The Liability of the Classification Society Under Italian Law

The Liability of the Classification Society Under Italian Law

A recent Judgment rendered by the Court of Appeal of Ancona on 2nd August 2017 confirmed the emerging trend of Italian Courts to hold Classification Societies liable in tort toward third parties (i.e. buyers, charterers and/or underwriters) who relied on the issued certificates when deciding to purchase or charter a ship.

 

The case concerned an Italian shipping company that purchased a ship relying on her good conditions, as certified by a Classification Society, but then found her to be severely faulty. In the meantime, the seller (who has a legal obligation under Italian law to guarantee that the sold item is free from hidden defects) went bankrupt and the purchaser therefore could only summon the Classification Society for liability in tort. The Court of Pesaro, adhering to the most recent trend, found the Classification Society liable and the Court of Appeal confirmed the decision of the first-degree judge.

 

The judgments of the Court of Pesaro and the Court of Appeal of Ancona recall the sentence issued by the Court of Genoa on 24th February 2010, the leading case for tort liability of the Classification Societies under Italian law.

 

In said judgment, a maritime company time-chartered a ship, that was in the highest classification according to the Classification Society, for a single voyage from Hamburg to Libya. However, during loading of the goods in Hamburg the German authority ordered a detention of the ship due to a number of deficiencies. The time charterers brought a legal action in tort before the Court of Genoa against the Classification Society, claiming that they could not sue the owners because, shortly after the events in question, the ship had been sold to another party and any claim against the Owners would have therefore remained unsecured.

 

The Judge first considered that, under Italian law, tort liability is subject to the general rule set out by article 2043 of the Civil Code, which provides that whoever causes, by negligence or wilful misconduct, a wrongful damage to a third party must compensate the damages. In particular, tort liability is established when the following requirements are met: (i) negligent or wilful misconduct, (ii) wrongful damage and (iii) causal link between the misconduct and the damage.

 

Provided, therefore, that a Classification Society negligently carries out an inspection, thus issuing a certificate which does not reflect the status of the ship, and a buyer/charterer relies on such a certificate when deciding to purchase/charter said ship, the issue to be resolved by the Judge was whether a certificate issued by a Classification Society only concerns the contractual relationship between them and the Owner or if it also concerns third parties.

 

In such respect, the Court of Genoa firstly stated that “there is no commercial communication in the maritime field that does not connect the name of the ship, her class and the relevant Classification Society; in this way the receiver of the communication is immediately aware of the ship’s essential qualities and can therefore understand if the price requested for her use or purchase is adequate”.

 

In light of the above statement, the Court of Genoa therefore holds that the Classification Society has a responsibility toward third parties, who have the right to freely determine their contractual activity (recalling Supreme Court Judgment No 2765/1982), and is therefore liable if its negligent activity interfered with said right.

 

On 8th July 2014 the Court of Appeal of Genoa, although confirming the principle stated by the first-degree Judge, focused its judgment on the burden of proof lying on the party claiming damages towards the Classification Society.

 

In particular, the Court of Appeal specified that the Classification Society can be held liable towards the purchaser (or charterer or underwriter) only if and where the purchaser manages to prove the following: (i) that the certificate issued by the Classification Society was misleading and/or wrong and/or not in line with the status of the ship at the moment of the inspection; (ii) that the purchaser was aware of the class assigned to the ship before making the purchase; and (iii) that the decision to purchase the ship was made on the basis of the certificates issued by the Classification Society.

 

To learn more from the author, please contact Francesco Gasparinic at francesco.gasparini@mordiglia.it.