Introduction

Welcome to this edition of ITIC’s electronic newsletter, The Wire, which focusses specifically on ship classification societies.

A ship classification society is an organisation that, inter alia;

• develops and publishes rules and technical standards for the design, construction and evaluation of ships and offshore structures;
• issues certificates of classification on satisfactory completion of the relevant surveys;
• certifies, being delegated and instructed by flag states, that the construction of individual ships complies with the relevant safety and environmental international conventions to which virtually all nations are party.

Classification societies can face various legal claims, primarily related to breach of contractual duties and negligence. The main types of claims are:

• Contractual claims by shipowners or shipbuilders for negligence or breach of duty in performing surveys, inspections, or certification services. These claims allege that the classification society has failed to exercise reasonable care and skill in carrying out its contractual obligations.
• Claims by flag states when a classification society acts as a Recognized Organization (RO) on their behalf. If negligent acts or omissions by the RO in performing statutory duties on behalf of a flag state lead to liability for the state, the state can seek compensation from the classification society.
• Third-party tort claims, such as (a) claims by purchasers of ships, charterers, cargo owners, ships’ crews and other parties who may have relied on inaccurate advice or classification certificates issued negligently, and (b) claims by parties suffering losses due to maritime accidents, alleging that the classification society is negligent in certifying an unseaworthy ship.

Although it is shipowners who typically pay for their services, classification societies have experienced a significant increase in exposure to third party claims which may be attributable to a number of related factors including:

• The growth in litigation generally.
• The difficulty to sue successfully “one-ship” shipowning companies.
• The legal and financial presence of classification societies in different jurisdictions around the world.
• The perception that classification societies are attractive “deep-pocket” defendants because of their accumulated wealth and professional indemnity insurance cover.

In contractual claims, claimants must prove a breach of contract and consequent damages. In third party tort claims, claimants must prove damages, negligence and a causal link between the two.