Shohei Tezuka
Partner, Higashimachi LPC

In November 2021, the UK Supreme Court delivered its decision in the “CMA CGM Libra”^[1] that the Owners are liable for the grounding of the Vessel, which navigated outside of a buoyed and dredged fairway after departing port with a defective passage plan. The Owners argued that the defective passage plan was a matter that fell under the error in navigation exception under the Hague Rules and therefore they were not liable. However, the Court rejected the Owners’ submissions and held that they were in breach of the seaworthiness obligation. This judgment will have a material impact on the practice of ship operations, which will be discussed in this article.

<FACTS>

1. The grounding and claims

In May 2011, the container vessel “CMA CGM LIBRA”, loaded with 5,983 containers, grounded on a shoal outside of the buoyed and dredged fairway during its departure from the port of Xiamen, China on a voyage to Hong Kong.

At the time of grounding, the Vessel’s even keel was 15.5 metres. Although the depth of the point of grounding was stated as being more than 30 metres on the printed chart equipped onboard the Vessel, there was actually a shoal of 1.2 metres depth less than a cable to her starboard, which was marked in the Notice to Mariners 1691/11 that will be described in further detail below.

The Owners declared General Average and claimed against cargo interests in the sum of about US$ 13 million as their contributions. However, about 8% of the cargo interests, representing a sum of about US$ 800,000, rejected the claim on the grounds that the casualty was caused by the Vessel’s defective passage plan and that such defect amounted to the Owners’ failure to exercise due diligence to make the Vessel seaworthy. In response, the Owners commenced proceedings in the English High Court.

2. The Vessel’s passage plan – charts etc. on board

In planning the departure from the port of Xiamen, the master and crew used the most up-to-date printed version of a chart issued by the UK Hydrographic Office. The UK Hydrographic Office regularly publishes (usually on a weekly basis) Notices to Mariners which provide crew with navigational information. The Notice to Mariners 6274(P)/10 issued in December 2010 was on board the Vessel and included certain information regarding the approaches to Xiamen port.

Some of the information included in Notices to Mariners must be marked on charts. Notice to Mariners 6274(P)/10 included the following warning:

“Numerous depths less than the charted exist within, and in the approaches to Xiamen Gang”

However, this warning was neither annotated to the working chart nor referred to in the passage plan document.

Another Notice to Mariners 1691/11 was issued in April 2011, several weeks prior to the Vessel’s departure from Xiamen. This notice required several corrections to charted depth, including a depth of 4.8 metres and another depth of 1.2 metres on a 30-metre contour outside the dredged fairway.

In his cross-examination, the master accepted that if the warning in the Notice to Mariners 6274(P)/10 was marked on the chart he would not have attempted to navigate outside the fairway. At the time of the casualty, it was after high water and the depth in the fairway, which was increased by the high water, would have been sufficient for the Vessel to navigate.

<Main issue>

The Hague Rules applied to the contracts of carriage in question. Under the Rules, the carrier (i.e. the Owners) is required to exercise due diligence to make a ship seaworthy (Article III rule 1(a)), and, on the other hand, the carrier is excepted from liability for loss or damage arising or resulting from, inter alia, an act or neglect of the Master in the navigation of the ship (“error in navigation”, Article IV rule 2(a)).

It is established in English case law that a carrier cannot rely on the error in navigation defence if the casualty was caused by an error in navigation on the part of the master or crew, but a breach of the seaworthiness obligation was causative of the navigation error.

Thus, the main issue in this case was whether the defective passage plan was a matter of the due diligence obligations in making the Vessel seaworthy before and at the beginning of the voyage (if so, the Owners as carrier were liable), or a matter of error in navigation (if so, the Owners as carrier were excepted).

The High Court held that the defective passage plan constituted a breach of the seaworthiness obligations and the Owners were liable. The Court of Appeal upheld this first instance decision and the Owners appealed to the Supreme Court.

<The Supreme Court judgment>

In the Supreme Court, the Owners submitted that the seaworthiness obligations under the Hague Rules concern the physical state of the ship, namely her attributes and equipment, and, on the other hand, navigation (and any error) focuses on the crew’s operation of the ship using these attributes and equipment. On this basis, the Owners argued that the defect in the Vessel’s passage plan was related to navigation, hence the Owners could rely on the error in navigation defence and were not liable.

However, the Court affirmed the established interpretation that the error in navigation defence may not be relied upon if an error in navigation caused by the unseaworthiness of the ship led to the casualty. Although the Court did not reject the assertion that passage planning is a matter of navigation, it held that there is no “attribute threshold” in law between the seaworthiness obligation and error in navigation, and consequently rejected the Owners’ arguments.

The Court applied the “prudent owner test” established under English case law to the case. That is to say, it asked the question, “would a prudent shipowner have required that it should be made good before sending his ship to sea had he known of it?”. It held that a ship is likely to be unseaworthy if she commences a voyage without a passage plan, or with such a defective passage plan that it could endanger the safety of the ship.

