The Court of Appeal handed down judgment today in Alize 1954 v Allianz Elementar Versicherungs AG (The “CMA CGM LIBRA”). The three judgments discuss the legal test for unseaworthiness, the nature and limits of the carrier’s non-delegable obligation to exercise due diligence, and the consequences of a defective passage plan. John Russell QC and Benjamin Coffer appeared for the successful Respondents, instructed by John Reed and Jai Sharma at Clyde & Co.

On 17 May 2011, the CMA CGM LIBRA grounded whilst leaving the port of Xiamen, China. The owners claimed general average contributions from the cargo interests. At first instance, Teare J held that the passage plan was defective because it failed to record a warning required by a Notice to Mariners that depths shown on the chart outside the fairway were unreliable and waters were shallower than recorded on the chart. On that basis, Teare J held that the vessel was unseaworthy at the commencement of the voyage: the defects in the vessel’s passage plan and the relevant working chart rendered the vessel unseaworthy.

The owners appealed against the Judge’s decision, arguing that passage planning could not render a vessel unseaworthy because it involved no more than the recording of a navigational decision. The owners argued that a ship could only be unseaworthy if there was a defect affecting an “attribute” of the ship. The owners accepted that the attribute would not need to be physical, so for example, inadequate systems could constitute one of the ship’s attributes. However, they argued that the passage plan and working chart were not attributes of the vessel but merely records of navigational decisions taken by the crew. Although it was incumbent on the owner to have on board everything necessary for the crew to carry out proper passage planning, such as a competent crew, up to date charts and proper systems and instructions, the use which the crew then made of it went to navigation or seamanship.

A strong Court of Appeal comprising three experienced shipping judges (Haddon-Cave, Flaux and Males LLJ) emphatically rejected that argument. The Court held that it is clear on the authorities that errors in navigation or management can render a vessel unseaworthy if they occur prior to the commencement of the voyage. There is no relevant distinction between mechanical acts of the master and crew and acts of the master and crew which required judgment and seamanship. Nor is there any relevant distinction between one-off acts of negligence which rendered a ship unseaworthy and continuing or systemic failings. The Court doubted whether unseaworthiness required a defect affecting an “attribute” of the ship (noting that the decision of the Court of Appeal in The Apostolis [1997] 2 Lloyd’s Rep 241 is difficult to reconcile with The Kapitan Sakharov [2000] 2 Lloyd's Rep.255), but did not find it necessary to decide the point as it was clear that the defective passage plan and chart were attributes of the ship in this case.

The owners also argued that even if the ship was unseaworthy, there was no relevant failure to exercise due diligence. Relying on the references in cases such as The Happy Ranger [2006] 1 Lloyd’s Rep 649 to the carrier’s “orbit” of responsibility, the owners argued that navigation was outside their “orbit” because it was a matter solely for the Master and crew. Again, that argument was roundly rejected by the Court. Once the Owners assumed responsibility for the cargo as carriers, all the acts of the master and crew in preparing the vessel for the voyage are performed qua carrier, even if they are acts of navigation before and at the commencement of the voyage. The Owners are responsible for all such acts as a consequence of the non-delegable duty under Article III rule 1.

What does the judgment mean for the future? On the facts of the case, the decision should be relatively uncontroversial: the Court of Appeal agreed with the Judge that it turned on a straightforward application of the existing test for unseaworthiness to the defective passage plan and chart. Once the Judge had concluded that the chart had not been properly updated to reflect the warning in the notice to mariners, it is not difficult to see why he went on to find that the vessel was unseaworthy. It is well settled that defective charts can make a vessel unseaworthy. There is no obvious distinction between defective updating of the chart as part of passage planning and a chart which is defective in any other way. As Lord Justice Males rightly observes in the draft judgment at [77], “the judge’s factual findings mean that this is a straightforward case”.

The same is likely to be true for any other defects in passage planning documents: if such defects satisfy the McFadden test (would a prudent shipowner have required the defect to be remedied before sending the ship to sea, had he known of it?) the vessel will be unseaworthy. More interesting, perhaps, is whether defects in passage planning which are not recorded in any documentation can make a ship unseaworthy. What if the Master has an intention prior to the commencement of the voyage to navigate in a way which exposes the ship to danger? If there is no requirement to identify any “attribute” of a ship, the Master’s intention arguably makes the ship unseaworthy – although there might be difficult questions as to whether that prior intention is sufficiently causative. Another possible example, considered in the course of argument before the Court of Appeal, is if the SMS requires a master-pilot exchange to take place prior to departure. It would appear that the fact that no such exchange has taken place is capable of constituting unseaworthiness.

The decision reaffirms once again that the carrier’s duty to exercise due diligence to make the ship seaworthy is non-delegable. However, it identifies the fuzziness at the outer limits of that principle: what does it mean to say that a failure to exercise due diligence occurs outside of the carrier’s “orbit”? Are there any other situations in which the orbit theory might apply, other than shipbuilding defects or dangerous cargo? If, say, the master were to visit somebody suffering from coronavirus while at port with the result that the vessel is quarantined, is that failure to exercise due diligence within the carrier’s orbit? The judgment identifies these sorts of questions as problem areas for the law, but does not provide definitive answers.