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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, 26 August 20
ASIAN COAL PRICES LIKELY TO REMAIN DEPRESSED SAY TRADERS, ANALYSTS - REUTERS
Asian coal prices, which have fallen around 25% this year as power demand slumped due to the coronavirus outbreak, are unlikely to move higher befo ...
Wednesday, 26 August 20
WORLD COAL EXPORTS: INDONESIAN THERMAL COAL EXPORTS HAVE COME UNDER PRESSURE AS THERMAL COAL PRICES WEAKEN - REPORT
Indonesia’s exports to decline sharply from record highs
Indonesia is the world’s largest thermal coal exporter, sellin ...
Wednesday, 26 August 20
JAPAN'S COAL IMPORTS ARE BEING AFFECTED BY COMPETING INFLUENCES - REPORT
Japan is the world’s third largest thermal coal importer, importing an estimated 135 million tonnes of thermal coal in 2019. The country&rsqu ...
Wednesday, 26 August 20
PENDING SOUTH KOREA LEGISLATION COULD FORCE HALT TO COUNTRY’S COAL PLANT EXPORT DEALS - KOREA ECONOMIC DAILY
South Korea’s parliament looks set to pass new legislation to ban financing on foreign coal power projects, putting all overseas coal-fired p ...
Tuesday, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
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- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- VISA Power Limited - India
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Australian Coal Association
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
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