‘Table of Contents’ has been prepared only to be used as a tool for ease of referencing. Words used herein have not been included in the word count as are not a part of the main text.

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TABLE OF CONTENTS

a. Pattern of discussion ...................................................................................... 1 b. Case of too many cooks? ............................................................................... 2 c. Seaworthy in fact vs. Due diligence .............................................................. 3

c.1 Strict nature of absolute seaworthiness under common law ..................... 3 c.2 Illusion of due diligence under H(V)R (same retained by RR) but their raison d’être justified ............................................................................... 4

d. Status quo ........................................................................................................ 6

d.1 ISMC setting the standards since 1998 whilst carriage law lags behind reality ................................................................................................... 7

d.1.1 Tougher regimes to police compliance and enhance prospect of seaworthiness ....................................................................... 9 d.1.2 Burdening the carrier as insurer of goods for breach of seaworthiness? ...................................................................................... 11 d.1.3 ISM warranty in insurance ............................................................ 11 d.1.4 Basis for satisfying claims ............................................................. 12

d.2 Shipowner’s acceptance of extended obligation under C/P .................... 14 d.3 Shorter turn-around time ......................................................................... 15 d.4 Technological advancements in vessel communication systems ........... 16

e. Duty ceases on sailing under present carriage regimes ........................... 16

e.1 Defeating the purpose of ISMC ............................................................... 16 f. Moving forward - RR ...................................................................................... 17

f.1 When does the voyage conclude under RR? ........................................... 19 f.2 How will the courts decide on this extended obligation? Two examples considered (where repairs cannot be effected at sea) .................. 19

g. Cost factor ..................................................................................................... 21 h. Which regime’s seaworthiness test is best suited to the 21st century? ............................................................................................................. 21 Bibliography ............................................................................................... 23 - 32

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a. Pattern of discussion.

Various instruments require a vessel to be made, whilst some require her to be

maintained in a seaworthy condition. A few of those will be identified prior beginning

our discussion on the topic, in below mentioned order:

(i) Establishing which one of the two (basis their nature) amongst due diligence1

and absolute test of seaworthiness is preferable;

(ii) Discussion on present day state of affairs and the added impetus for ship-

operators2 to maintain their vessels in a seaworthy state;

(iii) Discussion on doctrine of stages and why such is not in sync with present

day trade practices;

(iv) Introduction to Rotterdam Rules3 and the justification for retaining the due

diligence aspect followed by considering two examples which highlights potential

problematic areas;

(v) Penultimate discussion is on shifting of risk under RR and the related cost

factor (speculative);

(vi) Ending with a well reasoned conclusion as to which regime’s test for multi-

faceted issue of seaworthiness4 is best suited to the 21st century.

(given the international nature of the problem the discussion is not based on English

law alone).

1 Rotterdam Rules have retained the due diligence aspect of the Hague (Visby) Rules. Such is discussed in section ‘f’. 2 Ship-operator has been preferred to ship-owner as former better encompasses various entities which could be operating a vessel, such as demise charterer, a management company and a ship owning company. Shipowners and ship-operators has been used interchangeably in certain sections. 3 Referred to as RR hereinafter. 4 William Tetley, Marine Cargo Claims (4th Ed, Carswell) p 949.

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b. Case of too many cooks?5

Seaworthiness has been described “as a thread that runs through all maritime law in

various forms”6 that varies with varying exigencies7 and is set out in various

instruments, such as:

(i) Seamen employment: UK: s.42(1) c.21 MSA’95;8 Singapore: s.112(1) c.179

MSA’95; Canada: s.85(1) c.26 S.C.2001 (wherein it is a continuing obligation).

(ii) Marine Insurance: England: MIA 1906, s.39; Australia: MIA 1909, s.45 (wherein it

attaches at commencement of voyage and is more in line with the common law

obligation).9

(iii) Bills of lading10 and similar documents:11 Common law; Hague (Visby) Rules;12

Hamburg Rules;13 Rotterdam Rules.14

(iv) Charterparties:15 Implied warranty is usually altered by express clauses.16

5 Section heading has been borrowed from following article title, Lars Gerspacher, ‘The Ambiguous Incorporation of Charterparties into Bills of Lading Under English Law: a Case of Too Many Cooks?’ (2006) 12 JIML 192. 6 Drobnig, International Encyclopedia of Comparative Law, Instalment 12 (Martinus Nijhoff publishing 1981) p 16. 7 Nicola S.Pretty, ‘Unseaworthiness - Turning a Blind Eye’ (2008) 22 (1) Austl. & N.Z.Mar.L.J. 42, 44 <heinonline> accessed 25 January 2015. 8 Merchant Shipping Act 1995, s.42(1) Ch.21, mentions: “…..reasonable means to ensure the seaworthiness of the ship for the voyage at the time when the voyage commences and to keep the ship in a seaworthy condition for the voyage during the voyage…..”. 9 Implied warranty of seaworthiness is only under voyage policies but not under Time policies under English Law (such can be altered by an express clause to the contrary). However as per American law, under time policies warranty of seaworthiness attaches at starting of risk. See Geoffrey Brice, ‘Unexplained Losses in Marine Insurance’ (1992-1992) 16 (1) Tul.Mar.L.J. 105, 110 <heinonline> accessed 25 January 2015. 10 B/L and similar contracts of carriages represent common or public carriage. See William Tetley (n 4) p 15. 11 Such as waybills. 12 Art III(1) Hague (Visby) Rules. “The International Convention for the Unification of Certain Rules Relating to Bills of Lading Signed at Brussels 25 August 1924” is the full title of Hague rules which were amended by The Hague-Visby protocol signed at Brussels on 23 February 1968. Hague rules closely resemble the Canadian Water Carriage of Goods Act 1910 as mentioned in Comite Maritime International, The Travaux Préparatoires of the Hague and Hague-Visby rules, p 19 <http://www.comitemaritime.org/Uploads/Publications/ Travaux%20Preparatoires%20of%20the%20Hague%20Rules%20and%20of%20the%20Hague-Visby%20Rules.pdf> accessed 17 January 2015. Hereinafter referred to as H(V)R. 13 Runs throughout the carriage period (discussing such is beyond the scope of the question). 14 Article 14 Rotterdam Rules.

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(v) International Codes and Conventions: ISM Code17 (it encompasses all the

relevant codes and conventions).18

c. Seaworthy in fact vs. due diligence.

c.1 Strict nature of absolute seaworthiness19 under Common Law.

Such uncompromising obligation20 (which includes cargoworthiness)21 is evident

from decision in Steel v State Line22 and The Caledonia.23 The latter better explains the

rigid nature of the absolute undertaking whereby ship-operator’s are liable for damages

due to defects not discoverable or detectable24 (such as latent defect)25 and their best

endeavours26 are not sufficient even if done in good faith and honestly thus placing

