Duty of care between colliding ships

The law of negligence applies to collisions at sea and there is generally no problem in finding that a duty of care exists between colliding ships. Under the established neighbourhood principle [1] , a ship owes a duty of care to other ships navigating the same seas. [2] 

The burden of proof is however on the claimant to establish that the duty of care has been breached and it is the breach of the duty that resulted in the damage sustained, the claimant must also show that such damage is not too remote from the breach. [3] 

The standard of prudent seamanship applies to those in charge of navigating the ship; the duty of seamen is to use reasonable care and skill in navigation to prevent the ship from causing injuring to other ships at sea, this is an objective test taking into account the facts and circumstances of each case. [4] 

An important factor taken into account when assessing the conduct of seamen is the extent by which the collision regulations have been followed. [5] The regulations [6] require compliance with the principles of good seamanship, a breach of which usually results in finding negligence. [7] 

The rules impose a duty on seamen to use all means possible to determine the risk of collision and if such a risk is found, a duty to take positive action to avoid collision according to the principles of good seamanship is further imposed. [8] 

The vessels in this case were on a crossing course, the rules provide that where vessels are ‘...crossing so as to involve the risk of collision, the vessel which has the other on her own starboard side shall keep out of the way and shall, if the circumstances of the case admit, avoid crossing ahead of the other vessel.’ [9] .

The vessel which is directed to keep out of the way is called the give-way vessel and is required to take early and substantial action to keep clear. [10] The vessel is required to keep clear by altering course or reducing her speed. [11] According to the facts of this case, the Bacchus as the give-way vessel was in breach of the rules by failing to take the required action and still attempting to cross ahead of the Neptune.

According to the rules, ‘where one of two vessels is to keep out of the way, the other shall keep her course and speed.’ [12] This stand-on vessel is however required to take action by her manoeuvre alone when it becomes clear that the give-way vessel is not taking appropriate action. [13] Although the duty of the stand-on vessel to keep her speed and course is to be observed strictly [14] , it can be departed from when it becomes clear the give-way vessel is not taking the appropriate action. The Neptune however only responded with a modest turn to port where the proper manoeuvre should have been a hard turn to port. As the rules impose on the Neptune a positive duty to take action, the vessel may be held accountable for failing to take the appropriate action and taking insufficient action instead; [15] this may affect the apportionment of liability. [16] 

The stand-on vessel is further required to take the best action possible when it becomes clear that collision cannot be avoided by the action of the give-way vessel alone. [17] 

The law nevertheless recognises that it may be impossible for seamen to exercise ordinary judgement and skill in cases of sudden and great danger. [18] The principle applies only in cases where the danger is sudden and not imminent; a vessel will not be exonerated where there has been time to act. [19] If the sudden and dangerous situation which resulted in the wrong step being taken was created by another vessel, that vessel will incur the liability for the collision. [20] It does not seem that the danger in this case was sudden although the dangerous situation was created by the Bacchus so it can be argued that only the Bacchus should incur liability for the collision.

Causation

It can be argued that the Bacchus has breached rules 15 and 16 of the regulations but since the statutory presumption of fault was abolished [21] , the Neptune still has to prove that it was the Bacchus’s negligent breach that caused the damage to the ship. [22] 

If the ‘but-for’ test is applied in this case, it is clear that the breach of the duty of care by the Bacchus resulted in the collision which caused the damage to the Neptune. If the Neptune succeeds in proving causation, the Bacchus can try to prove that the chain of causation was broken by some intervening event. It does not seem the chain of causation was broken in this case however the fact that the vessel was destroyed after salvage services were performed may be considered, the explosion might have been caused by the salvors.

Apportionment of liability

Where there is some degree of fault on the part of all the ships involved in a collision, a court may apportion liability between the ships according to the degree in which each ship was at fault. [23] The Neptune may argue that the Bacchus was completely at fault for failing to comply with the collision rules and breaching the duty of good seamanship, it is however likely that some fault will be attributed to it for failing to exercise the proper manoeuvre when the collision was imminent. [24] This will result in some liability being apportioned but definitely to a much lesser degree than that of the Bacchus. It may be argued that there were two incidents of damage to the Neptune in this case, when the Neptune is badly holed and leaking oil from her hold and the explosion which rendered the ship a total loss. Two sub-apportionments of loss may need to be made in respect of the separate incidents provided it can be shown that there has been no intervening event. [25] 

