In day-to-day operations maritime customs and commercial usage play a much more significant role in contracts of affreightment than one might think. Thus, 𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐬 𝐨𝐟 𝐚𝐟𝐟𝐫𝐞𝐢𝐠𝐡𝐭𝐦𝐞𝐧𝐭 𝐢𝐧𝐜𝐥𝐮𝐝𝐞 𝐧𝐨𝐭 𝐨𝐧𝐥𝐲 𝐞𝐱𝐩𝐫𝐞𝐬𝐬 𝐜𝐥𝐚𝐮𝐬𝐞𝐬 𝐚𝐠𝐫𝐞𝐞𝐝 𝐛𝐲 𝐭𝐡𝐞 𝐩𝐚𝐫𝐭𝐢𝐞𝐬, 𝐛𝐮𝐭 𝐚𝐥𝐬𝐨 𝐚 𝐬𝐞𝐫𝐢𝐞𝐬 𝐨𝐟 𝐨𝐛𝐥𝐢𝐠𝐚𝐭𝐢𝐨𝐧𝐬 𝐭𝐡𝐚𝐭 𝐚𝐫𝐞 𝐚𝐮𝐭𝐨𝐦𝐚𝐭𝐢𝐜𝐚𝐥𝐥𝐲 𝐢𝐧𝐜𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞𝐝 𝐢𝐧𝐭𝐨 𝐭𝐡𝐞 𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐬 𝐨𝐟 𝐚𝐟𝐟𝐫𝐞𝐢𝐠𝐡𝐭𝐦𝐞𝐧𝐭 𝐢𝐟 𝐭𝐡𝐞 𝐩𝐚𝐫𝐭𝐢𝐞𝐬 𝐡𝐚𝐯𝐞 𝐧𝐨𝐭 𝐚𝐠𝐫𝐞𝐞𝐝 𝐨𝐭𝐡𝐞𝐫𝐰𝐢𝐬𝐞.
Special attention must be paid to contracts that are governed by the Hague or Hague/Visby Rules, which not only may alter the scope and application of some of the implied obligations, but also restrict the possibility for the parties to a contract to mutually exclude them.
In this note, I want to consider Owner’s obligation as to seaworthiness of the vessel, probably one of the most ‘popular’ causes for disputes between the shipowners and charterers.
At common law, definition of seaworthiness is established in 𝐊𝐨𝐩𝐢𝐭𝐨𝐟𝐟 𝐯 𝐖𝐢𝐥𝐬𝐨𝐧 (1876) 1 QBD 377 which specifies that carrier should provide a vessel ‘𝘧𝘪𝘵 𝘵𝘰 𝘮𝘦𝘦𝘵 𝘢𝘯𝘥 𝘶𝘯𝘥𝘦𝘳𝘨𝘰 𝘵𝘩𝘦 𝘱𝘦𝘳𝘪𝘭𝘴 𝘰𝘧 𝘵𝘩𝘦 𝘴𝘦𝘢 𝘢𝘯𝘥 𝘰𝘵𝘩𝘦𝘳 𝘪𝘯𝘤𝘪𝘥𝘦𝘯𝘵𝘢𝘭 𝘳𝘪𝘴𝘬𝘴 𝘸𝘩𝘪𝘤𝘩 𝘰𝘧 𝘯𝘦𝘤𝘦𝘴𝘴𝘪𝘵𝘺 𝘴𝘩𝘦 𝘮𝘶𝘴𝘵 𝘣𝘦 𝘦𝘹𝘱𝘰𝘴𝘦𝘥 𝘪𝘯 𝘵𝘩𝘦 𝘤𝘰𝘶𝘳𝘴𝘦 𝘰𝘧 𝘵𝘩𝘦 𝘷𝘰𝘺𝘢𝘨𝘦’.
Generally, the undertaking as to seaworthiness covers:
- 𝐏𝐡𝐲𝐬𝐢𝐜𝐚𝐥 𝐬𝐭𝐚𝐭𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐯𝐞𝐬𝐬𝐞𝐥 (its hull and machinery), including, for instance, cranes on board the vessel for loading/off loading cargo.
- 𝐂𝐫𝐞𝐰 – the vessel must be equipped with competent and adequate crew.
