MGN 564: Marine Casualty and Marine Incident Reporting

Marine Guidance Note (MGN) 564 describes how marine casualties and marine incidents should be reported to MAIB. This notice replaces MGN 458.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/788079/MGN564_Amendment1.pdf

Geographic boundaries of ‘High Risk Area’ for piracy in the Indian Ocean reduced

The High Risk Area reflects the area where the threat from piracy exists, while also recognizing the current containment of pirate attacks in the Indian Ocean. The industry group of shipping and oil industry organizations BIMCO, International Chamber of Shipping (ICS), INTERCARGO, INTERTANKO and the Oil Companies International Marine Forum (OCIMF) responsible for establishing the High Risk Area emphasized that a serious threat remains despite the reduction to the area’s geographic boundaries and that correct reporting, vigilance and adherence to 5th edition of the best management practice (BMP5) remains vital.

The reduction to the High Risk Area considers recent shipping industry experience, pirate intent and capability and follows extensive consultation with nations, collations and military naval forces, including Combined Maritime Forces, EUNAVFOR and the United Kingdom Maritime Trade Operations (UKMTO), which provide advice and protection to shipping.

The regional UKHO Maritime Security Chart, Q6099 will be updated by Notice to Mariners and a new version will be produced to reflect these changes which will take effect from 1 May 2019.

In summary:

• The area previously classified as “high risk” forms only a part of the area called the Voluntary Reporting Area (VRA);
• Ships entering the VRA are encouraged to report to the UKMTO to be monitored during transit and register with the Maritime Security Centre for the Horn of Africa (MSCHOA);
• Pre-transit risk assessments should take into account the latest information from both the VRA and High Risk Area.

The industry associations also noted that in view of the continuing threat of pirate attacks, shipping companies must comply with BMP5.They should also be careful in their voluntary reporting on piracy incidents, sighting of potential pirates, and any suspicious activity. These actions will provide crucial intelligence on risk levels in the area. Specifically, the new coordinates of the HRA are the following:

In the Southern Red Sea: Northern Limit: Latitude 15^o 00’N

In the Indian Ocean a line linking: From the territorial waters off coast of east Africa at Latitude 05^o 00’S to 050^o 00’E

Then to positions: Lat: 00^o 00’N / Long: 055^o 00’E - Lat: 10^o 00’N / Long: 060^o 00’E / Lat: 14^o 00’N / Long: 060^o 00’E. Then a bearing 310^o to the territorial waters of the Arabian Peninsula.

The HRA will be adjusted again if and when the situation demands it.

The IMO's Maritime Safety Committee (MSC) adopted a resolution in May 2011 on the Implementation of Best Management Practice Guidance, recognizing the urgent need for merchant shipping to take every possible avenue to protect against pirate attack.

Additionally, to assist in the prevention of piracy and armed robbery, the IMO has produced Circular MSC.1/Circ.1334 Guidance to ship owners and ship operators, shipmasters and crews on preventing and suppressing acts of piracy and armed robbery against ships. The guidance advocates effective self-protection measures as the best defense and recommends areas where action can be taken, such as reducing the amount of cash carried on board and emphasizing the need for discretion regarding the future movements and possible cargo of ships.

In addition, further interim guidance on the use of privately contracted armed security personnel (PCASP) on board ships to counter Somali-based piracy has also been approved by an IMO intersessional working group, on 2011.

See more details on how to be protected from maritime piracy, on the PDFs’ at below links,

https://www.ocimf.org/media/91171/Global-Counter-Piracy-Guidance-For-Companies-Masters-and-Seafarers.pdf

http://www.imo.org/en/OurWork/Security/PiracyArmedRobbery/Guidance/Documents/MSC.1-Circ.1334.pdf



 

Limiting ship owners' liability for compulsory pilotage services

06 March 2019
The peculiar nature of the shipping business makes the prudent management of time, risk and liability a sacred imperative to staying afloat. Unfortunately, loss does occur despite a ship owner's best efforts; the perils of the sea constituting only a fraction of their worries. It is not uncommon for shipowners to incur liability for acts or omissions for which neither they nor their employees are directly responsible. This is particularly common in the compulsory pilotage field. However, even in cases where liability cannot be disputed, shipowners may be entitled to limit their liability and, in some cases, escape it entirely.

