Dispute over Ship Collision Damages: Shao Jun'ou Vs Zhoushan Dingheng Shipbuilding Co., Lt.d and Shanghai Dingheng Shipping Co., Ltd.

2015-08-17 16:58:50 BJT

ZHANG Jiansheng

[Abstract]
In case collision involved a ship which is on her trial voyage, according to the principle of "Who controls shall assume the risk", since the ship is controlled by the shipbuilder, who shall thus bear the risk accordingly. For collision involved three ships, whether it shall be deemed as one incident or two shall depend on the examination whether there exists a close-quarters situation and whether there is sufficient time for taking avoiding measures.

[Case index]
First instance: Ningbo Maritime Court, (2011)YHFZSCZ No.24 dated 23 December 2011
Second instance: Zhejiang Higher People's Court, (2012)ZHZZ No.31 (16 May 2012)

[Detail of case]
Plaintiff (Appellee): Shao Jun'ou
Defendant (Appellant): Zhoushan Dingheng Shipbuilding Co., Ltd. (hereinafter referred to as "Zhoushan Dingheng")
Defendant: Shanghai Dingheng Shipping Co., Ltd. (hereinafter referred to as "Shanghai Dingheng")

At aournd 1000hrs on 19 April 2010, "Zhe Xiang 988" owned by the Plaintiff departed from Fuzhou after loading with around 5000MT sand, while "Ding Heng 9" was anchored in Fo Du fairway. At 1144hrs, "Zhou Hai You 9", sailed down from Dinghai, passed through the sea area in a distance of 0.5nm west to Yang Xiao Mao. At 1158hrs, the Second Officer of "Ding Heng 9" observed "Zhe Xiang 988" in a distance about 0.3nm who approached to her. Both of the ships had not taken any avoiding measures. At around 1200, the two ships collided. At 1201hrs, "Zhou Hai You 9" detected "Zhe Xiang 988" in a distance shorter than 0.3nm, and order to "hard to port". At around 1201.5hrs, "Zhe Xiang 988" first observed "Zhou Hai You" which was in a distance of tens of meters. At around 1202hrs, the two ships collided. At around 1204hrs, "Zhe Xiang 988" sunk. The Plaintiff paid the wreck removal cost for "Zhe Xiang 988" in an amount of RMB2 million and indemnification to family dependents of the 4 deceased crewmembers in an amount of RMB2.28 million. On 15 June 2011, the MSA issued the Investigation Report of Marine Incident, determining that "Zhe Xiang 988" and "Zhou Hai You 9" shall bear equal liability for the collision between them, while "Zhe Xiang 988" shall bear the major liability for the collision between her and "Ding Heng 9" and "Ding Heng 9" bears the secondary liability. The Plaintiff brought a lawsuit before the court requesting the two Defendants to bear the joint and several liability to indemnify the Plaintiff for RMB4 million and assume the legal costs.
The court found that the registered operator of "Ding Heng 9" is Zhoushan Dingheng during her trial voyage. On 28 April 2011, the Defendant Zhoushan Dingheng completed the building of "Ding Heng 9" and the Defendant Shanghai Dingheng obtained the ownership of the ship the next day, on 29 April 2011.

[Trial]
Upon hearing, Ningbo Maritime court ascertained: around 2 minutes after collided with "Ding Heng 9", "Zhe Xiang 988" collided with "Zhou Hai You 9", which caused "Zhe Xiang 988" sunk. Given the panic of the crewmember and short time between the two collisions, most of the crewmember would not be able, even maneuver the ship with normal seamanship, to avoid the occurrence of the subsequent collision, thus there is causal relationship of the collisions involved the three ships and shall be deemed as a chain collision. In connection with the Investigation Report of Marine Incident, the court ascertained that the proportion of collision liability among "Zhe Xiang 988", "Zhou Hai You 9" and "Ding Heng 9" in this collision incident shall be 45%: 45%: 10%. Taking into consideration of the depreciation of the ship, market condition and the market price of ship of same kind at the time when the incident occurred, the court ascertained that "Zhe Xiang 988" valued RMB12 million and the losses sustained by Plaintiff due to this collision totaled RMB16.28 million.

The Defendant Zhoushan Hengding was the shipbuilder of "Ding Heng 9" and actually controlled the ship during her trial voyage. It was during her trial voyage, "Ding Heng 9" collided with "Zhe Xiang 988", thus Zhoushan Hengding shall indemnify the losses sustained by the Plaintiff due to this collision. The Plaintiff failed to prove that the Defendant Shanghai Hengding has actually controlled "Ding Heng 9" at the time when the collision occurred. Shanghai Hengding obtained the ownership of the ship after the incident. In addition, the Plaintiff has not claimed for maritime lien before the court and thus was not entitled to request the Defendant Shanghai Hengding to indemnify its loss. Taking consideration of the Plaintiff's loss and the liability proportion assumed by "Ding Heng 9", the Defendant Zhoushan Hengding shall indemnity the Plaintiff for RMB1.628 million, which has not exceeded the limitation invoked by the two Defendants. In sum, according to Paragraph 1 of Article 169 of the Maritime Code of the PRC and Paragraph 1 of Article 64 of the Civil Procedure Law of the PRC, the court ruled that 1) the Defendant Zhoushan Hengding shall indemnify the Plaintiff Shao Jun'ou for RMB1.628 million within 10 days after the judgment becomes effective; 2) overrule other claims by the Plaintiff Shao Jun'ou. After the first instance judgment was pronounced, Zhoushan Hengding filed an appeal with dissatisfaction to the first instance judgment, and the appellant court upheld the first instance judgment.

[Analysis]

1. How to determine whether it's one collision or two for collisions involving three ships?

Two factors shall be taken into consideration: 1) whether there is continuity in time; 2) whether there is causal relationship between the two collisions. If the first collision does not cause subsequent close-quarter situation or even it does cause close-quarter situation which could be avoided through good seamanship and cautions but still collided with other ships or terminal, then these collision shall be deemed as two separate collisions. The reason lies in that under such circumstance, there is no causal relationship between the two collisions, the other party has no intervention to or fault at the second collision, thus the chain of causation has been broken and shall not bear relevant indemnification liability. In this case, about 2 minutes after she collided with "Ding Heng 9", "Zhe Xiang 988" collided with "Zhou Hai You 9" which caused "Zhe Xiang 988" sunk, there is continuity in time between the two collision and the second collision could not be avoid even with good seamanship and caution, thus there is causal relationship between the collisions of the three ships which shall be deemed as chain collision.

2. Who shall be held liable if the ship which is on her trial voyage involves a collision?

There are various points of views on who shall be held liable when a collision occurred to the ship which is on her trial voyage. The author holds that according to the theory of cost for risk control, to let the party who is most close to the risk to bear the risk shall encourage the party to try its best to control the risk for its own interests and would also minimize the cost for risk control, otherwise it may cause moral risk, i.e. to leave alone what was under its control but let other parties to bear the risk of loss arising therefrom. In case the aggrieved party claim for maritime lien, which is statutory real security, since the maritime claims arising due to ship collision have recourse effect and could reach to the owner who obtains the ownership of the ship after the collision incident. In this connection, there is risk for the shipowner as the holder of the real security to be held liable for statutory risk.

(By Judge of Ningbo Maritime Court)







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