MarIus

4.6.1 General considerations

Once more returning to the Sunna, the Supreme Court there held, in connection with the shipowner's due diligence obligation to make the ship seaworthy, that the shipowner was vicariously liable for the master's wrong in having established a practice of disregarding the night time sailing rules. This topic of a shipowner's vicarious liability for the master's conduct in respect of the requirement of initial seaworthiness deserves a separate analysis. Admittedly, that question would become moot if the reasoning of the English Court of Appeal in the Libra were to control, but as discussed in the previous chapter, the reasoning of the Court - including the significance given to the English case, the Mun-caster Castle - is in the writer's view not persuasive, at least not under Norwegian law.

The Supreme Court in the Sunna first set out the due diligence obligation of the shipowner as applied to the facts, by stating:

"A prudent shipowner would not - had he been aware of the subject matter - have allowed the ship to commence the voyage with a system of watch keeping which exposes the cargo to a significantly increased risk."(1)Para. 48 – my translation.

The Court found it unnecessary to decide whether or not the shipowner, through privity,(2)Although the use of this term seems misconceived, see above. had knowledge of the relevant facts, since the master was to be deemed a servant of the shipowner for the purpose of ensuring the vessel's seaworthiness. The Court stated:

"It is obvious that the master has not exercised due diligence in ensuring seaworthiness of the vessel. [The shipowner] is in this respect vicariously responsible for its captain so that his mistake is considered the mistake of the shipowner [reference to legal commentary and also Rt. 1993.965 Faste Jarl]. When a disposition by the master has led to unseaworthiness of the vessel at the beginning of the voyage it is, as stated, of no relevance whether his mistake also might be seen as a nautical fault covered by section 276 first paragraph. Accordingly, it seems clear to me that the shipowner cannot relieve itself of liability on that basis. Since the shipowner is vicariously responsible for the mistakes of the master, it is not necessary for me to render a decision on whether or not there is privity(3)Norwegian: ‘egenfeil’, which is a dubious term, since it could both mean privity in the proper sense (decision making at the alter-ego level of the company) or fault through the negligence of servants being someone else than the master, see chapter 3.4. on the shipowner's part."(4)Paras 52 and 53 – my translation.

This statement of the law seems unproblematic on the facts as found by the Court: to have in place a proper bridge management system would go to the root of seaworthiness of ship and crew, hence it would be considered to lie within the shipowner's "direct control", in the parlance of the New Zealand Supreme Court in the Tasman Pioneer.

However, the statement by the Supreme Court seems overly broad. If we slightly shift emphasis on the relevant facts, in the direction of the master's intentions concerning how to deploy the crew during the upcoming voyage, the statement becomes less clear.

This gives occasion to discussing another point of relevance concerning the division of risks embedded in the HVR and how that division is, or may have been, distorted through the legislators' rewriting of the HVR when implemented into the MC. This point concerns what could be called "human latent defects" of the master or crew.

The factual premise for the discussion is that we assume that a master by outward appearance is considered competent (his papers being in order, there being no record of prior mishaps, etc.) but that he has a mindset, concealed from observers, of being rule defiant. Would this characteristic of "human latent defect" be something for which a shipowner would be vicariously liable?

The example may appear artificial but is not too far from the facts of the Sunna, and it is essentially in line with how the shipowner argued its case.(5)The shipowner argued that a nautical mistake cannot be something for which the shipowner becomes vicariously liable, even though the mistake may constitute unseaworthiness, see chapter 4.1. For the purpose of analysis, the facts may be slightly twisted: a master has a mindset of not complying with safety rules requiring double watch during night time sailing (but rather relies on ad-hoc decision making as to whether a double watch is needed), hence the ship is unseaworthy due to the ensuing increased risk of something going wrong. This mindset is however not made known to anyone, and cannot be inferred from any deficient bridge management plan at the time of departure. Would then the shipowner be vicariously liable for such (wilful) rule defying intentions by the master?

