Collision clauses

Collision clauses

Most bill of lading terms either refer to the BIMCO "both to blame collision clause" or reproduce it more or less exactly. The clause acts in a similar way as the "knock for knock" agreements entered into by certain motor insurers, which bind the policy holder even though they are not in the policy holder's personal interest. These effectively prevent the insured from pursuing another driver who is to blame for an accident on the premise that it is administratively cheaper for the insurer to pay the claim rather than to seek a recovery from the other insurance company, which will involve proving liability. The "both to blame"" clause is not wholly based on international law but mainly on contract and it is therefore open to negotiation.

Typical bill of lading term: 'Both to blame clause'

"If the ship comes into collision with another ship as a result of the negligence of the other ship and any act neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or management of the ship, the owners of the goods carried hereunder will indemnify the carrier against all loss or liability to the other or non carrying ship or her owners in so far as such loss or liability represents loss of, or damage to, or any claim whatsoever of the owners of the said goods, paid or payable by the other or non carrying ship or her owners to the owners of the said goods and set off, recouped or recovered by the other non carrying ship or her owners as part of their claim against the carrying ship or her owners as part of their claim against the carrying ship or carrier. The foregoing provisions shall also apply where the owners operators or those in charge of any ship or objects other than, or in addition to the colliding ships or objects are at fault to a collision or contract"

It should be noted that the clause might extend to port and harbour installations owned by the carrier as well as to ships.

Position under international conventions

Collisions are not dealt with under the Hague, Hague-Visby or Hamburg Rules. There is a 1910 Brussels Convention on Collisions, which deals with apportionment of liability, including liability for cargo losses, based on comparative fault. The effect of this is to limit cargo claims against the (non-carrying) colliding vessel to the proportion to which that vessel is to blame for the collision. There is therefore in theory the opportunity for cargo to maintain contractual rights to sue the other colliding vessel, and possibly to recover more than would be possible against their own carrying ship under the Hague etc Rules. The provisions on collisions provide a potential back door route to increased limits of liability and may also get around the negligent navigation defence in the Hague and Hague-Visby Rules.

In the United States, the provisions of the Brussels Convention on Collisions did not apply until 1975 and this meant that the other colliding vessel could sometimes be made 100% liable to cargo even if only partly to blame. Also, the US is not party to the 1976 Limitation Convention, which often severely reduces claims against a ship. These factors made it far more worthwhile to try to bring a claim against the other vessel for cargo loss and gave the impetus for development of the "both to blame" collision clause as a contractual device by ship owners to deter such claims.

Practical measures by shippers

Contract stage

There does not seem to be any specific impediment to deletion of the clause altogether, leaving the way free for possible claims against the other vessel by shippers under ordinary maritime law. At this point, rather complex legal issues would need to be considered as the other vessel would not be a "carrier" in terms of carriage convention liabilities and claims would not therefore be brought under those conventions but based on the general law of negligence etc. Claims in tort for negligence against a vessel other than the carrying vessel could in practice be difficult claims to pursue. They would also be limited in the UK by the overall limitation amount for all claims against the offending vessel, which is relatively low even after recent changes to the limitation convention. The question of any indemnities (other than the both to blame clause) between the ships and between the carrying ship and the shipper would also need to be considered. Most liner-container cargo may derive little real benefit from deletion of the clause even if the clause is on the face of it an unfair restriction of a shipper's rights. However, where very large volumes or particularly valuable cargoes are likely to travel on one vessel, a cost benefit analysis may suggest it is worthwhile to keep all options available in the event of a subsequent loss.

Claim stage

Maintaining the opportunity to sue the other vessel could be of potential use if the carrier with whom the shipper has contracted becomes insolvent and unable to meet the claim under Hague Rules etc. Most shippers carry cargo insurance so the likely real individual benefit of this option should not be overestimated especially as most individual claims only involve a few containers of average value.