We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
01 December 2010
The Rome Court of Appeal recently issued a decision which sets an important precedent on the distinction between a charterparty contract and a contract of carriage of goods by sea.
Legal proceedings had originally been issued by Italian cargo underwriters Padana Assicurazioni against the owner of Italian-flagged tank vessel Alessandro I.
The vessel had been chartered by its owner, Transmare SpA, to charterer Enimont Anic by a time charterparty contract dated May 23 1986 on the Essovoy 1969 form for five years, with the vessel to be principally employed in Italian coastal traffic.
On January 30 1981 the vessel loaded at Gela, Sicily with a cargo of chemical products in drums to be carried to Ravenna. However, on February 1 1991, just a few hours after departure from the loading port, it sank together with its entire cargo off the coast of Puglia.
The event gave rise to a number of legal proceedings and much criticism, because the chemical cargo was toxic and had to be recovered from the bottom of the sea, at huge cost to the Italian state and with serious risk to the environment.
Among these proceedings was a case initiated before the Tribunal of Rome in 2004 by the cargo underwriters against Transmare, claiming damages deriving from the total loss of the cargo.
During the course of the proceedings, Transmare (which in the meantime had paid into a limitation fund in Rome with the financial support of its protection and indemnity club, Assuranceforeningen Skuld of Oslo) was declared bankrupt. However, the claimants continued legal action against the bankrupt entity and also against Skuld directly.
Shortly after the casualty and before the commencement of legal proceedings, the Bari Port Authority had appointed an inquiry commission which, at the end of several investigations, concluded that the casualty had been caused not by the unseaworthiness of the vessel, but rather by the fault and neglect of the master, who had failed to adopt the proper nautical measures to prevent the vessel from sinking after becoming aware of heavy listing.
The first instance proceedings ended on May 24 2004 with the tribunal rejecting the claim, holding that the claimants had not discharged their burden of proof, having failed to demonstrate that the loss of the cargo was caused by the fault of the carrier or the commercial fault of its servants.
Dissatisfied with the judgment, the cargo underwriters appealed, arguing that the liability of the owner should be affirmed because:
On September 6 2010 the Court of Appeal rejected the appeal by formulating an interesting principle of law. The court rejected the allegation that the owner had been negligent at the beginning of the voyage, finding that the inquiry commission had clearly identified the cause of the sinking as the fault and negligence of the master, who had aggravated the listing of the vessel by transferring ballast from one tank to another instead of modifying the route or even taking refuge at the port of Bari. The court then undertook a detailed examination of the terms and conditions of the time charterparty in order to decide whether this contract amounted to a contract of carriage of goods by sea and whether Article 422 of the Italian Code of Navigation (which substantially reproduces Article IV of the Hague-Visby Rules and contains the list of the excepted perils, including the fault in navigation provision) would thus apply; in which case the owner, as carrier, would escape liability.
The court concluded that the time charterparty, in spite of its definition, was to be considered a contract of carriage of goods by sea, under which the owner, as carrier, had undertaken an obligation to take care of the goods and to carry them from one port to another, and not simply an obligation to navigate and to perform voyages under the orders of the charterers. Therefore, no liability was appointed to the owner, since the loss of the cargo had been caused by the errors and neglect of the master of the vessel (ie, by an excepted peril).
In reaching this decision, the court attributed overriding importance to the charterparty clause stating that the owner "shall not... be responsible for any loss or damage arising or resulting from any act, neglect, default or barratry of Master", as well as to the paramount clause incorporating the US Carriage of Goods by Sea Act.
The general principle of law which may be inferred from this decision is that under Italian law, a contract must be construed as a contract of carriage of goods by sea if a time or voyage charterparty contains:
The contract will therefore be subject to the provisions of the Code of Navigation in respect of the carriage of goods.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.