Summary
The “Happy Aras” (the “Vessel”) was on a laden voyage from Reni, Ukraine to Mersin, Turkey when she grounded off Turkey. The Vessel was seriously damaged, and Owners declared general average. Cargo Insurers, who had issued general average security on Cargo Interests’ behalf, refused to pay a USD1.2m general average contribution to Owners, alleging that the grounding was caused by Owners’ actionable fault in that the Vessel was unseaworthy.
In dismissing Owners’ claim, the Court found that the grounding had been caused by the Master’s incompetence, which rendered the Vessel unseaworthy. The Court also found that Owners had failed to prove that they had exercised due diligence before and at the beginning of the voyage by having a proper system in place for vetting the Master’s competence.
Case note contributed by Sheridan Steiger, LLM (International Trade and Commercial Law), LLB (Hons), BA (Hons), Solicitor of England & Wales, and International Contributor to DMC’s Case Notes
Background
In March 2023, the Vessel was on a voyage from Reni, Ukraine to Mersin, Turkey.
The figure below sets out the Vessel’s planned course (the “Passage Plan”) (shown as a yellow line) and the approximate route taken culminating in the Vessel going aground (shown as a red line) on 20 March and suffering serious hull damage.
Subsequent salvage operations, lightering and transhipment of the Vessel’s cargo did not complete until mid-June 2023.
Owners declared general average and the average adjustment assessed Cargo Interests’ contribution at about USD1.2 million.
Cargo Insurers, who had issued general average security on Cargo Interests’ behalf, refused to contribute, alleging that the grounding was caused by the Vessel’s unseaworthiness before at the beginning of the voyage by reason of:
(i) an incompetent Master; and
(ii) a defective passage plan.
The Court heard no evidence from the Vessel’s crew. Instead, experts relied on contemporaneous records (namely the deck, engine and GPS logs, working charts, and AIS information) and written witness testimony given by the crew in proceedings before the Turkish Commercial Court.
The Vessel’s tonnage meant it did not require a voyage data recorder, nor had one been fitted.
Judgment
Facts
The Judge found the following facts from the evidence before the Court.
The Master took over as Office of the Watch (the “OOW”) at 20:00 on 20 March 2023.
The Vessel’s passage plan required the Vessel’s position to be fixed and recorded at regular intervals both during the Master’s watch and the preceding one. No such fixes were recorded.
When the Master took over, instead of following the passage plan, the Vessel made an early alteration of course on to a southerly heading, effectively “cutting the corner”. The Master should have recorded this deviation in the Deck Log but did not. The Vessel effectively remained on this course until the grounding.
Nautical twilight, when the horizon is still visible in clear weather, ended at 20:18. A lookout was on the bridge with the Master; however, at some point between assuming the watch and the Vessel reaching Way Point 54 (at around 20:35), the Master sent the lookout below to make tea. From that point onwards the Master was alone.
At Way Point 54, the Master should have made a course alteration and did not. The Vessel went aground at 20:58 and Owners’ expert opined that she was at sailing speed of 9kn (with no attempt having been made to alter course or reduce speed) at the time of the grounding.
The Judge held that the entries in the deck log and engine log were inconsistent with the AIS data; the deck log recorded the grounding at 20:45 and the engine log suggested avoiding action had been taken at 20:35.
The Judge also asked the experts to opine on the passage plan against the yardstick of the IMO guidelines and the Vessel’s own SMS. Both criticised the passage plan, noting that it was “of a basic type” and incomplete. However, both experts also agreed that had the passage plan been followed then the grounding would not have occurred.
Law
The Judge set out the relevant law and referred to The “CMA CGM Libra” (fn.1):
“A shipowner is not entitled to recover general average contributions from the owners of the cargo where the loss or expenditure was caused by its ‘actionable fault’ which includes any causative breach of the terms of the relevant contract of carriage.”
The contract of carriage incorporated the Hague Rules. Article III, rule 1 states:
“Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy.”
The Judge also set out the test for unseaworthiness from The “Cape Bonny” (fn.2):
“… whether a prudent owner would have required the relevant defect, had he known of it, to be made good before sending his ship to sea.”
