CSAV v. ER Hamburg
Issue 2: Bunker Tank Heating
DMC Category Rating: Developed
This case note was prepared by Jim Leighton, BSc (Hons) (University of Plymouth), LLM (Maritime Law) (University of Southampton) and Claims Consultant
The cause of the explosion had not been determined by the arbitrators, but two rival contentions existed: (1) that the cargo was inherently unstable and volatile; and (2) that the cargo exploded due to the fact that it was stowed adjacent to a bunker tank which was heated during the voyage causing the cargo to become unstable and explode. The appeal was concerned with the second scenario. There were two issues:
(1) What is the proper interpretation of clause 8 of the charterparty, which places the responsibility for stowage on the charterers, in the light of clause 24 which expressly incorporated as a clause paramount the Hague/Hague-Visby Rules to the charter. In other words, if the stowage was done in such a way as to render the vessel unseaworthy, are the shipowners or charterers responsible under the contract for the loss? Clause 8 provides so far as is material that "Charterers are to load, stow and trim the cargo at their expense under the supervision of the Captain".
(2) Assuming as a fact that the bunkers were heated to a temperature above what was required to keep the fuel oil reasonably thin and that this was causative of the explosion, do the shipowners have a defence to a claim for breach of Article III.2 ["failing to care for … the goods carried"] by reason of Article IV.2(a); in other words was this an "act, neglect or default … in the management of the ship"?
The arbitrators had found that the container should not have been stowed next to a bunker tank and that the Chief Officer, had he understood the computer programme he was using, would have realised that the location of the container was close to a source of heat and not "away from" "sources of heat" as the IMDG Code required. Therefore, he was negligent and the ship was unseaworthy as a result.
The respondent shipowners submitted, amongst other arguments, on issue 1:
The question was not whether the shipowners were under a duty to intervene in the loading process, but whether they owed that duty to the charterers. The judge held that there was no authority to assist the charterers to prove the existence of such a duty. The reliance of the charterers on certain passages from Canadian Transport Ltd v Court Line Ltd  AC 934 was misfounded. The judge considered the relevant passages from the speech of Lord Atkin, in Court Line, to simply highlight that a master was entitled to seek to protect his vessel from stowage which rendered the vessel unsafe. A clear distinction was drawn between an entitlement to supervise and a duty to do so, owed to the charterers. There was no indication that their Lordships, in Court Line, did not have in mind the relationship between stowage and seaworthiness.
The other reason for rejecting the argument of the charterers was that they were contrary to authority. The Imvros was not to be distinguished on its facts or on grounds of construction. That case concerned a shipment of timber, which was loaded by the charterers on deck in contravention of the IMO Code of Practice for Ships Carrying Timber Deck Cargoes. In consequence of the bad stowage, which was held to amount to unseaworthiness, some of the deck cargo was lost overboard. The shipowners settled claims from the bill of lading holders and then sought and were awarded indemnity from the charterers under a clause 8 of the NYPE Form of charter worded similarly to that in the present case. The judge in that case, Justice Langley, said that expressions such as "under the supervision of the Captain" were not a qualification on the obligations of the charterers but denoted a right of the Captain to be satisfied with or to supervise the performance of the loading and stowing operations. "A right to intervene did not normally carry with it a liability for failure to do so, let alone relieve the actor from his liability" (at page 851).
Justice Langley continued that "it would be a remarkable construction which produced the result that so long as the loading was carried out by the charterers badly enough to put the, or the other, cargo but not the vessel at risk, the charterers would be liable but the moment the loading was so badly carried out that it made the vessel unseaworthy the entire responsibility fell upon the owners and the charterers were relieved of it". Any construction which had that effect should be resisted, said Justice Morison, because in reality no shipowner could safely and properly leave the stowage to the charterers. Court Line, when properly understood, was also a complete answer to the charterer’s main submission.
It was also appropriate for the English courts to construe the same contract in the same way as the US courts. The decisions in Nichimen Co Inc v MV Farland 462 F 2d 319  2nd District Court of Appeal, Fernandez v Chios Shipping Co Ltd 458 F Supp 821  District Court and Duferco SA v Ocean Wilde Shipping Corp 210 F Supp 2d  District Court were compelling. The US court decisions indicated that making the shipowner responsible for the effects of the charterer’s improper stowage would undermine the purpose of the unamended clause 8. These decisions clearly recognised the difference between a right to supervise and require re-loading, on the one hand, and a duty to do so, on the other.
The judge considered the unseaworthiness argument to be "something of a red herring" because it was entirely the fault of the charterers if their improper stowage caused the vessel to become unseaworthy. "Making the vessel unseaworthy through improper stowage does not, contractually, make the shipowners liable; on the contrary, all damage caused directly by improper stowage will be for the charterer’s account."
As a result The Imvros decision was plainly right and should be followed; the arbitrators’ reasoning and conclusions therefore could not be faulted.
Issue 2: Bunker Tank Heating
The judge indicated that the question was whether the act [heating the bunker tank] was done as part of the care of the cargo or as part of the running of the ship not specifically related to the cargo: Gosse Millard Ltd v Canadian Government Merchant Marine Ltd  AC 223. The unequivocal answer was that the heating of the bunker tank was done as part of the running of the ship not specifically related to the cargo (i.e. the heating of the bunker tank was done in order to enable the provision of fuel to the main engines of the vessel for the primary purpose of propelling the vessel through the water). The shipowners could therefore rely upon Article IV.2(a) as a complete defence.
The judge specifically approved of the passage in Cooke, Voyage
Charters (2nd edn.), para. 85.261, where it states: "The
principal enquiry, therefore, is whether the act or default which caused the
loss of damage was done (or left undone) as part of the care of the cargo or as
part of the running of the ship, not specifically related to the cargo. Some
functions of machinery on board are clearly related only to cargo."
The lesson to be learnt was that the charterers, during the negotiation of the charterparty, could have ensured the effect they now sought to achieve by negotiating for the well recognised amendment to clause 8: "Charterers are to load, stow and trim the cargo at their expense under the supervision and responsibility of the Captain" [emphasis added].
Issue 2: Bunker Tank Heating
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