Operation of a ship’s hatch covers

Contracts of affreightment in general

It is commonly recognized that carriage of goods by sea is usually performed under contracts of affreightment. These contracts are generally divided between those evidenced by a bill of lading and those embodied in a charterparty agreement.² It is important to note at the outset that issues relating to bills of lading are dealt with by international conventions, including the Hague Rules,³ the Hague–Visby Rules,⁴ the Hamburg Rules⁵ and the Rotterdam Rules.⁶ However, the same cannot be said of charterparty agreements which are not regulated by

international conventions and remain governed by the general law of contracts. The result of this ‘freedom of contract’ – based exclusively on the correlation of supply and demand – is that the parties may agree to any terms they deem fit to govern their transactions. Thus, given the global use of these agreements – and the innumerable possible contractual provisions available – charterers and shipowners tend to prefer to use standard form contracts. These standard form contracts have become invaluable instruments for shipowners and charterers from around the world, who, being provided with the basic contractual terms for their agreements – since most of these terms have already been judicially tested – can focus on the peculiarities of the relevant transaction.

Bearing in mind the facts set out above, it now becomes pertinent to point out that most of the available standard charterparty forms have a ‘jurisdiction’ or ‘dispute resolution’ clause which subjects the interpretation of the agreement to the laws of a particular country. In this respect, it is common for charterparties to include clauses subjecting the contracts to English or American law and the resolution of any disputes arising therefrom to arbitration in London or New York.⁷ It is also noteworthy that in certain cases the standard form does not give the parties any option but subjects the agreement to English law.⁸

This short introduction already sheds light on the potential effect of a domestic law decision on the global chartering market. Therefore, it is considered appropriate to insert a discussion of an English court decision in a volume otherwise dedicated to international affairs.

Time charters

Depending on the service the ship is expected to perform, charterparties have been traditionally classified either as bareboat, time or voyage charters. However, with the development of modern commercial practices, a number of new charter-party categories have emerged, e.g. slot charters, trip charters and consecutive voyage charters.

Each of these types of charters has its own characteristic features, but for the purpose of this chapter focus will be placed on the time charter, which was the type of charter used in The Flintermar.⁹

A succinct description of the nature of a time charter agreement may be given by saying that under a time charter the shipowner agrees to place his vessel at the disposal of the charterer, who is entitled to use it – during the relevant period of

time – in any manner he deems fit within the agreed contractual limits.¹⁰ Alternatively, a more detailed definition of the nature of a time charter agreement was given by Lord Diplock in The Scaptrade.¹¹ In this case, Lord Diplock explained that a time charter:

It may be perceived from the above definition that under a time charterparty the shipowner retains possession of the vessel, together with the control of its navigation and merely agrees to provide a carrying service.¹³ The shipowner therefore remains responsible for the equipment and management of the vessel, whereas the charterer gets its commercial operation for which he must pay hire. The charterer will also be responsible for the expenses incurred in following his instructions and will be liable towards the owner for any liabilities resulting from the same.

In this respect, it must be noted that there is ample literature regarding the division of responsibilities during the loading and unloading of cargo under charterparty agreements.¹⁴ However, problems may arise under time charters where loss of or damage to property, or personal injuries are suffered during the operation of the vessel’s hatch covers. A further complication to this problem arises when independent stevedores are engaged to perform the hatch cover operations.

In the past, English courts had been faced with the allocation of the ‘cost’ of such operations,¹⁵ but until The Flintermar decision they had not been compelled to allocate the ‘responsibility’ for the said operations. An important question thus remained as to whether the recognized division of responsibilities for loading and unloading operations is broad enough to include the hatch cover operations or whether hatch cover operations should be considered as a separate matter.

Facts

The Flintermar was chartered by its owners – C. V. Scheepvaartonderneming Flintermar – to Med Feeder Co. Ltd under the BALTIME 1939 form on 13 January 1995 for a period of six months plus/minus 15 days with a charterer’s option to extend for a further six months. By an addendum to the charterparty, dated 13 January 1995, Sea Malta Co. Ltd guaranteed Med Feeder’s obligations under the charterparty.

The Flintermar had a single hold which could be subdivided into two or three single-deck holds. The hatch cover to the hold comprised 11 interlocking pontoons with a uniform length of 10.85 metres. Ten of these pontoons had a width of 5.45 metres, while the central ‘baby’ pontoon was 2.2 metres wide. Although, in principle, this central ‘baby’ pontoon was designed to strengthen the vessel by remaining closed during loading and unloading operations, there were times in which it had to be removed.