When looking at the scheme of the MC, the answer may appear to be clear. MC s. 276 states that the shipowner is liable for the consequences of unseaworthiness if "caused by the carrier personally or by someone for whom the carrier is responsible [failing] to take proper care to make the ship seaworthy at the commencement of the voyage." In this sense, it seems natural to say in our example that the master fails to take "proper care" to ensure seaworthiness, i.e. to ensure that he does not have the intention of defying the safety rules.

If, on the other hand, we look to the scheme of HVR, the answer becomes less obvious. The instrumental provision in art. III 1 sets out the shipowner's obligations in terms of exercising due diligence to: a) make the ship seaworthy; b) properly man and equip the ship; c) make it cargoworthy. This instrumental part concerning the shipowner's obligations, is diluted when transformed into the MC, being inconspicuously placed in a general provision obliging the shipowner to care for the cargo in MC s. 262.

With the scheme of the HVR art. III 1, separating the shipowner's obligations relating to the ship and the crew, general questions concerning "latent defects" in both respects, spring to mind.

With respect to the provision of a seaworthy ship, the position would be that if the ship suffers a structural defect which is not reasonably discoverable at the time of commencement of the voyage, the ship would be considered unseaworthy, but there would be no breach of the due diligence obligation by the shipowner. Moreover, the legal test concerning whether or not the shipowner has exercised due diligence would clearly extend to its servants, including the master and crew,(6)Who often play an important part in ensuring the seaworthiness of the ship, including that of checking its condition before departure. In this respect the Supreme Court’s reference in the Sunna to MC s. 131 concerning the master’s seaworthiness duties, is apposite, but not within the risk allocation system of the HVR, see chapter 3.3. but on the premise that the defect is not reasonably discoverable by the shipowner (including its servants), there would be no basis for liability.(7)For a review of the concept of latent defect of the ship within the context of initial seaworthiness and the HVR, see Solvang (2021) pp. 20–22 and 52.

With respect to the shipowner's obligation to properly man the ship, the position may be different. HVR art. III 1 b) could here be rewritten, by setting out its essence:

"The shipowner shall exercise due diligence in providing a competent master at the time of commencement of the voyage".

If then the master is competent by all external characteristics, is the shipowner liable if the master has some concealed intention of doing a wrong during the voyage? It would seem unnatural to consider the master the servant of the shipowner in relation to the duty of the shipowner to provide a competent master.(8)See the Eurasian Dream, Lloyd’s Rep. 2002, 2, 692, as an example where the master was found, due to being inexperienced in the relevant trade, to be incompetent, and that this should have been detected and rectified by the shipowner. Put differently, is the subject matter of the obligation of performance by a shipowner (a competent master) at the same time the servant of the shipowner for the purposes of fulfilling that obligation?

The answer seems to be no. Perhaps such an answer may seem absurd, in the context of contract law: why should not a shipowner be responsible for a master with (wilful) damage creating potential? However, in most instances such "absurdity" would not materialize, since normally the shipowner, as principal, would be liable for the negligent or wilful fault caused by its servant at the time when such fault materializes. The point only arises when there is, as in the HVR, this kind of formulated obligation directed towards a specific time of performance (making the vessel seaworthy at the commencement of the voyage), combined with exceptions from liability for specific faults thereafter (nautical faults during the voyage).(9)The fact that such nautical faults may be intertwined with the concept of initial unseaworthiness is immaterial for the present purposes.

The point is not to conduct any in depth research on this point of liability for "latent human defect", but to point to the fact that there is no necessary parallel to ordinary Norwegian principles of vicarious liability in contract law, hence the risk allocation system must be analysed within the parameters of the HVR - as highlighted e.g. by the Australian and the New Zealand Supreme Courts (above).

