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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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Monday, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
India, a lockdown coupled with government directives that fav ...
Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
Thermal coal spot prices have fallen sharply as the impact of COVID-19 drives a contraction in seaborne trade for only the second time this century ...
Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
Friday, 21 August 20
BHP COMMITS TO SELLING ITS THERMAL COALMINES WITHIN TWO YEARS - THE GUARDIAN
Move follows pressure from investors but company stops short of full exit from coalmining
BHP has announced it plans to sell off its ...
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- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
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- The Treasury - Australian Government
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- MS Steel International - UAE
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- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
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