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Sweet & Maxwell is part of Thomson Reuters. © 2013 Thomson Reuters(Professional) UK Limited

Journal of Business Law

2000

Seaworthiness in charter parties

Chen Liang

Subject: Shipping

Keywords: Charterparties; Seaworthiness

*J.B.L. 1 The following discussion will be divided into three sections. The first is about some commonfeatures of un/seaworthiness. Various relevant terms about the seaworthiness of the selectedstandard forms of charter parties and the associated legal issues will receive attention in Section 2,while Section 3 will discuss the effects of the breach of the seaworthiness obligation.

Since the Hague or Hague Visby Rules are often incorporated as overriding terms into charter parties(which is quite similar to the situation where the Rules apply to the contract as a matter of law1 ), therelevant part of the Rules will be examined in detail. Even the Hamburg Rules, which are yet to bewidely accepted in the shipping field, will be looked at where appropriate, but to a more limited extent,as seaworthiness is not an independent concept there.

This discussion is largely based upon English law which, if not directly related to Hong Kong, shouldhave strong persuading force there, even after the sovereignty change of July 1, 1997. The Carriageof Goods by Sea Act 1971 (hereafter the COGSA 1971), incorporating the Hague Visby Rules, can befound now contained in The Hong Kong's Carriage of Goods by Sea Ordinance 1994. The LondonConvention on the Limitation of Shipowner's Liability 1976, now contained in Schedule 7 to theMerchant Shipping Act 1995, (hereafter MSA 1995), can also be found incorporated in Hong Kong'sMerchant Shipping (Limitation of Shipowners' Liability) Ordinance (cap. 434), whilst the MarineInsurance Ordinance (cap. 329) is identical to the Marine Insurance Act 1906 (hereafter MIA 1906).The following discussion will be centred around the English versions of these conventions as well asthe selected standard forms of charter parties, popularly used in the international shipping field.

I will not discuss in detail statutes mainly related to safety at sea, the breach of which could lead tofines and imprisonment,2 as they are not directly relevant to *J.B.L. 2 charter party disputes.However, the impact of the International Safety Management (ISM) Code3 on the general standard ofseaworthiness obligation under charters will be mentioned wherever appropriate.

1. Some Common Features of Seaworthiness Obligation

1.1. What are Un/seaworthy Ships?

The circumstances making a ship seaworthy vary (nowadays possibly including the Y2K issue4 ), andthey are too many to be listed exhaustively.5 However, article III, rule 1 of the COGSA 1971 lists threesituations which seem to be able to encompass most of the seaworthiness requirements:

(a) make the ship seaworthy;

(b) properly man, equip and supply the ship;

*J.B.L. 3 (c) make the holds, refrigerator and cool chambers, or other parts of the ship in whichgoods are carried, fit and safe for their reception, carriage and preservation.

A close look at these three criteria reveals that their drafting may invite criticism. In comparison with(b) and (c), the word “seaworthy” in (a), if interpreted literally, seems to refer to defects in the hull only.6 That literal interpretation, if accepted, would produce the effect of excluding “properly man . .” in (b)and fitness of the holds for reception and carriage of goods in (c) from the connotation of “seaworthy”in (a). Whether this accords with the usual meaning of the word “seaworthy” (or “seaworthiness”) incommon law requires examination. Lord Denning M.R. held in the Court of Appeal in The Aquacharm7 that the word “seaworthiness” in the Hague Rules should be used in its ordinary meaning, and not inany extended or unnatural meaning. As for its ordinary meaning, authority can be found in an old

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case, Reed v. Page ,8 where it was said to be used in two senses:

“Firstly, the fitness of the ship to enter on the contemplated adventure of navigation, and secondly,fitness of the ship to receive the contemplated cargo as a carrying receptacle.”9

In 1984 it was held in the Commercial Court in The Good Friend 10 that the word “seaworthy” in articleIII, rule 1 should include the meaning of fitness to receive cargo, which is obviously consistent withthe rule at common law.

However, in 1987, the Commercial Court reopened the issue in a time charter party case, TheArianna. 11 Webster J. gave his view that “Although in many cases seaworthiness and fitness forservice have been treated as synonymous (where no doubt it has been appropriate to do so), theyare not necessarily the same thing”.12

This dictum seems to contradict the decision of The Good Friend on article III, rule 1 of the COGSA1971, and is not consistent with the existing common law as set out above. At best, the dictum ofWebster J. in The Arianna should be *J.B.L. 4 technically confined to the particular facts of TheArianna relating to the charter party, and should not be regarded as overriding The Good Friend'sdecision. In fact, in a bill of lading case on article III, rule 1 of the Hague-Visby Rules: The Gudermes13 in 1991, the English High Court again held that the seaworthiness obligation should include theobligation to make a hull fit for receiving goods.14 Although to differentiate seaworthiness from fitnessin the context of the COGSA 1971 does not seem useful in practice, as they are not alternative butcomplementary requirements, it is better to interpret (a) and (b) or to interpret (b) and (c) asoverlapping with each other,15 in order to conform to the common law's construction of the word.

As the terms describing the three situations in (a) and (b) and (c) are somewhat broad, the concretecircumstances that can be said to fall into these three situations are not always clear cut. In fact, dueto the use of the general word “seaworthy” in (a), the seaworthy circumstance in (a) may well becapable of including any circumstances, which might be held to affect the seaworthy state of the shipin common law. Bearing the above fact in mind, one could say that the issue of whether or not (a), (b)and (c) are exhaustive is immaterial.

Although incompetent shore-based staff would not render a ship, owned by a company, improperlymanned for the purpose of article III, rule 1(b), it would probably constitute want of due diligence inmaking the ship seaworthy after the ISM code has come into force. The 1995 amended version of theInternational Convention on Standards of Training, Certification and Watchkeeping for Seafarers hasalso raised the standard of competent crews or masters, as it places more weight upon the ability ofthe crew to apply the knowledge than upon the quantity of the knowledge acquired.

Because something can be regarded as affecting the seaworthy state of a ship in common law canalso be so regarded under article III, rule 1, the same tests designed by the common law may well beapplied under article III, rule 1.

In common law, some of the tests have long been established in the English courts: that is, thestandard of seaworthiness is relative to the knowledge at the time.16 In other words, a ship does nothave to be equipped with equipment which has not been invented17 or which has recently come intothe market.18

*J.B.L. 5 To judge whether or not a pure defect in the ship constitutes unseaworthiness, onewell-known test is often referred to. That test is contained in the dictum of Channel J. in theMcFadden v. Blue Star Line case.19

“If the defect existed, the question to be put is that would a prudent owner have required that it shouldbe made good before sending his ship to sea had he known of it? If he would, the ship was notseaworthy within the meaning of the undertaking”. [Emphasis added]

We should be careful not to interpret the word “prudent” as referring to the state of mind of ashipowner in looking for a defect, or the state of mind of a shipowner in making it good. It seems thatthe word “prudent” only describes the state of the mind of the shipowner in encountering a defectwhich has already been found by whatever means, and which has not yet been fixed. “Prudent” is notused in the sense of “exercising due diligence” as required under the COGSA 1971. This dictum hasalso been adopted in a recent case, The Sabro Valour ,20 where Clarke J. added that hindsightwisdom should not be applied in determining whether or not unseaworthiness exists.

The above tests can only help to establish what will affect the seaworthy state of a ship under article

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III, rule 1. But unlike the common law where the seaworthiness obligation is strict, they cannot beused to judge whether or not the seaworthiness obligation under the COGSA 1971 has beenbreached; whether or not there has been a breach will further depend upon whether or not duediligence has been exercised, which will be dealt with later.

1.2. Unseaworthiness as a Breach of Contract

Under English common law, there is a tendency to classify the obligation of seaworthiness, implied orexpressed in the contract, as a specific contractual term. The prevailing view is that theseaworthiness obligation is an innominate term in the sense that the breach of it may either lead tothe termination of the contract with or without damages, or may lead only to damages. That was theview held by the leading charter party case, Hong Kong Fir v. Kawasaki 21 at the Court of Appeal,where the concept of the innominate term was first established. That case was later approved inobiter in the House of Lords in a sale of goods case, Burge Corpn v. Tradox. 22

*J.B.L. 6 However, a dispute does arise as to whether or not the House of Lords' decision in anearlier case, Kish v. Taylor , can be understood as classifying the seaworthiness obligation as acondition. The part of the judgment giving rise to the dispute in Kish v. Taylor is to be found in thefollowing words of Lord Atkinson23 :

“The fact that a ship is not in a fit condition to receive her cargo, or is from any cause unseaworthywhen about to start on her voyage, will justify the charterer or holder of the bill of lading in repudiatinghis contract and refusing to be bound by it, ” (Emphasis added).

The above dictum was interpreted by Sellers L.J. in The Hong Kong Fir case as referring and beingconfined to the situation where the unseaworthiness occurs before the goods are loaded.24

Diplock L.J. in The Hong Kong Fir case went further in suggesting that even the unseaworthinesswhich occurs before loading would not entitle the innocent party to terminate the contract as a breachof condition; as he remarked, referring to the above cited dictum of Lord Atkinson in Kish v. Taylor ,later cited by Sellers L.J. in The Hong Kong Fir :

“ The cases referred to by Sellers L.J. illustrate this and I would only add that in the dictum which hecites from Kish v. Taylor it seems to me, from the sentence which immediately follows it as from theactual decision in the case and the whole tenor of Lord Atkinson's speech itself, that the word ‘will’was intended to be ‘may’.”25

According to Diplock L.J.'s view, the classification of seaworthiness as an innominate term could alsoaccommodate the House of Lords' early decision in Kish v. Taylor by suggesting thatunseaworthiness occurring before loading was a kind of breach of the innominate term and morelikely to lead to the repudiation of the contract. In the light of this survey of the judicial authorities, andtaking into account the development of the law, I would rather regard seaworthiness as an“innominate term” than a “condition”.

Under the COGSA 1971, where the strict obligation for seaworthiness was reduced to the exercise ofdue diligence, the state of unseaworthiness of the ship alone26 without the want of due diligence is noteven a breach of an innominate term.27 In The Good Friend ,28 the bill of lading was subject to theHague Rules. Staughton J. held29 that breach of article III, rule 1 with respect to the seaworthiness ofa ship is a breach of contract. However, he did not go further to classify such a breach of contract.Under the COGSA 1971, in the absence of the provisions to the contrary, as to which kind of breachof contract should the *J.B.L. 7 breach of the seaworthiness obligation be classified as, we shouldrefer to the authorities existing in the common law before English courts.

As we will see, the concept of “want of due diligence” is similar to that of negligence. In The Evgrafov,30 Hobhouse J. indicated that breach of article III, rule 2 was a breach of contract but did not explainwhat kind of breach of contract it was. In the Court of Appeal in the warehouse bailment case J.Spurling v. Bradshaw ,31 Denning L.J. (as he then was) touched upon whether or not negligence inthe care of the goods by a warehouseman would go to the root of the contract--i.e. effectively being abreach of a condition. He clearly indicated that negligence in the care of goods may or may not go tothe root of the contract, making it possible to fit the duty of care of goods into a later form ofcontractual term--the innominate term. If negligence in the care of goods may be classified as abreach of an innominate term, there seems to be no reason why want of due diligence in making theship seaworthy should be different.

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1.3. Unseaworthiness as a Tort

Unseaworthiness will also constitute a tort committed by the carrier/shipowner towards the cargoowner/charterer. This is so whether or not there is a contract between them.32 A recent House ofLords decision in The Nicholas H 33 shows that the English courts will not readily impose a tortiousduty of care on a classification society, an independent third party who has no direct contractualrelationship with the claimant, the cargo owner who has a contract with the carrier/shipownergoverned by the Hague-Visby Rules. The classification society in this case had not done any physicaldamage to the goods by issuing seaworthiness-admitted certificate to the shipowner,34 though thewrong message contained in the certificate is alleged to have made possible the cargo damage*J.B.L. 8 caused by the unseaworthiness of the ship. One of the underlying reasons for not imposinga tortious obligation is said to be to prevent the Hague-Visby Rules from being side-stepped.35 Thisreasoning virtually has the effect of extending the benefits of the exception clauses in theHague-Visby Rules to a third independent contractor, which is expressly prohibited by article IV, rule2 bis of the Rules. This reasoning appears inconsistent with a string of recent non-marine cases ledby White v. Jones ,36 where it was held by the House of Lords that a solicitor owes a duty of caretowards an intended beneficiary of a will even though they do not have a direct contractualrelationship with each other. Such seeming inconsistency was what Lord Lloyd spoke strongly against(though he was in a minority) in The Nicholas H. Lord Lloyd's view was surely based upon theagreement that the famous three-parts tests37 had been passed in The Nicholas H in that there was aproximate relationship between the classification society and the cargo owners, and that theclassification society had foreseen the damage and that it was fair and reasonable to impose the dutyof care in torts on the classification society as on solicitors and other kinds of advisers. After all, thedamage in The Nicholas H was viewed as indirect physical loss rather than pure economic loss, forwhich there is a strong school holding the view that in English law to establish a duty of care in tort foreconomic loss is not a legitimate extension38 unless, perhaps, such *J.B.L. 9 economic loss isaccompanied by physical loss.39 However, we can distinguish The Nicholas H from White v. Jones onthe grounds of a recent airworthiness case Philicox v. Civil Association Authority ,40 which held that aclassification society may only assume tortious duty of care towards the public rather than a privateparty, such as a cargo claimant. By contrast, in Perrett v. Collins 41 where a surveyor, though avoluntary, non-commercial and non-profit-making body which may not indicate a more subsidiary rolethan that of classification society in The Nicholas H , was held to be liable for the personal injury of apassenger in a plane, for which a certificate was wrongly issued.42 This contrast was said to lie in thenature of harm: i.e. one is property damage in The Nicholas H and Philcox v. Civil AssociationAuthority , and the other is personal injury in Perrett v. Collins. 43 The other underlying reasoning inThe Nicholas H was that the seaworthiness obligation in the Hague Visby Rules44 is non-delegable,which seems to refer to the vicarious liability in the widest sense. Under this non-delegable rule, thewant of due diligence committed by an independent contractor, such as a ship repairer, will beimputed to the shipowner carrier.45 It seems that a classification society should be treated similarly.This reasoning seems most plausible in confining The Nicholas H strictly to the construction of theHague Visby Rules, distinguishing it from other general principles in tort law, especially thatdeveloped in White v. Jones. 46 That said, it is still possible that when a similar case appears beforethe House of Lords a contrary view may win the day because of the wrong dissenting view of LordLloyd in The Nicholas H , and the tendency in the general law of torts that many kinds of adviserssuch as bankers, valuers and lawyers seems increasingly being imposed with a tortious duty of caretowards a party with whom they do not have contractual relationship apart from a kind of *J.B.L. 10special relationship47 “akin to contract” 48 which usually means that the defendant has assumedresponsibility for economic loss to the plaintiff who has relied upon the service provided by thedefendant.49 The establishment of a limitation of liability regime for classification society can onlyreinforce such a possibility.50

2. Seaworthiness Obligation under Varied Charter Terms

2.1. Under time Charters on Baltime (39) or NYPE(93) terms

The absolute warranty to make a ship seaworthy under common law is not implied in the time charter.Any kind of seaworthiness obligation under time charters can only be expressly set out.51

A ship must be seaworthy at the time of delivery52 according to clause 1 of Baltime form (1939): “. .she being in every way fitted for ordinary cargo service”. In the New York Produce Exchange form

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(NYPE 93), a similar requirement is mentioned in clause 2: “. . the vessel on her delivery shall beready to receive cargo with clean-swept holds and tight, staunch, strong and in every way fitted for orduring cargo service, having water ballast and with sufficient power to operate all cargohandling gearsimultaneously.”53 This seaworthiness obligation may be reduced to due diligence in making the shipseaworthy if the Hague Rules are incorporated.54

A maintenance clause in clause 3 of Baltime also requires “the owner to . maintain her in a thoroughlyefficient state in hull and machinery during service”. A similar requirement can also be found in clause6 of NYPE(93) as follows: “the owners shall maintain the vessel's class and keep her in a thoroughlyefficient state in hull, machinery and equipment for and during the service, and have a fullcomplement of officers and crew.”

*J.B.L. 11 The seaworthy obligation in the delivery clause is obviously not a continued one, butunder the maintenance clause it is. In The Trade Nomad ,55 it was held that the maintenance clause ina Shelltime 4 charterparty had only imposed the maintenance obligation in the terms of “exercise duediligence” 56 on the shipowner related to the defects coming into existence after, rather than before,the delivery. If the Hague or Hague-Visby Rules are incorporated into these time charters, one viewsuggests that time charters will cater for each voyage in their coverage by imposing on the shipownera different kind of seaworthy obligation, i.e. that the ship should be made seaworthy before or at thestart of each voyage from every loading port.57 The reason for this is simply because many bills oflading issued under these time charters may well have many different loading ports.58 But this viewwas doubted by Mustill J. in The Hermosa by saying that to make an analogy between a time charterincorporating Hague Rules and a consecutive voyage charter is not exact.59

2.2. Under voyage charters on Gencon(94) terms

In the case of voyage charters, the seaworthiness warranty is implied for the voyage from the port ofloading.60 But for the voyage to the port of loading, the seaworthiness obligation should be expresslyprovided in the voyage charters.61

The implied absolute seaworthiness warranty can be contracted out totally or modified by the expressterms of the voyage charters. Clause 2 of the Gencon(94) is a clause which has reduced the absolutewarranty of seaworthiness to a personal due diligence on the part of the owners and managers. Itreads:

“The owners are to be responsible for loss of or damage to the goods or for delay in delivery of thegoods only in case the loss, damage or delay has been caused by personal want of due diligence onthe part of the Owners or their manager to make the vessel in all respects seaworthy and to securethat she is properly manned, equipped and supplied, or by the personal act or default of the owner ortheir manager” [Emphasis added].

