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Lost lifeboat. Can owners deduct the costs from ship manager's fee?

One for ship-owners and ship-managers - vessel lost its lifeboat at sea sometime after the end of normal working hours. Crew noticed it the next morning. Later lifeboat was sighted off Japan. In view of high costs of purchasing a new l/b vs the cost of deviating the vessel, it was decided (in consultation with H&M and P&I) that l/b must be abandoned. The shipowners then withheld 90,000$ (as claim for the lifeboat) against the fee owed to the Shipmanager. Were owners correct in setting off the claim against the ship-management fee? - NO.

SHIPMAN’09 makes managers liable only where they have been negligent or grossly negligent. Owners had not furnished any evidence to prove such (to be noted that there is a substantial evidentiary burden on the owners under SHIPMAN’09). There was also no provision for set-off under SHIPMAN’09. With back against the wall, owners remitted the funds due to the ship-managers. This was a case handled by ITIC.

A cautionary note for managers (unrelated to above incident) – SHIPMAN’09 may seem to be a shipmanager friendly contract under English law, but not so in other jurisdictions, such as US – see ‘Lin Shipping v. V.Ships' where they found that that the pro-managers limitation provisions in SHIPMAN’09 were unreasonable.

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