4.5 Is the topic resolved through the English Court of Appeal case, the Libra?
The above illustration of the relationship between nautical fault and initial unseaworthiness is based on general considerations relating to the system of risk allocation of the HVR. There is however a specific case which deserves mentioning in that respect, namely the English Court of Appeal case, the Libra.(1) [2020] EWCA Civ. 293.That case, from 2020, appeared long after the Sunna but the factual and legal questions bear semblance. The Libra is interesting because the outcome is very much in line with that of the Sunna, although the reasoning is, unsurprisingly, quite different. The English Court takes arguments from the wording of the HVR (as implemented into the English COGSA) and from a selection of English law authorities in the periphery of the topic at hand.
The case concerned the shipowner's claim for general average contribution following the ship's grounding after departure from the Chinese port, Xiamen. The grounding itself was held to have been caused by negligent navigation by the master in that he departed from the marked fairway and into shallow waters, which turned out not to have sufficient depth for the ship's draft.
Such negligent navigation would have exempted the shipowner from liability under the HVR art. IV 2 a) (nautical fault). The crucial point was however the following: The captain's passage plan and working chart was held to be insufficiently prepared, and negligently so, by failing to show in a conspicuous way recent information contained in a Notice to Mariners, according to which depths marked on the official chart, outside of the stipulated fairway, were incorrect; the area was much shallower than what appeared from the official chart. Furthermore, the Court held that if the passage plan and working chart had been prudently updated with this information, the grounding would most likely have been avoided, since the master would then, in the decisive moment of navigational decision making, have been reminded that the route he was about to select was not a safe one.
Hence, there was a question of initially unseaworthiness through the passage plan and working chart not being in an adequate working order, thus increasing the risk of something going wrong during the voyage. In other words, it was, as in the Sunna, a question of a mistake, made by the master, which could be seen as having a dual aspect; the direct cause of the incident was a nautical fault but the underlying cause stemmed from a failure in existence at the time of departure, i.e. initial unseaworthiness.
The Court of Appeal upheld the lower Court's decision by holding that the shipowner was not exempted from liability for the incident, and therefore not entitled to general average contribution. The reasoning was essentially that the shipowner's due diligence obligation to make the ship initially seaworthy pursuant to HVR art. III 1 overrode whatever nautical fault exception otherwise in existence, and that the master was the shipowner's servant for the purpose of fulfilling the obligation to make the ship initially seaworthy - all of which accords well with the Norwegian Supreme Court's findings in the Sunna.
On a methodological score, which forms the primary interest in this article, various aspects are however of interest.
First, the Court found as a matter of construction of the wording of the HVR that art. III 1, unlike art. III 2, made no express reservation for the liability exceptions in art. IV 2 a), hence there was, according to the Court, no basis for introducing any argument about nautical fault exceptions being applicable in respect of a shipowner's obligation to make the ship initially seaworthy.
Second, this line of argument was coupled with the test of initial unseaworthiness under English law, which entailed the question: would a prudent shipowner have let the ship sail with knowledge of the relevant facts (that the passage plan and working chart were inadequate), something which was answered in the negative.
Third, the question then arose whether the master was the shipowner's servant for the purpose of the shipowner's due diligence obligation to make the ship seaworthy. This was answered in the affirmative, with added remarks that in this respect it did not matter whether the task by the master (which failed, thus making the ship unseaworthy) belonged to the master's nautical sphere of expertise. According to the Court, it followed from the English House of Lords case the Muncaster Castle,(2)Lloyd’s Rep. 1961, 1, 57that such a due diligence obligation was non-delegable, hence it did not matter by whom, on the shipowner's behalf, the negligent mistake causing initial unseaworthiness was made.
This line of reasoning shows how complex, and diverse, these topics are - and it invites criticism, from a non-English perspective.
As to the first point above concerning literal interpretation of the HVR: It is, of course, true that art. III 2, unlike art. III 1, contains reference to the liability exceptions in art. IV. But to impute such significance to this detail in drafting appears, at least to the writer, not to be persuasive. If that lack of reference in art. III 1 shall be given such significance, it would be natural to ask: would not such an important point have been expressed in clearer terms by the drafters of the Rules?
