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Monday, 31 August 20
DEFECTIVE PASSAGE PLANNING: UNSEAWORTHINESS OR A NAVIGATIONAL DECISION? THE CMA CGM LIBRA QUESTION SAILS ON TO THE UK SUPREME COURT - GARD
 KNOWLEDGE TO ELEVATE
The UK Supreme Court has granted leave to appeal the recent decision in Alize 1954 v Allianz Elementar Versicherungs AG (The “CMA CGM LIBRA”). While the decision involved General Average, we discuss the ramifications of the finding of unseaworthiness as it applies to the allocation of risk and liabilities in the wider context of the marine transport of goods.
International law aims to apportion risk in the transport of goods between the ship interests and cargo interests. Simply put, shipowners are responsible for cargo claims caused by unseaworthiness of the ship but are exempt from liability for cargo claims caused by certain risks, including navigational errors. The decision in Alize 1954 v Allianz Elementar Versicherungs AG (The “CMA CGM LIBRA”) [2020] EWCA Civ 293 shifts the established boundary between what is considered “seaworthiness” and “navigation” resulting in shipowners bearing a greater portion of the risk of the adventure. While the CMA CGM LIBRA case involved General Average, it comes as no surprise that decision led to an increase in claims by cargo interests alleging unseaworthiness on the basis of navigational decisions. The vessel owners recently obtained permission to appeal the decision to the UK Supreme Court and the International Group of P&I Clubs supports the vessel owners’ position.
Background to the case
On 17 May 2011, M/V “CMA CGM LIBRA”, a 6,000 TEU container ship, grounded while leaving the port of Xiamen, China. The ship’s charts had failed to record a warning derived from a Notice to Mariners that depths shown on the chart outside the fairway were unreliable and waters were shallower than recorded on the chart. The grounding occurred when the master sailed the vessel outside of the fairway, expecting the waters to be deeper than they actually were. The owners claimed general average contributions from the cargo interests.
The first instance judgment
In Teare J’s first instance decision dated 8 March 2019, he held that the passage plan and working charts were defective due to the failure to record the warning required by the Notice to Mariners, and these defects rendered the vessel unseaworthy at the commencement of the voyage. The owners’ claims were therefore dismissed.
The first instance decision gave rise to significant controversy in maritime law circles. Some commentators held the view that the decision confused issues of unseaworthiness with issues of navigation. They argued that the preparation of passage plans is a matter of navigation, the neglect of which would entitle a carrier to defences under Article IV Rule 2(a) of the Hague or Hague-Visby Rules. By considering passage planning as falling within the orbit of seaworthiness rather than navigation, the court is disrupting the well-established division of risk between the ship and cargo. It has also been commented that applying a strictly temporal approach, i.e. that all acts or omissions prior to the commencement of the voyage relate to seaworthiness may have wider implication to re-distributing risk between the ship and cargo than the question of passage planning.
Other commentators saw the decision as a correct application of principles concerning a carrier’s duties in respect of seaworthiness, based on the traditional definition of seaworthiness laid down in McFadden v Blue Star Line (1905): “Would a prudent owner have required that [the relevant defect] should be made good before sending his ship to sea, had he known of it? If he would, the ship was not seaworthy.” On this view, given that no prudent shipowner would knowingly send his vessel to sea with a defective passage plan and defective charts that had not been properly updated, these commentators argued that it therefore follows that the vessel was not seaworthy at the commencement of the voyage.
The Court of Appeal decision
The first instance judgment was appealed, and for a time, it seemed that the controversy had been resolved following the handing down of the Court of Appeal’s judgment on 4 March 2020. In a unanimous decision by a 3-member panel of experienced shipping judges, the Court of Appeal upheld the first instance judgment. The Court confirmed that errors in navigation or management can render a vessel unseaworthy if they occur prior to the commencement of the voyage. The Court rejected the vessel owners’ argument that the passage plan and working chart were not “attributes of the ship”, but records of navigational decisions taken by the crew.
The Court also found that once the owners assumed responsibility for the cargo as the carrier, all acts of the master and crew in preparing the vessel for the voyage (even if they are acts of navigation performed before or at the commencement of the voyage) are performed qua carrier and not qua navigator. Thus, the owners are responsible for all such acts, and the crew’s failure to exercise due diligence to make the vessel seaworthy would be imputed to the owners.
Leave to appeal to the Supreme Court
In late July 2020, the owners obtained permission to appeal the Court of Appeal’s decision to the UK Supreme Court. The owners’ position remains that the crew’s decision as to what to mark on the chart was a navigational decision rather than an “attribute of the ship” and was therefore not an issue of seaworthiness. It is anticipated that the appeal will take place in late 2021.
Concluding comments
Given the importance of this case regarding the allocation of risk between ship and cargo in a maritime adventure, the International Group of P&I Clubs welcome the UK Supreme Court’s decision to hear the case, and has backed the application made seeking leave to appeal to the Supreme court. Gard will continue to provide updates on developments in this case as they unfold.
Source: Gard
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Tuesday, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
Monday, 26 October 20
'LONG ASCENT' TO RECOVERY OF GLOBAL GROWTH - BALTIC EXCHANGE
The global economy has so far avoided a “financial catastrophe” but growth projections from the International Monetary Fund’s lat ...
Friday, 23 October 20
SHIPPING LOANS AND COLLATERAL DAMAGE - VICTOR ONYEGBADO, AKABOGU & ASSOCIATES
KNOWLEDGE TO ELEVATE
Shipping finance transactions are characterised by peculiar risk factors principally on account of the shipping asset&rsq ...
Friday, 23 October 20
WHAT WILL THE 2020 ELECTIONS MEAN FOR US ENERGY? - WOOD MACKENZIE
The 2020 elections present American voters with a choice between two radically different visions for the future of energy. President Donald Trump r ...
Wednesday, 21 October 20
BRAZIL EXPORTED 238.7 MLN TONNES OF IRON ORE IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
Brazil’s iron ore exports have been gradually but steadily recovering following a disastrous winter period of 2019/2020. In the first 9 month ...
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- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
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- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
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- Marubeni Corporation - India
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- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
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- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
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- Australian Commodity Traders Exchange
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- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
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- Power Finance Corporation Ltd., India
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- The University of Queensland
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- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
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- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
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- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
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- Sakthi Sugars Limited - India
- Australian Coal Association
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
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- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
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- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
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