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09 March 2011
The Court of Appeal recently overturned a first instance judgment concerning owners' liability for cargo damage following the grounding of the general cargo ship Sunna off Swona Island, Orkney on January 2 2007.
The vessel was carrying a cargo of ferrosilicon from Grundartangi, Iceland to Scunthorpe, England when it ran aground off Swona Island. The ensuing investigation revealed that the master had implemented a bridge watch routine that did not accord with the Standards of Training, Certification and Watchkeeping Convention. In particular, a designated lookout during navigation in darkness was not always used.
Around two months before the grounding it had been pointed out in a port state control inspection carried out in the Netherlands that the master's bridge watch arrangement did not accord with the convention. As a result, the owners' designated person ashore instructed the master to ensure compliance with the applicable rules and regulations, both by issuing a non-conformity note and by giving oral instructions to the master. Irrespective of this, the master continued the same watch system and made false entries in the deck logbook to make it appear as if a separate lookout were being used when it was dark.
In the early morning of January 2 2007 the duty officer fell asleep and for about 45 minutes the vessel continued sailing without any lookout. A strong current in Pentland Firth brought the vessel off its track and onto rocks off Swona Island. The vessel and cargo were salvaged, but both suffered significant damage. The owners declared general average, but the cargo interests refused to pay their contribution. The cargo interests filed suit at the Oslo District Court holding the owners liable for the cargo damage on the basis of privity, or alternatively that the vessel was unseaworthy. The owners brought a cross-action against the cargo interests to collect their general average contribution.
On June 6 2009 the Oslo District Court gave judgment in favour of the cargo interests. The court held that the owners - as represented by the vessel's designated person ashore, who was also technical inspector and a part of the owners' management team - had negligently breached their duties under Articles 6.4 and 12.6 of the International Safety Management Code. The code requires that all personnel involved in the safety management system have an adequate understanding of relevant rules, regulations, codes and guidelines, and that they take timely corrective actions to correct any deficiencies found. It was held that:
On November 15 2010, following an appeal by the owners, the Court of Appeal reversed the district court judgment. In relation to the question of owners' privity, the owners argued that the requirement of due care should not be interpreted strictly. The relevant question was therefore not whether any additional precautions by the designated person ashore could have prevented the grounding, but whether a reasonable person in the shoes of the designated person ashore at the time, with the skills and knowledge that the designated person ashore had (or ought to have had), would have taken extra precautions. In this case the designated person ashore had ordered the master to comply with the convention, both through oral instructions and by issuing a non-conformity note. He could not have expected that further steps were necessary.
The Court of Appeal accepted this argument and held that the duty of care was an ordinary duty of care and not a stricter duty. The master was obviously aware of the convention's requirements and the owners had, except for the port state control inspection two months earlier, a very good impression of the master. Hence, the owners could not be criticised for not having done more to ensure that the master actually complied with the rules and regulations.
In relation to the unseaworthiness issue, the owners argued that the vessel had a safety management system, including a bridge watch system that complied with the International Safety Management Code. The crew was experienced, well qualified and equipped with necessary equipment, manuals and instructions to perform the voyage safely. The fact that the master did not routinely use a designated lookout during navigation in darkness did not render the vessel unseaworthy at the beginning of the voyage.
The appeal court also accepted this argument and held that the vessel was equipped in such a manner that any unseaworthiness that may have existed when the vessel commenced its voyage could have been easily rectified during the voyage by using a designated lookout, and was also rectified on one occasion a couple of hours after departure. Hence, the vessel's grounding four days later was not caused by any unseaworthiness existing at the commencement of the voyage.
The cargo interests have appealed the decision before the Supreme Court.
For further information on this topic please contact Gaute Gjelsten, Oddbjørn Slinning or Trond Eilertsen at Wikborg Rein by telephone (+47 22 82 75 00), fax (+47 22 82 75 01) or email (email@example.com, firstname.lastname@example.org or email@example.com).
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