It is, moreover, worth underscoring that the question being discussed here has a connecting factor to those previously discussed. It makes sense to say that what is within the shipowner's "direct control" would be the ensuring that a competent master is employed, as reflected in HVR art. III 1 b). The mindset of the master relating to nautical matters is considered to be outside of such control and within the nautical sphere of the master's expertise. Therefore, in order to have a functional approach relating to his nautical decision making (chapter 4.3), this requires a link to what we have addressed here concerning "latent human defects". In the context of a shipowner's vicarious liability, the master is, as a starting point and liability-wise, not a servant of the shipowner with respect to seaworthiness aspects which relate to his role and functions in nautical decision making. On the other hand, blatant disregard for rules or orders would probably not be considered nautical in nature, since this concept requires some kind of concrete evaluations ("acts of seamanship").

Our question is, therefore: provided the intention of the master is of a nautical nature and provided it is concealed from observers, would the shipowner be vicariously responsible for it as part of its initial seaworthiness obligation?

In the Sunna this was not considered in its pure form, since the master did not have in place a prudent bridge management plan at the time of commencement of the voyage. This fact was not "hidden", and the first officer was even privy to it. Hence, this task was probably something within the shipowner's "direct control", and could thus be seen as having been delegated to the master. Put differently, this failing task could have been detected by some (other) representative of the shipowner, and was in that sense "patent" rather than "latent".

There is, therefore, probably no reason to criticize the Supreme Court's finding in this respect. However, the case involved nuances of facts, and the shipowner argued essentially along the lines as discussed here. In response to such arguments, the Supreme Court's general statement that the master is the servant of the shipowner for the purposes of all matters relating to initial seaworthiness, appears overly broad.

4.6.2 The Norwegian Supreme Court case, the Faste Jarl

The above discussion about "latent human defects" has relevance to another Norwegian Supreme Court case, the Faste Jarl(10)ND 1993.162.from 1993. Also in that case the Supreme Court seems to be missing central legal points concerning the HVR and its risk allocation system.

The ship grounded shortly after departure from the load port due to the first mate, who was alone on the bridge, being intoxicated. The cargo was not damaged, but the shipowner's claimed general average contribution for the costs of having the vessel salvaged. The cargo refused to contribute in general average, alleging breach of the shipowner's obligation for initial seaworthiness under the HVR, as implemented into the then MC. The shipowner, on the other hand, claimed that the grounding was due to a nautical fault, which absolved them from liability and made them entitled to general average contribution. We deal with the issue of cargo liability only. (11)The primary question was that of entitlement to set off losses resulting from breach of initial unseaworthiness, against general average contribution claims, as here: cargo would not have had any claim for contribution against it, if the vessel had not been unseaworthy and grounded. The Court held that such set-off right existed.

Since the first mate, who was alone on the bridge, had already been drinking before departure (and fell asleep, after having set the ship on autopilot), the Court held that the incident was not to be considered a nautical fault but rather a situation of initial unseaworthiness.

The shipowner argued that the intoxication formed part of the first mate's conduct in his nautical capacity and should therefore be separated from his role as the shipowner's delegate for the purpose of making the ship initially seaworthy. Such an argument was dismissed by the Court in a few words (see below). There was also a factual question whether the master, who went to rest at his cabin when the first mate took over the watch on the bridge, should have detected the mate's incapacitation. This the Court found unnecessary to decide, on the basis that the shipowner would in any event be vicariously liable for the first mate's fault of intoxicating himself.

The arguments submitted by the parties are only briefly referred to in the decision. The reasoning by the Court is also very brief. We shall set it out.

The shipowner referred to the, at the time, relevant provision of the MC, which incorporated the HVR Catalogue, including art. IV 2 a), and argued that:

"the shipowner is not liable for navigational fault even if that is attributable to intoxication. That does not apply if the intoxication existed at the commencement of the voyage. There is however no reason to believe that the first mate was incapable of operating the ship already at that time. According to [the MC corresponding to HVR art. IV 2 q)] there is an additional requirement that someone for whom the shipowner is responsible, is to blame for the unseaworthiness. No one can be blamed for possible unseaworthiness by reason of the first mate's intoxication. This person's own knowledge that he was intoxicated, will have to be disregarded."(12)P. 968 – my translation.