The Nigerian Ports Authority (NPA) Act allows the minister of transport to designate certain areas of the nation's ports and territorial waters as compulsory pilotage districts.(1) In general, the navigation of ships within these areas must be performed by a pilot employed or licensed by the NPA. Where there is a loss or injury to a third party directly resulting from the negligence of such a pilot, the shipowner under pilotage cannot reject liability for such loss even though the pilotage was compulsory. Section 54 of the act codifies this well-settled principle:

The master or owner of a ship navigating in circumstances in which pilotage is compulsory shall be answerable for any loss or damage caused by the ship or by any fault of the navigation of the ship in the same manner as he would if pilotage were not compulsory.(2)

The rationale for this legal position is that a pilot rendering pilotage services becomes a servant of the vessel under pilotage, such that their actions or omissions bind the vessel and its owners. Although Section 55 of the act recognizes the pilot's personal liability – as well as the owner's right to claim indemnity from the pilot – the prospects of a full recovery by the owner from the pilot are slim, if not non-existent.

Thankfully for owners the Merchant Shipping Act 2007 entitles shipowners to limit their liability in respect of loss, injury or damage arising from the operation of a vessel.(3) Previously, shipowners could not limit their liability unless they could prove that the act or omission causing loss or damage occurred without their "actual fault or privity". However, having acceded to the Convention on Limitation of Liability for Maritime Claims 1976, together with the introduction of the Merchant Shipping Act 2007, the actual fault or privity rule has been abolished in Nigeria. Thus, shipowners can limit their liability unless the claimant can show that the loss resulted from a personal act or omission by the shipowner (or the shipowner's agents acting within the scope of their employment), which was committed with intent to cause such loss or committed recklessly and with the knowledge that such loss would probably occur.(4)

The burden of proof now rests with the claimant rather than the owner. Owners are entitled to exercise their right to limit their liability, unless the claimant can present contrary evidence which nullifies that right in line with the Merchant Shipping Act.

IMO issues updated guidelines on fatigue

In the 100th session of its Maritime Safety Committee (MSC 100), IMO approved revised guidelines on fatigue, to assist all stakeholders to contribute to the mitigation and management of fatigue, which poses significant risks to safety and health of seafarers, operational safety, security and protection of the marine environment.

The Guidelines are composed of modules each devoted to an interested party. The modules are as follows:

•Module 1 Fatigue
•Module 2 Fatigue and the company
•Module 3 Fatigue and the seafarer
•Module 4 Fatigue, awareness and training
•Module 5 Fatigue and ship design
•Module 6 Fatigue, the Administration and port State Authorities

The modules are all interrelated; it is recommended that all parties become familiar with module 1, which contains general information on fatigue.

These guidelines should be taken into consideration when:
1.       developing, implementing and maintaining safety management systems under the ISM Code;
2.       promoting fatigue mitigation and management;
3.       promoting awareness of the causes and consequences of fatigue and developing and delivering training programmes and courses;
4.       conducting casualty or accident/incident investigations; and
5.       preparing applications for minimum safe manning documents or when determining minimum safe manning levels for ships.

Module 1 Fatigue

Causes of fatigue
1.lack of sleep, i.e. inadequate restorative sleep;
2.poor quality of sleep and rest;
3.work/sleep at inappropriate times of the body clock (circadian rhythm);
4.staying awake for long periods;
5.stress; and
6.excessive workload (prolonged mental and/or physical exertion).

There are many ways to categorize the causes of fatigue. To ensure thoroughness and to provide good coverage of most causes, they have been categorized into five general factors:

1.seafarer-specific factors;
2.management factors (ashore and aboard ship);
3.ship-specific factors;
4.environmental factors; and
5.operational factors.
The most significant aspects of fatigue are:
1.sleep;
2.body clock and the circadian rhythm;
3.time awake;
4.jet lag;
5.workload;
6.stress;
7.health; and
8.individual differences

Module 2 - Fatigue and the company

To ensure that fatigue prevention is practised onboard, a company should consider the following:

Ø  ISM Code requirements for clear, concise guidance on operational procedures on board;

Ø  ensure adequate resources, including manning levels;

