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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, 11 April 23
OIL RISES ON CHINA STIMULUS EXPECTATIONS, WEAKER DOLLAR - REUTERS
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Sunday, 09 April 23
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Thursday, 06 April 23
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Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
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- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Minerals Council of Australia
- MS Steel International - UAE
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
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- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- VISA Power Limited - India
- White Energy Company Limited
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- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
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- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
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- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
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- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
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- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
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