The Nicholas H

The loss of the Nicholas H, and her posthumous embarkation1 on what may be a lengthy voyage through the English courts, raises the novel question of the liability of classification societies to cargo interests. The known facts are stark. The vessel, a bulk carrier, sank in deep water en route from San Juan, Puerto Rico, to various ports in Italy on 9 March 1986, taking with her a cargo of bulk ore owned by the commodity trading house Marc Rich & Co. A.G. Marc Rich claimed U.S. $6 million for the loss of the ore, but the shipowner’s liability was contractually limited by the Hague Rules to $500,000. The claim was settled for that amount. Marc Rich then brought a claim against the vessel’s classification society, Nippon Kaiji Kyokai, (NKK) for the balance of $5.5 million, plus interest.

NKK and Marc Rich agreed to try as a preliminary issue the question whether, assuming the facts pleaded in the statement of claim were true, NKK owed a duty of care in tort to Marc Rich. The matter came before Hirst, J., who was thus asked to pronounce upon the following extreme but sketchy scenario. Having loaded the Marc Rich cargo in South America in early 1986, the vessel developed a crack in her shell plating and took refuge at San Juan, Puerto Rico. NKK were duly notified and she was surveyed by their non-exclusive local agent on 25 February. He recommended permanent repairs at the nearest available port before the voyage to Europe, the undertaking of which repairs he made a condition of the vessel’s maintaining class. However, a team flown out from Greece by the shipowner “baulked”, to use the judge’s word, at this. Temporary repairs using sealant and welding techniques were carried out in situ. On 1–2 March, NKK’s surveyor issued a further report revoking his first recommendation and approving the temporary repairs for a voyage to Europe. The vessel set sail; the crack reopened after a week at sea with the result referred to above. Most fortunately, there was no loss of life. The court assumed the negligence of the surveyor in altering his recommendation, failing to take advice from a naval architect and failing to ensure that the repairs were adequate.