Marine Brief: latest decisions May 2019

In this briefing we consider some recent UK decisions addressing issues including: the construction of time charter clauses following capture by pirates; liability under Hague Visby for fire started deliberately; and defective passage planning and seaworthiness.

Contract construction in time charter disputes – vessel detained by pirates

Eleni Shipping Ltd v Transgrain Shipping BC (The Eleni P) [10.04.19]

The vessel, ELENI P, time-chartered on an amended NYPE 1946 form to carry iron ore from Ukraine to China, was routed via the Suez Canal and the Gulf of Aden. Following transit of the canal on her laden voyage, she sailed through the Gulf of Aden without incident and into the Arabian Sea where she was captured by pirates. Released some seven months later, she proceeded to China to discharge her cargo. Owners claimed over US$5.6 million from charterers, the bulk of which was for time hire from the vessel’s seizure until she was again equidistant from her destination to her point of capture. The Tribunal rejected Owners’ claim for hire for this period on the grounds that it was off-hire due to two additional clauses, Clause 49 and 101. Owners appealed.

The court considered the construction of the two special clauses and held that clause 49 did not protect the charterers but that Clause 101 (relating to transiting the Gulf of Aden) provided that the capture was an off-hire event. The judgment provides welcome discussion of the well-known principles of contract construction and their application with the particular nuances of time charters, which give rise to specific considerations on the allocation of risk.

Contact: Michael Biltoo

Related item: Contract construction in time charter disputes – vessel detained by pirates

Liability for damage caused by fire caused deliberately or barratrously

Glencore Energy UK Ltd v Freeport Holdings Ltd (The Lady M) [14.03.19]

The vessel had been carrying cargo from Russia to the United States when the chief engineer - who may or may not have been suffering from stress or an undiagnosed mental illness at the time - deliberately started a fire in the control room. The vessel was towed to port by salvors, general average was declared and cargo owners agreed to pay the salvors US$3.8 million which they then sought to recover from owners. The court was asked to consider (1) whether the conduct of the chief engineer constituted barratry, and (2) if so, whether owners were precluded from relying upon the exemptions from liability contained in Hague Visby Rules art.IV(2)(b).

On the first issue, the court considered further facts were needed as to the chief engineer’s state of mind to determine whether his conduct constituted barratry.

On the second, the court concluded that the words in art.IV(2)(b) had a natural and ordinary meaning and that there was no proper basis in law for implying the words ‘or the fault or neglect of the crew’ into the rule. Furthermore, it is common ground that an act of barratry occurs without the actual fault or privity of the carrier. The art.IV(2)(b) rule is therefore capable of exempting owners from liability where the fire is caused deliberately or barratrously, subject only to a causative breach of art.III(1) or the actual fault or privity of owners.

Contact: Michael Biltoo

Scope of seaworthiness and passage planning considered

Alize 1954 v Allianz Elementar Versicherungs AG (The CMA CGM LIBRA) [08.03.19]

The vessel, a large container ship, ran aground on a shoal in an area where the charted depths were over 30 metres. The shoal was not marked on the paper admiralty charts available at the time but recent Notices to Mariners had warned that depths less than those chartered existed in the approaches to the port. The vessel’s passage plan did not contain a clearly marked warning of the danger created by the presence of depths less than those charted. General average was declared and 92% of cargo interests paid their contribution. However, 8% refused submitting that the unsafe and negligently prepared passage plan rendered the vessel unseaworthy and was causative of the casualty.

Owners submitted that the Master’s navigational decisions were reasonable and that passage planning was part of navigation and not in itself an aspect of seaworthiness. The 8% argued that the vessel was unseaworthy before and at the beginning of the voyage due to its defective passage plan.

The court agreed with the 8% and concluded that seaworthiness extended to having the appropriate documentation on board, including a passage plan which is required at the beginning of the voyage. Owners’ duty to exercise due diligence to ensure the vessel’s seaworthiness was non-delegable and it was irrelevant that they had relied on the Master and Second Officer to prepare the passage plan.

Contact: Michael Biltoo

This article was co-authored by Ingrid Hu, Trainee Solicitor, London.

Read other items in Marine Brief - May 2019