Extent of the Implied Obligation of Seaworthiness

An Examination of the Extent of the Implied Obligation of Seaworthiness and the Effects of Breach

Introduction

The carrier to provide a ship which is seaworthy is one the most fundamental obligations in a contract of affreightment. [1] This obligation featured in customary maritime law. [2] The obligation was incorporated into modern English law by being treated in Lyon v Mells [3] as an implied promise. [4] In that case, Lord Ellenborough stated that in every contract of affreightment, there is an implied term to provide a tight and fit ship for the purpose it was intended. The implied duty of seaworthiness in Lyon v Mells has been complex and the recent decision in Papera Traders Co Ltd v Hyundai Marine Co Ltd (The Eurasian Dream) [5] has tried to restate the main features of the modern law. The aim of this brief is to examine the extent of the implied obligation of seaworthiness and the effects of the breach. The brief starts by consideration the meaning of seaworthiness. Then, it looks at the nature of the implied duty of seaworthiness. The brief goes by examining the extent of the obligation to provide a seaworthy vessel. Finally, the brief examines the effects of the breach of the obligation.

Meaning of seaworthiness

Many cases have defined the meaning of seaworthiness. In one of the leading cases of Kopitoff v Wilson [6] defined seaworthy vessel as one which is “fit to meet and undergo the perils of sea and other incidental risks to which of necessity she must be exposed in the course of a voyage.” [7] The test to determine seaworthiness is an objective one. [8] Thus, in McFadden v Blue Star Line, [9] Channel J said the vessel must be fit which an ordinary careful and prudent carrier would require his/her ship to have at the stating of her sailing after taking into account regard its possible circumstances. [10] Therefore, the standard varies due to a number of factors including the voyage nature, the cargo type and the likely dangers that might be encountered during the voyage. [11] What is required from the ship-owner relates to the knowledge of the relevant standards at the applicable time. As Viscount Sumner expressed in FV Bradley & Sons Ltd v Federal Steam Navigation Co Ltd, [12] seaworthiness and due diligence are relative, inter alia, to the state of the knowledge and the standards prevailing at the material time. [13]

The nature of the obligation

The seaworthiness obligation is of twofold, namely the structural fitness of the vessel for the intended voyage and the cargo-worthy of the vessel. Therefore, a vessel is unseaworthy if it cannot cope with stormy and rough sea. [14] A vessel can be unseaworthy if one of the deck port holes is insufficiently fastened to cause the voyage water to enter through the port and damage the cargo. [15] A fracture to the vessel’s shell plating and leaking rivets are among other structural unfitness, which can lead to un-seaworthiness. [16] The first aspect of the seaworthiness obligation extends to the physical state of the ship as well as the competence and adequacy of the crew, seaworthy equipment, the sufficiency of fuel and other supplies and the facilities required for the carriage of the cargo. [17]

The requirement of manning extends not only to the crew’s competence but also the ship master. [18] Seaworthy equipment extends to the provision of adequate bunkers for the intended voyage [19] and any cranes on board used for loading and offloading cargo. [20] The sufficiency of fuel extends to cases where insufficient power causes serious fluctuations in temperature leading to “chocked bananas” [21] and in cases where there is sludge in the ship’s lubricating oil. [22] An overloaded vessel or a vessel with improperly stowed cargo may be rendered unseaworthy. However, only bad stowage which endangers the safety of the vessel may amount to un-seaworthiness. [23] Bad stowage that affects the cargo damaged by it does not render the ship unseaworthy. [24] Seaworthiness also extends to the provision of relevant documentations, charts, or navigational aids. [25] This extends to the getting of necessary health certificate from a port health authority, [26] compliance with International Safety Management Code (ISM) [27] and the carrying of a valid International Ship Security Certificate (ISSC) certificate. [28]

As for the second aspect of the seaworthiness, the vessel must also be in a good state from the start of the voyage to perform the contract of voyage safely as regards to the particular cargo to be carriage on the voyage. [29] Thus, in Stanton v Richardson, [30] a ship had contracted to carry a cargo of sugar in bags. However, when wet sugar was loaded this gave off a quantity of molasses. It was held that the owner of the ship has an obligation “to supply a ship that is seaworthy in relation to the cargo which he has undertaken to carry.” [31] The same applies to cargo that needs to be refrigerated in which the equipment must be adequate [32] and a vessel free from disease if it is to carry live animals. [33] To be seaworthy, the ship must also be able to discharge and deliver the cargo safely at its destination. [34] Therefore, seaworthiness embraces obligations with respect to every part of the vessel, stores, manning and equipment, overloading and bad stowage, possession of relevant documentation and cargo worthiness. [35]

