Court Dismisses Dock Owner’s Claim of Negligent Vetting of Vessel by Time Charterer

Grand Famous Shipping Ltd. v. Port of Houston Auth., 2021 U.S. Dist. LEXIS 234778, 2021 WL 5826781 (S.D. Tex., Dec. 8 , 2021, Ellison, J.).

This limitation proceeding arose out of a collision of M/V YOCHOW with a barge and then with a dock at the TPC terminal. At the time of the incident, The China Navigation Company Pte., Ltd. (CNCo), a charterer, then sub-chartered the vessel to Daiichi which directed the vessel to Houston for the discharge of its cargo. TPC asserted that CNCo was negligent and liable for the damage to the facility. One of the claims of negligence was that CNCo failed to vet the finances and safety protocols of the owner of the vessel, Grand Famous Shipping Ltd.

The trial judge noted that the claim for negligent vetting of a vessel is res nova in the Fifth Circuit. (2021 U.S. Dist. LEXIS 234778 *18). He declined to borrow from Texas law maintaining that General Maritime Law applied. 

While the court acknowledged that there may be good reason to impose a duty on a time charterer to vet the owner’s finances and safety protocols and under certain circumstances, General Maritime Law has imposed a duty not to hire an incompetent or unfit contractor (relying on Smolnikar v. Royal Caribbean Cruises Ltd., 787 F. Supp. 2d 1308 [S.D. Fla. 2011] and Davies v. Commercial Metals Co., 46 So.3d 71 [Fla. 5th D.C.A. 2010]), the courts have been reluctant to expand the duties of a time charterer. Unless the parties vary or alter the role of the time charterer, there is no duty to vet the vessel particularly its finances. The primary cause of the incident was negligent navigation, the time charterer which exercises no control over that is not the most responsible party.