THE RIGHT DECISION
The Club prides itself on its sympathetic claims handling and cost effective claims settlements. In many cases a Member is facing a claim from his customer and is understandably anxious to protect his commercial relationship by settling the claim as quickly as possible. These factors, and the fact that lawyers do not come cheap, all contribute to the vast majority of claims being settled without recourse to courts or arbitrators.
Claims against ship managers are often particularly complex and involve substantial sums. A successful defence can never be guaranteed and the cost of failure can be very high. However, the circumstances of a recent case were such that it was left to three arbitrators in Vancouver to decide on the Member’s guilt or innocence.
The facts of the case were that the Member had been appointed as the manager of the “OPAL WOOD” by the ship’s Canadian owners. In 1998 the ship was on passage from a British Columbian port to Vancouver with a licensed Canadian pilot on the bridge. In the course of the voyage the “OPAL WOOD” was required to make a turn to starboard in order to pass between the mainland and a small island. The weather was good and the manoeuvre should have been executed without difficulty. However, at the last moment the master realised that the pilot had delayed giving the order to alter course, as a result of which the “OPAL WOOD” was in danger of grounding on the island. Despite the master’s best efforts this is what happened a short while later, and the “OPAL WOOD” suffered serious bottom damage.
Repairs were subsequently carried out in Vancouver and the substantial sum involved was recovered from their hull underwriters by the owners. It was clear that the casualty had occurred as a result of an error in navigation and this was confirmed in the findings of the official enquiry.
Some two years later the managers received a claim from the owners for an amount in excess of US$2,000,000. The bulk of the claim was for loss of use of the ship and included the deductible on the owner’s hull policy. The claim was based on the allegation that the managers had failed to ensure that a proper bridge management system was in place on the “OPAL WOOD”, as evidenced by the fact that there had been only minimal exchanges between those on the bridge and the pilot prior to the grounding.
Lawyers were appointed in Vancouver to protect the Member’s interests and detailed investigations made into the veracity of the owner’s allegations. As a result it became clear that the Member had in fact taken all necessary steps to introduce approved bridge management systems on all the ships under his management, including the “OPAL WOOD”. The fact that the master and second officer had failed to implement this system prior to the grounding was not the fault of the Member.
The owner’s lawyers continually increased the costs of the defence by such means as insisting that lawyers from Vancouver travel to Scotland to take the deposition of the master. Expert witnesses were retained and travelled to Vancouver for the arbitration hearing together with a number of the Member’s staff from various countries.
On several occasions in the period leading up to the hearing, the owner’s lawyers suggested a compromise settlement be discussed. However, both the Club and its Member felt strongly that this was a claim that should be decided by the arbitrators and no settlement discussions took place.
The arbitration hearing was concluded on June 1st, 2001 and the findings were declared to be ready for publication only eight days later. This swift decision caused some concern and it was therefore with considerable relief that the Club received the good news that the arbitrators had found in the Member’s favour. Unfortunately, both sides were required to bear their own costs but this still resulted in a considerable saving when compared to the amount of the owner’s claim. There is always a risk in leaving a judge or arbitrator to decide on the merits of a claim, but in this instance there is no doubt that the right decision was made.