Settlement negotiations

Justice at last!

The Supreme Court of New Zealand handed down its decision in the Tasman Pioneer case on

The 16 April 2010, finding in favour of the Tasman Orient Line. The case had been lost in two previous instances, but the Supreme Court put things straight and corrected the lower courts’ misinterpretation of Article 4(2) (a) of the Hague Visby Rules, which protect a carrier in respect of loss or damage arising or resulting from “act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship”.

The Tasman Pioneer was a general cargo vessel on time charter to Tasman Orient Line. The owners were entered with The Swedish Club for both P&I and H&M. The charterer was the carrier under the Bills of Lading and the defendant in these actions. At the time of the accident, the vessel had left Yokohama, after having arrived from New Zealand with containerised cargo, and was bound for Pusan. The master was running behind schedule, and saw an opportunity to take a shortcut and save time by steaming between the islands of Biro Shima and Kashiva Shima, at the southern end of the central Japanese island of Shikoku, instead of following the usual route to the open sea. It was not a very good decision to make this night-time transit at a speed of 15 knots with strong winds at 35 knots and rain partly obscuring the radar images. However, during the narrow transit the master did decide to abort the passage, but the

vessel had come too close to the island of Biro Shima and touched bottom twice, at 0255 on 3 May 2001.

In spite of the grounding, the master kept the vessel steaming for a couple of hours before he anchored and then called the owners, who in turn called in the vessel’s underwriters. A few days later, the vessel was beached, with cargo holds numbers one and two completely flooded. The master was later criticized for his post-grounding conduct, as he failed to notify the Japanese Coast Guard of the grounding or to appoint Nippon Salvage to avoid further aggravation of the cargo damage. Instead, he continued his voyage for a couple of hours after the grounding incident, although he knew that the vessel was taking on water and was down by the head. However, there were no evidence presented that damage to the cargo was aggravated by any subsequent events following the grounding. It was the grounding alone that led to the flooding of cargo holds one and two, and it actually took about a week for the salvors to mobilise pumping equipment to start refloating the vessel.

Settlement negotiations

Prior to the case proceeding before the High Court of New Zealand, we made serious efforts to settle with two local New Zealand law firms, each representing various cargo claimants to the amount of USD 8.7 million and USD 3.4 million. The charterer as defendant managed to limit liability to about USD 4 million, and a corresponding limitation fund was established. GA contribution from cargo was about USD 2 million. We held several meetings with both claimants, and in the end managed to settle with the smallest claimant, whilst the other decided to go forward with the court proceedings.

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