In London Arbitration 14/23 the Tribunal heard that a vessel's grounding, without any causative negligence, resulted in the Charterers breaching their warranty that in the ports to which the ship would be ordered, the vessel would always remain afloat. Jeong-Sook Kim provides the details.
London Arbitration 14/23 held that the master of a grounded ship was not at fault for seeking tug assistance, finding no failure in exercising good navigation and seamanship. The costs incurred for refloating, shifting, and re-anchoring were deemed the Charterers' responsibility as damages for breaching warranty, and the ship was not considered off-hire when time loss resulted from events for which the Charterers were responsible.
Facts
The vessel, chartered for one trip from the US Gulf to China under the NYPE form with an expected duration of 80-90 days, anchored at the Alliance Anchorage on the Mississippi river on 18th August, 2021. Despite the master’s notice of readiness on 19th August 2021, the vessel awaited berthing instructions.
Anticipating an approaching hurricane on 26th August, 2021, the master sought urgent instructions from the Charterers regarding berthing intentions and tug availability for the vessel's safety. The Charterers, viewing these as navigational matters for the owners and port authority, did not respond to the master’s recommendations, resulting in the vessel remaining at the anchorage and grounding during Hurricane Ida on 28th – 29th August.
On 31st August, the master requested pilot and tug assistance to shift and re-anchor the vessel. While still anchored on 12th September, the vessel turned due to strong winds, causing entangled anchor chains. Tug assistance on 22nd September disentangled the fouled chains, with the Charterers paying the costs, later deducted from hire.
Following loading in New Orleans on 27th September, the vessel sailed to China via the Cape of Good Hope, making bunkering stops at various ports, including Singapore. Despite the Owners' inquiry, the Charterers declined an underwater survey, arguing no evidence of bottom touching in fresh water. A subsequent inspection by the Owners in Singapore revealed significant fouling on 18th November 2021
The dispute
The Owners asserted claims totalling US$194,619.80, encompassing three specific issues.
Issue 1 - Tug Assistance Costs incurred on August 31st to Refloat, Shift, and Re-Anchor the Vessel
The Owners alleged that the Charterers were responsible for the costs of tug assistance on several grounds, including the assertion that
- the anchorage was unsafe,
- port charges fell under the Charterers' responsibility as per clause 2 of the charterparty,
- the charterers were obligated to indemnify implied by clause 8 for consequences arising from the master's compliance with orders regarding the vessel's employment, and
- the Charterers were in breach of their warranty regarding the vessel always being afloat.
The Charterer argued that there was nothing in the characteristics of the port or the conditions encountered by the vessel that exposed it to risks that could not be avoided by the exercise of good navigation and seamanship (The Eastern City) [1958] 2 Lloyd's Rep 127 at page 131 and (The Ocean Victory) [2014] 1 Lloyd's Rep 59 at para 112), and it was the master’s failure in those respects that resulted in his requirement for tug assistance. Both parties presented expert opinions, and though they agreed on certain aspects, the tribunal ultimately favoured the Owners' expert.
The Tribunal held that the Alliance Anchorage was not unsafe for the vessel. Since the tugs' assistance was necessary for the Charterers to comply with their warranty that the vessel would always be afloat, the related expenses were deemed the responsibility of the Charterers under clause 2, which stipulates that "port charges, recommended pilotages, and other usual expenses (including tug costs)" are for the account of the Charterers. The expense of the tugs would be recoverable under the indemnity implied in clause 8.
Issue 2 – Tug assistance cost incurred on 22nd September and deducted hire
The tribunal assessed the Charterers' allegations regarding the fouling of anchor cables and the master's actions. The Charterers argued that the master's negligence led to the fouling, contending that he failed to implement adequate measures and neglected remedial action until berthing instructions were given.
