The first defendant, based in Germany, was the time charterer of the cargo ship MS C, registered in Antigua and Barbuda, which it operated for one of its feeder services. The second defendant shipowner was M Co Ltd, based in Antigua. The crew of the MS C consisted of the master, the first officer, a chief engineer, three deck crew, a machinist and a cook. The ship was equipped with a watch alarm, which should ensure that the person on watch does not fall asleep. On 26 March 1997, first officer JG, who was on watch alone at night, changed course. Then he fell asleep. Since the watch alarm was switched off, he only woke up again when the ship ran aground off the Isles of Scilly and was about to sink.

The plaintiff, an English cargo insurer, claimed damages in the amount of DEM 1,007,740.35 (= EUR 515,249.46), contending that the defendants are liable for both the unseaworthiness of the ship according to § 559 HGB [Commercial Code] and for breach of management according to §§ 606, 607 HGB. The ship was not adequately crewed. The first officer was overtired because of the tight schedule and the scope of his duties. In English territorial waters there was also an obligation for ships with foreign flags to also sail with a lookout at night. The defendants were obligated to notify the crew of this prior to departure. There was no exemption from liability due to nautical fault. The first officer's falling asleep was the opposite of command of the ship. There was also no typical sea hazard. The defendants contested the lawsuit.

In the hearing before the Regional Court, the parties agreed to apply German substantive law. The Regional Court upheld the complaint on the merits (LG Hamburg HmbSeeRep 2000, 161). The appeal of the defendant to the Court of Appeal led to the dismissal of the action (OLG Hamburg TranspR 2004, 127). The plaintiff seeks to restore the Regional Court judgment. The defendants claim that the appeal should be dismissed.

Held: Appeal dismissed.

The appellate Court correctly interpreted 'seaworthiness' in § 559(1) HGB as including, in addition to seaworthiness in the narrower sense, ie the suitability of the hull, the dangers of the sea with the specific cargo on the intended voyage insofar as these are not of a very unusual nature, including the so-called viability of the ship, ie its associated furnishings, equipment, crewing and provisions (seaworthiness in the broader sense). Accordingly, a faulty or unacceptably insufficient crewing of the ship by the shipowner will lead to liability of the carrier under § 559 HGB read in conjunction with § 278 BGB [Civil Code]. The Court of Appeal ruled that the number and composition of the crew of MS C met the requirements in the Safe Manning Certificate issued for the ship dated 24 September 1996. In this respect, no legal error is apparent. The plaintiff further complains, without success, that the Court of Appeal did not determine with regard to the Certificate of Competency of 18 November 1996 whether the MS C had sufficient crew on an objective view. This is irrelevant because the appellate Court has regarded the defendant as exonerated within the meaning of § 559(2) HGB, without any legal errors, at least for subjective reasons.

The appellate Court also rightly denied the defendants' liability under §§ 606, 607(1) HGB for the culpable conduct of the first officer that led to the stranding of the ship. In this respect, the exclusion of liability due to nautical fault applies in accordance with § 607(2) HGB. According to this, the carrier is only liable for its own fault, but not also for third party faults, in the event of damage caused by conduct while navigating or otherwise operating the ship.

The exclusion of liability for nautical fault is based on the Hague Rules, which the German legislature incorporated into the Commercial Code in 1937. The purpose of the Hague Rules is to balance the interests of shipowners and carriers in extensive exemption from liability on the one hand, with the conflicting interests of cargo interests on the other. The conflict was resolved by ordering compulsory liability for commercial fault with simultaneous exemption from liability for nautical fault (Official justification of the Law of 10 August 1937). This should ensure that the carrier is released from liability in respect of a risk of causing damage to the contractual partner's legal interests, which is accompanied by a lack of opportunities to intervene (isolation of the ship on the high seas) and a high risk to its own property (the ship).

'Management of the ship' within the meaning of § 607(2)(1) HGB means all measures taken by the crew with regard to the movement of the ship. This includes all ship manoeuvres, rudder and engine commands, setting of the course, manning the lookout, determining the location, calling in pilots, observing the radar, signaling and observing the rules of the road. The 'other operation' of the ship is the technical handling of the ship, in so far as it does not concern navigation. Operation of the ship within the meaning of § 607(2)(1) HGB does not include measures by the ship's crew which are primarily made in the interest of the cargo, as can be seen from § 607(2)(2) HGB.

The Court of Appeal rightly assumed that the behaviour that could be considered as the cause of the damage, namely setting a changed course, not switching on the watch alarm and occupying the bridge with only one, and thereby possibly overly tired, officer on watch, all relate to the management or technical operation of the ship in the sense addressed above. In this context, it cannot be isolated to 'falling asleep'. The events that caused the damage must rather be assessed as a whole. The result of the present situation should therefore not be judged differently than the case, for example, where the first officer was awake and wrongly or carelessly set or took a wrong course, or failed to correct a course set.

The Rules, which were primarily made in the interest of cargo owners, cannot be interpreted restrictively to the effect that the exclusion of liability specified therein only covers cases of negligent misconduct. The exemption from liability under § 607(2)(1) HGB applies in accordance with its clear wording as well as its meaning and purpose, especially in the case of intentional behaviour, despite longstanding criticism in the academic literature. In the case of transport law reform, in particular, no urgent need for a change in the liability regime in the area of sea transport was seen (cf TranspR 1993, 39, 40). A limitation of the exclusion of liability specified in § 607(2) HGB to negligent behaviour is therefore ruled out. There is also the fact that, according to the findings of the appellate Court, deliberate misconduct on the part of the first officer or even deliberate damage within the meaning of § 607a(4) HGB cannot be assumed.