ITIC settles off-hire dispute resulting from ship manager’s negligence

International Transport Intermediaries Club (ITIC) recently settled a claim brought against a ship manager for failure to maintain its obligations under a technical management contract, leading to liability for costs incurred when the vessel was denied permission to berth by port authorities in Australia.

The manager was responsible for the technical management of a bulk carrier which called regularly at an Australian port to load iron ore. The master had notified the manager of a problem with the winch used for the vessel’s mooring rope which, although still operational, needed its worn pinion gear replaced.

The manager had taken no action to arrange the repairs and, over the following months, the vessel called several times at the same port. Each time, when the pilot went on board, the master explained the problem to him, and the pilot was satisfied that, as the mooring lines could be lifted by the winch, the vessel was able to berth safely.

The situation continued until one pilot decided that he would not accept the master’s assurances and refused to allow the vessel to berth. The pilot spoke to the harbour master, who instructed the vessel to go to the anchorage until the winch could be repaired. This caused a four-day delay, during which time the vessel went off-hire in accordance with the terms of the charter-party.

The owner subsequently brought a claim for approximately $150,000 against the manager for the hire not paid to it by the charterer during the off-hire period, and for the additional costs incurred in rectifying this problem outside of scheduled maintenance.

The owner argued that, had the manager responded when it was first made aware of the issue, the repairs could have been carried out without the vessel having to go off-hire. Investigations confirmed that this was indeed the case.

ITIC reviewed the owner’s claim, and determined that some of the losses claimed would have been incurred irrespective of the manager’s negligence. Ultimately, however, it was clear that the manager had breached its obligations to the owner under the ship management agreement and a settlement of $120,000 was negotiated by ITIC.


ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Chemical tanker owner fails in claim against agent for low-sulphur fuel costs

 

 

International Transport Intermediaries Club (ITIC) has reported a case in which the owner of a chemical tanker made an unsuccessful claim against a port agent for costs incurred in taking on additional low-sulphur fuel at a European port.   The port agent was appointed by the owners of the chemical tanker to attend the vessel in port. As the agent did not have an office at that particular port, it engaged its usual sub-agent to assist locally.   Prior to the vessel’s arrival, the master sent an email to the agent asking whether there were any restrictions on the type of fuel that could be used while the vessel was both alongside and at the port’s outer roads. The agent passed this request to its sub-agent, who in turn made inquiries of the local harbour-master, who was responsible for enforcing the EU directive relating to the use of low-sulphur fuel.   The harbour-master confirmed that the vessel was required to burn low-sulphur marine gas oil from the time of its arrival at the port’s outer roads. This advice was passed to the master, who duly followed these instructions.   As the vessel waited at anchorage it became clear to the master that he would not have sufficient low-sulphur fuel on board to complete operations and, as the vessel was unable to take on additional low-sulphur fuel at that port, the owners decided to divert to another port to replenish their supply. The vessel thereafter returned to its intended discharge port and operations proceeded without further disruption.   The agent subsequently received a claim from the owners of the vessel for approximately $150,000. The owners alleged that the information provided to them by their agent was incorrect, and that the local regulations only required vessels to burn low-sulphur fuel while alongside the berth, and not at anchorage. Because low-sulphur fuel was more expensive, the owners claimed for the additional costs incurred in burning this fuel when, they claimed, this was not necessary. They also claimed for the costs of diverting the vessel to take on the additional low-sulphur fuel.   It was established that the sub-agent had simply passed on the instructions received from the harbour-master, and that the agent had in turn passed this on, word for word, to the owners. Lawyers mounted a vigorous defence to the claim, which was subsequently withdrawn. ITIC covered the legal  costs of defending the agent.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com

 

 

 

For more information:                             

Charlotte Kirk                                              

ITIC                                                               

Tel. +44 (0)20 7338 0150                          

Fax. +44 (0)20 7338 0151                         

charlotte.kirk@thomasmiller.com           

Bad vibrations lead to costly dispute for shipmanager

International Transport Intermediaries Club (ITIC) has emphasised the importance of shipmanagers using the right contracts and having appropriate insurance in place to cover the legal costs of defending even weak claims.

In the latest edition of its Claims Review, ITIC relates the case of a shipmanager which took on the management of a vessel. One of its duties under the BIMCO Shipman 98 management agreement was to provide crew for and on behalf of the owners. In 2004, while the vessel was heading towards Shanghai, the master reported that it had experienced “excessive vibration” after passing close to a buoy marking a wreck.

After the master had left the ship at Shanghai and returned home, the shipmanager received an anonymous fax from the vessel, advising that it had actually hit a wreck. When the vessel reached its final destination it was drydocked, and damage was noted. Under the terms of the management agreement, the shipmanager was a co-assured under the hull policy, but the owner started arbitration proceedings against it, claiming that substantial additional costs had been incurred. The claim was based on an allegation that the shipmanager was vicariously liable for the actions of the master.

Wide-ranging allegations were also made to the effect that there had been significant tension, distrust and acrimony between the master and some of the vessel’s officers, which were a direct cause of the damage to the ship. The defence of the shipmanager was that, under the terms of the management agreement, it had no liability for the negligence of the crew. Rather, the manager’s sole obligation was to provide an appropriately qualified crew.

Negotiations and investigations by experts and lawyers continued for the next five years, and substantial costs were incurred. The arbitration hearing was scheduled to take place in early 2010 but, by late 2009, the owner (probably realising that its claim for crew negligence was unlikely to succeed) served an entirely revised claim, backed up by a lengthy report from an expert. The claim was fundamentally altered and was now focused on the shipmanager’s application of the ISM code and the role of the ‘designated person ashore’. A further allegation was made that the bridge team, or at least the principle members of it, were suffering from fatigue at the time of the incident and that the shipmanager should have been aware of this.

By this time, the costs of investigation and preparing the defence had reached $659,000. A defence was submitted on behalf of the manager that, on the evidence available, there was no error in navigation and so the claimant’s case could not be proven. Although ITIC’s lawyers were confident that the claim could be successfully defended, it was recognised that the hearing could last up to seven days, resulting in legal costs in the region of $560,000, in addition to $659,000 already spent preparing the defence.

In 2011, the owner made an offer to settle the claim on a ‘drop hands’ basis, with each side bearing its own costs. Although the shipmanager felt that it had been presented with an extremely weak case, it was not possible to completely rule out the possibility of adverse findings. Accordingly, the offer was accepted.

ITIC says, “This case shows how important it is to use the right contract and to have insurance and knowledgeable assistance to cover the legal costs and support and time needed to defend even weak claims. The defence of a shipmanager is always expensive and very time-consuming.”

Copies of the ITIC Claims Review can be requested from: chris@merlinco.com

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com.

For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com