Seaworthy vessel

Seaworthy vessel

A CASE recently before the Court of Appeal in London dealt with the extent of a shipowner's obligation to exercise due diligence to make a vessel seaworthy.

The Fjord Wind was voyage-chartered on terms which contained both an absolute obligation to make the vessel seaworthy and a separate obligation requiring no more than the exercise of due diligence to make the vessel seaworthy.

Having completed loading, the Fjord Wind suffered an engine failure. It had suffered a number of similar problems previously, and the matter had been referred to the engine manufacturer, MAN. The cause of the problem, though, had never been identified.

Although the Court of Appeal construed the charter party to require no more than the exercise of due diligence, it went on to consider the scope of that obligation. In particular, the court held that the obligation was non-delegable. The court decided that the due diligence obligation on owners was to satisfy themselves that no line of enquiry that competent experts should have pursued had been overlooked.

It was not enough for the owners merely to refer a recurring crankpin problem to the engine manufacturer and leave it in their hands, however high their reputation. (www.lsso.com)

Alleged scuttling

THIS case before the Commercial Court in London had at its heart the sinking of a 90ft steel motor yacht in calm water and good weather off Cape Spartivento while on a voyage from Piraeus to Sardinia in July 1995.

On board were a skipper, engineer and deckhand. The skipper said he first saw water rising fast in the engineroom at about 1700hrs, and thought the ingress was on the port side aft. The engineer said attempts to stem the ingress were unsuccessful. By about 1730hrs, the crew had taken to a liferaft, and the Milasan sank forty minutes later.

At about 1830hrs, the crew was picked up by a cargo vessel. The following morning, the crew were dropped at a port in Sicily from where the skipper reported the loss to the yacht's manager, who in turn informed the insurers.

The insured value of the yacht was $1.3m. Following a full investigation into the history of the yacht, its skippers and its beneficial owner, Sheikh Khalid, the insurers declined liability under the policy, and proceedings were then brought against them.

The insurers denied that the yacht had been sunk as the result of an insured peril, and further argued that the yacht had been deliberately and wilfully cast away with the connivance of the owner.

The court was unimpressed by the evidence given by the skipper and engineer in relation to the cause of the ingress of water, as well as the sequence of events leading to the sinking. Among other things, their evidence conflicted in material respects with the evidence obtained by solicitors acting for the insurers.

The court concluded that the yacht had been deliberately cast away, but was Sheikh Khalid party to the fraud? The court concluded that he was. His efforts to sell the vessel since 1993 had failed. The yacht was becoming "old, dowdy and expensive to run" and was a wasting asset. The sheikh was an unsatisfactory witness and, said the judge, had "clearly lied to insurers" on certain occasions prior to the loss. In the end, the court was satisfied that the sheikh was aware of and involved with the deliberate sinking of the yacht. Accordingly, the claim under the policy failed and was dismissed.

Among other things, the case illustrates the advantage of obtaining evidence from a crew as soon as possible after a casualty. Witnesses are pinned down, making it difficult if not impossible for them to present an alternative account later on. (Holmes Hardingham).

Delay in discharge

The "Spiros C"

THE UK Court of Appeal has reversed the decision of Mr Justice Colman in the Commercial Court in London in Tradigrain v King Diamond Shipping SA.

In the Commercial Court, the judge had found that an implied term existed in the bill of lading contract to place an obligation on the shipper to discharge the goods in a reasonable time. Reversing this decision, the Court of Appeal said that the incorporation into the bill of lading contract of the discharge regime of the relevant party was sufficient to negate the implication into the bill of lading of any term imposing liability on shippers as the discharge regime envisaged the charterers or the receivers - and not the shippers - being responsible.

Following this reasoning, the appeal court considered that, as the subcharter discharge regime did not envisage liability for discharge being placed upon the shippers, there could be no basis to imply a term to contrary effect.

The appeal court was also doubtful whether or not, regardless of the incorporation of the subcharter terms, a term could be implied at all relating to liability for discharge of the cargo.

The appeal court judgment gives some comfort to shippers, although it is unlikely to be the end of the story on this issue. (Ince & Co)