The Supreme Court dismissed shipowners’ appeal and held that their container vessel was unseaworthy under article III rule 1 of the Hague Rules because a defective passage plan caused her to ground on leaving Xiamen. The owners could not rely on the nautical fault exception in article IV rule 2(a), and their crew’s failure to prepare a proper plan was a want of due diligence for which the owners remained responsible, so their claim for general average contribution failed.
On 18 May 2011 the container vessel CMA CGM LIBRA grounded on a shoal outside the buoyed fairway while leaving Xiamen, China, bound for Hong Kong. Salvage cost about US$9.5 million. The owners claimed general average of some US$13 million from cargo interests. Most cargo interests paid, but about 8 per cent refused, and the owners sued the respondents for approximately US$800,000. The contracts of carriage incorporated the Hague Rules. A shipowner cannot recover general average where the loss was caused by actionable fault, including a causative breach of the contract of carriage.
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The defective passage plan
The ship carried a notice warning of depths shallower than those charted on the approach to Xiamen. The working chart and passage plan omitted that warning. The trial judge found that the omission helped cause the master’s decision to leave the fairway and the resulting grounding. The owners did not challenge those findings.
The owners’ case
Cargo interests said the owners had failed to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage, contrary to article III rule 1. The owners replied that a passage plan records navigational decisions, that a defective plan does not make a vessel unseaworthy, and that article IV rule 2(a) exempts loss caused by act, neglect or default of the master or crew in the navigation or management of the ship. Alternatively, they said due diligence had been exercised: the master was competent, the vessel had the current chart and the notice, and the owners had provided what a competent crew needed. Teare J rejected that defence and dismissed the general average claim. The Court of Appeal upheld him.
No category dividing seaworthiness from navigation
The Hague Rules distinguish two duties. Article III rule 1 requires the carrier to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage. Article III rule 2 governs the care of the goods. The nautical fault exception cannot excuse a causative breach of the first duty. A navigational mistake may therefore have different consequences depending on whether it leaves the ship unseaworthy at departure or occurs later in the voyage.
The Court did not accept that unseaworthiness requires an “attribute” of the ship in any prescriptive sense. Seaworthiness has long extended beyond physical defects to matters such as charts, systems, crew knowledge and, in some cases, cargo or trading history. Comments in The Aquacharm and The Apostolis were treated as illustrative of particular facts, not as a legal threshold. The usual test, drawn from McFadden v Blue Star Line, is whether a prudent owner, had he known of the defect, would have required it to be made good before sending the ship to sea. That test is not universal at the boundaries, but it was appropriate here because the defect concerned the safety of the vessel. Teare J’s finding that it was inconceivable a prudent owner would have allowed departure with this plan was unassailable. A vessel is likely to be unseaworthy if she sails without a passage plan, or with a defective plan that endangers her. There was no meaningful distinction between failing to correct a chart and failing to annotate it in passage planning: either can leave an unsafe working chart. The defect was not one that would reasonably have been expected to be put right before danger arose.
Due diligence could not be delegated to the navigators
The owners’ alternative argument was that due diligence is discharged by employing competent officers, instructing them in passage planning and auditing their performance, because navigation is exclusively the master’s responsibility. The Court rejected that as novel and unsound. The Muncaster Castle establishes that the carrier must answer for lack of diligence by those implicated in the work of making the vessel seaworthy, whether servants or independent contractors. The duty is non-delegable. Limits exist where the want of diligence occurs before the vessel or cargo comes within the carrier’s orbit, but they did not apply here. The vessel was at all times in the owners’ control, and the master and second officer prepared the plan as the owners’ servants. Specialist skill does not take the work outside the carrier’s responsibility, any more than specialist repair or engine work does. Providing a competent crew and proper systems is part of the obligation under article III rule 1, not its limit. If errors in appraisal or planning before the voyage render the vessel unseaworthy, the carrier is liable whether or not systems and competence obligations were otherwise met.
Verdict: The Court unanimously dismissed the owners’ appeal. The defective plan made the vessel unseaworthy at departure and contributed to the grounding. Failure to exercise due diligence in preparing it defeated the claim for general average contribution.
Source: Alize 1954 and another v Allianz Elementar Versicherungs AG and others [2021] UKSC 51
