Shipyard was acquitted since the shipping company could not lift the burden of proof

The shipping company had requested the shipyard to make an offer including 25 years of inspection and maintenance onboard the M/S Princess Seaways. The shipping company had in their request enclosed their standard terms regarding the liability for damages – including that the shipyard had to cover every form of damage or loss caused by injuries onboard the ship or to the ship’s equipment as a result of negligence or errors caused by either the shipyard or the subcontractor.

In contrast, the shipyard’s offer implied that the shipyard did not accept liability for any indirect loss and that the shipping company in the past had accepted these terms. The internal relationship between these partially contradictory terms was not clarified in the reached agreement.

Oil in the engine room

In the late morning of February 17 2011, an oil pipeline was accidently cut open while a subcontractor was repairing M/S Princess. The accident caused approximately 200 litres of hot oil to pour out and spread in the engine room.

The incident was with no doubt caused by the subcontractor’s negligence. The shipyard assumed liability in accordance with the parties’ agreed contract. All “hot work” was stopped, and the shipyard began cleaning the ferry in order to ensure that it could sail on schedule within the next 24 hours. Three hours later the subcontractor resumed repairing the ferry and approximately eight hours later the shipping company decided to restart the only hot source of the ferry – the Saache kettle –– since the heating and restart of the main system would take a while.

After additionally two hours an employee from the shipyard reported smoke in the casing and for that reason the kettle was interrupted. Shortly after, a fire occurred and caused significant damages in the casing.

Multiple fires and damages to the ferry

On February 20, 2011 (three days after the oil spill) the ferry sailed from the shipyard. The shipping company, the shipyard and the Danish Maritime Authority all agreed that the ferry was ready for departure. However, more fires occurred onboard the ferry during the night of February 21, 2011. All fires occurred close to the head engine of the ferry.

The shipping company submitted a claim for damages against the shipyard which stated that the shipyard was liable for damages onboard the ferry caused by the fires.

The parties agreed that the fires were caused by the oil spill. However, the shipyard rejected the claim stating that the causes of the fires were neither based on the shipyard’s nor its subcontractor’s fault or negligence.

The shipping company and the shipyard’s disagreement on liability

The shipping company stated that the fires were caused by ignition of the oil which had not been properly cleaned by the shipyard. Thus, the shipping company claimed that the fires happened occurred following the oil spill. The fires were attributable to both the the oil spill and insufficient clean-up.

The shipping company emphasized that the shipyard was liable unless the shipyard was able to prove that the shipping company had performed independent actions which gave rise to liability by handling the process after the oil emission with negligence.

The shipyard stated opposite that they could only be liable if the shipping company was able to prove that the fires were attributable to specifically proven defects and absence of the shipping company or its employees. The shipping company indicated that although it was common ground that the oil spill was attributable to an incident which the shipping company was liable for, the leaked oil could not cause a fire without the presence of a heating source.

Thus, the shipping company argued that the shipyard had restarted the kettle too early in contrary to the instructions given from the shipping company which caused an obvious risk of fire.

The Danish Maritime and Commercial Court: The shipping company has not lifted the burden of proof

The Danish Maritime and Commercial Court stated that the fires were caused by ignition of the spilled oil. However, the shipyard was acquitted of liability for the damages because the shipping company could not prove the presence of the shipyard’s negligence.

The court noted that the fires did not happen close to the date of the oil spill – but eight hours later in connection with the presence of a heating source which caused the oil to ignite. The kettle released gasses at a temperature of 290 degrees while the oil’s self-ignition point was at 350 degrees. At the time of the ignition of the oil, numerous crew members and employees from the shipyard were present. They all had to have been aware of the previous incident regarding the oil spill.

Thus, the court ruled that the shipping company had not lifted the burden of proof for which the ignition of the oil – approximately eight hours later – was caused by someone’s negligence which the shipyard was liable for. Hereinafter, the shipping company had not proven a legal basis of the shipyard’s liability of the fire on February 17, 2011.

Regarding the fires during the night of February 21, 2011, the court ruled that the shipping company had mandatory supervision and liability for the safety of the ferry subsequent to the examination of the engine room with help from the Danish Maritime Authority and the shipyard, since the option to depart l the ferry solely was a decision made by the shipping company.

IUNO’s opinion

The case illustrates how important mutual agreements between two parties become in situations where the liability must be established. One part can be liable for injuries if the actual cause cannot be proven, and the part cannot prove that the accident was caused by the other part’s negligence.

It was clear that the fire of February 17 2011, never would have taken place if the oil pipeline had not been cut open by accident. Nevertheless, the case led to the fact that the shipyard was not liable for the fires.

Thus, the judgement illustrates that a contractual regulation of liability has great importance in case of claims among the parties. The phrasing of the terms in the agreement has exceptional importance since these determine which of the parties have to lift the difficult burden of proof in relation to claims deriving from accidents.