15 Charterparties represents private carriage as compared to Bills of lading which represents common carriage. See William Tetley (n 4) p 15. 16 Discussed in sections ‘d.1’, p 7 and ‘d.2’. 17 ISM Code incorporated via Ch. IX , International Convention for the Safety of Life at Sea (SOLAS), 1974 (last amended in May 2011) which has been adopted by 96% of world’s merchant tonnage. See Baris Soyer, Warranties in Marine Insurance (2nd Ed, Cavendish) para 3.98. Also see ‘Regulation (EC) No. 336/2006’ on the implementation of the International Safety Management Code within the EU Community <http://eurlex.europa.eu/LexUriServ/LexUriServ .do ?uri=CONSLEG:2006R0336:20081211:EN:PDF> accessed 23 January 2015. 18 ISM Code, Article 1.2.3. 19 FC Bradley & Sons Ltd v Federal Steam Navigation Co (1926) 24 LlL Rep 446, where Scrutton LJ. lays down the classic definition of seaworthiness. Such is true unless there is an agreement to the contrary. See Alexander Stronach, ‘Contracts of Affreightment and Charter-parties’ in David S.Garland, The American and English Encyclopedia of Law (2nd Ed, 1898) p 211 <heinonline> accessed 18 January 2015. 20 Whereby cargo interests are placed in an advantageous position. See B.S.Shah, ‘Seaworthiness: A Comparative Survey’ (1966) 8 (1) Malaya L.R. 95, 97 <heinonline> accessed 17 January 2015. 21 Reed & Co. Ltd v Page Son & East (1927) 27 Ll.L.Rep. 114. 22 Steel and another v State Line Steamship Co [1874-80] All ER Rep 145. 23 The Caledonia 157 U.S. 124 (1895) (US Supr. Court) (Fuller CJ) where it was said: “The warranty…..ship is…..in fact seaworthy at that time, and does not depend on his knowledge or ignorance, his care or negligence.” <http://caselaw.lp.findlaw.com/scripts /getcase.pl?court=US&vol=157&invol=124> accessed 17 January 2015. Also see Alexander Stronach (n 19) p 212; George H.Chamlee, ‘The Absolute Warranty of Seaworthiness: A History and Comparitive Study’ (1973) 24 (2) Mercer L.R. 519, 524 <heinonline> accessed 17 January 2015. 24 Sanford D.Cole, The Hague Rules 1921 Explained (Effingham Wilson 1921); Halsbury’s Laws (5th Ed, 2008) Vol 7, para 470. 25 The Glenfruin (1885) 10 P.D. 103; London Rangoon Trading Co Ltd v Ellerman Lines Ltd (1923) 14 Ll L Rep 497; Riverstone Meat Company Lty. Ltd. v Lancashire Shipping Company Ltd. (The Muncaster Castle) [1961] 1 Lloyd's Rep. 57. 26 Kopitoff v Wilson (1876) 1 QBD 377.

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cargo interests in a very favourable position. To counter such, carrier’s use exculpatory

clauses27 in B/L’s (recognised under English Law but not under U.S. law)28 to their

benefit29 (as in The Laertes30, The Kheti31 and most recently in Irbenskiy Proliv32).

c.2 Illusion of due diligence33 under H(V)R34 (same retained in RR)35 but

their raison d’être36 justified.37

Though an objective test,38 legal standards for judging such (i.e. to exercise

reasonable care and skill39 whilst lack of it is equated to negligence40) are demanding

27 The ill intent of such clauses was highlighted in Lyon and Another v Mells (1804) 102 E.R. 1134, where Ellenborough L. said: “…..it is impossible without outraging common sense…..to make the owners of vessels say…..if through…..defaults on our part she be lost, we will pay nothing.” 28 On grounds of public policy. See B.S.Shah (n 20) p 97; Benjamin W.Yancey, ‘Carriage of Goods: Hague, Cogsa, Visby, and Hamburg’ (1982-1983) 57 (5) Tul.L.Rev. 1238, 1239 <heinonline> accessed 17 January 2015. 29 Even though they were repugnant to the object of carriage. See John F.Wilson, Carriage of Goods by Sea (7th Ed, Pearson publishing) p 10. 30 The Cargo ex Laertes (1887) 12 P.D. 187, where following was held: “…..she was not seaworthy for the voyage.....the exception in…..bill of lading…..limits, the warranty…..” 31 W.R.Varnish & Co. Ltd. v “Kheti” (Owners) (1948) 82 Ll.L.Rep. 525. 32 Mitsubishi Corporation v Eastwind Transport Ltd and others [2004] All ER (D) 234 (Dec). 33 Hague (Visby) rules, Article III(1), whereby absolute obligation of ship operator to ensure seaworthiness is strictly qualified, with exercising due diligence. Also see Claudiu Iulian Lesni, ‘The Ship Owner's Obligation to Ensure Seaworthiness of the Ship - Implicit Obligation of the Ship Owner in the Charter Party’ (2012) 4 (1) Contemp. Readings L.& Soc.Just. 563, 565 <heinonline> accessed 23 January 2015. 34 In UK, Hague-Visby Rules have the force of law in relation to Bills of Lading, in accordance with Carriage of Goods by Sea Act 1971, s.1 subject to their issuance under Article X of the rules. 35 RR have retained this aspect of H(V)R. Further discussed in section ‘f’. 36 Tasman Orient Line CV v New Zealand China Clays Llimited and ors (2009) CA519/2007 9 April 2009 (CA of New Zealand), where Baragwanath J. said : “…..raison d’être of the Hague Rules was to…..from the laissez-faire of the common law and to prohibit exorbitant exemption clauses.” <http://www.uncitral.org/pdf/english/texts/ transport/rotterdam_rules/NZAppealCourtJudgement.pdf> accessed 27 December 2014. 37 Canadian S.S. Lines v. Grain Growers Export Co., (1918) CanLII 17 (Can. Ont. CA), decision affirmed in 59 SCR 643, (1919) CanLII 14 (Can. SC) <canlii.org> accessed 23 January 2015; C. Itoh & Co. (America) v M/V Hans Leonhardt 1990 AMC 733 (E.D.La. 1989) where carrier was successfully able to discharge the burden of having exercised due diligence before the commencement of the voyage. 38 Great China Metal Industries Co. Ltd. v Malaysian International Shipping Corporation, Berhad (The Bunga Seroja) [1999] 1 Lloyd’s Rep 512, 517 (Aus. HC); Northern Shipping Company v Deutsche Seereederei GmbH and others (The Kapitan Sakharov) [2000] 2 Lloyd's Rep. 255 (Auld LJ). Germany also has a similar approach, per Ralph Ashton, ‘A Comparison of

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and void of any compromise41 as is clear from The Happy Ranger42 and The Muncaster

Castle.43 Ship-operator’s obligation has rightly been termed as “an indissoluble

personal obligation”.44 However the point made clear by above two cases is that ’before

the voyage’ is to be construed as point in time when vessel comes in the carrier’s orbit

of influence.45 Furthermore ship-operators are protected from incurring liability in

respect of latent defects or defects not discoverable (as in The Amstelslot,46 The

Hellenic Dolphin47 and The Cathy48).

the Legal Regulation of Carriage of Goods by Sea under Bills of Lading in Australia and Germany’ (1999) 14 Austl. & N.Z.Mar.L.J. 24, 47 <heinonline> accessed 23 January 2015. 39 Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) (No.1) [2002] 1 Lloyd's Rep. 719; Golden Fleece Maritime Inc. and another v St Shipping and Transport Inc. [2007] All ER (D) 16 (Aug) where ‘due diligence’ was examined in the context of an express charterparty clause and it was said: “…..due diligence is equivalent to the common law duty of care and contains no limit on the expense involved in exercising that duty. Due diligence requires the exercising of reasonable care and skill…..” and the decision was affirmed by CA in [2008] EWCA Civ 584. 40 Lack of due diligence is equated with negligence as was decided in Union of India v NV Reederij Amsterdam (The Amstelslot) [1963] 2 Lloyd's Rep 223 (Devlin L); The Eurasian Dream (n 39). 41 The Muncaster Castle (n 25), where text from 13th Ed of Scrutton on Charterparties was quoted by Radcliffe L.: “In reality there is no great gain to the shipowner”. Also see N.J.Margetson, ‘Liability of the Carrier under the Hague (Visby) Rules for Cargo Damage Caused by Unseaworthiness of its Containers’ (2008) 14 JIML 153, 158. 42 Parsons Corp and others v C V Scheepvaartonderneming 'Happy Ranger' [2006] EWHC 122 (Comm), where the crane hooks were proof tested by class but were not load tested as per class rules. It sets forth the point that shipowner’s failure to detect defects on a brand new ship. Also see Editorial, ‘Digest of Contemporary Developments’ (2006) 12 JIML 7, 8. 43 The Muncaster Castle (n 25), where it was made abundanty clear that the duty is non delegable. Same approach also applied in The Kasmar Voyager [2002] 2 Lloyd’s Rep 57, where the shipowner failed to prove that main engine’s spare piston provider MAN had exercised due diligence and consequently could not recover GA contribution from cargo interests. Also see Editorial, ‘Seaworthiness – The Illusion of the Hague Compromise’ (2006) 12 JIML 87. 44 Editorial, ‘Seaworthiness – The Illusion of the Hague Compromise’ (n 43) p 88. 45 Theodora Nikaki, ‘The Carrier's Duties under the Rotterdam Rules: Better the Devil You Know’ (2010) 35 Tul.Mar.L.J. 1, 17 <heinonline> accessed 21 January 2015. 46 The Amstelslot (n 40), where shipowner’s were held not liable by HL for a latent defect in the reduction gear which had been surveyed by competent surveyors in the preceeding year. 47 The Hellenic Dolphin [1978] 2 Lloyd's Rep 336. 48 W. Angliss and Company (Australia) Proprietary, Limited v Peninsular and Oriental Steam Navigation Company [1927] 2 K.B. 456, where it was said: “…..do not think…..carrier can be held guilty of want of due diligence…..the builders' employees have put in…..bad work…..”.

