LP 33/2020 The Alize v Allianz Case – Court of Appeal Judgement and Defective Passage Planning

The Association has previously talked about the Admiralty Court decision in the Alize v Allianz case in LP 08/2019 A Defective Passage Plan May Render a Vessel Unseaworthy. The owners then brought it to the Court of Appeal and the appeal was dismissed recently on 4 March 2020. The Court held that the defective passage plan made prior to the commencement of the voyage, even it’s related to navigation, was an aspect of seaworthiness and all the acts of the master and crew in preparing the vessel for the voyage were performed qua carrier.

Moreover, the author has in practice encountered some other cases in relation to passage plan disputes, all suggesting that a properly prepared passage plan will now be a non-delegable duty of owners. Whether it has been properly executed during the voyage is also something to be considered.

I.   Court of appeal decision

1.  The owners’ argument

First, a one-off defective passage plan could not render a vessel unseaworthy and the distinction between navigation and seaworthiness was not made clear in the first instance. Updating the working chart is simply a mechanical exercise and what the carrier needs to do is to have on board everything necessary for the crew to carry out proper passage planning, such as a competent crew, up to date charts and proper systems and instructions. Whether the crew has marked the chart or how it is marked are actual navigation duty of the crew where any failure would be within the exception in article IV rule 2(a) of the Hague Rules. Making notes of necessary warning on the chart was not made mandatory in NM6274(P)/10 and the owner has done what should has been done to make the vessel seaworthy by having onboard an up to date chart. There was no English case before the present decision where an error in navigation prior to commencement of the voyage had been held to render the vessel unseaworthy.

Secondly, actions of the master and crew carried out qua navigator could not be treated as attempted performance by the carrier of its duty qua carrier to exercise due diligence to make the vessel seaworthy.

2.  The Court of Appeal’s position

The judges rejected the owners’ argument in sequence. With regard to the first submission, the Court held that:

(1)   There was no principled basis for concluding that a negligence in the navigation or management before the commencement of the voyage could not render the vessel unseaworthy (The Thordoc (1937) 58 L1 L Rep 33, The Evje (No 2) [1978] 1 Lloyd’s Rep 351).

(2)   There is no relevant distinction between one-off acts of negligence and systemic failings. The judge was right to find that the defect in the passage plan, which included the working chart, namely that it did not contain the warning about the unreliability of charted depths outside the fairway, rendered the vessel unseaworthy.

(3)   The purpose of updating charts and passage plans is to ensure a safe navigation with all providable information provided. If a prudent owner would not allow a ship to sail knowing it had a defective passage plan, then the ship is unseaworthy. The obligation to exercise due diligence prior to and during the voyage to make the vessel seaworthy was a non-delegable obligation of the owners, to which none of the exceptions was a defense.

(4)   A defect in the working chart alone could render the vessel unseaworthy, regardless of the passage plan.

The owners’ second submission was misconceived as well. The judges referred to W. Angliss & Co (Australia) Pty Ltd v P&O Steam Navigation Co case where the shipowners were not held liable for negligence of the shipbuilder as the owners had not acquired the ship at the time. “The Muncaster Castle” case and “The Kapitan Sakharov” case was also considered, both concluding that the carrier’s responsibility does not begin until the ship comes into his orbit.

Furthermore, once the owners assumed responsibility for the cargo as carriers, all the acts of the master and crew in preparing the vessel were performed qua carrier, even if they were acts of navigation before and at the commencement of the voyage.

II.   More considerations on passage planning

In hindsight, the Court of Appeal decision was not surprising. The IMO has emphasized the importance of passage plan in 1999 in Resolution A.893(21) and it has become increasingly vital for shipowners.

First, passage plan covers a variety of aspects of navigation and involves miscellaneous documents and details. It can hardly be executed flawlessly in practice and is indeed not something the owners would focus on. However, this case marks a turning point where the importance of passage plan is identified by law. It should be clarified though, a defective passage plan does not necessarily constitute unseaworthiness. Based on the experience of the Club in claim handling, whether the defects are causative to the loss is to be identified.

Second, passage plan seems to have become an important evidence, and something attached with extra consideration after the “Alize v Allianz” case. While it was recognized that defective charts could render a ship unseaworthy, this case is more about defects in the passage plan. Situations relating to passage planning such as poorly prepared documents and deviation calculation are from now on troubles of owners.

More importantly is whether the passage plan is properly executed during the voyage.

Disputes relating to passage plans may include cargo damages under B/L, refusal to contribute to general average and safe port disputes. The first two in most cases are a question of seaworthiness while the master’s good seamanship is considered in safe port disputes. Therefore, it’s the owners’ obligation to have a properly prepared passage plan prior to commencement of the voyage, but also to have a system established to ensure the proper execution of the plan, such as cooperation with pilots and timely adjustment to the plan in the event of changes. Referring to the IMO Guidelines for Voyage Planning, 4 stages has been identified as (1) appraisal, i.e. gathering all relevant information; (2) detailed planning of the whole voyage from berth to berth; (3) execution of the plan; and (4) monitoring of process in the implementation of the plan.

Fourth, the implementation of SMS is vital no matter in which stage of passage planning. The owners’ submission in the “Alize v Allianz” case, although not supported, is right that passage planning is not only about navigation, it includes systemic/mechanical issues. Generally, apart from the passage plan required by the ISM Code and PSCI, an operational guidance will be established by companies to complement basic requirements.

Overall, the decision has reaffirmed owners’ overriding obligation to exercise due diligence. We have reasons to believe that more problems will be coming up and we will keep following on development of such sorts of cases.

The above content is for members’ reference only, it does not mean that the author and the association have expressed any opinions on any specific case, nor can it be used in any public publishing occasion.

For more information, please contact CPI FD&D team.