A recent decision by the U.S. Fifth Circuit highlights how clear language in a charter party can help preclude a charterer’s liability.
In Barron v. BP America Production Co., 2014 WL 4851804 (5th Cir. Oct. 1, 2014), the U.S. Fifth Circuit Court of Appeals affirmed a dismissal of the plaintiff’s Jones Act, unseaworthiness, and general maritime law negligence claims against BP. On July 12, 2010, Plaintiff Kenneth W. Barron was injured while working on the Big Wave, a vessel performing cleanup work as part of BP’s Vessels of Opportunity in the wake of the Deepwater Horizon oil spill. Barron alleged that the Big Wave was transiting the Mississippi Sound in inclement weather when he was thrown from his seat due to the vessel’s excessive speed.
The vessel was chartered by BP for the cleanup work, but the case partly turned on what kind of charter BP had with the vessel owner. A charter party is a maritime contract where one party, usually a vessel owner, hires his or her vessel out to a second party, the charterer. The most basic kinds of charter parties are demise charters and non-demise charters. Under a demise charter, the full possession and control of the vessel is transferred from the vessel owner to the charterer. A demise charter is sometimes called a “bareboat” charter when the vessel is transferred without crew, provisions, fuel or supplies. In non-demise charters, the vessel owner retains control, as in a time charter in which the ship is hired for a period of time, or in a voyage charter in which the ship is hired for a certain number of voyages.
If the charter party is a non-demise charter, as BP argued it had in Barron, the charterer is not liable for claims of negligence of the crew or of the unseaworthiness of the vessel. If the charter party is a demise charter, the charter would be deemed “owner pro hac vice of the vessel for the duration of the contract,” and “therefore responsible in personam for the negligence of the crew and the unseaworthiness of the vessel.” Forrester v. Ocean Marine Indem. Co., 11 F.3d 1213, 1215 (5th Cir. 1993).
Barron argued BP had effected a demise charter and became owner pro hace vice of the Big Wave by exercising control of the oil spill response fleet, requiring vessels such as the Big Wave to maintain radio contact, requiring vessel training, and directing the fleet of vessels back to port on the day of Barron’s accident. The Court rejected the plaintiff’s argument and relied solely on the language of the charter in doing so. The Master Vessel Charter Agreement provided as follows:
– Article 15 of the charter party, entitled “CHARTER NOT A DEMISE,” provided that “[n]othing stated in this CHARTER is to be construed as demise of the VESSEL to CHARTERER. VESSEL OWNER shall at all times remain responsible for the navigation of the VESSEL, acts of pilots, tug vessels, crew, and all other similar matters as if trading for its own account.”
– Article 3, relevant to BP’s alleged control at the time of Barron’s injury, provided that “[t]he decision to proceed on a trip in the face of adverse or changing weather or sea conditions shall be the sole decision of the VESSEL OWNER or the designated master.”
– Article 24 served as a merger clause, stating that “[t]his CHARTER cancels and supersedes all prior negotiations, representations or agreements, both written and oral.”
The Court found the charter agreement unambiguously established BP was a non-demise charterer. The Court therefore did not need to go into parole evidence to affirm that BP was not liable to Barron’s claims under the Jones Act or unseaworthiness.
The Court also rejected Barron’s negligence claim under general maritime law. Barron had alleged BP breached its duty of reasonable care by “placing Barron in a position of peril” given the weather the day of the accident and the Big Wave’s small size. The Fifth Circuit affirmed the district court’s dismissal of the claim at the summary judgment level, finding Barron had presented only improper lay opinion, not competent summary judgment evidence BP had acted negligently.
The decision in Barron should stress the importance of clear language in a charter party. A non-demise charter that avoids the battle of parole evidence is one that explicitly states the charter is non-demise, but also specifically places responsibility on the vessel owner for navigation of the vessel, for the crew of the vessel, and for proceeding in the face of hazards. With these specific provisions in a master charter agreement, a boat owner is more likely to keep any interpretation argument within the four corners of the document.
It is interesting to note that contractual language regarding a charter party can be effectively definitive, as the Fifth Circuit ruled here. Compare a similar contract, purporting to hold and independent contractors’ employees are not borrowed servants. There, the Fifth Circuit regularly holds the facts on the ground, not the contractual language, is determinative.