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At this stage it is safe to say that no-fault feature of common law has to an extent been

addressed and risk is now better distributed between the interested parties.49

Additionally, industry’s preference of due diligence requirement is apparent from the

global adoption of H(V)R50 by various nations51 and widely used incorporation in B/L

and C/P.52

d. Status quo.

An author53 rightly suggests that vessels overall management must be taken into

account and not just her (and her equipments) physical condition when judging on

seaworthiness and relies on the reasoned approach in The Bunga Seroja.54 Decision in

The Eurasian Dream55 confirms such an approach.

49 Effected parties being ship-operators; P&I Clubs and Cargo owners and subsequently the subrogated cargo insurers. 50 As per 2005 data more than 75% of nations had either ratified Hague or Hague Visby regime. Data available at <http://www.admiraltylaw.com/papers/countrytable.pdf> accessed 23 January 2015. Latest statistics, as of 2009, can be found in CMI Yearbook 2009, p 441 <http://www.comitemaritime.org/Uploads/pdf/CMI-SRMC.pdf> accessed 23 January 2015. 51 UK has shown its intent by s.3 of Carriage of Goods by Sea Act 1971, whereby there is express denunciation of implied absolute undertaking of seaworthiness in relation to contracts of carriages coming in the Act’s ambit and are instead subject to HVR. 52 See section ‘d.2’ for discussion on inclusion of due diligence obligation in C/P wherein Clause Paramount is usually made use of. 53 Ambrose Rajadurai, ‘Regulation of Shipping: The Vital Role of Port State Control’ (2004) 18 Austl. & N.Z.Mar.L.J. 83, 92 <heinonline> accessed 21 January 2015. 54 The Bunga Seroja (n 38). 55 The Eurasian Dream (n 39). The incident took place before ISM code came into force but the hearing took place once the code was made mandatory for Ro-Ro vessels.

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d.1 ISMC56 setting the standards since 199857 whilst carriage law lags

behind reality.58

It represents an “internationally recognised standard of good ship and safety

management”59 (and encompasses compliance with all the relevant international rules

and regulations)60 that is a piece of public law61 and which each company62 has

adopted through their SMS63 whereby their seaworthiness obligations64 are defined65

and to be complied with. Such has to be documented and retained66 with proper

verification procedures to check implemention.67 In addition non-compliances have to

be identified and recorded and if there be a failure on carier’s part to comply with the

measures laid out to correct the deficiencies then such would amoun to lack of due

56 ISM Code. 57 ISM code was made mandatory for tankers, passenger ships and bulk carriers from 01 July 1998 and for other cargo ships including general cargo ships and container ships - and mobile offshore drilling units of 500 gross tonnage and above from 01 July 2002. Ref. IMO resolution A.741(18) adopted on 04 November 1993 < http://www.ismcode.net/primary_source_docum ents/Original_A_741_18.pdf> accessed 23 January 2015. 58 Section title borrowed from text in John Hare, Shipping Law & Admiralty Jurisdiction in South Africa (2nd Ed, Juta & Co. Ltd. publishing) p 631 where the author says: “The ISM code has set the standards, yet carriage law has lagged behind reality.” 59 Yvonne Baatz and others, Maritime Law (3rd Ed, Informa 2014) p 344. Statement to similar effect made in Lloyd's Register North America Inc. v. Dalziel 2004 FC 822 (CanLII) (Fed. Court of Canada) where it was said: “…..to meet the requirements of the International Safety Management (ISM) Code, an international standard related to the safe management and operation of ships.” <http://www.canlii.org/en/ca/fct/doc/2004/2004fc822/2004fc822.html> accessed 25 January 2015. 60 Article 1.2.3, ISM Code. 61 Howard Bennett, ‘The Marine Insurance Act 1906: Reflections on a Century’ (2006) 18 (3) S.Ac.L.J. 669, 689 <heinonline> accessed 23 January 2015. 62 Defined in Article 1.1.2, ISM Code. 63 Article 1.4, ISM Code. Also see IMO resolution A 22/Res.913, ‘Revised Guidelines on Implementation of the International Safety Management (ISM) Code by Administration’ <http://www.ismcode.net/auditing_procedures/IMO_Res913A22_e.pdf> accessed 21 January 2015. 64 ISM when taken in its entirety basically spells out different requirements which must be adhered to at all times to keep a vessel seaworthy. 65 It was said in Compania Sud Americana De Vapores SA v Sinochem Tianjin Import and Export Corp [2009] All ER (D) 273 (Jul), by Clarke J. that “A vessel may be unseaworthy if there is no system in operation to deal with the ordinary incidents of a voyage”. One of the aims of ISM code is to identify such and provide workable solution systems. 66 Konstantinos Bachxevanis, ‘‘Crew Negligence’ and ‘Crew Incompetence’: Their Distinction and its Consequence’ (2010) 16 JIML 102, 126. 67 Article 1.4.6 and 12.1, ISM Code. To ensure and monitor satisfactory compliance the auditors generally sail for a few days on the vessels.

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diligence.68 Article 10 obliges companies to maintain compliance with relevant rules

and regulations and to lay down maintenance procedures (which prompted the

companies to develop PMS)69 which is a continuous process. The ISMC, as a whole,

addresses the issue of keeping a ship seaworthy70 at all times71 and places an equal

amount of burden on the shore staff as it does on the sea staff.72 It has also found its

way into standard charter forms73 and is a good indication of industry’s recognition and

acceptance of the ISMC. ISMC also responds to the industry’s needs, such as most

recently via Article 6.2.2.74

Cases such as The Marion,75 The Toledo,76 The Torepo77 (cases decided in the pre-

ISM era), The Cosco Busan,78 The Patraikos 279 and The Kamal XXVI80 (post ISM

68 Gregory W.Poulos, ‘Legal Implications of the ISM Code: New Impediments to Sea Fever’ (1996-1997) 9 (1) U.S.F.Mar.L.J. 37, 69 <heinonline> accessed 22 January 2015. 69 Planned Maintenance System. Softwares such as RDRM, ORPMS, NORCOMMS PMS and other similar programmes have been developed to assist the staff to carry out maintenance diligently. A prudent company’s PMS is usually certified. 70 The relevance of seaworthiness to the ISM Code is mentioned in Phil Anderson, ISM Code: A Practical Guide to the Legal and Insurance Implications (2nd Ed, LLP) p 136, where the author cites text from George P.Pamborides, “The ISM Code: Potential Legal Implications”. 71 Richard Williams, ‘The Rotterdam Rules: Winners and Losers’ (2010) 16 JIML 191, 194, where author specifically refers to Art 6 and 10. 72 See Theodora Nikaki ‘The Carrier's Duties under the Rotterdam Rules: Better the Devil You Know’ (n 45) p 11, 12. 73 Such as in SHELLTIME 4, line 28. See Seagate Shipping Ltd v Glencore International AG (The Silver Constellation) [2008] EWHC 1904 (Comm) where BIMCO ISM clause was incorporated. Also ref GARD P&I Club’s stance on the subject as mentioned in ‘Circular No. 11/97’ <http://www.gard.no/ikbViewer/web/publications/content?p_document_id=62948> accessed 24 January 2015. Also ref (n 113). 74 Industry was possibly facing a hurdle due to insufficient crew complement even though they were in compliance with Safe manning certificate (required by SOLAS Regulation V/14.2). Ref IMO Resolution A.1047(27), ‘Principles of Minimum Safe Manning’ which details the implementation of Article 6.2.2 <http://www.imo.org/KnowledgeCentre/IndexofIMOResolutions /Documents/A%20-%20Assembly/1047(27).pdf> accessed 22 January 2015, thereby addressing issues such as those which arose in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 1 All ER 474. 75 The Marion [1984] 2 Lloyd's Rep. 1 76 The Teledo [1995] 1 Lloyd's Rep. 40 77 The Torepo [2002] EWHC 1481 (Admlty) [2002] 2 Lloyd's Rep. 535, however it is not clear from the judgement whether the ISM principles were considered by the court. See Phil Anderson (n 70) p 237, 238. 78 USCG report on allision involving Cosco Busan is available at <https://www.uscg.mil/foia/ CoscoBuscan/COSCOBUSANfinal030609.pdf> accessed 23 January 2015. Also see Craig