Ø  promote a safety reporting culture with open communication and no fear of reprisal;

Ø  the need for joining seafarers to be adequately rested before assuming duties;

Ø  schedule time for proper handover on crew change;

Ø  voyage length, time in port, length of service and leave ratios;

Ø  multicultural issues; language barriers, social, cultural and religious isolation;

Ø  interpersonal relationships, stress, loneliness, boredom, social deprivation and increased workload as a result of small crew numbers;

Ø  provision for shore leave and onboard recreation, family communication;

Ø  watchkeeping arrangements

Ø  job rotation, if practicable;

Ø  adequate sleeping berths and accommodation;

Ø  adequate quality and quantity of food for proper nutrition;

Ø  read other modules of these guidelines for additional potential managerial mitigation tools; and

Ø  modification of present ship design or future designs, if necessary.

Module 3 - Fatigue and the seafarer

To reduce and manage the risk of fatigue on ships:

•Seafarers should obtain adequate sleep
•Sleep is most valuable if obtained in a single block.
•There may be instances when seafarers may not obtain adequate sleep, even though they are provided with adequate sleep opportunity, due to factors like the type of food consumed or use of electronic devices.

A number of countermeasures have been identified as potentially providing some relief in managing fatigue:

1.Short rest breaks within duty periods
2.Strategic napping
3.Caffeine
4.Nutrition and hydration
5.Environment (light, temperature, humidity and sound)
6.Physical activity
7.Social interaction
8.Job rotation when practicable.

It must be emphasized that these countermeasures will not restore an individual's state of alertness; they only provide short-term relief and may, in fact, simply mask the symptoms temporarily.

Module 4 - Fatigue, awareness and training

Fatigue training and awareness are essential components for effective fatigue management. Fatigue management should be taught in such a way that seafarers can understand and relate to it personally. As a minimum, training should consist of:

1.fatigue, its causes and potential consequences (contributors, consequences, high-risk situations);

2.sleep (circadian rhythms, body clock, sleep process, circadian low, sleep debt, sleep disorders, working at night and watchkeeping);

3.fatigue countermeasures (e.g. mitigation strategies, managing sleep habits, caffeine, nicotine, alcohol, nutrition, exercise, napping, rest breaks);

4.basic information on sleep disorders and treatment of them, where to seek help if needed and any requirements relating to fitness for duty;

5.an understanding of the rules and regulations dealing with fatigue (MLC, 2006 and STCW Convention), and a recognition that these represent one line of defence in managing the risk of fatigue;

6.how to identify fatigue in oneself and in others;

7.personal strategies that seafarers can use to improve their sleep and to minimize their own fatigue risk, and that of others, while they are on duty;

8.the responsibility of the company to provide, and of seafarers to take advantage of, adequate rest periods;

9.the responsibility of the seafarer to report situations when unable to obtain adequate sleep or feeling at risk of making fatigue-related errors; and

10.the responsibility of the company to have policies in place to appropriately manage fatigue risks including policies against retaliation for reporting.

Module 5 - Fatigue and ship design

There are various aspects of fatigue that can potentially be influenced by the design of the living, sleeping and working environment. Fatigue can be caused by excessive noise, heat or cold, light, too much or too little humidity and poor air quality, among others, where people live and work. Sleeping, living and working areas should be located within the ship to minimize undesired motions, vibrations and noise.

Consideration should be given to:

1.ensuring cabins are cool, quiet, dark and well ventilated;
2.bunk design, layout and orientation;
3.mattress, bedding, padding for ship movement, headroom clearance especially upper bunk/deckhead;
4.insulating and/or isolating sleeping areas;
5.use of colour and artwork in the cabins; and
6.use of acoustic insulation and/or other noise-abatement measures.

Module 6 - Fatigue, the Administration and port State Authorities

-Fatigue and the Administration

Administrations have an important role to play in mitigating and managing the risks of fatigue at sea:
•Implementation and enforcement of international regulations that have a direct impact on mitigating and managing fatigue.
•Consider the impacts on seafarer fatigue as a result of the requirements placed on shipboard operations and seafarers.
-Fatigue and port State authorities

Port State authorities are encouraged to consider the potential effects that inspections and reporting requirements may have on the wider aspect of seafarer fatigue:

•Port State authorities should consider the impact of inspections, surveys, audits and other visits to ships on seafarer fatigue.
•Port State authorities should consider the impact of reporting and information requests on seafarer fatigue.