The meaning of due diligence in the above clause should be the same whether it is under Gencon(94)or under the Hague or Hague-Visby Rules. In the context of article III, rule 1 or article IV, rule 1 of theHague-Visby Rules, “due diligence” was interpreted by Willmer L.J. as “indistinguishable from anobligation to *J.B.L. 12 exercise reasonable care”.62 Most straightforwardly Lord Devlin declared inthe House of Lords in The Amstelslot that “lack of due diligence is negligence”.63

The underlined word “personal” in clause 2 of Gencon(94) is significantly different from thenon-delegable due diligence in making the ship seaworthy under the COGSA 1971. If the “owners”are corporate bodies, the shipowner has no real body to be kicked and no real soul to be damned.Nonetheless, in such a situation the alter ego of the corporation must be held guilty for “personal”want of due diligence under clause 2 of Gencon(94). Viscount Haldane L.C. provided a guidelineabout how to find the alter ego of a shipowner company in the Lennard's Carrying Company Limitedv. Asiatic Petroleum Company Limited case 64 :

“My lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of itsown; its actual and directing will must consequently be sought in the person of somebody whom forsome purposes may be called an agent, but who is really the directing mind and will of thecorporation, the very ego and centre of the personality of the corporation. That person may be underthe direction of the shareholders in general meeting; That person may be board of directors itself, or itmay be and in some companies it is so, that that person has an authority co-ordinate with the boardof directors given to him under the articles of association, and is appointed by the general meeting ofthe company, and can only be renewed by the general meeting of the company.”

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The word “manager” used in clause 2 of Gencon(94) seems to emphasise the alter ego of theshipping company, or should only refer to the persons, usually the senior managers, who areauthorised by the constitution of the shipping company65 to represent it or refer to the legalrepresentative of a third party ship-managing company. Under article 4 of ISM code, a person ashoremust be designated to ensure the safe operation of the vessel. This “designated person” should havedirect access to the highest level of management, and be a link between the ship and the company.Even “manager” cannot also be interpreted as including such “designated persons”, and there is apossibility in the context of a small shipping company that the “act” and “knowledge” of the“designated *J.B.L. 13 person” may be regarded as that of the alter ego of the company. The ISMcode would substantiate the personal obligation of the “owners and their manager” with the duty tostipulate and supervise the execution of the safety management system.66 In The Apostolis ,67 amarine superintendent is regarded as an alter ego of the shipowning company.

The second half of clause 2 of Gencon(94) emphasises the shipowner's vicarious immunity68 as wellas the causal link related to the breach of seaworthiness obligation. It provides:

“And the owners are not responsible for loss, damage or delay arising from any other causewhatsoever, even from the neglect or default of the master or crew or some other person employedby the owners on board or ashore for whose acts they would, but for this clause, be responsible, orfrom unseaworthiness of the vessel on loading or commencement of the voyage or at any timewhatsoever.”

In the common law of voyage charters, the seaworthiness warranty only exists at or before the start ofthe voyage or, if the voyage can be divided into several stages, before the start of each stage. Thelatter situation is usually accommodated by the phrase “doctrine of stages” applicable under theGencon (94).

Under common law, there are three kinds of doctrine of stages with respect to seaworthiness, whichcan be summarised as follows.69

If the time spent in the port of departure can be divided into several stages, the carrier must make theship (a) seaworthy for loading at the beginning, and (b) seaworthy for lying while waiting for thevoyage to start, and (c) seaworthy for the voyage by the beginning of the voyage.70 As this mainlyoccurs in the port, the doctrine can be conveniently called the in-port doctrine of stages.71

*J.B.L. 14 If a sailing voyage is divided into several stages for the purpose of taking on fuel, thecarrier must load enough for each stage at the beginning of each. Although this doctrine of stages issometimes called the doctrine of bunking stages72 or the doctrine of coaling stages,73 as there aremany kinds of fuel, it seems more appropriate to call it by the comprehensive name: the fuellingdoctrine of stages.74

If a ship is required to traverse both river and sea, fresh water or brine could make a difference interms of watermark with the same load, and river perils are different from those at sea. Thesedifferences will affect the seaworthiness of the ship, and the carrier must usually make sure that theship will adapt properly to the adequate watermark or be fit to encounter the perils expected whileentering the sea from the river or vice versa.75 It may be called the river-sea doctrine of stages.

All these three doctrines of stages also reflect the nature of seaworthiness, which is not an absoluteconcept and is, among other things, relative “to the particular voyage or particular stage of the voyageon which the ship is engaged”.76

2.3. When the COGSA 1971 is incorporated

When the COGSA 1971 is incorporated into time or voyage charters as paramount terms, theseaworthy obligation provided by COGSA will prevail over either the common law absoluteseaworthiness warranty (if so implied under the charters) or the seaworthiness obligation imposed byother express charter terms. So in Anglo-Saxon Petroleum Shipping Co. Ltd v. Adamastors ShippingCo. Ltd 77 it was held by the House of Lords that the Hague Rules' seaworthiness obligationincorporated by a paramount clause is applicable to both the ballast (or approach) voyage as well asthe cargo-carrying voyage. However, this case was distinguished in the recent case: The Fjord Wind ,78 where the U.S. COGSA 1936 or the Canadian Water Carriage of Goods Act 1936, both based uponthe Hague Rules, were incorporated by an ordinary, rather than a paramount clause, on the *J.B.L.15 term of NYPE version, and it was held that the Hague Rules' seaworthiness obligation is

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applicable only to the laden voyage, while the absolute seaworthiness obligation provided for byanother clause in the charter is applicable to the approach voyage.

The obligation to make a ship seaworthy consists of two parts: one is the state of seaworthiness ofthe ship, the other is the duty to exercise due diligence when making it so. The seaworthinessobligation can only be breached if the ship is both found to be in an unseaworthy state and the duediligence in making the ship seaworthy has not been exercised.

Apart from that, the breach of the seaworthiness obligation can simply be described as negligence inmaking the ship seaworthy. The following are distinct issues in the seaworthy obligation under theCOGSA 1971.

2.3.1 Non-delegable One important aspect of the seaworthy obligation is that this obligation isnon-delegable under COGSA 1971.79

Wilmer L.J. in the Court of Appeal in Riverstone v. Lancashire 80 suggested that the words “on thepart of the carrier” in article IV, rule 1 were broad enough to “render the carrier liable for lack of duediligence on the part of his own servants, whatever the task on which they may be engaged”.However, in the same decision in the Court of Appeal, the ship repairer was held to be anindependent contractor whose negligence should not be imputed to the shipowner. But the Court ofAppeal's decision was reversed in the House of Lords,81 as it was firmly decided that the negligenceof the fitter employed by the ship repairers should be imputed to the carrier, because such negligencewas the failure to exercise due diligence. In contrast, in Angliss v. Peninsular ,82 though the court alsoapproved the rule that the exercise of due diligence was not limited to the personal diligence of thecarrier, it was held that the negligence of the ship builder should not be imputed to the carrier in so faras he had engaged a ship builder of repute and adopted all reasonable precautions. A convincingreasoning for the different decisions in the two cases was given by Lord Hodson in the House ofLords in The Riverstone Meat case83 : “it could be argued that The Angliss , in so far as it deals withshipbuilders, was dealing with something outside the scope of Article III, for to make a ship seaworthyis not the same as to make a seaworthy ship , but the expression ‘to make a ship seaworthy’ is, in myopinion, wide enough to cover the work of repair however extensive those repairs may be.”(Emphasis added) Perhaps this principle can be applied to support the decision in The Nicholas Hwith respect *J.B.L. 16 to the classification society in the following way; if a classification society isfound to be liable for the unseaworthiness of the ship because it has given the wrong advice aboutthe state of the ship, it is more comparable to a ship repairer than to a ship builder simply because thesurveys are usually carried out periodically after the ship has been built.84

Generally speaking, the ISM code's requirement for the shipowner to be responsible for the safetymanagement system would make the shipowner more accountable for subordinates' errors. This maybe true under the voyage charters without the incorporation of COGSA, but it seems that the ISMcode does not really widen the scope of the carrier's vicarious liability for unseaworthiness undervoyage charters incorporating the COGSA 1971 as overriding terms. This is because the COGSA1971 has already adopted the non-delegable stance.

2.3.2 Distinguishing want of due diligence as to seaworthiness from faults in article IV, rule 2(a) or (b)As the want of due diligence can be described as negligence, the picture of the distinction betweenthe breach of seaworthiness obligation and negligence in the management or the navigation of theship, though clear in common law, have been blurred under the COGSA 1971, as is the distinctionbetween breach of the seaworthiness obligation and the fault causing a fire. One contrast exists,however, between the obligation to exercise due diligence in making the ship seaworthy under theCOGSA 1971 and negligence in article IV, rule 2(a) or (b). The contrast is that the obligation toexercise due diligence in making the ship seaworthy is non-delegable,85 while in navigation ormanagement, or in relation to fire,86 the personal liability of the carrier is separate from his vicariousliability. This contrast is essential to establish a carrier's liability, but is still not enough to distinguishbetween want of due diligence under article IV, rule 1 and negligence in article IV, rule 2(a) or (b). Aglance at the legal battles in this connection reveals that probably the most effective way of makingsuch a distinction is to investigate whether negligence occurs “before” or “at” the beginning of thevoyage or “after” the voyage starts. That is because under article III, rule 1 the carrier is only requiredto exercise due diligence in making the ship seaworthy at or before the voyage starts, whilst theexclusions in article IV, rule 2 are only concerned with the risks occurring during the voyage.

As we have seen, there is doctrine of stages at common law. The issues as to whether such adoctrine of stages could be applied under the COGSA 1971 is *J.B.L. 17 essential for distinguishing

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negligence in making a ship seaworthy from negligence in navigation or management of the ship, orfrom actual fault or privity of the carrier in causing a fire.87

In Maxine Footwear v. Canadian Government ,88 a fire occurred after the loading but before thevoyage started. The issue to be decided by the Privy Council was whether the carrier had exerciseddue diligence under article IV, rule 1 so as to be able to rely on article IV, rule 2(a) or (b). Such adecision depended upon whether or not the doctrine of stages in the common law could be applied tothe interpretation of article III, rule 1. In the face of such an issue, Lord Somervell of Harrow rejectedthe submission that the obligation to exercise due diligence in making the ship seaworthy underarticle IV, rule 1 occurs at two points of time, i.e. at the beginning of the loading and at the beginningof the voyage, which is the result of the application of the in-port doctrine of stages to article III, rule 1.Instead, he remarked that the period for exercising due diligence should be a continued one, startingat least from the beginning of the loading to the beginning of the voyage. As he put it:

“In their lordship's opinion, ‘before and at the beginning of the voyage’ means the period from at leastthe beginning of the loading until the vessel starts on her voyage. The word ‘before’ cannot in theiropinion be read as meaning ‘at the commencement of the loading’. If this had been intended, it wouldhave been said. The question when precisely the period begins does not arise in this case, hence theinsertion above of the words ‘at least’.”89

It was held by the Privy Council that there was want of due diligence on the part of carrier to make theship seaworthy before or at the beginning of the voyage; as a result, the carrier was not allowed toenjoy the protection of article IV, rule 2(a) or (b). His Lordship also held the view, obiter , that thedoctrine of stages and absolute warranty of seaworthiness should stand and fall together:

“It is also unnecessary to consider the earlier cases as to ‘stages’ under the common law. Thedoctrine of stages had its anomalies and some important methods were never elucidated by authority.When the warranty was absolute it seems at any rate intelligible to restrict it to certain points of time.It would be surprising if a duty to exercise due diligence ceased as soon as loading begins, only toreappear shortly before the beginning of the voyage.”90

*J.B.L. 18 It is not clear whether his Lordship, whilst making the above statement, had in mind onlythe in-port doctrine of stages or the doctrine of stages as a whole which includes the fuelling doctrineand the river-sea doctrine of stages.

As the Maxime Footwear case is only concerned with the in-port doctrine of stages, technically itseems that the above decision should not be understood to exclude the application of the fuellingdoctrine of stages and the river-sea doctrine of stages to article III, rule 1 of the COGSA 1971.Adopting the above interpretation seems to be in line with the decision of The Makedonia undercommon law.91 Although Hewson J. in this trial court decision held back from reading the fuellingstages into the word “voyage” in article III, rule 1 of the COGSA 1924, he seemed to agree that if thecarrier at the port of loading loads only enough fuel for the first stage, he should be obliged to loadfuel for the intermediate stage or stages at the intermediate port or ports until the contract voyage iscompleted. He said92 :

“I see no obligation to read into the word ‘voyage’ a doctrine of stages, but a necessity to define theword itself. ‘Voyage’ in the context means what it has always meant; the contractual voyage from theport of loading to the port of discharge as declared in the appropriate bill of lading. The rule says‘voyage’ without any qualification such as ‘any declared stage thereof’. In my view, the obligation onthe shipowner was to exercise due diligence before or at the beginning of sailing from the loadingport, to have the vessel adequately bunkered for the first stage to San Pedro, and to arrange foradequate bunkers of a proper kind at San Pedro and other selected intermediate ports on the voyageso that the contractual voyage might be performed.”

It seems that under the COGSA 1971, the shipper cannot accuse the carrier of failure to exercise duediligence if the carrier, before or at the beginning of the voyage , not only loads enough fuel only forthe first stage, but at the same time (i.e. before or at the beginning of the voyage) makes arrangementfor the fuel to be loaded at the intermediate ports. This seems to virtually apply the fuelling doctrine ofstages to the COGSA 1971. However, one difference should not be ignored. Under the COGSA 1971,the carrier should make arrangements to load fuel at the intermediate ports before or at thecommencement of the whole voyage , while under common law, the carrier may arrange for fuel to beloaded at the intermediate port after the whole voyage has started. The same should be true of theriver-sea doctrine of stages. Given that the fuelling doctrine and the river-sea doctrine of stages canbe generally applied to the COGSA 1971, they can be used generally to decide whether or not the

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negligence causing the loss is the want of due diligence in making the ship seaworthy occurring at orbefore the voyage begins, or is negligence in relation to the navigation or management of the ship, orin giving rise to fire after the voyage starts.

One special way of finding whether or not there is a breach of seaworthiness obligation in somespecial situations merits notice here: a porthole is left open *J.B.L. 19 before the voyage starts, it isnot closed during the voyage, and goods are water-damaged. Does an open porthole constituteunseaworthiness? According to Lord Blackburn in the common law case Steel v. State Line ,93 if aporthole left open before the voyage starts cannot be closed during the voyage, it constitutesunseaworthiness. But if it can be closed during the voyage, it does not. However, there is anargument that if the porthole so left open is not closed during the voyage because some responsiblecrew member has a “disabling want of skill” or “disabling lack of knowledge” this would constituteunseaworthiness in the sense of crew incompetence.94 But another argument should prevail, i.e.failure during the voyage to close the porthole which is capable of being so closed is regarded asnegligence in the management of the ship.95 The position of the law with respect to this situationshould be the same under the COGSA 1971 as at the common law, because the fact that a portholewhich cannot be closed during the voyage is left open before the voyage starts is in itself evidence ofthe want of due diligence on the part of the carrier before or at the beginning of the voyage. In a HighCourt case: International Packers London Ltd v. Ocean S.S. Co. Ltd 96 the common law principle ofdealing with open portholes was applied under the Australian COGSA 1924. In this case, waterentering through the hatch during the voyage damaged the goods, and it was held that the failure to fitlocking bars on the hatches on sailing was not want of due diligence in making the ship seaworthy forthe purpose of article III, rule 1. That is because the locking bars are capable of being fitted at shortnotice while at sea, so “the decision when to fit them must ordinarily be left to the discretion of themaster or other officers in charge”.97

From a recent case reported in 1996, The Apostolis ,98 the following situation could also beconceived. An unseaworthy hatch cover needs to be welded during the voyage. If such welding canbe done without the possibility of causing fire to the cargo on the ship, such state of hatch coverwould not be regarded as rendering the ship unseaworthy. On the other hand, if such unseaworthyhatch cover must be welded during the voyage and such welding cannot be done without exposingthe cargo on the ship to the danger of fire, such state of hatch cover should be regarded as makingthe ship unseaworthy. In this particular case, the carrier was found in the court of first instance tohave breached article III, rule 1 and have committed actual fault and privity in article IV, rule 2(b),99

but the *J.B.L. 20 decision was overruled in the Court of Appeal,100 as there was no convincingevidence to persuade the court to reach a decision that the fire on cargo had been caused by thewelding rather than by a cigarette end. So there was no need in this case to make a distinctionbetween the fault constituting breach of article III, rule 1 and the fault depriving the carrier from beingprotected by article IV, rule 2(b) as for either fault the carrier would be found liable for the loss ofgoods caused by fire. In The Lydia Flag ,101 Moore-Bick J. seems also to suggest that if there areenough time left to rectify an otherwise unseaworthy aspect of the ship, the carrier has justification todelay in making such rectification. With the enforcement of the ISM code, arguably, the chance of thecarrier to rely upon the protection of article IV, rule 2, especially (a) and (b), seems to be reduced.This is because the ISM aims to ensure that there is a system (safety management system), whichdemonstrates the efforts to the degree of ordinary duty of care or due diligence to prevent or at leastreduce, rather than, guarantee the non-occurrence of human errors in navigation whether committedby the carrier or by his servants or agents at any stage of the voyage.102 For the purpose of cateringfor the ISM code issues under charter parties, voyage or time, BIMCO has drawn up a standard ISMcharterparty clause under which the shipowner is made liable for the consequences of breaching ISMcode's requirements.103 Besides, BIMCO Standard Year 2000 clause for voyage and time charter hasalso been designed to impose upon the owner and charterer the duty of exercising due diligence inensuring Year 2000 conformity. The consequences of breach of such a duty have not been expresslymentioned in the clause. But it is mentioned that the other duties under the contract of affreightmentwill not be prejudiced, which implies that the obligation in respect of Y2K should be assimilated intothe other long-standing obligations such as those provided under article III, rule 1 of the Hague VisbyRules.

