Smit v. Mobius
Case No. DMC/S&T/09/01
Smit International (Deutschland) GmbH v. Josef Mobius, Bau-Gesellschaft (GmbH
TOWAGE CONTRACT: BIMCO TOWHIRE CONDITIONS: DAMAGE ARISING FROM ACCIDENT INVOLVING TOW: THIRD PARTY CLAIMS: UNSEAWORTHINESS OF TUG: KNOCK FOR KNOCK AGREEMENTS: CONVENTION ON LIMITATION FOR MARINE CLAIMS: MERCHANT SHIPPING ACT 1995: APPLICATION TO KNOCK-FOR-KNOCK AGREEMENTS
In relation to a claim for indemnity under the BIMCO TOWHIRE conditions, the question whether or not the claimant’s vessel was seaworthy was not relevant to the operation of the knock-for-knock agreement contained in those conditions. Nor was a claim under the knock-for –knock agreement itself limited by the Convention on Limitation for Maritime Claims 1976. However, the question whether limitation had been applied to any third party claim, in respect of which indemnity was sought under that agreement, was relevant in determining whether the claim had been ‘reasonably compromised’, as the agreement required.
DMC Rating Category: Developed
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Smit had chartered one of their tugs to Mobius for 6 months operations in the Kiel Canal under BIMCO TOWHIRE conditions. In March 2000, whilst the tug was towing one of Mobius’ barges, the tow came into contact with a dredger belonging to a third party. The third party claimed damages from Smit, which compromised the claim and then claimed indemnity from Mobius under the TOWHIRE conditions. Mobius, on the other hand, claimed from Smit for the damages to the barge and for loss of its use whilst it was under repair.
The relevant clauses of the TOWHIRE conditions were the following:
On the second issue, the Judge quoted with approval a passage from Rainey’s
‘The Law of Tug and Tow’, in the context of a collision between an innocent
ship and vessels under tow, where the tug and tow are not in common ownership:
In this case, the relevant claim for the purposes of applying the Limitation Convention was related to the operation of the tug and not the tow [presumably because the third party claim against Smit had been based on the negligent operation of the tug]. Under the terms of clause 18.2(b) however, Smit were entitled to a full indemnity, since the limitation provision was not incorporated into that clause. ‘The tow is protected to the extent that the third party’s claim may be limited to the tug’s tonnage and the Hirer is only liable for the amount of a claim which has been reasonably settled. Thus, if the tug unreasonably refused to limit the claim by reference to the tug’s tonnage, that could provide a defence.’
The judge did not accept that clause 18.4 represented an exclusion of the limitation legislation so far as the tow was concerned. ‘Express words would be required’ to achieve such a result. ‘In my view, clause 18.4 is emphasising that where the third party damage can be limited by reference the tonnage of the tug then it should be, whichever of the two parties is actually handling the third party claim.’
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