Cargo owners

The owners of the cargo that was lost or damaged as a result of the collision may have redress against the colliding ships, but only to the extent by which each ship was liable for the collision. [26] The position of the carrier under a bill of lading contract is preserved [27] so the owners can claim in contract against the Bacchus; this right is however restricted as the Bacchus will probably be able to rely on the numerous defences usually provided under the contract. [28] The cargo owner may have a claim in tort against the Neptune, this will however be moderated according to the degree of blame attributed to the Bacchus, legal proceedings against the non-carrying ship must commence within two years from the time the cause of action arose. [29] 

Damages

For damages to be claimed, the loss must be directly caused by the negligent act and must have been foreseeable by a reasonable person at the time of the negligence. [30] 

The damage to the Neptune was as a result of the negligence of the Bacchus and it can be argued that damage or loss of the ship would have been reasonably foreseeable.

The damages may be claimed only for physical damage to the ship and for any consequential financial loss as a result of the damage, Mercury Oil Plc will find it difficult to claim against the Bacchus as it lacks a proprietary and possessory interest in the Neptune, its claim will be classed as pure economic loss which cannot be recovered. [31] 

SALVAGE

The Neptune and the Ixion

The law of salvage [32] provides two ways of rewarding a salvor, Article 13 [33] confers a right to a reward from all salved interests on a salvor for undertaking salvage operations which have had a useful result and Article 14 provides special compensation from the owner of the salved vessel in a case where a salvor has carried out salvage operations with respect to a ship which by itself or its cargo has threatened to damage the environment but has not earned a worthwhile reward under Article 13. [34] 

The Ixion has undertaken salvage operations to minimise the flow of oil from the Neptune but was only able to save a quantity of cargo before the Neptune exploded. Although the skill and the efforts of the salvor to prevent or minimise damage to the environment is taken into account [35] , the salvage award under Article 13 cannot exceed the salved value of the property [36] , as the Neptune is destroyed, this means that it cannot exceed the value of the quantity of cargo saved, this does not give the salvor a lot to claim from considering all the expenses incurred.

As the parties have signed a LOF 2000 contract with SCOPIC incorporated, special compensation under Article 14 is replaced with a right to remuneration based on industry agreed tariff rates, out of pocket expenses and a bonus. [37] The SCOPIC remuneration will however be payable only to the extent that it exceeds an Article 13 award [38] and will commence from the time the written notice invoking the clause was sent to the ship owners, any services rendered before that time will be assessed under Article 13. [39] 

Although the Neptune is destroyed, Sisyphus SA should be able to get back the expense of mobilising additional tugs and equipment used, any other out of pocket expenses reasonably incurred and an additional bonus as SCOPIC remuneration.

The fact that a flow of oil could not be staunched by the salvor and a considerable slick developed as a result may be considered when assessing the salvage award, it is not clear on the facts of the case whether this happened because of negligence on the part of the salvors but if that is found to be the case, Sisyphus SA may be deprived of the whole or part of the payment due under the SCOPIC clause. [40] 

THE BACCHUS AND THE ATLAS

The Atlas has carried out salvage operations on the Bacchus and has had a useful result, the Article 13 award will be calculated taking into account amongst other factors, the fact that the Atlas is a station-keeping tug so will charge a higher rate for its services than a commercial vessel. [41] The SCOPIC remuneration will be calculated and paid unless it exceeds the award under Article 13, if this is the case the Article 13 award will be discounted by 25% of the difference between it and the SCOPIC remuneration. [42] 

As the LOF has been signed and SCOPIC incorporated, the owners of the vessel are under an obligation to provide security for the SCOPIC remuneration within two days of receiving the notice invoking the clause. [43] The salvor is however entitled to withdraw his services and revert back to his right under Article 14 is the security is not provided within the two days. [44] On the facts of this case it seems that the Atlas either did not exercise the right to withdraw or the salvage operations were carried out within two days; before the right accrued. The ship owner is entitled to terminate the obligation to pay SCOPIC remuneration after the clause has been invoked provided that the salvor is given 5 days notice of such termination. [45] As the assessment of the SCOPIC remuneration starts from the time the written notice is invoked [46] till five days after the termination notice has been given plus any time reasonably used after the five days to demobilise [47] , it seems that Jupiter will have to pay Hesperides salvors for the work done until the ship reached the place of safety. It is not clear if the contract between the parties agreed a place of safety for the ship, it may however be argued on the facts of that the Atlas may have towed the Bacchus to a port of refuge. If this is the case, salvage services have ended so far the ship is in a safe condition and Hesperides should be remunerated. [48] 

