UK: "CMA CGM LIBRA" General Average Defence

Last Updated: 18 March 2019
Article by John Reed and Jai Sharma

In a recent case before the English Admiralty Court, we successfully defended a shipowner's claims for contributions in General Average.

On the night of 17/18 May 2011 the large container vessel "CMA CGM LIBRA" departed from the Chinese port of Xiamen bound for Hong Kong and Europe laden with 8,950 TEU of containerised cargo with a value in excess of US$500 million. She also had on board almost 8,000 tons of bunkers.

Shortly after dropping the pilot, the vessel's Master sailed out of the recognised dredged channel marked by lit buoys, resulting in the vessel grounding at a speed of around 12 knots on a shoal that the vessel's Owners (CMA CGM) allege was uncharted.

The grounding site was within an area identified as being a Former Mined Area, where although there is no longer any direct threat to surface craft due to mines remaining from the Second World War and/or Korean War, mariners are warned that the former presence of those mines has inhibited hydrographic surveying giving rise to a risk of there being uncharted shoals.

The vessel was subsequently refloated by professional salvors operating under a Lloyd's Open Form salvage contract and following an underwater inspection was found to have suffered little or no damage. She proceeded on her voyage to Hong Kong and then Europe.

CMA CGM funded the salvage operation in the first instance and declared General Average to recover the amount of the salvors' remuneration (together with other elements of General Average expenditure said to have been incurred) that would otherwise be paid by Cargo Interests.

The total amount of General Average expenditure was in excess of US$13 million, of which US$9.5 million was paid to the salvors.

Approximately 92% of Cargo Interests agreed to pay General Average in full, alternatively with a very small discount of 1.5%. The remaining (approximately) 8% chose not to pay, alleging there was actionable fault (Rule D of the York-Antwerp Rules) on the part of CMA CGM, which would give them a complete defence to the General Average claim. We acted for those Cargo Interests.

CMA CGM refused to accept that they were responsible for the casualty and commenced legal proceedings in the Admiralty Court to recover approximately US$800,000 from the non-paying Cargo Interests.

At the time of the casualty, "CMA CGM LIBRA" was a recent new building having entered into service less than a year earlier. Although she was equipped with an electronic charting system (ECDIS) she had not been provided with official electronic charts. Her primary means of navigation was intended to be paper charts published by the United Kingdom Hydrographic Office (UKHO).

Prior to departure from Xiamen, the vessel's Second Officer prepared (and the Master approved) a passage plan for the voyage to Hong Kong. The intention as per that passage plan was to follow the recognised dredged channel until reaching the open sea approximately 23 miles from the berth.

The Court held that the passage plan was inadequate. In addition to a number of arguably minor errors and inconsistencies that demonstrated a lack of attention to detail that were perhaps not causative, it did not refer to the existence of a crucial Preliminary Notice to Mariners (NM6274/P10) that had been issued by the UKHO approximately 5 months before the grounding, alerting mariners to the presence of numerous depths less than charted in the approaches to Xiamen and confirming that the charted depths within the dredged channel were sufficient for the vessel.

Moreover, contrary to CMA CGM's requirements (and those of the industry) the passage plan did not refer to any "no-go areas" which had not been marked or identified on the chart. During his evidence given at trial, the vessel's Master confirmed that had the chart been marked up with the appropriate "no-go areas" he would not have left the channel and attempted to execute the manoeuvre that ultimately led to the stranding of the vessel.

The vessel's passage plans for a number of previous voyages to and from Xiamen also contained similar failings.

The Court further held that the absence of an adequate passage plan was causative of the grounding, and that CMA CGM were in breach of their obligation to exercise due diligence to make the vessel seaworthy as required by Article III Rule 1 of the Hague (or Hague-Visby) Rules.

Accordingly, there was actionable fault on the part of CMA CGM and the Cargo Interests are not liable to contribute in General Average, resulting in a considerable saving for our clients. This is particularly important in an environment where cargo insurance rates are under pressure.

This is a significant judgment and highlights the need for shipowners to ensure that careful, accurate passage planning is carried out, particularly when an intended voyage includes navigating in confined and difficult waters. On this occasion, the shipowners were very lucky that there was no damage to the environment, little or no damage to the vessel, and no physical damage to cargo.

This case also emphasises the need for careful consideration to be given to any request for payment of contributions in General Average.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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