2.3.3 Distinguishing want of due diligence as to seaworthiness from breach of article III, rule 2 withrespect to bad stowage Although it was acknowledged by Langley J. in a recent case: The IMVROS104 that “it is often not an easy question to determine the moment when the line between bad stowageand unseaworthiness is covered, yet because the stowage of goods only occurs after the goods areshipped, it is impossible for the bad stowage of the goods itself to be the cause of uncargoworthiness

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when receiving the same goods”, in McFadden v. Blue Star *J.B.L. 21 Line ,105 it was held, under abill of lading incorporating the Harter Act, that the warranty of fitness to receive cargo is a warrantyonly as to the condition of the ship at the time of loading, and that the warranty does not continueonce the goods are on board. However, bad stowage, according to Lord Summer in Elder Dempsterv. Patterson ,106 could affect the seaworthiness of the ship if safety of the ship is affected. In Kopitoffv. Wilson ,107 bad stowage affected the safety of the ship so that it became unable to withstandordinary perils of the sea, it was held that the ship was rendered unseaworthy by the bad stowage. InRoman Karmer ,108 the possibility that the loading of some specific kind of goods would affect thesafety of the ship was also conceived.

In a Hague Rules' case before the High Court, The Frisco ,109 the common law rule concerning therelationship between bad stowage and unseaworthiness was applied. In this case, it was held that thefailure to lash the cargo was a failure to exercise due diligence in making the ship seaworthy underarticle III, rule 1. This case indicates that there should be no difference between the common law andCOGSA 1971 as to when bad stowage can be regarded as causing unseaworthiness.110 In TheVisungis ,111 a voyage charter case on Gencon terms, the concept of stowage was held to be used ina sense of the placing of the cargo rather than of securing the cargo on board with the result ofdividing the vicarious liabilities between that of the voyage charterer and that of the shipowner fornegligent stowage and negligent lashing of goods respectively.112 As the lashing of goods could notbe performed personally by the alter ego of the shipowner, the negligent lashing, even affecting thesafety of the vessel, could not be made a responsible cause for the ship's unseaworthiness under theGencon (94) unless it is a breach of obligation under the ISM code which could be attributed to thepersonal fault of the alter ego. However, if similar facts occur in the context of a voyage charterincorporating the Hague Visby Rules where the obligation of seaworthiness is non-delegable, suchnegligent lashing of goods by the shipowner who happens *J.B.L. 22 not to be a carrier could still beimputed to the carrier as breach of the seaworthiness obligation.

That said, it should be noted that under the COGSA 1971, if damage to one consignment of goods iscaused by the bad stowage of another consignment, but it does not affect the safety of the ship, thecarrier should still be liable for the damage on the grounds of the breach of article III, rule 2.

2.3.4 Distinguishing want of due diligence as to seaworthiness from latent defect in article IV, rule 2(p)Under the COGSA 1971, article IV, rule 2(p) states that the carrier is not liable for loss or damagecaused by “latent defects not discoverable by due diligence”.113 The type of subject-matter in whichlatent defects could be found are not expressly provided for by article IV, rule 2(p). However, inDreyfus v. Tempus , the phrase “latent defect” was held not to cover inherent vice in the goods.114 Butlatent defects may be construed as defects in the shore crane belonging to the shipowner115 ; it goeswithout saying that the latent defects should be able to refer to the defects in the ship.

The wording of article IV, rule 2(p) in fact echoes the judicial definition of latent defects in commonlaw. This definition, originating from an early edition of Carver, was formally approved by LordSterndale M.R. in the case of The Dimitrios N. Rallies. 116 The definition reads:

“A defect which could not be discovered by a person of competent skill and using ordinary care.”

The phrase “ordinary care” used here does not differ significantly from the phrase “due diligence”117

used in article IV, rule 2(p). In fact, the application of this definition to the interpretation of the HagueRules can be found in several cases.118

It is clear from the definition that, for the purpose of finding latent defects, only ordinary examinationof a ship is required. Porter J. provided an instructive elaboration in Charles Brown & Co. v. NitrateProducers' Steamship Co. 119 :

*J.B.L. 23 “I agree first of all the ‘latent defect’ does not mean latent to the eye, It means latent to thesense, that is, it may be hammer-tested, or there may be any other test. The only question is whetherby “latent” it means that you have to use every possible method to discover whether it exists, orwhether you must use reasonable methods. I cannot myself believe that in every case it is obligatoryupon a ship's officer on the commencement of a voyage to go and tap every rivet to find that if it has adefect or not. If that were so, the ship would be held up in port for a very long time while the rivetswere being tapped and eyes used to determine whether a defect existed or not. I think it means suchan examination as a reasonably careful man skilled in that matter would make.”120

In other words, if a defect is latent, and even if the actual examination of the ship is carried out afterthe damage is caused by this defect, the latent defect exception is still available to the carrier.

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However, article IV, rule 1 requires the carrier to prove that he has actually exercised due diligence inmaking the ship seaworthy before or at the beginning of the voyage. Obviously what must be provedin article IV, rule 1 is more than what is required in article IV, rule 2(p). Logically, the mere dischargeof the burden of proof in article IV, rule 2(p) does not necessarily excuse the carrier from the burdenof proof required in article IV, rule 1. The converse is the same, i.e. the mere discharge of the burdenof proof required by article IV, rule 1 does not excuse the carrier from the burden of proof of the latentnature of the defect as required under article IV, rule 2(p), unless the latent defect obviously existsbefore the voyage starts121 and does not only come into existence during the voyage.122

*J.B.L. 24 In a Court of Appeal case The Antigoni ,123 though it was acknowledged that the defencesin article IV, rule 1 and in article IV, rule 2(p) are alternatives, and “the shipowners could succeed ifthey established either one of them, and did not need to establish both”,124 yet it was also submittedthat the carrier “will find it much easier to establish due diligence if he can point to the likelihood of alatent defect”.125 But in The Fjord Wind , it was indicated by Moore-Bick J. that the inability ofidentifying the latent defect is one reason why the shipowner could not discharge the burden of proofof his exercise of due diligence in making the ship seaworthy in this case of voyage charterincorporating the Hague Rules.126

2.4. When the Hamburg Rules Incorporated

One can seldom see the occasion that the Hamburg Rules are incorporated into charters asoverriding terms. Yet it is an international convention already in force, and there must be such anoccasion in the future, if not already now.

Under the Hamburg Rules, although “seaworthiness” does not appear in the text, the words “take allmeasures that could reasonably be required” seem not to differ much in effect from “the exercise ofdue diligence” in the COGSA 1971. Just as the seaworthiness obligation under article III, rule 1 of theCOGSA 1971 can be held as personal to the carrier, under the Hamburg Rules, the carrier will alsobear the responsibility if he cannot prove that his servants or agents apart from himself have taken allreasonable measures required. However, the seaworthiness obligation under the Hamburg Rules isnot confined to “before or at the beginning of the voyage” as that required under article III, rule 1 ofthe COGSA 1971. It can be argued that the seaworthiness obligation under the COGSA 1971 isextended to after the commencement of the voyage under the Hamburg Rules.

3. Effect of the Breach of Seaworthiness Obligation

3.1. Unseaworthiness as a breach of contract bars exception clauses

Given that the breach of the seaworthiness obligation under charters, with or without the incorporationof the COGSA 1971, could be regarded as breach of an innominate term, the following situations canbe anticipated. The contractual exclusion clauses including indemnity clauses,127 in the case ofCOGSA 1971 being *J.B.L. 25 article IV, rule 2 and rule 6,128 can only be barred from being availableto the carrier from the time when the repudiation of the contract given rise to by the breach of theseaworthiness obligation is accepted by the innocent party. However, even if the exclusion clausesare barred as in the above situation, the carrier could still rely on the excepted perils at common law129 to cover loss or damage occurring after the time when the repudiation is accepted. In the samesituation, the carrier should be able to rely on the exclusion clauses to cover the loss or damageoccurring between the time when the repudiation of the contract is accepted by the innocent party andthe time when the unseaworthiness occurs.

If the breach of the seaworthiness obligation is not serious enough to lead to the repudiation of thecontract or the repudiation given rise to by the breach of the seaworthiness obligation is not acceptedby the cargo claimant,130 the exclusions embodied in article IV, rule 2 will be available to the carrier tocover loss of or damage to the goods occurring any time during the voyage covered by the contract.One phenomenon needs be noted here: although the concept of fundamental breach has long beenabolished, English courts sometimes view some overriding obligations, such as seaworthiness, in away as if breach of it could still automatically bar the exception clauses.131 Such a view, however, ifexisting as a school, should not be regarded as the prevailing one. As there is a trend that carriage ofgoods by sea law more often than ever before relies on the general principles of contract law to solveits own problems (e.g. the application of the principles of classifying contractual terms), I can see no

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convincing reasons that a *J.B.L. 26 special kind of breach of contract, like breach of warranty inmarine insurance,132 need to be established in the carriage of goods by sea law to cater for suchoverriding obligations.133

Under the COGSA 1971, the package limitation of liability clause under article IV, rule 5, like thelimitation clause in the general law of contract, can survive any breaches of contract which go to theroot of the contract. This is the application of Lord Diplock's theory134 that the secondary obligation topay monetary compensation can survive the failure of the primary obligation--e.g. breach of contract.This application should not, in my view, be made invalid by the rule that the limitation of liability clausein article IV, rule 5 is regarded as substantive by Caltex v. B.P. 135 The same should be true of thetime limitation clause under article III, rule 6 of the COGSA 1971, even though this kind of clause isalso regarded as substantive in The Aries. 136 In fact, Lord Wilberforce in The New York Star casesaid that the limitation of time clause should survive the termination of the contract.137

There should be no question about the view that the tonnage limitation under Schedule 7 to MSA1995 will survive the termination of the contract caused by the breach of seaworthiness since this kindof clause is clearly procedural according to Clarke J. in Catex v. B.P. 138

To sum up, the breach of seaworthiness obligation cannot bar the right to rely on the above threekinds of exception clauses.

3.2. Unseaworthiness igniting off-hire clause or cancellation clause, etc.

Unseaworthiness may also affect the time of delivery of the vessel, and is therefore as capable ofcausing the cancellation of the charter as provided under clause 9 of Gencon(94), clause 22 ofBaltime(39) and clause 16 of NYPE.139 Likewise, unseaworthiness may also ignite the off-hiring if itfalls within one of the named accidents in the off-hire clause as provided by clause 11 of Baltime (39)*J.B.L. 27 or clause 3 of NYPE(93).140 In The Hermota , where the view that unseaworthiness canlead to off-hire was entertained but rejected upon the particular facts.141

If unseaworthiness is free from fault of either the shipowner or the charterer, it could even constitutefrustration of the charter.142

3.3. Unseaworthiness as an overriding responsible peril at the risk of thecarrier/shipowner

Even if the exclusion clauses could be available to the carrier in the wake of the breach of theseaworthiness obligation being accepted by the innocent party as shown above, whether suchexclusion clauses could actually protect the carrier will depend mainly on the operation of the rule ofcausation. There are not many differences between the charter incorporating the COGSA and thatwithout such incorporation.

Under the COGSA 1971, article IV, rule 1 requires a causal connection between the breach of theseaworthiness obligation and loss of or damage to the goods before such a breach can be regardedas the responsible cause. This causal connection requirement was acknowledged by Lord Sowervellin the Privy Council in the Maxine Footwear case while interpreting the Hague Rules143 :

“Art. III, r.1 is an overriding obligation. If it is not fulfilled and the non-fulfilment causes the damage theimmunities of IV, cannot be relied on” (Emphasis added).

The causal words used under the COGSA 1971 to describe the required causal connection betweenthe breach of the seaworthiness obligation and the loss of or damage to the goods, and to describethat between unseaworthiness and “due diligence” are “resulting from” and “caused by” respectively.Should we interpret those words as “proximately caused by” as they are usually interpreted so as tobe consistent with the interpretation of the words in article IV, rule 2, or should they be interpreted asincluding the meaning of both “proximate cause” and “remote cause”?144 Surely, if a breach ofseaworthiness obligation under the COGSA is the proximate case, whilst an excluded peril in articleIV, rule 2 is a remote cause, the *J.B.L. 28 responsible cause is the breach of the seaworthinessobligation. This was so held in the High Court hearing of The Tolmidis. 145 The question to beconsidered is whether the breach of the seaworthiness obligation under the COGSA can be regardedas the responsible cause, even if such breach is a remote cause or “a” proximate cause, whilst anexcluded peril under article IV, rule 2 is “the” proximate cause or “a” concurrent proximate cause.Such a question was raised in The Tolmidis 146 case but was not settled. However, in The Torenia ,147

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it was held that where a non-excepted peril (in this case a structural defect not covered by latentdefect in article IV, rule 2(p)) together with an excluded peril under article IV, rule 2 are concurrentcauses of the loss claimed, the non-excepted peril is sufficient to be regarded as the responsiblecause of the loss, resulting in the baring of the carrier's right under the exclusions in article IV, rule 2.The approach of requiring a less effective causal connection between the non-excepted peril, underthe COGSA 1971, and the loss claimed before the non-excepted peril can be regarded as theresponsible cause indicates the possibility of requiring the same causal connection between thebreach of seaworthiness obligation, which is also a non-excepted peril, under the COGSA 1971 andthe loss claimed before the breach of seaworthiness obligation can be regarded as the responsiblecause. This view was confirmed in a 1993 case, The Fiona ,148 before the High Court where DiamondJ. applied this causation rule in making the breach of article III, rule 1 the responsible cause, while theshipper's fault also alleged as a cause of the loss claimed and covered by article IV, rule 6 wasdisregarded. His Justice also acknowledged that a similar rule has long existed at common law, infact stemming from the following dictum of Lord Wright in Smith Hogg v. Black Sea 149 :

“The sole question, apart from express exception, must then be: ‘Was that breach of contract “a”cause of the damage.’ It may be preferred to describe it as an effective or real or actual cause thoughthe adjectives in my opinion in fact add nothing. If the question is answered in the affirmative theshipowner is liable though there were other co-operating causes, whether they are such causes asperils of the seas, fire and similar matters, or causes due to human action, such as the acts oromissions of the master, whether negligent or not or a combination of both kinds of cause.”

It is not very clear whether this should be interpreted as suggesting that if the unseaworthiness is aremote cause of the damage of goods it may also be regarded as the responsible cause. A carefuldigest of Lord Wright's judgment may reveal that this question should be answered in the positive.Lord Wright chose to use “a cause” or “an effective or real actual cause” instead of “a dominant” or “aproximate” cause, but the emphasis is placed on the overriding effect of the *J.B.L. 29unseaworthiness in his following remark, “I doubt whether there could be any event which couldsupersede or override the effectiveness of the unseaworthiness if it was ‘a’ cause”.150 In his Lordship'smind if unseaworthiness is a less effective cause, i.e. a remote rather than a proximate cause, it is stillsufficient for the unseaworthiness to be regarded as the responsible cause. If this interpretation iscorrect, “a cause” in Lord Wright's dictum should mean “cause caissons” rather than a concurrentproximate cause. However, “a” cause should not be interpreted in extreme as having the meaning of “causa sine qua non ”.151

In The Fjord Wind ,152 it seems that the remote causation rule (or even a “but for” causation rule153 )applied under common law to the incident of unseaworthiness is applied by Moore-Bick J.154 to thebreach of seaworthiness obligation under a charter party clause of Hague rules type. So it seemsplausible to construe “resulting from” and “cause” in article IV, rule 1 as including both the meaning of“proximately caused by” and “remotely caused by”.155

Assuming that this is right, the following situations when the breach of the seaworthiness cancompete with and override the excluded perils in article IV, rule 2 (or at common law when thecontract is terminated) for being the responsible *J.B.L. 30 cause of loss claimed through theoperation of the rule of causation can be anticipated:

1. Under the COGSA 1971, if the breach of seaworthiness is the remote cause (not to mention itbeing “a” or “the” proximate cause) of the loss claimed, the carrier is barred from relying on theexclusion clauses with respect to the loss so caused.

2. Where the contract is terminated by the breach of seaworthiness obligation, if the unseaworthinessis the remote cause (not to mention it being “a” or “the” proximate cause) of the loss claimed, thecarrier is barred from relying on the excluded perils available to a common carrier at common law withrespect to the loss so caused.

