Lloyd's Maritime and Commercial Law Quarterly
THE LIABILITY OF CLASSIFICATION SOCIETIES
P. F. Cane*
Classification societies are ship surveyors. They are employed by governments, shipowners, insurers and so on. They are said to perform both public and private functions. The liability of classification societies for loss caused by negligence has recently been considered by higher courts in the United States and the United Kingdom. This article analyses the functions of classification societies and examines the recent cases. Much of the reasoning used to justify not imposing liability is problematic both conceptually and in policy terms. The conclusion is that the liability of classification societies neither is nor should be as limited as some media coverage of these cases has suggested.
The liability of classification societies for negligence in surveying ships has recently been considered by higher courts on both sides of the Atlantic—by the English Court of Appeal in The Nicholas H
1 and by a United States federal Court of Appeals for the Second Circuit in The Sundancer.2 The relevant facts of The Nicholas H (assumed, not proved) were that MR owned cargo worth $6 million which was lost when the vessel in which it was being carried sank as a result of the failure of repairs to the ship’s cracked hull. MR commenced but did not pursue an action against the charterer. It settled its claim for compensation against the shipowner (S), whose liability, under the Hague Rules, was limited to $500,000. MR claimed the balance of its loss in tort from NKK, the shipowner’s classification society, on the ground that NKK’s surveyor negligently approved the repairs and that, if this approval had not been given, the ship would not have set sail on her fatal voyage and the cargo would not have been lost.
In The Sundancer the plaintiffs (SC) converted a passenger car ferry into a cruise liner. They engaged the defendant classification society (ABS) to provide survey certificates both for their own insurance purposes and in order to satisfy statutory requirements for registration of the vessel in the Bahamas. ABS was nominated under the relevant Bahamian legislation to provide the certificates required for registration and (so the court held) it enjoyed statutory immunity from suit in respect of bona fide provision of these certificates. But it enjoyed no such immunity in respect of the certificate provided to SC for insurance purposes. The Sundancer sank soon after being inspected and certified by ABS. SC claimed that, if ABS had
* Fellow of Corpus Christi College, Oxford.
1. Marc Rich & Co. A.G. v. Bishop Rock Marine Co. Ltd. (The Nicholas H)
[1994] 1 Lloyd’s Rep. 492, rvrsg [1992] 2 Lloyd’s Rep. 481 (Hirst, J.), helpfully discussed by Russell Harling [1993] LMCLQ 1.
2. Sundance Cruises Corp. v. American Bureau of Shipping (The Sundancer)
[1994] 1 Lloyd’s Rep. 182. The U.S. Supreme Court has refused to hear an appeal from this decision.
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