Operation of a ship’s hatch covers
Operation of a ship’s hatch covers
Allocation of responsibility under a time charterparty agreement
Norman A. Martínez Gutiérrez
Lecturer, IMO International Maritime Law Institute
In 2005, the English Court of Appeal decided the case of The Flintermar.1 The main issue in this case was to determine who – between shipowners and charterers – was responsible for the ship’s hatch cover operations.
The purpose of this chapter is to analyse – in the light of The Flintermar – the allocation of responsibility for hatch cover operations under English law and to consider the practical applications of this decision to the global chartering community.
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
1  1 Lloyd’s Rep. 409;  EWCA Civ 17.
2 J. Wilson, Carriage of Goods by Sea (Harlow: Pearson/Longman, 2008), 6th edn, p. 3. This division, however, is not exhaustive since there are documents which may not necessarily fall into either category, e.g. freight contracts, sea waybills, mate’s receipts, etc. In this respect, see S. Boyd et al., Scrutton on Charterparties and Bills of Lading (London: Sweet & Maxwell, 2008), 21st edn, p. 1.
3 International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1924.
4 International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1924 as amended by the 1968 Visby Protocol.
5 United Nations Convention on the Carriage of Goods by Sea, 1978.
6 United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea – the Rotterdam Rules.
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.
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
7 E.g. clause 22 of the BALTIME 1939 (as revised 2001), clause 59 of the BIMCHEMTIME 2005, clause 26 of the BOXTIME 2004, clause 22 of the GENTIME, clause 45 of the NYPE 93, clause 34 of the SUPPLYTIME 2005.
8 E.g. clause 36 of the BPTIME 3 and clause 41 of the GASTIME.
9 In the case of The Flintermar, the charterparty in question was a BALTIME charter and the parties agreed to subject their disputes to English law.
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:
is a contract for services to be rendered to the charterer by the shipowner through the use of the vessel by the shipowner’s own servants, the master and the crew, acting in accordance with such directions as to the cargoes to be loaded and the voyages to be undertaken as by the terms of the charter-party the charterer is entitled to give to them.12
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.
10 Op. cit., Wilson, fn 2, pp. 5, 83.
11  2 Lloyd’s Rep. 253.
12 Ibid., pp. 256–7. In this respect, see also T. Coghlin et al.,Time Charters (London: Informa, 2008), 6th edn, p. 1.
13 Op. cit., Wilson, fn 2, pp. 4–5; op. cit., Coghlin et al., fn 12, pp. 1–
14 See for example, op. cit., Boyd et al., fn 2; op. cit., Wilson, fn 2; Coghlin et al., fn 12; R. Colinvaux, Carver’s Carriage by Sea (London: Stevens & Sons, 1982), 13th edn; J. Cooke et al., Voyage Charters (London: Informa, 2007), 3rd edn.
15 The Azuero  1 Lloyd’s Rep. 464.
The case of The Flintermar
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 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
16  1 Lloyd’s Rep. 409, p. 412.
17 Although in actual fact Sea Malta was acting as guarantors of Med Feeder’s obligations under the charterparty, they appear as ‘charterers’ in box four of the agreement.
the stevedores. The Court was asked to consider the following clauses found in the charterparty:
4. Charterers to provide
Whilst on hire the charterers […] to arrange and pay for loading, trimming, stowing […] unloading […] and delivery of cargoes […].
The Master to prosecute all voyages with the utmost dispatch and to render customary assistance with the vessel’s crew […].
13. Responsibility and Exemption
The charterers to be responsible for loss or damage caused to the vessel or to the owners by goods being loaded contrary to the terms of the charter or by improper or careless bunkering or loading, stowing or discharging of goods or any other improper or negligent act on their part or that of their servants.
Clause 30 – Assistance by Crew
Time charter hire includes rendering customary assistance by the officers and crew same as when trading for own account inter alia:
1) opening and closing of hatches;
5) supervision of loading and discharging;
Above services to be rendered […] free of charge to the charterers.
Clause 38 – Stevedores damage
Should any damage be caused to the vessel or her fittings by the stevedores, the Master shall endeavour to obtain repairs from the stevedores themselves and will report to charterers and port agents within twenty four hours from occurrence (but in any case before vessel sails from port where damage incurred), Master to endeavour to obtain stevedores’ written acknowledgement of damage caused and will arrange together with agents for a survey of damages, failing which charterers shall not be liable for their repair costs.