After the inception of the ISM code on July 1, 1998 with respect to certain types of vessels, claims ofloss caused by unseaworthiness may increase considering that the European Council Directive onPort State Control,156 incorporated into the U.K.'s Merchant Shipping (Port state control). Regulation1995,157 at least for those ships trading to Europe, made it compulsory for the European port states todetain deficient vessels calling at their ports, in compliance with International Conventions such asISM Code (including, perhaps, Y2K compliance). Detention is bound to cause delay--one importantreason for the damage of perishable goods, which should probably be the responsibility ofshipowners.158

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Although a breach of the seaworthiness obligation under the COGSA 1971 can bar the exclusions inarticle IV, rule 2 through the operation of causation, whether it can actually do so depends on whetheror not the required causal connection can be proved. The rule of the burden of proof is crucial as towhether or not a breach can actually be regarded as the responsible cause in competition with the*J.B.L. 31 excepted perils in article IV, rule 2. Before the breach of seaworthiness can bar theexception clauses, two causal connections need to be proved; one is the causal connection betweenthe unseaworthy state of the ship and the loss of or damage to the goods claimed, and the other isthe causal connection between the want of due diligence and the unseaworthy state of the ship. Inpractice, after the cargo owner has raised a prima facie case against the shipowner by showing thatthe goods, which were shipped in good condition, are damaged on arrival, the shipowner canimmediately resort to the excepted peril in article IV, rule 2. It is for the cargo owner to establish onthe balance of probability that damage was caused by the unseaworthy state of the ship. If the cargoowner has successfully discharged the above burden of proof, the carrier has to show that he hasexercised due diligence in making the ship seaworthy, or that the want of due diligence on his behalfdid not cause the particular unseaworthy state of the ship which is allegedly the cause of the loss ofor damage to the goods.159 The particular provisions under the COGSA 1971 which impose on thecarrier the burden of proof of the want of due diligence is article IV, rule 1.160 As the seaworthinessobligation is personal to the carrier under the COGSA 1971, the words “want of due diligence on thepart of carrier” in article IV, rule 1 should be understood as including the want of due diligence of theservants or agents of the carrier. The words “the exercise of due diligence” should refer not only tothe exercise undertaken by the carrier himself, but also to the exercise of due diligence undertaken byhis servants or agents. That is to say, in order to rely on article IV, rule 2, the carrier should not onlyprove that he has exercised due diligence in making the ship seaworthy but also should prove that hisservants and agents have also exercised such due diligence. The same burden seems to lie on theother peoples, such as the servants and agents, if they intend to claim the protection of exclusions inarticle IV, rule 2.

The burden of proof in this respect under charters without incorporation of COGSA is lesscomplicated. It is simply the application of the common law rule of burden of proof: he who alleges itmust prove it.

Unseaworthiness can also bar the carrier's right to rely on the package limitation of liability clausesunder the COGSA 1971 as a peril at the risk of the carrier if they can be compared to wilfulmisconduct, which is the only expressed peril that can bar the carrier's right under the limitation ofliability clause.161

*J.B.L. 32 In Horabin v. British Airways Company ,162 Barry J. said that negligence can bemisconduct, but cannot be wilful. Tudor Evans J. also agreed in a carriage by road case, TexasInstruments v. Nason (Europe) in 1991163 that “wilful misconduct is far beyond any negligence, evengross or culpable negligence ”. Applying these authorities to the interpretation of the COGSA 1971,we can see that negligence in the care of goods cannot bar the limitation of liability clause.

The want of due diligence, the equivalent of negligence, in making the ship seaworthy would notconstitute wilful misconduct under article IV, rule 5(e), just as negligence would not do so. But it is amoot point whether or not the Y2K non-compliance, a well-anticipated unseaworthiness risk, wouldreveal more serious wrong than mere negligence on the part of the carrier so as to deprive his right toenjoy the limitation of liability. As Y2K non-compliance may or may not cause any loss or damage, itis arguable that it at most amounts to mere negligence or privity rather than wilful misconduct.

The same is true with respect to the tonnage limitation clause under the Limitation of LiabilityConvention 1976,164 now incorporated into Schedule 7 to the MSA 1995. With respect to the timelimitation clause under COGSA 1971, article III, rule 6, even wilful misconduct,165 not to mentionunseaworthiness short of being wilful misconduct, cannot pose a bar mainly because of the existenceof words “in any event” and “whatsoever”.

Under the charters without the incorporation of COGSA of any version, the circumstances underwhich unseaworthiness can bar package limitation clauses or time limitation clauses all depend uponthe contractual terms adopted.

3.4. Impact on marine Insurance

The full examination of seaworthiness in the context of marine insurance is beyond the scope of this

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paper. The present discussion will be limited to insurance directly relevant to seaworthiness incharters with or without incorporation of COGSA.

3.4.1 Impact on mutual insurance for shipowners Mutual insurance with the P. & 1 club is basically atime insurance, so s.39(5) of MIA 1906 will govern the aspects of seaworthiness unless the club rulesprovide the otherwise. As s.39(5) reads:

“In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of theadventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state,the insurer is not liable for any loss attributable to unseaworthiness.”

*J.B.L. 33 In The Eurysthenes ,166 where s.39(5) was under consideration, the word “privity” wasinterpreted as meaning “knowingly turning a blind eye” to the true fact, as “privy” means that theperson concerned, apart from the positive knowledge, “knows of the act beforehand and consent to itbeing done”.167 In the same case, “privy” was interpreted as not amounting to wilful misconduct,though it was said that “privy” may sometimes but not always overlap with wilful misconduct. It wasalso said that “privy” alone should not mean that the person concerned personally did the act, but onlythat somebody else did it and that he knowingly concurred with it.168 Finally, “privy” was said to be “farmore blameworthy than mere negligence”, because “negligence in not knowing the truth is notequivalent to knowledge of it”.169 In the trial court hearing The Star Sea ,170 Tuckey J. said that “Privityin s.39(5) does not carry any connotation of fault” which is slightly different from the explanation inThe Eurysthenes , though his justice did admit in the same sentence that privity was “not the same aswilful misconduct or negligence”. Although the Court of Appeal hearing The Star Sea had notspecifically discussed whether or not privity is more serious than negligence, yet Lord Denning'sopinion about the meaning of privity was cited with approval.171 Actually in the Court of Appeal, the“blind knowledge” test was elaborated as having the actual suspicion of the fact giving rise tounseaworthiness, but checking deliberately not made.172 The Court of Appeal found that the hullassured did not suspect the incompetence of the master, so no privity of the hull assured had beenfound. As a result, the trial court's decision that the hull assured had committed privity was overruled.From this, it can be seen that the view “privity” be “far more blameworthy than mere negligence”should still stand good. As Y2K issue has attracted enormous media attention, it is arguable that theY2K non-compliance may amount to “privity” on the part of the shipowner.

As “privity” is more blameworthy than negligence--which is equivalent to want of due diligence--theseaworthiness requirement under s.39(5) is less strict than the obligation to exercise due diligence inmaking the ship seaworthy under the COGSA 1971 or Gencon(94). In other words, negligence canconstitute the breach of the seaworthiness obligation under the COGSA 1971 or Gencon(94), but itdoes not entitle the underwriter to avoid the liability for loss or damage caused by theunseaworthiness under s.39(5). Therefore, in the case of breach of due diligence on the part of theshipowner under the COGSA 1971 or Gencon(94), the shipowner would not fall between the stools ofliability *J.B.L. 34 insurance with the P & I club and the protection of exemption clauses in bills oflading or charters.

3.4.2 Impact on hull insurance Unseaworthiness is usually not an insured peril in hull insurance.However, it could be insured against just as that partly done under the Inchmaree clause which isnow incorporated substantially in the subclause 6.22 in the Institute Time Clauses Hulls (1/11/95) andthe sub-clause 4.2 of the Institute Voyage Clauses Hulls (1/10/83).173 It should be noted here that theInstitute Time Clauses Hull (95) has widened the scope of people whose want of due diligencecausing the accidents covered by the Inchmaree clause will provide the ground upon which the claimof indemnity under the Inchmaree clause will be rejected by the underwriter. The inclusion ofsuperintendent and other middle managing people in clause 6 reflect the current tendency, as shownin the ISM code, to place stricter obligation on the shipowner. As the seaworthiness obligation underthe COGSA is non-delegable, this new amendment to the Institute Time Clauses Hull makes thefollowing scenario more likely: shipowners will be deprived of the protection of exception clausesbecause of the breach of seaworthiness obligation under the COGSA; and at the same time, hewould lose coverage under the Inchmaree-type clause of the hull insurance.

Another new amendment to the Institute Time Clauses Hull is that a new clause about classificationsociety has been added as clause 4. Clause 4.3 requires the reporting of incidents and ship damageto the classification society. Failure to report would not mean that the underwriter could discharge hisliability, as it had not been expressed in clause 4.2. A failure without knowledge of the assured wouldnot constitute “privity” for the purpose of s.39(5). However, such a failure would always constitutewant of due diligence on the part of carrier under the COGSA, which has adopted a non-delegable

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stance. So should such a failure constitute breach of duty provided in s.1.4.4 of the ISM code.

3.4.3 Impact on cargo insurance The explanation of “privity” in The Eurysthenes in the context of hullinsurance could well be applied to the interpretation of the adjective “privy” in clause 5.2 of InstituteCargo Clauses A or B or C ( and to that in clause 5.1 as well). Although clause 5.2 is designed towaive the breach of warranty of seaworthiness, as a matter of fact the implied warranty ofseaworthiness under the MIA 1906 has only been reduced to the warranty of “making the shipseaworthy without the involvement of the privity of the assured and his servants”. Therefore, thewarranty of making the ship seaworthy without privity under clause 5.2 is also less strict than theexercise of due diligence under the COGSA 1971. On the other hand, the privity in clause 5.2 isconfined to the assured and his servants, while the want of due diligence under the COGSA 1971 isconfined to that of the carrier and his servants, and sometimes to that of an independent contractor,such as a ship repairer. In this respect, it seems difficult *J.B.L. 35 that the fault in causingunseaworthiness on the carrier, who is usually an independent contractor rather than the servant ofthe cargo assured, can be imputed to the cargo assured. This difficulty is not beyond comprehension,for the cargo assured often has no control of the vessels' condition.

From the viewpoint of cargo interests, the breach of seaworthiness obligation on the part of thecarrier/shipowner under Gencon or COGSA may not be enough to deprive the cargo interests' rightsunder cargo insurance for the purpose of clause 5 of A or B or C clauses, even if the want of duediligence of the carrier could be imputed to the cargo assureds and their servants. In theory, thismeans that in the wake of such kind of unseaworthiness, the cargo interests will have the luxury ofchoosing between indemnity from the shipowner/carrier and indemnity from the cargo insurer.174

a1. Currently working as an Assistant Professor in the Department of Shipping and TransportLogistics, the Hong Kong Polytechnic University, Hong Kong. This is based on a paper delivered atthe Seminar on Charter Parties Disputes, held by LLP and Inside Asia Consultancy on July 5, 1996 inHong Kong.

J.B.L. 2000, Jan, 1-35

1. See s.1(6)(a) of the COGSA 1971 about the incorporation of Hague-Visby Rules into a contract as a matter of contract.The Apostolis [1997] 2 Lloyd's Rep. 241 (CA). See also the counter claim in The Apostolis (No. 2) [1999] 2 Lloyd's Rep.292 [Q.B. (Com. Ct)].

2. See a recent case: The Safe Carrier [1994] 1 Lloyd's Rep. 589 (H.L.). See also a recent English regulation imposingcriminal liability on the designated person under the ISM code: Merchant Shipping (International Safety Management(ISM) Code Regulations, 1998.[1998] 2 Lloyd's Rep. 652 [Q.B. (Com. Ct)] at 656.

3. This Code was adopted by the assembly of IMO and incorporated into the International Convention for the Safety ofLife at Sea (SOLAS), 1974 as being attached to Chapter IX which came into force on July 1, 1998. It has also beenbrought into force on the Chinese mainland (see “Ten Revisions of SOLAS Effective”, Chinese Shipping Gazette , July20, 1998) and in Hong Kong (see Merchant Shipping (Safety) (Safety Management) Regulation, 1998).Even with thesystem in place, it is not guaranteed that human errors will not occur. See, per Moore-Bick J. at 657-658, The LydiaFlag [1998] 2 Lloyd's Rep. 652 [Q.B. (Com. Ct)] where his justice remarks in a slightly different context with respect tothe difference between want of due diligence on the part of the owner and negligence or incompetence of the crew inreporting accidents: “It happens on occasions that even the best systems fail to ensure that wholly competent membersare appointed to a vessel's crew ”

4. Y2K problem, also known as the Millennium bug (in fact, an electronic date recognition problem but not a computervirus), can, but not necessarily, render a ship unseaworthy, even though it is a once for all problem rather than arecurrent one. It may occur around, but not necessarily, on January 1, 2000. Examples of non-Y2K compliance couldbe: dead machine, ships out of control, or wrong data provided. As for an in-depth study of this problem, see D. G.Houser & C. M. Boldman, “Y2K-a property Loss?” [1999] I.J.I.L. p. 1. Lloyd's List , March 16, 1998.

5. The seaworthiness cases in English courts are numerous. For the issue of proper manning of a ship, see: Rio Tinto v.Seed Shipping Company , T.L.R. Vol. 42, 381, where the master's illness was held not to mean that he wasincompetent. Anglo-Saxon Petroleum v. Adamentos [1957] 2 Q.B. 233 (QBD): that one of the engine staff isincompetent made the ship unseaworthy. In a Hong Kong case Taitexma Enterprise Corp. v. Tillemont Shipping Corp.S.A. [1995] H.K.C. 119 (CA), it was held that negligence by the carrier in appointing an incompetent crew has to beproved before the carrier could be accused of committing a breach of the seaworthiness obligation. The lack ofdocument making the ship unseaworthy or not is a question of fact: see Ciampa v. British India Steam NavigationCompany [1915] 2 K.B. 774 (KBD) about how a foul bill of health rendered the ship uncargoworthy. By contrast, in thefollowing two cases a lack of documents did not make the ship unseaworthy: The Derby [1985] 2 Lloyd's Rep. 325 (CA);Chellew Navigation Company v. A. R. Appelquit [1933] 38 Com.Cas. 218. For the other examples, see The Aquacharm[1982] 1 W.L.R. 119 (CA), where the draught of the vessel preventing the ship entering the Panama Canal did not makethe ship unseaworthy. In Queensland National Bank v. Peninsula and Oriental Steam Navigation Company [1898] 1

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Q.B. 567, the billion-room of the ship being incapable of resisting thieves was held to render the ship unseaworthy; TheSchwann [1909] A.C. 450 (P.C.) where a defect in the three-way cock led to unseaworthiness; Standard Oil Companyv. Clan Line Steamers [1924] A.C. 100 (P.C.), where the shipowner improperly instructed the crew about the ballast ofthe tank made the ship unseaworthy. The Sabro Valour [1995] 1 Lloyd's Rep. 509 [Q.B. (Adm. Ct.)], where it was foundthat either the wiring or insulation had been damaged mechanically at the beginning of the voyage, or flammablematerials were improperly stored close to the exhaust of the ship's engine, either of which constitutesunseaworthiness.[1999] 1 Lloyd's Rep. 848 at 851 [Q.B. (Com. Ct)].

6. This seems to be a view contended by one party but not approved in The Hermosa [1990] 1 Lloyd's Rep. 638, perMustill J. at 647.[1905] 1 K.B. 697 (KBD).

7. [1982] 1 W.L.R. 119 (CA).[1924] All E.R. 135 (HL).

8. [1927] 1 K.B. 743 (CA).[1876] 1 Q.B.D. 377.

9. ibid. at 754. See also Rathbone Brothers v. Mackver [1903] 2 K.B. 378 (CA), here unseaworthiness was held to includeunfitness of the hull to receive cargo. See a recent case, The Athenian Harmony [1998] 2 Lloyd's Rep. 410 [Q.B. (Com.Ct)]. 414, per Colman J. where the hull was held not fit to receive cargo, though it is regarded as a problem ofnegligence in care of goods rather than as an uncargoworthy problem. However, the difference betweenuncargoworthiness and negligence in care of goods is insignificant as in either case the carrier should be responsiblefor cargo damage so carried.[1994] 1 Lloyd's Rep. 644 [Q.B. (Com. Ct)]

10. [1984] 2 Lloyd's Rep. 586, per Staughton J. p. 592 [Q.B. Com. Ct)].[1980] 1 Lloyd's Rep. 469 (QBD); see also TheWaltraud [1991] 1 Lloyd's Rep. 389 [Q.B. (Adm. Ct)].

11. [1987] 2 Lloyd's Rep. 376 [Q.B. (Com. Ct)] See also a recent case: The Liepaya [1999] 1 Lloyd's Rep. 649 [Q.B. (Com.Ct)] where the contamination of goods by unclean holds was linked to the issue of unseaworthiness of the vessel.Seealso The Athenian Harmony [1998] 2 Lloyd's Rep. 410 [Q.B. (Com. Ct)] where damages caused by uncargoworthinessseem to be regarded as damage caused by negligence in care of goods.

12. ibid. at 390.[1999] 1 Lloyd's Rep. 218 [Q.B. (Adm. Ct)].

13. [1991] 1 Lloyd's Rep. 456 [Q.B. (Com. Ct)]; see also The Komninos S [1990] 1 Lloyd's Rep. 541 [Q.B. (Com. Ct)]. ibid.see, per Sir Robert Gatehouse, at 223. As for the definition of the usual meaning of stowage which includes lashing ofgoods, see, per Sir Robert Gatehouse in the same case at 223. See also The IMVROS [1999] 1 Lloyd's Rep. 848[Q.B.D. (Com. Ct)], where in a charter for one time trip, to which the Hague or Hague-Visby Rules were inapplicable, itwas held that the charterer had been responsible for proper lashing and stowing of goods, whether or not the failure todo so will render the ship unseaworthy. This case illustrates that the seaworthiness obligation is delegable at commonlaw.

