View source for Alize 1954 and CMA CGM SA v Allianz Versicherungs AG and Ors - the CMA CGM Libra

DMC/SandT/21/17

'''England'''

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

'''United Kingdom Supreme Court: Lords Reed (President), Briggs, Hamblen, Leggatt and Lady Arden: [2021] UKSC 51: 10 November 2021'''

Judgment Available on BAILII @ https://www.bailii.org/uk/cases/UKSC/2021/51.html 

Timothy Hill QC, Alex Carless and Michal Hain (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)

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

'''Summary'''

The United Kingdom Supreme Court, in dismissing Owners’ appeal, held that the Admiralty Judge directed himself properly in law and the findings he made amply supported the conclusion he reached that the defective passage plan involved a want of due diligence to make the vessel seaworthy by Owners before and at the beginning of the voyage under Article III, Rule 1 (footnote 1) to which Article IV, Rule 2(a) (footnote 2) was no defence.

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

'''Background'''

The fuller facts and background to the case can be found in the background section of the Court of Appeal case note, which can be found here [[https://www.onlinedmc.co.uk/index.php?title=Alize_1954_and_CMA_CGM_SA_v_Allianz_Elementar_Versicherungs_AB_-_The_CMA_CGM_Libra]].

'''Judgment'''

Lord Hamblen (with whom the other Lords and Lady Arden agreed) gave the sole speech of the United Kingdom Supreme Court, which dismissed Owners’ appeal for the following key reasons:

Issue 1: Did the defective passage plan render the vessel unseaworthy for the purposes of Article III, Rule 1 of the Hague Rules?

Owners had sought to argue that there was a category-based distinction between the condition of seaworthiness of the vessel herself and the navigation of the vessel by the master and crew, where the former related to Owners’ due diligence obligation to make the vessel seaworthy under Article III, Rule 1 and the latter related to the ‘nautical fault’ exception under Article IV, rule 2(a).

However, the Court considered this was incorrect.  The two are not mutually exclusive as both negligent navigation or management of the vessel may cause unseaworthiness, negligence is likely to amount to a failure to exercise due diligence, unseaworthiness of the vessel can result from either, and if that is the case, before and at the beginning of the voyage, Owners will be liable for any resulting loss and damage.

Owners had also sought to argue that there was an “attribute threshold” such that unseaworthiness requires there to be a physical attribute of the vessel herself that threatens the safety of the vessel or her cargo.

However, the Court considered that seaworthiness is not limited to physical defects in the vessel and her equipment.  Seaworthiness also extends to documentary matters, knowledge and skill of the crew, the vessel’s systems and, sometimes, to the vessel’s cargo or trading history.  Accordingly, it is not correct or helpful to regard unseaworthiness as subject to such a threshold.

Further, save for exceptional cases, the prudent shipowner test, that is, whether a prudent shipowner would have required the relevant defect to be made good before the vessel was sent to sea had he known of it, is an appropriate test of seaworthiness.  That test was well suited to adapt to differing and changing standards.  It confirms that a defect that is remediable may mean the vessel is not unseaworthy; this is likely to depend on whether or not the defect in question would reasonably have been expected to be put right before any danger to the vessel or the cargo arose.

On that basis, on the proper interpretation of the Hague Rules, the ‘nautical fault’ exception cannot be relied on as a defence to a causative breach of Owners’ obligation to exercise due diligence to make the vessel seaworthy before and at the beginning of the voyage when, in applying the prudent shipowner test, a vessel is likely to be unseaworthy if she begins her voyage with a defective passage plan that endangers the safety of the vessel.

Issue 2: Did the failure of the Master and second officer to exercise reasonable skill and care when preparing the passage plan constitute want of due diligence on the part of the carrier for the purposes of Article III, Rule 2 of the Hague Rules (footnote 3)?

In the alternative, Owners’ case was that the master and crew’s failure to navigate the vessel safely is not a lack of due diligence by Owners so long as they had equipped the vessel with all that was necessary, including a competent crew, for her to be safely navigated, such that what happened was outside Owners’ ‘orbit of responsibility’.

However, the Court considered that Owners’ obligation to exercise due diligence to make the vessel seaworthy before and at the beginning of the voyage requires that due diligence is exercised in the work of making the vessel seaworthy, regardless of who is engaged to carry out that task for Owners.

As such, Owners are liable for a failure to exercise due diligence by the master and deck officers in the preparation of a passage plan for the vessel’s voyage.  That navigation is the responsibility of the master and involved the exercise by him and deck officers of their specialist sill and judgment makes no difference.  The obligation is not simply limited to providing a proper system for passage planning.

On that basis, if the causative negligence consists of a passage planning error at the appraisal and planning stage, before and at the beginning of the voyage, and thereby renders the vessel unseaworthy, then Owners would be liable regardless of whether there were proper systems in place for passage planning and competent crew.

In light of the above, the Court concluded that the Admiralty Judge directed himself properly in law and the findings he made amply supported the conclusion he reached that the defective passage plan involved a want of due diligence to make the vessel seaworthy by Owners before and at the beginning of the voyage under Article III, Rule 1, to which Article IV, Rule 2(a) was no defence.

'''Comment'''

This judgment represents the final word in this jurisdiction on the relationship between Article III, Rule 1 and Article IV, Rule 2(a) of the Hague/Hague-Visby Rules, having resulted from a relatively novel factual scenario.

There is held by some a sense, as earlier evoked by the Volcafe Ltd v CSAV [2018] UKSC 61 judgment, that the United Kingdom Supreme Court is redrawing, rather than simply clarifying, the lines of the Hague/Hague-Visby Rules in a more pro charterer and cargo interest fashion.

That view is questionable given that the result here effectively adopted the long-standing position on the relationship between Article III, Rule 1 and Article IV, Rule 2(a)-(b), from the Privy Council judgment in Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589, where there is a causative breach of Article III, Rule 1.

The result confirms a need by owners to make doubly sure that the masters and deck officers on their vessels are fully trained and kept competent in the use of, and fully utilise, the navigational systems on board and to ensure, in particular, that electronic charts and passage planning ECDIS (“Electronic Chart & Display Information System”) are kept up-to-date before the commencement of voyages.

Whilst ECDIS has many advantages, as with all technological solutions, there is an every-present potential for user error, defects or limitations in the software or the hardware.  As such, despite a paper chart having been involved in the present case, application of the principles of this judgment in the ECDIS context could be expected in future, and the law is fit to meet those challenges.

By way of some examples, future problems that could possibly arise include incidents caused by inadequate crew training on and familiarization with the proper use of ECDIS, failure to keep software up-to-date, for example, with the latest notices to mariners, or ECDIS security vulnerabilities being exploited by cyber-attack as a result of user error or misuse.

Footnote 1: 

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.

Footnote 2:

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.

Footnote 3:

2.  Subject to the provisions of article 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried."