DMC/SandT/05/17
Tidewater Marine Service C.A. v. Gulf of Paria East Operating Company
United States of America: Arbitration Award: Society of Maritime Arbitrators of New York: Donald J. Szostak, Chairman, Jack Berg and David W. Martowski, Arbitrators: 2 June 2004
Frilot, Partridge, Kohnke & Clements, L.C., for the Claimant, Tidewater Marine
Cleary, Gottlieb, Steen & Hamilton for the Respondent Gulf of Paria East Operating Company
BAREBOAT CHARTERPARTY: BARGE: REDELIVERY IN LIKE GOOD ORDER AS ON DELIVERY: DID CHARTERPARTY TERMS APPLY TO AN EXPLOSION THAT OCCURRED DURING TANK CLEANING AFTER BARGE LEFT CHARTERER’S SERVICE: WHEN DID REDELIVERY OCCUR?: CAUSE OF  EXPLOSION: NEGLIGENCE OF CLEANING CONTRACTORS: WHETHER CHARTERER RESPONSIBLE FOR NEGLIGENCE OF CONTRACTORS: RESPONSIBILITY FOR THIRD PARTY EQUIPMENT ON BOARD
Summary
In this award, arbitrators from the Society of Maritime Arbitrators of New York held that a substantial claim arising from an explosion on board a barge during tank cleaning operations failed for lack of proof of causation. Even if the claimant had proved that the cleaning contractor engaged by the charterer had caused the explosion, the charterer would not have been held responsible for its contractor’s negligence, since the duty to clean the tanks was, in the circumstances of this case, clearly delegable. A counterclaim from the charterer for an  indemnity in respect of the loss of third party equipment on board the barge at the time of the casualty similarly failed, since there was no evidence to link the explosion with the cleaning contractors and therefore with the alleged failure of the ship operator properly to supervise the cleaning contractor and to check his equipment for safety                        

DMC Category Rating: Confirmed

Facts
The claims in this arbitration arose out of the total loss by explosion and fire of the tank barge “Pelican”, owned by Tidewater Marine (“Tidewater”). The accident occurred on 14 June 2001, when the barge was moored alongside a Tidewater facility at Maracaibo in Venezuela, whilst contractors – WINS Service Company – were engaged in removing some 70 barrels of unpumpable heavy crude oil that remained in the tanks of the barge as a consequence of her chartered service to the Respondent “GOPEOC”. The explosion killed five members of the cleaning gang and destroyed the barge as well as third party equipment on board. The barge, which was a constructive total loss, sank alongside the dock and had to be removed pursuant to a government wreck removal order. Costs were incurred in pollution containment and removal. Tidewater’s claims from the incident amounted to some USD2.894 million, whilst GOPEOC counterclaimed for payments it had had to make to the third party in respect of its equipment which was destroyed on the barge. 

Prior to the casualty, the barge had been bareboat chartered to GOPEOC under a Barecon 89 standard form of charter for an initial period of sixty days, with an extension option of a further thirty days. Delivery took place at Guiria on or about 23 March 2001. GOPEOC deployed the barge in support of its services in off-shore oil & gas exploration in the Gulf of Paria in Venezuela. It permitted its subcontractor, Schlumberger Venezuela S.A., to put certain special purpose oil production analysis and test equipment on board the barge. On delivery, a joint survey was conducted, which found the barge’s tanks “dry and clean”. 

At the beginning of June 2001, GOPEOC  informed Tidewater of its intention to close its exploratory well and to terminate the charter. About 8 June, GOPEOC returned the barge to Tidewater in Guiria, the place designated for redelivery. As its tanks still contained 70 barrels of unpumpable heavy crude oil and the charter required the ship to be redelivered “in the same or as good… state, condition… as on delivery, the parties agreed that GOPEOC would arrange for cleaning contractors – WINS Service Company – to attend the vessel at Tidewater’s Maracaibo facility later in the month to remove the crude oil and gas free the tanks. Tidewater had recommended WINS and approved their hiring, specifically noting that WINS had cleaned the tanks of the “Pelican” on several prior occasions. Concurrently with the cleaning operations, the Schlumberger equipment that remained on board was to be removed. The barge duly left Guiria in the tow of another Tidewater vessel, the tug “Gulf Pacer”,  on 8 June 2001, and reached Maracaibo on 14 June. The cleaning operation began later that day and the explosion occurred shortly afterwards. 

In support of its claim, Tidewater maintained that firstly, that the charterparty was still in force at the time of the explosion and that, accordingly, the charterers were in breach of their contractual duty to redeliver the vessel in the same good condition as on delivery. Secondly and alternatively, if the Tribunal found that the barge had already been delivered by the time of the casualty, then Tidewater maintained it was entitled to recover in tort on the basis that WINS’ cleaning operation had been negligent, for which GOPEOC was vicariously responsible. 

As for the counterclaim, GOPEOC maintained that Tidewater was responsible for the loss of the Schlumberger equipment as it was the party with full control of the “Pelican” at the time of the accident. Tidewater had, GOPEOC argued, an affirmative duty to prevent WINS from boarding the barge without proper supervision and without the proper equipment – specifically non-explosion-proof tools and blowers.

The Award
The panel held that Tidewater’s claim in contract under the charterparty failed. The documentary evidence supporting the conclusion that the “Pelican” was redelivered under the charter on sailing from Guiria on the afternoon of June 8, some six days prior to the casualty was, the panel said, “simply overwhelming”. In consequence, the charter had come to an end and its terms were no longer effective, therefore, to determine responsibility for the explosion. The fact that GOPEOC had still the obligation under the charterparty to gas free and clean the tanks and to remove the Schlumberger equipment did not mean that the charterparty continued in force until those operations were concluded. 

As for the claim in tort, the panel held that Tidewater had failed to carry the burden of proving that the explosion was caused by the negligence of the cleaning contractors, WINS. There was no definitive evidence on causation, the panel found. Nor was it a case where Tidewater could take advantage of the “res ipsa loquitur” principle, that the “matter speaks for itself”. That principle depended on a number of factors, one of which, - that  the event must  be caused by an agency or instrumentality that was in the party’s exclusive control – did not exist in this case. In no sense did WINS have “exclusive control” of the “Pelican” as it lay moored in Tidewater’s facility. 

The finding that Tidewater failed in its burden of establishing the cause of the explosion effectively disposed of the argument that GOPEOC has a vicarious liability for that negligence. But the panel dealt with this issue in passing, agreeing with the GOPEOC contention that the relationship of principal-agent does not apply to the work of an independent contractor – which WINS was acknowledged to be. The panel accepted that a party can be liable for the negligence of an independent contractor where the contractual duty (of GOPEOC in this case) is non-delegable. But that was not the position here. Tidewater was fully aware that GOPEOC had no tank cleaning experience or capability and intended to engage a tank cleaning contractor. In fact, GOPEOC had asked Tidewater to recommend suitable contractors to it. Moreover, Tidewater conceded in oral argument before the panel that the tank cleaning operation was a delegable, and not a non-delegable, operation. 

Given that, as the panel said, the cause of the explosion remained “speculative, at best”, there was no basis on which Tidewater could be held responsible for the loss of the Schlumberger equipment on board the barge. If the explosion was not proven to be caused by the negligence of WINS, there was no finding of negligence on the part of Tidewater in allowing WINS access to the barge without, as GOPEOC alleged, the proper supervision and without the proper equipment. 

As a result, the panel held that both the claim and the counter-claim failed, but it did award GOPEOC a substantial sum in costs, given that it had been successful in defeating the Tidewater claim.