What is a both-to-blame collision clause?
– Short definition: A both-to-blame collision clause is a contract term used in marine insurance and bills of lading that requires parties to share collision losses when both vessels are found negligent. It effectively splits financial responsibility between the involved shipowners/interest holders rather than leaving one side fully liable.
Why the clause exists (context)
– Under conventions like the Hague-Visby Rules, carriers can avoid liability for certain navigation errors if they have exercised due diligence to make the ship seaworthy. When cargo interests try to recover after a collision, the legal and practical interactions between tort claims, carriage contracts, and marine insurance can leave carriers exposed. A both-to-blame collision clause preserves the carrier’s contractual ability to pass on part of the cost when blame is shared.
Key terms (definitions)
– Bill of lading: A document issued by a carrier acknowledging receipt of cargo and setting out the terms of carriage.
– Cargo interests: The owners of the goods, shippers, or consignees who have a financial interest in the cargo.
– Tort: A civil wrong (e.g., negligence) that gives rise to legal liability.
– Indemnity: A contractual promise to compensate another party for a loss or liability.
How the clause works — plain steps
1. Collision occurs between Vessel A and Vessel B.
2. Liability is investigated (by courts, arbitrators, or maritime authorities) and apportioned — for example, 60% A / 40% B or 50/50.
3. A cargo owner can pursue recovery against the party at fault under tort or contract, and initial recoveries may follow domestic rules (some jurisdictions allow full recovery from the other vessel).
4. The both-to-blame clause allows the vessel that initially pays more than its share to claim contribution from the other vessel(s) according to the agreed apportionment or as determined by law.
Special considerations and interactions
– Apportionment vs. full recovery: In some legal systems, cargo owners may collect the full loss from the non-carrying vessel and that vessel then seeks contribution. The both-to-blame clause prevents inequitable outcomes by creating a contractual right to share losses.
– Hague-Visby Rules: Article IV(2)(a) provides a defense for carriers who exercised due diligence to make the ship seaworthy. Cargo interests may still bring tort claims against the non-carrier vessel.
– Jurisdictional differences: U.S., English, and other maritime systems have different procedural and substantive rules that affect who pays first and who can seek contribution afterward.
– Scope: The clause typically applies to collision damage among vessels and to associated cargo losses, but insurance policies commonly exclude wear-and-tear, decay, and war risks.
– Evidence and quantification: The precise share of blame must be established (court, tribunal, or settlement). The clause’s operation depends on that apportionment.
Checklist — what to verify if you’re dealing with such a clause
– Is a both-to-blame collision clause present in the bill of lading and/or the marine insurance policy?
– Which law or jurisdiction governs the bill of lading and the insurance policy?
– Are the terms consistent with Hague-Visby Rules or other applicable conventions?
– Has fault been apportioned formally (court/tribunal) or only informally?
– What values are being used for apportionment (cargo value, freight, ship’s value, total interests)?
– Are any exclusions (war, wear-and-tear, inherent vice) relevant to the loss?
– Is there separate P&I (protection & indemnity) or hull insurance that interacts with the clause?
– What steps must be taken to preserve rights of contribution (timelines, notices, subrogation)?
Worked numeric example
Assumptions:
– Ship A carries cargo worth $1,000,000.
– Ship B’s cargo and vessel interests total $500,000.
– Collision causes cargo damage of $400,000 (to Ship A’s cargo) and $200,000 hull repair costs to Ship B.
– Liability is apportioned 50/50.
Practical flow:
1. Cargo owner of Ship A claims $400,000 against Ship B’s owners and recovers that amount (under a tort action).
2. Because the loss is shared 50/50, Ship B’s owner can invoke the both-to-blame clause to claim half of their liability from Ship A’s owners.
– Total liabilities attributable to the collision (for contribution) could be treated as the monetary losses: $400,000 (cargo) + $200,000 (Ship B hull) = $600,000.
– Ship B’s share = 50% of $600,000 = $
$300,000.
Flow and net effects (worked example)
– Step 1 (claim and payment): Ship B pays $400,000 to Ship A’s cargo owner for the cargo damage. Ship B also pays $200,000 to repair its own hull. Cash outflows by B before contribution = $400,000 + $200,000 = $600,000.
– Step 2 (contribution): Because liability is apportioned 50/50 on a total loss of $600,000, Ship B is entitled to recover 50% × $600,000 = $300,000 from Ship A.
– Net results after contribution