SHIP INSPECTORS NOT LIABLE IN SINKING, APPEALS COURT RULES

SHIP INSPECTORS NOT LIABLE IN SINKING, APPEALS COURT RULES

Likening inspectors of supertankers to truck mechanics, a federal appeals court upheld a lower court ruling that a ship inspector cannot be held liable for failing to detect the safety defects that sank the cruise ship Sundancer.

The Sundancer sank off British Columbia in 1984 after running aground. Its owners contend the damage to the hull would not have sunk the ship if the American Bureau of Shipping had detected safety defects during an $85,000 inspection while the ship was being converted from a ferry to a luxury liner shortly before the accident."This is a real blow to safety at sea," said Brian Starer of the New York law firm Haight, Gardner, Poor & Havens, which represents the owners, Sundance Cruises Corp. and Sundance Cruises Inc., in their $264 million suit against ABS.

But classification society representatives said the decision will help ensure safety by making it clear that final responsibility for a ship lies with its owner. The decision "reaffirms that the shipowner has a non- delegable duty for the safety of the vessel and cannot pass that on," said John Grimmer of New York law firm Lord Day & Lord, Barrett Smith, which represents ABS.

In the decision, the three-member panel of the Second Circuit of the U.S. Court of Appeals made an unusually clear statement about the role of classification societies such as ABS.

"Put simply, the purpose of the classification societies is not to guarantee safety, but merely to permit Sundance to take advantage of the insurance rates available to a classed vessel," the court said in affirming a lower court decision granting summary judgment in favor of ABS.

"I couldn't have said it better," said Christopher B. Kende, a lawyer with Holtzmann, Wise & Shepard, which represents French classification society Bureau Veritas in the United States.

Mr. Grimmer said the court's statement echoed the Supreme Court's position on the role of the Federal Aviation Administration.

"The FAA is not there to guarantee safety, but to promote safety," said Mr. Grimmer. "That's what ABS is really there for."

Classification societies perform the bulk of the world's detailed ship safety inspections. Owners pay the societies to do the inspections and issue certificates that banks and insurers require before they issue loans or policies.

The maritime authorities of many governments contract out to the societies to perform governmental inspections as well and issue Safety of Life at Sea (SOLAS) certificates. That is the kind of inspection that is at issue with the Sundancer, which was registered in the Bahamas.

The societies have come under criticism from many quarters over the last 10 years for failing to prevent substandard ships from plying the oceans. Some have gone as far as to suggest that the societies should be eliminated in favor of a new, international inspection system.

"This case is really about safety and what SOLAS certificates mean," Mr. Starer said. "If the flag (Bahamas) immunizes the class society that issues the certificate on their behalf, where is the teeth?

"This puts tremendous pressure on countries like the United States and other port states" to more closely examine ships that have SOLAS certificates, he said.

Sundance plans to ask the appeals court for a rehearing, said Mr. Starer. If that effort fails, the case could end up before the Supreme Court.

"We'll take it one step at a time," said Mr. Starer.

The owners contend that holes were made in the ship's bulkhead and vital plumbing safety valves were removed during the ship's conversion to a luxury liner. After the grounding, these defects allowed water to flow into undamaged compartments, sinking the ship.

The Sundancer's troubles did not end in British Columbia. The ship later was refloated and renamed the Pegasus, the flagship of Epirotike Lines of Greece. In early June 1991 the ship caught fire off a dock in Venice and sank once again.