Boluda Towage Rotterdam BV & Ors v Elise Tanschiffahrt KG & Anor
[2024] EWHC 1329 (Admlty)
Mercuria Energy Trading Pte v Raphael Cotoner Investments Limited
23 November 2023
[2023] EWHC 2978 (Comm)
High Court
A ship was wrongly anchored, leading to its capture. The owner argued this was the captain's fault (navigational error), not the owner's. The court agreed, saying the captain's mistake, not the owner's instructions, caused the problem. The owner wasn't liable.
Key Facts
- •Appeal against an arbitration award concerning the detention of the vessel AFRA OAK by the Indonesian Navy.
- •Detention occurred in Indonesian territorial waters near Singapore while the vessel was laden with cargo owned by the charterer.
- •The dispute centers on the application of Article IV(2)(a) of the Hague Rules (incorporated into the charterparty) to employment orders given by the charterer.
- •The charterer claimed the owner breached employment orders by anchoring in Indonesian waters, contravening local law.
- •The owner argued the master's actions constituted 'act, neglect, or default...in the navigation or management of the ship,' a Hague Rules defence.
- •The arbitration tribunal dismissed the charterer's claim, finding the master's actions negligent navigation, not a breach of employment orders.
Legal Principles
Article IV(2)(a) of the Hague Rules provides a defence where the loss or damage arises from the act, neglect, or default of the master, mariner, pilot, or servants of the carrier in the navigation or management of the ship.
US Carriage of Goods by Sea Act 1936, Section 4(2)(a); Hague Rules, Article IV rule 2(a)
Interpretation of arbitration awards requires a fair and reasonable reading of the award as a whole, avoiding minute textual analysis.
Kershaw Mechanical Services Ltd v Kendrick Construction [2006] 4 All ER 79; Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14
Under a time charter, the charterer has the right to direct the employment of the vessel, while the owner has a duty to comply with such directions. The master retains responsibility for the safety of the vessel, crew, and cargo, and may refuse to obey orders that expose the vessel to undue risk.
The Hill Harmony, Whistler International v Kawasaki Kisen Kaisha [2001] 1 AC 638
The scope of 'employment' orders and 'navigation' are distinct. 'Employment' concerns the economic aspect – the exploitation of the vessel's earning potential. 'Navigation' embraces matters of seamanship.
The Hill Harmony
When the Hague Rules are incorporated into a charterparty, the owner has the benefit of the immunities for all contractual activities.
Adamastos Shipping v Anglo-Saxon Petroleum [1959] AC 133; The Satya Kailash [1984] 1 LR 588
Outcomes
The appeal was dismissed.
The Tribunal correctly found that the master's negligent navigation, not a breach of employment orders, caused the loss. The master's failure to exercise good navigation and seamanship in choosing to anchor in Indonesian waters fell within the Hague Rules' exception for negligent navigation.
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