- 𝐅𝐮𝐞𝐥 𝐚𝐧𝐝 𝐨𝐭𝐡𝐞𝐫 𝐬𝐮𝐩𝐩𝐥𝐢𝐞𝐬 must be sufficient.
- 𝐂𝐚𝐫𝐠𝐨𝐰𝐨𝐫𝐭𝐡𝐢𝐧𝐞𝐬𝐬 – if the holds are prepared to take on board a particular type of cargo etc.
- 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐰𝐢𝐭𝐡 𝐢𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐬𝐚𝐟𝐞𝐭𝐲 𝐬𝐭𝐚𝐧𝐝𝐚𝐫𝐝𝐬, such as International Safety Management Code (ISM) and holding of a valid International Ship Security Certificate (ISSC) certificate.
- 𝐑𝐞𝐥𝐞𝐯𝐚𝐧𝐭 𝐝𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧, 𝐜𝐡𝐚𝐫𝐭𝐬, 𝐦𝐚𝐩𝐬, necessary health certificates from ports health authorities etc.
At common law the obligation as to seaworthiness is established in landmark case 𝐌𝐜𝐅𝐚𝐝𝐝𝐞𝐧 𝐯 𝐁𝐥𝐮𝐞 𝐒𝐭𝐚𝐫 𝐋𝐢𝐧𝐞 [𝟏𝟗𝟎𝟓] 1 KB 697 which establishes a long established test for seaworthiness (also known as ‘McFadden test’ or ‘prudent owner test’):
‘𝘐𝘧 𝘵𝘩𝘦 𝘥𝘦𝘧𝘦𝘤𝘵 𝘦𝘹𝘪𝘴𝘵𝘦𝘥, 𝘵𝘩𝘦 𝘲𝘶𝘦𝘴𝘵𝘪𝘰𝘯 𝘵𝘰 𝘣𝘦 𝘱𝘶𝘵 𝘪𝘴𝘮 𝘸𝘰𝘶𝘭𝘥 𝘢 𝘱𝘳𝘶𝘥𝘦𝘯𝘵 𝘰𝘸𝘯𝘦𝘳 𝘩𝘢𝘷𝘦 𝘳𝘦𝘲𝘶𝘪𝘳𝘦𝘥 𝘵𝘩𝘢𝘵 𝘪𝘵 𝘴𝘩𝘰𝘶𝘭𝘥 𝘣𝘦 𝘮𝘢𝘥𝘦 𝘨𝘰𝘰𝘥 𝘣𝘦𝘧𝘰𝘳𝘦 𝘴𝘦𝘯𝘥𝘪𝘯𝘨 𝘩𝘪𝘴 𝘴𝘩𝘪𝘱 𝘵𝘰 𝘴𝘦𝘢 𝘩𝘢𝘥 𝘩𝘦 𝘬𝘯𝘰𝘸𝘯 𝘰𝘧 𝘪𝘵? 𝘐𝘧 𝘩𝘦 𝘸𝘰𝘶𝘭𝘥, 𝘵𝘩𝘦 𝘴𝘩𝘪𝘱 𝘸𝘢𝘴 𝘯𝘰𝘵 𝘴𝘦𝘢𝘸𝘰𝘳𝘵𝘩𝘺 𝘸𝘪𝘵𝘩𝘪𝘯 𝘵𝘩𝘦 𝘮𝘦𝘢𝘯𝘪𝘯𝘨 𝘰𝘧 𝘵𝘩𝘦 𝘶𝘯𝘥𝘦𝘳𝘵𝘢𝘬𝘪𝘯𝘨’
If the charterparty and/or the bills of lading incorporate the Hague/Hague Visby Rules, then that absolute obligation of seaworthiness is altered in favour of a due diligence obligation.
In 𝐏𝐫𝐞𝐬𝐢𝐝𝐞𝐧𝐭 𝐨𝐟 𝐈𝐧𝐝𝐢𝐚 𝐯 𝐖𝐞𝐬𝐭 𝐂𝐨𝐚𝐬𝐭 𝐒𝐭𝐞𝐚𝐦𝐬𝐡𝐢𝐩 𝐂𝐨 [𝟏𝟗𝟔𝟑] 2 Lloyd’s Rep 278 at p 281, the Court established that the obligation of the owner to provide a seaworthy vessel is absolute, meaning in the event of the breach the owner is responsible irrespective of the fault. However, it does not imply the obligation for the owner to provide a perfect ship, she shall be just ‘reasonably suitable’ for intended use or service.