Moreover, this detail in wording is not in a similar way picked up e.g. by the New Zealand Supreme Court in its fairly extensive review of the legislative history of the HVR in the Tasman Pioneer. Likewise, it is telling that the reference in art. III 2 to art. IV does not form part of the wording of the US COGSA, which essentially implements the Hague Rules verbatim. Hence, the English law argument is on this point not available under U.S. law,(3)Cooke et al (2007) p. 976, see also fn. 187. which is also capable of explaining the reservation about the US law position in the Libra (below).
As to the second point above, one reflection is that the fact English law authorities establishing the test of what shall constitute initial unseaworthiness under English law (and under the HVR), does not in itself answer the more complex question at hand: shall, despite such definition of unseaworthiness, nautical faults occurring before departure constitute exceptions to the (otherwise) liability for unseaworthiness, e.g. along the lines of a functional approach as set out in chapter 4.3 above?
In other words, it appears formalistic to say that the test of unseaworthiness (that a prudent shipowner would not have let the ship sail with knowledge of the relevant facts) automatically resolves the question of liability for such unseaworthiness, if/when the failing task of a navigational nature constitutes the unseaworthiness.
This has a side to the third point above concerning the Court's reference to the Muncaster Castle. That reference seems to be an English law peculiarity for the reason that the Muncaster Castle deals with delimitation as to who is the shipowner's servant back in time, involving ship repair situations, and similar. Although the Muncaster Castle contains general statements as to non-delegable duties on the shipowner's part to exercise diligence to make the ship seaworthy, this does not, in the writer's view, answer the question at hand. Put differently, there is no basis in the wording of the HVR to say that a shipowner is responsible for servants back in time - or where such line is to be drawn. Hence, that type of arguments (including the English authorities on the point) cannot as a matter of analysis be said to resolve the interrelation and grey zones concerning the master's potential dual roles in connection with the vessel's unseaworthiness before departure. Put still differently, no one would doubt that the master is generally speaking a servant of the shipowner; he is a servant also during the voyage, but the question concerns the exception from liability for nautical faults, and that is a question clearly not applicable to the situation being decided in the Muncaster Castle, namely a shipowner's vicarious liability for the fault of a ship repair worker; a ship repair worker is not capable of committing a nautical fault.
The English approach is therefore marked with an idiosyncratic narrow type of construction, not looking at the (clashing) policy considerations in play under the HVR. And it is to be noted that the Libra is a Court of Appeal decision, with the English Supreme Court often taking a different, and wider, approach to central HVR questions, as was amply illustrated in the Muncaster Castle itself.(4)Solvang (2021) chapter 2.2.
The reference in the Libra to the Muncaster Castle is an English law peculiarity also for the reason that under Norwegian (and Nordic) law it is questionable indeed whether the Muncaster Castle would be followed.(5)Which is discussed in some detail in Solvang (2021). Hence, this argument under English law would likely not be available under Norwegian law, as, tellingly, it was not even raised in the similar discussion in the Sunna.
The Libra contains also some other points worth observing. The Court discusses foreign law sources including considerations about what can be derived from the New Zealand Supreme Court's review of the risk allocation system of the HVR in the Tasman Pioneer(6) Paras 55–58 of the decision with, in the writer’s view, a fairly narrow discussion of what can be inferred from the statement by Wilson J, quoted in chapter 3.2 above.1and of the U.S. law position, which seems to take a different approach to that taken by the Court in the Libra. The U.S. law position is therefore of interest.
The U.S. case referred to is the Jalavihar.(7) Court of Appeals for the Fifth Circuit, [1997] USCA5 1466; 118 F.3d 328 – discussed at paras 68–70 in the Libra.The circumstances were that the court of the first instance had held cargo damage to be caused by nautical fault, in that the master of the Jalavihar had failed to properly communicate with the pilot. This miscommunication, constituting negligence, was held to be the proximate cause of the incident. The cargo side had argued before the court of the first instance that the master should have made the relevant communication with the pilot already before departure, the failure of which constituted initial unseaworthiness for which the shipowner would be vicariously liable. On this point, the court of the first instance made obiter remarks to the effect that the fault would, even if made before departure, still be navigational in nature, hence not lead to liability for the shipowner. Upon appeal the Appeals Court upheld the finding by the court of the first instance on causation, and did not express any view on the question whether a nautical fault committed before departure, thus constituting initial unseaworthiness, would lead to liability.
The question seems therefore not to be authoritatively decided under U.S. law, but - as the Court in the Libra stated - even if it had been, and it had gone in a different direction than that of the Libra, "it would be inconsistence with English law".(8)Para 70.