Marine Brief: latest decisions February 2022

In this briefing, we consider some recent decisions addressing issues including who is the operator of a vessel, general damages and demurrage, and passage planning and unseaworthiness.

STEMA BARGE II: Court of Appeal provides clarification as to who is the ‘operator’ of a vessel

Splitt Chartering Aps & others v Saga Shipholding Norway AS & others (the STEMA BARGE II) [15.12.2021]

Splitt Chartering Aps & others v Saga Shipholding Norway AS & others (the STEMA BARGE II) [15.12.2021]

The Court of Appeal held that ‘operator’ should be interpreted to mean more than mere physical operation, and that it requires management or control of the vessel.

Under the Limitation Convention 1976, shipowners (and salvors) are entitled to limit their liability for specified claims. The term ‘shipowners’ is defined as "the owner, charterer, manager or operator of a seagoing ship", but what constitutes an ‘operator’ has been open to interpretation.

This decision provides helpful clarification as to who should be considered an ‘operator’ for the purposes of limitation. The first instance decision was reversed and Stema UK was not entitled to limit its liability under the 1976 Convention.

Related item: STEMA BARGE II: Court of Appeal provides clarification as to who is the ‘operator’ of a vessel

Court of Appeal gives broad meaning to demurrage in claim for liquidated damages

K Line Pte Ltd v Priminds Shipping (HK) Co Ltd (The Eternal Bliss) [18.11.21]

The Court of Appeal has provided clarity around the availability of general damages in addition to demurrage arising from delay for owners and charterers.

Charterers had delayed in discharging a cargo of soybeans which led to deterioration of the cargo, resulting in a claim by the cargo receivers against the vessel owners which owners settled for approximately US$1.1 million.

The court was asked to consider whether, despite charterers having paid demurrage in full, owners were entitled to recover the sum paid to cargo interests from charterers on the basis that it was “a different kind of loss”.

The Court of Appeal overturned the Commercial Court’s decision and held that in the absence of any contrary provisions in a charterparty, demurrage liquidates the whole of the damages arising from a failure to complete cargo operations within the laytime, not just some of the damages.

Related item: Court of Appeal gives broad meaning to demurrage in claim for liquidated damages

Supreme Court clarifies seaworthiness obligations under the Hague Rules

Alize 1954 and ors v Allianz Elementar Versicherungs AG and ors (The CMA CGM LIBRA) [10.11.2021]

The Supreme Court’s decision in the CMA CGM LIBRA reinforced the conclusion reached in favour of cargo interests in both the High Court and Court of Appeal and clarified the underlying law on passage planning and unseaworthiness under Article III, Rule 1 of the Hague Rules.

The dispute arose between cargo interests (albeit only 8% of them) and owners for monies sought in General Average following the grounding of the vessel whilst leaving the port of Xiamen, China. The vessel had been navigating outside of the buoyed fairway and ran aground on a shoal in an area where the charted depths were over 30 meters. The shoal was not marked on the paper admiralty charts available at the time, but recent notices to mariners had warned of depths less than those charted on approach to the port. The vessel’s passage plan had not provided for it to leave the buoyed fairway but nor did it contain a clearly marked warning of such dangers created by the presence of depths less than those charted.

In a unanimous decision, the five Supreme Court judges held:

1 The defective passage plan was causative of the grounding and breached the carrier’s seaworthiness obligation.

2 The failure of the Master and Second Officer to exercise reasonable skill and care when preparing the passage plan did constitute want of due diligence on the part of the carrier.

The judgment has clarified a number of grey areas surrounding passage planning and it’s link to unseaworthiness under the Hague Rules, and is another example of the English courts becoming increasingly supportive of the position of cargo interests. 

Read other items in the Marine Brief - February 2022