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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, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- PTC India Limited - India
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Bhatia International Limited - India
- VISA Power Limited - India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- ICICI Bank Limited - India
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- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Economic Council, Georgia
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
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