Clearlake Shipping Pte Ltd v Privocean Shipping Ltd (15 May 2018. QB D (Com Ct) is an unreported decision of Cockerill J on the effect of cl.2 of NYPE 1946 form and s.4(2)(a) of US COGSA 1936 which is applied as a paramount clause. Charterers incurred extra expenses due to unnecessary strapping insisted on by the master with a view to the ship’s stability. The master insisted on the strapping in order to ensure the stability of the vessel. In the arbitration the charterer produced expert evidence that the cargo strapping had been unnecessary and that adequate stability could have been achieved by distributing the cargo differently or by ballasting. The arbitrators found that the master had been negligent and in breach of cl. 8. However, they rejected charterer’s contention that the cost of strapping was for owner’s account by virtue of cl.2 of the charter which provided that “Charterers are to provide necessary dunnage and shifting boards, also any extra fittings requisite for a special trade or unusual cargo…” The shipowners, though, had a defence to the claim under s.4(2) of the incorporated US COGSA 1936, since the neglect or default of the master was “in the management of the ship”.
On appeal Cockerill J upheld both findings.(i) Clause 2 said nothing about the position where the charterer had paid for a fitting that turned out to have been unnecessary. (ii) The master’s default was in the management of the ship and owners had a defence under s.4(2) of the incorporated US COGSA 1936. The master’s breach was not any lack of care for the cargo during loading or discharge. His intervention came before loading. Since his action in requiring the cargo to be strapped was directed at the safety of the ship it was an act in the management of the vessel within the s.4(2) exemption. It was also clear that safe stowage without strapping could have been achieved by ballasting, and the same result should be reached whether the issue was one of different distribution of the cargo or of ballasting. Ballasting would be a matter in the management of the vessel and it followed that for that reason also the exemption from liability applied.
The case provides a salutary reminder to time charterers that they may be getting more than they bargained for with a clause paramount. The US COGSA exceptions in s4(2) and the Hague Rules exceptions in art IV(2), are not limited to breaches in respect of the activities listed in s2/art II. As stated by Robert Goff LJ in The Satya Kailash [1984] 1 Lloyd’s Rep 588, 596.
“[o]n the approach of the majority of the House of Lords in the Adamastos case, even such general words of incorporation can be effective to give an owner the protection of the statutory immunities in respect not merely of those matters specified in s. 2, but also of other contractual activities performed by him under the charter.”
Hearing of this case leaves me rather sad: first, masters were told how they could, and could not, cross oceans (The Hill Harmony). Now, they are being told how they may or may not load their ships. Ballasting is often necessary but it is not, nor has it ever been, a substitute for the proper loading, distribution, stowage and securing of cargo! Quite apart from responsibilities for stability under SOLAS, since the ship was loading grain in the USA, it would have had to satisfy the National Cargo Bureau and the US Coastguard as to its departure stability condition, and that it would be compliant with stability requirements throughout the whole voyage so far as could be foreseen. It may not be relevant here, but the Merchant Shipping Act 1995 makes it an offence for a ship to be dangerously unsafe, that is to say, unfit to go to sea without serious danger to human life by reason of, among other things, unsafe or improper loading. Had the ship sailed ballasted as suggested by the experts and arbitrators, would it have been able to maintain sufficient stability and comply with loadline requirements throughout the en route ballast exchange mandated by the Ballast Water Management Convention? Possibly in heavy weather? Or adjust trim, if necessary, for the Panama Canal without having to discharge ‘dirty’ ballast somehow? Would it have been able to bunker fuel if it needed to en route without having to deballast (with ballast not exchanged)? Is it not at least within the spirit of the Convention to transport as small an amount of ballast as is commensurate with safety so as to reduce the spread of harmful aquatic organisms and pathogens around the world? How does the tribunal’s view help to achieve this laudable aim? It is difficult, if not impossible to know without access to the reports and opinions, but even on the sparse amont of information, and assuming that it was not the best of plans, how could it be said to have fallen so far below the average as to amount to negligence? Or am I thinking of the wrong test?
Athough the judgment provides a good result for the owners, it nevertheless leaves a seemingly diligent master’s reputation tarnished by a finding of negligence. Is it now expected of masters to keep stowage and trimming costs at the forefront of their minds when considering how best to ensure ships’ safety and stability? SOLAS Chapter V Regulation 34-1 was designed to ensure that the master had absolute discretion: neither the owner, charterer or anyone else could prevent or restrict the master from taking or executing any decision which in his judgement is necessary for the safety of life at sea and for pollution prevention. In my view, the decision in the Hill Harmony and in this case undermines this provision. In his dictum in the Hill Harmony Lord Hobhouse placed great faith in classification societies’ rules as ensuring vessels’ safety in heavy weather. Unfortunately, the tragedies of the ‘Erika’, the ‘Prestige’ and the ‘El Faro’ do not bear him out. The latest decision further undermines the master’s authority to care for the safety of his ship and all on board. Still, with autonomous ships on the horizon I look forward to the day, perhaps soon, when the ‘experts’ will be able to do it all in-house and perfectly, by themselves.
I would be very interested to read the case report, as well as the reasoned award and experts’ opinions if and when they should ever be published.
With apologies to Professor Baughen for my rant.
Regarding the ballast, the report seems to imply that this would be taken on board at the loadport. Hence my remarks on its exchange were based on that assumption. However, if the ship had arrived in the US port in ballasted condition, then in all probability that would have been oceanic or at any rate deep sea ballast following exchange. Therefore it would simply have been a case of retaining some of it on board at the load port without the necessity for further exchange. However, this does not detract from the fact that ballast is not a substitute for the proper securing of cargo.