An important consideration is that The Flintermar was equipped with a hatch gantry crane, the sole purpose of which was the opening and closing of the hatch. However, the crane could only operate over a single tier of containers, three containers wide. Therefore, if there were containers blocking the gantry crane, the hatch could be opened in one of two ways: either (a) a shore crane could remove the containers blocking the crane, allow the gantry crane to open and close the hatch, thereafter restowing the moved containers; or (b) a shore crane could open and close the hatch. In this case the pontoons would be stowed ashore.¹⁶

The claim in this case arose out of an incident which occurred on 16 September 1995, when The Flintermar called at Med Centre Container Terminal (MCT), Gioia Tauro. During this call, the ship’s hatch gantry crane was blocked by containers. Therefore, stevedores employed by MCT performed the unloading of containers and – unusually – opened and closed the hatch at this call. During the closing of the hatch cover, the baby pontoon fell into the vessel’s hold together with the vessel’s chief officer.

The shipowners entered into a settlement agreement with the chief officer for compensation for his personal injuries and subsequently brought a claim for indemnity against Sea Malta as charterers.¹⁷

The issues

The main issue for the Court to decide was who was responsible for the opening and closing of the hatch as this party would be vicariously liable for the acts of

the stevedores. The Court was asked to consider the following clauses found in the charterparty:

First instance decision

At first instance, the case was brought before His Honour Judge Hallgarten, QC sitting in the Central London County Court.¹⁸

In presenting their claim, the plaintiffs argued that their right to indemnity arose out of clause 13 of the charterparty¹⁹ due to the fact that the charterers had undertaken the responsibility for the loading and unloading operations under clause 4 of the same agreement. Furthermore, they argued that the opening and closing of hatches were part of the said operations for which the charterers were liable.

On the other hand, the defendants’ argument was based on the fact that although the printed clauses 4, 9 and 13 of the charterparty may have shifted the responsibility for these operations from the shipowners to the charterers,²⁰ additional clauses 30(5) and 48 reversed the shifting of responsibility. Additionally, it was argued that the vessel’s crew directed the hatch cover closure, and was therefore responsible for proper performance of the operation.²¹

The issue as to whether the opening and closing of hatches is, as a general rule, a separate operation was not decided in this case. The reason being that, in this case, five containers needed to be restowed to be able to open and close the hatch covers.²²

His Honour Judge Hallgarten held that the chosen system for the closing of the hatches was unsafe. However, he found that this was not the proximate cause of the accident. In his opinion, the accident was caused by the negligence of the stevedores’ signalman or crane driver.²³ Nevertheless, and more importantly, His Honour Judge Hallgarten held that since the stevedores were performing owners’ work in replacing the pontoons, the owners’ claim failed.

The Appeal

The shipowners appealed His Honour Judge Hallgarten’s decision before the Court of Appeal. The appeal was heard by Rix LJ, Waller LJ and Sir Martin Nourse.

In their appeal, the owners restated their argument that hatch cover operations should be regarded as part of the loading and unloading operations for which the charterers were responsible. Alternatively, they asked the Court to recognize that owners and charterers had in practice reached an unwritten ‘accord’ – which from the evidence presented before the first instance court can also be described as ‘extremely informal’ – whereby, in situations where the ship’s gantry crane was blocked by containers, the charterers’ stevedores would use a shore crane to deal both with the containers and the pontoons.²⁴

The charterers, on the other hand presented the following four main arguments:

Rix LJ delivered the judgment on behalf of the Court. In his judgment he confirmed His Honour Judge Hallgarten’s finding that the accident was caused by the negligence of the stevedores.²⁵ However, for a proper construction of the charter to determine the allocation of responsibility for hatch cover operations he considered the following three questions essential:

In relation to the first question, Rix LJ held that the primary responsibility for hatch handling rests with the owner.²⁷ Regarding the second question, he held that subject to clause 48, clauses 4 and 13 placed primary responsibility for the cargo

operations on the charterers.²⁸ It was in answering the third question that he opened the case for debate. Insofar as the third question is concerned, he held that:

Rix LJ then came to the conclusion that:

He therefore held that the hatch handling was to be considered as an integral part of the cargo operation and decided – contrary to His Honour Judge Hallgarten’s judgment – that charterers were responsible for the injuries caused.³¹

Opening and closing of hatches as part of the loading and unloading operations