Liabilities Arising from Maritime Collisions

Liabilities Arising from Maritime Collisions

Following the occurrence of a maritime collision between two vessels, the competent maritime court may be confronted with one of the following situations and issue decisions accordingly:

• One of the two vessels is declared at fault.
• Both vessels are found to be at fault to a certain extent, and as a result, liability is borne by both vessels.
• Both vessels are held responsible, but the degree of responsibility of each cannot be determined.
• Neither of the vessels is found to be at fault, for example, where the collision is the result of an unavoidable incident.

The burden of proving that the collision was unavoidable lies with the party against whom a claim is brought on the basis of negligence or lack of due care. Establishing that an incident was unavoidable is highly difficult and is only possible in limited circumstances, such as where a sudden and unforeseeable event occurs, for instance, the unexpected failure of braking systems, which constitutes the sole cause of the collision. In any event, with regard to the extent of liability arising from a collision, a hypothetical example may be considered. Assume that the vessels Sahand and Alborz collide, both sustain damage, and the cargo on both vessels is also damaged, and that the vessel Sahand is recognized as being responsible for the collision.

Legal Foundations of Liability Arising from Maritime Collisions Under Iranian Law

In this scenario, the owners of the vessel Sahand shall bear responsibility as follows:

• Toward the owners of the vessel Alborz for damage caused to the vessel.
• Toward the cargo owners on board the vessel Sahand.
• Toward the cargo owners on board the vessel Alborz.

From a legal perspective, the situation shall be as follows:

• The owners of the vessel Sahand shall be liable to compensate the damage suffered by the owners of the vessel Alborz and to restore the vessel Alborz to its prior condition.
• The owners of the vessel Sahand shall bear no liability in respect of the damaged cargo on board the vessel Sahand due to the existence of an exception clause relating to liability for negligence included in the charter agreement.
• The owners of the vessel Sahand shall be liable to compensate the owners of the damaged cargo on board the vessel Alborz.
• Where the vessel Alborz is subject to a charter agreement, its owners may claim damages for loss of hire. This means that, had the collision not occurred, the vessel Alborz could have completed its existing voyage and, in addition, undertaken another voyage for which freight had already been agreed. This claim applies where the owners of the vessel Alborz were required to charter another vessel to fulfill their contractual obligations.
• The owners of the vessel Alborz are entitled to a vessel with the same efficiency and seaworthiness as it had prior to the collision. Where the replacement of worn parts and equipment is necessary, resulting in an increase in the value of the vessel Alborz, the usual deductions for new replacing old shall not be permissible. This is because the matter concerns compensation for loss rather than an insurance-based adjustment. The claim is for amounts that the owners of the vessel Alborz have directly and naturally incurred in order to restore the vessel to its pre-collision condition. Accordingly, they are entitled to recover such expenses from the owners of the vessel Sahand so as to be placed in the position as if the collision had not occurred.
• The owners of the damaged cargo on board the vessel Sahand may, in accordance with common practice whereby cargo owners generally insure their cargo, recover their losses from the insurance institution with which the cargo was insured. In this case, after payment of compensation to the cargo owners, the insurance institution may not, under maritime law, bring a claim against the owners of the vessel Sahand to recover the amounts paid. This is because the cargo owners on board the vessel Sahand themselves did not have such a right, and therefore the insurer cannot bring a claim by way of subrogation.
• However, the owners of the damaged cargo on board the vessel Alborz may recover their losses from the insurance institution, and in this case the insurer may, by way of subrogation, recover the compensation paid to the cargo owners from the owners of the vessel Sahand. In other words, the right of subrogation is applicable in this situation.
• The owners of the vessel Sahand may limit their liability if they prove that no personal act of negligence or lack of due care was committed. This is possible provided that the total claims against the vessel Sahand do not exceed the maximum liability limit stipulated in the relevant conventions.

Frequently Asked Questions About Liabilities Arising from Maritime Collisions