Lower courts' decision
Supreme Court decision
The Supreme Court recently issued a decision that may increase shipowners' liability where claims are made by cargo interests based on the master's nautical errors during the voyage, by limiting owners' right to rely on the nautical faults exception in the Maritime Code.
The Sunna ran aground in UK waters off Swona Island when carrying a cargo of ferrosilicon from Grundartangi, Iceland to Scunthorpe, England. The incident was caused because the only officer on watch had fallen asleep. Subsequent investigations revealed that the master had implemented a bridge manning routine which was not in compliance with the 1978 International Convention on Standards of Training, Certification and Watchkeeping for Seafarers. More specifically, the vessel did not always have a designated lookout when navigating in darkness.
About two months before the incident, a port state control inspection carried out in the Netherlands had revealed this. As a result, the owner's designated person ashore under the International Safety Management Code instructed the master to ensure compliance with the applicable regulations by issuing a non-conformity note and giving the master oral instructions in a meeting. Disregarding these instructions, the master continued his illegal watchkeeping routine and instead made incorrect entries in the deck log book, making it appear as though there were a separate lookout on duty after dark.
The cargo interests primarily alleged that the master's watchkeeping practice rendered the vessel unseaworthy pursuant to Section 276(2) of the Maritime Code. This provision states that owners will be liable if they cannot prove that due diligence was exercised in making the vessel seaworthy at the commencement of the voyage. Alternatively, the cargo interests argued that the grounding was caused by the owner's own fault as it failed to prevent the master from continuing his watchkeeping routines, pursuant to Section 275 of the code.
The owner's defence was that the grounding was caused by an error in navigation and in the management of the vessel, and thus it was exempted from liability under the Section 276(1) of the code.
The Oslo District Court found that the grounding was the owner's fault, and that the owner was liable for the cargo damage and salvage costs. The court held that the owner's designated person ashore's measures were insufficient to stop the master's illegal watchkeeping practice and to ensure that he complied with the watchkeeping regulations. The owner was identified with the designated person ashore in this respect.
The Borgarting Court of Appeal reversed the Oslo District Court's judgment. The appeal court saw no basis for criticising the designated person ashore for not having done more. It also rejected the argument that the master's watchkeeping practice made the vessel unseaworthy at the commencement of the voyage, as the vessel was sufficiently manned to complete the voyage safely. The master could have complied with watchkeeping rules by utilising the available crew differently, and the failure to utilise the available crew correctly was considered a nautical error or an error in the management of the vessel which exempted the owner from any liability.
The Supreme Court held in favour of the cargo interests and found owner liable. The basis for the decision was that owner had failed to make the vessel seaworthy prior to commencement of the voyage under Section 276(2) of the Maritime Code. The watchkeeping practice was held to constitute unseaworthiness as the practice was in operation at the commencement of the voyage. The Supreme Court stated that the voyage had to be considered as a whole, and the fact that the vessel had a proper bridge manning at the time it left port did not change this position.
When considering whether the watchkeeping practice was an act attributable to the owner, the Supreme Court held that the owner must be identified with the master. The Supreme Court stated that at the commencement of the voyage, it was clear to the master that the vessel would regularly fail to be seaworthy during darkness due to the watchkeeping practice. It was thus not necessary for the Supreme Court to consider whether the owner itself could be criticised for not stopping the master's watchkeeping practice.
It follows from the Sunna judgment that an established practice onboard which is erroneous or illegal may in itself constitute unseaworthiness at the commencement of the voyage. This applies even if the practice is comprised of repeated nautical errors and thus, when viewed in isolation, is a single error exempted from liability, and occurring at sea after the commencement of the voyage.
It also follows from this judgment that under Norwegian law, there is full identification between the master and the owner in relation to the duty to make the vessel seaworthy. Hence, if the master repeatedly commits navigational errors, this may amount to unseaworthiness, even if the owner is unaware, and cannot be criticised for being unaware, of the master's errors.
Under English law, this issue would be considered as a question of whether the owner was or should have been aware of the practices onboard, whether the vessel was unseaworthy by reason of the mater's incompetence and, if so, whether the owner could be criticised for employing an incompetent master. Arguably, this would be the preferred way to deal with this issue, but the Norwegian Supreme Court did not agree.
For further information on this topic please contact Gaute Gjelsten, Oddbjørn Slinning or Nina Hanevold at Wikborg Rein by telephone (+47 22 82 75 00), fax (+47 22 82 75 01) or email ([email protected], [email protected] or [email protected]).