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Seaworthiness in the Context of Marine Insurance and General Average

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Seaworthiness in the Context of Marine Insurance and General Average _____________________ 海 運 學 會 Institute of Seatransport Seminar on Seaworthiness In the context of Marine Insurance and General Average Speakers: Capt. L C Chan – Risk Management & Loss Prevention Consultant of CM Houlder Insurance Brokers Ltd. Mr. Raymond T C Wong – Emeritus Chairman of Institute of Seatransport Date : 27th July 2016 AGENDA • Seaworthiness – Definition – Maritime Law concept – Governed by Ship Certificates – Description • What does it mean for a vessel to be “unseaworthy”? – With some cases for reference • ISM Code • Marine Insurance Implications – Warranties – Voyage & Time policies – Cargo Policies - Seaworthiness Admitted – Hull Policies – Wear & Tear, Latent Defect, Due Diligence and ISM Warranty – Burden of Proof • General Average – Cargo’s Refusal to Contribute – GA and Contract of Carriage – Consequences flow from Rule D of the York-Antwerp Rules – Burden of Proof 2 – Exercising due diligence to provide a seaworthy ship Capt LC Chan – Profile Sea Experience 1. 10 years as Deck Officers in bulkers, tankers & container vessels 2. 15 years as Master in bulker and container vessels In CM Houlder - Risk Management & Loss Prevention Consultant Before CM Houlder • Management team in a container liner – accident investigation, cargo operations, vessel claims matters, recruitment of senior officers, crew training & instructor in company simulator centre • Corporate Safety, Security & Environmental Protection Officer to set policy, implement and supervise • Corporate Emergency Response Team manager to handle ship and land accidents • DPA, CSO, Representative in various public/private committees, such as PAC, POC, Shipping Consultative Committee, Civic Exchange.… 3 RAYMOND T C WONG 王德超 • Raymond has been adjusting averages since 1966 • Fully qualified by examinations in 1980 becoming the first Chinese Fellow of the UK Association of Average Adjusters (founded 1869) – Sitting on the Advisory & Dispute Resolution Panel of the Association of Average Adjusters • A founder and executive committee member of the HK Marine Insurance Club 香港海事保險學會 (established 1979) • A founder and executive committee member of the HK Maritime Law Association 香港海商法協會 (established1987) • Emeritus Chairman of the HK Institute of Seatransport 香港海運學會 (established 1984) • Honourary Advisor of the HK Logistics Management Staff Association 香港物流 管理人員協會 (established 1986) • Principal of Asia Maritime Adjusting (HK) 亚理海损理算事务所, trading division of TCWong Average Consulting Ltd., Hong Kong 德超海损理赔顾问有 限公司 www. averageadj.com 4 Seaworthiness Captain LC Chan 2016-07-27 CM Houlder Insurance Brokers Ltd. Seaworthiness (適航) - Definition Constructed建造, outfitted裝備, manned人員 配備 and in all respects fitted for a safe voyage at sea and in port. A shipowner, carrier or charterer and the master shall exercise due diligence to ensure vessel is seaworthy at all times during the voyage. In this respect the vessel must be properly manned and cargo to be properly loaded taking into account of ship’s stability. And they shall also make a reasonable and careful inspection and perform maintenance of the vessel. 6 Maritime Law concept on seaworthiness Four contractual relationships:- In a marine insurance voyage policy, the assured warrants that the vessel is seaworthy. (Policy) A carrier of goods by sea owes a duty to a shipper of cargo that the vessel is seaworthy at the start of the voyage. (B/L) A shipowner warrants to a charterer that the vessel under charter is seaworthy. (C/P) A shipbuilder warrants that the vessel under construction will be seaworthy. (Contract) 7 Governed by Ship Certificates (1/4) Constructed: Such as Certification Of Classification, Safety Construction Certificate, International Loadline Certificate etc. 8 Governed by Ship Certificates (2/4) Outfitted: Such as Safety Equipment Certificate, Safety Radio Certificate, Radio Station License etc. 9 Governed by Ship Certificates (3/4) Manned: Minimum Safe Manning Certificate 10 Governed by Ship Certificates (4/4) In All Respects Fitted: Other certificates…. to ensure vessel is safe and secure for the voyage at sea and in port. IMO List Of Certificates and Documents Required To Be Carried Onboard Ships Such as Safety Management Certificate (SMC), International Ship Security Certificate (ISSC) etc. 11 Seaworthiness – description (1/4) Constructed: IMO & Flag State requirements to be observed, SOLAS (International Convention for the Safety of Life at Sea) & MARPOL (International Convention for the Prevention of Pollution from Ships) to be complied etc. Such as SOLAS Chapter II-1 - Construction - Subdivision and stability, machinery and electrical installations… The subdivision