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implementation) make it clear that it is imperitive to have proper procedural systems in

place as required by ISMC and more importantly to be in compliance with them.81 It has

been suggested82 that compliance with SMS does not signify successful discharge of

due diligence obligation, following the decision in The Eurasian Dream.83 It has

however been more than a decade since ISMC’s implementation and industry has

matured since, to address its requirements and total compliance with SMS84 could

indeed signify having exercised due diligence85 (absent latent defects).86

d.1.1 Tougher regimes to police compliance and enhance prospect

of seaworthiness.87

In modern day shipping vessels have to satisfy, in addition to various

external audits88 (statutory requirement) and external vetting inspections89

H.Allen, ‘Proving Corporate Criminal Liability for Negligence in Vessel Management and Operations: An Allision-Oil Spill Case Study’ (2011-2012) 10 (2) Loy.Mar.L.J. 269, 304-308 <heinonline> accessed 23 January 2015. 79 The Patraikos 2 [2002] 4 SLR 232 (Sg. H.C.) cited in Kian Sing Toh and others, ‘Admirality and Shipping Law’ (2002) SAL Ann Rev., para 2.83-2.88. <heinonline> accessed 23 January 2015. Also see Iliana C.Varotsi and others, Maritime Work Law Fundamentals: Responsible Shipowners, Reliable Seafarers (Springer 2007) p 645. 80 Kamal XXVI (owners and/or demise charterers) v Ariela (owners) [2009] EWHC 177 (Comm). 81 Antonio J.Rodriguez and Mary Campbell Hubbard, ‘International Safety Management (ISM) Code: A New Level of Uniformity’ (1998-1999) 73 (5,6) Tul.L.Rev.1585, 1601-1602 <heinonline> accessed 23 January 2015. 82 Konstantinos Bachxevanis (n 66) p 126. 83 The Eurasian Dream (n 39). The incident took place before ISM code came into force but the hearing took place once the code was made mandatory for Ro-Ro vessels. The company was in the ISM implementation phase. 84 Courts will first seek to establish the adequacy of SMS with regards to requirements under the code and SOLAS’74, Ch. IX and thereafter proceed to see if it was implemented properly. See Phil Anderson (n 70) p 147. 85 Iliana C.Varotsi (n 79) p 646; Phil Anderson (n 70) p xv, where the author says: “…..if a ship operator can demonstrate…..was genuinely trying…..to make their SMS work…..good chance of passing…..due diligence-even if an accident does subsequently arise.” 86 Baris Soyer, Warranties in Marine Insurance (n 17) para 3.102, where the author says that the ISM code might not be conclusive evidence of seaworthiness if there is latent defect in hull. 87 Latter half of section title borrowed from text in Julian Cooke, Voyage Charters (4th Ed, Informa 2014) p 238 88 One example of an external ISM Audit guidelines for a classification society can be found at <http://www.ismcode.net/auditing_procedures/Class_NK_Handbook_for_ISM_Audits.pdf> accessed 21 January 2015.

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(commercial requirement), strict90 PSC’s91 also (whereby they can goto the

extent of banning vessels from their waters)92 where, besides other things,

compliance with ISMC (SMS and related documentation, its implementiation and

proof of an able shore management) is checked, for it is usually proof enough of

compliance wth various mandatory international instruments.93 Paris MOU94 has

introduced a matrix system to calculate a ship risk profile95 to help

administrations96 eliminate sub-standard ships,97 their operating companies and

to tackle FOC’s.98

89 Presently there are three vetting inspection regimes in-use in the industry, namely CDI/SIRE (for tankers) and Rightship (for bulk carriers). Also see Julian Cooke (n 87) p 238, where the author acknowledges the fact and says: “Many charters, both voyage and time, require the vessel to be suitably approved by one of these systems.” 90 See John Hare, ‘Port State Control: Strong Medicine to Cure a Sick Industry’ (1997) 26 (3) Ga. J. Int'l & Comp. L. 571, where the author mentions that PSC is the most effective cure of the malaise of the maritime industry <heinonline> accessed 25 January 2015. 91 They supplement Flag State Inspections. Ref <http://www.imo.org/OurWork/Safety/ Implementation/Pages/PortStateControl.aspx> accessed 21 January 2015. Guidelines for PSC inspections related to ISM code are detailed in IMO circular MSC/Circ.890, ‘Interim Guidelines for Port State Control related to the ISM Code’ <http://www.ismcode.net/auditing_procedures /MSC_Circ_890.pdf> accessed 21 January 2015. Also ref EU Directive ‘2009/16/EC’ on Port State Control for EU members. Also see Alan Edward Branch, Elements of Shipping (8th Ed, Routledge) para 17.8. 92 See ‘Port State Control Annual Report 2013’. As per given data, Paris MOU banned 28 vessels from their region in 2013. <https://www.parismou.org/sites/default/files/Paris%20MoU %20 Annual%20Report%202013%20revised_1.pdf> accessed 25 January 2015. 93 As per 2013 statistics of Tokyo MOU, 1,395 vessels were detained. Ref ‘Annual Report on Port State Control in the Asia-Pacific Region 2013’ < http://www.tokyomou.org/doc/ANN13.pdf> accessed 25 January 2015. Also available are the 2013 statistics from Paris MOU, where there were 668 detentions. Ref ‘Port State Control Annual Report 2013’ for Paris MOU (n 92). 94 1982 Paris Memorandum of Understanding marked the beginning of present day PSC. See Ademuni Odeke, ‘Port State Control and UK Law;’ (1997) 28 (4) J.Mar.L.& Com. 657 <heinonline> accessed 25 January 2015. 95 Explanation of system is available online at <https://www.parismou.org/system/files/Annex %207.pdf> and a detailed guidance on the matrix system is available on Class DNV’s website: <http://www.dnv.com/binaries/1012026%20Brosjyre%20Paris%20MoU_web_tcm4446253.pdf> accessed 21 January 2015. 96 Indicates the littoral state to which the relevant PSC belongs. 97 Paris MOU also publishes details of vessels detained for serious deficiencies online to enhance public awareness, on the following link < https://www.parismou.org/publications-category/caught-net> accessed 25 January 2015. 98 Flag of Convenience. See Navegacion Castro Riva S.A. of Panama v The M.S.Nordholm v The S.S.Theogennitor 178 F. Supp. 736 (E.D. La. 1959) (U.S. Dist. C.), where Skelly Wright J. said: “It is time that admiralty courts protect responsible shipping against old and underpowered, shadowy-owned tramps, flying the flag of any nation, and manned by the flotsam of the world.” <http://law.justia. com/cases/federal/district-courts/FSupp/178/736/

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A company’s DOC99 can also be revoked by the Flag state because of non-

compliance (eg. a major non conformity) whereby it looses its right to function as

a ship operating company.100 Ship-operators also run the risk of being held

criminally liable under the MSA’95. 101

d.1.2 Burdening the carrier as insurer of goods?102

Such an issue has been addressed by ICC103 whereby insurance cover of

goods does not cease if vessel is unseaworthy and therefore is a welcome relief

for ship-operators and charterers.

d.1.3 ISM warranty in Insurance.

