Marine Brief: latest decisions July 2022

In this briefing, we consider some recent decisions covering wilful misconduct under the CMR, apportionment of liability under the Collision Regulations, the construction and scope of indemnity cover of mortgagee's interest insurance policies and the power of a ship’s master to arrest or confine a person on a ship at common law.

Wilful misconduct under the CMR revisited by the High Court

Knapfield v Cars Holdings Ltd [13.06.22]

The High Court was asked to consider the application of wilful misconduct under the Convention on the Contract for the International Carriage of Goods by Road 1956 (the CMR), and provided helpful clarification on the level of conduct required to break the CMR’s limits of liability.

The court concluded that the cause of the damage to the car was the inadequate securing of the front wheel straps which caused the vehicle to slide backwards. However, whilst that failure of securing the vehicle was perhaps negligent, it was not reckless or deliberate. Further, a failure to follow instructions was also not sufficient to establish wilful misconduct under the CMR – again, it was deemed to be negligent, but not reckless or deliberate.

Accordingly, the defendant was permitted to rely on the limits of liability within the CMR.

Contact: Shaan Barton

Related item: Wilful misconduct under the CMR revisited by the High Court

Admiralty court apportions liability under Collision Regulations’ crossing rules

Wilforce LLC and Anr v Ratu Shipping Co.SA and Anr [20.05.22]

The Admiralty court was asked to consider whether the duty of good seamanship or the crossing rules should govern the responsibility between the vessels.

The court found that the authorities relied upon were not necessarily entirely consistent, especially in light of the EVER SMART decision. However, it ruled that the result would have been the same regardless of whether the decision was based upon the duty of good seamanship or whether it was as a breach of the crossing rules.

Accordingly, the WESTERN MOSCOW was found to be 75% liable for not keeping a proper lookout. The WILFORCE was held to be 25% liable for failing to reduce speed when the risk of collision became apparent.

Contacts: Brittany Ling and Andrew Purssell

Related item: Admiralty court apportions liability under Collision Regulations’ crossing rules

MT ZOUZOU: detention, constructive total loss and mortgagee’s interest insurance - Commercial Court clarifies scope of indemnity

Piraeus Bank A.E. v Antares Underwriting Limited and others ('The ZOUZOU') [17.05.22]

The Commercial Court - after considering issues around detention and constructive total loss - rejected in full a mortgagee bank’s claim in the sum of US$71 million made against mortgagee interest underwriters, which arose out of the detention of the vessel 'ZOUZOU' in Venezuela in August 2015.

The decision will be welcomed by the international marine insurance market, as it provides clarity in respect of the proper construction and scope of indemnity cover of mortgagee's interest insurance (MII) policies, confirming that MII provides secondary insurance to banks and is not a ‘catch all’ or ‘umbrella’ cover that responds to every type of claim or loss.

Contacts: Jonathan Evans, Craig Boyle-Smith and Ingrid Hu

Related item: MT ZOUZOU: detention, constructive total loss and mortgagee’s interest insurance - Commercial Court clarifies scope of indemnity

The master’s power to confine passengers confirmed by NSW Court of Appeal

Royal Caribbean Cruises Ltd v Rawlings [04.02.22] NSWCA 4

In an Australian first, the New South Wales Court of Appeal provided guidance regarding the power of a ship’s master to arrest or confine a person on a ship at common law.

This decision provides clarity to masters and confirms their power to arrest or confine a person on a ship where they have reasonable cause to believe, and do in fact believe, that it is necessary for the preservation of order and discipline, or for the safety of the ship or persons or property on board.

The decision also confirms the justification defence as it applies at common law, and comments on the application of Australia’s choice of law rules for incidents on the high seas.

Contact: Peter Craney

Related item: ‘Here comes the Hook’ - the master’s power to confine passengers confirmed by NSW Court of Appeal