Seaworthiness Under U.S. Law

The claim against the Naughty Rose would be governed by the charter party between the Naughty Rose's owners and Cut and Run Ltd. Generally charter parties for ships trading to the U.S. incorporate by reference the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1303 et seq. Therefore, the issue of seaworthiness would, in all probability, be governed by COGSA. Although COGSA divides the concept of seaworthiness into three categories, only one of which uses the term "seaworthy", all three categories are aspects of "seaworthiness". Thus, under § 1303:

(1) The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to−

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

(c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage, and preservation.

2. Shifting Burden

Thus, to establish the carrier's liability for damage to cargo under COGSA, there is a back and forth of burdens. First, the cargo interests must show a prima facie case that the cargo was damaged while in the carrier's custody. This can be established by proving:

(1) cargo was delivered to the carrier in good condition; and

(2) it was discharged in a damaged condition.

Thomas J. Schoenbaum, Admiralty and Maritime Law §§10‑24 (4th ed. 2004) (hereafter "Schoenbaum").

There is then a presumption of the carrier's liability. To be exonerated from liability the carrier must show that the damage was caused by one of the "excepted causes" under COGSA, 46 U.S.C. §1304(2), or that it acted with due diligence to prevent the damage. Schoenbaum, § 10‑24. If cargo has made an issue of the vessel's seaworthiness, Cargo has the initial burden to prove the unseaworthy condition that caused the loss. Id. The burden then shifts, and the carrier will have to prove it exercised due diligence to prevent the unseaworthy condition which was beyond its privity or knowledge. Id.

3. Due Diligence

Under § 1304(1) a carrier that has exercised due diligence to make the ship seaworthy under § 1303 will not be liable for loss or damage arising or resulting from an unseaworthy condition. It is the carrier's burden to prove due diligence in making the vessel seaworthy.

COGSA which applies to foreign commerce "from the time goods are loaded on to the time when they are discharged from the ship," 46 U.S.C. § 1301(e), "insulate[s] the carrier from liability to cargo for errors in navigation and management, as long as the shipowner has exercised due diligence in furnishing a seaworthy ship."

Complaint of Seiriki Kisen Kaisha, 629 F. Supp. 1374, 1391 (S.D.N.Y. 1986) (quoting Kasanin, Cargo Rights & Responsibilities in Collision Cases, 51 Tulane L. Rev. 880, 883 (1977) and citing U.S.C. §§ 1304(1) and 1304(2)(a)).

4. Due Diligence Required Until the Voyage Commences

The duty of due diligence to provide a seaworthy vessel operates before and at the beginning of the voyage and during the loading of cargo. It ends when the vessel begins its voyage. 46 U.S.C. § 1303(1); Schoenbaum, § 10‑25.

5. Non‑Delegable Duty

The legal test for seaworthiness is "whether the vessel is reasonably fit to carry the cargo which she has undertaken to transport." The Silva, 171 U.S. 462, 464 (1898); Schoenbaum § 10‑25. This standard is applied on a case‑by‑case basis. The carrier's duty to provide a seaworthy vessel is not a delegable duty, and the carrier is responsible for the acts of its agents, including those it subcontracts to make repairs or manage the vessel. Schoenbaum, § 10‑25.

To prove that it exercised due diligence the carrier must show exactly what it did to make the vessel seaworthy, and that its actions were all that could be reasonably expected under the circumstances. Id.

It should also be noted that under COGSA, the carrier cannot shift the burden of proof to the shipper or use additional exculpatory clauses in bills of lading and other shipping documents. United States v. Ultramer Shipping Co., Inc., 685 F. Supp. 887, 895 (S.D.N.Y. 1988).

6. The Naughty Rose

Turning to the seaworthiness of the Naughty Rose, without a full trial we will assume that engine problems caused the steering gear failure that caused the Naughty Rose to turn towards the Hungry Knight. The scenario itself points out that the Philippine crew noticed the problem but was unable to explain the severity of the situation to the Chief Officer. The crew's second language was English and the Croatian Chief Officer's second language was French.

The crew's inability to communicate with the officers could render the vessel unseaworthy because the owner and manager did not properly man the ship with a competent crew. If a crew is incompetent, and the incompetence leads to the loss, then the vessel is unseaworthy. Application of Theisen, 349 F. Supp. 737, 741 (E.D.N.Y. 1972). The lack of ability to communicate was or should have been within the manager's and crewing agent's knowledge. This is a situation where the carrier and its agents had ample opportunity and available information to discover the true situation of the communication on the vessel. Id. In practical terms, when manning a ship the communication skills of the candidates should be evaluated. Furthermore, during the mandated periodic vessel audits, and during the superintendent's visits to the vessel, the overall manning conditions and communications should be evaluated.

