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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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Wednesday, 21 October 20
INDIA: THE COMMERCIALISATION OF COAL BLOCKS WILL BENEFIT THE ECONOMY - HINDU BUSINESS LINE
As the government of India receives 76 bids for 23 coal mines against the 38 up on auction, what does this commercialisation of coal block allocati ...
Wednesday, 21 October 20
MARKET INSIGHT - INTERMODAL
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Tuesday, 20 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.82 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.49 points Monday, up 0.82 percent week on week.
The index, released by China ...
Tuesday, 20 October 20
BIMCO 'SHIPLEASE' TERM SHEET - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
The ever-growing importance of sale and leaseback transactions as an alternative to financing ships by way of loan, makes ...
Friday, 16 October 20
KOMIPO ON BEHALF OF K GENCO'S INVITED BIDS FOR TOTAL 715,000 MT MIN. 5,700 NAR COAL FOR DECEMBER
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 715,000& ...
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- Posco Energy - South Korea
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- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
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- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
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- Wood Mackenzie - Singapore
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- Ministry of Finance - Indonesia
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- Renaissance Capital - South Africa
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- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
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- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Planning Commission, India
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- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
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- Indian Oil Corporation Limited
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- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
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- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
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- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
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- Jaiprakash Power Ventures ltd
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- Coal and Oil Company - UAE
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- PTC India Limited - India
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
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- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
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- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
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- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
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- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
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- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
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