Deck cargo lost overboard leads owners and charterers to court to debate liability and to identify which rules apply to the matter.

The Commercial Court has recently passed a judgment bringing much needed clarity to the scope of owners' indemnity under clause 13(b) of the NYPE 1993 time charterparty. Owners are advised to sit up and take note.

During a voyage from Finland to Egypt, the M/V "SOCOL 3" encountered high seas and some deck cargo was lost overboard. The matter between owners and charterers went to arbitration in London where the tribunal held that there were three causes for the loss: inadequate stowage, unsatisfactory lashings and the instability of the vessel. Charterers were found liable for the stowage and inadequacy of the lashings, whilst owners were found liable for the instability.

Owners relied on clause 13(b) of the NYPE which provides that owners are indemnified by charterers in the event of loss or damage to deck cargo. Clause 13(b) states that:

"In the event of deck cargo being carried, the Owners are to be and are hereby indemnified by the Charterers for any loss and/or damage and/or liability of whatsoever nature caused to the Vessel as a result of the carriage of deck cargo and which would not have arisen had deck cargo not been loaded".

The tribunal concluded that the cargo claim would not have arisen if deck cargo had not been carried and that owners were fully indemnified under 13(b). Charterers appealed.

Before the High Court1, charterers argued that the Hague Visby rules were inapplicable as the charterparty did not include an "on-deck" statement. Further, that in breach of the rules the vessel was unseaworthy on sailing. Charterers were unsuccessful in this argument, the Court finding that the bill of lading rather than the charterparty was the relevant contract of carriage and that this contained the required "on-deck" statement. Therefore the rules did not apply.

Owners did not have it all their own way though. The Court, reversing the tribunal's decision, found that owners could not rely on the indemnity in clause 13(b). The negligence of the Chief Officer in his assessment of the stability of the vessel was directly attributable to owners. Owners' negligence had caused the vessel to be unseaworthy due to the unstable stowage. Clause 13(b) was not drafted widely enough for owners to seek an indemnity for any loss or damage caused by their own negligence.

The lesson for owners is that if they want to exclude liability for their own negligence then they will have to include very clear words to that effect.

Footnote

1. Onego Shipping & Chartering BV v JSC Arcadia Shipping (The "SOCOL 3")

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