Eridania Spa & Ors v Oetker & Ors

A charterparty’s seaworthiness provisions must be construed together and against the commercial background. Where a due-diligence clause applies before and at the beginning of the voyage, it governs the owner’s seaworthiness obligation throughout the relevant adventure, rather than creating different standards for different stages.

Seaworthiness concerns the vessel’s condition, judged against the particular ship, voyage and circumstances. A serious casualty occurring on an ordinary voyage may support an inference of an unidentified defect. Once unseaworthiness is proved, the owner must establish due diligence by itself and by independent contractors. Where repeated failures called for a thorough investigation, failure to produce evidence of the contractor’s investigations may leave that burden undischarged.

The claimants, cargo interests, sued the disponent owners and owners of the Fjord Wind for loss and damage to a cargo of soya beans. The vessel suffered repeated crankpin-bearing failures shortly after leaving Rosario, causing loss of propulsion, delay and transhipment costs.

Moore-Bick J gave judgment for the claimants, holding that the vessel was unseaworthy and that the owners had failed to prove due diligence. The defendants appealed. The principal issues were the construction of clauses 1 and 35 of the voyage charter, the vessel’s seaworthiness when leaving Rosario, and whether the owners had discharged the due-diligence burden in respect of their independent contractors.

Appeal dismissed. Clarke LJ delivered the principal judgment. Waller LJ agreed. Sir Murray Stuart-Smith agreed with the result and with the conclusions on construction and seaworthiness, although he expressed greater difficulty on due diligence.

1. Construction. Clause 1, read with clause 35 and the charterparty as a whole, did not impose an absolute warranty of seaworthiness for the approach voyage. Clause 35 required due diligence to make the vessel seaworthy before and at the beginning of the voyage, and that obligation governed each stage of the relevant adventure. A shifting standard would be commercially unlikely and inconsistent with the incorporated bill of lading regime. The approach in Anglo-Saxon Petroleum Shipping Co Ltd v Adamastos supported avoiding different standards for cargo and non-cargo periods.
2. Unseaworthiness. Seaworthiness concerned the condition of the vessel, not whether the owner had acted prudently. The prudent-owner standard was relevant only to whether an owner knowing of the defect would have remedied it. The failure of a crankpin bearing within hours, on an ordinary voyage and without outside intervention, supported the inference of an unidentified defect. Its potentially serious consequences meant that a prudent owner would have rectified it.
3. Due diligence. The burden lay on the owners once unseaworthiness was established. Under Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd, the duty was non-delegable and extended to independent contractors. The prior bearing failures required a very thorough investigation into the failed bearings, lubrication and operating conditions. The owners produced no evidence from MAN, no adequate documents and no clear account of the investigations undertaken. They therefore failed to show that they and MAN had pursued all lines of enquiry reasonably expected of competent experts.
4. The court did not need to determine the other alleged failures of due diligence. Since the vessel was unseaworthy and the owners had not proved due diligence, liability for the resulting loss followed under the charter or bill of lading contract. Causation and quantum were not challenged.

• Court of Appeal (Civil Division): appeal from the decision of Moore-Bick J in the Commercial Court, reported at [1999] 1 Lloyd's Rep 307; appeal dismissed.