Extent Of The Implied Obligation Of Seaworthiness And The Effects Of Breach - Essay Example

An examination of the extent of the implied obligation of seaworthiness and the effects of breach Introduction Domestic common law and statutes together with international conventions such as the Hague Visby Rules ensure that the carrier of goods by sea implicitly guarantees that the vessel transporting the goods are seaworthy. In a typical case the burden is on the owner of the goods to prove that the ship was not seaworthy following which the burden shifts to carrier to prove that he or she had used due diligence to ensure the vessel’s seaworthiness.1 The law with respect to seaworthiness is necessary since the vendor is discharged of liability once the goods are dispatched at a port for shipment to the buyer.2 Moreover, should the goods arrive in a nonconforming state the buyer is at liberty to reject them.3 The difficulty with respect to liability arises if the goods were damaged in transit. Since the vendor is discharged of liability upon delivery of the goods at the dispatching port provided they conform to the terms of the contract and are subsequently damaged in transit, the question of seaworthiness arises to determine whether or not the carrier should be held responsible for those damages. This paper examines the implied duty of the carrier to ensure seaworthiness and the implications with respect to breach of the implied duty. Definition of Seaworthiness In order to fully understand the concept and extent of liability for an unseaworthy vessel it is necessary to examine how the term seaworthiness is defined by the courts. In an early case the Court of Appeal per Cairns J defined seaworthiness as such that: “The ship should be in a condition to encounter whatever perils of the sea a ship of that kind, and laden in that way, may be fairly expected to encounter on the voyage.”4 Over the years this definition has been expanded upon in such a way as to impose upon the carrier the duty to not only ensure that the vessel is physically fit but to guard against the possibility that it might become unseaworthy during the voyage. For instance, seaworthiness was defined in McFadden v Blue Star Line [1905] 1 KB 697 as a vessel which: “...must have that degree of fitness which an ordinary careful and prudent owner would require his vessel to have at the commencement of her voyage having regard to all the probable circumstances of it.”5 Seaworthiness of a vessel was defined in the case of Kopitoff v Wilson (1976) 1 QBD 377 as a vessel which was: “...fit to meet and undergo the perils of the sea and other incidental risks which of necessity she must be exposed in the course of the voyage.”6 These common law definitions of seaworthiness are mirrored in the Maritime Insurance Act 1906 Section, Section 39 which provides for a vastly similar duty on the part of the carrier with respect to a vessel being able to withstand the ordinary perils of the sea.7 Section 39 however adds a new dimension to the meaning of seaworthiness leaving open a number of plausible possibilities. Section 39 of the Maritime Insurance Act 1906 provides as follows: “A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured.”8 The term “all respects” has given rise to the extension of the duty to provide a seaworthy vessel and has therefore been expanded by the courts. Sir MacKenzie Chalmers, one of the original drafters of the Maritime Insurance Act 1906 explains that: “the words ‘in all respects’, in S. 39 include ‘manning, equipment and stowage’, but these additional words were cut out in the Lords, being regarded as unnecessary and probably restrictive.”9 This broad concept of seaworthiness has been incorporated by Article III rule I of he Hague Visby Rules which imposes upon the carrier a duty before and at the commencement of the voyage to “exercise due diligence” ensuring that the vessel is seaworthy, properly manned and equipped and to ensure that refrigeration and holds are such that they are “fit and safe for their reception, carriage and preservation.”10 In this sense, the Hague Visby Rules have substituted an absolute duty to provide a seaworthy ship with an absolute duty to exercise due diligence in ensuring that the vessel is seaworthy. While the Hamburg Rules do not specifically refer to seaworthiness it goes so far as to imply the duty by imposing liability for all negligence on the part of the carrier.11 William Tetley provides a definition of seaworthiness that encapsulates the broader concept of due diligence as well. Tetley defines seaworthiness as follows: “...the state of a vessel in such a condition, with such equipment and manned by such a master and crew that normally the cargo would be loaded, carried, cared for and discharged properly and safely on the contemplated voyage.”12 The Implied Duty The duty to provide a seaworthy vessel can be either expressed or implied.13 When