In A Turtle Offshore SA and another v Superior Trading Inc – Lawtel 17.12.08 the Claimant rig-owners claimed damages from the Defendant tug-owner for the loss of the Claimant's rig and associated wreck removal expenses. The Defendant counterclaimed for 95 per cent of the agreed freight.  

Using the standard form of towage contract known as TOWCON, the parties had agreed that the Defendant's tug would tow the Claimant's rig from Brazil to Singapore via Cape Town. The tug ran out of fuel in the South Atlantic, whereupon the towage connection was released and the rig drifted away from the tug. She was later found on the shores of Tristan da Cunha. Salvage attempts failed and the wreck of the rig was later removed and dumped at sea. The issues were (i) whether the Defendant had breached the TOWCON; (ii) if so, whether the Defendant was protected from liability under Part II clause 18 of the TOWCON; (iii) whether the Defendant was entitled to the sum sought in its counterclaim.  

It was held that the Defendant had breached the TOWCON by failing to exercise due diligence to ensure that when the towage commenced the tug carried sufficient bunkers to enable tug and tow to reach Cape Town. As a result the tug was neither seaworthy nor ready for the voyage.  

The commercial purpose of clause 18 was to make clear to the parties which one of them was to bear the risk of the loss, damage and liabilities which might arise during the towage and enable each to insure against them. It followed, notwithstanding that the TOWCON placed obligations on the Defendant to exercise due diligence to tender the tug in seaworthy condition and ready for the towage and to exercise its best endeavours to perform the towage, that clause 18 exempted it from liability for breach of those obligations where the loss, damage or liabilities thereby caused were within the loss, damage and liabilities which the Claimant had agreed to accept for their sole account. There was no dispute that the losses claimed by the Claimant fell within the type of losses which they had agreed to accept for their own account. However, it was necessary to consider whether there was a limit to the wide words of clause 18 and, if so, whether the facts of this case fell within that limit.  

It was held that clause 18 should be construed so that it applied so long as the Defendant was actually performing its obligations under the TOWCON, albeit not to the required standard. It could not be said that the Defendant had not ceased to do anything at all in the performance of its obligations. It followed that the loss and damage claimed by the Claimant was for their sole account and that the Defendant was exempt from liability in respect thereof.  

It was also held that as the contract provided that 95 per cent of the towage price was due and payable on arrival of tug and tow at the place of destination, the Defendant's counterclaim failed.