Christian Dwyer Global Head of Admiralty
A question of timing: errors, navigational or otherwise, made before or at beginning of voyage capable of rendering vessel unseaworthy
Alize 1954 and CMA CGM SA v. Allianz Elementar Versicherungs AG & Others (CMA CGM Libra)  EWCA Civ 293 In a unanimous judgment, a Court of Appeal panel of experienced shipping Lords Justice has upheld the decision of the Admiralty Judge, Teare J, in the CMA CGM Libra that a defective passage plan rendered the vessel unseaworthy and that the Owners’ claim for contribution in general average failed.
The background facts
The containership, CMA CGM Libra, grounded in May 2011 whilst leaving Xiamen, China, laden with cargo and bound for Hong Kong. Shortly after dropping the pilot, the Master navigated outside the dredged and buoyed fairway and the ship ran aground in water where the Admiralty chart indicated ample depth.
Following the grounding, general average (GA) was declared and her owners, CMA CGM, sought contributions from cargo interests towards a GA claim of some US$ 13 million (principally the salvage expenditure of approximately US$ 9.5m, which was funded by the Owners in the first instance).
Approximately 92% of cargo interests contributed in GA, whilst some 8% of cargo interests refused to pay. The Owners sued and the cargo interests defended the claim by arguing that the ship was unseaworthy, that the Owners had not exercised due diligence before and at the beginning of the voyage to make the ship seaworthy, and that the unseaworthiness resulted in the grounding. This, they said, was a breach of the Owners’ obligation under Article III, Rule 1 of the Hague/Hague-Visby Rules, which were incorporated in the contracts of carriage, and amounted to actionable fault within the meaning of the York-Antwerp Rules, such that no GA was due.
The Admiralty Court decision
The Court found in favour of the cargo interests. The Admiralty Judge, Teare J, held that the navigation of the ship was negligent and that the ship’s passage plan was defective. The passage plan consisted of both the Owners’ passage plan form and the working chart. On the chart was marked a course line which was within the fairway at all times. The chart did not specifically refer the navigator to the terms of a Notice to Mariners, issued in 2010, which said that “numerous depths less than the charted exist within and in the approaches to Xiamen”. The navigator was, therefore, not warned of the grave dangers of straying outside the fairway.
Whether this constituted a breach of the contract of carriage and, therefore, defeated the Owners’ claim in GA depended on whether the Owners had breached their obligations under Article III, Rule 1 of the Hague Rules which require that “the carrier shall be bound before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy…”.
The Judge applied the well-established test of unseaworthiness from McFadden v. Blue Star Line , namely whether a prudent owner would have required the defect, had he known of it, to be made good before sending his ship to sea. The Judge noted the adoption by the IMO in 1999 of the Guidelines on Passage Planning, which require berth-to-berth passage planning, including indications on charts of “all areas of danger”. With this in mind, the Judge concluded that it was “inconceivable that the prudent owner would allow the vessel to depart from Xiamen with a passage plan which was defective in the manner which I have found”. The Judge added that if a vessel carries a chart which the officers have failed to update, or a passage plan that is defective because it lacks a required warning of ‘no go’ areas, then those defects are capable of rendering the vessel unseaworthy at the beginning of the voyage. The Judge rejected the Owners’ argument that passage planning is an element of navigation, not of seaworthiness, and noted that the Owners’ obligation under Article III, Rule 1 of the Hague Rules is not subject to the ‘negligent navigation exception’ in Article IV, Rule 2(a). In other words, if there is a causative breach of Article III, Rule 1, the fact that a cause of the casualty is also negligent navigation will not protect the carrier from liability.
Teare J acknowledged that the duty to make the ship seaworthy is not absolute; it is a duty to exercise due diligence, i.e. not to be negligent. As the duty is non-delegable, the owners remain liable for the negligence of any parties who carry out the duty on their behalf – here the Master and Second Officer - who could have prepared a proper passage plan with reasonable care and skill, but did not do so.
The Judge concluded on the evidence that the defective passage plan was causative of the grounding as, had there been an explicit warning on the chart about the charted depths being unreliable, the Master would not have strayed outside the buoyed fairway. Therefore, the breach caused the loss and there was actionable fault, such that the cargo interests were not liable in GA.
The Court of Appeal decision
All three members of the Court of Appeal panel wrote separate judgments and endorsed the approach taken by the Admiralty Judge; indeed, Flaux LJ referred to Teare J’s “meticulous and pellucid judgment”.
The Owners’ grounds of appeal were that:
- the Judge wrongly held that a one-off defective passage plan rendered the vessel unseaworthy for the purposes of Article III, Rule 1 and failed to distinguish between matters of navigation and aspects of unseaworthiness; and
- the Judge wrongly held that the actions of the Master and crew which were carried out qua navigator could be treated as attempted performance by the carrier of its duty qua carrier to exercise due diligence to make the vessel seaworthy.
In relation to the first ground, the Owners argued that passage planning was a record of a navigational decision and so could not render a vessel unseaworthy. They said that, for a vessel to be unseaworthy, the defect would have to affect an ‘attribute’ of the ship (albeit not necessarily a physical attribute). The Owners said that their obligation was to have on board everything necessary for the crew to undertake passage planning, but that the use the crew made of it went to navigation (for which the Owners were excused from liability for any negligence on the part of the crew).