In response, the Owners argued that the Clause Paramount exempted them from responsibility for the master's acts under Article IV, Rule 2(a) of the Hague-Visby Rules; the Owners were not responsible for loss or damage arising or resulting from such an "... Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship ..." (Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 Lloyd's Rep 7 and Clearlake Shipping Pte Ltd v Privocean Shipping Ltd (The Privocean) [2018] 2 Lloyd's Rep 551).
The tribunal held that the master's failure to promptly address the fouling issue, leading to additional costs and delayed berthing, constituted a serious and negligent omission. In this regard, the master had taken no evidence to remedy the issue and disentangle the chains for over a week, until berthing was imminent.
Nevertheless, the Tribunal considered that there was insufficient evidence that had the master not failed to assess the risks involved and corrective action that might be taken, the fouling of the anchor cables would not have occurred. The Tribunal found that the second anchoring place was unsafe, and accordingly the Charterers were liable for the costs of engaging tugs to free the vessel. By the same reasoning, the vessel remained on-hire for the time taken to disentangle the anchor chains. The delay was a direct result of the unsafety of the anchorage. The tribunal applied the principle, as described by Rix J in Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd's Rep 139 at page 151, that a ship is not off-hire in circumstances where the loss of time is caused by events for which the Charterer is responsible.
Furthermore, even if the master was causatively at fault, the charterparty incorporated a clause paramount. The tribunal considered that Owners would be entitled to rely upon the exception for ‘Act, neglect, or default of the master… in the navigation or in the management of the ship’ in art. IV, rule 2(a) of the Hague / Hague-Visby Rules. Accordingly, Owners were not ‘responsible’ for loss or damage caused by the master’s negligence, and Charterers’ claim would fail on this basis.
Issue 3 - Hull fouling; the costs incurred for inspecting and cleaning the hull in Singapore
Clause 100 of the charterparty specified that
"Where the vessel remains at anchorage, in port or idle for a period exceeding 25 consecutive days (whether in tropical waters or not) in compliance with Charterers' orders/instructions, and this causes fouling of the hull or underwater parts, Owners shall not be responsible for such fouling or any vessel underperformance caused by such fouling. Charterers to arrange, before redelivery, the vessel's underwater hull area to be inspected and cleaned, if necessary. The cost of cleaning the hull or underwater parts, and the time spent doing so, shall be for Charterers' account.”
An underwater inspection occurred at Singapore, and significant hull fouling was discovered. The Owners claimed that the Charterers breached this clause by not arranging for the vessel's underwater areas to be inspected after waiting 34 days at the Alliance Anchorage. In response, the Charterers argued that the clause applied only to saltwater environments, not freshwater like the Mississippi. If bottom fouling had occurred, the Charterers contended it had not occurred in the freshwater of Alliance Anchorage. The Charterers provided expert evidence arguing that any fouling must have occurred prior to Alliance Anchorage. The Owners provided no expert evidence but attempted to introduce a news article suggesting increased salinity due to drought conditions, but the tribunal gave little weight to the article due to uncertainties about the location, timing, and salinity levels.
Ultimately, the tribunal favoured the Charterers, determining that the Owners' evidence was insufficient to support their claims. Consequently, the tribunal ruled against the Owners' request for reimbursement of inspection and cleaning costs, resulting in the failure of the Owners' claim for the expenses related to the inspection and hull cleaning in Singapore.
Commentary
The conclusions reached in this case highlight the importance of a careful examination of factual evidence to support contentions that are made in arbitration proceedings.
In this regard, in deciding Issue 2 the Tribunal made severe criticisms of the conduct of the master but did not consider that the Charterers had provided sufficient evidence that this conduct had led to the fouling of the anchor chains. Rather, this occurred as a result of the underlying unsafety of the anchorage.
Similarly, it is noteworthy that the Charterers succeeded in relation to Issue 3, in which the Owners did not provide any expert evidence of their own. If the Owners had introduced good expert evidence supporting their contention that the hull had been fouled at the Alliance Anchorage, the tribunal may well have had a more difficult decision to make.
For further information, please contact:
Jeong-Sook Kim
Associate
Jeong-sook@cjclaw.com