Who pays when a tow damages naval assets?
14th February 2024
Simon Tatham describes the legal conundrum and rigmarole after a barge and its cargo sliced through a naval floating dock during adverse weather.
Setting the scene of an incident: a harbour tug is heading into port with barge and its cargo astern, undertaking the final part of a jack-up rig’s delivery for repairs.
The jack-up straddles the barge, considerably wider than the craft. A pilot has boarded as this will be a tricky passage and a spring flood tide is running. A second tug is secured by a line astern. The weather is blustery.
As the flotilla follows a bend in the river, a strong gust swings the barge sharply to starboard and the outer edge of the stream where a naval floating dock is moored. The following tug is unable to prevent contact and the protruding corner of the jack-up slices into the side of the floating dock.
This is then unable to ballast down to float off a mine sweeper undergoing a drydocking and must suspend operations for a month of repairs. The jack-up’s sea fastenings are also ripped and broken by the impact with not uncostly repairs in consequence.
The local naval commander is not amused, local proceedings are issued, and the tug is arrested for security.
It transpires this part of the passage plan approved by the marine warranty surveyor prohibited port entry at winds more than Beaufort force four due to constrictions in the river.
Evidently, the harbour master had insisted the flotilla gain port entry before the weather worsened and although the pilot was aware of the condition of towage, he had assured the tug master that everything would be fine.
The tug master was concerned the pilot was pressing on too fast for comfort in the conditions but did not override his orders.
So far, as the navy is concerned, the tug is wholly to blame, but is soon very concerned to discover that despite fault, the tug can limit its liability under the 1976 Limitation Convention to about US$1.5M, a fraction of the claims with no realistic prospect of breaking limitation.
To do so would require proof the loss resulted from the tug owners’ personal act or omission, committed with the intent to cause such a loss, or recklessly and with the knowledge that such loss would probably result.
It is well known that all tugs in port are engaged on the UK Standard Conditions of Towage 1986 (UKSCT) and the navy now spots that article three might be helpful.
It provides that while towing on the orders of the hirer, the tug and crew are deemed to be servants of the hirer and under the control of the hirer and the hirer is vicariously liable for any act or omission by them.
So the navy, while not dropping its claim against the tug, hedges its bets by setting out to join the hirer in its proceedings. The problem is they do not know who the hirer is, and no one is prepared to tell them.
The local agent does not know himself, as he took the order from another agent with no details given. Is the hirer an oil major, a distant field operator, simply the local yard that gave an all-in price for bringing the jack-up into port or the hapless agent?
Absent any clue, the navy now decides to go the belt and braces route and attaches both the barge and the jack-up holding each responsible for its US$20M claim along with the tug.
The navy counts on the expectation that their aggressive tactics will bring the actual hirer, whoever that might be, into the open.
However, the claim is met by the allegation that surely neither the barge nor the rig can be negligent: they did nothing wrong and just happened, innocently, to be in the care of the negligent tug at the time.
Meanwhile, the tug has had to file a limitation fund in the local court to secure its release. It turns to the hirer, and quotes article four of the conditions. This provides that the tug owner shall not, irrespective of negligence on the part of the tug, be responsible or liable firstly for damage done to the tow or its cargo or to any other object or property and secondly for claims of any person not a party to the agreement for loss or damage.
It also goes on to impose on the hirer a duty to indemnify the tug owner against such claims. The hirer responds that the tug owner knew all about the passage plan and marine warranty surveyor’s conditions from the outset, and that the decision to proceed in unsuitable conditions was the sole and direct cause of the incident, denying liability. The question remains: who pays?
A version of this article first appeared in the publication “International Tug & Salvage” – Click here to read it.