14. ibid. at 472, per Hirst J.A Y2K problem seems to be discoverable upon exercise of due diligence, as it is related only tothe issue of checking whether or not a six digits memory system of dates has been converted into an eight digits one,unless the program related to the system cannot be decoded through the exercise of due diligence.

15. See also art. IV, r. 1 where “seaworthy” is also used side by side with words which are intended to describe theconcrete seaworthiness situation.[1930] 1 K.B. 699, at 705 (KBD) where Wright J. held that the phrase “latent defect”could not be interpreted to cover spontaneous combustion in the coal carried.

16. See, per Lord Simon in Bradley v. Federal Steam Navigation Co. (1926) 137 L.T. 266, 268. See also, per Moore-Bick J.at 315, The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B. (Com. Ct)]See Scrutton on Charterparties and Bills of Lading ,20th ed., Stewart C. Boyd, Andrew S. Burrows and David Foxton, eds, London: Sweet & Maxwell, 1996, p. 445.

17. See, per Bankes L.J. in Bradley v. Federal Steam Navigation Co. (1926) 24 Ll.L.Rep. 446, at 454 (CA), affirmed at theHouse of Lords (1927) 27 Ll.L.Rep. 221.(1922) 13 L.L.R. 363, at 365 (CA)

18. See, per Hamilton J. in the Virginia v. Norfolk [1912] 17 Com.Cas. 277, at 278-279; see also Bradley v. Federal SteamNavigation Co. (1926) 24 Ll.L.Rep. at 454. per Lord Devlin in Union of India v. Reederij Amsterdam [1963] 2 Lloyd'sRep. 223 at p. 235. See also Wilsons & Clyde Coal Co. v. English [1938] A.C. 57, at 80-81, per Lord Wright [HL(Sc.)]

19. [1905] K.B.D. 706. See also Bradley v. Federal Steam Navigation Co. (ibid.), per Scrutton L.J., at 454, referred to inThe Liepaya [1999] 1 Lloyd's Rep. 649, per Rix J. at 648-649. e.g. The Tilia Gorthon [1985] 1 Lloyd's Rep. 552, at 556,per Sheen J. See also, per Wright J. in Angliss v. Peninsular & Oriental Steam Navigation Co. [1927] 2 K.B. 456 at 462.

20. [1995] 1 Lloyd's Rep. 518 at 516.(1937) 58 Ll.L.Rep. 188 at 191. In contrast, see an American case Parente v. Bayville[1975] 1 Lloyd's Rep. 733 (U.S. Ct) which seems to hold the view that latent defects are defects which cannot bediscovered by any means, whether ordinary or extraordinary. Reference can also be made to a marine insurance casefor clarification of the differences between consequential damages and manifestation of latent defect: see The Nukila[1997] 2 Lloyd's Rep. 146 (CA).

21. [1962] 2 Q.B. 26 (CA), see Diplock L.J. at 71-72; see, per Sellers L.J. at 56, 57, 60; see, per Upjohn L.J. at 62.Apartfrom the word “latent”, even “defect” is said not to cover the meaning of damage, see, per Hobhouse L.J. at 156, TheNukila [1997] 2 Lloyd's Rep. 146 (CA).

22. [1981] 1 W.L.R. 711 (HL), see, per Lord Lowry at 718-719; see also, per Lord Scarman at 717. The concept of aninnominate term established in The Hong Kong Fir was considered but not applied in a Hong Kong sale of goods case

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in respect of breach of condition of description: Samsung Hong Kong Ltd v. Keen Time Trading Ltd [1998] 2 Hong KongLaw Reports & Digest, 341. See also s.15A of Sale of Goods Act 1979 (as amended).See, per Lloyd J. in The HellenicDolphin [1978] 2 Lloyd's Rep. 336, at 343 [Q.B. (Adm. Ct)].

23. [1912] A.C. 604, 617 (HL).See The Christel Vinnen [1924] P. 208 at 212-213, per Scrutton L.J. where the possibility of alatent defect coming into existence during the voyage was acknowledged. The fact that a latent defect which could notonly exist before the voyage started but could also come into existence during the voyage is an important reason for thecourts in some cases to prohibit the latent defect exclusion clause from qualifying the warranty of seaworthiness atcommon law, see, per Wright J. at 705 Dreyfus v. Tempus [1930] 1 K.B. 699 where he said that “ in any case the term‘latent defect’, without express words applying it to the commencement of the voyage, does not exclude the warranty ofseaworthiness.” See also The Christel Vinnen (idem) where the exception of “latent defect” in the hull was held not toqualify the implied warranty of seaworthiness. By contrast see The Cargo ex Larestes , 12 P.D. 187, where anexclusion clause excluding liability for the latent defect existing at the commencement of the voyage was held to qualifythe duty to exercise due diligence to make the ship seaworthy set out in the contract. From the above case, it seems tome that even if the exclusion clause expressly excluding the liability for a latent defect existing at the time of theshipment would not be able to qualify the absolute warranty of seaworthiness. But see also, per Moore Bick J. at655-656, The Lydia Flag [1998] 2 Lloyd's Rep. [Q.B. (Com. Ct)] who seemed to suggest that an Inchmaree clausecovering latent defect should be able to be construed to cover latent defect or unseaworthiness existing at thebeginning of the hull policy provided that it is not caused by want of due diligence on the part of the assured. As Y2Kproblems can normally be foreseeable, it is difficult to see that the non-Y2K compliance could be regarded as a latentdefect.

24. supra , at n. 21, see, per Sellers L.J. at 59.[1991] 1 Lloyd's Rep. 209 (CA).

25. ibid. at 71-72. ibid. at 212, per Staughton L.J.

26. ibid. at 71-72. ibid. at 213, per Staughton L.J.

27. However, the state of unseaworthiness of the ship alone might terminate the contract through the doctrine offrustration.[1999] 1 Lloyd's Rep. 307, at 319.

28. [1984] 2 Lloyd's Rep. 586 [Q.B. (Com. Ct)].By nature, indemnity clauses are also employed to exclude the liabilities ofcontractual parties; that is why many rules of construing general exclusion clauses are applied to construing indemnityclauses. e.g. see Smith v. Switchgear [1978] 1 All E.R. 18 (HL) where the special rule of construing negligence clausesis applied to the construction of an indemnity clause. But it is interesting to note that the word “indemnity” was said to beused in two senses by Staughton L.J. at 357, The Eurus [1998] 1 Lloyd's Rep. 351: “It may mean simply damagesawarded for tort or breach of contract . Alternatively the word ‘indemnity’ may refer to all loss suffered which isattributable to a specified cause, whether or not it was in the reasonable contemplation of the parties”.

29. ibid. at 597.See The Fiona [1994] 2 Lloyd's Rep. 506 (CA), where it was held that the breach of art. III, r. 1 coulddeprive carriers' right of indemnity under art. IV, r. 6. But see The Giannis N.K. [1998] 2 W.L.R. 206 (HL), where art. IV,r. 6 was held to be a free-standing provision not affected by art. IV, r. 3. In my opinion, this House of Lords decisioncannot be used as an authority for holding that art. IV, r. 6 should also not be affected by breach of art. III, r. 1 so as tocontradict the Court of Appeal's decision in The Fiona (idem ) because breach of art. III, r. 1 is a breach of aninnominate term.

30. [1987] 2 Lloyd's Rep. 634 at 646.See, per Lord Danedin at 258, in Atlantic Shipping and Trading Co. v. Louis Dreyfus &Co. [1922] 2 A.C. 250 (HL) where it seemed to be suggested that as a consequence of the breach of the seaworthinessobligation, the shipowner may be in a position of a common carrier.

31. [1956] 1 W.L.R. 461, at 465, 466.See The Santa Clara [1996] 2 Lloyd's Rep. 225 (HL) it was held by Lord Steyn that afailure to perform might signify to a repudiating party an election to treat the contract as at an end. See, per Lord Steynat 229: “An act of acceptance of repudiation requires no particular form: a communication does not have to be couchedin the language of acceptance. It is sufficient that the communication or conduct clearly and unequivocally conveys tothe repudiating party that that aggrieved party is treating the contract as at the end”.

32. The Termagant (1914) 19 Com.Cas. 239; Pyrene v. Scindia (1954) 2 Q.B. 402, p. 428. See also two recent casesconfirming she concurrent liabilities in tort and contract: Brown v. KMR Services [1995] 2 Lloyd's Rep. 513; The Lloyd'slitigation [1994] 2 Lloyd's Rep. 468 (HL).See, per Hirst, L.J. at 519, The Fiona [1994] 2 Lloyd's Rep. 506. See also, perMustill J. at 642 in The Hermosa [1980] 1 Lloyd's Rep. 638, where fundamental breach was mentioned in the context ofseaworthiness, but not clearly applied. By contrast, see, per Tuckey J. at 484, The Apostolis [1996] 1 Lloyd's Rep. 475.

33. [1995] 2 Lloyd's Rep. 299 (HL); see also, per Clarke J. at p. 48 in The Toledo [1995] 1 Lloyd's Rep. 40 where theclassification society was suspected to have made a mistake but was not directly sued by the cargo owners. In Reemanv. DOT [1997] 2 Lloyd's Rep. 648 (CA), where The Nicholas H. (dem.) was applied, and the surveyor was not imposedwith a duty of care to a ship purchaser in issuing a seaworthiness certificate just as was not a shipbuilder. It was held tothe same effects in The Morning Watch [1990] 1 Lloyd's Rep. 541 [Q.B.D. (Com. Ct)]. See also a U.S. case, TheSundancer [1994] 1 Lloyd's Rep. 183 (U.S. Ct.) where it was held that the classification society by issuing aclassification certificate had not guaranteed to the shipowner that the ship had been soundly constructed and thus notbeing liable for any loss caused by the defects in the ship.See The Good Luck [1991] 2 W.L.R. 1279 (HL).

34. Compared with a product liability case: The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 (CA), where the wrong informationis contained in a manual accompanying the defective product: an engine to have been fitted in a fishing vessel whichonly caused financial loss which was held not recoverable; but contrasted with Donoghue v. Stevenson [1932] A.C.562.In Total Gas v. Arco British [1998] 2 Lloyd's Rep. 209 (HL), per Lord Slynn, at 215, four kinds of conditions werementioned, i.e. promissory condition, contingent condition, condition precedent and condition subsequent. But they

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have a common factor, that is, they either prevent a contract from coming into being or make a contract terminate.

35. See, per Tuckey L.J. at 3 (ibid. ), where the owner of the fishing vessel fitted with the defective engine chose to sue themanufacturer of the defective engine in tort for financial loss to avoid the exception clause in the boat buildingcontract.See, per Lord Diplock, at 566-567, Photo Production v. Securicor [1980] 1 All E.R. 556.

36. [1995] 1 All E.R. 691 (HL); see South Australia Asset Management Corp. v. York Montague Ltd , [1996] 3 All E.R. 365(HL) where the valuer's tortious liability to a third party was limited so as not to be responsible for the market fall butresponsible for foreseeable consequences of the wrong information. In the following two cases, it was emphasised bythe courts that only if reasonable reliance by the third party upon the wrong advice can be established could the adviserbe held responsible in tort to the third party: Goodwill v. British Pregnancy Advisory Service [1996] 2 All E.R. 161,Possfund Custodian Trustee Ltd and Another v. Diamond and Others, Purr and Others v. Diamond and Others [1996] 2All E.R. 774. But see Caparo Industries PLC v. Dickman [1990] 1 All E.R. 568 (HL), where it was held that the auditor ofa public company's accounts owned no duty of care to a member of the public at large who relied on the accounts tobuy shares in the company or to an individual shareholder in the company who wishes to buy more shares, though itwas admitted by the courts that the auditor's statutory duty to prepare accounts was owed to the body of shareholdersas a whole. See also Anthony v. Wright [1995] 1 B.C.L.C. 236 (ChD) where Caparo's decision was applied. See alsoTrend Publishing (H.K.) Ltd v. Vivien Chan & Co. (a firm) , s.E161, Hong Kong Law Digest, May 1996, where it washeld that the solicitor who had prepared the tenancy agreement for the landlord did not owe a duty of care to thetenant.See, per Clarke J. at 294, Catex v. BP [1996] 1 Lloyd's Rep. 286.

37. The three-parts tests were established in Caparo Industries PLC. v. Dickman [1990] 1 All E.R. 568 (HL) and appliedand considered in many subsequent cases, e.g. see also, per Phillips J. at 556, The Morning Watch [1990] 1 Lloyd'sRep. 547 [Q.B.D. (Com. Ct)] where the three-part tests were considered.[1977] 1 Lloyd's Rep. 334 (HL).

38. That was again confirmed in a Court of Appeal case The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 (CA), where no dutywas held to be on the manufacturer of a defective engine in tort for economic loss claimed to be suffered by the ownerof the fishing vessel who is the buyer of the defective engine; see also Reeman v. DOT [1997] 2 Lloyd's Rep. 648 (CA).See also Perrett v. Collins [1998] 2 Lloyd's Rep. 255, where the duty of care for economic loss was distinguished fromduty of care for personal injury. Besides, the common law duty of care was viewed as not being able to override what isintended by legislation, see, per Philips L.J. at 680, Reeman v. DOT (idem). See also W and Others v. Essex CountyCouncil and Another [1998] 3 All E.R. 111 (CA) where the county council was held not to be responsible for theconsequences of providing wrong information to the plaintiff foster parents about a fostered child. See also the followingtwo cases applying similar principles: Harris v. Evans [1998] 1 W.L.R. 1285 (CA); X (Minors) v. Bedfordshire CountyCouncil [1995] 2 A.C. 633. But, by contrast, see Welton v. North Cornwall District Council [1997] 1 W.L.R. 570, where atortious duty of care was imposed upon an environmental health officer as there were no other remedies. See, per SirRichard Scott, V.-C. at 1301, Harris v. Evans (idem) where Welton (idem) was considered but distinguished.[1980] 2Lloyd's Rep. 317, 322. (PC). See also Fai General Insurance Co. Ltd v. Ocean Marine Mutual Protection and IndemnityAssociation (No. 2) [1998] Lloyd's Rep. I.R. 24 (Aus. Ct), where it was held that jurisdiction clauses and arbitrationclauses will survive the void of contract ab initio.

39. See, per Nourse L.J. at 10, The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 (CA).See, per Clarke J. at 294, Catex v. BP[1996] 1 Lloyd's Rep. 286, where the tonnage limitation clause is regarded as procedural.

40. The Times , June 8, 1995.See Michael Wilford and Others, Time Charters , 4th edn, London: LLP, 1995, at 100.

41. [1998] 2 Lloyd's Rep. 255 (CA). ibid. at 364. This could also be found in clause 3 of the Shelltime 4 charter partyconsidered in a recent case, The Trade Nomad [1999] 1 Lloyd's Rep. 723 (C.A.).

42. ibid. see, per Buxton L.J. at 274-275, and see, per Hobhouse L.J. at 259.See, per Mustill J. at 651 [1980] 1 Lloyd's Rep.638. See also a London arbitration case, London Arbitration 7/99, reported as Lloyd's Maritime Law Newsletter No. 505,March 4, 1999, at 3-4.

43. See also Page v. Smith [1995] 2 Lloyd's Rep. 95 where is was held that the defendant owes a duty of care to preventforeseeable damage including psychiatric damage.Michael Wilford and others, Time Charters (4th ed., London LLP,1975), at 100. See also, per Mustill J. at 648, The Hermosa [1980] 1 Lloyd's Rep. 638, where the frustration wasmentioned in the seaworthiness context. His justice also mentioned that frustration used to be treated as an impliedcondition precedent in English law. But see The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B. (Com. Ct)] whereunseaworthiness, found to be caused by the fault of the shipowner, was held to be the cause of the frustration of thevoyage.

44. See, per Mann L.J. at 503, [1994] 1 Lloyd's Rep. 492 (CA).[1959] A.C. per Lord Sowervell at 602-603 (PC).

45. See Riverstone v. Lancathire [1961] 1 Lloyd's Rep. 57 (HL).It was acknowledged that “proximate or dominant cause”can be used in contrast with “ultimate or indirect cause” in Landcatch Ltd v. IOPCF [1998] 2 Lloyd's Rep. 552 [Sct Ct] at568, per Lord Gill.

46. supra , at n. 36. This case was regarded by Phillips L.J. at 677 in Reeman v. DOT (supra , at n. 38) as a case whenextension of scope of duty of care was made, and Henderson v. Merrett Syndicates [1994] 2 Lloyd's Rep. 468 was alsoregarded, arguably, as falling into the same category.[1983] 1 Lloyd's Rep. 530.

47. As for such kind of special relationship, see, per Lord Browne-Wilkinson at 716-718 in White v. Jones (supra , at n. 36).See also a discussion by Jane Stapleton, “Duty of Care: Peripheral Parties as alternative opportunities for Deterrent”[1995] L.Q.R. 301 at 335-336. ibid. see, per Neill J. at 540.

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48. See Tuckey L.J. at 5, The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 (CA). Besides, in English law, remedy for economiclaw can be contracted for, see, per Tuckey L.J. at 5 (idem ).[1983] 2 Lloyd's Rep. 210, at 218.

49. See, per Stuart-Smith L.J. at 513, Phelps v. Hillingdon L.B.C. [1999] 1 W.L.R. 500 (CA); see also, per Lord Steyn, at584, Williams v. Natural Life Foods [1998] 2 All E.R. 577.[1993] 1 Lloyd's Rep. 257, at 288.

