Pride of Donegal

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Project Asia Line Inc of Delaware and United Shipping Services Limited v Andrew Shone & Others ("The Pride of Donegal") 
English High Court, Commercial Court: Andrew Smith, J.: 24 January 2002 
Mr. R Mawrey QC and Mr S Buckingham, instructed by Duval Vassiliades for the claimants 
Mr N Jacobs, instructed by Clyde & Co, for the defendant underwriters 

This case reviewed unseaworthiness under the Marine Insurance Act 1906 (‘MIA’), the court finding that the vessel was unseaworthy in two respects. The court also looked at the suspension and withdrawal of class in the context of claims under voyage policies on freight and held that the words "classed with major classification society" in the insurance policy required the vessel to be in class at the time that the events giving rise to the casualty occurred. It was not sufficient that the ship be so classed only at the commencement of the voyage. On the facts of this case, the ship was in class when the casualty occurred.

DMC Category Rating: Developed

This case note is based on an Article in the August 2002 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA. DLA is an International Contributor to this website

The Pride of Donegal left Detroit on 18 December 1995, intending to load cargo at Norfolk, Virginia and Brownsville, Texas for delivery to Asia. Problems with the turbocharger led the crew to make a number of temporary repairs but the difficulties continued, leading to engine breakdown on 27 December. Eventually the vessel was towed to Norfolk for repairs, arriving on 20 January.

The claimants (the charterers of The Pride of Donegal and the assignees of the benefit of the insurance contract) claimed a total of $876,000 by way of lost freight under two charterparties. The defendant insurers argued that there had been a breach of the implied warranty of seaworthiness under section 39(1) of the Marine Insurance Act of 1906 (‘MIA’). That section reads:

"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."

The insurance cover was for a period of 12 months from 13 September 1995 and was in respect of freight and bunkers "per any vessel owned and/or chartered and/or operated by the assured, classed with major classification society, not exceeding 20 years of age or held covered". The conditions included the Institute Voyage Clauses Freight Cl 288 1/8/89, which provided that the insurance covered "loss of the subject-matter insured caused…. by negligence of Masters, Officers, Crew or Pilot…provided such loss has not resulted from want of due diligence by the Assured, Owners or Managers". A declaration to insurers in respect of the voyage in question was made on 20 December 1995, with further details following on 27 December.

The Arguments 
The claimants argued that the main engine breakdown was due to the negligence of the crew in dealing with the turbocharger on and after 27 December, and that the loss was therefore covered by the policy.

Insurers' defence was that the vessel was unseaworthy in numerous respects when it left Detroit. Some of these were fairly minor and did not individually amount to unseaworthiness but did so if taken together with all the other defects. As regards classification, insurers argued that the terms of the insurance ("any vessel…classed with major classification society") required the vessel remain in class throughout the voyage, and operated either as a limitation on the cover, a warranty, or a condition precedent to insurers' liability. The claimants maintained that the vessel had only to be classed at the start of the voyage. The Pride of Donegal had ceased to be maintained with a classification society after 27 December 1995.

There was no dispute that the policy was a voyage policy or that the insured voyage began when the vessel left Detroit. The implied warranty under section 39(1) MIA was that she was seaworthy at the start of the voyage. Seaworthiness in this context means "reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure assured" (section 39(4)MIA). Thus the standard will vary with the demands of the voyage. Carver on Carriage by Sea introduces an additional test - whether, had he known of it, a prudent owner would have required that the defect should be made good before sending his ship to sea.

Unseaworthiness is a question of fact in each case. Not every defect that requires repair makes a vessel unseaworthy, but a trivial defect can render a vessel unseaworthy. So too can a defect which the crew can repair (Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha [1962] 2 QB 26. There is a presumption that a vessel is unseaworthy if "there is something about it which endangers the safety of the vessel or its cargo or which might cause significant damage to its cargo" (Athenian Tankers Management SA v Pyrena Shipping Inc (The Arianna) [1987] 2 Ll L R 376).

But there was no precedent for insurers' suggestion that the court should consider the defects cumulatively. The judge felt that, whilst there were circumstances in which the court might consider two or more defects together (such as where two defects were potentially concurrent causes of the loss), this was not the case here.

On the evidence, the judge held that, at the start of the voyage, the vessel had been unseaworthy in two separate respects; (i) as a result of corrosion of the turbocharger casing and (ii) because of defective generators. This constituted two separate breaches of warranty, and either one of them meant that that the claimants’ claim failed.

As regards classification, the judge found there was no basis on which to find either a warranty or a condition precedent. But the words did affect the scope of the cover. Quite simply, the cover extended to vessels as long as they were classed by a major classification society. The policy would therefore provide protection only if the vessel was in class at the time of the events that caused the loss. The evidence showed that the suspension of class was made retrospectively as a consequence of the main engine failure on 27 December 1995. This, the judge was satisfied, was an insured event and, at the time of that event, the vessel was still in class.

This will have been of small comfort to the claimants, however, given the earlier finding on the issue of seaworthiness.


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