3.2 Approach to construction illustrated by the New Zealand Supreme Court case, the Tasman Pioneer
This type of rewriting of the HVR when implemented into the MC may have good policy reasons, which we shall not discuss here.(1) As to the background for removal of the Catalogue, see e.g. Solvang (2021), pp. 57 and 93-94. It is nevertheless worth pointing to the obvious: when e.g. the so called Catologue (of liability exceptions in art. IV) is removed from the system of the MC, one loses important connecting factors to how those parts of the Rules are construed in countries where the Catalogue is retained.(2) In this respect: It is not the case that judges in those countries do not realise that part of the Catalogue may be considered moot in view of the shipowner's general liability for negligence. Obviously they see this - as did Brækhus when objecting to legislating the Catalogue, see Solvang (2021) pp. 57 and 93-94. However, even if part of the Catalogue may appear "illogical", it does not detract from the value of having the same text as a basis for uniform construction. See comments by the Court of Appeal in the Tasman Pioneer, below. Moreover, essential perspectives on the understanding of the HVR risk being lost in the process of such rewriting.
The New Zealand Supreme Court case, the Tasman Pioneer(3) Lloyd's Rep. 2010, 2, 13.from 2010, may serve as illustration of the approach taken when the HVR are left intact in domestic legislation.(4) In the form of the New Zealand Maritime Transport Act 1994, implementing the HVR.
The case concerned the scope of the navigational fault exception in grave cases of misconduct by the master; whether the exception should be somehow censored or curtailed by general principles of disloyal conduct, something the Supreme Court answered in the negative.
The circumstances of the case were: During the voyage of a liner service ship, the master decided to alter the normal route by deviating east of an island (the Japanese island Okino Shima) to shorten the sailing distance and thus bring the ship back on time schedule. While deviating, the vessel touched bottom, which led to seawater ingress.(5) It transpired that the deviation was in itself unproblematic; the master had sailed that route before, however on the present occasion he discovered that the radar did not work properly, hence he decided to abort the deviation, and as part of this abortion (turning in a narrow straight) the ship touched bottom. The master decided to conceal this navigational error by proceeding for about two hours until reaching a geographical point compatible with the original sailing route. From here, he called the Coast Guard and the offices of the shipowner, and gave a forged story of having struck an unidentified submerged object. He also instructed the crew to lie to the Coast Guard when later interviewed about the incident.
The water ingress stemming from the extra time taken before the master called for assistance, caused (additional) damage to the cargo, and when learning about the true facts, the cargo owners rejected the shipowner's invocation of the HVR exception for nautical fault relating to the (additional) cargo damage; that the initial grounding constituted nautical fault was not in dispute.
According to the cargo owners, the scope of the exception for nautical fault (negligent navigation) of the HVR could not reasonably encompass this type of wilful misconduct by the master. However, with differing results among the various court instances, the Supreme Court held that the nautical fault exception did apply. It is important to note that the Supreme Court emphasised the need to go to the roots of the HVR as drafted, and not let that intended risk allocation system be influenced by national law principles, e.g. concerning censoring of contractual (here: legislated) terms on the basis of principles of loyalty, etc. - as the lower Courts had held.
The Supreme Court starts its analysis by giving an account of the essence of the HVR, by looking at the relationship between HVR art. III and art. IV (and in that regard not with the wording of art. III being "hidden" as in the MC s. 262). Moreover, the Court emphasizes the relationship between the two articles by looking at what is considered to be within the "direct control" of the shipowner for purposes of initial seaworthiness, as opposed to what falls within the prerogative of master and crew as nautical fault exceptions:
"The scheme of the Rules is clear. Carriers are responsible for loss or damage caused by matters within their direct control (sometimes called "commercial fault"), such as the seaworthiness and management of the ship at the commencement of the voyage. This allocation of risk is confirmed by article 3.2 being made subject to article 4 and by the inapplicability of article 4.2(b) and (q) exemptions in the event of "actual fault or privity" of the carrier. The allocation of responsibilities between the carrier and the ship on the one hand and the cargo interests on the other promotes certainty and provides a clear basis on which the parties can make their insurance arrangements and their insurers can set premiums."(6) Para. 8 of the decision and with reference to and approval of the approach taken by the Australian High (Supreme) Court in the Bunga Seroja, below.
The Court goes on, for the purpose of that case, to inquire into the history of the nautical fault exception in art. IV 2 a), aided by the preparatory works of the Hague Rules, as to why the exact wording of that provision was chosen:
"This clause, Article IV, is the shipowners' clause. Now, Sir, I would venture to remind the Committee that we have dealt with the cargo interests clause in Article III, and we have agreed and accepted the actual words that the cargo interests have put forward imposing the obligations on the ship with regard to seaworthiness, and, what is more important, we have accepted Article III (2), which says that "The Carrier shall be bound to provide for the proper and careful handling ... of the goods carried." We have not sought to weaken those or qualify those in any way. When we come to Article IV (2) our big point is the navigation point, and what we have asked is that we should have the words which from time immemorial have certainly appeared in all British bills of lading. ..."(7) Para. 23 with quotes from Sturley (editor), The legislative History of the Carriage of Goods by Sea Act and the Travaux Preparatoires of the Hague Rules, Colorado 1990.
The purpose of that reference to the preparatory works of the Hague Rules (preceding the HVR) was to provide a route into the further history of that wording as guidance to construction of the nautical fault exemption. As part of that inquiry the Court also looks to the understanding of the exemption as expressed in foreign case law, e.g under English, German, French and Dutch law (the latter three belonging to the civil law tradition).(8) Paras. 23 and 26.
Likewise, it may be of interest to look at the methodological approach taken by the Court of Appeal in the Tasman Pioneer.(9) Lloyd's Rep. 2009, 2, 308.After having discussed the nature of the HVR liability exceptions in art. IV,(10) Realising, by quoting the Australian High Court in the Bunga Seroja (p. 326), that art. IV litras d, e, f, g, h, j, k, l, m, n, and p, would have little effect apart from the shipowner's general liability for negligence. This shows that also in modern times this Catalogue can be dealt with sensibly, and that it would not need to be stricken out of legislation as "illogical", as has been the position of the Norwegian legislature, see Solvang (2021) pp. 57 and 94-95. the Court states:
"However the antidote may be that the carrier does have a duty 'to properly man ... the ship' pursuant to Art III, r 1 (b) and by doing that should be regarded as having fulfilled its obligation in that regard to the shipper. Subpara (a) fits naturally into the reality, at that time, that the master at sea, being in command [...] has to make decisions in the navigation and management of the ship all the time. Mr. Gray [for the shipowner] is right to caution the court against taking into account the modern day constant contact between owner or charterer or their agents on shore and the bridge of the ship. The Conference could have adopted a policy that the ship owner was going to be liable for the consequences of such decisions by the master. It decided to the contrary."(11) P. 236.
This illustrates both the oddity of the nautical fault exception in modern times, and the need for a conscious attitude towards how to apply it, by looking into the text and history of the HVR. Although this example of the methodological approach is taken from New Zealand law, similar examples can be taken from other HVR nations, such as the Australian High Court (below) or from English courts, as in the Commercial Court decision of the Eurasian Dream,(12) Lloyd's Rep. 2002, 1, 719.which provides a synthesis of principles governing the application of HVR art. III 1 and 2 and their interaction with art. IV.