Safety Management System (“SMS”) failure
An inspector of CARB - California Air Resources Board (the clean air agency of the state of California) – boarded a ship in July 2011 managed by an ITIC Member at the Los Angeles Terminal.
The Chief Engineer was asked if he was aware of the revised CARB 2009 California Regulations effective from 1st July 2009 which required vessels to switch main engine, auxiliary engines and auxiliary boilers to low sulphur fuel when in Californian Regulated Waters. The Chief Engineer told the inspector that he was only aware of the requirement to switch auxiliary engines to low sulphur fuel, in accordance with the Regulation effective from 1st January 2007.
The Master checked the Safety Management System but was unable to locate the 2009 requirement. The CARB inspector then went through the records of fuel switchover for the main engine, auxiliary engines and auxiliary boilers, and ascertained that the ship had called at Californian ports 17 times between 2009 and 2011 without switching over the main engine or the auxiliary boilers. CARB imposed a penalty on the ship owners, of US$283,500, for the failure to switch fuel during 17 port calls.
The owners claimed against the managers on the basis that the managers had been negligent. In 2009 a fleet circular had been sent to all vessels by the managers setting out the change in regulations, and asking that it be displayed in a prominent position. The managers therefore initially rejected the claim as resulting from crew negligence (which was excluded in the BIMCO management agreement). The owners did not accept this rejection on the basis that the managers had failed to update the SMS.
As it was considered unlikely that the manager would successfully defend a claim resulting from his failure to update the SMS the claim was paid in full.