The liability of “makers”

  • The liability of “makers”

    Author: Lawrence Dardani

    Key words: maker, information asymmetry, technical recommendation, shipbuilding contract, supply, product liability, guarantee, exclusions of liability, service letter, tort

    Makers are suppliers of goods and services, the activity of which is denoted by a high degree of technical competence. In fact, the progress of technology and science has led to the individualization of peculiar figures of suppliers for highly specialized products and services.

    Typically, from when a vessel is built, it is within her shipowner’s interest to ensure that certain components of the vessel are provided by selected makers, as this will set the quality of the component and consequently of the vessel. For this purpose, a “makers’ list” is normally attached to shipbuilding contracts and throughout the operation of the vessel the owners tend to establish a direct relationship with such makers, so as to ensure the correct maintenance of the components.

    This has led to a two-fold phenomenon:

    (a)    the enhanced and specialized knowledge of makers has turned into a form of asymmetry of information, vis-à-vis the end users of the component, i.e. the shipowners; and

    (b)    a technological dependence characterizes the relationship between shipowners and makers, in respect of the maintenance of relevant components, as these cannot be put to the general care of appointed shipyard, but will often have to be put to the attention of surveyors of the maker itself.

    But most importantly, the role of the maker has become a crucial factor in the determination of the standards of diligence of shipowners with regard the maintenance of vessels. The role played by makers in the industry, indeed, has an impact on the numerous areas of maritime law, which involve the assessment of the shipowners’ diligence in the maintenance of vessels.

    Shipowners could incur (amongst others) the following consequences if, by failing to follow the makers’ recommendations, they perform negligently in maintaining the conditions of the vessel:

    (i)    The vessel could result unseaworthy for the purpose of the carriage of goods by sea, according to international law conventions (such as the Hague and Hague Visby Rules) and national legislations, thereby including the Italian Code of Navigation.

    (ii)    Failure to comply with the makers’ recommendation could cause the shipowner to breach the obligations arising under charterparties as to the due diligence to be had in the maintenance of the vessel’s conditions (e.g. the duty to maintain under clause 3 of the Shelltime 4 form).

    (iii)    Most importantly, the makers’ recommendations have become an important element to be taken into consideration by the vessels’ classification societies in determining the conditions necessary for the vessel to be in class.

    (iv)    Further, depending on the extent of failure to comply with the technical requirements set by the maker, this could provide insurers with a gross negligence defense.

    (v)    Apart from the above, failure to comply with the makers’ technical standards could have repercussions on the commercial employment of vessels, as it could jeopardize their vetting approvals.

    (vi)    Moreover, makers’ recommendations are typically matters to be taken into consideration in terms of ISM Code and the shipowners could easily fall short of its obligations under the Code, if such recommendations are overlooked.

    (vii)    Finally, in extreme circumstances, failure to comply with technical requirements, established by makers, could even determine criminal law liabilities.

    Moving from these premises, the paper intends to analyze the potential liabilities thath may be imputed to the makers upon a preliminary distinction between the liabilities that may arise in the aftermaths of the acquisition of unit, and the liabilities that may arise subsequently and irrespective of the moment of her acquisition.

    The discussion will include the consideration of the trend by which markers continuously divulge technical information (often in the form of technical recommendations and service letters), upon which operators often cannot avoid relying during the maintenance and operation of the vessel. The question will, then, be raised as to what liabilities follow for the maker from such informative material.

    Finally, few guidelines will be drawn with an aim to assist shipowners in the daily handling of their relationships with makers.