Marine Liability Insurance and Law - Essay Example

? [MARINE LIABILITY INSURANCE AND LAW] a) Assessment of the Situation A collision of two ships, a roll-on roll-off ship, MV Puffin, and a general cargo ship, MV Othership, has occurred in the Singapore Straits, leading to injury of crew members of both ships. Cargo carried by both ships has also been partly damaged. Parts of both ships have also been damaged. MV Puffin’s oil tanks have not been damaged and there is no flooding. Therefore, it is proceeding to Singapore for repairs, and it will request tug assistance on arrival. On the other hand, oil is leaking from the bunker tank of MV Othership, but it is proceeding to Singapore under own power. The collision occurred at 0613 Hrs, local time, when visibility was good and there was a wind variable force of 2. This may imply that one of the ship’s navigation equipment might have been faulty. From the records, both ships, MV Puffin and MV Othership have Hull and Machinery insurance, under standard Institute Clauses-Hull terms. It is also probable that these vessels do not have Liability Insurance and Protection and Indemnity (P&I) insurance. Hull and machinery insurance covers the ship itself, the equipment on board, including propulsion and auxiliary machinery, cargo handling and navigation equipment (NEPIA, 2013). It also provides cover for the ship’s contribution to general average and salvage and part of the liability for damage to another ship in collision. On the other hand, Protection and Indemnity (P& I) insurance covers third party liabilities (NEPIA, 2013). The situation requires that the owners of the entered ships should take necessary steps to mitigate the hazards and prevent further losses from occurring. For instance, damage of MV Puffin’s bow and MV Othership’s bunker tank and hull amidships may pose great risks, if mitigation steps are not taken. Secondly, two MV Puffin crew members have been slightly injured while three crew members of MV Othership have been injured. Also, second-hand cars and trucks in forward spaces of MV Puffin have been damaged while pallets of canned foods in number 3’ tween deck of MV Othership have been damaged. This means that each of the two vessels has caused injury to people, and damage to property involving third parties. Therefore, there is third party liability involved in this situation. b) Initial Advice to the Owner of the Entered Ships MV Puffin in Relation to ensuring that Safety Obligations have been carried out The owner of the entered ships, MV Puffin has to take necessary steps to ensure that safety obligations have been carried out. The fact that crew members of the two vessels have been injured, and that MV Puffin’s bow has been damaged and that oil is leaking from the bunker tank of MV Othership, may imply that there are health and safety risks exist. The following advice and recommendations on how to ensure compliance with safety obligations may be helpful. First, the International Safety Management (ISM) Code, section one, requires that the ship operator should provide for safe practices in ship operation and safe working environment (NEPIA, 2013). Therefore, the ship operator should establish safeguards against all identified risks, after correctly identifying the risks associated with this situation. This can be done by observing loss prevention through good practices and procedures, which should be applied to prevent occurrence of incidents that may lead to further loss (NEPIA, 2013).The operators should also seek to minimise the severity of the consequences when incidents occur. Secondly, this accident and all associated hazardous situations should be reported to the company. The ISM Code, section 9, requires that all non-conformities, hazardous situations and accidents should be reported to the company (NEPIA, 2013). This collision involving MV Puffin and MV Othership should be analysed. The accident should also be investigations so as to improve safety and prevent pollution. This hazardous incident should be investigated by the master, and reported to the Marine Accident Investigation Branch (NEPIA, 2012, p, 34). The operator of the ship, MV Puffin, should ensure that the accident is reported to the flag state administration. Therefore, there has to be compliance with the Merchant Shipping Regulations in Accident Reporting and investigation to ensure compliance with safety obligations (NEPIA, 2013). Another step that should be taken to ensure that safety obligations have been carried out is investigation of the collision. This investigation can be carried out by the master or a responsible officer such as a senior member of the ship’s crew, who most probably has to be the Shipboard Safety Officer (SSO) (NEPIA, 2013, p.34). In his investigation, the Shipboard Safety Officer should take the following into account. First, he should investigate major or serious injury and every dangerous occurrence, potential hazards to safety and health that underlie this collision. The