Tuesday, December 31, 2013

Mobil Shipping & Transp. v Wonsild Liquid Carriers case brief

Mobil Shipping & Transp. v Wonsild Liquid Carriers case brief summary
US court of appeals for the Second Circuit, 1999

  • In late 1994 Mobil Shipping (Mosat) chartered a freighter named the Alsterstern from Wonsild.
  • Under the charter, Wonsild warranted that the vessel “shall be in good working order and condition and in every way seaworthy and fit for the carriage of the cargo”.
  • The vessel lost power while proceeding to a discharge and crashed into the discharge berth.
  • A surveyor hired by Wonsild determined that the vessel could navigate if the vessel sailed at the safest speed, in favorable weather and the hull damage was monitored.
  • The vessel’s captain said he could navigate to Hong Kong before making the repairs.
  • Mosat told Wonsild that it was contemplating a discharge of the Hong Kong cargo in Singapore and it instructed the vessel to remain in Singapore.
  • Wonsild told Mosat that the costs of doing that would be bear by Mosat, since the vessel was able to navigate.
  • Mosat directed Wonsild to have the remaining oil discharged in Singapore.
  • Mosat paid the full freight as if the cargo had been transported to Hong Kong.
  • Mosat incurred in additional costs to off-load the oil, store it and obtain another vessel.

Procedural Posture
  • Mosat commenced a breach of contract in the southern district of New York.
  • The court held that Wonsild breached its contractual warranty that the vessel would be seaworthy throughout the voyage.
  • There was a heightened standard because the vessel was transporting hazardous oil.

Whether the vessel was seaworthy.

No, the ship was not seaworthy. Therefore, Wonsild breached its contractual obligation that the vessel would be fit to carry the oil throughout the voyage.
The district court opinion is correct and is affirmed.

  • Seaworthiness:
    • A vessel is seaworthy when it “is reasonably fit to carry the cargo which she has undertaken to transport”.
    • In this environmentally -sensitive era, consideration of the potential environmental impact of a disaster comports with modern notions of what goes into the “seaworthiness” calculus.
    • The vessel must be equipped to store and transport the fluid safety.
    • The hazardous nature of the cargo is a relevant factor when determining the seaworthiness.
    • The seaworthiness depends on timing, upon delivery or afterwards.
  • Latent Defect.... the mere existence of a latent defect doesn’t terminate ipso facto the liability either under COGSa or under the Hague-Visby Rules.
  • Wonsild decision of not repairing the vessel was a superseding, intervening act breaking the chain of causation that is necessary to excuse its failure to perform its contractual obligations.   
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