The extent of the obligation

The seaworthiness obligation is described as both absolute and relative. The standard that the ship must meet is relative. However, once the standard has been met, at common law the ship-owner’s obligation to meet the start is absolute. [36] It is no excuse that the owner did not know of a defect or s/he took reasonable steps to make the ship fit. [37] In Petrofina SA of Brussels v Compagnia Italiana Transporto Olii Minerali of Genoa, [38] a cargo of benzene was discoloured because of failure to properly clean the tank of the ship before loading. The ship- owners were liable despite the lack of the requirement of due diligence on the carriers. The fact that tank was charterer’s surveyor to his satisfaction was irrelevant. The absolute nature of the duty is sometimes described as an absolute warranty. However, this is somewhat misleading [39] in the modern context because the obligation is not an absolute promise or guarantee. [40] In the context of a breach, the obligation to provide a seaworthy vessel is neither a warranty nor a condition. [41] In Steel v State Line, [42] Lord Blackburn described the seaworthiness obligation as amounting to an undertaking not only that the ship-owners should do their best to make the ship fit, but also that the ship should really be fit. [43]

At common law, the absolute obligation of seaworthiness attaches at two points. Firstly, at the commencement of the loading, the vessel must be fit to receive her cargo and fit as a ship for the ordinary peril of lying afloat in harbour whilst receiving her cargo. [44] However, there is no implied obligation that the vessel must be seaworthy on the approach voyage to the port. [45] Secondly, the vessel must be fit in design structure, condition and equipment. [46] These two requirements were summarised in Virginia Carolina Chemical Co v Norfolk & North American Steam Shipping Co [47] where Kennedy LJ started that in a contract of affreightment, the carrying vessel must, at the time sailing with the goods, must be fit both to the vessel’s safety and also the safe carriage of the cargo in the ship which an ordinary careful and prudent owner would required his vessel to have at the starting of the voyage, having regard to the probable circumstances of that voyage and its nature.” [48]

At common law, the obligation that attaches at the commencement of the voyage is not a continuous obligation throughout the voyage. [49] The duty arises only at particular points in time. Therefore, if the goods are damaged in the course of the voyage, the ship-owner would be liable as an insurer, save for damages that happened from cause protected by the exceptions. [50] The standard of seaworthiness required is relative to the nature of the ship, the voyage contract for and the particular states of the voyage. [51] Other considerations include the weather whilst the ship is loading in harbour and when sailing. [52] The particular cargo to be carried may also vary the seaworthiness. In President of India v West Coast Steamship Co (The Portland Trader), [53] Kilkenny DJ stated that although the obligation to provide seaworthy ship is absolute, this means nothing or less than the duty to provide a vessel and equipment which are suitable for the intended use or service. [54]

It is worth examining in detail the doctrine of stages. [55] The obligation of seaworthiness operates at different points in the contract of carriage. The most usual stages are the commencement of loading of cargo and the sailing of the vessel. However, in many cases, voyage occurs in stages and, in the case of the liner business, ships call at a series of ports in regular rotation. [56] Stages may also occur naturally especially when the ship has to sail along the river to reach the high seas. [57] In these cases, the common law requires the ship to be seaworthy at the beginning of each stage. [58] In The Vortigern, [59] a ship sailing from the Philippines to Liverpool was to call at Colombo and Suez. At Colombo, the ship sailed with insufficient coal as a consequence had to have recourse to the claimant’s cargo of copra as fuel. The Court of Appeal held that the owners of the ship breached his implied obligation to provide a seaworthy ship because she was not seaworthy at the beginning of the voyage from Colombo to Suez.

