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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, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
Monday, 26 October 20
'LONG ASCENT' TO RECOVERY OF GLOBAL GROWTH - BALTIC EXCHANGE
The global economy has so far avoided a “financial catastrophe” but growth projections from the International Monetary Fund’s lat ...
Friday, 23 October 20
SHIPPING LOANS AND COLLATERAL DAMAGE - VICTOR ONYEGBADO, AKABOGU & ASSOCIATES
KNOWLEDGE TO ELEVATE
Shipping finance transactions are characterised by peculiar risk factors principally on account of the shipping asset&rsq ...
Friday, 23 October 20
WHAT WILL THE 2020 ELECTIONS MEAN FOR US ENERGY? - WOOD MACKENZIE
The 2020 elections present American voters with a choice between two radically different visions for the future of energy. President Donald Trump r ...
Wednesday, 21 October 20
BRAZIL EXPORTED 238.7 MLN TONNES OF IRON ORE IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
Brazil’s iron ore exports have been gradually but steadily recovering following a disastrous winter period of 2019/2020. In the first 9 month ...
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- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
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- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
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- The Treasury - Australian Government
- Planning Commission, India
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- GVK Power & Infra Limited - India
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- Alfred C Toepfer International GmbH - Germany
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- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
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- Indonesian Coal Mining Association
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- Economic Council, Georgia
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- Dalmia Cement Bharat India
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- Goldman Sachs - Singapore
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- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
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- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- VISA Power Limited - India
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- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- PTC India Limited - India
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
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- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
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- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Australian Coal Association
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
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- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
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