The Judge also noted that The “CMA CGM Libra” had also established that a defective passage plan could also render a ship unseaworthy for the purposes of article III, rule 1 of the Hague Rules.
Finally, the Judge set out the legal background to crew competence.
The “Eurasian Dream” (fn. 3) set out the duty that carriers owe to provide a competent crew as regards the vessel’s seaworthiness:
(i) Incompetence or inefficiency may consist of a ‘disabling want of skill’ or a ‘disabling want of knowledge’;
(ii) Incompetence or inefficiency is a question of fact which may be proved from one incident, but one mistake (or, even, more than one mistake) does not necessarily render a crew-member incompetent.
(iii) Incompetence is to be distinguished from negligence and may be shown from:
a. An inherent lack of ability
b. A lack of training or instruction
c. A lack of knowledge about a particular ship and/or its systems
d. A disinclination to perform the job properly
e. The test whether the crew’s incompetence or inefficiency has rendered the vessel unseaworthy is: Would a reasonably prudent owner, knowing the relevant facts, have allowed this vessel to put to sea with this Master and crew, with their state of knowledge, training and instruction?
f. Unseaworthiness must be a real cause of the loss.
Decision
The Judge found that the Master was incompetent.
The Judge accepted that negligence alone does not equate to incompetence and there is a “wide gulf” between the two. However, having assessed the Master’s actions between 20:00 and 20:58, the Judge found a pattern of serious failures:
· He did not question or criticise the previous OOW’s failure to plot the Vessel’s position.
· He failed to plot the Vessel’s position regularly.
· He “cut the corner” of the passage plan without recording the deviation.
· He sent the lookout below (a breach of the Vessel’s SMS).
· He neglected to alter course at Way Point 54.
· He neither kept a good lookout himself nor monitored the Vessel’s radar appropriately.
· He effectively ignored the Vessel’s Bridge Navigational Watch Alarm System.
· He made, or caused to be made, entries in the deck log and engine log that independent evidence later showed to be false.
The Judge commented that “the errors were numerous and egregious and can be characterized as a complete dereliction of duty.”
The Judge held that the Master was incompetent and a reasonably prudent owner would not have allowed him to sail the Vessel had they known the relevant facts.
The Judge then considered whether Owners were able to evidence that they had exercised due diligence to make the Vessel seaworthy at the commencement of the voyage.
While Owners had checked the Master’s certificates and a reference obtained from a previous employer, there was no evidence of on-going monitoring, training or performance evaluation. The Judge held that Owners could not show that they had exercised due diligence in ensuring the Master’s competence.
Both experts agreed that, while basic, if the passage plan had been followed, the Vessel would not have grounded. Therefore, the Judge held that the passage plan did not render the Vessel unseaworthy.
The Judge accordingly held that Cargo Insurers were not required to contribute in general average because of Owners’ actionable fault in the Vessel’s grounding occurring.
Comment
This judgment usefully summarises the English law test for unseaworthiness and reminds us that the conduct of the crew alone can amount to unseaworthiness. Prudent owners are reminded that – if they are to exercise due diligence – they not only need to have appropriate systems in place to ensure that the physical characteristics of the vessel are checked and repaired on a regular basis (and then recorded) but that they also need to vet their crew, provide regular training and then show that they actively test their compliance with the relevant systems
The Judge took a dim view of the Master’s attempts to falsify the records. Over the years, there have been a number of similar attempts, however these are often exposed during litigation either by expert evidence or reference to third-party data. Tempting as it may be to try to manipulate the records to favour a party’s position, once exposed, it does significant harm to that party’s case and calls into question everything else that party has to say on the case. It is far better to ensure that all parties (owners, lawyers, experts and insurers) have the correct facts from the outset so that they can adopt a considered strategy for settling or litigating the claim.
Finaly, a poor passage plan, even one below IMO guidelines, does not, alone, render a vessel unseaworthy. If actionable fault is to be found against owners, the English courts will require evidence of a causative link between a passage plan and the loss that has occurred.
Source: Unity Ship Group S.A. v Euroins Insurance JSC (The “Happy Aras”) – DMC
