Liabilities of Classification Societies to Shipowners / Answer to the Response of A. Kennedy – LR from Aristides Economides & Co – John Economides

Associations, Chartering, Classification Societies, Comment, Fixtures, Legal, Letters, Markets, News — By on December 22, 2014 at 8:12 PM
John A. Economides

John A. Economides

Following Andrew Kennedy’s response earlier on today at 15:28 GMT on the above subject, herebelow John Economides replies with a letter which we also quote in full:

QUOTE

Dear Sir/Madam,

I read with great interest today’s response from Mr. Andrew Kennedy Barrister,  Deputy Group Legal Director, Group Legal Services of Lloyd’s Register on my article dated 17th December 2014.

As I mentioned in that article,  “Claimants have been generally unsuccessful in their claims against classification societies for liabilities arising from alleged negligent or faulty survey and classification of ships. The main conditions for establishing a claim on such grounds (in tort) are,  a duty to conform to a standard of conduct, a breach of that duty, causation, foreseeability and damages (economic loss). However the standards to prove these conditions to the satisfaction of Courts are usually high and this is why in most cases claimants have found it difficult to fulfill them against classification societies.”

In support of this I listed numerous precedents from the UK and USA various claimants demonstrating the above and closed with the more recent case of the Redwood in Italy (2010) in which the time charterers were successful against LR.”

For good order let me clarify that in the case of the Redwood there were two decisions:

a)      The Tribunal of Genoa (2010) which established the principle of liability for the negligence of classifications societies towards third parties (deriving from the issuance of inaccurate certificates of class) i.e. the duty to conform with a standard of conduct and breach of that duty, and which affirmed that liability against defendants.

b)      The Genoa Court of Appeal (2014) which finally denied the liability of the defendants / Lloyds Register as Mr. Kennedy rightly points on causation – specifically because the time charterers did not prove to the satisfaction of the Court, prior and effective knowledge of the class certification and reliance upon it for the conclusion of the charter party.

I then focused on the subject stating that “More rare and unsuccessful in their claims against classification societies have been the shipowners themselves. The leading case here was the Sundancer in the United States (1993) brought by the shipowners against ABS. Interestingly in that case the classification society was released mainly on the grounds that the shipowner’s duty to furnish a seaworthy vessel is non-delegable.”

Finally I referred to the more recent case of the Hanna D in Greece (2011) in which the Piraeus First Instance Court and the Piraeus Court of Appeal accepted that “the provision of classification survey and certification services should conform with statutory and legal responsibilities like the classification Rules, IACS Unified Requirements (standards), Greek law principles of good faith and technical practice as well as relevant duties of care and diligence in the rendering of such services. Both Courts “accepted further that breach of these responsibilities and duties draws corresponding liabilities for the class which are extra contractual and (depending on the circumstances) in tort.”

The Piraeus Court of Appeal (PCA Dec. 89/2011) found that “the damage was due to poor condition (extensive wear and corrosion) of lower bulkhead plating which the class should have surveyed and mandated immediate repair and so upheld the claim of the plaintiffs for wrongdoing in tort and awarded to the shipowners compensation for actual and prospective damages (loss of profit) by the classification society.”

On the Greek cases Mr Kennedy refers:

The Patagonian Pride was a claim on certification followed by imposition of conditions of class for defects and requirement that those defects be repaired, within a reasonable period of time, for class to be maintained. The Hanna D was a claim for negligent, faulty and wrongful survey and non imposition of requirement for immediate repair.

The Vocean was a claim on advice contended conflicting with the imposition of requirements for repairs of during a routine periodic survey (based on a clear breach of the classification Rule requirements). Again the Hanna D was a claim for negligent, faulty and wrongful survey and non imposition of requirement for immediate repair.

The Jeannie was a claim on alleged wrongful withdrawal of the vessel’s class for clear deficiencies on claims barred by the classification contract. As aforementioned the Hanna D was a claim for negligent, faulty and wrongfulsurvey and non imposition of requirement for immediate repair.

Finally I cannot but agree with Mr. Kennedy’s implication in his response, that the Hanna D is an extraordinary case especially on the above (successful) premises. Adding however that in the same premises it is also novel and perhaps groundbreaking case on the liabilities of classification societies to shipowners.

Yours Sincerely,

John A. Economides

Lawyer – Partner, Aristides Economides & Co

UNQUOTE

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