In Northumbrian Shipping Co Ltd v E Timm & Sons Ltd [60] the court stated that, in the case of bunkering stops, the ship must take on sufficient fuel to reach “a particular convenient or usual bunkering port on the way.” [61] Lord Porter said that the right to determine bunkering stages was probably a matter for the ship-owner. It was also said in this case that refuelling stages should be fixed not later than the start of the voyage, that fuel sufficient for the intended stage and a margin of contingencies should be loaded, but that the allowance for contingencies ought not to be reduced because of the availability en route of alternative bunkering places, even if the charter gives the owner a wide liberty to deviate. This approach to margins seems to coincide with the requirements of marine underwriters. [62]

An appropriate clause in the contract of affreightment may exclude the common law absolute obligation. However, exception clauses will not cover losses due to un-seaworthiness unless the clause itself is explicit. [63] This is stricter cannon of interpretation than that applied to the question of whether negligence is covered by an exception. [64] Therefore, it is of critical importance whether or not the claimant can prove that a loss has been caused rather by un-seaworthiness, rather than by some other breach of contract that may be covered by an exception clause. [65] The courts are inclined to treat exception clause in the same way as all exceptions and apply a restrictive interpretation to them. [66] In The Vortigern, [67] the contract contained a clause exempting negligence of the master and the crew. However, the owners of the vessel were unable to rely on the clause because they had broken the absolute obligation of seaworthiness, which had reattached as regards the provision of bunkers at the intermediate fuelling port. In Nelson Line v Nelson, [68] a clause exemption the ship-owner from liability for any damage to goods “which was incapable of being covered by insurance” was held to be ineffective in excluding liability for damage to a cargo resulting from un-seaworthiness. [69]

Therefore, in order for the clause to be effective, it must be explicit and expressed in a clear and unambiguous language. [70] For example, in The Ibenskiy Proliv, [71] a bill of lading containing a clause which excluded liability for loss or damage of any kind “arising or resulting from: un-seaworthiness (whether or not due diligence shall have been exercised by the carrier, his servants or agents or others to make the vessels seaworthy).” It was held that the clause was sufficiently widely drafted to exclude all liability for un-seaworthiness. The court rejected the claimant’s argument that the clause was repugnant to the main object of the contact by reducing the contract to a mere declaration of intent. By contrast, in The Chistel Vinnen, [72] a clause protecting the ship-owner in the event of “damage occasioned by latent defect in the hull…even when occasioned by the negligence of the servants of the ship-owner” was held not to cover latent defects in existence at the time of the sailing.

However, the common law implied obligation to provide a seaworthy vessel is modified by The Hague and Hague/Visby Rules, which have mandatory application to most bill of lading contracts, to one of due diligence. Thus, where the contract of carriage of goods by sea is governed by The Hague or Hague/Visby Rules, the absolute obligation at common law is replaced by a duty to exercise due diligence to make the vessel seaworthy. [73] Whilst the carrier will no longer be strictly liable in the absence of any fault, s/he will be liable not only for his/her own negligence but also for the negligence of any party, including an independent contractor, to whom s/he has delegated responsibility under the rules to provide a seaworthy ship. [74]

The Hague/Visby Rules are designed to provide a basic, but compulsory, framework for the contract of carriage whereby parties are free to negotiate the remaining terms. [75] The object of the Rules is to unify certain rules applicable to bills of lading and to create uniformity in the protection afforded to carriers and cargo interests. [76] The Hague/Visby Rules establishes minimum obligations of the carrier and defines the maximum immunity a carrier is entitled and the extent to which s/he can limit his/her liability. Under Article III Rule 1 of The Hague/Visby Rules, a carrier is bound before and after the commencement of the voyage to exercise diligence to make the vessel seaworthy man and equip the vessel and make it cargo-worthiness. The seaworthy obligation embraces the common law aspects of seaworthiness, namely, physical condition of the ship, manning and equipment and cargo-worthiness. [77] The duration of the obligation, i.e. “before the and at the beginning of the voyage” has been interpreted as covering “the period from at least the beginning of the loading until the vessel starts on her voyage.” [78] The doctrine of charter-party stages does not apply. Thus, in Leesh River Tea Co v British India Steam Nav Co, [79] a ship was held to be seaworthy within the meaning of Article III when the cargo was damaged by the surreptitious removal of a storm valve cover plate by a person unknown whilst the ship was calling at an intermediate port.

