Owner claims against ship manager after California ballast fine

A claim recently handled by professional indemnity insurer International Transport Intermediaries Club (ITIC) illustrated how any failure to keep proper onboard records of regulatory and legislative changes can have costly consequences for shipowners and their intermediaries.

ITIC reported that the crew of a ship that frequently traded to US ports found themselves in contravention of state legislation when they conducted deballasting operations en route to California more than 50nm out from the California coast.

Such operations had been permissible — and had indeed been performed by the crew — under the regulations in force when the ship had previously traded to California.

But new regulations entered into force in July 2017 which meant that such deballasting was now in violation of regulations. Ships entering from international waters were now required to deballast more than 200nm, rather than more than 50nm, from the coast of California.

Californian authorities had distributed the news of this change to the shipping community by way of circulars. Information had also been published by the ship’s P&I club, but the change had not been not picked up by the ship’s managers.

As a result, the ship’s ballast water plan had not been updated to reflect the new rules The master admitted to the Californian authorities that the crew were not aware of the change in legislation. The authorities issued a fine of $280,000 against the owner, which was subsequently negotiated down to $215,000. The owner claimed this sum from the ship managers on the basis that they should have been aware of the change in law and should have updated the ballast water plan. The claim was settled by ITIC.