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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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Wednesday, 14 October 20
CHINA COKING COAL FUTURES RALLY ON REPORTED BAN ON AUSTRALIA CARGOES - REUTERS
Dalian coking coal futures rallied for a sixth straight session on Tuesday after reports surfaced that China had stopped buying coal from Australia ...
Wednesday, 14 October 20
MARKET INSIGHT - INTERMODAL
The tanker market has experienced severe freight rate and asset value declines over the past 5 months. A potential market upturn may arise in the c ...
Friday, 09 October 20
INDIA'S COAL IMPORTS IMPROVE SOMEWHAT, BUT RECOVERY IS UNEVEN - REUTERS
India’s coal imports, depressed by the impact of coronavirus this year, regained ground in September, but in an uneven uptick – shipmen ...
Thursday, 08 October 20
CHINA'S COAL IMPORTS FROM INDONESIA DECLINED 16.4% Y-O-Y, TO 80.2 MLN TONNES IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
China's coal imports boomed in 2019, surprising many who had expected the government would clamp down strictly on shipments.
...
Thursday, 08 October 20
GLIMMER OF LIGHT FOR COAL, BUT SHORT TERM - FNARENA
Is coal on the rebound? Demand appears stronger and supply reductions have underpinned a tightening market. Certainly, the Newcastle thermal coal p ...
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- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
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- Kobexindo Tractors - Indoneisa
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- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- PTC India Limited - India
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- The University of Queensland
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
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