However, the Court of Appeal accepted the cargo interests’ argument that the Article III, Rule 1 obligation is an overriding obligation, not subject to the exceptions to liability in Article IV, Rule 2, and that acts of negligent navigation before the commencement of the voyage can render the vessel unseaworthy. The Court made clear that the relevant enquiry is one of timing: when did the error occur? If the error occurred prior to or at the beginning of the voyage, that is capable of rendering the vessel unseaworthy; if the error occurred during the voyage, the Owners may be able to rely on a relevant exception.
Flaux LJ said that “it is well-established that acts of the master and crew which, if committed during the course of the voyage, would attract the exception, do not do so if committed before or at the commencement of the voyage, thereby rendering the vessel unseaworthy. In such cases the overriding obligation under Article III rule 1 comes into play.” Likewise, Haddon-Cave LJ referred to the temporal line of the beginning of the voyage, which reflected the risk allocation balance struck when the Hague Rules were devised.
The Owners’ suggested distinction between mechanical acts of the crew, which might render the vessel unseaworthy, and acts of the crew requiring judgment and seamanship, which would not render the vessel unseaworthy, was rejected. Similarly, the Court held that it does not matter whether the defect is a one-off incident, or a systemic failing; both are capable of constituting unseaworthiness. Still further, the Owners’ attempt to distinguish between charts that are defective because they have not been updated (which, it is settled law, can constitute unseaworthiness) and charts that have not been updated with necessary warnings, as part of passage planning, was debunked as “unprincipled and wholly artificial”. Ultimately, the Court did not need to decide whether a defect must affect an ‘attribute’ of the vessel because the Court agreed with the Judge that a defective chart and a defective passage plan are both ‘attributes’ of the vessel.
In relation to the second ground of appeal, the Court rejected the Owners’ suggested distinction between acts of the crew in their capacity as carrier (for which the Owners are responsible) and acts of the crew in their capacity as navigators (for which the Owners are not responsible). The Owners argued that navigation was outside their “orbit of responsibility” and so there was no failure to exercise due diligence to make the vessel seaworthy. The Court disagreed, with Flaux LJ stating that “Once the Owners assumed responsibility for the cargo as carriers, all the acts of the master and crew in preparing the vessel for the voyage are performed qua carrier, even if they are acts of navigation before and at the commencement of the voyage. The Owners are responsible for all such acts as a consequence of the non-delegable duty under Article III rule 1.”
The Court of Appeal remarked that the Judge’s findings were the natural result of applying established principles of law to the facts of the case, even if this was the first case before the English Court where a defective passage plan rendered the vessel unseaworthy. Males LJ said that “ultimately…the judge’s factual findings mean that this is a straightforward case”.
It is clear from this case that errors, navigational or otherwise, made before and at the beginning of the voyage are capable of rendering a vessel unseaworthy. Once the timing has been established, it is then a question of applying the McFadden test to determine whether the defect constitutes unseaworthiness. If it does, the Owners will rarely be able to demonstrate due diligence, given the non-delegable duty.
Causation will be a key battle ground and will depend on the evidence in a particular case. However, the defect does not have to be the sole cause, merely an effective cause. In this case, the Judge had found that the defective passage plan was an effective cause of the grounding and it was not for the appellate court to reopen that factual finding.
Shipowners should continue to ensure, and record, compliance with proper systems and procedures, including passage planning, before and at the beginning of the voyage, as well as recording compliance with systems and procedures during the voyage. Charts should, of course, be kept fully up to date.
We expect to see cargo interests demanding early disclosure of passage plans in all similar cases. It will be interesting to see, in a future case, how electronic charts and automatic updates, including Notices to Mariners, affect the position.
The owners’ Article III, Rule 1 obligations vis-à-vis specific cargo are determined by reference to the contractual voyage (as set out in the contract of carriage, usually the bill of lading), with the obligation to make the vessel seaworthy arising at the commencement of that contractual voyage. Parties should, therefore, check carefully the contractual voyage agreed in the bill of lading. Where, as in the container trade, a ship is calling at multiple ports in rotation and a defect in a passage plan results in a casualty on a particular leg of the rotation, the owners may only be liable in respect of cargo loaded at the port preceding the casualty (i.e. where causative unseaworthiness occurred). By way of example, if a vessel loads at and departs safely from Port A, then calls at Port B where, on departure, she grounds due to defective passage planning, the owners could argue that there is no causative unseaworthiness at the time of the commencement of the voyage from Port A and that any later defect occurred after the beginning of the contractual voyage, such that the owners have an exception. Whether or not this argument would succeed would depend on whether the owners are obliged (and whether it is possible) on departure from Port A to have prepared a berth-to-berth passage plan for Port A and Port B and any other intended port call, or if it is sufficient to have a passage plan from Port A to Port B and appropriate documents and systems in place for the drafting of passage plans for subsequent ports.
It appears that the Owners of the CMA CGM Libra did not take this point (against the 8% of cargo that alleged actionable fault) and cargo loaded at earlier ports in the rotation did not have to contribute in GA, when arguably there was no actionable fault by the Owners in respect of that cargo. On the other hand, the Owners recovered GA from 92% of cargo interests without a fight, at least some of which they were apparently not entitled to.
It remains to be seen whether the Owners will seek leave to appeal to the Supreme Court.
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