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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, 20 August 20
MINER BHP CONFIRMS PLANS TO EXIT THERMAL COAL SECTOR - THE SYDNEY MORNING HERALD
The head of mining giant BHP has laid out plans for a reshaping of its global operations by seeking to quit thermal coal mining, offload some cokin ...
Thursday, 20 August 20
LONDON RETAINS ARBITER CROWN - BALTIC EXCHANGE | HFW
Fears that the UK’s decision to leave the European Union would dent the reputation of the nation’s capital as the leader in maritime ar ...
Wednesday, 19 August 20
U.S. COAL STOCKPILES STEADILY INCREASE AFTER REACHING LOWEST LEVEL IN A DECADE IN 2019 - EIA
After reaching their lowest level in more than a decade in March 2019, U.S. coal stockpiles steadily increased to 152 million tons in April 2020, r ...
Wednesday, 19 August 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.26 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.92 points Monday, down 0.26 percent week on week.
The index, released by Chi ...
Wednesday, 19 August 20
COAL INDIA TRADE UNIONS DEFER DAY-LONG STRIKE: PTI
The unions had decided to go on strike against the commercial mining and the proposed divestment or buyback of shares of Coal India Ltd (CIL).
...
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- Altura Mining Limited, Indonesia
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- Kohat Cement Company Ltd. - Pakistan
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- Ind-Barath Power Infra Limited - India
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- Wilmar Investment Holdings
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- Sarangani Energy Corporation, Philippines
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- Planning Commission, India
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- European Bulk Services B.V. - Netherlands
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- Posco Energy - South Korea
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- Metalloyd Limited - United Kingdom
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- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
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- Merrill Lynch Commodities Europe
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- Mintek Dendrill Indonesia
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- Sindya Power Generating Company Private Ltd
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- Vedanta Resources Plc - India
- MS Steel International - UAE
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- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Australian Coal Association
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- PTC India Limited - India
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- Kapuas Tunggal Persada - Indonesia
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- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
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- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
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- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
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- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
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- The Treasury - Australian Government
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- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
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- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- White Energy Company Limited
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
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- Videocon Industries ltd - India
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- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
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