Although, as we have seen, Norwegian argumentation is conspicuously void of any reference to HVR art. III (as this is "hidden" in the provisions of the Code), what is here argued is in essence that the shipowner's obligation, according to art. III 1, consists in providing a ship with a competent crew, and that if the characteristic of a crew member is "latent" (as it possibly was), then no one is to blame for it other than the crewmember himself, and that the crewmember is not the shipowner's servant for the purpose of being (himself) a competent crewmember.

The cargo side, on the other hand, argued:

"In this case the first mate was intoxicated already upon the ship's departure from Oslo. Consequently, the ship was unseaworthy. Since the first mate was also aware of his condition, and the shipowner obviously is vicariously responsible for the first mate's fault, the shipowner is liable pursuant to [the then MC s. 118 corresponding to HVR art. IV 2 q)]. Apart from this, the shipowner has not demonstrated that the master should not have understood that the first mate was intoxicated [...]."(13)Ibid – my translation.

In other words, the cargo side argued along the lines of ordinary Norwegian law conceptions of a principal's vicarious liability for the fault of his servants, i.e. that the first mate was the shipowner's servant for fulfilling the shipowner's due diligence obligation to make the ship seaworthy.

The Court stated:

"According to [MC s. 118 corresponding to HVR art. IV 2 a)] the shipowner is not liable for damage caused by navigational fault on the part of the crew, provided that that fault is not attributable to unseaworthiness at the commencement of the voyage, and that the shipowner or someone for whom he is responsible is to blame for this. The requirement of seaworthiness according to MC 118 means i.a. that the ship shall be sufficiently manned. [...] The crew must be able to perform the voyage without the ship and/or cargo being exposed to greater danger than must be expected in the carriage of goods by sea. Also sickness or intoxication may, depending on the circumstances, lead to the ship being unseaworthy. […] Since the first mate was the only officer on the bridge, there existed already at the time of departure a considerable risk for damage. The ship was therefore not seaworthy. That the first mate 'has not exercised due diligence to ensure that the ship was seaworthy', is obvious."(14)P. 969 – my translation.

These remarks are as such straightforward. The Court then discussed the shipowner's arguments:

"The appellant has claimed that the shipowner is not responsible for the first mate getting intoxicated during service. This concerns a criminal offence, in contradiction of the employer's interests, which has no reasonable connection to the first mate's working tasks, and which for that reason are unforeseeable. I do not agree. In my view, the fact that a crewmember is intoxicated during service, with its ensuing dangers, is a not an unforeseeable risk in connection with ship operation, a risk it must be assumed that shipowners are generally aware of. The appellant has also submitted that the shipowner is not responsible because, in the assessment of whether the unseaworthiness was caused by negligence, one must disregard the first mate's own knowledge that he was intoxicated. I cannot see that this submission has any merit to it."(15)P. 970 – my translation. The last sentence reads in Norwegian: ‘jeg kan ikke se at denne anførselen har noe for seg’, which is the only reasoning given by the Court on this point.

Some reflections can be made on this brief review of the case, in line with the overall ambition of this article.

First, it is telling that the argumentation revolves around Norwegian sources of law and ways of thinking, such as the shipowner's argument that it should be acquitted on the basis of notions of the first mate having acted beyond the scope of his employment. This is taken from Norwegian tort law relating to a principal's (an employer's) vicarious liability,(16)Concerning this tort law topic on a comparative law basis, see Solvang (2021) pp. 76 et seq. but has little, if any, relevance in the context of risk allocation embedded in the HVR. It is worth reiterating the comments by both the Australian and New Zealand Supreme Courts in their cautioning of construing the HVR in a national law context.