Salvage claims constitute maritime liens and may be pursued by arresting the ship, cargo and freight. The liability of each interest is however several in relation to their salved values. [49] The convention provides that an action will be time barred if no judicial or arbitral proceeding have been commenced within two years. [50] 

OIL POLLUTION

The Neptune

The Neptune caused oil pollution by leaking oil from her hold; this has now adversely affected the beaches of Sicily, fifty sperm whales have died and a company that organises whale watching expeditions has cancelled all its trips for the summer season.

The liability [51] (CLC) and the fund [52] conventions 1992 will apply to this case as the collision happened in the territorial sea of Italy, a contracting state to the convention [53] and Pluto Inc may be liable under the convention as the owner of a ship that carries persistent oil in bulk. [54] 

The CLC provides that polluting ship owners will be jointly and severally liable for pollution damage so Pluto Inc will probably be liable for any damage that was caused by the collision and is not reasonably separable [55] between it and the Bacchus as the convention does not apply to the Bacchus as a ship that does not carry oil in bulk. [56] 

The CLC provides that ship owner shall be strictly liable [57] for pollution damage caused and preventive measures taken to prevent or minimise such damage [58] , it however does not prevent the owner from taking recourse against third parties. [59] It also states that the ship owner may not be sued outside the convention for pollution damage and exempts the crew of the ship, salvors and charterers from liability. [60] 

Basically the only recourse claimants can have under the CLC is against Pluto Inc but nothing in the convention will stop it from trying to recover some of the amount paid as damages from Jupiter SA in a negligence action for causing it to spill the oil in the first place if possible.

Pluto Inc will have the right to limit its liability for pollution damage under the CLC to an aggregate amount [61] provided that the damage could not be said to have arisen from the personal act or omission of the ship owner with the intent to cause such damage or reckless and with the knowledge that such damage would probably result. [62] 

The parties that have suffered pollution damage as a result of the collision can claim against Pluto Inc but such claims will be subject to the limitation figure and once the limitation fund has been constituted, it shall be distributed to claimants in proportion to their established claims. [63] A claim is admissible under the CLC to the extent that there is a causal link and proximity between the contamination by the oil spill and the loss or damage suffered by the claimant. [64] Compensation is payable for environmental damage [65] , this will cover the reasonable clean up costs to reinstate the impairment to the environment actually undertaken or to be undertaken and also loss of profit from such impairment as well as loss or damage caused by the measures taken to prevent or minimise the damage to the environment, the cost of restoring the Sicily beaches may be covered.

The ship owner may claim against the fund for any reasonable expenses incurred or sacrifices reasonably made voluntarily in minimising or preventing damage to the environment, [66] this may cover some of the costs of salvors. Also, reasonable costs for the rehabilitation of wildlife is payable under the fund so there might be a way of compensating for the death of the sperm whales. [67] 

Businesses that depend on tourists for their income may be compensated provided that it is the contamination from the oil spill that has caused the loss of income. [68] According to the IOPC’s claim manual [69] , factors to be taken into account when assessing their claims include the geographical proximity to the contaminated area and the extent to which the business is an integral part of the economic activity in the area. [70] The company that organises the whale watching may have a claim because the business provides a service to tourists so will be directly affected by a reduction in the number of tourists in the area of the oil spill, [71] a distinction is made between this type of business and the one that provides services to other businesses in the area as seen in the Sea Empress case. [72] 

The claimants will be able to claim against the 1992 fund convention to the extent that they have been unable to be compensated or adequately compensated by the liability convention [73] because no liability has arisen under that convention, the ship owner is financially incapable of meeting his obligations under the convention or the ship owner has exercised his right to limit his liability and the damage suffered exceeds such liability. [74] 

If the fund compensates a claimant, it will then acquire the rights of that claimant by subrogation against the ship owner and his insurers. [75] If the total amount for a particular incident exceeds the amount available under the fund, the compensation paid to each claimant will be reduced proportionately. [76] 

Claimants will lose their right to claim under the liability and the fund convention if they do not bring their claim within three years of the damage occurring, in any event no claim shall be brought after six years from which the incident that caused the damage happened. [77] Actions for compensation under both regimes can only be brought in a court of the state in which the pollution damage caused, in this case Italy. [78] 

The claimants may have the option of claiming for damages against the Supplementary Fund [79] if they have been unable to be compensated fully or adequately under the 1992 fund convention.