The Owners also submitted that the passage plan was made by the master and second officer, rather than the Owners themselves who owe the seaworthiness obligations. On this basis, they argued that there was no failure on the part of the Owners to exercise due diligence to make the Vessel seaworthy, even if the Vessel was unseaworthy. In rejecting this contention, however, the Court held that due diligence shall be exercised in the work of making a ship seaworthy, regardless of who has been entrusted with the task.

In this context, it is notable that the Court suggested that the owners may not be liable for a failure to exercise due diligence which occurred before they become responsible for a ship or cargo (e.g., unseaworthiness caused by latent faulty workmanship by the builder or undeclared dangerous cargo in containers). However, the Court also observed that the owners may nevertheless be liable if they could reasonably discover such defect or danger by exercising due diligence after the ship or cargo in question has come within their control.

In conclusion, the Court unanimously held that the Owners were liable for the unseaworthiness of the Vessel. Taking into account that the master accepted in his cross-examination that he would not have manoeuvred outside the fairway had the warning in the Notice to Mariners been marked in the working chart, the Court affirmed the existence of a chain of causation between the defective passage plan and the casualty, and dismissed the Owners’ appeal.

<Comments>

1. Breach of seaworthiness obligation

Under a contract of carriage to which English law applies, the carrier (owners) shall exercise due diligence to make the ship seaworthy before and at the beginning of the voyage.

As readers may already be aware, the due diligence obligation means that the owners are not automatically liable for the unseaworthy state of a ship. They would be liable if they fail to exercise due diligence to make the ship seaworthy, but not liable if the same is exercised. From the perspective of owners, they may rely on a two-layered defence, that is to say, (i) the ship was seaworthy, but even if she was unseaworthy, (ii) the owners exercised due diligence to make her seaworthy. In other words, the unseaworthy state of the ship could not have been remedied by the exercise of due diligence.

However, the matter in question in the case of the CMA CGM LIBRA was the defective passage plan, or more specifically, the fact that the relevant Notice to Mariners was on board but not expressly referred to in the working chart used for the passage planning. Under such circumstances, it would have been difficult for the Owners to submit that they had exercised due diligence if the Vessel was unseaworthy.

2. Impact on technical management practice

This Supreme Court judgment affirmed that defects in a passage plan can constitute a breach of seaworthiness obligations. It highlighted the importance of passage planning as well as preserving the evidence of proper planning, which will have a material impact on the technical management by shipowners.

The Court referred to the IMO’s Guidelines for Voyage Planning, adopted by Resolution A893(21) on 25 November 1999 and applicable to all ships engaged in international voyages, and examined the four components of passage planning identified by the Guidelines i.e. (i) appraisal, (ii) planning, (iii) execution and (iv) monitoring.

Amongst these four components, the (i) appraisal and (ii) planning stages are relevant to the seaworthiness obligations under the Hague (Visby) Rules since said obligations are related to the work to be performed before and at the beginning of a voyage. It could be said that the unanimous decision of the Court has made it clear that any defect in either of these two stages can render the ship unseaworthy.

The Guidelines require that, in relation to these two stages, an owner shall not only collect the various necessary information but also furnish a passage plan in which any and all risks and dangers can be identified at a glance, which includes properly plotting the intended route, tracking the voyage and all areas of danger and so on.

This judgment followed the Guidelines in holding that the Owners were in breach of the seaworthiness obligations since, although the relevant Notice to Mariners was on board, its contents, namely the existence of numerous depths less than those charted, were not marked in the working chart, and the warning in the notice was consequently omitted from the passage planning.

From the perspective of owners’ defence, it would be of material importance to preserve objective evidence of complying with the Guidelines in the process of passage planning (e.g., by way of writing and emails), in addition to paying appropriate attention to the Guidelines in passage planning. This will obviously increase an owner’s administrative and documentary work so they are required to balance such burden and efficacy of their daily operations.

More specifically, it should be worth considering, for the purposes of preparation for future claims as well as the safe operation of ships, for example, (i) to maintain the most up-to-date version of the charts and any updates such as Notices to Mariners so they can be confirmed at a glance, (ii) to record the process of collecting sea and weather conditions and other relevant data and the assessment of such data and its reflection in the passage plan, (iii) to preserve as objective evidence the time of collection and details of the information (e.g. (a) information acquired verbally should be confirmed immediately with the relevant persons via email, (b) hardcopy documents should be marked with the date of receipt and who it was received from, and (c) information obtained via the internet should be saved electronically) and (iv) to make a comprehensive record of the planning process itself, such as the details of the information and documents which have been collected and the assessment of such information and documents.

3. Future

The dispute in this case was whether the Owners could claim General Average contributions against cargo interests, however, the legal issues of the seaworthiness obligation and errors in navigation may also arise in cargo claims and, where the Hague (Visby) Rules are incorporated by a Clause Paramount, claims between owners and charterers.

Thus, it is anticipated that, depending on the particular facts of each case, more disputes will arise where the appropriateness of a passage plan is argued in the context of the seaworthiness obligation.

1. Alize 1954 and Anor v Allianz Elementar Versicherungs AG andOrs [2021] UKSC 51