The insurance industry also responded to the modern industry practices

and amended the ITC104 to reflect ISMC requirements.105 The clause has only a

1642500/> accessed 24 January 2015. Also see Lord Donaldson, ‘The ISM Code: The Road to Discovery?’ [1998] LMCLQ 526, 527. 99 Document of Compliance, which is issued to a shipping company found in compliance with ISM code. In UK it is issued by MCA, ref ‘The ISM Code: International Management Code for the Safe Operation of Ships and for Pollution Prevention’ para 3.1, 3.2 <https://www.gov.uk/ government/uploads/system/uploads/attachment_data/file/287935/ism_i2s_2009.05.pdf> accessed 23 January 2015. 100 An example of such is illustrated in Anders Mollman, ‘Denmark’ (2011-2012) 36 (2) Tul.Mar.L.J. 573, 577 <heinonline> accessed 21 January 2015; Cancellation of DOC of Anglo Eastern Ship Management (Singapore) Pte. Ltd. by DG Shipping, India due to non-compliance with ISM code on their vessel M.T. Prem Pride<http://dgshipping.gov.in/WriteReadData/News /201309110329283873290notice_suspension_110913_eng.pdf> accessed 21 January 2015. 101 Merchant Shipping Act 1995, s 98, 100 imposes statutory criminal penalties. Also see Seaboard Offshore Ltd v Secretary of State for Transport (The Sea Carrier) [1994] 1 W.L.R. 541 where breach by owners was examined in such light. 102 Forward v Pittard 99 E.R. 953 (Mansfield L); Paterson Steamships Ltd. v Canadian Co-operative Wheat Producers Ltd. [1934] All ER Rep 480, where with regards to common carrier it was said that: “At common law, he was called an insurer…..” 103 Clause 5, Institute Cargo Clauses, whereby the exclusion of damage caused by carrier’s unseaworthiness is only qualified by privity of assured. Also see John Dunt, Marine Cargo Insurance (Informa 2013) p 162, 163. 104 Clause 13, International Hull Clauses 01/11/03. 105 See ‘Marine insurance: The London market and the institute clauses’, p 162 <ftp://ftp.fao.org/docrep/fao/011/i0744e/i0744e02.pdf> accessed 23 January 2015; Nicola S.Pretty (n 7) p 52-53.

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limited effect106 as was judged in The Nancy107 but the case nonetheless brings

forth the point that ship operators must be in continuous compliance with ISMC

as the insurers will seek to prove vessel’s non-compliance when avoiding claims,

as was most recently pleaded in The Beril 1.108

d.1.4 Basis for satisfying claims.

Though the actual legal test is not changed by ISMC,109 it can however

provide evidence for helping ship operator’s establish due diligence has been

exercised by relying on its well documented and structured SMS and providing

concerned documentation and records,110 thus avoiding issues such as which

arose in The Asia Star.111 There is thus a clear link between successfully

satisfying such a burden and an effective SMS (both onboard and ashore)112

and any dereliction of duty would prima facie point towards lack of due

diligence.113

106 Nicola S.Pretty (n 7), where the author mentions that there is no check as to the reality behind the mandatory ISM certification (i.e. DOC and SMC). 107 Sea Glory Maritime Co and another v Al Sagr National Insurance Co M/V “Nancy” [2013] EWHC 2116 (Comm), where Blair J. recognized that it is purely a paper warranty and that the warranty in the policy did not require the vessel to be in compliance with the code’s requirements in fact and the burden had been discharged by producing a valid SMC and DOC thereby drawing a line between compliance with warranty and compliance with ISM code. 108 Summit Navigation Company Ltd v Generali Romania Asigurare Reasigurare [2014] EWHC 2384. 109 Phil Anderson (n 70) p 135. 110 Phil Anderson (n 70) p 135. Also see Konstantinos Bachxevanis (n 66) p 127, though the matter has been discussed in a different context. 111 The "Asia Star" [2007] 3 SLR 1 (Singapore Court of Appeal) <http://www.singaporelaw.sg/ sglaw/laws-of-singapore/case- law/cases-in-articles/shipping/1436-the-quot-asia-star-quot-2007-3-slr-1-2007-sgca-17> accessed 17 January 2015. 112 Yvonne Baatz (n 59) p 344; Phil Anderson (n 70) p 147. 113 See Hannu Honka, ‘The Standard of the Vessel and the ISM Code’ in Johan Schelin (ed), Modern Law of Charterparties (Jure AB 2003) para 3.3.3, p 115, where the author whilst speaking in context of ISM Code’s relevance in charterparties says that SMS would certainly be referred to in chartering disputes and that code will provide the basis for deciding on lack of due diligence.

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However it must not be overlooked that ship operators run the risk of

inconsistencies due to imperfections appearing in the documents which will work

to their own disadvantage.114 However companies are trying to achieve a greater

degree of accuracy by employing controlling mechanisms at various levels.115

Therefore for all the abovementioned reasons and taking cue from the speech of

Justice Clark in The Kapitan Sakharov,116 in the modern era ship-operators must

ensure full compliance with all the relevant instruments. Speeches in The Lendoudis

Evangelos II117 and The Eurasian Dream118 in all likelihood refer to such practices.

However isolated cases such as The Tasman Pioneer119 will surface infrequently for it

has rightly been said that “as long as ships will sail and man will men them, problems

are inevitable”.120

114 Phil Anderson (n 70) p 135. 115 One of those mechanisms (non-mandatory) which supplements the mandatory Internal Audit requirement (Article 12.1 ISM Code) are regular QHSE internal audits which also help attaining OHSAS 18001 and ISO 14001 certification. 116 Northern Shipping Company v Deutsche Seereederei GmbH and others (The Kapitan Sakharov) (1997-2008) All England Official Transcripts, where Clarke J. said: “If a shipowner were to follow the code…..it is I think unlikely that it would be held that he should have gone further.” Thus highlighting the point that compliance with international instruments is a pre-requisite. <lexisnexis> accessed 25 January 2015. Decision was affirmed by CA in [2000] 2 Lloyd's Rep. 255. 117 Demand Shipping Co. Ltd. v Ministry of the Food Government of the People’s Republic of Bangladesh and Another (The Lendoudis Evangelos II) [2001] 2 Lloyd’s Rep 304, where Cresswell J. said: ““Seaworthiness must be judged by the standards and practices of the industry at the relevant time…..so long as…..are reasonable”. 118 The Eurasian Dream (n 39). 119 The Tasman Pioneer (n 36) where the Master communicated of the vessels grounding to the owners only two and a half hours after the incident and also forged entries in the log book and misplotted the vessel’s positions. Even though the issue did not revolve around Art III(1) but was contested on Art IV(2)(a) of H(V)R, nevertheless master’s post grounding conduct would be an apt example of where the due diligence (during the voyage) is found wanting. 120 Robert B.Fisher Jr.,‘The Warranty of Seaworthiness in Charter Parties: Legal Methods of Amelioration’ (1975) 1 Mar. Law. 1, 31 <heinonline> accessed 25 January 2015.

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d.2 Shipowners’s acceptance of additional burden.121

Modern charter party forms usually replace the implied absolute duty of

seaworthiness with due diligence.122 This clearly shows the industry’s preference

between the two. Additionally it is customary to have express maintenance clauses

obliging the ship-operator to maintain the vessel123 during the period of the charter

(whether it be a voyage124 or time charter125) and their validity has been recognised by

the courts.126 In essence certain elements of off-hire127 clauses in time charters

somewhat serve a similar purpose.