Explore more here below:

http://www.imo.org/en/OurWork/HumanElement/Documents/MSC.1-Circ.1598.pdf
 

Further sulphur cap guidance from Ship Owners’ Club

As the 2020 sulphur cap deadline approaches, Ship Owners’ Club has followed up on its 2018 infographic which provided preliminary information on the 2020 Global Sulphur Limit. The earlier publication identified four possible methods that Members could opt for in order to comply with the sulphur cap of 0.5% m/m:

 

§  Install a scrubber system which will allow vessels to use whatever fuel oil is available.

§  Switch to low sulphur oil, for example Intermediate Fuel Oil (IFO) or Heavy Fuel Oil (HFO) that has been treated to reduce the sulphur content.

§  Switch to a distillate fuel such as Marine Diesel Oil (MDO) or Marine Gas Oil (MGO).

§  Use an alternative fuel source like Liquefied Natural Gas (LNG), Liquid Petroleum Gas (LPG), Methanol or Hydrogen.

The Club envisioned that operators of larger vessels might be more likely to adopt scrubber systems, but noted that these required space for installation, which might not be available on smaller tonnage. Availability of dry dock spaces for retrofitting on existing vessels might also restrict operators from choosing this option.

Switching to low sulphur oil (treated IFO or HFO) might then be the next best financially viable option if scrubber systems were not possible. Members who were able might opt to switch to distillate fuels, which were more expensive, but had naturally lower sulphur contents, especially where their vessels were intermittently trading within an ECA.

Some Members might choose to invest in technological developments, selecting alternative fuels. Whilst this might have a relatively slow uptake in its infancy, the Club said that, as further technical advances were developed; more vessels were expected to be fitted with these new systems.

The Club emphasized that accurate and clear records were vital to demonstrate the vessel’s compliance with the revised sulphur limit. Members were encouraged to ensure their systems are robust enough to avoid doubt.

https://www.shipownersclub.com/methods-of-compliance-with-the-2020-sulphur-limit/

Consequences and Process of General Average – Once it is declared

1. In a GA situation are ALL goods blocked (cargo not available for delivery), until the Average Adjusters have completed their work?

If the property owners provide valid security, it is indeed possible to take delivery of the cargo immediately subject to always the safety of the ship and other interests and whether the cargo can indeed be delivered. If the vessel is at a port of refuge, the intention would be to deal with the incident at hand. As noted from the casualty follow up from Roose & Partners, we understand that 198 containers have been declared as a Total loss and 460 containers are in the affected area, needing a survey. It does appear to us that the other containers and cargo on board is undamaged – however, you could get the updated details from Richards Hogg Lindley, who we understand, have been appointed as the Average Adjusters for the above incident.

a. How long can the work of these Average Adjusters take on average?

The role of the Average Adjuster is to adjust the General Average i.e. to ascertain what is due from the various interests for the sacrifices/expenditures incurred during a General Average incident. This may easily take a few years given that this incident is on board a container vessel with thousands of various interests.

b. When will the goods be unblocked?

Cargo interests will be entitled to seek delivery of their cargo as and when they provide valid security as has been requested by the Average Adjusters. In case, the cargo is uninsured, cargo interests could provide security by way of a cash deposit in lieu of an Average Guarantee (which is invariably signed by cargo insurers).

c. Will all goods be unblocked?

Once the cargo interests have provided valid and sufficient security (GA Bond + GA Guarantee / Cash Deposit), the goods can be delivered to the cargo interests.

 2. In this case, the final destination of the ship was Halifax but the ship has been taken to Freeport for assessment. Do all goods have to stay on board till the full assessment is complete or do they release goods as assessed. Say, for example, containers in a section of the ship that has not been affected at all..??

