Both to Blame collision clause. This is a clause found in both voyage and time charterparties and also in bills of lading. It is a protective clause, to give protection to one side. For example, a typical clause in a charterparty can state:
"Both to blame collision clause:
If the ship comes into collision with another ship as a result of the negligence of the other ship and any act, neglect or default of the Master, mariner, pilot or servants of the Carrier in the navigation or in the management of the ship, the owners of the goads earned hereunder will indemnify the Carrier against all loss or liability to the other or non-carrying ship or her owners in so far as such loss or liability represents loss of, or damage to, or any claim whatsoever of the owners of said goods, paid or payable by the other or non-carrying ship or her owners to the owners of said goods and set off, recouped or recovered by the other or non-carrying ship or her owners as pan of their claim against the carrying ship or carrier."
The purpose of such clauses is to restore the position of the shipowner/carrier who was traditionally not liable to compensate the owner of the cargo on board the vessel for errors in navigation or management of the vessel. Under United States case law, however, the cargo owner could bring a successful action against the non-carrying vessel for 100 per cent recovery (from The Atlas, 1875) and the owner of this vessel could then seek indemnity from the carrying vessel.
Before 1910 and the "International Convention for the Unification of Certain Rules of Law with Respect to Collisions between Vessels" adopted in Brussels in that year, if both ships were at fault, the damages were divided equally. This was called the "divided damages rule". This Rule was applied in the United States where the cargo was allowed to claim 100 per cent of its loss from the non-carrying vessel, which was then able to claim back 50 per cent from the carrying vessel.
This means that if vessel A was only 5 per cent to blame, its liability was allocated as 50 per cent. This led to the carrying vessel having to partly compensate one cargo, indirectly, if the vessel's fault in a collision was less than 100 per cent but not if the fault was 100 per cent owing to the old rule of no liability for errors in navigation. Collision can be such an error.
If the cargo interest was permitted to recover 100 per cent from the non-carrying vessel and this vessel could then claim indemnity from the carrying vessel, this led to absurd results in relation to the position under shipping law and the exception of liability for errors in navigation. Carriers and shipowners attempted to insert "Both to blame collision" clauses into bills of lading where claims and disputes were to be decided in United States courts. 'The effect of such clauses is to require the cargo interest to indemnify the carrying vessel for any compensation this vessel may have to pay the non-carrying vessel.
Initially, however, such clauses were held to be invalid in United States v. Atlantic Mutual Insurance Co., 1952, by the U.S. Supreme Court. In American Union Transport v. U. S.A., 1976, the clause was held to be valid in private contracts such as charterparties and bills of lading connected only with charterparties. However, if such a clause is inserted into a bill of lading that is used by a public carrier or a bill that can be endorsed to third parties, the both-to-blame collision clause is invalid.
When the Brussels Collision Convention was adopted, the "proportionate damages rule" in the Convention allowed an apportionment of liability depending on the actual fault. The United States has not adopted the Brussels Collision Convention, whereas other major maritime countries have.
In the United States the divided damage rule applied until 1975 and this caused much uncertainty in Contents Index shipowners if a claim from cargo interests was to be decided in that country. In United States v. Reliable Transfer Co., 1975, the U.S. Supreme Court permitted the proportional damages rule to be applied unless the two vessels are equally at fault or when it is impossible to determine precisely the comparative degree of their fault.
BLOG COMMENTS POWERED BY DISQUS