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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, 12 August 20
U.S. COAL PRODUCTION IN 2020 WILL DECREASE BY 29% FROM 2019 LEVELS TO 502 MMST - EIA
U.S. coal consumption, which dropped to its lowest point since April, totaled 95 MMst in the second quarter of 2020.
EIA expec ...
Tuesday, 11 August 20
BHP COAL ASSETS WORTH A BILLION LESS THAN JUST TWO YEARS AGO - IEEFA
Another global investor, the UK’s biggest public pension fund NEST, has withdrawn funds from BHP this week because the company is profiting & ...
Monday, 10 August 20
COAL IMPORT DROPS 43% IN JULY OWING TO HIGH STOCKPILE AT PITHEADS, PLANTS - PTI
“The market participants seem to have adopted a wait and watch approach and are currently looking for a direction. We do not expect to see an ...
Saturday, 08 August 20
GLOBAL COAL POWER PUZZLE - BALTIC EXCHANGE
Global Energy Monitor’s latest Global Coal Plant Tracker has put another nail in the coffin for the coal-carrying fleet with its finding that ...
Friday, 07 August 20
PEABODY'S $1.42 BILLION WRITE-DOWN CONCEDES COAL MINES HAVE LITTLE VALUE AND DIM FUTURE - IEEFA
Trouble at biggest mine in Powder River Basin speaks volumes about state of industry
Peabody Energy, the world’s largest priva ...
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- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- PTC India Limited - India
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- MS Steel International - UAE
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- White Energy Company Limited
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
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