A.Turtle Offshore SA Assuranceforeningen Gard-Gjensidig v Superior Trading Inc

A tug owner must exercise due diligence to ensure that the tug is seaworthy, ready for the voyage and carries sufficient bunkers. That duty remains personal and is not discharged by reliance on an independent warranty surveyor. A best-endeavours obligation may require a tug and tow to return to safety where an alternative bunkering plan is uncertain. A mutual risk-allocation clause may protect against losses caused by breaches occurring during performance, but clear language is required before it covers a radical abandonment of the contract. Contractual freight provisions are construed according to the agreed payment trigger.

The owners of the semi-submersible rig A TURTLE claimed approximately US$20 million from the owners of the tug MIGHTY DELIVERER after the tug ran short of fuel during a tow from Brazil to Singapore. The tow was released in the South Atlantic and the rig later grounded. The tug owners relied on the TOWCON liability allocation, sought to limit liability under the 1976 Limitation Convention, and counterclaimed for 95% of the agreed freight. The issues concerned seaworthiness and due diligence, best endeavours, the scope of the contractual exemption, limitation, and the construction of the freight provisions.

1. Due diligence and seaworthiness. The tug owners failed to exercise due diligence under clause 13 of TOWCON. A prudent tug owner should plan to reach Cape Town without refuelling at sea, assess the likely speed and duration of the tow, calculate the required towing power, and compare it with the tug’s available bollard pull and bunker capacity. The absence of a proper analysis meant that the tug was not tendered seaworthy and ready for the voyage (paras [54]-[70]).
2. Approval by Noble Denton did not discharge the tug owners’ obligation. The duty was personal and could not be delegated. Noble Denton acted as warranty surveyor for the rig’s insurers, and its approval did not constitute a representation or estoppel that the tug owners had complied with clause 13 (paras [72]-[83]).
3. Best endeavours. Once it became apparent that the tug would not reach Cape Town on its bunkers, reliance on RUBY DELIVERER was uncertain. The tug owners’ best-endeavours obligation required them to return the tug and tow to South America, notwithstanding the commercial cost. The prior breach did not make the later reliance on an uncertain alternative reasonable (paras [84]-[91]).
4. Clause 18. Clause 18 was a mutual, no-fault allocation of specified risks. It exempted the tug owners from liability for the claimed losses, although those losses were caused by breaches committed while the tug owners were performing the contract. The clause would not, without very clear words, protect a tug owner who radically abandoned the tow, for example by releasing it to undertake a more profitable contract. The present case involved performance, albeit defective performance, rather than such abandonment (paras [98]-[123]).
5. The tug owners would alternatively have been entitled to limit liability under Article 4 of the Limitation Convention 1976, since personal reckless conduct with knowledge that the particular loss would probably result was not proved (paras [125]-[132]). The 95% freight instalment was not due because tug and tow never reached Singapore. The claim and counterclaim were dismissed (paras [133]-[142], [156], [162]).

First-instance judgment. No appellate history is stated in the judgment.