Clause 48 – Charterers’ observer
[…] Any advice, accommodation or assistance that the charterers’ observer may render with regard to the loading/discharging operations of the vessel, is given to assist the Master. Neither the observer nor the charterers are to be held responsible in any way whatsoever for the consequences of such advice, recommendations or assistance; it being clearly accepted and understood by the charterers that the full and ultimate responsibility shall always remain with the Master of the vessel […] Loading, stowage, discharging to be made at Owners/ Master’s decision.
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 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.
18 C. P. Scheepvaartonderneming Flintermar v. Sea Malta Company Ltd, 2003, unreported.
19 The plaintiff’s argument was based on the case of The White Rose  2 Lloyd’s Rep. 52.
20 As in the case of The Filikos  2 Lloyd’s Rep. 555;  1 Lloyd’s Rep. 9.
21 The direction of the operation by the crew was necessary as the positioning of the interlocking pontoons was such that they needed to be opened and closed in a specific order which the stevedores were not familiar with. If the crew therefore performed the operation – the operation being performed and directed by the chief officer with the assistance of the shore crane – the responsibility for the same would be on the shipowners. This argument is in line with the decision of Sir Robert Gatehouse in The Visurgis  1 Lloyd’s Rep. 218, p. 224.
22 These five containers needed to be put ashore to be able to open the pontoons to unload the cargo. Once the discharge of cargo had finished, the pontoons were closed and the five containers were reloaded on deck.
23 Para. 48 of his judgment.
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:
(a) as held by His Honour Judge Hallgarten the opening and closing of hatches was part of the owners’ responsibility both under common law and under clause 30(1) of the agreement;
(b) even if the court were to recognize an ‘accord’ between the charterers and owners, such accord did not alter the fact that when dealing with hatch covers, stevedores were performing owners’ work;
(c) under clause 48 it was clear that the ultimate responsibility for loading and discharging was on the owners, particular attention having to be given to the phrase ‘the full and ultimate responsibility shall always remain with the Master of the vessel’; and
(d) the master’s unsafe system of work to close the hatches was a material factor in the causation of the loss and, as such, should defeat the owners’ claim.
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:
1 Who under the charter has primary responsibility for hatch handling operations?
2 Who under the charter – absent clause 48 – has primary responsibility for cargo operations?
3 Does the reference in clause 48 to the ‘master’s full and ultimate responsibility’ override the answer under (2)?26
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:
if the correct characterization of the facts of the discharge at Gioia Tauro is that the replacement of the pontoon, even if treated as part of the cargo operations themselves, is nevertheless properly to be considered as the consequence of the master’s decision as to the method of operation, then the owners will fail. If, however, it falls to be considered as part of the cargo operations and the accident was due to the stevedores’ negligent execution rather than the master’s decision, then, subject to Mr. Kimbell’s fourth submission on causation, cl. 48 will not avail the charterers.29
Rix LJ then came to the conclusion that:
[n]ot only did the hatch handling occur within the time and space of the overall cargo operation, but it was conducted by charterers’ stevedores as an integral part of that cargo operation, without extra payment or any payment charged to the owners, and all pursuant to an accord or agreement between the parties.30
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
Possible ways to approach the issue of hatch covers
It is submitted that there are two ways of approaching the issue of allocation of responsibility for hatch cover operations. The first is by considering hatch cover operations as part of the loading and unloading operations, whereas the second is to consider such operations as a completely separate operation.
Before proceeding further, and to be able to contemplate both possibilities, it must be borne in mind that the trade in the case of The Flintermar was a ‘feeder’ service. Therefore, at any given port containers could be loaded or unloaded, or merely shifted to allow the loading or unloading of other containers. Hence, at any given port the following operations could have taken place:
1 Containers on deck would be discharged first.
2 Pontoons would be opened to the extent that it was necessary to access containers below deck.
3 The containers below deck would be discharged.
4 Containers would be loaded into the hold.
5 The pontoons would be closed.
6 Any containers to be placed on deck would be loaded last.32