Shipboard Safety Officer should also make recommendations to the master to prevent recurrence and remove hazards that may exist, even after occurrence of the accident. The Shipboard Safety Officer should also make records of this accident which involves injury and damage of property, as well as, any other dangerous occurrence. c) Steps Necessary to reduce the Consequences of the Incident The collision of the two ships has caused damage to property and injury to persons. MV Puffin’s bow has been damaged and MV Othership’s bunker tank and hull amidships have also been damaged. This poses danger, given that both ships have proceeded with their journeys. The owners of the entered ships, MV Puffin should have to take steps to reduce the consequences of this collision. First, there is need of correcting the vessels’ navigation equipment and those that were damaged because, if the ships continue sailing in their condition, further danger might accrue. Any incident that may lead to death, injury or damage to property indicates that something is wrong, and the ship’s equipment in use needs to be corrected, if they are faulty (NEPIA, 2013, p, 35). For instance, the damaged bow should be looked at before MV Puffin proceeds to Singapore for repairs. This step should be aimed at reducing the probability of recurrence of a similar incident. Secondly, the ship operators should take necessary steps to make the situation safe. Section 8 of the ISM Code requires that the shipping company should respond to hazards, emergency situations and accidents that involve its ship at any time (NEPIA, 2013, p, 35). In this case, MV Puffin should make this situation safe by providing first aid or medical treatment to all the injured persons in this accident. Given that the ship is at sea and the injury is serious, crew members who have been injured should be taken to hospital for medical treatment. Alternatively, medical advice should be requested from the International Medical Centre in Rome, coast radio station or any other similar source (NEPIA, 2013, p. 35). 2. a) Potential Costs, Liabilities and Expenses that may attach to MV Puffin The collision between MV Puffin and MV Othership involves various potential costs, liabilities and expenses that may attach to MV Puffin. The first potential liability involves liabilities in respect to third parties. In a collision, the ship owner may have third party liability for injury to crew members, passengers or other people who are on board of either of the two colliding ships. Liabilities to third parties arise because MV Othership’s crew were injured. This means that third parties were involved in the collision, and they suffered injury for which they might need compensation. Where the assured has insurance in express terms against any liability to a third party, indemnity will be the amount paid or payable by the assured to such third party, in respect of such liability (Merkin, 2013, p, 100). Therefore, MV Puffin will incur costs of paying third parties in terms of compensation. Rule 19 (1) states that a ship has liabilities to pay damages or compensate for personal injury to a Seaman of an Entered ship. Also, hospital and medical and any other expenses related to such personal expenses should be paid by the ship owner (NEPIA, 2013, p. 23). Secondly, MV Puffin will incur liabilities in respect to Seamen. MV Puffin’s crew who have been injured because of the collision are entitled to compensation. The ship owner is liable in respect of any injury that its crew members suffer while they are on board (Christodoulou-Varotsi, 2008, p. 257). Therefore, MV Puffin will be liable to settle the expenses of medical care and maintenance of its injured, crew members until they have been cured. Another cost that may be attached to MV Puffin is diversion expenses. Given that both ships are reported be proceeding to Singapore, then one of them must have deviated or changed voyage. MV Puffin will have to incur diversion expenses in relation with this collision. In case there is a variation of the ship’s trip that would amount to deviation or change of voyage, the cost of such deviation can be covered, if notice is given to the underwriters immediately after receipt of advices (Hudson, Madge, & Sturges, 2012, p. 288). Liability resulting from collisions may also be attached to MV Puffin. According to Rule 19 9 (15), liabilities arising from collusions between an Entered ship and any other ship may be applicable, if a quarter of the member’s liabilities costs and expenses are not recoverable under Lloyd’s Marine Policy with Institute Time Clauses (NEPIA, 2013, p. 27). Also, when a ship that is insured comes into collision with any other vessel or ship, sometimes, the ship may become liable to pay by way of damages for property destroyed and personal injury caused (Mason, 2012, p. 131). In this case, MV Puffin is liable to compensate for pallets of canned foods in number 3’ tween deck of MV Othership that have been damaged, and MV