Liability as a Manager for Crew Negligence

The Club has seen a steady increase in the number of claims made against ship and crew managers that have arisen purely from the negligence of the crew. Claims arising from crew negligence should be covered by P&I or hull insurers. They are not the responsibility of the supplier of the crew, namely the ship or crew manager. For example, in the event of an error (by a fully certificated and qualified chief engineer) causing damage to a main engine, the claim should fall against the hull and machinery underwriters. The fact that the chief engineer made a mistake does not mean the ship or crew manager had been negligent.

However, a manager can be liable for negligence in the way in which he supplies crew. Essentially this will result from a shore based error, examples of which include the provision of uncertificated crew, failure to provide crew as per flag state requirements or failure to ensure proper medical examination of crew prior to employment.

The ship and crew manager can also face claims for crew negligence if the management contract is not tailor-made to the services that are being provided. The BIMCO “Shipman” contract (with the recommended amendment to the insurance clause) is widely used and also recommended by the Club as a balanced contract between the interests of the manager and the shipowner. The basis of the contract is one of agency which also extends to the provision of crew. Thus the employment contract is between the shipowner and the crew and not the manager and the crew. In such circumstances the manager would usually have a good defence to any claim made against him by the shipowner.

If the contract of crew employment is clearly between the manager and the crew and the BIMCO “Shipman” contract is used, the defence of agency may not succeed.

The shipowner considers the crew to be the employees of the manager and can refer to Clause 18.2 of the “Shipman” contract which states that the manager accepts liability for the “negligence, gross negligence or wilful default of the managers, their employees and agents”. This is despite the fact that it is clear the clause is written to exclude ship – board negligence claims. As the manager is directly employing the crew there is considerable danger of confusing the agency status of the contract. An alternative contract, the BIMCO “Crewman”, exists for the supply of crew who are employed by the manager. However, this does not cover the numerous other ship management services on offer such as technical, operational and commercial.

This point is being addressed by the BIMCO “Shipman” and “Crewman” sub-committee together with the implications of the ISM Code and STCW 1995 Convention. The new contracts should be available for use by early 1998. What does a manager do in the meantime? The Club’s recommendation is that he should not seek to change his existing contracts but wait until the new BIMCO “Shipman” and “Crewman” contracts become available. However, he should also add a clause to his ship management contract to the effect that as a ship or crew manager he is not liable for claims arising from negligence by crew. The appropriate wording is already incorporated in the existing “Crewman” contract, and should be added after the last sentence of Clause 18.2 of the BIMCO “Shipman” contract, along with a descriptive meaning of the word “crew” as follows:

“Under no circumstances shall the managers be liable for any of the actions of the crew even if such actions are negligent, grossly negligent or wilful. Crew shall mean the master, officers and seamen of the numbers, rank and nationality listed at .............”

If any member requires further advice on this matter they should contact the Club.