Therefore it can be concluded that shipowners are agreeing to liability for failure to

maintain the vessel in a fit state, at all times and such is in the interest of all concerned

parties. However problem of reconciling the maintenance clauses with H(V)R was

121 With regards to seaworthiness. Shipowners have various other obligations under charterparties, mentioning of which would be outside the scope of this discussion. 122 NYPE 93 (line 321); BPVOY 4 (line 1216); BIMCHEMVOY 2008 (line 273); SHELLVOY 6 (line 593); NORGRAIN 89 (line 232, 236). Also see John F.Wilson (n 29) p 10 where the author acknowledges the said fact and says: “Many modern standard charter forms have now adopted the Hague Rules formula with regard to the requirement of seaworthiness.” Also ref Golden Fleece Maritime Inc. (n 39). 123 It has been suggested that this express duty to maintain is entirely distinct from obligation with regards to seaworthiness. John F.Wilson (n 29) p 12. 124 BPVOY 4 (line 101, 102); CEMENTVOY 2006 (clause 1(a)(ii)). In the absence of express clause implied obligation of seaworthiness in fact attaches at port of loading. This duty can be altered by express clauses, such as those appearing in BPVOY 4 (Clause 1, Part II) and SHELLVOY 6 (line 11, 12). Effect of such a clause was considered in New York and Cuba Mail Steamship Company v Eriksen & Christensen (The Waco) (1922) 10 Ll.L.Rep. 772, where Greer J. concluded that the seaworthiness obligation attaches at the approach voyage. 125 LINERTIME (line 73, 74); INTERTANKTIME 80 (Line 209-212); NYPE 93 (Line 81-82); BOXTIME 2004 (clause 6) and BPTIME 3 (clause 9.1); BALTIME (clause 3). Usually in the absence of any express clauses the implied obligation of seaworthiness is at time of delivery of the vessel. See F.Wilson (n 29) p 12; Joanne H.Barak, ‘Time Charters: Who Bears the Burden of Complying with Subsequent Legislation - The Port and Tanker Safety Act of 1978’ (1981-1982) 16 (2) Geo.Wash.J.Int'l L.& Econ. 271, 278 <heinonlne> accessed 20 January 2015. 126 Tynedale Steam Shipping Company Ltd. v Anglo-Soviet Shipping Company Ltd. (1936) 54 Ll.L.Rep. 341; The Saxon Star [1957] 1 Lloyd’s Rep. 271; UBC Chartering Ltd. v Liepaya Shipping Company Ltd. (The Liepaya) [1999] 1 Lloyd's Rep. 649. 127 GENTIME (clause 9(a)(i)); NYPE 93 (clause 17); BOXTIME 2004 (clause 9(a)(i)); LINERTIME (clause 14).

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recognised in The Hermosa.128 Such could be solved by incorporating Article 14 of RR

instead.

d.3 Shorter turn-around time.129

Vessel’s nowadays stay in port for a relatively shorter time130 and one wonders

as to how the due diligence requirement before commencement of the voyage is being

achieved, given the strict rest hour regulations131 and busy port schedules. MAIB also

acknowledges the fact.132 It is obvious that bulk of regular maintenance work is being

carried out at sea.133 Such infact contradicts the ship operator’s arguments that they

lack continuous control134 of the vessel whilst she is on high seas.135

128 Chilean Nitrate Sales Corp v Marine Transportation Co Ltd and Pansuiza Cia de Navegacion SA (The Hermosa) [1980] 1 Lloyd's Rep. 638 where Mustill J. said: “…..in most time charters express terms as regards initial seaworthiness and subsequent maintenance which are not easily reconciled with the scheme of The Hague Rules…..”. the decision was approved by CA, [1982] 1 Lloyd's Rep 570. 129 An example of average turn around times in the early 20th century (for certain Canadian ports) is mentioned in Eric, W.Sager and Gerald E.Panting, Maritime Capital: The Shipping Industry in Atlantic Canada, 1820-1914 (Mc-Gill Queen’s University press 1990) p 140. In present day the turn around time is remarkably short, Ref to port of Chennai’s publishing of their performance indicator data on <http://www.chennaiport.gov.in/PorSta_Performance Indicators.html#ATT> acessed 22 January 2015. 130 See Erol Kahveci, ‘Fast Turnaround of Ships and their Impact on Crews’, SIRC <http://www.sirc.cf.ac.uk/uploads/publications/Fast%20Turnaround%20Ships.pdf> accessed 22 January 2015. 131 (i) Regulation VIII/1, Code A-VIII/1 and B-VIII/1, Standards of Training, Certification and Watchkeeping 1978, as amended (STCW); (ii) Reg. 2.3, Title 2, Standard A2.3, Maritime Labour Convention 2006. 132 See Marine Accident Investigation Branch, ‘Report No. 21/2007’ of M.V.Annabella available online at <http://www.maib.gov.uk/publications/investigation_reports/2007/annabella.cfm> accessed 22 January 2015. Also see Talal Aladawani, ‘The Supply of Containers and Seaworthiness - The Rotterdam Rules Perspective’ (2011) 42 (2) J.Mar.L.& Com. 185, 203-204 <heinonline> accessed 22 January 2015. 133 Another point to consider is that slow steaming gives the crew extra time to carry out routine maintenance operations during sailing. It is uncertain for how long slow steaming will continue and as such is not a sustainable ground for supporting Article 14 of RR. See articles advocating that slow steaming is here to stay: Maersk, ‘Slow Steaming Here to Stay’ (01 September 2010) <http://www.maersk.com/en/the-maersk-group/press-room/press-release-archive/2010/9/slow-steaming-here-to-stay>; Lee Hong Liang, ‘The Economics of Slow Steaming’, Seatrade Global (07 October 2014) <http://www.seatrade-global.com/news/americas/the-economics-of-slow-steaming.html> accessed 23 January 2015. Also see Theo Notteboom, Current Issues in Shipping, Ports and Logistics (UPA University press 2011) p 69. 134 M.Fehmi Ulgener, ‘Obligations and Liabilities of the Carrier’ para 5.3.3(1), p 147 in Meltem Deniz Guner-Ozbek (ed), The United Nations Convention on Contracts for the International

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d.4 Technological advancements in vessel communication systems.

Since then 1920’s136 there have been various advancements137 whereby

vessels can have instantaneous uninterrupted communications with the shore staff138

whereby operational issues can be said to be only “a mouse click or a satellite call

away”139 and vessels are even being monitored whilst underway.140

e. Seaworthiness duty ceases on sailing under present carriage regimes.

e.1 Defeating the purpose of ISMC.

The proposition of in-port stages141 and subsequent resurfacing at succeeding

stage142 of the voyage under common law143 and the duty under H(V)R that

Carriage of Goods Wholly or Partly by Sea: An Appraisal of the “Rotterdam Rules” (Springer 2011). 135 Talal Aladawani (n 132) p 203, 204. 136 The only way to communicate with vessels on high seas was via radio communication and the main purpose of having such equipment was for receiving Maritime Safety Information. A brief history of early radio communications is available online at <http://jproc.ca/rrp/nro_his. html> accessed 22 January 2015. Also see Anton A. Huurdeman, The Worldwide History of Telecommunications (John Wiley & Sons 2003) p 281, 282 137 A brief history of development of INMARSAT system is available online at http://www.marsat .ru/en/technologies/history-of-inmarsat/> and history of the first of these to be used for merchant ships i.e. INMARSAT ‘A’ is available at <http://www.comara.org/legacy/marisat.htm> accessed 22 January 2015. Also see David Sagar, ‘Inmarsat and the Mariner’ (1999) 14 (3) Int'l J. Marine & Coastal L. 423 <heinonline> accessed 22 January 2015. 138 Ships are nowadays equipped with advanced communication systems such as Iridium systems and FBB 150/250 for data communications including internet. 139 John Hare, Shipping Law & Admiralty Jurisdiction in South Africa (n 58) p 631. 140 See Jonathan Amos, ‘Ahoy! Your ship is being tracked from orbit’ (20 July 2012) <http://www.bbc.co.uk/news/science-environment-18889594> for a brief overview of todays maritime tracking technology. Accessed 22 January 2015. Such technology has been in commercial maritime use for a significant number of years now. 141 The two relevant stages are (i) commencement of loading and (ii) lying stage or setting sail stage. See Maxine Footwear Co Ltd. v Canadian Government Merchant Marine Ltd. [1959] AC 589. Also ref McFadden v Blue Star Line [1905] 1 K.B. 697; Paterson Zochonis & Co. Ltd. v Elder, Dempster & Co. Ltd. and Others (1924) 18 Ll.L.Rep. 319 (Viscount Cave); A.E.Reed and Company Ltd. v Page, Son and East Limited and Another [1927] 1 KB 743 (Scrutton LJ); Ben Line Steamers Ltd. v Pacific Steam Navigation Co. (The Benlawers) [1989] 2 Lloyd's Rep. 51. Also see B.S.Shah (n 20) p 107. 142 The Vortigern [1899] P. 140, where it was held that if the vessel calls an intermediate port for loading or bunkering then she must be seaworthy in fact prior undertaking the next stage. 143 It is not a continuing warranty as was decided in McFadden v Blue Star Line (n 141), where Channell J said: “…..ship is fit to encounter the ordinary perils of the voyage…..is not a continuing warranty…..”; Maxine Footwear (n 141), where Cartwright J. said: “When…..