We understand that the vessel diverted to Freeport as a port of refuge (there was salvage involved). Once the vessel is in a position of safety, Salvors will tender the vessel back provided they have received security (Salvage security). We believe that cargo interests would have to provide both Salvage and General Average Security (please check with Richards Hogg Lindley who have been engaged for this incident). Vessel Owners / Operators have a duty to continue with the voyage if it is possible. However, prior to doing that, they would have to deal with the incident at hand and ensure that the vessel can continue with the voyage. If cargo has been damaged during the incident, it would be discharged/disposed off prior to continuing with the voyage to avoid any issues for entry into the ports where the vessel is scheduled to call. Technically, it would be possible for cargo interests to seek delivery of their cargo at a port of refuge provided they have submitted adequate security. However, the containers should be easily dischargeable and with the extra costs to be incurred on the account of the cargo interests (if there is shifting / restow / etc – this will be on the account of the cargo interests).

3. When do all the different parties have to pay their part of the indemnity fees and are paid by insurance or cargo interest..??

If the cargo is insured for its full value in say ICC (A) form, then both Salvage and General Average will be covered and the insurers will either provide the security / make payment or reimburse the Insured for the same.

 4. These unexpected delays can, of course, create a certain “damage” to the owners of the goods; I understand the Insurance does not include any of the consequences of the General Average?

Marine Policies do not cover delay (invariably, Bill of Lading terms also exclude claims for delay – see clause 7(5) of the Hapag Lloyd Bills of Lading Terms and which can be viewed here).

However, should a party wish to be covered for these type of delay and which may result in down times, there are other covers available in the market.

5. When will the beneficiaries of the insurance paid out (this would then refer to the owners that really lost material or got their own material damaged) – do they have to wait until the Average Adjusters have done their work, made their conclusions, send in their reports etc… or can they claim immediately to the Insurance company and the Insurance company later on settles with the other parties?

If the cargo is a Total Loss, cargo interests can submit their claim to their insurers for indemnity. If the cargo is properly insured (say no underinsurance), generally cargo insurers step in and provide security (Salvage and General Average Guarantee).

In the off chance that the Insurers security is not accepted, cargo interests could instead provide security (say by cash deposit) and subsequently submit their claim from their Insurers for indemnity under the terms of the policy (any recovery will depend on the terms of the coverage of the policy).

Submitting emissions data for the EU MRV regulation

Class News 03/2019
18 February 2019

Applicability: Owners and operators of ships greater than 5,000 gt making commercial voyages into, out of or between EU ports

The first emissions reports for ships subject to the EU MRV (Monitoring, Reporting and Verification) regulation now need to be submitted for verification.

This Class News clarifies the processes and systems to be used (further to Class News 28/2017) for Lloyd’s Register (LR) clients.

For each affected ship, the emissions report needs to be verified and submitted to the EC and to the ship's flag by the company by 30 April 2019.

The regulation requires reports to be submitted directly to the THETIS-MRV system, which is operated by the European Maritime Safety Agency (EMSA). LR clients are requested to submit their emissions reports by 28 February 2019.

All documentation other than the emissions reports (i.e. monitoring plans and emission report evidence packs) should be submitted to CO2 Verifier. As the accredited verification body, LR will then retrieve the reports from THETIS-MRV for verification and upload them to CO2 Verifier, where full documentation and deliverables will be available for LR clients.

Before entering emissions reports into THETIS-MRV, clients need to set up a "partnership" with LR within the system to allow us access to your data. We appear as “Lloyd's Register Quality Assurance Ltd”.

For each ship, the annual aggregated data needs to be reported into THETIS-MRV. As an option, individual voyage data can also be entered. If you choose not to use this option, please submit all voyage data through CO2 Verifier so it can be verified.

If the monitoring plan for a ship has been uploaded to CO2 Verifier, it’s only optional for it to be uploaded to THETIS-MRV as well.

By 30 June 2019, affected ships are required to display a document of compliance on board, and the EC will publish the emissions data.

Additional details at,

 

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32015R0757

 

https://www.dnvgl.com/services/ship-performance-monitoring-system-navigator-insight-1452?utm_campaign=ship_navigator&utm_source=google&utm_medium=cpc&gclid=CjwKCAiA8OjjBRB4EiwAMZe6y2bVcoY4R3SacqmqSnF81aujW5Y1IbL5-y7OLBSxd-u9C0rhy2HUfBoCc18QAvD_BwE

Commercial manager not responsible for bunker oil pollution damage under bunker convention

20 February 2019 

Facts

On 7 August 2014 a ship (the Ms F) ran aground in Vejle Fjord. The ship was owned by a shipping line (RR) and the shipmaster was the sole owner of said shipping line. The Ms F was registered in Togo and its international safety management was provided by Company XX.

