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A case recently heard by the English Commercial Court1 provides important information about the courts' view on issues involving the ISM Code. All members and clients should take note.

1The EURASIAN DREAM [2002] 1 Lloyd's Rep. 719.

The incident
At the time of the incident the managers of the vessel had an ISM system in place; however, there was no mandatory requirement for the vessel to be ISM certified.

The vessel in question was a pure car carrier with 12 car decks. The car decks were internally segregated into five fire zones lettered A to E. On 23rd July 1998 the vessel was discharging cars and bunkering at the same time. According to the third officer, at about 18:50 a fire broke out on No. 4 deck where a service truck was being used to jump-start a vehicle (van). According to the master, at 18:50 he heard the fire alarm. The fire monitoring control panel indicated a fire on No. 4 deck (zone B). Apparently, efforts had been made to control the fire using portable fire extinguishers and hoses, but without success. When efforts to control the fire using fire extinguishers and hoses failed, at 19:45, on master's orders, all crew, except the master, chief engineer and electrical engineer, disembarked (abandoned) the vessel. At approximately 19:50, Co2 was released into zone B by the chief engineer. However, before releasing Co2 into zone B, no one ensured that ventilators and dampers, as well as the gas-tight doors between zones B and C, had been closed. Soon after, the master instructed the chief engineer to also release Co2 into all other car decks, in spite of knowing that there was only enough Co2 for any one of the largest fire zones. At 20:00 the remaining crew (master, chief engineer and electrical engineer) abandoned the vessel. In conclusion, a fire in one vehicle on No. 4 deck resulted in the vessel being abandoned, the cargo being destroyed and the vessel rendered a constructive total loss.

The judgment
The case was heard in the Commercial Court. In his judgment, Cresswell J. concluded that the vessel was unseaworthy before and at the beginning of the voyage because:
- The vessel was not suitably manned, as the master and crew were not competent regarding the vessel and fire equipment on board.
- The vessel was not suitably equipped.
- Documentation supplied to the vessel by the managers was inadequate.

The vessel was therefore unseaworthy in accordance with the classic test applicable, as a reasonably prudent owner, knowing the relevant facts, would not have allowed the vessel to put to sea with the master and crew, with their state of knowledge, training and instructions.

Creswell J. concluded that the defendants had failed to prove that they and those for whom they were responsible exercised due diligence to make the ship seaworthy. In doing so, the judge went somewhat further than previous similar cases, which have largely focused on the technical condition of the vessel and her fixtures and fittings and as well as taking this aspect into account, he also looked closely at the wider issues of the training and experience of the crew with such a vessel and their ability to deal with the specific problem which arose. Although there was no mandatory requirement for the vessel to be ISM-certified at the time of the incident and the judge did not specifically refer to the ISM Code, the deficient "systems" implied were in line with the ISM Code. Thus, in effect, he applied the "ISM test" to the question of unseaworthiness.

The ISM Code requires shipowners to implement a Safety Management System both on ship and ashore.

The ISM Code
All countries party to the 1974 SOLAS Convention are now bound by the ISM Code. Recognising that no two shipping companies or shipowners are the same, and that ships operate under a wide range of different conditions, the code is drafted in very broad terms setting out the general principles and objectives which must be attained, with each shipping company being left to implement those in a way to suit its particular business.

The purpose of the code is to provide an international standard for the safe management and operation of ships and for pollution prevention, thereby ensuring safety at sea, prevention of human injury or loss of life, and avoidance of damage to the environment, in particular to the marine environment and to property.

The code requires each shipowner to implement a Safety Management System both on ship and ashore. The system must set out defined responsibilities and levels of authority both on ship and ashore and defined lines of communication amongst the crew and also between them and shore personnel. It must contain a safety policy with procedures for reporting accidents and non-conformities with the code and also an environmental protection policy, with procedures for responding to emergency situations. Safety matters cover items such as properly trained crew, good communication on board and safe practices in ship operation. The shipowning company should ensure that its crew understands the rules, implement any training which is required to put the system in place and establish programmes for drills to prepare for any emergency action.

To ensure the safe operation of each ship and to ensure there is proper communication between the ship and the shore, each company has to designate a person (the designated person) whose responsibility and authority includes monitoring the safety and pollution prevention aspects of the operation of each ship. Furthermore, each company is responsible for ensuring that adequate resources and shore-based support are provided to enable the designated person or persons to carry out their functions.

These procedures should be documented in safety management manuals, which should be kept on board and ashore and all further paperwork implementing the code should be added to the manuals.

To comply with the code, the shipowner (or manager or bareboat charterer) has to demonstrate that he has a working system in place both on board his ship(s) and ashore, which implements the objectives of the code (the Safety Management System).

In conclusion, whilst the purpose of the code is to provide an international standard for the safe management and operation of ships and for pollution prevention, it inevitably must have an effect on what constitutes seaworthiness and due diligence. It follows from the judgement of Cresswell J. that if the Safety Management System (SMS) is deficient or not complied with, the shipowner is open to strong accusations that he has not exercised due diligence to ensure the ship is seaworthy or an accusation that he has not properly cared for the cargo, which may result in him being unable to rely on the defences offered by the applicable rules. It is imperative that shipowners (or managers or bareboat charterers) constantly review and update the implementation and operation of their SMS to ensure compliance with the objectives of the ISM Code.

The requirements embedded in the ISM Code and the SMS appear to have spurred a stricter legal standard of seaworthiness and due diligence according to English law. As has been pointed out in some recent articles in Gard News,2 the due diligence standard under English law seems to be moving toward a strict liability standard. The ISM Code and SMS requirements put fuel to the fire in this regard, because, almost by definition, if everyone did what they were supposed to do under the ISM Code and a well-working SMS, one would not see fire incidents like the one in the present case. The fact that fire occurred created the presumption that something important was not working according to standard.

2  See the articles "Due diligence to make a vessel seaworthy" and "The Court of Appeal re-affirms the law on exercise of due diligence" in Gard News issue No. 160.

Any comments to this article can be e-mailed to the Gard News Editorial Team.

Gard News is published quarterly by Gard Services AS, Arendal, Norway.