The importance of language skills has been established in U.S. proceedings and "[a]t least one court has noted that where the only regulation manuals on board a given vessel are in languages the crew does not understand, the vessel's managers have ''diminished the crew's opportunity to become properly apprised of their duties.''" Seiriki Kisen Kaisha, 629 F. Supp. at 1389 (citing In re Hercules Carriers, Inc., 566 F. Supp. 962, 981 (M.D. Fla. 1981)).

In Complaint of Seiriki Kisen Kaisha, the crew hiring procedures were expressly criticized because one interviewer assumed another would have the candidate speak in English, assumed the candidate could speak English, and assumed the candidate was proficient in radar because he had recently obtained his license. Id. at 1390. In hiring the crew, the candidate's proficiency should be tested at interview and during audits and should not be assumed. If this is not done and "incompetence results in navigational error which causes a collision, it is crew incompetence, and therefore unseaworthiness of the vessel, which has caused the … damage." Id. (quoting In re Ta Chi Navigation (Panama) Corp. S.A., 513 F. Supp., 148, 158 (E.D. La.), aff'd., 728 F.2d 699 (5th Cir. 1984)). This standard will be applied to all aspects of a ship's operation and not just navigation. From the scenario and the case law, clearly it is not enough that individuals can say and understand commands in the vessel's operating language. The scenario presents an extreme example of when a common command or phrase may not cover the situation; "large iceberg dead ahead" or "Don’t kill the albatross" might be others.

In addition, there could be a training issue here. Normally, an engine problem would be reported to the Chief Engineer rather than the Chief Officer. Cargo interests might argue that had the crew approached the Chief Engineer or one of the engineering officers with the engine problem their familiarity with the vessel's engine would have caused them to realize what the crew was saying earlier than the Chief Officer and Master realized. The issue could then arise as to whether better knowledge of the officer's duties and responsibilities would have prevented the crew from wasting valuable time trying to explain an engine problem to the Chief Officer and Master. The carrier will be able to show due diligence here if it provided, for instance, manuals to all crew with descriptions of the officer's and crew's duties, and required a signature that the manual had been read; or if it could show onboard training or meetings that covered these issues.

There is the additional issue of whether the engine defect rendered the ship unseaworthy. This will come down to a battle of experts regarding such issues as whether the defect existed before the ship left port. The carrier is only responsible for due diligence up until the commencement of the voyage. If the defect predated departure from the port at which the cargo in question was loaded, the carrier will be liable.

7. Heightened Standard for a Tanker

In considering the Naughty Rose's seaworthiness we have to keep in mind that the vessel is a tanker. In the U.S., tankers have been held to require a heightened standard of seaworthiness. Mobil Shipping & Transp. Co. v. Wonsild Liquid Carriers, 190 F.3d 64, 69 (2d Cir. 1999). Seaworthiness for tankers requires that a vessel be equipped to store and transport its fluid cargo safely. Id. at 68. Therefore, courts will consider the nature of the cargo being transported when determining whether the vessel is fit to perform its intended duties. Id. at 69. Where the seaworthiness of a tanker is concerned, the court will look beyond the vessel and its cargo to the protection of the environment. Id.

Common sense counsels that "safe" transport encompasses not only the vessel's ability to protect the cargo's integrity, but also its ability to transport the cargo without threatening the environment.

Id. Thus, it is likely that the issue of the engine's malfunction, as well as the language problems and the training of the crew will all be closely scrutinized by any court examining seaworthiness.

8. The Harter Act

In addition to COGSA, the 1893 Harter Act is still applied in the U.S. This Act attempted to preserve:

some of the traditional obligations of carriers but exempting carriers from liability for damage or loss caused by errors in navigation, or in the management of the vessel, perils at sea or to her navigable waters, acts of God, acts of public enemies, inherent defect of the goods carried, acts or omissions of the cargo owner, injury caused by saving or attempting to save life or property at sea, and seizures under legal process.

United States v. Ultramer Shipping Co., Inc., 685 F. Supp. 887, 894 (S.D.N.Y. 1988). Dissatisfaction with the Harter Act led Congress to enact COGSA in 1936 that largely superseded the earlier act. Id. However, the Harter Act continues to apply to coastwise trade, unless the parties agree otherwise, and for the period of time between cargo discharge from the vessel and delivery to a fit and customary wharf. Id.

Unlike the Harter Act, COGSA "requir[es] a causal link between a lack of due diligence in assuring seaworthiness of the vessel and the cargo damage or loss." Ultramar, 685 F. Supp. at 894. When the Harter Act applies, an enumerated defense in that act is not available to an unseaworthy vessel, even if the unseaworthy condition is not related to the damage or loss. Id. at 900.

DISCLAIMER:

The contents of this paper are not intended to be, and should not be construed as, legal advice. The assistance of attorneys should be sought with regard to any specific circumstance for which legal advice is required.

[1] This paper is intended to expand and supplement the presentation made at the Norton Rose / Holland & Knight seminar on May 11, 2006 at Piraeus, Greece.