Both to Blame Collision clause

The most unheralded and least discussed clause under the Institute Cargo Clauses -2009 is Clause 3 viz. Both to Blame Collision clause. Why? It is not invoked too often and most Marine practitioners including yours truly have not had the opportunity of handling a claim under this clause. The wording of the clause is as under:

“This insurance indemnifies the Assured, in respect of any risk insured herein, against liability incurred under any Both to Blame Collision Clause in the contract of carriage. In the event of any claim by carriers under the said Clause, the Assured agree to notify the insurers who shall have the right, at their own cost and expense, to defend the Assured against such claim.”

A careful reading and re-reading of the clause reveals that it talks about ‘liability incurred under any Both to Blame Collision clause in the contract of carriage‘. The contract of carriage document will be the Bill of Lading. So does it mean that the Both to Blame Collision clause features in Bills of Lading & in charterparties too? The answer is YES. Is the wording of the Both to Blame Collision clause same in the Bills of Lading & Institute Cargo clauses? Not at all. The BIMCO Both-to-Blame Collision clause appearing in most Bills of Lading reads as below:

‘If the Vessel 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 in the management of the Vessel, the owners of the cargo 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 said cargo, paid or payable by the other or non-carrying ship or her Owners to the owners of said cargo and set-off, recouped or recovered by the other or non-carrying ship or her Owners as part of their claim against the carrying Vessel or Carrier. The foregoing provisions shall also apply where the Owners, operators or those in charge of any ship or ships or objects other than, or in addition to, the colliding ships or objects are at fault in respect of a collision or contact.’

Sounds quite bombastic, does it not? In simple words, all it states is that when two vessels collide due to the sole fault of one or both contributing to the collision albeit in varying percentages of fault, and cargo in one or both vessels are damaged/lost, this clause in the Bill of Lading will come into play. The owners of the damaged cargo may claim for the losses either from 1) their cargo insurer 2) the vessel owner in which the cargo was carried or 3) the other vessel owner who contributed to the collision. In case it is (1), it must be noted that under subrogation, the insurer may proceed against the carrier vessel or the colliding vessel owner.By inserting the Both to Blame Collision clause, each of the vessel owners can recover from the other the losses for cargo in proportion to their percentage of fault (blame). This loss payable by each of the vessel owners is in turn recoverable from all the cargo owners in their respective vessels in proportion to the value of their cargo before the collision. If this sounds an unreasonable demand on cargo owners, please for a moment think about General Average and Salvage charges too.

Primarily in the United States, this clause in the Bills of Lading is held invalid and against public policy. In the absence of this clause in the Bill of Lading, the vessel owners would not be able to recover from the cargo owners their proportion of the loss due to collision. Clause 3, Both to Blame Collision clause under the Institute Cargo clauses protects the Assured ( cargo owner) against any claims against him arising out of the Both to Blame Collision clause in the Bill of Lading/charter party. All he has to do when a demand is made of him, is to inform his cargo insurer who would take up the case to its logical conclusion. Needless to add, the general exclusions of the Institute Cargo clauses would apply for claims under this clause too.

With the seaways getting crowded, there is the possibility of greater number of collisions where this clause could come into play.  Far lower than seaways, but the air too is getting crowded and we often here of near-misses in mid-air. Further, there could be the odd collision between two aircraft on the ground too as happened in the Canary Islands in 1977. Is there a case for a similar Both to Blame Collision clause in the Institute Air Clauses ( Cargo) too , especially with air freighters carrying millions of dollars of cargo on board especially high-value ones?