CMA CGM LIBRA bound for the Supreme Court
Alize 1954 and another v Allianz Elementar Versicherungs AG and others
Earlier this month the Supreme Court heard the appeal by the Owners of the CMA CGM Libra against the Court of Appeal’s decision in favour of the Defendant Cargo Interests. The outcome will have implications not only for ship owners, but also for cargo interest and P&I clubs, and can potentially shift risk away from cargo interests.
On the 17 May 2011 the 11,300teu 2009 built CMA CGM Libra sailed from Xiamen bound for Hong Kong. At the time, the shipping industry was transitioning from paper charts to electronic charts, and sailing with either would satisfy the chart requirement of SOLAS. The CMA CGMA Libra was sailing with British Admiralty paper charts, and was also fitted with an ECDIS installed with proprietary charts (C-Map Professional), although not required.
Shortly after departure from Xiamen, in the early hours of the 18 May 2011, the vessel deviated from the passage plan by navigating out of the buoyed fairway and grounded shortly thereafter.
The paper charts did not indicate the shoal on which the vessel grounded, as they had not been amended in accordance with an earlier Notice to Mariners (6274(P)/10) warning of "numerous depths less than charted exist within, and in the approaches to Xiamen Gang".
Salvage services were obtained and the vessel refloated with little damage, and the voyage to Hong Kong continued. Owners declared General Average for their salvage expenditure, in excess of USD13m. When the Defendant Cargo Interests refused to pay their General Average contribution, Owners initiated proceedings.
In the Admiralty Court, Teare J held that the passage plan, consisting of a plan provided by Owners, plus the Vessel’s working charts, was defective, as the charts were not updated. As a result the Vessel was unseaworthy before or at the beginning of the voyage.
The cause of the grounding was held to be the defective passage plan and the resulting negligence by the Master in navigating outside the fairway. Owners were in breach of their obligation to exercise due diligence to make the vessel ship seaworthy (Article III Rule 1 of the Hague Rules) and the Cargo Interests not liable to pay towards the General Average.
Owners appealed. On the first ground of appeal, namely that the judge had wrongly determined that a defective passage plan rendered a vessel unseaworthy and had failed to distinguish between navigational matters and seaworthiness, the Court of Appeal dismissed Owners’ arguments.
The Court held the judge had been right in that the passage plan was defective, and negligence in navigation or management could render a vessel unseaworthy. The obligation to exercise due diligence to make the vessel seaworthy was an overriding obligation, and none of the exceptions in Article IV of the Hague Rules applied.
On the second ground of appeal Owners argued that the Master’s and crew’s acts were acts qua navigator, in that they were delegated to Master and crew, and that Owners themselves had not failed to exercise their due diligence.
The Court of Appeal disagreed and held the distinction was misconceived. Once Owners were under the non-delegable duty of Article III Rule 1, they did not cease to be responsible simply because acts of Master and crew were categorised as acts of navigation. The appeal was dismissed.
And so the CMA CGM Libra has sailed on to the Supreme Court. The Court’s decision will determine the allocation of risk between owners of ship and cargo, and will affect ship owners, cargo interest and P&I clubs alike. While we await the final judgment, ship owners should be reminded that, following the Court of Appeal’s decision, the non-delegable duty to exercise due diligence to make the ship seaworthy may extend to navigational decisions by Master and crew even before the vessel has left berth.
