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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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Thursday, 10 September 20
U.S. COAL PRODUCTION IN 2020 TO BE 511 MMST, 28 PER CENT LOWER THAN IN 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 511 million short tons (MMst), 194 MMst (28%) lower than in 2019. Mitigation efforts related t ...
Thursday, 10 September 20
DRY BULK SHIPPING: CHINA'S DEMAND KEEPING THE DRY BULK MARKET GOING - PETER SAND | BIMCO
Overview
An impressive recovery in Chinese dry bulk imports has protected the industry from the effects of falling demand in the rest of the wo ...
Thursday, 10 September 20
TANKER SHIPPING: FREIGHT RATES BACK AT LOSS-MAKING LEVELS AFTER 12 VERY PROFITABLE MONTHS - BIMCO
Overview
A stunningly strong 12 months for the tanker shipping industry is now being replaced by lower freight rates, as lower oil product ...
Thursday, 10 September 20
INDIA'S COAL IMPORTS STUMBLE IN AUGUST, RAISING RISK OF SLOW RECOVERY - REFINITIV | BANCHERO COSTA
After posting a mild recovery in July, India's coal imports have stumbled in August as the South Asian nation battles to restart it ...
Thursday, 10 September 20
THE FIRST 8 MONTHS OF 2020, INDONESIA EXPORTED 217.4 MLN TONNES OF COAL BASED ON REFINITIV - BANCHERO COSTA
The coal market has been hit by a weaker global economy as a result of COVID-19 pandemic and falling industrial electricity demand ...
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- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
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- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
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- Meralco Power Generation, Philippines
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- PowerSource Philippines DevCo
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- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
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- Mercator Lines Limited - India
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- MS Steel International - UAE
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- Africa Commodities Group - South Africa
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- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
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- The University of Queensland
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- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
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- Bukit Makmur.PT - Indonesia
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- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
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- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
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- Eastern Energy - Thailand
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- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
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- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
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- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
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- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
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- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
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- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
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- Intertek Mineral Services - Indonesia
- Australian Coal Association
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- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- ASAPP Information Group - India
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- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
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- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
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- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
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- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
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