Shipowners are liable for tug losses
24th October 2023
Simon Tatham explains why UK Standard Conditions of Towage enable substitute tug owners to sue shipowners for damage or loss
In the tug world, tug damage, however caused, is generally at the risk and expense of the ships they assist. However, the terms that largely today protect tugs have their history and are frequently the product of court decisions over the decades.
It is, therefore, with some wonder that occasionally I see such carefully sculpted contracts compromised by the insertion of other laws, other than English law, governing their terms. The contract wording might seem straightforward, but a local court, not bound by these precedents, might well take a contrary view, possibly after a long and expensive multi-party fight.
You might say I am bound to say that, as an English solicitor, and we do appreciate the annoyance felt sometimes by our legal comrades abroad at the incursion of English law and jurisdiction into their local contracts. This is an attempt to explain why.
Turning first to relevant history, in the mid 1960s, United Towing’s tug Hullman sank after a collision with the Conoco-owned tanker it was assisting in the UK.
Hullman was hired in as a substitute tug by another local operator which had been engaged on the old pre-1986 version of the UK Standard Conditions of Towage (UKSCT). Hullman had no direct contract with the tanker owner but argued the indemnity provisions of the UKSCT applied to them. The claim, which was not very well argued, was thrown out in a 1973 Admiralty Court decision.
When the UKSCT was updated to the current version in 1986, the relevant provision, clause 5, was amended to ensure substitute tug owners were protected, the wording falling in line with a recent series of important court decisions in the context of shipping law.
Clause 5 now provides, in summary, that the tug owner is at all times entitled to contract with any other tug owners as agent for the hirer, and it is agreed by the hirer that such contract shall be subject to these UKSCT conditions; so the other tug owner may, as principal, sue the hirer and have the full benefit of conditions in every respect. And that of course includes the all-important indemnity provisions.
On that basis, the unfortunate Hullman would have recovered in full. These substitute tug arrangements operate typically in ports where, for whatever reason, there is occasionally an undersupply of tugs.
Tug operators call each other up and ask if their competitor can free up a tug for the upcoming job. In some cases, the other tug owner then subcontracts to yet another tug owner. In this case, since the UKSCT continues to apply to this further subcontract, the third tug owner gets the same benefit.
It can readily be appreciated therefore, that when the owner of the offending ship is approached with a very large claim for tug damage or loss from a company with whom neither they nor their agents have had dealings, there is much scratching of heads and protesting.
All the more so as they will not be getting a bill for the tug services themselves: the invoicing goes up the line. The same applies to charterers and their local agents where they are the party responsible for the hiring of tugs.
It can further be appreciated that a local court, faced with a claim in circumstances where there is no national law jurisprudence guiding the judge through this complex legal and factual maze, will be tempted to say the connection between the offending ship and the damaged tug is simply too tenuous to allow the claim, particularly if negligence of the tug has played a part.
The claimants will then have to persuade the judge to take note of expert evidence of “how it would be decided in London”, advice which we had to issue from time to time but with no guarantee of success.
The British Tugowners Association is currently co-ordinating a panel to review the 1986 conditions and to update them where appropriate, but I think it unlikely that clause 5 will see any change.
The supporting caselaw, the last of which was heard in 2003, (although that case concerned a tug requisition form, which the visiting ship was obliged to sign on arrival to load at Kharg Island but to much the same effect), has since been reinforced by statute.
The Contracts (Rights of Third Parties) Act 1999, which applies to contracts of towage, confers upon a third party the right to enforce a contract term or benefit where the contract in question expressly confers that right upon an identified third party by name or as a member of class. ’Other tug owner’ would answer that description.
Thus, to use a phrase dating back to oak-hulled warships liable to destructive weevil attack, the UKSCT are ’copper bottomed’ and the contract of choice, or the gold standard, for tug owners who stray from that at their peril.
A version of this article first appeared in the publication “International Tug & Salvage” – Click here to read it.