the duty to provide a seaworthy vessel is implied it cannot be waived save and except by an expressed clause.14 Quite often a voyage charter of a bill of lading will be silent as to the obligation for the carrier to provide a seaworthy vessel. In such a case either the Hague Visby Rules or Hamburg Rules which govern the transport of goods from the port of one State to another will apply.15 By virtue of Article III Rule 1 the ship is required to be seaworthy and the carrier is required to exercise due diligence in making sure that the ship is seaworthy.16 Under common law the implied duty is also firmly established. For example Field J said in Kopitoff v Wison (1876) 1 QBD 377: “We hold that, in whatever way a contract for the conveyance of merchandise be made, where there is no agreement to the contrary, the shipowner is, by the nature of the contract, impliedly and necessarily held to warrant that the ship is good, and is in a condition to perform the voyage then about to be undertaken, or, in ordinary language, is seaworthy, this is, fit to meet and undergo the perils of the sea and other incidental risks to which she must of necessity be exposed in the course of the voyage.”17 The implied duty to provide a seaworthy vessel is also applicable to cases where a vessel is chartered to another for a specific time period. The position at common law requires that the vessel is seaworthy upon delivery and that obligation is absolute unless there are other arrangements expressed in the charter contract.18 It therefore followed that the duty to provide a seaworthy vessel under a charter party contract is not a continuous duty and will only be applicable at the time of delivery. In all cases involving contracts with respect to sea vessels the time in which the obligation to provide a seaworthy vessel will depend on the nature of the contract. The obligation to provide a seaworthy vessel where the vessel is contracted under a bill of lading for the purpose of receiving and delivering cargo appears to be a continuous one commencing at the time of taking on the cargo. It was explained in McFadden v Blue Star Line [1905] 1 KB 679 that: “...the warranty of seaworthiness in the ordinary sense of that term, the warranty, that is, that the ship is fit to encounter the ordinary perils of the voyage, is a warranty only as to the condition of the vessel at a particular time, namely, the time of sailing.” 19 It was also held in McFadden v Blue Star Line however, that the ship must also be fit at the time of loading to receive and store the cargo at the time of loading.20 In other words the implied obligation to provide a seaworthy vessel for the purpose of discharging a bill of lading is a continuous obligation. It commences at the time of loading and continues once the vessel begins its journeys. It will be no defence to claim that the vessel was seaworthy at the time of loading and became unseaworthy later on.21 Breach of the Implied Obligation In order to determine whether or not the shipowner is in breach of the implied obligation to provide a seaworthy vessel it is necessary to determine when the ship actually commences its voyage. This is important since the duty continues from the time of loading to the time of commencing the journey. Professor William Tetley explains that a ship’s journey commences: “when all hatches are battened down, visitors are ashore and orders from the bridge are given so that the ship actually moves under its own power or by tugs or both.”22 In other words the implied obligation to provide a seaworthy vessel ceases once the ship has left its moorings. In the event any damages are sustained as a result of unseaworthiness later on will not be the shipowner’s responsibility since he or she discharged the obligation once the vessel commenced its voyage.23 Determining the time at which a ship is seaworthy to the extent that it implicitly imposes upon the carrier an obligation to ensure seaworthiness is not altogether straightforward. For instance a ship may if custom permits commence a journey in an unseaworthy state if that state could be remedied at a later stage without undue delay and difficulties. If however, the condition or state of unseaworthiness is not remedied during the voyage the carrier will not be in breach of the implied obligation to provide a seaworthy vessel although they can be liable in negligence.24 The Extent of Liability With Respect to Seaworthiness The extent of liability with respect to seaworthiness is intricately died to the duty to provide a seaworthy vessel within the scope and range of its definition and meaning. Having established that seaworthiness relates both to physical fitness and navigational matters, it is now necessary to examine, the extent of liability. The duty to provide a seaworthy vessel has been expressed by the courts in terms of a “warranty of seaworthiness.”25 Blackburn J. went so far as to say: “That is generally expressed by saying that it shall be seaworthy; and I think also in marine contracts, contracts for sea carriage, that is what is properly called a ‘warranty,’ not merely that they should do their best to make the ship fit, but that the ship should really be fit.”26 A breach of the obligation to provide a seaworthy vessel will incur liability and the extent of liability largely depends upon how severe the breach is, the time and expense necessary to modify the damages and the specific dynamics of the contract itself.27 Ultimately, the obligation to provide a seaworthy vessel arises to extend some form of insurance to the cargo owner against damages sustained in transit by imposing liability on the carrier/owner with respect to seaworthiness.28 As previously illustrated the extent of liability is founded on the premise that a ship contracted either for transporting cargo or on a charter basis is required to be seaworthy to such an extent that it is capable or withstanding the ordinary perils at sea.29 The extent of the obligation and consequences with respect to liability were demonstrated in The Antigoni [1991] 1 Lloyd’s Rep. 209. In this case the ship’s balance weights on the engine’s crankshaft was required to be checked at regular intervals and maintained a certain torque. The ship’s engineer did not carry out the work required with the result that the ship’s engine ultimately failed while out at sea and the ship was towed. Cargo owners were successful in a claim based on seaworthiness and the ship owners were therefore liable.30 In other words liability is such that the obligation to provide a seaworthy ship has developed to impose upon the carrier/owner a duty to ensure that the ship is fit so that it is capable of carrying the goods from the point of loading to its destination.31 Liability for unseaworthiness can extend to damages sustained by one cargo by other cargo or from the remnants of previous cargo. In The Inowroclaw [1989] 1 Lloyd’s Rep 498 coffee beans were damaged as a result of rain, sea and copra.32 The cargo owner was successful in his claim for unseaworthiness as well as negligence33 a result which speaks to the seemingly boundless extent of the carrier’s liability and the implied duty to provide a seaworthy vessel. Another good example of the broad extent of liability for breach of the implied obligation to provide a seaworthy vessel is found in the case of The Iron Gippsland [1994] 1 Lloyd’s 335. In this case the ship was transporting varying degrees of oil for different owners. While the same inert gas was utilized in each of the oil tanks the claimant’s oil had become contaminated by the inert gas. The court found that the gas system could have been isolated and ruled that the carrier had failed to take proper care of the claimant’s oil.34 Under Common law and international conventions the duty to provide a seaworthy vessel cannot be delegated as a means of escaping liability. If the person to whom that duty is delegated fails in due diligence, the ship owner remains liable for that failure.35 Likewise in The Sundancer [1994] 1 Lloyd’s Rep 183, Sundance purchased a car ferry subsequently converting it into a cruise ship. A classification organization had issued safety certificates for the newly converted cruise ship yet the ship did not have valves in the grey water system and when it struck a rock at sea the ship flooded and sank. It was ruled that the ship’s conversion had been faulty and as such unseaworthy. Despite the safety certificates issued the owner’s duty to provide a seaworthy vessel was non-delegable and he was therefore liable.36 The English courts have ruled similarly. For example in The Toledo [1995] 1 Lloyd’s Rep 40 a ship’s shell plating malfunctioned as a result of brackets that were corroded. The problem had not been isolated during the ship’s classification. The court ruled however that the problem had been obvious enough and the ship owners could have easily discovered the problem had they exercised due diligence. Since they did not, they had breached the implied obligation to provide a seaworthy vessel with the result that they were found to be liable for the breach.37 Even where liability is limited by statute, that liability can be applied at common law. For instance Article IV Rule 2 of the Hague Visby Rules does not include damages by fire, if the fire has been caused by unseaworthiness the carrier will liable. Therefore the courts will examine the cause of the fire and not merely look at the fire. For example in The Subro Valour [1995] 1 Lloyd’s Rep. 509 a vessel caught fire as a result of faulty wiring with the result that the owner/carrier was liable for a breach of the obligation to ensure seaworthiness.38 In another case, The Fiona [1994] 2 Lloyd’s Rep 506 the cargo included fuel which emitted inflammable vapours which started a fire when it had been sampled just before the journey