50. An international convention about the liabilities of classification societies is under drafting with C.M.I.[1940] A.C. 997,1007 (H.L.); see also Herskell v. Continental Express (1950) 83 Ll.L.R. 438, at 458.

51. See a Scottish case: Gietsen v. Turball , 1908 S.C. 1101; see also a recent case, The IMVROS [1999] 1 Lloyd's Rep.848 [Q.B. (Com. Ct)], where absolute seaworthiness obligation was expressly set out in the time charter. See alsoCarver on Carriage by Sea , Raoul Colinvaux edn, London: Stevens & Sons, 1982, at 508. ibid. at 1008.

52. The Madeleine [1967] 2 Lloyd's Rep. 224. ibid. at 1003, per Lord Wright; “causa causans” is supposed to mean a causewhich causes, while “causa sine qua non ” means, 1 suppose, a cause which does not, in the sense material to theparticular case, cause, but is merely an incident which precedes in the history or narrative of events, but as a cause isnot in at the death, and hence is irrelevant.” See also per Lord Sumner in Elder Dempster v. Patterson [1924] A.C. 522,529, where his Lordship said that the proof of unseaworthiness consists of two parts, i.e. (1) that the ship wasunseaworthy in the sense of the word established by the decisions, and (2) that the damage complained of was causedthereby and could not have arisen but for the unseaworthiness”. Carver (On Carriage by Sea , Raoul Colinvaux ed.,London: Stevens & Sons, 1982) at p.109 seems to use the above second sense as the ground for supporting the viewthat the unseaworthiness being a causa sine qua non of the loss is not sufficient for being regarded as the responsiblecause; see also an older edition of Scrutton on Charterparties and Bills of Lading, 19th ed. p. 5, n. 5, where the difficultyof extracting the ratio dividendi from The Smith Hogg [1940] A.C. 997 (H.L.) was also felt.

53. See Adamastos v. Anglo-Saxon Petroleum [1957] 1 Lloyd's Rep. 271.[1999] 1 Lloyd's Rep. 307.

54. See The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B. (Com. Ct)], where a duty of exercising due diligence in making aship seaworthy, a similar duty as that under the Hague Rules, was provided for in a clause applicable to thecargo-carrying voyage. See also, per Mustill J. at 647, The Hermosa [1980] 1 Lloyd's Rep. 638.As for the application ofthe “but for” causation rule in a case about pollution liability, see Landcatch Ltd v. IOPCF [1998] 2 Lloyd's Rep. 552[Sct. Ct.].

55. [1999] 1 Lloyd's Rep. 723 (CA). See also The Liepaya [1999] 1 Lloyd's Rep. 649, where the same Shelltime 4 form wasbased upon, and it was found that the obligation to exercise due diligence to maintain the vessel in a fit condition wasbreached on the part of the shipowner.[1999] 1 Lloyd's Rep. 307 at 327, as His Justice said “I am unable to find that thecasualty would still have occurred even if there had not been a want of due diligence in these respects”.

56. Compared with the seaworthiness obligation under the COGSA 1971 to be discussed later.Contractual intention shouldprevail if the causal words used did not really reflect the contractual intention, see, per Rix, J. at 430 in The Eurus[1997] 2 Lloyd's Rep. 408 [Q.B. Com. Ct)]. This case was affirmed at the Court of Appeal, reported in [1998] 1 Lloyd'sRep. 351. As for the relationship between causation and foreseeability, see, per Staughton L.J., at 361-362, where the“foreseeability was regarded as a significant element in causation, but not regarded as a test of causation in contract”.See also, per Staughton L.J. at 357 (idem ) where it was said that “the “word ‘remoteness’ is often used to refer both tocausation and to the question whether loss was foreseeable or within the reasonable contemplation of the parties”.Besides, at 358 (idem. ) “due to ” was also noted to import a test of causation. See also, per Phillips L.J., at 675,Reeman v. DOT [1997] 2 Lloyd's Rep. 648 (CA) where foreseeability and causation were considered.

57. See Michael Wilford and others, Time Charters , 4th edn London: LLP, 1995, at 97.In force in July 1996 and enforceand expand the requirements under the 1982 Paris Memorandum of Understanding on Port State Control.

58. See Julia Cooke and Others, Voyage Charters , London: LLP, 1993, pp. 721-722.S.I. 1995 No. 3128, in force onJanuary 1, 1996, amended by subsequent two regulations: Merchant Shipping (Port State Control) (Amendment)Regulations 1998, S.I. 1998 No. 1433, which specifically requires the detention of the ships not carrying documentationrequired under the ISM code; Merchant Shipping (Port State Control) (Amendment No. 2) Regulations 1998, S.I. 1998,No. 2198, which is related to selection of ships for inspection.

59. [1980] 1 Lloyd's Rep. 638, at 647-648.See “Bimco draws up ISM charterparty clause”, Lloyd's List , March 16, 1998,where the following ISM clause drafted by BIMCO is said to be expected to be adopted universally into new andexisting charterparties:“From the date of coming into force of the International Safety Management (ISM) code inrelation to the vessel and thereafter during the currency of this charterparty, the owners shall procure that both thevessel and ‘the company’ (as defined by the ISM code) shall comply with the requirements of the ISM code.Uponrequest the owners shall provide a copy of the relevant document of compliance (DOC) and safety managementcertificate (SMC) to the charterers. But either DOC or SMC should not be treated as different from other documentarycertificates, that is to say, all of them are not conclusive evidence of seaworthiness of ships concerned.Except asindicated in this charterparty, loss, damage, expense or delay caused by the failure on the part of the owners of ‘thecompany’ to comply with the ISM code shall be for the owners' account”.

60. See Thin v. Richards [1892] 2 Q.B. 141 (CA); see also a Scottish case: Seville Salphur and Copper Co. v. Colvils(1888) 25 Sc.L.R. 437.See, per Moore-Bick J. at 323, in The Fjord Wind [1999] 1 Lloyd's Rep. 307, where theshipowner was found to have not discharged his burden of proof of exercise of due diligence or the want of duediligence had not caused the loss or damage concerned. See also, per Hobhouse J. at 46, The Yamatojawa [1990] 2Lloyd's Rep. 39 [Q.B. (Com. Ct)], where his Justice said that the burden of disproof of the causal connection be on thecarrier, and the carrier had disproved the causal connection between the want of due diligence and the damage causedfor the purpose of art. IV, r. 1 of the COGSA.

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61. See Seville Salphur Co. v. Colvils (ibid.). See The Theodegmon [1990] 1 Lloyd's Rep. 52 [Q.B. (Com. Ct)].

62. Riverstone v. Lancashire [1960] 1 All E.R. 193, at 299 (C.A.). The cited words were not affected by the subsequentHouse of Lords' decision which overrides the Court of Appeal's decision in Riverstone v. Lancashire , see [1961] A.C.807 (HL).But in The Breydan Merchant [1992] 1 Lloyd's Rep. 373 [Q.B. (Adm. Ct)], where an alleged unseaworthinesshad not prevented the shipowner from enjoying the limitation of liability under the Merchant Shipping Act 1979.

63. [1963] 2 Lloyd's Rep. 223, p. 233 (HL); see also Moore Bick J. at 320, The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B.(Com. Ct)]. Maxine Footwear v. Canadian Government Merchant Marine [1959] A.C. 589 (PC) where the fact that thenegligence of the carrier's servants had caused the fire was held to be failure to exercise due diligence.[1952] 2 All E.R.1016 at 1070 (QBD); see also, per Bingham L.J. in a carriage by road case: Circle v. Medeast [1988] 2 Lloyd's Rep.427 at 434.

64. [1915] A.C. 705, at 713 (HL).[1991] 1 Lloyd's Rep. 146, at 153 (QB).

65. See The Safe Carrier [1994] 1 Lloyd's Rep. 589 (HL). As for the application of attribution rules to the finding of anassured in a hull insurance case, see, per Leggatt L.J. at 374 in The Star Sea [1997] 1 Lloyd's Rep. 360 (CA) which hasconsidered the case of Meridian Global Funds Management Asia Ltd v. Securities Commission [1995] 2 A.C. 500,considered in two insurance cases for the purpose of ascertaining whether the conduct should be attributed to that ofthe assured: The Start Sea [1997] 1 Lloyd's Rep. 360 (CA) and Arab Bank v. Zurich Insc. [1999] 1 Lloyd's Rep. 262[Q.B. (Com. Ct)].Such a regime already has its amended 1996 version, which is yet to come into force.

66. See The Toledo [1995] 1 Lloyd's Rep. 40, per Clarke J. at 50, where the failure to set or carry out a proper system ofinspection of vessels has been regarded as constituting want of due diligence in making the ship seaworthy. However,see also The Safe Carrier [1994] 1 Lloyd's Rep. 589 (HL) which has applied the principle that the corporation will nottake the responsibility for the criminal offence committed in respect of safety of ships by its subordinates who are notthe legal representatives of the corporation. See also The Lydia Flag [1998] 2 Lloyd's Rep. 652 where it was allegedthat the failure by the crew to report was a result of there being no system in place requiring the reporting ofdefects.[1990] 1 Lloyd's Rep. 310, at 316 (CA).

67. [1997] Lloyd's Rep. 241 (CA) at 248, per Leggatt L.J.See, per Lord Denning in [1976] 3 W.L.R. 274 (CA).

68. Vicarious immunity is used in the sense that the want of due diligence of shipowners' servants or agents in this respectwould not be imputed to the carrier. ibid. at 274.

69. Many cases deal with doctrines of stages: e.g. Northumbrian Shipping Co. v. Timm & Son [1939] A.C. 397 at 403-404,411; Thin v. Richards [1892] 2 Q.B. (C.A.) 141; Reed v. Page [1927] 1 K.B. 743, at 754 (CA); Whatson v. Clark [1813] 1Dow, Daniels v. Harris (1874) L.R. 10 C.P. 1 at 7; McFadden v. Blue Star Line [1905] 1 K.B. 697 at 704-705; TheVortigern [1899] at 140; The Makedonia [1962] 1 Lloyd's Rep. 316 at 329. ibid. at 274.

70. As for the meaning of lying stage, see, per Lord Howarth at 750 in Reed v. Page [1927] 1 K.B. 743. ibid. at 274-275;see also The Gloria (1936) Ll.L.Rep. 35 (KB) where the mere omission to take precaution against the possibility of theship being in an unseaworthy state was held not to amount to privity.

71. As to the application of the in-port doctrine of stages under the COGSA, see Maxine Footwear v. CanadianGovernment [1959] A.C. 589 (PC) See New York and Cuba Mail Steamship Co. v. Eriksen and Christensen (1922) 27Com.Cas. 330 at 336; see also Dixon v. Sadler (1839) 5 M. & W. 305.[1995] 1 Lloyd's Rep. 651, at 660.

72. e.g. see a bill of lading case: Northumbrian Shipping Company v. E. Timm & Son Ltd [1939] A.C. 397 (HL).[1997] 1Lloyd's Rep. 360, at 375, per Leggatt L.J. who said that “ and applying what we believe to be the approach of LordDenning to s. 39(5), an approach with which we agree, ”

73. e.g. see a voyage charter party case: The Vortigern [1891] P. 140 (CA). ibid. at 377, per Leggatt L.J.

74. As for the fuelling doctrine of stages see the following bunking cases; Thin v. Richard [1892] 2 Q.B. 141; The Vortigern[1899] P. 140; McIver v. Tate Steamship Ltd [1903] 1 K.B. 362; Greencook Steamship v. Maritime Insurance Co. Ltd[1903] 2 K.B. 657. The stages of the voyage are normally fixed by the shipowner, see, per Tucker L.J. at 234 inNoemijula Steamship Co. Ltd v. Minister of Food [1951] 1 K.B. 223.In respect of the Y2K problem, it is also a moot pointwhether it could only be an insured peril when it is expressly so provided in the policy rather than being implied as onekind of unseaworthiness, insured or not insured.

75. e.g. see the following two marine insurance cases: Burges v. Wickham , 3 B. & S. 669; Boulton v. Lampton , 15 C.B.(A.G.) 132.Even loss or damage caused by unseaworthiness including Y2K non-compliance, which may or may notcause loss of or damage to the subject-matter insured thus being a risk rather than a certainty, may be recovered fromthe cargo insurer under the all risks clause (A), unless the insurer can succeed in proving that the Y2K non-complianceis attributable to the wilful misconduct of the assured.

76. See, per Moore-Bick, J. at 315, The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B. (Com. Ct)]

77. [1957] 1 Lloyd's Rep. 79.

78. supra , at n. 76, p. 314, per Moore-Bick J. Compared also with the non-delegable nature of the bailee's obligation inEnglish law, discussed in Norman Palmar & Ewan McKendrick edn, Interest in Goods , 2nd ed., London: LLP, 1998, p.477.

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79. By contrast, in a charter party case, The IMVROS [1999] 1 Lloyd's Rep. 848 [Q.B.D. (Com. Ct)], which was not subjectto the Hague or Hague Visby Rules; it was indicated that the unseaworthiness caused by the bad stowage undertakenon the part of the charterer would not be imputed to the shipowner, even the supervising duty of the master with respectto the stowage would not undercut the charterer's obligation.

80. [1960] 1 All E.R. 219.

81. [1961] 1 Lloyd's Rep. 57 (HL).

82. [1927] 2 K.B. 456.

83. [1961] 1 Lloyd's Rep. 57, at 90 (HL).

84. See The Toledo [1995] 1 Lloyd's Rep. 40, where the classification society, though suspected to have made a mistakeleading to the unseaworthiness, was not sued directly. Rather the shipowner was found to be responsible for theunseaworthiness.

85. See, per Wilmer L.J. in the Riverstone v. Lancashire [1960] 1 All E.R. 219.

86. A fire caused by a cigarette discarded by crew is a clear example entitling the carrier to enjoy the protection of art. IV, r.2(b), see The Sabro Valour [1995] 1 Lloyd's Rep. 578 where a discarded cigarette was disregarded as the cause of fire.See also a non-marine case, Davie v. New Merton Board Mills Ltd [1959] A.C. 604 (HL).

87. As to the meaning of “actual fault or privity” in art. IV, r.2(b), see The Lady Gwendolen [1965] 2 All E.R. 283, “actualfault or privity” can be interpreted as personal fault of the alter Ego or directing mind of the shipping company if theshipowner is a corporate. See also, per Lord Denning in a land law case: Bolton v. Graham [1957] 1 Q.B. 159 (CA) at172. See also my discussion as to the personal want of due diligence under clause 2 of Gencon(94) early in this article.

88. [1959] A.C. 589 (PC).

89. ibid. at 604. That the word “before” lacks a definition is significant in respect of the Y2K problem, which often exists,long before the loading takes place, in the shore-side equipment of the carrier, rendering the ship unseaworthy.

90. ibid. at 604.

91. [1962] P. 190.

92. ibid. at 194-195.

93. (1877) 3 App. Cas. 72, 90; per Lord Herschell in Gilroy v. Price [1893] A.C. 56, at 64; see also, per Bankes L.J. inBradley v. Federal Steam Navigation (1926) 24 Ll.L.Rep. (CA) 446, at 455.

94. See, per Leggatt L.J. at 374. The Star Sea [1997] 1 Lloyd's Rep. 360 (CA).

95. See The Southgate [1893] P. 329.

96. [1955] 2 Lloyd's Rep. 218 (QB).

97. ibid. at 230-231. See also a Hong Kong Court of Appeal case: Taitexma Enterprise Corp. v. Tillemount Shipping Corp.SA [1995] 1 H.K.C. 119 (CA) where it was found that a third officer who had committed error in navigation is competentand thus there is no want of due diligence on the shipowner in manning the ship.

98. [1996] 1 Lloyd's Rep. 475 (QBD) overruled at CA reported in [1997] Lloyd's Rep. 241 (CA).

99. ibid. at 484; per Tuckey J.

100. See s.1(6)(a) of the COGSA 1971 about the incorporation of Hague-Visby Rules into a contract as a matter of contract.The Apostolis [1997] 2 Lloyd's Rep. 241 (CA). See also the counter claim in The Apostolis (No. 2) [1999] 2 Lloyd's Rep.292 [Q.B. (Com. Ct)].

101. See a recent case: The Safe Carrier [1994] 1 Lloyd's Rep. 589 (H.L.). See also a recent English regulation imposingcriminal liability on the designated person under the ISM code: Merchant Shipping (International Safety Management(ISM) Code Regulations, 1998.[1998] 2 Lloyd's Rep. 652 [Q.B. (Com. Ct)] at 656.

102. This Code was adopted by the assembly of IMO and incorporated into the International Convention for the Safety ofLife at Sea (SOLAS), 1974 as being attached to Chapter IX which came into force on July 1, 1998. It has also beenbrought into force on the Chinese mainland (see “Ten Revisions of SOLAS Effective”, Chinese Shipping Gazette , July20, 1998) and in Hong Kong (see Merchant Shipping (Safety) (Safety Management) Regulation, 1998).Even with thesystem in place, it is not guaranteed that human errors will not occur. See, per Moore-Bick J. at 657-658, The LydiaFlag [1998] 2 Lloyd's Rep. 652 [Q.B. (Com. Ct)] where his justice remarks in a slightly different context with respect tothe difference between want of due diligence on the part of the owner and negligence or incompetence of the crew inreporting accidents: “It happens on occasions that even the best systems fail to ensure that wholly competent membersare appointed to a vessel's crew ”

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103. Y2K problem, also known as the Millennium bug (in fact, an electronic date recognition problem but not a computervirus), can, but not necessarily, render a ship unseaworthy, even though it is a once for all problem rather than arecurrent one. It may occur around, but not necessarily, on January 1, 2000. Examples of non-Y2K compliance couldbe: dead machine, ships out of control, or wrong data provided. As for an in-depth study of this problem, see D. G.Houser & C. M. Boldman, “Y2K-a property Loss?” [1999] I.J.I.L. p. 1. Lloyd's List , March 16, 1998.

