Seaworthiness duty to exercise due diligence before and at the beginning of the voyage

‘… well established rule that exemption and indemnity clauses are, in the absence of a contrary intent, not construed as applying to loss cause by the negligence of the party who invokes them. It follows that the warranty must cover a condition that the vessel shall at the commencement of each stage be in this respect seaworthy for that stage.’
The Fiona [1994] 2 Lloyd’s Rep. 506 per Hoffmann LJ at p.521

Modern regime

The absolute undertaking of seaworthiness implied by the common law is nowadays usually abrogated either by express words in standard charterparty forms or by incorporation into the contract of carriage The Hague or The Hague-Visby Rules. The Rules limit the carrier’s liability to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage: Art III (1) and Art IV (1). Furthermore, duty to exercise due diligence is a positive obligation which the carrier must discharge in order to be protected by Art IV(2). Standard of due diligence (see also Concept of Due Diligence) differs and dependant on the facts, prevailing circumstances of each case and the knowledge available at the time of exercising the duty.

Unlike bills of lading, provisions of the Hague/Hague-Visby Rules are not directly applicable to charterparties, therefore, in order for the charterparty to be subject to Hague/Hague-Visby the parties expressly incorporate them into the charterparty either by printing the Rules into their contract or by inserting in the contract so-called ‘clause paramount’ which incorporates the Rules into the contract. In the latter case the result will be not of incorporation the ipsissima verba of the rules but:

… to import into the contractual relation between owners and charterers the same standard of obligation, liability, right and immunity as under the rules subsists between carrier and shipper; in other words, … [to] agree to impose on the owners, in regard, for instance, to the seaworthiness of the chartered vessel, an obligation to use due diligence in place of the absolute obligation which would otherwise lie on him.
Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd (The Saxon Star)[1958] 1 All ER 725 per Viscount Simonds at p.731.

NYPE93 standard charter form, for example, adopted the Hague/Hague-Visby Rules regime by incorporation of cl.31 'clause paramount', see below:

NYPE93_cl31

Obligation as to seaworthiness is also often present in introductory clauses, as for example in SYNACOMEX 90 cl.2: "The said vessel being tight, staunch and in every way fit for the voyage …" or NYPE 93 cl.2, which says:

The Vessel on her delivery shall be ready to receive the cargo with clean-swept holds and tight, strong and in every way fitted for ordinary cargo service, having water ballast and with sufficient power to operate all cargo-handling gear simultaneously.

If the duty to provide a seaworthy vessel incorporated into charter by such or similar clause alone without supplementary Clause Paramount, the courts would likely find that there was an absolute warranty that the vessel should be seaworthy. Similar conclusion will be applicable for NYPE 1993 Time charterparty form cl.2, which says in line 34 that the vessel should be delivered ‘… tight, staunch, strong and in every way fitted for ordinary cargo service …’. These words bear a meaning that the shipowner is under absolute obligation of seaworthiness but only at the beginning of the charter. Unseaworthiness at the moment of delivery gives the charterer right to cancel contract:

There was here an express warranty of seaworthiness and unless the ship was timeously delivered in a seaworthy condition, including the necessary certificate from the port health authority, the charterers had the right to cancel”.
In Cheikh Boutros Selim El-Khoury and Others v Ceylon Shipping Lines, Ltd., (The Madeleine), [1967] 2 Lloyd’s Rep. 224 per Roskill J at p. 241 on cl.1 of the BALTIME charterparty which provided that ‘ …[the vessel] being in every way fitted for ordinary cargo service’, the vessel when delivered did not have a deratisation certificate and accordingly was unseaworthy.

The advantage of having an expressed obligation of seaworthiness in the contract of carriage is that a general liability exclusion clause in the contract will be applicable, provided the clause is clearly worded, to exclude the carrier’s liability in case of breach of the obligation of seaworthiness, because the exclusion clause will extend to cover the breach of the duty. In Bank of Australasia and Others v Clan Line Steamers, Limited, [1916] 1 K.B. 39 clause 12 provided that ‘No claim that may arise in respect of goods shipped by this steamer will be recoverable unless made at the port of delivery within seven days from the date of steamer’s arrival there’ and clause 14 provided that ‘The shipowners shall be responsible for loss or damage arising from any unseaworthiness of the vessel when she sails on the voyage.’ Cargo of wool arrived to destination damaged by sea water owing to the unseaworthiness of the steamer. No claim was made by endorsees of bills of lading upon defendants within seven days after the arrival of either vessel. The High Court held that in view of the fact that the bill of lading was subject to an express condition making the shipowners liable for damage resulting from unseaworthiness, the provisions of clause 12 applied. In his judgement Buckley J distinguishing Tattersall v National Steamship Co (1884) 12 QBD 297 and said at pp.48-49:

It seems to me that in this case clause 14 has expressly introduced that which would otherwise be implied, and that therefore the obligation as regards seaworthiness in this case rests upon express contract and not upon implied contract. The relevance of that for the present purpose is this. The clause of limit of liability, according to Tattersall’s Case, would not extend to the implied contract if it were implied; but if it is expressed, then such stipulation of the contract is to be applied to that part of the contract as well as to any other part. The result is that Tattersall’s Case does not apply in this case. There is here an express contract as to unseaworthiness. Consequently clause 12 applies.

As any other provision which serving to benefits of one party only the clauses qualifying or excluding the shiponwers’ obligation to provide a seaworthy vessel, in cases of doubt, must be construed against the person who produced it, and for whose benefit it operates. However even very wide drafted clauses, intended to relieve the carrier of liability for loss of or damage to the goods shipped caused by, amongst other things, the unseaworthiness or uncargoworthiness of the vessel, or the negligence of the carrier, its servants or agents can still survive the scrutiny of contra proferentem rule. In Mitsubishi Corporation v Eastwind Transport Ltd. & Ors [2004] EWHC 2924 (Comm), bills of lading contained the following wording:

… the Carrier shall not be responsible for loss or damage to or in connection with the Goods of any kind whatsoever (including deterioration, delay or loss of market) however caused (whether by unseaworthiness or unfitness of the vessel or any other vessel, tender, lighter or craft or any other mode of conveyance whatsoever or by faults, errors or negligence, or otherwise howsoever).

The High Court held that such wording shifts most risks which might result in loss of or damage to the goods shipped from the carrier to the holder of the bill of lading. But that is not inconsistent with the purpose of a commercial contract of carriage where the bearer of a risk can insure against it.

It shall be also noted that under the Hague-Visby Rules the carrier’s duties to make the ship seaworthy before and at the beginning of the voyage (but sometimes can apply to an earlier stage), are extended to the whole period of loading, from at least the beginning of the loading and until the ship starts on her voyage, and therefore do not cease if operation has been interrupted, as would be the case under the common law and doctrine of stages. Furthermore, when incorporated into charterparty, the Rules may apply not only to laden but to the ballast voyages as well. Thus in Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd (The Saxon Star) [1958] 1 All ER 725 a majority of the House of Lords considered that it was natural in a case where there might be many ballast voyages that the parties should have intended the Hague Rules to apply over the whole of the vessel’s employment. And in Fyffes Group Ltd and Caribbean Gold Ltd v Reefer Express Lines Pty Ltd and Reefkrit Shipping Inc, (The Kriti Rex) [1996] 2 Lloyd’s Rep 171 it was held that the Hague-Visby Rules provision as to seaworthiness are applicable to ballast voyages insofar as they formed part of the contractual service.

The essence and intend of the statutory instruments replacing the absolute obligation at common law to provide a seaworthy ship with one to exercise due diligence to make the ship seaworthy is to avoid:

… responsibility for latent and undiscoverable defects. But the warranty of diligence remains; and this requires the application of the usual rule, that the acts and negligences of the agent are deemed those of the principal.
Per Roskill J in Cheikh Boutros Selim El-Khoury and Others v. Ceylon Shipping Lines, Ltd., (The Madeleine), [1967] 2 Lloyd’s Rep. 224.)

In many cases, however, limitation and qualification of the implied warranty of seaworthiness is a limitation or qualification more apparent than real, because if due diligence has been used by the shipowner and all his servants and agents the vessel in fact will be seaworthy and defects causing unseaworthiness of so latent a nature that due diligence could not have discovered it, are rather seldom or very seldom occurrences.

Where the ship is employed under a charterparty, the shipowner must indemnify the charterer against the claims of third persons whose goods have been carried in the ship and who, under the particular contract of carriage, have the right to hold the charterer responsible for breach of the undertaking of seaworthiness.

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