Following the incident, the Ms F was detained by the Danish navy, which took precautionary measures to avoid potential oil pollution and refloated the vessel.

On 5 September 2014 the navy notified a shipbroker (NN) that the navy reserved the right to issue claims against it "as the registered owner of the ship", because NN was listed as the Ms F's owner in the Lloyd's register.

On 2 March 2016 the navy demanded that NN pay DKr 80,660.60 for the precautionary measures that the navy had undertaken. NN answered the claim by email on 7 March 2016 and informed the navy that the Ms F's registered owner was in fact RR. The navy subsequently made a claim against RR.

On 25 August 2016 NN informed the navy that the Ms F had been sold and that it no longer represented RR. As a result, the navy brought proceedings against NN before the Maritime and Commercial Court, claiming payment for the precautionary measures that it had taken. During the trial, employees of NN told the court that the shipbroker had been engaged in shipbroking assignments and had been the Ms F's commercial manager. The shipping line managed crew, insurance and class-related issues.

The navy claimed that NN was strictly liable under Section 183 of the Merchant Shipping Act (which implements Article 3 of the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001) for the costs relating to the precautionary measures that the navy had taken to avoid potential oil pollution damage. The navy argued that the parties liable under the act were "the shipowner, including the registered owner, shipping line, bareboat charterer, manager or others, who manage the operation of the ship in the ship owner's place". It also pointed out that NN fell within the scope of this group of persons. However, NN disputed this argument and claimed that as it had not been responsible for ship's operation, the technical manager/operator was instead liable for the costs.

Decision

The Maritime and Commercial Court ruled in favor of NN. Referencing Section 183 of the Merchant Shipping Act, the court stated as follows:

The provision implements the Bunker Convention 2001, which in article 1, paragraph 3, and defines the liable parties as "the owner, including the registered owner, bareboat charterer, manager and operator of the ship". In accordance with the underlying report, it follows from the legislative proposal to § 183 (4) of the Danish Merchant Shipping Act that "… contrary to the provisions in chapter 10… the bunkers regulation does not stipulate that only a single party is responsible but the regulation works to include a number of parties as being responsible. A common feature of this group of persons is that all parties are responsible for the operation of the ship to a greater or lesser extent. In that way they have a certain "Ownerlike" character cf. the special explanatory memorandum to § 183, (4) in legislative proposal No. 44 of 24 February 2005, and page 17 in Sølovsudvalget's report No. 1451 of 2004. It is also illustrated that the expression "manager or others, who manage the operation of the ship in the ship's owner's place" is equate with the terms "operator" and "manager" in the Bunker Convention.

As already stated, § 183 (4) of the Danish Merchant Shipping Act concerns strict liability, and if the occasion should arise, also a joint and several liability, for damage caused by bunker oil. The Court finds that the applicable law shall be understood in such a way that liability contemplates that one is attending to the technical operation of the ship as specified in § 183 (4) and the mentioned preliminary works. There is no legal basis for extending the strict liability for damages caused by the technical operation of the ship to cover also the commercial operation of the ship.

As NN had not participated in the Ms F's technical operation, the court found that NN was not liable.

Comment

The International Convention on Civil Liability for Bunker Oil Pollution Damage introduced a strict liability for bunker oil pollution damage. Liability is incumbent on numerous persons involved with a ship's operation. The Maritime and Commercial Court's decision establishes that shipbrokers, chartering brokers and commercial managers that provide cargo, commercial contracts or commercial agreements, but are not involved with a ship's technical operation, may fall outside the scope of liable parties under the convention.

Genoa Court of Appeal confirms decision on limitation of carrier's liability under Hague-Visby Rules

20 February 2019 

First-instance decision

Five yachts were loaded on board the M/V S Partner in the port of Baltimore to be carried to Genoa. The carrier issued bills of lading and the carriage was subject to the Brussels Convention 1924, as amended by the 1968 and 1979 protocols (ie, the so-called Hague-Visby Rules). During the sea passage, the ship encountered adverse weather conditions, which caused the five yachts to shift inside the hold and suffer serious damage. Upon the ship's arrival at the port of destination, the yachts were declared a total loss due to the extent of the damage suffered.

