Class II Liability

Damage to hull resulting from unsafe berth

A vessel is ordered to a port to deliver aid cargo. The depth of the berth is misdeclared by the local authorities and when the vessel berths, she strikes a concrete protuberance some 12 feet below the surface. A length of the hull is breached and a bunker tank punctured. As a result a quantity of bunkers is spilt and the vessel takes in water and grounds on the bottom of the berth. The vessel is arrested by the authorities as security for a hefty (and inflated) pollution fine and clean up costs. Despite the inequity of the situation (clear fault on the part of the port), the owners of the vessel are obliged, for practical reasons, to post full security and before long a local judgement is issued holding them fully responsible. In the meantime the vessel is refloated and temporary repairs effected. The vessel then sails to the nearest port available to conduct permanent repairs.

The owners institute arbitration proceedings against the Assured under the charterparty, in London. They prove that the berth was unsafe and the Assured is found liable for the losses suffered by the owners. These include the temporary and permanent repair costs and liability to the port authorities under the local judgement. Damages awarded against the Assured amount to $1,350,000. In addition, costs are awarded against the Assured in the sum of £75,000. The Assured’s own legal and survey fees amount to well in excess of £80,000.

The Club's damage to hull clause (clause 11, section 1) covers the Assured for liability to the owners in respect of the physical damage to the vessel. The Assured is also covered under the terms and conditions, for liability to the owners in respect of the pollution clean up costs (under clause 11, section 10) and for the fine imposed in this regard (clause 11, section 13). In addition, the Assured's own legal and survey costs are covered, as are those costs awarded against him by the London arbitrators.