From the 𝐊𝐨𝐩𝐢𝐭𝐨𝐟𝐟 𝐯 𝐖𝐢𝐥𝐬𝐨𝐧 definition of the seaworthiness it could be understood that it refers to the ability of the ship to operate and navigate safely at sea, i.e. it condition, machinery, crew etc. In my interpretation, his test does not cover cargoworthiness directly, another important aspect, which relates to ability of the vessel to take on board, carry and protect cargo during the voyage.
𝐒𝐞𝐚𝐰𝐨𝐫𝐭𝐡𝐢𝐧𝐞𝐬𝐬 𝐢𝐧 𝐦𝐚𝐫𝐢𝐧𝐞 𝐢𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐜𝐨𝐧𝐭𝐞𝐱𝐭
In terms of defining seaworthiness of the vessel in marine insurance context, important consideration shall be given to 𝐒𝐞𝐜𝐭𝐢𝐨𝐧 𝟑𝟗 𝐨𝐟 𝐔𝐊 𝐌𝐚𝐫𝐢𝐧𝐞 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐀𝐜𝐭 𝟏𝟗𝟎𝟔.
Thus, Section 39(4) establishes, that a ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured.
In the context of Section 39 of the UK Marine Insurance Act 1906 seaworthiness is considered as a warranty. Section 39 also explains clearly when the warranty shall be effective:
- In a voyage policy there is an implied warranty that at the commencement of the voyage the ship shall be seaworthy for the purpose of the particular adventure insured.
- Where the policy attaches while the ship is in port, there is also an implied warranty that she shall, at the commencement of the risk, be reasonably fit to encounter the ordinary perils of the port.
- Where the policy relates to a voyage which is performed in different stages, during which the ship requires different kinds of or further preparation or equipment, there is an implied warranty that at the commencement of each stage the ship is seaworthy in respect of such preparation or equipment for the purposes of that stage.
- In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness.
⚠️ 𝐓𝐡𝐢𝐬 𝐚𝐫𝐭𝐢𝐜𝐥𝐞 𝐦𝐚𝐫𝐤𝐬 𝐭𝐡𝐞 𝐛𝐞𝐠𝐢𝐧𝐧𝐢𝐧𝐠 𝐨𝐟 𝐚 𝐬𝐞𝐫𝐢𝐞𝐬 𝐈 𝐚𝐦 𝐩𝐫𝐞𝐩𝐚𝐫𝐢𝐧𝐠 𝐨𝐧 𝐭𝐡𝐞 𝐭𝐨𝐩𝐢𝐜 𝐨𝐟 𝐢𝐦𝐩𝐥𝐢𝐞𝐝 𝐨𝐛𝐥𝐢𝐠𝐚𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐚 𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭 𝐨𝐟 𝐚𝐟𝐟𝐫𝐞𝐢𝐠𝐡𝐭𝐦𝐞𝐧𝐭 𝐮𝐧𝐝𝐞𝐫 𝐄𝐧𝐠𝐥𝐢𝐬𝐡 𝐥𝐚𝐰.
𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐛𝐞 𝐧𝐨𝐰 𝐭𝐨 𝐠𝐞𝐭 𝐞𝐬𝐬𝐞𝐧𝐭𝐢𝐚𝐥 𝐝𝐞𝐭𝐚𝐢𝐥𝐬 𝐨𝐧 𝐎𝐰𝐧𝐞𝐫𝐬' 𝐚𝐧𝐝 𝐂𝐡𝐚𝐫𝐭𝐞𝐫𝐞𝐫𝐬' 𝐢𝐦𝐩𝐥𝐢𝐞𝐝 𝐨𝐛𝐥𝐢𝐠𝐚𝐭𝐢𝐨𝐧𝐬 𝐚𝐧𝐝 𝐦𝐨𝐫𝐞 𝐦𝐚𝐫𝐢𝐭𝐢𝐦𝐞 𝐥𝐞𝐠𝐚𝐥 𝐢𝐧𝐬𝐢𝐠𝐡𝐭𝐬 🔖