As the liability and the Fund regimes only apply to ships that carry oil in bulk, damage caused by the Bacchus that is reasonably separable will not be covered by the conventions. The 2001 Bunker Oil Pollution convention may apply; it covers oil spills outside the vessel that causes pollution damage in the territory of state parties. [80] The convention has almost the same terms as the liability and the fund conventions but does not have its own limitation of liability provisions; instead the 1957 or 1976 limitation convention will apply. [81] The convention however did not enter into force until November 2008 and the collision happened in January 2008 so it can be argued that it has no application.

The government of Italy has imposed a six-month ban on all fishing within 100 miles of the incident. The fisher men in this area will be affected and also the Spanish fish processing plants. It may be argued that the claims under these heads are covered by the CLC as the damage happened as a result of the collision and it is not reasonably separable. Under the CLC, compensation is payable is fish processing sectors for pure economic loss in situations where the government has imposed a temporary fishing ban. [82] The losses suffered by fish processing plants due to shortage of supply as a result of the interruption of fishing activities are covered [83] but there has to be a sufficiently close link between the contamination and the loss suffered. Factors taken into account when determining whether there is a sufficiently close link include the proximity of the claimant’s business and whether there are any alternative sources of business. [84] 

In relation to proximity, the fish processing plants are not close but there is a great level of economic dependency as over sixty percent of fish in Italian water are processed in Spain.

It may however be argued that the damage can be separated as it seems on the facts of the case that the damage to the fishing grounds was only caused by the leaking fuel oil from the Bacchus. As the CLC does not apply to ships that do not carry oil [85] , it may be argued that English law applies as the parties have agreed to submit to the jurisdiction Of English law with regards to the collision however, the courts in the United Kingdom will not entertain any action to enforce a claim for damages where the discharge or escape of oil has not caused contamination in the territory of the United Kingdom. [86] An alternative solution will be to seek recourse under Italian law; any judgment given in Italian courts may be enforced by English courts. [87] 

GENERAL AVERAGE

The rights in general average in relation to the Bacchus are governed by the York-Antwerp Rules 1994 (the rules) by virtue of incorporation into the bills of lading contracts. A General Average act (GA) occurs when any extraordinary sacrifice or expenditure is intentionally made or reasonably incurred for the common safety or to preserve from peril the property involved in a common maritime adventure. [88] 

In this case, a General Average contribution may arise in relation to the cargo that was jettisoned to lighten the Bacchus, the freight in relation to that cargo if it was due on delivery and the salvage services provided to save the ship and its cargo. Any port of refuge costs including the wages and maintenance of the crew may also be covered. [89] However, it is only losses that are a direct consequence of the GA act that are covered. [90] 

The principles of equity require that the sacrifice made or expenses incurred should be made good or repaid by the parties that have benefited from such act in proportion to the value of their property that was saved. [91] For a sacrifice or expenditure to be recoverable as a GA contribution, it must not have occurred as a result of an ordinary incident of the voyage [92] , it must be reasonably made and the loss should be incurred under the pressure of a real and imminent danger. [93] On the facts of the case, it seems that the GA acts will be covered. It may be argued that it was the Bacchus’s fault that put the parties in a position on peril in the first place so the ship owner should be barred from bringing a GA claim [94] , the York-Antwerp rules however provide that the rights of the parties to a claim should not be affected by fault. [95] The other interests are not barred from raising the fault as a defence to a claim for contribution so may do so as long as the fault is actionable. The cargo interests may use this defence unless the ship owner is relieved from fault by a defence under the carriage contract; [96] this is very probable considering that the bills of lading under the contract will most likely be subject to the Hague/Visby rules; the rules confer a lot of immunities and defences on a carrier. [97] It is clear that the jettisoning of the cargo was not an ordinary incident; however the jettisoned cargo must have been carried in accordance with a recognised custom of trade to give rise to a GA contribution. [98] The loss of freight [99] arising from the loss of the cargo may be made good as GA, the expenses that would have been incurred in earning the freight such as the cost of discharge will however be deducted from its gross value.