Othership’s crew who have been injured. There are also costs associated with damage to property, which may also be attached to MV Puffin. For instance, MV Othership’s cargo has been damaged in the collision. Also its bunker tanks have been damaged, as a result of the collision. Damage to property involves any damages that are caused to other ships, cargo and port equipment (Chaturvedi, 2006, p. 41). This also involves liabilities in respect to cargo. Towage expenses may also be attached to MV Puffin. Rule 19 (15) states that there may be recovery in respect of liabilities costs and expenses that arise from towage of an Entered ship as long as the towage is for the purpose of saving or attempting to save life or property at sea (NEPIA, 2013, p, 34). MV Puffin will incur towage costs, liabilities and expenses because it will request for tug assistance on arrival at Singapore. Finally, according to Rule 19 (13) (a), there are liabilities, costs and expenses that are incurred as a result of any escape or discharge or threatened escape or discharge of oil the extent of the ship owner taking liabilities for damages or compensation payable to any person arising from or in respect of pollution (NEPIA, 2013, p. 31). MV Puffin will incur these liabilities because its collision with MV Othership led to the damage of MV Othership’s bunker tank, resulting into leakage of oil from bunker tank. Leakage of oil from the Bunker tank of MV Othership poses a risk of pollution to the water. In case, oil leaks and pollutes sea water, as a result of this collusion, then MV Puffin will be liable for pollution. b) The Ship Owner’s Insurance Policies that would cover these Costs, Liabilities and Expenses, if covered under P&I Insurance Given the high cost of injury and damage that results from collisions, liabilities for a collision between two vessels are apportioned on fault, based on legal principles (NEPIA, 2013, p. 172). It can also be affected by either ship’s legal right to limit liability. Therefore, costs, liabilities and expenses that may be attached to MV Puffin can be covered by various insurance policies of MV Puffin, if covered under P & I insurance. The ship owner’s liabilities are usually covered by both Hull and Machinery insurance policies and the P & I clubs. P & I clubs offer a third party cover for financial liabilities that arise from the payment of damages, compensation or expenses of death, personal injury, illness or loss (NEPIA, 2013, p. 53). In marine insurance, prior discharge of the insured’s liability to the third party applies only to the extent that the insured’s liability is in respect of death or personal injury (Birds, 2010, p. 150). Secondly, P & I will cover for ships’ crew (NEPIA, 2013, p, 53). The ship operator should ensure that all cases that require medical treatment have been presented to the attention of the P & I club, as soon as practicable. To protect legal interests of the ship owner, necessary steps should be taken to ensure that the seafarer receives the most professional and cost effective treatment (NEPIA, 2013, p. 54). P & I cover also provides for the ship owner’s liabilities arising out of damage to property, pollution and other consequential losses. 3. Evidence that should be collected following a Collision and its Importance in Subsequent Litigation The Master, appointed surveyor and team members from a law firm are responsible for the collection of evidence, following a collision. First, evidence pertaining to the training and health status of the ships’ crew should be collected. Training and health of crew plays a significant role in preventing or causing ship accidents, such as the collision between MV Puffin and MV Othership. According to the ISM Code, section six, the ship company should ensure that its ship is manned with qualified, certified and medically fit seafarers, in accordance with national and international requirements (NEPIA, 2013, p. 60). This evidence is important in determining the factors that might have led to the collision. For instance, if legal action is to be taken, then evidence on crew training and health will be necessary in the formulation of claims about the causes of the collusion. Secondly, lawyers should collect evidence from witnesses. Statements from witnesses should be taken, during the evidence collection phase. This evidence should be collected from the crew members of the two ships, as well as, from third parties. Evidence collections will also involve the collection of documents from the ship and the owner. ISM records are some of the records that can be collected. Also documents from third parties such as documents from vessel traffic control in areas where monitoring of vessel traffic takes place (Stauffenberg, 2008). Evidence in the form of documentation such as copies of log books, surveys of damaged cargo dated photographs and copies of tally books, among others are extremely significant in ascertaining the accurate reason for the damage because the P & I club will