104. The seaworthiness cases in English courts are numerous. For the issue of proper manning of a ship, see: Rio Tinto v.Seed Shipping Company , T.L.R. Vol. 42, 381, where the master's illness was held not to mean that he wasincompetent. Anglo-Saxon Petroleum v. Adamentos [1957] 2 Q.B. 233 (QBD): that one of the engine staff isincompetent made the ship unseaworthy. In a Hong Kong case Taitexma Enterprise Corp. v. Tillemont Shipping Corp.S.A. [1995] H.K.C. 119 (CA), it was held that negligence by the carrier in appointing an incompetent crew has to beproved before the carrier could be accused of committing a breach of the seaworthiness obligation. The lack ofdocument making the ship unseaworthy or not is a question of fact: see Ciampa v. British India Steam NavigationCompany [1915] 2 K.B. 774 (KBD) about how a foul bill of health rendered the ship uncargoworthy. By contrast, in thefollowing two cases a lack of documents did not make the ship unseaworthy: The Derby [1985] 2 Lloyd's Rep. 325 (CA);Chellew Navigation Company v. A. R. Appelquit [1933] 38 Com.Cas. 218. For the other examples, see The Aquacharm[1982] 1 W.L.R. 119 (CA), where the draught of the vessel preventing the ship entering the Panama Canal did not makethe ship unseaworthy. In Queensland National Bank v. Peninsula and Oriental Steam Navigation Company [1898] 1Q.B. 567, the billion-room of the ship being incapable of resisting thieves was held to render the ship unseaworthy; TheSchwann [1909] A.C. 450 (P.C.) where a defect in the three-way cock led to unseaworthiness; Standard Oil Companyv. Clan Line Steamers [1924] A.C. 100 (P.C.), where the shipowner improperly instructed the crew about the ballast ofthe tank made the ship unseaworthy. The Sabro Valour [1995] 1 Lloyd's Rep. 509 [Q.B. (Adm. Ct.)], where it was foundthat either the wiring or insulation had been damaged mechanically at the beginning of the voyage, or flammablematerials were improperly stored close to the exhaust of the ship's engine, either of which constitutesunseaworthiness.[1999] 1 Lloyd's Rep. 848 at 851 [Q.B. (Com. Ct)].

105. This seems to be a view contended by one party but not approved in The Hermosa [1990] 1 Lloyd's Rep. 638, perMustill J. at 647.[1905] 1 K.B. 697 (KBD).

106. [1982] 1 W.L.R. 119 (CA).[1924] All E.R. 135 (HL).

107. [1927] 1 K.B. 743 (CA).[1876] 1 Q.B.D. 377.

108. ibid. at 754. See also Rathbone Brothers v. Mackver [1903] 2 K.B. 378 (CA), here unseaworthiness was held to includeunfitness of the hull to receive cargo. See a recent case, The Athenian Harmony [1998] 2 Lloyd's Rep. 410 [Q.B. (Com.Ct)]. 414, per Colman J. where the hull was held not fit to receive cargo, though it is regarded as a problem ofnegligence in care of goods rather than as an uncargoworthy problem. However, the difference betweenuncargoworthiness and negligence in care of goods is insignificant as in either case the carrier should be responsiblefor cargo damage so carried.[1994] 1 Lloyd's Rep. 644 [Q.B. (Com. Ct)]

109. [1984] 2 Lloyd's Rep. 586, per Staughton J. p. 592 [Q.B. Com. Ct)].[1980] 1 Lloyd's Rep. 469 (QBD); see also TheWaltraud [1991] 1 Lloyd's Rep. 389 [Q.B. (Adm. Ct)].

110. [1987] 2 Lloyd's Rep. 376 [Q.B. (Com. Ct)] See also a recent case: The Liepaya [1999] 1 Lloyd's Rep. 649 [Q.B. (Com.Ct)] where the contamination of goods by unclean holds was linked to the issue of unseaworthiness of the vessel.Seealso The Athenian Harmony [1998] 2 Lloyd's Rep. 410 [Q.B. (Com. Ct)] where damages caused by uncargoworthinessseem to be regarded as damage caused by negligence in care of goods.

111. ibid. at 390.[1999] 1 Lloyd's Rep. 218 [Q.B. (Adm. Ct)].

112. [1991] 1 Lloyd's Rep. 456 [Q.B. (Com. Ct)]; see also The Komninos S [1990] 1 Lloyd's Rep. 541 [Q.B. (Com. Ct)]. ibid.see, per Sir Robert Gatehouse, at 223. As for the definition of the usual meaning of stowage which includes lashing ofgoods, see, per Sir Robert Gatehouse in the same case at 223. See also The IMVROS [1999] 1 Lloyd's Rep. 848[Q.B.D. (Com. Ct)], where in a charter for one time trip, to which the Hague or Hague-Visby Rules were inapplicable, itwas held that the charterer had been responsible for proper lashing and stowing of goods, whether or not the failure todo so will render the ship unseaworthy. This case illustrates that the seaworthiness obligation is delegable at commonlaw.

113. ibid. at 472, per Hirst J.A Y2K problem seems to be discoverable upon exercise of due diligence, as it is related only tothe issue of checking whether or not a six digits memory system of dates has been converted into an eight digits one,unless the program related to the system cannot be decoded through the exercise of due diligence.

114. See also art. IV, r. 1 where “seaworthy” is also used side by side with words which are intended to describe theconcrete seaworthiness situation.[1930] 1 K.B. 699, at 705 (KBD) where Wright J. held that the phrase “latent defect”could not be interpreted to cover spontaneous combustion in the coal carried.

115. See, per Lord Simon in Bradley v. Federal Steam Navigation Co. (1926) 137 L.T. 266, 268. See also, per Moore-Bick J.at 315, The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B. (Com. Ct)]See Scrutton on Charterparties and Bills of Lading ,20th ed., Stewart C. Boyd, Andrew S. Burrows and David Foxton, eds, London: Sweet & Maxwell, 1996, p. 445.

116. See, per Bankes L.J. in Bradley v. Federal Steam Navigation Co. (1926) 24 Ll.L.Rep. 446, at 454 (CA), affirmed at theHouse of Lords (1927) 27 Ll.L.Rep. 221.(1922) 13 L.L.R. 363, at 365 (CA)

117. See, per Hamilton J. in the Virginia v. Norfolk [1912] 17 Com.Cas. 277, at 278-279; see also Bradley v. Federal SteamNavigation Co. (1926) 24 Ll.L.Rep. at 454. per Lord Devlin in Union of India v. Reederij Amsterdam [1963] 2 Lloyd's

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Rep. 223 at p. 235. See also Wilsons & Clyde Coal Co. v. English [1938] A.C. 57, at 80-81, per Lord Wright [HL(Sc.)]

118. [1905] K.B.D. 706. See also Bradley v. Federal Steam Navigation Co. (ibid.), per Scrutton L.J., at 454, referred to inThe Liepaya [1999] 1 Lloyd's Rep. 649, per Rix J. at 648-649. e.g. The Tilia Gorthon [1985] 1 Lloyd's Rep. 552, at 556,per Sheen J. See also, per Wright J. in Angliss v. Peninsular & Oriental Steam Navigation Co. [1927] 2 K.B. 456 at 462.

119. [1995] 1 Lloyd's Rep. 518 at 516.(1937) 58 Ll.L.Rep. 188 at 191. In contrast, see an American case Parente v. Bayville[1975] 1 Lloyd's Rep. 733 (U.S. Ct) which seems to hold the view that latent defects are defects which cannot bediscovered by any means, whether ordinary or extraordinary. Reference can also be made to a marine insurance casefor clarification of the differences between consequential damages and manifestation of latent defect: see The Nukila[1997] 2 Lloyd's Rep. 146 (CA).

120. [1962] 2 Q.B. 26 (CA), see Diplock L.J. at 71-72; see, per Sellers L.J. at 56, 57, 60; see, per Upjohn L.J. at 62.Apartfrom the word “latent”, even “defect” is said not to cover the meaning of damage, see, per Hobhouse L.J. at 156, TheNukila [1997] 2 Lloyd's Rep. 146 (CA).

121. [1981] 1 W.L.R. 711 (HL), see, per Lord Lowry at 718-719; see also, per Lord Scarman at 717. The concept of aninnominate term established in The Hong Kong Fir was considered but not applied in a Hong Kong sale of goods casein respect of breach of condition of description: Samsung Hong Kong Ltd v. Keen Time Trading Ltd [1998] 2 Hong KongLaw Reports & Digest, 341. See also s.15A of Sale of Goods Act 1979 (as amended).See, per Lloyd J. in The HellenicDolphin [1978] 2 Lloyd's Rep. 336, at 343 [Q.B. (Adm. Ct)].

122. [1912] A.C. 604, 617 (HL).See The Christel Vinnen [1924] P. 208 at 212-213, per Scrutton L.J. where the possibility of alatent defect coming into existence during the voyage was acknowledged. The fact that a latent defect which could notonly exist before the voyage started but could also come into existence during the voyage is an important reason for thecourts in some cases to prohibit the latent defect exclusion clause from qualifying the warranty of seaworthiness atcommon law, see, per Wright J. at 705 Dreyfus v. Tempus [1930] 1 K.B. 699 where he said that “ in any case the term‘latent defect’, without express words applying it to the commencement of the voyage, does not exclude the warranty ofseaworthiness.” See also The Christel Vinnen (idem) where the exception of “latent defect” in the hull was held not toqualify the implied warranty of seaworthiness. By contrast see The Cargo ex Larestes , 12 P.D. 187, where anexclusion clause excluding liability for the latent defect existing at the commencement of the voyage was held to qualifythe duty to exercise due diligence to make the ship seaworthy set out in the contract. From the above case, it seems tome that even if the exclusion clause expressly excluding the liability for a latent defect existing at the time of theshipment would not be able to qualify the absolute warranty of seaworthiness. But see also, per Moore Bick J. at655-656, The Lydia Flag [1998] 2 Lloyd's Rep. [Q.B. (Com. Ct)] who seemed to suggest that an Inchmaree clausecovering latent defect should be able to be construed to cover latent defect or unseaworthiness existing at thebeginning of the hull policy provided that it is not caused by want of due diligence on the part of the assured. As Y2Kproblems can normally be foreseeable, it is difficult to see that the non-Y2K compliance could be regarded as a latentdefect.

123. supra , at n. 21, see, per Sellers L.J. at 59.[1991] 1 Lloyd's Rep. 209 (CA).

124. ibid. at 71-72. ibid. at 212, per Staughton L.J.

125. ibid. at 71-72. ibid. at 213, per Staughton L.J.

126. However, the state of unseaworthiness of the ship alone might terminate the contract through the doctrine offrustration.[1999] 1 Lloyd's Rep. 307, at 319.

127. [1984] 2 Lloyd's Rep. 586 [Q.B. (Com. Ct)].By nature, indemnity clauses are also employed to exclude the liabilities ofcontractual parties; that is why many rules of construing general exclusion clauses are applied to construing indemnityclauses. e.g. see Smith v. Switchgear [1978] 1 All E.R. 18 (HL) where the special rule of construing negligence clausesis applied to the construction of an indemnity clause. But it is interesting to note that the word “indemnity” was said to beused in two senses by Staughton L.J. at 357, The Eurus [1998] 1 Lloyd's Rep. 351: “It may mean simply damagesawarded for tort or breach of contract . Alternatively the word ‘indemnity’ may refer to all loss suffered which isattributable to a specified cause, whether or not it was in the reasonable contemplation of the parties”.

128. ibid. at 597.See The Fiona [1994] 2 Lloyd's Rep. 506 (CA), where it was held that the breach of art. III, r. 1 coulddeprive carriers' right of indemnity under art. IV, r. 6. But see The Giannis N.K. [1998] 2 W.L.R. 206 (HL), where art. IV,r. 6 was held to be a free-standing provision not affected by art. IV, r. 3. In my opinion, this House of Lords decisioncannot be used as an authority for holding that art. IV, r. 6 should also not be affected by breach of art. III, r. 1 so as tocontradict the Court of Appeal's decision in The Fiona (idem ) because breach of art. III, r. 1 is a breach of aninnominate term.

129. [1987] 2 Lloyd's Rep. 634 at 646.See, per Lord Danedin at 258, in Atlantic Shipping and Trading Co. v. Louis Dreyfus &Co. [1922] 2 A.C. 250 (HL) where it seemed to be suggested that as a consequence of the breach of the seaworthinessobligation, the shipowner may be in a position of a common carrier.

130. [1956] 1 W.L.R. 461, at 465, 466.See The Santa Clara [1996] 2 Lloyd's Rep. 225 (HL) it was held by Lord Steyn that afailure to perform might signify to a repudiating party an election to treat the contract as at an end. See, per Lord Steynat 229: “An act of acceptance of repudiation requires no particular form: a communication does not have to be couchedin the language of acceptance. It is sufficient that the communication or conduct clearly and unequivocally conveys tothe repudiating party that that aggrieved party is treating the contract as at the end”.

131. The Termagant (1914) 19 Com.Cas. 239; Pyrene v. Scindia (1954) 2 Q.B. 402, p. 428. See also two recent cases

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confirming she concurrent liabilities in tort and contract: Brown v. KMR Services [1995] 2 Lloyd's Rep. 513; The Lloyd'slitigation [1994] 2 Lloyd's Rep. 468 (HL).See, per Hirst, L.J. at 519, The Fiona [1994] 2 Lloyd's Rep. 506. See also, perMustill J. at 642 in The Hermosa [1980] 1 Lloyd's Rep. 638, where fundamental breach was mentioned in the context ofseaworthiness, but not clearly applied. By contrast, see, per Tuckey J. at 484, The Apostolis [1996] 1 Lloyd's Rep. 475.

132. [1995] 2 Lloyd's Rep. 299 (HL); see also, per Clarke J. at p. 48 in The Toledo [1995] 1 Lloyd's Rep. 40 where theclassification society was suspected to have made a mistake but was not directly sued by the cargo owners. In Reemanv. DOT [1997] 2 Lloyd's Rep. 648 (CA), where The Nicholas H. (dem.) was applied, and the surveyor was not imposedwith a duty of care to a ship purchaser in issuing a seaworthiness certificate just as was not a shipbuilder. It was held tothe same effects in The Morning Watch [1990] 1 Lloyd's Rep. 541 [Q.B.D. (Com. Ct)]. See also a U.S. case, TheSundancer [1994] 1 Lloyd's Rep. 183 (U.S. Ct.) where it was held that the classification society by issuing aclassification certificate had not guaranteed to the shipowner that the ship had been soundly constructed and thus notbeing liable for any loss caused by the defects in the ship.See The Good Luck [1991] 2 W.L.R. 1279 (HL).

133. Compared with a product liability case: The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 (CA), where the wrong informationis contained in a manual accompanying the defective product: an engine to have been fitted in a fishing vessel whichonly caused financial loss which was held not recoverable; but contrasted with Donoghue v. Stevenson [1932] A.C.562.In Total Gas v. Arco British [1998] 2 Lloyd's Rep. 209 (HL), per Lord Slynn, at 215, four kinds of conditions werementioned, i.e. promissory condition, contingent condition, condition precedent and condition subsequent. But theyhave a common factor, that is, they either prevent a contract from coming into being or make a contract terminate.

134. See, per Tuckey L.J. at 3 (ibid. ), where the owner of the fishing vessel fitted with the defective engine chose to sue themanufacturer of the defective engine in tort for financial loss to avoid the exception clause in the boat buildingcontract.See, per Lord Diplock, at 566-567, Photo Production v. Securicor [1980] 1 All E.R. 556.

135. [1995] 1 All E.R. 691 (HL); see South Australia Asset Management Corp. v. York Montague Ltd , [1996] 3 All E.R. 365(HL) where the valuer's tortious liability to a third party was limited so as not to be responsible for the market fall butresponsible for foreseeable consequences of the wrong information. In the following two cases, it was emphasised bythe courts that only if reasonable reliance by the third party upon the wrong advice can be established could the adviserbe held responsible in tort to the third party: Goodwill v. British Pregnancy Advisory Service [1996] 2 All E.R. 161,Possfund Custodian Trustee Ltd and Another v. Diamond and Others, Purr and Others v. Diamond and Others [1996] 2All E.R. 774. But see Caparo Industries PLC v. Dickman [1990] 1 All E.R. 568 (HL), where it was held that the auditor ofa public company's accounts owned no duty of care to a member of the public at large who relied on the accounts tobuy shares in the company or to an individual shareholder in the company who wishes to buy more shares, though itwas admitted by the courts that the auditor's statutory duty to prepare accounts was owed to the body of shareholdersas a whole. See also Anthony v. Wright [1995] 1 B.C.L.C. 236 (ChD) where Caparo's decision was applied. See alsoTrend Publishing (H.K.) Ltd v. Vivien Chan & Co. (a firm) , s.E161, Hong Kong Law Digest, May 1996, where it washeld that the solicitor who had prepared the tenancy agreement for the landlord did not owe a duty of care to thetenant.See, per Clarke J. at 294, Catex v. BP [1996] 1 Lloyd's Rep. 286.

