The case

In January 2003, the M/s “Redwood”, flying the Maltese flag, was time chartered for a voyage from Hamburg to Libya.

The ship had received by Lloyd’s Register the highest classification (LR 100 A1) and had been granted a clean class certificate.

During the loading operations, the Hamburg Port Master noticed a number of “deficiencies”, and decided to detain the ship, thus forcing the time charterers to transfer the cargo already loaded on board to another vessel in order to complete the voyage.

The legal claim

As a consequence of these facts, the time charterers brought a claim for damages against Lloyd’s Register before the Court of Genoa.

The Court of first instance condemned the Register on the basis of two main assumptions:

  1. charterers usually rely on the certifications issued by Classification societies. In the opinion of the Court, the role played, de jure and de facto, by Classification societies legitimizes the reliance of operators while concluding a charter party.

The Court recalled that, pursuant to the provisions of  the SOLAS Convention and of UE Directive 94/57/CE, certificates issued by classification societies do represent documents that universally and immediately attest the integrity and reliability of a ship.

  1. the highest classification and the clean class certification received by M/s “Redwood” in 2001 were considered as the result of the “gross negligence” of  Lloyd’s Register  inspectors.  Such liability was proved by two qualified experts, appointed by the Court, who conducted a formal inspection on board of the ship in Hamburg and ascertained that the “Redwood” was surely already in bad condition in 2001 when the Lloyd’ Register inspectors gave the highest classification and issued the clean class certification.

Therefore, the Court condemned the Lloyd’s Register to pay the requested damage to charterers. The overruling decision of the Court of Appeal  The Court of Appeal of Genoa did take a different (and quite interesting) view.

In the opinion of the Court, there is no doubt that a third party, who relied on the classification certificate when concluding a charter party, must be indemnified for damages suffered in case of wrong (or unfaithful) certification.

Nevertheless, still according to the Court, the classification society must be considered liable for damages and, consequently, ordered to reimburse the time charterers for the losses suffered, only in case the time charterers/claimants are able to provide “clear evidence” that they have “effectively” relied on the said certification “before concluding the charter party”.

In particular, according to the Court of Appeal’s view, the claimants should have proven:

  1. to be actually aware of the certification issued for the ship they intended to charter;
  2. to be actually aware of the certification issued for the ship before the conclusion of the charter agreement with the owner;
  3. that the decision to time charter that particular ship was specifically grounded on the contents of the certification issued by the classification  society.

Since the claimants have never supplied such evidence on these three circumstances, the Court of Appeal dismissed the claim.

Brief comment

The Court of Genoa basically confirmed Italian case law on the liability of classification societies toward third parties.

The Court of Appeal confirmed this general principle but substantially reduced its potential impact by placing such a heavy burden of proof on the time charterers/claimants.

Charterers are advised: when entering into a charter party subject to Italian law, they always need to make it very clear that the choice of a particular vessel was made (also) because of her classification given in the certificate issued by a Classification  society.