Alize 1954 & Anor v Allianz Elementar Versicherungs AG & Ors [2021] UKSC 51

A container vessel grounded after leaving Xiamen port due to a defective passage plan that failed to note warnings about uncharted depths outside the fairway. The Supreme Court held that the defective passage plan rendered the vessel unseaworthy and the carrier could not rely on the nautical fault exception under the Hague Rules.

Facts

The container vessel CMA CGM LIBRA grounded on a shoal whilst leaving Xiamen port, China, on 18 May 2011. The grounding occurred when the master decided to navigate outside the buoyed fairway, despite the passage plan indicating the vessel should remain within it. The passage plan was defective because it failed to note a warning from Notice to Mariners 6274 that ‘Numerous depths less than the charted exist within, and in the approaches to Xiamen Gang.’ This warning was not annotated on either the passage plan document or the working chart (BA 3449). The defect was found to be causative of the master’s negligent decision to leave the fairway.

The General Average Claim

Following the grounding, salvage costs of approximately US$9.5m were incurred. The shipowners claimed general average contributions from cargo owners totalling approximately US$13m. Some cargo owners refused to pay, arguing that the loss was caused by the carrier’s actionable fault in failing to exercise due diligence to make the vessel seaworthy.

Issues

The Supreme Court addressed two main issues:

Issue 1: Seaworthiness

Whether a defective passage plan could render a vessel unseaworthy for the purposes of article III rule 1 of the Hague Rules, or whether such matters fell exclusively within ‘navigation’ and were therefore covered by the nautical fault exception in article IV rule 2(a).

Issue 2: Due Diligence

Whether the carrier’s obligation to exercise due diligence was limited to providing competent crew, proper equipment, and adequate systems, such that the crew’s failure to properly prepare a passage plan was not attributable to the carrier.

Judgment

The Supreme Court unanimously dismissed the appeal, upholding the decisions of Teare J and the Court of Appeal.

The Article IV Rule 2 Exception

Lord Hamblen, delivering the judgment of the court, confirmed that article IV rule 2 exceptions cannot be relied upon where there has been a causative breach of the carrier’s seaworthiness obligation under article III rule 1. He quoted from Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589:

Article III, rule 1, is an overriding obligation. If it is not fulfilled and the nonfulfillment causes the damage the immunities of article IV cannot be relied on. This is the natural construction apart from the opening words of article III, rule 2.

No Category-Based Distinction

The court rejected the owners’ argument that there was a category-based distinction between seaworthiness and navigation:

If the vessel is unseaworthy then it can make no difference whether negligent navigation or management is the cause of the unseaworthiness or is itself the unseaworthiness. What matters is the fact of unseaworthiness.

The Prudent Owner Test

The court endorsed the prudent owner test as the appropriate standard, noting the judge’s finding that it was ‘inconceivable’ that a prudent owner would allow the vessel to depart with such a defective passage plan.

Non-Delegable Duty

On due diligence, the court confirmed that the carrier’s obligation under article III rule 1 is non-delegable. Quoting Lord Radcliffe in The Muncaster Castle [1961] AC 807:

The carriers must answer for anything that has been done amiss in the work. It is the work itself that delimits the area of the obligation.

The carrier cannot escape liability by delegating the task of making the vessel seaworthy to its servants, regardless of their specialist skill.

Implications

This decision has significant implications for maritime law:

Passage Planning Standards

Carriers must ensure passage plans meet the standards set out in the IMO Guidelines. A vessel is likely to be unseaworthy if she begins her voyage without a passage plan or with a defective one that endangers safety.

Scope of Seaworthiness

The judgment confirms that seaworthiness is not limited to physical attributes of the vessel but extends to documentary matters including passage plans and working charts.

Carrier Responsibility

Carriers cannot limit their due diligence obligation to merely providing systems and competent crew. They remain responsible for any failure by their servants to properly execute the task of making the vessel seaworthy, including in relation to passage planning.

Insurance Implications

The decision may shift more cargo damage and general average claims onto shipowners and their P&I Clubs where defective passage planning is causative of loss.

Verdict: Appeal dismissed. The defective passage plan rendered the vessel unseaworthy and the carrier failed to exercise due diligence. The carrier could not rely on the nautical fault exception under article IV rule 2(a) of the Hague Rules.

Source: Alize 1954 & Anor v Allianz Elementar Versicherungs AG & Ors [2021] UKSC 51