136. The three-parts tests were established in Caparo Industries PLC. v. Dickman [1990] 1 All E.R. 568 (HL) and appliedand considered in many subsequent cases, e.g. see also, per Phillips J. at 556, The Morning Watch [1990] 1 Lloyd'sRep. 547 [Q.B.D. (Com. Ct)] where the three-part tests were considered.[1977] 1 Lloyd's Rep. 334 (HL).

137. That was again confirmed in a Court of Appeal case The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 (CA), where no dutywas held to be on the manufacturer of a defective engine in tort for economic loss claimed to be suffered by the ownerof the fishing vessel who is the buyer of the defective engine; see also Reeman v. DOT [1997] 2 Lloyd's Rep. 648 (CA).See also Perrett v. Collins [1998] 2 Lloyd's Rep. 255, where the duty of care for economic loss was distinguished fromduty of care for personal injury. Besides, the common law duty of care was viewed as not being able to override what isintended by legislation, see, per Philips L.J. at 680, Reeman v. DOT (idem). See also W and Others v. Essex CountyCouncil and Another [1998] 3 All E.R. 111 (CA) where the county council was held not to be responsible for theconsequences of providing wrong information to the plaintiff foster parents about a fostered child. See also the followingtwo cases applying similar principles: Harris v. Evans [1998] 1 W.L.R. 1285 (CA); X (Minors) v. Bedfordshire CountyCouncil [1995] 2 A.C. 633. But, by contrast, see Welton v. North Cornwall District Council [1997] 1 W.L.R. 570, where atortious duty of care was imposed upon an environmental health officer as there were no other remedies. See, per SirRichard Scott, V.-C. at 1301, Harris v. Evans (idem) where Welton (idem) was considered but distinguished.[1980] 2Lloyd's Rep. 317, 322. (PC). See also Fai General Insurance Co. Ltd v. Ocean Marine Mutual Protection and IndemnityAssociation (No. 2) [1998] Lloyd's Rep. I.R. 24 (Aus. Ct), where it was held that jurisdiction clauses and arbitrationclauses will survive the void of contract ab initio.

138. See, per Nourse L.J. at 10, The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 (CA).See, per Clarke J. at 294, Catex v. BP[1996] 1 Lloyd's Rep. 286, where the tonnage limitation clause is regarded as procedural.

139. The Times , June 8, 1995.See Michael Wilford and Others, Time Charters , 4th edn, London: LLP, 1995, at 100.

140. [1998] 2 Lloyd's Rep. 255 (CA). ibid. at 364. This could also be found in clause 3 of the Shelltime 4 charter partyconsidered in a recent case, The Trade Nomad [1999] 1 Lloyd's Rep. 723 (C.A.).

141. ibid. see, per Buxton L.J. at 274-275, and see, per Hobhouse L.J. at 259.See, per Mustill J. at 651 [1980] 1 Lloyd's Rep.638. See also a London arbitration case, London Arbitration 7/99, reported as Lloyd's Maritime Law Newsletter No. 505,March 4, 1999, at 3-4.

142. See also Page v. Smith [1995] 2 Lloyd's Rep. 95 where is was held that the defendant owes a duty of care to preventforeseeable damage including psychiatric damage.Michael Wilford and others, Time Charters (4th ed., London LLP,1975), at 100. See also, per Mustill J. at 648, The Hermosa [1980] 1 Lloyd's Rep. 638, where the frustration wasmentioned in the seaworthiness context. His justice also mentioned that frustration used to be treated as an implied

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condition precedent in English law. But see The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B. (Com. Ct)] whereunseaworthiness, found to be caused by the fault of the shipowner, was held to be the cause of the frustration of thevoyage.

143. See, per Mann L.J. at 503, [1994] 1 Lloyd's Rep. 492 (CA).[1959] A.C. per Lord Sowervell at 602-603 (PC).

144. See Riverstone v. Lancathire [1961] 1 Lloyd's Rep. 57 (HL).It was acknowledged that “proximate or dominant cause”can be used in contrast with “ultimate or indirect cause” in Landcatch Ltd v. IOPCF [1998] 2 Lloyd's Rep. 552 [Sct Ct] at568, per Lord Gill.

145. supra , at n. 36. This case was regarded by Phillips L.J. at 677 in Reeman v. DOT (supra , at n. 38) as a case whenextension of scope of duty of care was made, and Henderson v. Merrett Syndicates [1994] 2 Lloyd's Rep. 468 was alsoregarded, arguably, as falling into the same category.[1983] 1 Lloyd's Rep. 530.

146. As for such kind of special relationship, see, per Lord Browne-Wilkinson at 716-718 in White v. Jones (supra , at n. 36).See also a discussion by Jane Stapleton, “Duty of Care: Peripheral Parties as alternative opportunities for Deterrent”[1995] L.Q.R. 301 at 335-336. ibid. see, per Neill J. at 540.

147. See Tuckey L.J. at 5, The Rebecca Elaine [1999] 2 Lloyd's Rep. 1 (CA). Besides, in English law, remedy for economiclaw can be contracted for, see, per Tuckey L.J. at 5 (idem ).[1983] 2 Lloyd's Rep. 210, at 218.

148. See, per Stuart-Smith L.J. at 513, Phelps v. Hillingdon L.B.C. [1999] 1 W.L.R. 500 (CA); see also, per Lord Steyn, at584, Williams v. Natural Life Foods [1998] 2 All E.R. 577.[1993] 1 Lloyd's Rep. 257, at 288.

149. An international convention about the liabilities of classification societies is under drafting with C.M.I.[1940] A.C. 997,1007 (H.L.); see also Herskell v. Continental Express (1950) 83 Ll.L.R. 438, at 458.

150. See a Scottish case: Gietsen v. Turball , 1908 S.C. 1101; see also a recent case, The IMVROS [1999] 1 Lloyd's Rep.848 [Q.B. (Com. Ct)], where absolute seaworthiness obligation was expressly set out in the time charter. See alsoCarver on Carriage by Sea , Raoul Colinvaux edn, London: Stevens & Sons, 1982, at 508. ibid. at 1008.

151. The Madeleine [1967] 2 Lloyd's Rep. 224. ibid. at 1003, per Lord Wright; “causa causans” is supposed to mean a causewhich causes, while “causa sine qua non ” means, 1 suppose, a cause which does not, in the sense material to theparticular case, cause, but is merely an incident which precedes in the history or narrative of events, but as a cause isnot in at the death, and hence is irrelevant.” See also per Lord Sumner in Elder Dempster v. Patterson [1924] A.C. 522,529, where his Lordship said that the proof of unseaworthiness consists of two parts, i.e. (1) that the ship wasunseaworthy in the sense of the word established by the decisions, and (2) that the damage complained of was causedthereby and could not have arisen but for the unseaworthiness”. Carver (On Carriage by Sea , Raoul Colinvaux ed.,London: Stevens & Sons, 1982) at p.109 seems to use the above second sense as the ground for supporting the viewthat the unseaworthiness being a causa sine qua non of the loss is not sufficient for being regarded as the responsiblecause; see also an older edition of Scrutton on Charterparties and Bills of Lading, 19th ed. p. 5, n. 5, where the difficultyof extracting the ratio dividendi from The Smith Hogg [1940] A.C. 997 (H.L.) was also felt.

152. See Adamastos v. Anglo-Saxon Petroleum [1957] 1 Lloyd's Rep. 271.[1999] 1 Lloyd's Rep. 307.

153. See The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B. (Com. Ct)], where a duty of exercising due diligence in making aship seaworthy, a similar duty as that under the Hague Rules, was provided for in a clause applicable to thecargo-carrying voyage. See also, per Mustill J. at 647, The Hermosa [1980] 1 Lloyd's Rep. 638.As for the application ofthe “but for” causation rule in a case about pollution liability, see Landcatch Ltd v. IOPCF [1998] 2 Lloyd's Rep. 552[Sct. Ct.].

154. [1999] 1 Lloyd's Rep. 723 (CA). See also The Liepaya [1999] 1 Lloyd's Rep. 649, where the same Shelltime 4 form wasbased upon, and it was found that the obligation to exercise due diligence to maintain the vessel in a fit condition wasbreached on the part of the shipowner.[1999] 1 Lloyd's Rep. 307 at 327, as His Justice said “I am unable to find that thecasualty would still have occurred even if there had not been a want of due diligence in these respects”.

155. Compared with the seaworthiness obligation under the COGSA 1971 to be discussed later.Contractual intention shouldprevail if the causal words used did not really reflect the contractual intention, see, per Rix, J. at 430 in The Eurus[1997] 2 Lloyd's Rep. 408 [Q.B. Com. Ct)]. This case was affirmed at the Court of Appeal, reported in [1998] 1 Lloyd'sRep. 351. As for the relationship between causation and foreseeability, see, per Staughton L.J., at 361-362, where the“foreseeability was regarded as a significant element in causation, but not regarded as a test of causation in contract”.See also, per Staughton L.J. at 357 (idem ) where it was said that “the “word ‘remoteness’ is often used to refer both tocausation and to the question whether loss was foreseeable or within the reasonable contemplation of the parties”.Besides, at 358 (idem. ) “due to ” was also noted to import a test of causation. See also, per Phillips L.J., at 675,Reeman v. DOT [1997] 2 Lloyd's Rep. 648 (CA) where foreseeability and causation were considered.

156. See Michael Wilford and others, Time Charters , 4th edn London: LLP, 1995, at 97.In force in July 1996 and enforceand expand the requirements under the 1982 Paris Memorandum of Understanding on Port State Control.

157. See Julia Cooke and Others, Voyage Charters , London: LLP, 1993, pp. 721-722.S.I. 1995 No. 3128, in force onJanuary 1, 1996, amended by subsequent two regulations: Merchant Shipping (Port State Control) (Amendment)Regulations 1998, S.I. 1998 No. 1433, which specifically requires the detention of the ships not carrying documentationrequired under the ISM code; Merchant Shipping (Port State Control) (Amendment No. 2) Regulations 1998, S.I. 1998,No. 2198, which is related to selection of ships for inspection.

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158. [1980] 1 Lloyd's Rep. 638, at 647-648.See “Bimco draws up ISM charterparty clause”, Lloyd's List , March 16, 1998,where the following ISM clause drafted by BIMCO is said to be expected to be adopted universally into new andexisting charterparties:“From the date of coming into force of the International Safety Management (ISM) code inrelation to the vessel and thereafter during the currency of this charterparty, the owners shall procure that both thevessel and ‘the company’ (as defined by the ISM code) shall comply with the requirements of the ISM code.Uponrequest the owners shall provide a copy of the relevant document of compliance (DOC) and safety managementcertificate (SMC) to the charterers. But either DOC or SMC should not be treated as different from other documentarycertificates, that is to say, all of them are not conclusive evidence of seaworthiness of ships concerned.Except asindicated in this charterparty, loss, damage, expense or delay caused by the failure on the part of the owners of ‘thecompany’ to comply with the ISM code shall be for the owners' account”.

159. See Thin v. Richards [1892] 2 Q.B. 141 (CA); see also a Scottish case: Seville Salphur and Copper Co. v. Colvils(1888) 25 Sc.L.R. 437.See, per Moore-Bick J. at 323, in The Fjord Wind [1999] 1 Lloyd's Rep. 307, where theshipowner was found to have not discharged his burden of proof of exercise of due diligence or the want of duediligence had not caused the loss or damage concerned. See also, per Hobhouse J. at 46, The Yamatojawa [1990] 2Lloyd's Rep. 39 [Q.B. (Com. Ct)], where his Justice said that the burden of disproof of the causal connection be on thecarrier, and the carrier had disproved the causal connection between the want of due diligence and the damage causedfor the purpose of art. IV, r. 1 of the COGSA.

160. See Seville Salphur Co. v. Colvils (ibid.). See The Theodegmon [1990] 1 Lloyd's Rep. 52 [Q.B. (Com. Ct)].

161. Riverstone v. Lancashire [1960] 1 All E.R. 193, at 299 (C.A.). The cited words were not affected by the subsequentHouse of Lords' decision which overrides the Court of Appeal's decision in Riverstone v. Lancashire , see [1961] A.C.807 (HL).But in The Breydan Merchant [1992] 1 Lloyd's Rep. 373 [Q.B. (Adm. Ct)], where an alleged unseaworthinesshad not prevented the shipowner from enjoying the limitation of liability under the Merchant Shipping Act 1979.

162. [1963] 2 Lloyd's Rep. 223, p. 233 (HL); see also Moore Bick J. at 320, The Fjord Wind [1999] 1 Lloyd's Rep. 307 [Q.B.(Com. Ct)]. Maxine Footwear v. Canadian Government Merchant Marine [1959] A.C. 589 (PC) where the fact that thenegligence of the carrier's servants had caused the fire was held to be failure to exercise due diligence.[1952] 2 All E.R.1016 at 1070 (QBD); see also, per Bingham L.J. in a carriage by road case: Circle v. Medeast [1988] 2 Lloyd's Rep.427 at 434.

163. [1915] A.C. 705, at 713 (HL).[1991] 1 Lloyd's Rep. 146, at 153 (QB).

164. See The Safe Carrier [1994] 1 Lloyd's Rep. 589 (HL). As for the application of attribution rules to the finding of anassured in a hull insurance case, see, per Leggatt L.J. at 374 in The Star Sea [1997] 1 Lloyd's Rep. 360 (CA) which hasconsidered the case of Meridian Global Funds Management Asia Ltd v. Securities Commission [1995] 2 A.C. 500,considered in two insurance cases for the purpose of ascertaining whether the conduct should be attributed to that ofthe assured: The Start Sea [1997] 1 Lloyd's Rep. 360 (CA) and Arab Bank v. Zurich Insc. [1999] 1 Lloyd's Rep. 262[Q.B. (Com. Ct)].Such a regime already has its amended 1996 version, which is yet to come into force.

165. See The Toledo [1995] 1 Lloyd's Rep. 40, per Clarke J. at 50, where the failure to set or carry out a proper system ofinspection of vessels has been regarded as constituting want of due diligence in making the ship seaworthy. However,see also The Safe Carrier [1994] 1 Lloyd's Rep. 589 (HL) which has applied the principle that the corporation will nottake the responsibility for the criminal offence committed in respect of safety of ships by its subordinates who are notthe legal representatives of the corporation. See also The Lydia Flag [1998] 2 Lloyd's Rep. 652 where it was allegedthat the failure by the crew to report was a result of there being no system in place requiring the reporting ofdefects.[1990] 1 Lloyd's Rep. 310, at 316 (CA).

166. [1997] Lloyd's Rep. 241 (CA) at 248, per Leggatt L.J.See, per Lord Denning in [1976] 3 W.L.R. 274 (CA).

167. Vicarious immunity is used in the sense that the want of due diligence of shipowners' servants or agents in this respectwould not be imputed to the carrier. ibid. at 274.

168. Many cases deal with doctrines of stages: e.g. Northumbrian Shipping Co. v. Timm & Son [1939] A.C. 397 at 403-404,411; Thin v. Richards [1892] 2 Q.B. (C.A.) 141; Reed v. Page [1927] 1 K.B. 743, at 754 (CA); Whatson v. Clark [1813] 1Dow, Daniels v. Harris (1874) L.R. 10 C.P. 1 at 7; McFadden v. Blue Star Line [1905] 1 K.B. 697 at 704-705; TheVortigern [1899] at 140; The Makedonia [1962] 1 Lloyd's Rep. 316 at 329. ibid. at 274.

169. As for the meaning of lying stage, see, per Lord Howarth at 750 in Reed v. Page [1927] 1 K.B. 743. ibid. at 274-275;see also The Gloria (1936) Ll.L.Rep. 35 (KB) where the mere omission to take precaution against the possibility of theship being in an unseaworthy state was held not to amount to privity.

170. As to the application of the in-port doctrine of stages under the COGSA, see Maxine Footwear v. CanadianGovernment [1959] A.C. 589 (PC) See New York and Cuba Mail Steamship Co. v. Eriksen and Christensen (1922) 27Com.Cas. 330 at 336; see also Dixon v. Sadler (1839) 5 M. & W. 305.[1995] 1 Lloyd's Rep. 651, at 660.

171. e.g. see a bill of lading case: Northumbrian Shipping Company v. E. Timm & Son Ltd [1939] A.C. 397 (HL).[1997] 1Lloyd's Rep. 360, at 375, per Leggatt L.J. who said that “ and applying what we believe to be the approach of LordDenning to s. 39(5), an approach with which we agree, ”

172. e.g. see a voyage charter party case: The Vortigern [1891] P. 140 (CA). ibid. at 377, per Leggatt L.J.

173. As for the fuelling doctrine of stages see the following bunking cases; Thin v. Richard [1892] 2 Q.B. 141; The Vortigern[1899] P. 140; McIver v. Tate Steamship Ltd [1903] 1 K.B. 362; Greencook Steamship v. Maritime Insurance Co. Ltd

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[1903] 2 K.B. 657. The stages of the voyage are normally fixed by the shipowner, see, per Tucker L.J. at 234 inNoemijula Steamship Co. Ltd v. Minister of Food [1951] 1 K.B. 223.In respect of the Y2K problem, it is also a moot pointwhether it could only be an insured peril when it is expressly so provided in the policy rather than being implied as onekind of unseaworthiness, insured or not insured.

174. e.g. see the following two marine insurance cases: Burges v. Wickham , 3 B. & S. 669; Boulton v. Lampton , 15 C.B.(A.G.) 132.Even loss or damage caused by unseaworthiness including Y2K non-compliance, which may or may notcause loss of or damage to the subject-matter insured thus being a risk rather than a certainty, may be recovered fromthe cargo insurer under the all risks clause (A), unless the insurer can succeed in proving that the Y2K non-complianceis attributable to the wilful misconduct of the assured.

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