Payment made to salvors can be claimed as GA provided that the salvage services were performed for the purpose of preserving the property involved in the maritime adventure from peril. [100] This may include the enhancement of the salvage award as a result of the skill and effort used by the salvors to prevent or minimise damage to the environment [101] but not the special compensation payable where the salvor has not had a useful result. [102] 

The cost and expenses incurred by the ship entering a port of refuge as a result a GA act undertaken may be admitted. [103] The ship owner is also allowed to claim the additional wage and fuel costs caused by the prolongation of the voyage due to the stay at the port of refuge [104] , these expenses are however only allowed up to the date of the ship’s condemnation or the abandonment of a voyage. [105] 

In this case, it seems that the original voyage has been abandoned and the cargo will have to be transhipped. Transhipment costs may be allowable as port of refuge expenses if the parties agree to preserve the GA allowances by entering into a non-separation agreement, the effect of the agreement is to preserve the rights in GA as if the voyage had continued in the original ship. [106] Under the York-Antwerp rules the allowance will continue for as long as the journey is justifiable under the carriage contract, this in English law will be until the voyage is frustrated by delay or it would have been had the good not been transhipped. [107] 

A standard form of the non-separation agreement is incorporated into the rules with a Bingham clause which has the effect of limiting the cargo interests’ liability to the amount it would have cost to tranship the goods to the destination at their own expense [108] , a ship owner may be able to claim back its expenses in situations where the cargo is transhipped and forwarded to its destination as substitute expenses. [109] 

The transhipment costs may be covered under GA as they were incurred in place of port of refuge charges that may have been recoverable, this is however only allowed up to the amount of GA expense that was actually avoided so the transhipment costs will be allowable to the extent that they do not exceed what the port of refuge charges would have been had the transhipment not taken place. [110] The substituted expenses will be apportioned in the same way as the other GA losses regardless of the fact that the cargo interest has derived a benefit. [111] 

All the property that is ultimately saved by the GA act will contribute provided they were at risk at the time the loss was incurred. [112] The interests, including the one sacrificed will contribute in proportion to their value at the time and place the adventure ends. [113] 

There is a limitation period of six years from the date of the GA act for bringing a claim, this may however be reduced by contract [114] or if the claim is based on a GA bond, extended till the date of the bond. [115] 

Limitation of Liability

As the parties have agreed to submit to the jurisdiction of the English courts with regards to the collision action, the 1976 limitation act as incorporated into English law [116] will apply. Jupiter SA and Pluto Inc will be able to limit their liabilities in respect of all the claims arising out of the collision, the limitation figure will be based on the vessels’ tonnage. [117] The master and crew of the ship, charterers, insurers and salvors are also entitled to limit their liability. [118] 

Claims subject to liability in this case will include claims for damage and loss of the vessels and consequential losses which have occurred as a result. [119] Pluto Inc’s claim for the loss of the Neptune will be subject to limitation so will Jupiter SA’s claim for damage to the Bacchus. Both ship owners’ claims for consequential losses will also be covered so salvage expenses may be covered. In a situation where there are counter claims arising out of the same incident as it will probably be in this case between Pluto Inc and Jupiter SA , their respective claims will be set off against each other and the provisions of the convention will only apply to the balance. [120] 

Any claims by the owners of the cargo on the Bacchus arising in respect of the loss and damage to their cargo and loss caused by delay as a result of the collision will be subject to the limitation figure [121] so will any claims by Mercury Plc against Pluto inc under the charter party. [122] Claims for salvage, general average contributions and in respect of liability for oil pollution damage are however not subject to limitation. [123] 

The right to limit may only be lost if it is proved that the loss resulted from the personal act or omission of the ship owner, committed with intent to cause the damage or recklessly and with knowledge such damage would be caused. [124] It is very difficult for a ship owner to lose the right to limit, however the 1996 protocol to the 1979 convention has substantially increased the limitation figures. [125] 

Any party that may be liable can invoke limitation of liability but this does not mean that they are admitting liability [126] ; limitation of liability may be invoked without the party constituting a limitation fund. [127] A fund may however be constituted by depositing the aggregate sum as calculated under the convention or producing an acceptable guarantee to a competent authority, where a limitation fund has been constituted, any claimants against it would be barred from bringing any claims against the assets of the person that has constituted the fund and any property of such person which has been arrested may be released. [128]