of passenger ships into watertight compartments must be such that after assumed damage to the ship's hull the vessel will remain afloat and stable… 12 Seaworthiness – description (2/4) Outfitted: Fire Fighting Equipment and Life Saving Appliance to be installed and in place, radio equipment in good order etc. Such as SOLAS Chapter III - Life-saving appliances and arrangements - The Chapter includes requirements for life-saving appliances and arrangements, including requirements for life boats, rescue boats and life jackets according to type of ship. SOLAS Chapter IV – Radiocommunications - The Chapter incorporates the Global Maritime Distress and Safety System (GMDSS). All passenger ships and all cargo ships of 300 gross tonnage and upwards on international voyages are required to carry equipment designed to improve the chances of rescue following an accident……. 13 Seaworthiness – description (3/4) Manned: STCW (International Convention on Standards of Training, Certification and Watchkeeping for Seafarers), SOLAS & MARPOL to be complied. Competent seafarers to be deployed to meet the IMO and Flag State standard. Such as The STCW Convention & Code 2010 Manila Amendments - Revised requirements on hours of work and rest and new requirements for the prevention of drug and alcohol abuse, as well as updated standards relating to medical fitness standards for seafarers; new requirements relating to training in (ECDIS)…… Such as SOLAS Chapter IX - Management for the Safe Operation of Ships – safety management system to guide…… 14 Seaworthiness – description (4/4) In All Respects Fitted: All navigational equipment and engines in good order, to take care of environmental protection, proper cargo stowage and securing etc. …. 15 What does it mean for a vessel to be “unseaworthy”? Not in a fit condition nor ready for a safe sea voyage. Following are some unseaworthy cases for your reference. 16 Cargo is overloaded (1/2) 17 Cargo is overloaded (2/2) Forward Draft Port=10.6 / Starboard=10.8 ~Fwd Mean (Fm) = 10.7 Aft Draft Port=11.2 / Starboard=11.0 ~Aft Mean (Am) 11.1 Mean of Fm+Am = (10.7 + 11.1) / 2 = 10.9 Midship Draft Port=11.0 / Starboard=11.2 ~Midship Mean (Mm)=11.1 (Sagging) Mean of Mean = (10.9 + 11.1)/2 = 11.0 (Summer Draft 11.0) Note: Draft correction and trim correction to be applied 18 Cargo not properly loaded or secured causing vessel in unsafe condition - improper ship’s stability / hull stress / visibility restriction 19 20 Insufficient Under Keel Clearance (UKC) or Air Draft Clearance Police consider charges for Hong Kong tugboat captain whose vessel hit bridge and caused traffic chaos to and from airport (2016 Feb) 21 Improper Manning Unqualified deck officers, engineers or ratings Expired officer/engineer certificate of competency, invalid watchkeeping certificates, invalid physical examination report of individual crew etc. Master passed away at sea, 6 days to destination and 3 days to a safe port, what to do? 1) Chief officer is holding a valid master license and there is an extra licensed chief officer onboard. 2) No officer onboard has a valid master license. 22 Equipment Failure Such as Fire Fighting Equipment or Life Saving Appliance not in place or in bad condition, navigational equipment or engines out of order Lifeboat is damaged by shore crane during cargo loading, can vessel sail? 23 Inadequate publications per IMO or Flag State requirements 24 Out of date charts (charts not corrected on time) 25 Not enough fuel to reach destination or a safe port 26 Inadequate food or fresh water or medicines 27 Damages or cracks of ship’s hull – unsafe ship’s hull integrity 28 A slippery substance on the rungs of a ladder Ice Class Artic Sea Smoke 29 Not well prepared before entering into pirate high risk area Master has no instructions on how to avoid attack or reduce risk, such as Crew not well trained in taking anti-pirate measures such as where is Safe Muster Point or Citadel, action when pirates attacking vessels, or pirates already onboard…. Ice Class Artic Sea Smoke Vessel not equipped with anti-pirate protection measures 30 More examples of unseaworthy (1/4) Invalid major trading certificates Ship's crew not well trained or not familiar on proper operation of ship's equipment especially on FFA & LSA Crew not familiar on dealing with emergency situations Deck officers do not know how to properly use the navigation equipment / GMDSS equipment Engineers not familiar on operating of M/E & Aux. engines Major outstanding survey items showing in the Survey Status of the ship's Classification Society 31 More examples of unseaworthy (2/4) Poor maintenance of the ship / poor house keeping of the ship which could lead to major disasters at sea or severe pollution to the marine environment Navigational equipment with major deficiencies - gyro compass not working properly, magnetic
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