began. Although the ship owner had not been aware of the dangers posed by the cargo, the court ruled that the danger had been exemplified by residue from previous cargo and the ship owner could not escape liability.39 The underlying principle is that a ship is unseaworthy if any latent defects cause damages and those latent defects could have with due diligence on the part of the carrier/owner have been discovered. The Court of Appeal put is succinctly in The Fjord Wind [2000] 2 Lloyd’s Rep. 191 stating that: “Putting the matter in simple terms, a ship should not be unseaworthy if proper care is taken.”40 Ultimately, the carrier is under a continuing duty to exercise due diligence in ensuring that he vessel is seaworthy. This is the ambit of Article III of the Hague Visby Rule and is carried over by the British Carriage of Goods by Sea Act 1971.41 Unless a carrier/owner exercises due diligence he will not be able to claim any exemptions from liability.42 The implied obligation to provide a seaworthy ship and liability for losses sustained as a result of that breach were explained by Hobhouse J in The Torenia [1983] 2 Lloyd’s Rep 210 as follows: “If...in all cases where a structural defect in the ship has contributed to the loss, the carrier has in effect to prove that he had exercised due diligence to make the ship seaworthy.”43 Conclusion Due diligence is obviously an absolute duty on the part of ship carriers and owners. With it the implied obligation to provide a seaworthy ship is also absolute and capable of wide and far reaching construction. The result is that the ship owner/carrier is ultimately liable for damages and losses if there was a latent defect in the ship, its crew and/or the manner is which it stored or transported its cargo. The imposition of the implied duty is significant since the cargo, once it is dispatched to the port discharges the vendor of his or her liability for damages or loss. In the absence of a an obligation to perform due diligence with respect to the seaworthiness of the ship transporting the goods the purchaser would have no remedy should the goods sustain damages en route should the ship itself suffer damages as a result of unseaworthiness. Bibliography Bugne Corp. v Tradax Export [1981] 1 WLR 711 Carriage of Goods by Sea Act 1971 Colinvaux, Raul. Carver’s Carriage by Sea. London: Stevens and Sons, (13th Ed. 1982) D’Arcy, Murray. Murray, Carole and Cleave, Barbara. Schmitthoff’s Export Trade the Law and Practice of International Trade. London: Sweet & Maxwell, 2000. Giertsen and Others v Gorge Turnbull and Company (1908) 16 SLT 250 Guest, A.G.Benjamin’s Sale of Goods. London: Sweet & Maxwell, 2006 at 1576 Hague Visby Rules Kopitoff v Wilson (1876) 1 QBD 377 Maritime Insurance Act 1906 Maxine Footwear Co. Ltd. v Canadian Government Merchant Marine Ltd. [1959] AC 589 McFadden v Blue Star Line [1905] 1 KB 697 Minister ov Materials v World Steamship Company, Ltd. [1952] 1 Lloyd’s Rep. 485 Phillips Petroleum Co. v. Reardo Smith Line Ltd. [1952] 12 Lloyd’s Rep. 39 Smith, Hogg & Co. Ltd. v Black Sea & Baltic Generals Ins. Co. Ltd. [1940] AC 997 Soyer, B. Warranties in Marine Insurance. London: Cavendish Publishing Limited (2001) Soyer, B. ‘Post-Contractual Duty of Utmost Good Faith in Marine Insurance Contracts: A New Perspective for the New Millennium.” 8(2001) International Maritime Law, 191-198 Steel v State Line Steamship Co. (1877-1878) LR 3 App. Cas. 72 Takahashi, K Right to Terminate (Avoid) International Sales of Commodities. (2003) Journal of Business Law, 102-130 Tetley, William. Marine Cargo Claims. London: Wiley and Sons, (4th Edn, 2008) The Antigoni [1991] 1 Lloyd’s Rep. 209 The Fiona [1994] 2 Lloyd’s Rep 506 The Fjord Wind [2000] 2 Lloyd’s Rep. 191 The Iron Gippsland [1994] 1 Lloyd’s 335 The Muncaster Castle [1961] AC 807 The Subro Valour [1995] 1 Lloyd’s Rep. 509 The Sundancer [1994] 1 Lloyd’s Rep 183 The Toledo [1995] 1 Lloyd’s Rep 40 The Torenia [1983] 2 Lloyd’s Rep 210 Table of Contents Introduction...............................................................................................................................1 Definition of Seaworthiness......................................................................................................2 The Implied Duty......................................................................................................................4 Breach of the Implied Obligation.............................................................................................6 The Extent of Liability With Respect to Seaworthiness..........................................................7 Conclusion..............................................................................................................................11 Bibliography...........................................................................................................................12 Read More