Alize 1954 and CMA CGM SA v Allianz Elementar Versicherungs AB - The CMA CGM Libra

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DMC/SandT/20/09

England

Alize 1954 and CMA CGM SA v Allianz Elementar Vericherungs AG and Others (The “CMA CGM Libra”)

English Court of Appeal: Flaux, Haddon-Cave and Males LLJ: [2020] EWCA Civ 293: 4 March 2020

Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWCA/Civ/2020/293.html

Timothy Hill QC and Alex Carless (instructed by Reed Smith LLP) for Alize and CMA CGM (Owners/Appellants)

John Russell QC and Benjamin Coffer (instructed by Clyde & Co LLP) for Allianz and Others (Cargo Interests/Respondents)

CLAIM FOR CONTRIBUTION IN GENERAL AVERAGE: NEGLIGENT VOYAGE PLANNING BY THE VESSEL’S OFFICERS CAUSED GROUNDING OF VESSEL LEADING TO EXPENDITURE IN THE NATURE OF GENERAL AVERAGE TO REFLOAT THE VESSEL: WHETHER CARGO INTERESTS ENTITLED TO DEFEND THE CLAIM ON THE BASIS THAT OWNERS HAD FAILED TO EXERCISE DUE DILIGENCE TO MAKE THE VESSEL SEAWORTHY BEFORE AND AT THE BEGINNING OF THE VOYAGE: ARTICLE III, RULES 1 AND 2 AND ARTICLE IV, RULE 2(A) OF THE HAGUE/HAGUE-VISBY RULES

Summary

The Court of Appeal, in dismissing Owners’ appeal, held that:

(1) Passage planning (which includes making appropriate marks of dangers on charts) is an aspect of seaworthiness that arose before and at the beginning of the voyage [under Article III, rule 1 of the Hague/Hague-Visby Rules - see Fn.1], such that;

(2) Where Owners had not discharged their non-delegable obligation to exercise due diligence before and at the beginning of the voyage in relation to passage planning (including marking dangers on charts), as was the case here;

(3) Owners were not entitled to rely on the defence of “error of navigation” [under Article IV, rule 2(a)- see Fn.2], to succeed in their claim for a contribution in general average against Cargo Interests, where the failure to mark dangers on the chart was the operative cause of the grounding after the voyage from Xiamen to Hong Kong had commenced.

Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor of England & Wales, LMAA Supporting Member and International Contributor to DMC’s Case Notes

Background

The vessel, a large container ship of some 6,000 TEU, that was mostly full of cargo at the time of the incident, ran aground while leaving the port of Xiamen in the People’s Republic of China, where she had loaded cargo. The next port of call was scheduled to be Hong Kong. The passage plan to the next port had been prepared by the second officer.

The passage plan was contained in two documents. The first was a passage plan document provided to the vessel by Owners in which the plan was to be recorded. The second was the working chart. The chart did not include a reminder note about or markings for “no go” areas alongside the fairway, where the depths recorded on the chart were known to be inaccurate.

The Master made a decision to depart from the fairway along the departure route which led to the vessel grounding. The Admiralty Judge, based on the expert evidence, decided that the departure from the fairway was negligent, in view of the Notice to Mariners that warned of the innacurate chart depths.

This alone was insufficient for the defence of Cargo Interests to succeed, as there had to be in addition a failure by Owners to exercise due diligence before and at the beginning of the voyage for that defence to apply. The Admiralty Judge took the view that the burden of proof was on Owners to show that they had exercised due diligence before and at the beginning of the voyage to make the vessel seaworthy.

Based on IMO passage planning guidance, which stated that such plans should include “all areas of danger”, the Admiralty Judge concluded that the update placed on the working chart was inadequate, because this did not remind the mariner of the content of the Notice to Mariners, which indicated that depths outside the buoyed fairway were unreliable.

The Admiralty Judge concluded, on the expert evidence, that both prudence and necessity dictated that the working chart should have been marked with a note, to the effect that “depths less than charted exist outside the fairway”, to give the mariner a clear warning of the danger, as the chart was the primary document to which the navigating officer would refer when making navigational decisions when departing Xiamen.