The standard imposed by the obligation to exercise due diligence has been interpreted by courts as being roughly equivalent to that of the common law duty of care, [80] with the important difference that it is a personal obligation that cannot be delegated. [81] The exercise of due diligence is equivalent to the exercise of reasonable skills and care. [82] The carrier’s duty to ensure seaworthiness is overriding in that a breach of the duty, if it causes loss or damage, prevents the carrier relying on the defences in Article IV Rule 2 and on the right to indemnity contained in Article IV Rule 6. However, a carrier is entitled to limit financial liability under Article IV Rule 5 notwithstanding a failure to exercise due diligence to make the vessel seaworthy. The words in Rule 5 “in any event” mean what they say. They have unlimited scope.

Unlike the common law, which can be excluded by agreement, due diligence obligation under The Hague Rules is said to be “inescapable”. As Lord Viscount Simonds stated in The Muscaster Castle, [83] the ship-owner’s obligation requires due diligence by whomsoever who repairs the vessel. [84] The carrier cannot be held responsible for negligent acts done by the shipbuilders or their employees. [85] However, the carrier cannot rely for protection if the defect should have been apparent on a reasonable inspection of the ship at the time of takeover. [86]

The modern standard charter forms have now been adopted The Hague Rules formula with regard to the requirement of seaworthiness. This practice may affect the operation of the implied seaworthiness obligation. Therefore, by using a “clause paramount” the NYPE charter expressly incorporates into the charter-party the provision of the US Carriage of Goods by Sea Act 1936, whilst the Baltime form excludes the ship-owner’s liability for loss or damage to cargo unless the damage has been caused by the lack of due diligence on the carrier or his/her representative to make the ship fit and seaworthy. [87] It appears that the duty to exercise diligence has replaced the common law absolute obligation to provide a seaworthy vessel. [88] In Adamastos Shipping Co v Anglo-Saxon Petroleum, [89] the contract contained a clause paramount incorporating the provisions of the US Carriage of Goods by Sea Act 1934 which were treated by the court as if written verbatim into the charter. The House of Lords was prepared to give full effect to the provisions of The Hague Rules in respect of all voyages under the contract regardless of whether they were to or from ports in the United States or whether they were in ballast or with cargo.

Some authors have suggested that since the provisions of seaworthiness in The Hague Rules are applicable prior to the commencement of the voyage, the due diligence obligation to provide a seaworthy ship would arise in respect of each voyage under the time charter. [90] However, in The Hermosa, [91] Mustill J pointed out that in most time charters there are express terms regarding the initial seaworthiness and subsequent maintenance which are not easily reconciled with The Hague Rules’ scheme, which creates an obligation as to due diligence attaching voyage by voyage. [92] He said that the interpretation adopted in that case in relation to a voyage charter does not necessarily applies in all aspects to time charters which incorporates The Hague Rules. [93]

Under common law, a cargo claimant who alleges that loss or damage has been caused by the failure to deliver in accordance with the contract or failure to provide a seaworthy ship may succeed on either ground but bears the burden of proof on both. [94] However, a carrier who resists a claim under the first head may find him/herself providing evidence that establish liability under the second. [95] In certain circumstances, the claimant’s burden of proof will be assisted if there are facts, which might give rise to an inference of un-seaworthiness. [96] Normally, the presence of seawater in the hold will be treated by the courts as prima facie evidence of the ship not being seaworthy. However, under The Hague/Visby Rules, different opinions exist as to the burden of proof relating to the exercise of due diligence. Under Article IV Rule 1, where there are loss or damage resulting from the un-seaworthiness, the burden of proving due diligence lies on the carrier. This has led to a general assumption that the onus is not on the carrier to proof due diligence until the other party establishes that the ship was not seaworthy and that the loss was attributable to that fact. [97] However, there is another opinion that the burden of proof in both cases should rest with the carrier because is the party who has access to the full facts. [98] Case law tends to favour the first opinion. [99]

Cargo may be damaged by multiple causes. Therefore, in order for a claim of un-seaworthiness to succeed, the claimant must show that the un-seaworthiness caused the loss. [100] If the un-seaworthiness is the cause then, the carrier will be liable, [101] provided that the loss is not too remote. Similar principles apply where the damage or loss is caused by the un-seaworthiness and made worse by the negligence of the crew. [102]