Second, it is telling that the important aspect of HVR art. III is totally lost in the discussion. This provision, together with art. IV, forms the essence of the HVR risk allocation system and of important international law sources on the topic, but is virtually absent in Norwegian law discussion. Hence, the Supreme Court dismisses in one sentence an argument by the shipowner to the effect that the shipowner cannot be held vicariously liable for the first mate's fault in incapacitating himself through intoxication. That argument, according to the Court, "has no merits to it".

It is, furthermore, telling that in the Sunna an important part of the Supreme Court's reasoning consisted of referring back to the Faste Jarl decision on a similar point of construction.(17)Paras 52–53 of the Sunna. In that way the lack of reasoning in the Faste Jarl multiplied itself by becoming part of the reasoning in the Sunna.

The argument which the Supreme Court in the Faste Jarl found "has no merits to it" lies, ironically, at the core of the complexity of the HVR. Here we shall review that very question in light of some of the main findings based on the international sources, as earlier discussed. This could be approached from different angles.

It might be convenient to start with the simple: if the condition of intoxication of the first mate was patent at the time of the ship's departure, hence reasonably discoverable by other crewmembers, then a failure to take action by such other crewmembers would clearly be imputed to the shipowner. However, officers and crewmembers are generally not required to "check one another" for possible signs of incapacitation, hence to establish negligence in this respect would necessarily be fact specific.(18)In the Faste Jarl it was up for discussion whether the master should have detected the first mate’s intoxication. However, as a general observation; he would probably not have gone to his cabin to rest if he had suspicion that the first mate was in a state which would bring him (and the other crewmembers and the ship) into danger.

The more difficult question arises if, in such circumstances, the patent incapacitation was not discovered by anyone, and the circumstances were such that no one onboard could be blamed for not discovering it (as seems to have been the position in the Faste Jarl). On the one hand, we are within the general notion of it being within the shipowner's "direct control" to detect such patent deficiencies before departure. However, a complicating factor is that the very crewmember intoxicating himself, would seemingly not be deemed the shipowner's servant for the purpose of not intoxicating himself, as discussed in the previous chapter relating to HVR art. III 1 b), and as seems to have been the rationale for the shipowner's argument in the Faste Jarl.

The question would in this respect be whether general notions of the shipowner's "direct control" relating to seaworthiness matters before the ship's departure, would lead to an inference of liability on the shipowner's part, based on constructive knowledge, along the lines that there could have been people on the bridge checking the seaworthiness of the ship (i.e. the first mate's condition) on behalf of the shipowner, and the fact that there were none, should not work in the shipowner's favour. However, such a principle of constructive knowledge is not easily compatible with negligence in the stricter sense.(19)Liability based on constructive knowledge would be more compatible with what is known under Norwegian law as “control liability” (kontrollansvar) as found e.g in sale of goods law. Or it might fall within notions of cumulative fault or other doctrines of inferred negligence, as in the English doctrine of res ipsa loquitor, see Solvang (2021) pp. 90–93.

The above conundrum should however be seen in conjunction with some further examples. If one assumes that the master had decided to start drinking shortly after departure (e.g. because there were others on the bridge upon departure while he would later be alone), and that the rest of the facts were as in the Faste Jarl, how should that be considered? Since the master's intention in this example was in existence already upon departure, the ship would be unseaworthy; there was an increased risk of something going wrong just as much as if the drinking had already started - and a prudent shipowner would not, with knowledge of the facts, have allowed the ship to sail.

This brings up another aspect. In the Faste Jarl, the shipowner argued that the first mate's intoxication was related to his navigational capacity, hence should be seen within the parameters of what later happened; navigational fault and the ship's grounding. That seems not to be the right way of looking at it. Clearly, the act of making oneself intoxicated is not "navigational" and cannot in that respect be linked to what the intoxication may later lead to. Rather, the argument should be taken from HVR art. III and possible (human) latent defects, as discussed above.(20)On this point the approach in the Libra of adopting the principle of non-delegable duties, taken from the Muncaster Castle, would dispose of the question – but that way of approaching it is not persuasive, as earlier set out.