Subsequently, receivers commenced legal proceedings before the Tribunal of Genoa, claiming the full value of the yachts. The carrier pleaded that the sea and weather conditions that the ship had encountered during the voyage had been so severe as to amount to a peril of the sea and, alternatively, it was entitled to limit its liability under Article 4.5(a) of the Hague-Visby Rules.

The receivers counterargued that the carrier was not entitled to rely on the limitation of liability as the yachts had not been lashed or, in any event, their stowage and lashing inside the hold had been insufficient as to amount to a 'gross fault'.  The Tribunal of Genoa granted the receivers' claim on the issue of liability, but held that the owner was entitled to limit its liability.

On the limitation issue, the tribunal held that:

·         the carrier was entitled to rely on the benefit of limitation under Article 4.5(a) of the Hague-Visby Rules; and

·         to establish the loss of the carrier's limitation of its liability, the claimants had to provide evidence that the damage had resulted from an act or omission of the carrier done with the intent to cause damage or "recklessly and with knowledge that damage would probably result" and not simply due to gross fault.

Evidence collected at first instance was held to be insufficient to break the carrier's limitation of liability.

Appeal

The receivers appealed the first-instance decision on the limitation issue. They did not oppose the tribunal's view that the words "recklessly and with knowledge that damage would probably result", as set out in Article 4.5(e) of the Hague-Visby Rules, do not frame the concept of gross fault. Instead, the receivers pleaded that, in order to discharge their burden of proof and successfully break the carriers' limitation of liability, the carrier's actual knowledge of the likelihood of damage could be proven by simple presumptions, otherwise it would have been an impossible task to discharge such a heavy burden of proof against the carrier. In particular, the receivers argued, among other things, that the carrier's professional qualification should be regarded as proof of its awareness of the likelihood of a harmful event in case of its reckless conduct.

The carrier counter-appealed the first-instance decision claiming that no liability could be established against it, by seeking to bring itself within the exception of the peril of the sea. Further, the carrier insisted that the first-instance decision should be upheld in respect of the limitation issue and that it was entitled to limit its liability (if any).

After confirming the first-instance decision regarding the carrier's liability, thereby upholding the tribunal's view that the sea and weather conditions encountered during the voyage were not so severe as to amount to an excepted peril for an ocean sea passage, the Genoa Court of Appeal centred on the limitation issue.

The court referred to Italian Supreme Court Decision 8328 of 19 June 2001 issued in respect of a carriage by air under the Warsaw Convention 1929, which held that the concept of "recklessness and knowledge that damage would probably result" forged by international uniform law consists of two layers:

• the recklessness of the carriers' conduct; and
• the carriers' awareness that a harmful event would probably occur as a result of its reckless conduct.

The Supreme Court's decision concluded that a carrier's awareness must be actual. Receivers must therefore prove the carrier's actual knowledge of the likelihood that a harmful event will occur as a result of its reckless conduct in order to exclude the carrier's limitation of liability.

Having accepted the reasoning of the Supreme Court's decision, the Genoa Court of Appeal concluded that the receivers could not rely on simple presumptions in order to discharge their burden of proof and instead had to provide actual evidence. Further, and alternatively, the court stated that the carrier's professional quality (as an important liner) could not assist the receivers in discharging their burden of proof, as the carriage of goods by sea is always carried out by professionals.

Comment

The Genoa Court of Appeal's decision is welcome, as it interprets the principle of the loss of a carrier's limitation of liability as set out by the Hague-Visby Rules with the aim of safeguarding the uniform application of said convention. Indeed, it affirms that receivers must give actual (and in concreto) evidence of a carrier's knowledge that damage would probably have resulted as a consequence of its reckless conduct in order to claim the exclusion of the carrier's limitation of liability, with no recourse to factual presumptions.

The judgment will be welcomed by carriers and protection and indemnity clubs, as it will be difficult for claimants to discharge such a high standard of evidence in order to successfully plead the loss of a carrier's limitation of liability.