SHIPOWNERS, TIMECHARTERERS ASSESS RESCUE COSTS

The duty of a master of a merchant ship to render assistance to those in danger at sea is well established. Under international law, every nation requires the master of a ship flying its flag to render assistance to any person found at sea in danger of being lost and to proceed with all possible speed to rescue persons in distress if so requested. Under U.S. domestic law (46 U.S.C. sec. 2304(b)), a master of an American merchant vessel who fails to render assistance to those in danger may be fined $1000, imprisoned for 2 years, or both.

Although the practice of merchant vessels rendering assistance at sea is hallowed by long usage, the costs associated with modern rescue efforts are not. The question now being raised by some engaged in chartering vessels is simple: should the shipowner or time charterer pay for time lost when vessels deviate from their normal routes to assist in rescue efforts. The question was recently presented to three experienced maritime arbitrators in the New York M/V KITSA arbitration (S.M.A. 3119).

On December 17, 1990, while on a time chartered voyage from Vancouver to Taiwan, the M/V KITSA was one of three vessels ordered by the Coast Guard to assist the M/V ELOUNDA DAY which was taking on water. All three vessels altered course and responded to the distress call.

Traditionally, the master of a distressed vessel has discretion to release assisting vessels, which must otherwise remain on station until no longer needed. The master of the ELOUNDA DAY released two of the vessels, but ordered the KITSA to remain. The ELOUNDA DAY’s crew abandoned ship on December 23 and boarded the KITSA. The ELOUNDA DAY subsequently foundered.

The KITSA’s owner notified the time charterer about the rescue deviation. The charterer subsequently placed the vessel off-hire for five days covering the duration of the deviation by deducting $46,000 from its hire payment for non-use of the ship.

The shipowner then commenced arbitration to recover withheld hire, claiming the charter party contract did not contain an off-hire exception for deviating to save life. Therefore, the charterer should pay hire for the deviation period.

The charterer argued that, despite being mandated by tradition and law, the saving of lives aboard another vessel is entirely the shipowner’s business for which the charterer should not be penalized.

Two of the arbitrators held for the shipowner based on the premise that a charterer must pay hire continuously except for express exemptions named in the charter party. When charterer failed to add to the charter party clause granting the vessel liberty to deviate to save life with a simple caveat, “at shipowner’s time and expense” the charterer implied it would accept rescue costs.

In a well reasoned dissent, the third arbitrator held for the charterer. The KITSA was ordered by the Coast Guard to a vessel’s aid, therefore, the KITSA was effectively and legally removed from the charterer’s service. “The immediate obligation . . . to respond to ships in distress rests with the shipowning community. Although it might sound callous, the interests of the time charterer are financial and do not rise to the same moral and professional level as the shipowner. . . . Indeed, the laws of many maritime nations . . . now recognize claims for life salvage and in some instances, maintain funds to reimburse such expenses.”

TThe split decision in the KITSA charter dispute indicates that assessing costs for rescues at sea remains unsettled under American law. The charter party caveat seems to be “when in doubt, write it out.”


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