The CLIPPER SAO LUIS1 is an interesting decision of the English High Court on the scope of charterers' liability when appointing stevedores to act on their behalf. It examined the extent of charterers' responsibility if the stevedores that they had appointed caused damage which rendered the shipowners liable to a third party. The main issue before the court was whether or not the charterers were responsible to the shipowners under the terms of the charterparty. The dispute concentrated on clause 8 of a NYPE charterparty form and a rider clause 35.
1 Maceio Shipping Ltd v. Clipper Shipping Lines Ltd (The CLIPPER SAO LUIS) (2000)1 Lloyd's Rep. 645.
The clauses stated:
The Charterers are to load stow and trim and discharge the cargo at their expense under the supervision and responsibility of the Captain, however this responsibility not to have any effect on the stevedore damage clause
Charterers are responsible for damages to the hull, machinery, equipment caused by stevedores in loading and discharging vessel, only when such damage is duly substantiated by the Master's prompt notice of claim
The vessel loaded a part cargo of bales of cotton in hold No. 5 at Cotonou in early February 1997. Most of the cotton was stuffed in containers but there were some 536 loose bales. Having proceeded via Abidjan, the vessel arrived at Rio de Janeiro on 14th February 1997. Following the commencement of discharge, a fire was detected in hold No.5. It was subsequently determined that the fire had been caused by stevedores dropping lit cigarette butts and/or matches in the hold. The shipowners consequently declared general average. The main issue before the court was whether or not the charterers were responsible to the owners under the charterparty for the damage which had clearly been caused by the stevedores which they had appointed.
The first point to mention is that surprisingly enough there was no physical damage to the vessel, there was only damage to the cargo. Therefore, the judge held that clause 35, under which the charterers are only responsible for damage to the vessel itself, was not applicable. As a result, the submissions centred around clause 8 and the extent of charterers' responsibility when they appoint stevedores. The judge was quite willing to imply a term to the effect that the charterers would appoint reasonably competent stevedores. In the judge's view, however, the owners had not established that the fire had been caused by the appointment of incompetent stevedores. It is interesting to note that the judge considered that a stevedore flicking a lit match/cigarette butt into a hold full of loose bales of cotton did not necessarily make that stevedore incompetent. The judge indicated that one or more mistakes do not necessarily make a person incompetent. In his view, there must be a history of incompetence and a disabling lack of knowledge on the part of the stevedores, and the owners had failed to establish this. The consequence of the loss, therefore, remained the owners' responsibility under clause 8.
The conclusion from the decision is that one or two acts of stupidity on the part of a stevedore will not necessarily render charterers responsible to owners under a charterparty. There is, therefore, quite a heavy evidential burden to be met if owners hope to hold charterers responsible for any loss that is suffered as a result of the "incompetence" of a stevedore.
The decision reinforces the importance of carefully negotiating and agreeing charterparty terms. Gard Services can assist and advise Members and Clients in this respect.