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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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Thursday, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
Wednesday, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
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- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- Planning Commission, India
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
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