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Collision and Non Contact Incidents

Introduction   -   Jurisdiction   -   Security   -   Investigation and Evidence   -   Adjustment of Claims   -   Relevant Rules

Introduction

Collision is one of the few areas where third party liabilities may be covered by the hull policy. Traditionally, the English hull policy covered 3/4ths of the collision risks and the P&I Clubs the remaining 1/4th. The usual Lloyd's hull policy does so under the 'Running Down Clause' (RDC). Nowadays the Club may exclude collision risks altogether or cover up to 100% of the risk, depending upon the mix of hull and P & I cover for the risk adopted by the ship owner.

Collision cover under the hull policy will normally only encompass a ship owners liability for damage to the opponent vessel and her cargo caused by physical contact between the two vessels. It is usually limited to the insured value of the insured vessel. P&I cover encompasses such liabilities in excess of the hull cover limit, together with a wide range of other risks flowing from the collision incident including damage to cargo carried on the entered vessel, personal injury, pollution and wreck removal. Therefore the Club will almost certainly be involved in the resolution of any serious collision claim and will generally take the lead role in dealing with it whilst liaising closely with the Member and their hull insurers.  See Class I Rule 25v.

 


Jurisdiction

The claims for damages suffered by the owners of vessels involved in a collision, if not settled amicably, will need to be resolved through litigation. The jurisdiction in which such disputes are dealt with can have an important bearing on the outcome because different jurisdictions apply different laws to the resolution of such claims. Most collisions occur in ports, harbours, anchorages or coastal waters where there is an obvious local jurisdiction but collisions that occur on the high seas require a choice of jurisdiction which can be influenced by the parties to the dispute.

Decisions in respect of jurisdiction taken in the early stages of a case can have an enormous impact on the overall outcome. This is particularly true in serious cases where limitation of liability of one or both of the vessels may be an issue. Laws on the application of rights to limitation vary from country to country. If the Member is considered to be the less blameworthy of the two parties, and is likely to make a net recovery on the balance of claims, the better jurisdiction is one which minimises the Members liability and maximises his recovery without the constraints of limitation. Conversely, where the Member is thought to be the more blameworthy, a jurisdiction which offers the best prospects of defence and the lowest limits of liability is preferable.

However choice of jurisdiction is not simply a matter of picking a forum which suits the Member, irrespective of its connection with the incident. The chances are that, if a particular forum suits the Members interests, it will not suit the interests of the other vessel and voluntary agreement is unlikely. There must be some means of enforcing the jurisdiction of choice by service of proceedings on the concerned vessel or a sister vessel or the owning company, if any of them are in the chosen jurisdiction and there must be sufficient connection with that jurisdiction to sustain proceedings there. Moreover, the question of which side establishes jurisdiction first may be a factor. Quick decisions on choice of jurisdiction may be necessary.

If neither party is able to enforce the jurisdiction of their choice it may be necessary to agree a compromise. For many years England has commonly been accepted as a neutral forum for deciding questions of collision liability. Because of the vast experience of the English Admiralty Court and the system of judicial precedent, litigants can reach an informed view about how the Courts are likely to view liability in a particular set of circumstances. English jurisdiction is therefore regularly agreed for collisions which occur all over the world between vessels of various nationalities.

It is extremely important that the Club is consulted at the earliest possible stage if a collision occurs so that the issue of jurisdiction can be resolved as soon a possible.


Security

Early consultation is also vital in order that decisions can be taken concerning the security that may be required for the Members own claim or the need to provide security on behalf of the Member to ensure that one of his vessels is not detained. In some cases, the opponent vessel may be the only significant asset against which a claim can be made and it may therefore be necessary to obtain financial security in case that vessel is subsequently sold or otherwise lost. In the event that such security cannot be obtained immediately in a suitable jurisdiction, it may be necessary to give consideration to lien insurance as a temporary measure. [See the section of this guide on Guarantees.]  


Investigation and Evidence

To make often complex decisions about issues such as jurisdiction, it is important to collect certain basic information rapidly in order that a view can be taken on the likely apportionment of liability and the amount of each vessels claim.

The following surveys will therefore normally be arranged by the Club when it has been notified of the incident:

  • a survey of the entered ship in order to determine the extent of the damage sustained and repairs required. This survey is usually arranged for and on behalf of the owners and their hull underwriters and will be for their account. It is customary to invite the owners of the other vessel to attend and conduct a joint survey in order to avoid later disputes about the extent of the damage;
  • a without prejudice survey of the damage to the other ship. Again, this is normally conducted jointly with the opponents surveyor. It is usually arranged on behalf of the owners and their collision liability underwriters and the costs will be apportioned between the Club and the hull underwriters in the same proportion as their respective cover for collision liabilities;
  • in most cases, the Members Classification Society will also appoint a surveyor to inspect the vessel;
  • in serious collision cases, and particularly in the event that the circumstances of the case are likely to be in dispute, a speed and angle of blow survey will be arranged. This will assess, from the extent and configuration of the physical damage to both ships, their relative speeds and the angle between them at the time of the collision. Such evidence, being based on fact, can frequently be used to resolve any inconsistencies between the various reports on the circumstances of the case. The cost of this report is usually apportioned between the hull underwriters and the Club since it concerns both the prosecution of the Members claim and the defence of the opponent vessels claim.


The Club will normally send their correspondent/surveyor (and possibly a lawyer in the more serious cases) to investigate the casualty but there is much that the ships crew can do to facilitate this process.

Brief notes to form the basis of factual reports should be prepared by the Master, duty officers, helmsman and any other material witnesses as soon as possible after the incident and before memories begin to fade. However, it should be borne in mind that written evidence may be disclosable to the other side in the event of litigation.[See the section of this guide on Documentary Evidence.]

The following additional documentary evidence should be retained on board the vessel in order to facilitate the handling of the claim:


Adjustment of Claims

Once liability has been apportioned and the amount of each vessels recoverable damages agreed, the case is normally settled by a single net payment from one vessel owner to the other. However, the amounts to be reimbursed by Club and hull underwriters are calculated differently. Under the Club Rules and the terms of most hull policies the claims on the insurers are calculated on the basis of a cross-liability adjustment, unless the liability of one or other vessel is limited by law, when a single liability adjustment is applied.

The following examples illustrate this approach:


Cross Liability Adjustment

Assume that both vessels in an example collision are insured for 3/4th collision liability with their hull underwriters and for 1/4th with their P&I Clubs. In the example vessel A is 75% to blame for the collision and vessel B is 25% to blame. Vessel A suffers damage costing $100,000 and vessel B damage costing $200,000. The payments by each underwriter are illustrated below.

  • the original working chart being used at the time of the collision (from which nothing should be erased);
  • deck and engine room movement books;
  • rough and fair deck and engine-room log books;
  • any navigational equipment logs;
  • course recorder print-out;
  • telegraph and engine data logger print-outs;
  • echo sounder print-out;
  • any radar or other plots made of the movement of the other vessel prior to collision;
  • vessel turning circle and stopping distance data sheet;
  • copies of vessels GA plan, stability data, and tonnage, loadline and safety certificates.

The following information will be required by the Club and any lawyers instructed for the Member:

  • the exact time of the collision;
  • the vessels position at the time of the incident;
  • the vessels heading at the time of the collision;
  • an estimate of the angle of blow of the collision;
  • details of the first sighting of the colliding vessel and the last position fix of the Member's vessel prior to the sighting;
  • details of the Member's vessels course and speed at the time of the sighting;
  • estimates of the colliding vessels course and speed at the time of the sighting;
  • details of any alterations of course and/or speed on either vessel thereafter, prior to the collision;
  • details of the radars in use, the mode of operation, and ranges set prior to the collision;
  • details of any lights, shapes displayed/ sound signals made prior to the collision;
  • details of the weather and tidal conditions;
  • details of those on the bridge/in the engine-room prior to/at the time of the collision;
  • details of the accuracy of the bridge and engine-room clocks and any recording devices;
  • details of any independent witnesses; e.g. any pilot on board either vessel, any third party vessel in the vicinity;
  • details of movements of either vessel following the collision;
  • details of any communication between the vessels before and after the collision.

In most maritime jurisdictions, the question of responsibility for collisions is determined with reference to the International Regulations for the Prevention of Collisions at Sea, which codify how vessels should conduct themselves in order to avoid collisions. The apportionment of liability between the vessels is normally based on the causative importance of any breaches of these regulations.

 

Vessel A

Vessel B

Percent to blame

75%

25%

Own damage

$100,000

$200,000

Liability to other vessel

$150,000(75%x$200,000)

$25,000(25%x$100,000)

Net settlement

$125,000 paid to B

 

U/Ws pay

$112,500(3/4x$150,000

$18,750(3/4x $25,000)

P&I pays

$37,500(1/4x $150.000)

6,250(1/4x $25,000)

Thus each collision liability underwriter reimburses its share of each vessels gross liability to the other vessel.


Single Liability Adjustment

If given the same example, Vessel A is entitled to limit liability in respect of Vessel Bs claim to $100,000 payment by the underwriters and the Clubs of each vessel will be adjusted on a single liability basis. This means that the net liability of one ship to the other is first calculated, in this example that of Vessel A to Vessel B, and then the limitation amount is applied to that net figure. The other vessel having been unable to recover its full claim because of the effect of limitation is treated as having no liability to pay its share of collision damage.

Vessel As hull underwriters will reimburse $75,000 [ 3/4ths of the limitation amount] and her Club will pay reimburse $25,000 [ 3/4ths of the limitation amount] Since Vessel B is treated as having no liability, Bs collision liability insurers [Hull and Club] will pay nothing.

Relevant Rules

Class I Rule 2 Definition of Hull Policies   -    Class I Rule 2 Definition of Ship   -   Class I Rule 18 ii Oil Pollution Limit   -   Class I Rule 25 Preamble   -   Class I Rule 25v Collision Liability