usually take over the handling of claims of damage on behalf of the assured (SKULD, 2009, p. 9). Third, there is a need to take photographs, draw diagrams and sketches in the collection of evidence after a collision. These photographs, diagrams and sketches should be dated, signed and witnessed. The use of photographs, diagrams and sketches that have been signed and dated as evidence is important for subsequent litigation. This is because the documents can show the actual damage caused by the collision in images. The Master can also take a recorded video or take coloured photographs to improve clarity of information. During a collision, the ships’ parts such as navigation equipment may be damaged. These parts may be damaged as a result of the collision or they may be damaged before the collision, leading to the accident. During the evidence collection phase, it is prudent to keep the damaged equipment or parts for inspection and determination of the cause of the accident later (NEPIA, 2013, p. 35).these equipment may also be used to determine whether the accident was a result of equipment failure or human error, and may be used in subsequent litigation to determine liabilities and compensation requirements. A collision between two ships may be caused by faulty navigation equipment of one of the vessels because it may be unseaworthy. Therefore, during collection of evidence, it is imperative to collect evidence pertaining to the seaworthiness of the two ships involved in the collision. Seaworthiness is the duty of the ship owner (Cartner, Fiske, & Leiter, 2009, p.180). Seaworthiness enables a ship to withstand the expected sea hazards so that it can complete the voyage successfully. A ship owner should not allow his or her ship to sail when it is unseaworthy. He or she should ensure that the ship is made good before sending it to the sea (Hodges, 2012). Determination of the ships’ seaworthiness will be important in ascertaining the ship that might have been the cause of the accident. Separately, during investigations and evidence gathering, following a collision, the Master should save the ships on board VDR recording and investigate whether AIS data is available from official or commercial sources. This data will be extremely significant in the establishment of faults that led to the accident, and will be used for subsequent litigation. It is therefore, imperative for a surveyor to be appointed by the operators of MV Puffin. The work of the surveyor will be to investigate the damage caused to the other vessel, MV Othership. However, the surveyor should investigate both vessels. This evidence of the damage caused by collision will be used to determine collision liability. It will also be prudent for the two ships to allow a law firm to attend on board the vessels, immediately after the collision. This will facilitate the collection of evidence, taking of statements from the Master and crew to enable them report liability aspects later. This will help either of the ships to seek compensation. Rule 26 (9) states that a member who seeks to recover through this class damage by collision must give a written undertaking to be responsible for such proportion of the costs of any legal or other proceedings taken to the directors (NEPIA, 2013, p, 26). Finally, there should be collection of evidence pertaining to oil leakage or a likely discharge of oil. The Master should ensure that she or he reports the details of the incident that involves discharge or likely discharge of oil to the flag state quickly. This will ensure that the coastal states are aware of the pollution or possible/expected pollution by informing them of oil pollution or threat to oil pollution. References Birds, J., 2010. Insurance Law in the United Kingdom. Alphen aan den Rijn: Kluwer Law International Press. Cartner, J. A., Fiske, R. P., & Leiter, T. L., 2009. International Law of the Shipmaster. New York: Routledge Publishers. Chaturvedi, P., 2006. Challenges of Occupational Safety and Health:Thrust, Safety in Transportation. New Delhi : Concept Publishing Company. Christodoulou-Varotsi, I., 2008. Maritime Work Law Fundamentals: Responsible Shipowners, Reliable Seafarers. Heidelberg : Springer Press. Hodges, S., 2012. Cases & Materials on Marine Insurance Law. New York: Routledge Publishers. Hudson, G. N., Madge, T., & Sturges, K., 2012. Marine Insurance Clauses. Abingdon: Routledge Press. Mason, H. B., 2012. Encyclopaedia of Ships and Shipping. Salzwasser: Verlag Gmbh Press. Merkin, R., 2013. Marine Insurance Legislation. London: CRC Press. NEPIA., 2013. 2013-14 P&I Rules. Retrieved from http://www.nepia.com NEPIA., 2012. An Introduction to P&I Insurance and Loss Prevention: Second Edition. Newcastle: NEPIA Press. SKULD., 2009, July. An introduction to P & I Insurance for Mariners. Retrieved from http://www.fd.unl.pt/docentes_docs/ma/wks_MA_19719.pdf Stauffenberg, N. V., 2008. Collision under English Law. Retrieved from http://www.vht-online.de/PDF/TC_02/08.pdf Read More