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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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Friday, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
Friday, 18 September 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
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- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- The University of Queensland
- Singapore Mercantile Exchange
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Economic Council, Georgia
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
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