The Court of Appeal upheld the decision of the Admiralty Judge in ‘The CMA CGM LIBRA’ in that a defective Passage Plan can render a vessel unseaworthy notwithstanding that the defect stemmed from navigational decisions. Any such error is attributable to the carrier or owner and constitutes a failure by the carrier or owner to exercise ‘due diligence’ before and at the commencement of the voyage to make the vessel seaworthy under the Hague/Hague-Visby Rules. This ruling represents a significant shift of the risk of loss caused by navigational mistakes away from cargo interests and onto owners’ mutuals.
On 4 March 2020, the Court of Appeal handed down its decision1 on the Owners’ appeal against the earlier decision of the Admiralty Judge, Teare J., which was to the effect that the CMA CGM LIBRA (Vessel) was causatively unseaworthy on account of a defect in her Passage Plan created by the master. Justice Teare had also confirmed that the Owners did not exercise ‘due diligence’ to make the Vessel seaworthy before the commencement of the voyage due to the non-delegable nature of the task.
The Court of Appeal unanimously dismissed the Owners’ appeal against that decision. The Court also rejected the Cargo’s ground of cross-appeal that there was no proper system or culture on board the Vessel and found in favour of the Owners in this respect. However, it found a defective Passage Plan is an “attribute” of the Vessel. Although the Court of Appeal recognised that the “conclusion that the vessel was unseaworthy due to having a defective passage plan appears to have been novel”, it held that “… a properly prepared passage plan is an essential document which the vessel must carry at the beginning of any voyage. There is no reason why the absence of such a document should not render a vessel unseaworthy, just as in the case of any other essential document”.
The Court considered clear policy reasons in upholding the Admiralty Court’s decision in that “Article III rule 1 of the Hague Rules draws a clear temporal line … This reflects the balance struck at the inception of the Hague Rules in 1924. The signatories to the Convention agreed to divide the allocation of risk for maritime cargo adventures into two separate regimes. The first regime imposes a non-delegable duty on carriers to exercise due diligence to make the ship seaworthy ‘before and at the beginning of the voyage’ (Article III rule 1). The second regime excuses carriers from liability for loss or damage caused by errors of crew or servants ‘in the navigation or in the management of the ship’ thereafter, i.e. during the voyage (Article IV rule 2(a))” (emphasis in the original).
The above decision appears to expand the scope of the carrier’s or owner’s non-delegable duty to exercise due diligence to make the vessel seaworthy before the commencement of the voyage. In short, the ruling suggests that the carrier or owner will be held liable for every mistake of its employees, even if navigational, before the commencement of the voyage if that causes loss subsequently on voyage.
Given that a berth-to-berth Passage Plan is to be prepared by those in charge of the vessel’s navigation for every voyage prior to the departure from every port, future litigation and disputes are to be anticipated focusing on investigating potentially causative mistakes in the Passage Plan. In this respect, allegations of unseaworthiness due to inadequate passage planning are to be expected, making settlement of such disputes more difficult.
Owners will need to review not only their instructions to their master but also how they can review any Passage Plan that might be prepared prior to departure.
The Owners are seeking leave to appeal this decision to the Supreme Court.