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 Reporter March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

MOL’s Coal Carrier for Tokyo Electric Power

Mitsui O.S.K. Lines, Ltd. today announced that the coal carrier Hakutaka, which will serve Tokyo Electric Power Company, Inc. was delivered at Mizushima Shipyard

Swire Pacific Offshore Acquires 2 Newbuildings

Shipowner and operator, Swire Pacific Offshore Operations (Pte) Ltd (SPO) celebrated the naming of two new vessels, Pacific Centurion, an Anchor Handling Tug Supply (AHTS) vessel,

Helios LPG Pool to Start Operating

Dorian LPG Ltd. today announced the commencement of operations of Helios LPG Pool LLC on April 1st, 2015.  Helios LPG is jointly run by Dorian LPG and Phoenix Tankers Pte.

Casualties

Greek Ferry Runs Aground in the Aegean

A Greek ferry ran aground on the Aegean island of Kassos overnight, the AP is reporting.      None of the 227 passengers and 55 crew were injured and a tug

Ship Salvage in the Presence of WWII Era Torpedo & Mines

T&T Salvage continues to support shipowners with prompt, safe and cost-effective solutions to complex salvage, wreck removal, and anti-pollution challenges.  A comprehensive management team,

Mega Ships and Cyber Attacks Pose New Threats

Shipping losses continued their long-term downward trend with 75 reported worldwide in 2014, making it the safest year in shipping for 10 years, according to

Insurance

The Bigger the Ship, the Riskier

Container ship safety is under the spotlight with ever-increasing ship sizes, as evidenced by the January 2015 inauguration of the world’s largest container ship, the MSC Oscar (19,224 teu).

Marine Claims Insurance Reminder by Danish Authority

If you own a ship with a gross tonnage (GT) of or above 300, you must inform the Danish Maritime Authority about your insurance for maritime claims by 31 March 2015.

TT Club Warns Baltic Ports to Protect Against Reputational Damage

Speaking during Baltic Transport Week in Gdansk this week Andrew Huxley, Development Director at freight transport insurance specialist TT Club, warned port and

 
 
Maritime Careers / Shipboard Positions Maritime Standards Naval Architecture Offshore Oil Pipelines Port Authority Salvage Ship Electronics Ship Simulators Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | terms and conditions | 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: 0.1482 sec (7 req/sec)