Towage of the Frisius, property of Bensam, by the tug Sun Essex, property of Sovlot, from the Netherlands to Nigeria, during which the Frisius’ stern broke and the vessel sank. Sovlot requested a declaratory judgment that Sovlot was not liable for any compensation towards Bensam and demanded payment of the remaining towage remuneration, damages for delay, other costs, and damages for wrongful arrest of the Sun Essex by Bentam upon its arrival in Nigeria.

Held: In light of the division of risks and liabilities as laid down in the knock-for-knock towage contract, Sovlot’s request for a declaratory decision to reject liability is in principle allowable. Serious failure in the performance of the towage contract by Sovlot does not stand in the way of allowing the claim, because losses or damage must be borne by Bensam based on the knock-for-knock towage contract, if the damage ‘is due to breach of contract, negligence or any fault on the part of the Tugowner, his servants or agents’.

Sovlot cannot rely on the knock-for-knock agreement if that would be unacceptable according to the standards of reasonableness and fairness in case of gross negligence. It is established case law that ‘normal’ exoneration clauses should not apply if the damage can be attributed to the debtor’s intent or conscious recklessness. However, reliance on the restrictive effect of reasonableness and fairness is also possible in other circumstances. When assessing this defence, the context and circumstances of the case must be taken into account. In a case like this, this includes, besides the extent to which a party is to blame, the fact that a knock-for-knock agreement is quite common, that the agreement was made between two professional parties, and that the suffered damages are covered by insurance (compare Gerechtshof ‘s-Gravenhage 11 December 2012, Schip en Schade 2013/86 and Hoge Raad (Dutch Court of Cassation) 24 January 2014, Schip en Schade 2014/63 ‘Vos Sympathy’.)

Relying on the knock-for-knock agreement is not unacceptable according to the standards of reasonableness and fairness:

(1) The tow departed under conditions that met the requirements of the Towage Approval Certificate prior to departure. When the towage got into trouble on the Gulf of Biscay due to bad weather conditions, the master sought shelter close to shore and reduced the speed in order to reduce the risks. The sole circumstance that the master decided to sail to La Coruña (Spain), during which the Frisius’ stern broke after the wind turned southwest and the waves rose approximately four metres high, is insufficient to assume a breach of the rules of good seamanship or to assume that Sovlot can be accused of gross negligence as a result;

(2) The factual cause of the rupture and breaking of the Frisius has not been established. It is plausible that this was caused by a combination of different factors;

(3) The knock-for-knock clause is common in towage contracts as the present;

(4) Both parties acted in the ordinary course of their respective businesses;

(5) The damage to the Frisius is covered by a Hull and Machinery Insurance policy taken out by Bensam;

(6) The fact that Sovlot did not sent daily voyage reports to Bensam is not important, as the damage was not a result thereof.

According to Part I of the towage contract, the remaining towage remuneration is only due after passing the Canary Islands and upon arrival in Nigeria, so this remaining remuneration is, in principle, not due. However, Sovlot relies on Part II of the towage contract which stipulates that the towage remuneration is due ‘Tug and/or Tow lost or not lost’. Hence there are conflicting contract provisions. In that case the provisions of Part I take precedence over provisions of Part II, based on a rule in Part I of the towage contract. Therefore the claimed remaining towage charge is not allowable.

Pursuant to art 6 of the Arrest Convention 1952, Sovlot’s claim for wrongful arrest must be decided on the basis of Nigerian law, as the vessel was arrested within the Nigerian jurisdiction. According to Nigerian law, the arrest of a vessel is wrongful if it is effected either without good grounds or unreasonably. Inter alia, in light of the knock-for-knock provision in the towage contract, the insurance cover for the Frisius, and Bensam’s refusal to accept security offered by Sovlot’s P&I Club in order to lift the arrest, it is plausible that the vessel was arrested without good grounds and that Sovlot suffered damages as a result thereof.