Bad Vibrations Lead to Costly Dispute for Shipmanager

Thursday, September 29, 2011

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.”

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter July 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Volvo Penta Names Brown Commercial Marine Sales Director

Dave Brown has joined Volvo Penta of the Americas as director of commercial marine sales.   In this new position, Brown will provide strategic and administrative

Romica Manufacturer Secures DNV GL Approval

U.K. winch maker Romica said it is to “redouble its exports drive” after its Romania-based manufacturing partner successfully acquired accreditation with DNV GL.

HII Names Leonard a Corporate Director

Capt. Joseph J. Leonard (U.S. Navy, Ret.) has joined Huntington Ingalls Industries (HII) as corporate director of customer affairs, large surface combatant program, the shipbuilder announced.

Casualties

Piracy Drops to 21-year low - IMB

Piracy and armed robbery at sea has fallen to its lowest levels since 1995, despite a surge in kidnappings off West Africa, according to a new report from the International

Migrants Survivors Tell of Struggle at Sea

The bodies of 21 women and one man were brought ashore to Sicily on Friday as fellow migrants described scenes of panic and violence when water poured into their dinghy.

Kooiman to Repair MTS Julius Rütgers

Eiltank Schiffart GmbH & Co KG has placed the order for the repair of the inland waterway tanker vessel Julius Rütgers Shipyard with the shipyard Gerb. Kooiman B.

Insurance

How to Avoid Claims for Self-cooking Cargo

North P&I Club has advised its members to be extra vigilant during loading and transport of soya beans to ensure they do not get blamed for cargoes that start ‘cooking’ at sea.

ABS Advisory Solutions Integrate ERM

ABS Group anticipated the update to Circular A-123 from the United States (US) Office of Management and Budget (OMB) requiring US executive departments and agencies

Verweij Hoebee Groep Extends Service Portfolio with Management Audits

Verweij Hoebee Groep, a subsidiary of BMT Group, expanded its service portfolio with the introduction of management audits of ship owners.   This unique prevention

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Naval Architecture Pod Propulsion Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0748 sec (13 req/sec)