The question of who should be liable as the “redare” of a ship has long been one of the most complex and controversial areas of Swedish maritime law. This question was recently put to the test in the Supreme Court’s judgment in case no. T 6909-22 “Baltic Cable”. The case highlights several interesting aspects of shipowner liability in modern shipping.
There is no equivalent English term for the “redare”, who under Swedish law has been considered as the person (or company) that runs the vessel for his or her own account, typically the owner or the demise charterer but not necessarily either of those. Time charterers and voyage charterers are not considered as “redare”.
The case concerned a submarine power cable for the transmission of high-voltage direct current between Trelleborg and Lübeck which was damaged when a ship anchored at the site. The main issue before the Supreme Court was who should be regarded as the shipowner and thus liable for the damage under the rules in Chapter 7, Section 1 of the Maritime Code (1994:1009). The case also raised the question of what constitutes qualified gross negligence as referred to in Chapter 9, Section 4 of the Maritime Code.
The owner of the submarine cable, Baltic Cable, brought an action in the District Court against the registered owner of the vessel, SS, and two other companies. Baltic Cable claimed that the three defendants should jointly and severally pay damages to the company. In the first instance, the defendants would be liable because they had caused the damage through gross negligence and with knowledge that the damage was likely to occur (so-called qualified gross negligence). In the second instance, the defendants would be liable as “redare” since the master and crew of the vessel had caused the damage through fault or negligence in the performance of their duties on board the vessel.
The District Court did not consider that the defendants had caused the damage to the subsea cable with such qualified gross negligence as alleged by the plaintiff. However, the District Court considered that the master and the crew had caused the damage by errors or negligence in the performance of their duties, e.g. by anchoring in violation of the applicable anchoring prohibition. Regarding the question of who is to be considered the “redare”, nothing else was considered to emerge other than that the owner of the vessel, SS, should be regarded as the “redare” at the time of the accident. The District Court therefore ordered SS to pay damages to Baltic Cable. The Court of Appeal upheld the District Court’s judgment.
The Supreme Court began the question of the shipowner’s liability with a general account of the redare’s liability under Chapter 7, Section 1 of the Maritime Code and the diffuse concept of “redare”, and then made the following findings.
There is no uniformity in the concept of “redare”, either in the Maritime Code or in other statutes. In order to determine who is a “redare”, an overall assessment of the circumstances of the specific case must be made, including an examination of the division of functions of the “redare”, which often occurs and is derived from the shipowner. The “redare” must be regarded as the person on whom the majority of the typical shipowning functions rest. With regard to the burden of proof for the various circumstances that may be relevant in assessing who is the “redare”, the Supreme Court stated that this had to be determined separately for each function.
The Supreme Court found that neither of the two companies could be regarded as “redare”, given that one company acted primarily as an agent for SS and was responsible for concluding freight contracts for the vessel, and that the other company acted as an economic hub for the business. The registered owner of the vessel, SS, was therefore considered to have the majority of the shipowning functions and was therefore ordered to pay damages to Baltic Cable.
As regards the requirement of qualified gross negligence, the Supreme Court stated the following.
The right to limitation of liability under maritime law is lost if damage is caused by qualified gross negligence. The provision in Chapter 9, Section 4 of the Maritime Code is based on the 1976 Convention on Limitation of Liability for Maritime Claims. According to the Convention, the right to limitation of liability is lost if someone has caused the damage intentionally or recklessly and with knowledge that such damage was likely to occur. The provision of the Convention has been interpreted and applied by national courts in such a way that the right to limitation of liability has been lost on a number of occasions. As a result, the International Maritime Organisation adopted Resolution A. 1163(32) on 15 December 2021, providing certain guidance on the interpretation of the Convention provision. According to the Resolution, the Convention provision should be interpreted in such a way that the right is “virtually unbreakable in nature” and that it can only be lost in very limited circumstances. The Supreme Court held that the loss of the right of limitation under Chapter 9 of the Maritime Code requires that the liable party has caused damage by wilful negligence.
On the question of qualified gross negligence, Baltic Cable argued that an ordinary paper chart should have been used when the vessel was under way and at anchor, and that the cable would have been detected then. In this case, the vessel was equipped with electronic charts in the form of an approved ECDIS system with a duplicate. The presence of paper charts on board is therefore not normally required. In the circumstances of the case, the Supreme Court held that the failure to provide the vessel with paper charts did not amount to gross negligence. Nor had Baltic Cable shown that the defendant was aware of any shortcomings in the crew’s handling of the electronic charts. It was therefore not established that the defendant had acted with such qualified gross negligence as alleged. The Supreme Court found that it had not been shown that SS or any other defendant had caused the damage through qualified gross negligence.
In summary, the Supreme Court has now clarified that the concept of “redare” may vary depending on the context in which it is used, and that the person acting as shipowner must derive his powers from the shipowner. Regarding the interpretation of the requirement of qualified gross negligence, the Supreme Court has clarified that the right to limitation of liability should only be lost in very limited circumstances and as a result of wilful negligence.