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commences at the beginning of loading144 but ceases on her departure145 is not

consistent with the adoption of ISMC.146 Reading into the H(V)R rules, if

unseaworthiness develops at an intermediate port then owners of onboard transit

cargo147 might not have any redress148 against the ship-operator.149 Given especially

the ‘nature’ of container trade150 such can be said to be an unreasonable proposition as

different containers on a single vessel could be subject to varying findings, depending

on their load port.151

f. Moving forward - RR.

In the build up to the Hague rules the idea of requiring the carriers to exercise

continuing due diligence was infact rejected152 owing to lack of modern navigational

aids and lack of control by the ship-operator once the vessel had departed.153 However

absolute it seems…..intelligible to restrict it to certain points of time” and also recognized that the stages doctrine had its anomalies. 144 Obligation of seaworthiness qua cargo is throughout loading. 145 Maxine Footwear (n 141), where it as held: “…..means the period from at least the beginning of the loading until the vessel starts on her voyage”; Western Canada Steamship Company Ltd v Canadian Commercial Corporation [1960] 2 Lloyd's Rep 313 (Canada Supreme Court); The Makedonia [1962] 1 Lloyd’s Rep 316. Also see Halsbury’s Laws (5th Ed, 2008) Vol 7, para 376. 146 Talal Aladawani (n 132) p 201. 147 i.e. cargo loaded on the vessel at previous port. Due diligence obligation is undertaken for the contractual voyage which is indicated on the bill of lading. See The Makedonia (n 145). 148 With regards to due diligence obligation of seaworthiness. 149 Leesh River Tea Co. Ltd. and Others v British India Steam Navigation Co. Ltd. [1967] 2 Q.B. 250. Also see John F.Wilson (n 29) p 187; Eric Baskind and others, Commercial Law (OUP 2013) p 565; John O,Honnold, ‘Ocean Carriers and Cargo; Clarity and Fairness - Hague or Hamburg’ (1993) 24 (1) J.Mar.L.& Com. 75, 97 (fn 82), 98; Lachmi Singh, The Law of Carriage of Goods by Sea (Bloomsbury 2011) para 2.19; C.W.O’Hare, ‘Allocating Shipment Risks and the Uncitral Convention’ (1977-1978) 4 (2) Monash U.L.Rev.117, 131; Ralph Ashton (n 38) p 46; B.S.Shah (n 20) p 107, 108 <heinonline> accessed 19 January 2015. 150 Accounted for 16% of all sea trade in 2013. Statistics calculated from the International Seaborne Trade Chart (fig. 1.2) for the period 1980-2013 as published in ‘Review of Maritime Transport’ (2013) UNCTAD, p 7 <http://unctad.org/en/publicationslibrary/rmt2013_en.pdf> accessed 20 January 2015. 151 A.Nicholas, ‘The Duties of Carriers Under the Conventions – Care and Seaworthiness’, para 6.16, p 116-117 in D.Rhidian Thomas, The Carriage of Goods by Sea Under the Rotterdam Rules (Lloyd’s list 2010). 152 The Travaux Préparatoires (n 12) p 147 (Van Slooten). 153 Theodora Nikaki and Baris Soyer, ‘New International Regime for Carriage of Goods by Sea: Contemporary, Certain, Inclusive and Efficient, or Just Another One for the Shelves’ [2012] Berkeley J.Int'l L. 303, 329 <heinonline> accessed 21 January 2015.

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given the discussion in section ‘d.4’ such an argument today would be termed as

anachronistic.154

UNCITRAL155 has rightly retained the existing duty of due diligence under H(V)R, as:

(i) carriers obligations regarding carriage and ship which are already in

mention are consistent with public law obligation156 of overall safety and

preservation of environment.; 157

(ii) jurisprudence of these terms is uniformly158 established.159

The continuing obligation has been introduced, and rightly so, to bring the carriage

regime in line with present practices and for safe shipping requirement (recognised as

carrier’s public law obligations)160 and such amounts to taking reasonable steps during

154 Theodora Nikaki and Baris Soyer (n 153) p 329. 155 United Nations Commission on International Trade Law, Working Group III (Transport Law), Ninth session (A/CN.9/WG.III/WP.21), pt. 60, p 25 <http://www.un.org/ga/search/view_doc .asp?symbol=A/CN.9/WG.III/WP.21&referer=http://www.uncitral.org/uncitral/en/uncitral_texts/transport_goods/rotterdam_travaux.html&Lang=E> accessed 21 January 2015. 156 Jennifer Lavelle (ed), The Maritime Labour Convention 2006: International Labour Law Redefined (Informa 2014) para 3.4, p 48, where the author mentions that civil duties include not to be negligent, to keep vessel safe, sound and seaworthy and follow the terms of the convention. 157 See Theodora Nikaki ‘The Carrier's Duties under the Rotterdam Rules: Better the Devil You Know’ (n 45) p 9. 158 Theodora Nikaki and Baris Soyer (n 153) p 320, where it is mentioned: “…..courts in major jurisdictions…..a uniform interpretation…..to most…..core provisions of the Hague regimes.” 159 De Kundan Jha, ‘The Rotterdam Rules: Should India Ratify’ (2013) 3 (1) Revista de Drept Maritim 74 <heinonline> accessed 21 January 2015. 160 United Nations Commission on International Trade Law, Working Group III (Transport Law), Ninth session (A/CN.9/WG.III/WP.21), pt. 60, 61. <http://www.un.org/ga/search/view_doc.asp ?symbol=A/CN.9/WG.III/WP.21&referer=http://www.uncitral.org/uncitral/en/uncitral_texts/transport_goods/rotterdam_travaux.html&Lang=E> accessed 21 January 2015.

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the voyage161 to make the ship seaworthy again.162 The standard required will

understandably be lower at sea compared to when she is in port.163

f.1 When does the voyage conclude under RR?

Various schools of thought have been put forward164 as to when the duty of

seaworthiness concludes. Voyage can be construed as ending when vessel reaches

the customary anchorage or port limits165 and on the other hand, so as not to deprive

RR of their force, it should include period of discharge. However such remains to be

seen, on how the courts of different jurisdictions interpret it.166

f.2 How will the courts decide on this extended obligation? Two examples

considered (where repairs cannot be effected at sea).

(1) There is a breakdown of propulsion machinery on a container vessel bound

from Singapore to Porto Amelia167 (whose planned route just avoids the IBF ERZ)168

161 UNICTRAL Doc A/CN.9/544, ‘Report of Working Group III (Transport Law) on the work of its twelfth session (Vienna, 6-17 October 2003)’p 46 < http://daccess-ddsny.un.org/doc/UNDOC/ GEN/V03/906/87/PDF/V0390687.pdf?OpenElement> accessed on 25 December 2014. 162 Unless the damage was so extensive that it would not be reasonable to expect the carrier to repair that. See Anthony Diamond QC, ‘The Rotterdam Rules’ [2009] LMCLQ 445. 163 De Kundan Jha (n 159) p 74; M.Fehmi Ulgener (n 134). Whilst vessel is in port it is usual to hire a shore workshop to effect repairs. However riding teams (i.e. who sail with the vessel) are also not uncommon. 164 Theodora Nikaki, ‘The Obligations of Carriers to Provide Seaworthy Ships and Exercise Care’, p 107 in D.Rhidian Thomas (ed), A New Convetion for the Carriage of Goods by Sea (Lawtext publishing 2009); Talal Aladawani (n 132) p 200-201. 165 See The Makedonia (n 145), where the term ‘voyage’ was defined. 166Parallel can be drawn to issue which arose in Mississippi Shipping Co. Inc. v Zander and Co. Inc. (S.S.Del Sud) 270 F.2d 345 (U.S.CA, 5th Cir.) where the point of contention was as to when is the vessel deemed to have broken ground. Similar problems can be anticipated under RR, with regards to conclusion of voyage. Case available online at <http://openjurist.org/270/f2d/ 345/mississippi-shipping-co-v-zander-and-company> accessed 25 January 2015. 167 Porto Amelia is located in Mozambique and is just outside the IBF marked Extended Risk Zone for piracy. 168 Latest map depicting the IBF Piracy Extended Risk Zone is available at <http://www.itfsea farers.org/files/seealsodocs/33553/IBF%20LIST%20OF%20WARLIKE%20AND%20HIGH%20RISK%20DEFINITIONS%20JULY%202014.pdf> accessed 26 January 2015.

