11/11/2021

Landmark Supreme Court decision on shipowners’ seaworthiness and due diligence obligations

Alize 1954 and another v Allianz Elementar Versicherungs AG and others [2021] UKSC 51

The Supreme Court has handed down its landmark judgment in The CMA CGM LIBRA [2021] UKSC 51.

There were two issues before the Supreme Court: first, whether a defective passage plan rendered a vessel unseaworthy and, second, whether a negligent failure by the master to annotate the passage plan constituted want of due diligence by the carrier within the framework of the Hague Rules.

Lord Hamblen, with whom the rest of the court agreed, held that a defective passage plan could render a vessel unseaworthy, because a vessel’s quality of seaworthiness or navigability and the navigation by the master and crew were not mutually exclusive categories so that there is no difference between negligent navigation causing unseaworthiness and itself being the unseaworthiness.

He also dismissed the appeal on the second issue, holding that the carrier is liable for the crew’s failure to exercise due diligence in passage planning irrespective of whether navigation is the responsibility of the master and involves the exercise of their specialist judgment.

The decision represents a landmark because it is the first decision by the Supreme Court on both seaworthiness and the obligation to exercise due diligence. It is also of great practical relevance to the shipping community at large, because it lays down the correct framework for the interpretation of the Hague Rules (including as amended by the Visby Protocol).

Adopting the appellants’ analysis, Lord Hamblen held that (i) the Hague Rules should be interpreted by reference to broad and general principles of construction rather than any narrowed domestic law principles, (ii) regard may be had to the travaux, (iii) in considering the object and purpose of the Hague Rules, it is appropriate to have regard to their history, origin and context and (iv) it may be appropriate to have regard to the French text for the Rules.

Furthermore, the court rejected cargo interests’ argument that the ‘prudent owner’ test, which asks whether a prudent shipowner would have required the defect to be made good, is a universal test of unseaworthiness, although Lord Hamblen accepted that will be an appropriate and helpful test to apply in most cases.

Timothy Hill QC, Alex Carless and Michal Hain were instructed by Reed Smith LLP for the appellant shipowners.

Read the full judgment