London Arbitration 2/23

The subject vessel was chartered on an amended NYPE 1981 form, with rider clauses, for a one-time charter trip with one leg via Indonesia to China and grounded while under pilotage in the port of Chaozhou. She suffered damage to her port side hull structure. Owners claimed that the port was unsafe and in breach of the charterparty, claiming the cost of repairs and associated damages plus interest and costs. Charterers countered the claim stating that the alleged loss and damage was due to 1) negligent navigation and/or 2) unseaworthiness and/or 3) want of due diligence and/or 4) dangers and accidents of the seas and/or 5) errors of navigation. Charterers asserted these were all risks which Owners agreed to bear.

The charterparty included the following relevant provisions:

“The vessel shall be employed in such lawful trades between safe ports and places excluding …

4. … hire shall continue until the hour of the day of her redelivery in like good order and condition, ordinary wear and tear excepted, to the Owners (unless vessel lost) on dropping last outward sea pilot, one safe port South China …

6. Vessel shall be loaded and discharged in any dock or at any berth or anchorage or place that Charterers or their agents may direct, provided the vessel can safely lie always afloat at any time of tide …

8. …The Captain (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency …

11. The Charterers shall furnish the Captain from time to time with all requisite instructions and sailing directions …

16. … Exceptions … all dangers and accidents of the seas … and errors of navigation throughout the Charter, always mutually excepted. …

25. Nothing herein stated is to be construed as a demise of the vessel to the Time Charterers. The Owners shall remain responsible for the navigation of the vessel, acts of pilots and tug boats, seaworthiness, insurance, crew, and all other similar matters, same as when trading for their own account.”

Voyage Facts

The vessel was a gearless Panamax bulk carrier with a summer deadweight of 73,144 tons on a corresponding draught of 13.871 m. Her overall length was 225 m and her beam 32.26 m. The vessel met the SOLAS Chapter V Regulation 19 chart carriage requirements by carrying and using paper charts for navigation, as well as using Electronic Navigational Charts (“ENCs”).

The port and its approaches were shown on several nautical charts, including three paper charts, but only the Chinese MSA Chart 81102 showed the limits of the 14.5 m channel, which was shown as being some 200 m wide.

The vessel’s arrival draughts at Chaozhou were reported to be 13.85 m forward and 13.85 m aft.

The vessel passed between Buoys No 1 and No 2 at Chaozhou around 08:15 and entered the channel. The pilot then boarded the vessel, and a master–pilot exchange took place. The pilot ordered “Half Ahead”, and the vessel proceeded along the centerline of the channel.

After the pilot commenced issuing a series of maneuvering orders in quick succession, the master stated that, at about 09:20, a strong vibration was felt, and the vessel’s speed reduced, indicating that it had grounded. At about 09:21, the master advised the pilot that there was water in the ballast (tanks).

The vessel then proceeded to her berth, and it was determined that the vessel had suffered damage to her port side.

The port of Chaozhou was approached by a buoyed channel. Neither of the two charts that were available onboard the vessel prior to the pilot’s arrival, indicated the presence or limits of the channel. Therefore, the vessel could not know from her charts how close to the buoys she could pass and remain in the channel.

It was established that the pilot was using a PPU that likely utilized Chinese MSA Chart 81102 if not more detailed hydrographic data. Both parties accepted that the vessel grounded outside the channel in charted shoal water where she should not have been, and that the pilot would have known of the location of the charted shoal water.

There was no evidence that the vessel’s INPP was sighted by or discussed with the pilot. Nor was there any evidence that the pilot’s plan was discussed in detail or plotted on the vessel’s charts or radars.

Decision

The tribunal found that the master was negligent and ruled the cause of the grounding was the negligent navigation of the vessel during her inbound passage to her discharge berth.

The owners asserted that the port was unsafe, principally due to the incompetence of the pilot and/or tug masters, and the presence of a boulder in the fairway.

The tribunal held that the deep-water channel was safe for the vessel at the material time. The limits of the channel were marked on appropriate navigational charts and were known to the pilot.

The tribunal used the parameters set forth in Leeds Shipping Co Ltd v Societe Francaise Bunge (The Eastern City) [1958] 2 Lloyd’s Rep 127, page 131 to determine the safety of the port. These parameters allowed that the port, in the relevant period, could be reached by the ship, used, and return from the port without, in the absence of some abnormal occurrence, being exposed to danger that could not be avoided by good navigation and seamanship.

The test for competence was derived from Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1 Lloyd’s Rep 719 per Creswell J which sought to determine whether the pilot was affected by a disabling lack of skill or knowledge, derived from inherent lack of ability, lack of adequate training, lack of knowledge, or a disinclination to perform the job properly.

The tribunal found the pilot to have been competent, but negligent in misjudging the turn into the port and failing to take appropriate action to correct his error. The evidence available indicated that the pilot routinely worked with bulk carriers and had not been involved in any other incident before or after the vessel’s grounding. 

Since the pilot was able to control the tugs in push/pull mode and absent any other evidence that any of the tugs failed to perform in a competent manner, the tribunal also found the tug masters to be competent.

A one-off mistake such as this by a competent pilot was not a defect of the port, as stated in Kodros Shipping Corporation v Empresa Cubana de Fletes (The Evia) (No 2) [1982] 1 Lloyd’s Rep 334, page 338.

The grounding also was not the result of an abnormal occurrence, either in the context of the safe port test set out above or in the context of the definition in Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2017] 1 Lloyd’s Rep 521.

Whatever the reasons for the slow rate of turn, both parties’ experts agreed that the pilot could and should have taken action to increase the rate of turn but failed to do so.

The owners could not recover costs under the implied indemnity because clauses 16 and 25 of the charterparty made them responsible for the consequences of errors of navigation.

The tribunal held the charterer’s claim that vessel was unseaworthy at the beginning of her voyage because she lacked the appropriate chart to prepare a berth-to-berth passage plan that was compliant with IMO Resolution A893(21). The master made no effort to obtain the required chart and commenced the inbound passage without any knowledge of the limits of the deep-water channel.

There was no evidence that the owners exercised due diligence to ensure that the vessel had a compliant passage plan before she departed for Chaozhou.

The tribunal ordered the owner to pay their own and the charterer’s costs as well as the award of £91,410 plus interest and fees.