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which slows her down considerably, from 21 to 8 knots.169 Vessel’s management

decides not to divert to Colombo for repairs and are instead planned for Porto Amelia

and subsequently the vessel is hijacked near Madagascar.170

(2) There is a breakdown of vessel’s auxiliary machinery171 due to which a

number of reefer containers are effected172 but the ship-operator chooses not to

divert for repairs.

In the above examples is the ship-operator obliged to divert? The answer probably

revolves around the company’s internal procedures (such as SMS guidelines) dealing

with such contingencies and the risk assessment173 conducted at the time.174 However

it remains to be seen how courts will adjudicate on minutiae of Article 14 and whether

the judicial dance of various jurisdictions will be in harmony.175

169 As per BMP4,para 3.4, till date no hijacking has taken place on vessels proceeding at over 18kts. Latest version of BMP4 is available at <http://www.mschoa.org/docs/public-documents/bmp4-low-res_sept_5_2011.pdf?sfvrsn=0> accessed 27 January 2015. 170 Similar scenario is also considered in Giulia Argano, ‘Pirates: A Charterers' Peril of the Sea’ (2011) 1 Southampton Student L. Rev. 169, 190 <heinonline> accessed 26 January 2015. Also see Stephen Askins, ‘Supplementary Written Evidence’ in House of Commons, Foreign Affairs Committee, Piracy Off the Coast of Somalia: Tenth Report of Session 2010-12 (Stationary Office 2012) pt 10-12, Ev 65, where it is mentioned that not following BMP’s guidelines would amount to unseaworthiness, available at: <http://www.publications.parliament.uk/pa/ cm201012/cmselect/cmfaff/1318/1318.pdf> accessed 26 January 2015. 171 Referring specifically to auxiliary generators which supply power to reefer containers. 172 Similar example also considered in Francis G.J.Libert, ‘Part I: Deviation: From Genesis to Nemesis’, ‘Part II: The Rotterdam Rules and Modern Transport’ (LLM thesis, University of Wales, Swansea 2009) p 13, part II. 173 Refer MSC/Circ.1023, available at: < http://www.imo.org/OurWork/HumanElement /VisionPrinciplesGoals/Documents/1023-MEPC392.pdf> accessed 26 January 2015. Suggested methodology is used both ashore and onboard vessels. 174 The test to judge seaworthiness would be “...would a prudent shipowner, if he had known of the defect, have continued the voyage without effecting any possible repairs?”. See A.Nicholas (n 151) para 6.14, p 116. 175 Susanna H.Marsden, ‘Putting a Premium on Reform: The Impact of the Rotterdam Rules on Shippers and Insurers of Cargo’ [2012] Insurance L.Rev. 56, 63 <heinonline> accessed 23 January 2015.

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g. Cost factor.

If RR come into force then they will inevitably disturb the balance between P&I

Clubs,176 cargo interests and ship-operators.177 Following an obvious decline in risk of

cargo interest there will be a fall in premiums and conversely there will be a rise in

insurance costs of P&I clubs as the carriers will bear the higher risk factor. However, it

has been suggested178 that the rise of latter will be less than the fall of former which

subsequently would result in a cumulative reduction in cost of insuring cargoes.

Therefore if the ship-owners, in a balancing act, increase freight rates, it should not be

a remarkable increase. However it is mentioned that there is no numerical data to back

up the above argument179 and therefore it has not been considered in detail in this

essay.

h. Which regime’s seaworthiness test is best suited to the 21st century?180

Common law is clearly not a preferable alternative as it creates imbalance and lacks

necessary flexibility. H(V)R, though widely used across all forms of contracts of

carriages, the underlying rationale of concluding the duty at commencement of voyage

is not consistent with modern practices; technological advancements and the

mandatory ISMC181 (on which outcome of cargo litigation and arbitration depends).182

176 As it will be the P&I clubs who will be covering cargo claims arising from unseaworthiness of vessels. Also refer GARD P&I club rule 34(1)(a) (2014) available on club’s website at <http://www.gard.no/ikbViewer/Content/20738744/Rules%202014_web.pdf> and Standard P&I club rule 3.13.1 (2014) available online at < http://www.standard-club.com/media/931579/pi-and-defence-rules-and-correspondents.pdf> accessed 22 January 2015. 177 Adam Weintrit, Marine Navigation and Safety of Sea Transportation: Advances in Marine Navigation (2013 CRC press) p 274. 178 Theodora Nikaki and Baris Soyer (n 153) p 337. 179 Ibid p 337. 180 Section heading borrowed from text in William Tetley, ‘A Critique of and the Canadian Response to the Rotterdam Rules’ para 2.9, p 296 in D.Rhidian Thomas (ed), A New Convetion for the Carriage of Goods by Sea (n 164). 181 Talal Aladawani (n 132) p 200-201. 182 William Tetley (n 4) p 945.

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Given that the contractual provisions generate an effect equivalent to RR, Article 14183

and mandatory compliance with various instruments (mentioned in section ‘b’) coupled

with the requirements for satisfying a plethora of strict international inspection

regimes,184 a ship-operator’s (who would want to maintain status quo)185 liabilities might

not be prejudiced186 by adoption of Article 14 of RR which can best be described as

evolutionary187 and only appear to be increasing their liabilities superficially. It must be

mentioned in passing that UK will probably take into account its burly position in

maritime dispute resolution and weigh interests of all commercial parties188 before

ratifying RR.189

Therefore, in the author’s reasoned opinion, continuing due diligence test of RR is the

most suitable alternative190 amongst the three as it passes muster with present

practices.

191192

183 Francis G.J.Libert (n 172) p 33, part II. 184 Such as Port State Control (discussed in section ‘d.1.1’) and Tanker Vetting inspections to name a few. 185 Since the balance seems to be tipping in favour of the cargo interests as the nautical fault exception of H(V)R has also been removed from Rotterdam rules, as published in Gertjan Van Der Ziel, ‘Questions of Balance in the Rotterdam Rules’, Lloyd’s List (27 August 2009) <http://www.rotterdamrules.com/sites/default/files/pdf/Questions-of-balance-in-the-Rotterdam-Rules-Lloyd%27s-List-27-08-2009.pdf> accessed 22 January 2015. 186 Richard Williams (n 71) para 1.5(i), p 194. 187 Michael F.Sturley, ‘Modernizing and Reforming U.S. Maritime Law: The Impact of the Rotterdam Rules in the United States’ (2008-2009) 44 Tex.Int'l L.J. 427, 429. Also see Sara B.Cannon, ‘Navigating the Uncharted Waters of Liability Apportionment: The Rotterdam Rules and American Cargo Damage Claims’ (2013-2014) 66 (2) Rutgers L.Rev. 463, 470 <heinonline> accessed 21 January 2015. 188 With regards other nations, it would depend on whether they are import-export or fleet owning nations. 189 Mary Brooks and Jason Mackey, ‘Will the Rotterdam Rules Be Accepted: A Liner Cargo Interest Perspective’ (2012) 35 (2) Dal.L.J. 267, 277 <heinonline> accessed 22 January 2015. Status of the ratification can be located online at <http://www.uncitral.org/uncitral/ en/uncitral_texts/transport_goods/rotterdam_status.html> accessed 23 January 2015. 190 For comparison refer to a diametrically opposite view expressed in Diego Esteban Chami, ‘The Rotterdam Rules from an Argentinean Perspective’ (2009) 14 (4) Unif L.Rev. 847, 850 <heinonline> accessed 25 January 2015. 191 Siya

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