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Triple Collision: Claim under the Collision Liability Clause

Old law cases

The report on a case recently handed down by the Hong Kong Admiralty Court concerning two collisions involving three ships, has prompted the Editor to refer to the notes he made on a couple of interesting triple collision cases he studied whilst preparing for the examination of the British Association of Average Adjusters in late 1970’s.  They are:

 

France (William) Fenwick v. Merchants’ Marine Insurance 1915

Whilst proceeding up the Seine, in an attempt to pass the “Rouen”, the “Cornwood collided with the “Rouen” which then struck and seriously damaged the “Galatee” which was coming down the river at the time.  The Owners of the “Cornwood” having been held liable for the damage to both the “Rouen” and the “Galatee”, submitted claim against the Underwriters on the Policy under the Running Down Clause (now commonly known as the Collision Liability Clause).  The Underwriters contended that the collision of the “Rouen” with the “Galatee” was not such a “consequence” of the collision between the “Cornwood” and the “Rouen” as to make them liable in terms of the policy.

 

The Court found for the plaintiffs, the Owners of the “Cornwood”, the judge saying: “I think it sufficient to find that the forces put into operation by the negligent navigation of the “Cornwood” did in fact, not only cause a collision between herself and the “Rouen” but afterwards sent the “Rouen” into the “Galatee”.  Of course there must be a collision and in my judgment the collision between the “Rouen” and the “Galatee” was such a consequence of the collision between the “Cornwood” and the “Rouen” as makes the Underwriters liabile.”

 

The case went to appeal which was dismissed, the Court holding that the collision between the “Rouen” and the “Galatee” was brought about by the collision between the “Cornwood” and the “Rouen”.

Abadesa & Miraflores (Collision Liability) 1967

It was reported that the tanker “George Livanos” was following the tanker “Miraflores”, both being inward bound in the River Scheldt.  The other tanker “Abadesa” was outward bound.  The “Miraflores” reduced speed to avoid a small coaster.  As a result the “George Livanos” closed to about half a mile astern.  The “Miraflores” increased speed but a cross- current forced her towards mid-channel across the “Abadesa”.  Putting her engine full astern and letting her starboard anchor go, she sounded 2 of 4 short blasts of a local signal meaning: “Keep out of my way, I cannot manoeuvre.”.  The “Abadesa” put her engine full astern and let go her port anchor, but the 2 vessels collided.  The “George Livanos” grounded while manoeuvring to avoid the “Miraflores”.

It was submitted that “The liability of each vessel involved must be assessed by comparison of her fault with the fault of each of the other vessels involved individually, separately, and in no way conjunctively.”  The apportionment of fault was as follows.

Collision:

“Abadesa”             2/3rds to blame

“Miraflores”        1/3rd to blame

Grounding:

“Abadesa”                               40% to blame

“Miraflores”                          20% to blame

“George Livanos”               20% to blame

It was reported that the Underwriters on the “Abadesa” agreed to pay 3/4ths of the liability of the “Abadesa” to the “George Livanos”, thereby accepting that such damage was a consequence of the collision on the facts presented.

 

Collision Liability Clause (previously known as the Running Down Clause)

The 3/4ths Collision Liability Clause under the Institute Time Clauses – Hulls 1/10/83 commonly incorporated in the policies of insurances on ship provides that:

8.1 The Underwriters agree to indemnify the Assured for three-fourths of any sum or sums paid by the Assured to any other person or persons by reasons of the Assured becoming legally liable by way of damages for

8.1.1 loss of or damage to any other vessel or property on any other vessel

8.1.2 delay to or loss of use of any such other vessel or property thereon

8.1.3 general average of, salvage of, or salvage under contract of, any such other vessel or property thereon, where such payment by the Assured is in consequence of the Vessel hereby insured coming into collision with any other vessel.

8.2 The indemnity provided by this Clause 8 shall be in addition to the indemnity provided by the other terms and conditions of this insurance and shall be subject to the following provisions:

8.2.1 Where the insured Vessel is in collision with another vessel and both vessels are to blame then, unless the liability of one or both vessels becomes limited by law, the indemnity under this Clause 8 shall be calculated on the principle of cross-liabilities as if the respective Owners had been compelled to pay to each other such proportion of each other’s damages as may have been properly allowed in ascertaining the balance or sum payable by or to the Assured in consequence of the collision.

8.2.2 In no case shall the Underwriters’ total liability under Clauses 8.1 and 8.2 exceed their proportionate part of three-fourths of the insured value of the Vessel hereby insured in respect of any one collision.

8.3 The Underwriters will also pay three-fourths of the legal costs incurred by the Assured or which the Assured may be compelled to pay in contesting liability or taking proceedings to limit liability, with the prior written consent of the Underwriters.

Exclusions

8.4 Provided always that this Clause 8 shall in no case extend to any sum which the Assured shall pay for or in respect of

8.4.1 removal or disposal of obstructions, wrecks, cargoes or any other thing whatsoever

8.4.2 any real or personal property or thing whatsoever except other vessels or property on other vessels

8.4.3 the cargo or other property on, or the engagements of, the insured Vessel

8.4.4 loss of life, personal injury or illness

8.4.5 pollution or contamination of any real or personal property or thing whatsoever (except other vessels with which the insured Vessel is in collision or property on such other vessels).

In practice, the remaining 1/4th of any sum or sums paid by the Assured within the terms of the clause is invariably covered by the vessel’s entry in a Protection and Indemnity Association (commonly called P&I Club).  Furthermore, the exclusions under the Clause 8.4 are liabilities customarily covered by the P&I Club.

It is however worth noting the construction of the following wording:

  • indemnify … paid” – Underwriters are only liable when the Assured has paid.
  • legally liable by way of damages” – Liability must arise by way of tort and not by way of contract or statute, i.e. breach of duty (other than under contract) leading to liability for damages.
  • in consequence … coming into collision … another vessel” – There must be actual contact with another vessel.
  • indemnity … in addition” – Claims arising under the clause are in addition to anything else recoverable even though the total amount payable exceeds the insured value.
  • Where … both vessels are to blame … unless the liability … limited by law … indemnity … shall be calculated on the principle of cross liabilities” – The principle of cross liabilities is the method used for calculating the claim on the policy of insurance, there being however an important limitation, namely, when the liability of one or both vessels is limited by law.

For Example

(By modifying a question suggested by Mr. D. John Wilson, a most distinguished average adjuster.)

Vessel “A” was (a) insured on Hull & Machinery, etc. for $1,000,000 so valued, subject to the Institute Time Clauses – Hulls 1/10/83 with Deductible $30,000 and (b) entered on full conditions with an P&I Club.  She was entering port when she collided in dense fog with the outward bound vessel “B”.  Both vessels sustained damages.  Vessel “A” veered off “B” and struck and sank the barge “X” and the buoy moored thereto, and finally grounded causing damage to a submarine cable.

 

The liability for the collision and resulting damages was eventually determined on the basis of vessel “A” being 75% to blame and vessel “B” 25%, the damages amounting to a total of $1,200,000 being agreed as follows:


YORK-ANTWERP RULES 2016

Readers may have by now noted that the words underlined below under Rule 17 of the York-Antwerp Rules 1994 were omitted from the published text of the York-Antwerp Rules 2016 adopted in New York in May 2016.