on the negligent navigation exception. Where loss or damage was caused by a breach of the carrier’s obligation to exercise due diligence to make the vessel seaworthy under article III rule 1, the article IV rule 2 exceptions could not be relied upon, including where the excepted matter was the cause of the unseaworthiness.
Attribute of the vessel. The concept of unseaworthiness is not subject to an attribute threshold requiring there to be an attribute of the vessel which threatens the safety of the vessel or her cargo. In the course of the judgment the court referred to earlier authorities confirming that seaworthiness is not limited to physical defects in the vessel and her equipment. Seaworthiness extends, for example, to documentary matters such as having on board adequate and up-to-date charts[3] and the mental abilities of the crew and whether they have a “disabling want of skill” or a “disabling want of knowledge”[4].
The prudent owner test. In considering whether a defect rendered a vessel unseaworthy the court also referred with approval to the long established “prudent owner” test stating:
“Save for exceptional cases at the boundaries of seaworthiness, the well-established prudent owner test, namely whether a prudent owner would have required the relevant defect to be made good before sending the vessel to sea had he known of it, is an appropriate test of seaworthiness, well suited to adapt to differing and changing standards”.
Remediable defects. The fact that a defect is remediable may mean that a vessel is not unseaworthy. This is likely to depend on whether it would reasonably be expected to be put right any defect before any danger to vessel or cargo arose. The court rejected any distinction between providing the vessel with the materials and equipment required to make a vessel seaworthy and the use made of those materials by the crew. It stated that if it is necessary to make use of those materials in order to render the vessel seaworthy for the voyage then the carrier will be responsible for any negligent failure so to do.
Passage plan. The carrier’s obligation requires the carrier to ensure that a proper passage plan is prepared; not merely to provide a proper system to enable the crew to carry out the required planning exercise. The court stated:
“Given the “essential importance” of passage planning for the “safety … of navigation”, applying the prudent owner test, a vessel is likely to be unseaworthy if she begins her voyage without a passage plan or if she does so with a defective passage plan which endangers the safety of the vessel”.
ISSUE 2 – DID THE FAILURE OF THE MASTER AND SECOND OFFICER TO EXERCISE REASONABLE SKILL AND CARE WHEN PREPARING THE PASSAGE PLAN CONSITUTE WANT OF DUE DILIGENCE ON THE PART OF THE CARRIER FOR THE PURPOSES OF ARTICLE III RULE 2 OF THE HAGUE RULES?
The court confirmed that the carrier has a non delegable obligation to exercise due diligence to make the vessel seaworthy.
The court rejected the argument that the crew failure to exercise due skill in navigation matters (here to prepare the passage plan) was not a breach of the carrier’s due diligence obligations on the basis that it was outside the orbit of the carrier.
It was confirmed that the carrier is responsible for any failure to exercise due diligence by those to whom he has entrusted the task of making the vessel seaworthy. It is the carrier’s contractual responsibility to ensure that due diligence is exercised in making the vessel seaworthy and he cannot contract out of that responsibility by delegation[5]. The court stated:
“The obligation on the carrier to exercise due diligence to make the vessel seaworthy requires that due diligence be exercised in the work of making the vessel seaworthy, regardless of who is engaged to carry out that task”
and
“The carrier is liable for a failure to exercise due diligence by the master and deck officers of his vessel in the preparation of a passage plan for the vessel’s voyage. The fact that navigation is the responsibility of the master and involves the exercise by the master and deck officers of their specialist skill and judgment makes no difference”.
“The carrier’s seaworthiness obligation in relation to passage planning is not limited to providing a proper system for such planning”.
On the subject of passage planning the court suggested that errors made by the master or officers in the later execution or monitoring stages of passage planning (i.e. navigation during the voyage) might fall within the nautical fault exception under Article IV whereas if such errors were attributable to the carrier’s failure to have proper systems in place that might be considered a failure on the part of the carrier to exercise due diligence to make the vessel seaworthy and thus not within the Article IV exclusion.
Conclusion
This is an important decision with comment that may be relevant for future cases involving consideration of the Hague Rules .
[1] [2021] UKSC 51
[2] Following Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589
[3] Grand Champion Tankers Ltd v Norpipe A/S (The Marion) [1984] AC 563
[4] Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1 Lloyd’s Rep 719
[5] Following the House of Lords decision in Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd (The Muncaster Castle) [1961] AC 807
0 Comments