In the light of the conventional and non-delegable test of seaworthiness, namely being to ask whether a prudent owner, if he had known of the relevant defect, would have required it to be made good before sending the ship to sea, the Admiralty Judge concluded that it was inconceivable that a prudent owner would not have required the defect to have been made good before departure. Accordingly, the Admiralty Judge found against Owners, dismissing their claim against Cargo Interests for contribution in general average, as the failure to exercise due diligence was the effective cause of the grounding.

As a result, Owners appealed to the Court of Appeal in relation to the scope of the obligation on a shipowner to exercise due diligence to make the vessel seaworthy before and at the beginning of the voyage, under Article III, rule 1 of the Hague/Hague-Visby Rules, on the basis that production of a defective passage plan was an “error of navigation”, to which a defence in Owners’ favour arose under Article IV, Rule 2(a), and that it did not matter that the error occurred prior to the commencement of the voyage.

Judgment

Flaux LJ (with whom Haddon-Cave and Males LJJ agreed, and gave short judgments of their own in support) gave the leading opinion of the Court of Appeal, which dismissed Owners’ appeal for the following key reasons:

The Admiralty Judge’s factual findings made this a straightforward case. The Notice to Mariners was a stark warning that depths outside the fairways at Xiamen were unreliable, which made it necessary as a matter of prudent passage planning to mark the warning on the chart, as the primary document on which the navigator would rely, but this was not done. Applying the traditional test, the Admiralty Judge held that, as a result of this failure, the vessel was unseaworthy at the commencement of the voyage, and a prudent owner would not have let the vessel depart from Xiamen with that defect in the passage plan. Failure to mark the warning on the chart was the cause of the grounding, as - without that failure - the Master would not have attempted the manoeuvre that he did and would have remained in the fairway.

Whether viewed as a defective chart or defective passage plan, either way, at the commencement of the voyage, the failure to mark the warning on the chart meant that it was not safe for the vessel to proceed to sea. The conclusion that the vessel was unseaworthy due to that defect appears to have been novel, but was no more than the application of well-established principles. The non-delegable obligation on shipowners to exercise due diligence was well established law. Therefore, Owners were liable for a failure to exercise due diligence by whomsoever the work to make the vessel seaworthy might have been done, including the vessel’s personnel. As such, an error by the Master and officers in planning the passage was not outside the “orbit of responsibility” of Owners.

The signatories to the Hague Rules in 1924 agreed to divide the allocation of risk for maritime cargo adventures into two separate regimes by drawing a clear temporal line. The first regime imposed a non-delegable obligation on carriers to exercise due diligence “before and at the beginning of the voyage” to make the vessel seaworthy and properly manned, equipped and supplied for the voyage, under Article III, rule 1 of the Hague/Hague-Visby Rules. The second regime excused carriers from liability for loss or damage caused by errors of crew or servants “in the navigation or the management of the ship” thereafter, i.e. during the voyage, under Article IV, rule 2 of the Hague/Hague-Visby Rules.

Accordingly, in seeking to elide these two separate regimes, Owners’ position was wrong in principle, and the appeal was to be dismissed on that basis.

Comment

The judgment, although coming as somewhat of a surprise to some shipowners in the industry, does represent a conventional application of the Hague/Hague-Visby Rules to relatively novel facts, where the error in question was adjudged to be the effective or dominant cause of the grounding incident.

The chances of a repetition may possibly be somewhat less likely in future, as this case concerned a paper-based passage plan, prior to the mandatory use of the far more automated electronic passage planning that is done nowadays on ECDIS (“Electronic Chart & Display Information System”).

However, while ECDIS has many advantages, as with all technological solutions, there is always in practice a very real potential for user error and for defects or limitations in the software or hardware. As such, application of the principles of this judgment in the ECDIS context could be expected in the future.


Fn.1: Article III rule 1 of the Hague/Hague-Visby Rules reads:

"Article III

Responsibilities and Liabilities

1. The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to

(a) make the ship seaworthy;

(b) properly man, equip and supply the ship;

(c) make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation."


Fn.2: Article IV, rule 2 of the Hague/Hague-Visby Rules reads in relevant part as follows:

"Article IV

Rights and Immunities

2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from

(a) act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship;"