The Standard Club’s chairman Jeremy Grose has issued a circular on the warranty of seaworthiness to all its stakeholders.
Continuing warranty of seaworthiness
The managers are aware that, from time to time, owners/members have been offered contractual terms with counterparties that require the shipowner to provide a continuing warranty of seaworthiness for the entire duration of the voyage. Should this situation arise, the club would urge owners/members to exercise caution before entering into contract terms since such a warranty could prejudice their P&I cover.
Cargo risk cover
Cover for cargo risks is conditional inter alia upon the member not contracting on terms more onerous to the carrier than those of the Hague or Hague Visby Rules (HVR) or equally wide exemptions of the carrier from liability. Article III paragraph 1 of the HVR provides, for example, that the carrier must, before and at the beginning of the voyage, exercise due diligence to:
make the ship seaworthy
properly man, equip and supply the ship
make the holds, refrigerating and cool chambers, and all other parts of the ship in which
goods are carried, fit and safe for their reception, carriage, and preservation.
HVR – Shippers advised to excise caution
Under the HVR, ‘exercising due diligence’ means taking all reasonable precautions to see that the ship is fit for the voyage contemplated. The carrier is not obliged to give an absolute guarantee of seaworthiness and the ship need only be seaworthy at the commencement of the voyage.
If a cargo owner can show that their loss was caused by a failure of the carrier to exercise due diligence to make the ship seaworthy before and at the commencement of the voyage, the resulting loss will fall under club cover. If, however, the loss was shown to have been caused by some event which affected the ship’s seaworthiness only during the voyage then, assuming the due diligence test in Article III paragraph 1 is passed, the carrier would not be liable to the cargo interests under Article III paragraph 1 of the HVR.
A continuing warranty of seaworthiness throughout the voyage alters that position and would make the carrier potentially liable for any and all events affecting the ship’s seaworthiness during the entire voyage. This would represent terms less favourable than the HVR and so place any resulting claims outside of club cover.
Owners and members are therefore advised to give serious consideration to the potential
ramifications on the cover of contracting on terms that give a continuing warranty of seaworthiness and to contact the managers for guidance before fixing on this basis.
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