Section 8 Towage liabilities

7.8.1 General

This section is divided into two parts. The first part deals with the extent of cover for liability arising from the entered ship being towed. The second part concerns the entered ship towing another ship or object.

7.8.2 What is towage?

Which situations qualify as towage within the meaning of this clause? It is those services ordinarily provided by a tug such as pushing, pulling, holding, moving, tendering or escorting.

Traditionally, international towage contracts include, in the period of towage, the time from when a tug leaves its station to perform the agreed towage services to the time when it is back and safely moored at its station. This wide contractual interpretation is valid only between those affected by the towage contract and those who insure their increased contractual liabilities. In the absence of such a contract, courts will look to the natural meaning of the word towage. In that sense of the word, there is no towage until an adequate tow line has been reasonably connected and the tug has started to pull.

If in the course of towage the towing vessel makes direct contact with the ship or object to be towed and inflicts physical damage to the vessel the collision liability cover under the Hull policy will be engaged.

In case of collision liability arising during towage, P&I cover is usually available for that proportion of the collision liability that is not covered by the prevailing Hull policy.

7.8.3 Where the entered ship is towed

7.8.3.1 Towage contracts

Towage can be performed under various contracts, the terms of which can increase or reduce the liability which would otherwise result. Both subsections (b) and (d) of this provision make it a condition that the towage contract has been approved by the Club in advance for its liability to be covered under these Rules. This also follows from Rule 10 Section 2 (e).

This does not mean that each and every new contract has to be sent to the Club for approval. Customary contracts such as the United Kingdom Standard Towage Conditions (1986), The Dutch and Scandinavian Towage Conditions and the BIMCO TOWCON and TOWHIRE contracts are approved provided that no significant amendments have been made, which affect the traditional liability system under these contracts. A Member who is offered towage under other contracts or on modified or unspecified terms, should contact the Club for advice. The Club can then analyse the liability under the proposed contract and help the Member to negotiate more favourable terms if obtainable. The Club would also make it clear to the Member if and under which conditions cover is available under these Rules.

7.8.3.2 Effects of towage contracts

Various, standard towage conditions go a long way to relieving the owner of the tug from liability. The tow assumes liability for damage done by or to the tug, tow and any other object or property. The tow also assumes liability for loss of the tug or the tow and for any claim for damage to third parties. It does not matter whether the damage was caused by the negligence of the tug owner or his servants or agents, unless it resulted from failure on the part of the management of the tug owning company to exercise reasonable care to make the tug seaworthy.

The BIMCO TOWCON and TOWHIRE contracts are based on a different concept of liability. The operational risks of towing are allocated between the tug and the tow on a knock-for-knock basis. This means that each party is responsible for loss of or damage to its own property, and injury to or death of its own servants or agents.

7.8.3.3 Liability unrelated to towage

It follows that those who agree to be towed or who enter a towage contract have to accept wide ranging liability for what may happen during the towage as defined in the contract. Depending on the terms of the towage contract, the tow may be responsible for damage unrelated to the actual towage. For example, a tug may collide with a lock gate or cause wash damage to other ships on its way to or from the ship to be towed and the provisions of the towage contract may attribute the responsibility for these matters to the tow resulting in the tow having to pay the losses whether those on board the tug were negligent or not.

7.8.3.4 Liability related to towage

The towage itself involves serious risks. Wrong manoeuvres by the tug or the tow or late disengagement of the tow line, can cause the tug to overturn and sink. The terms of the towage contract can impose on the owner of the tow responsibility for loss of life, oil pollution and wreck removal in addition to the loss of the tug. Even without contractual obligations, certain consequences of such an accident would still involve cover under these Rules as the accident was not caused by direct contact but by the use of a tow line. Pulling the aft tug under water or capsizing it by the tow line, if the engine of the towed ship is put full ahead by mistake, would also be covered by application of Rule 7 Section 1.

If the same engine manoeuvre made the ship hit and sink the forward tug, the result would be a collision subject to cover under the Hull policy as the faulty manoeuvre no doubt would have made the towed ship responsible. If there was shared blame for the collision but the tow was fully liable under the terms of the towing contract, the increased contractual liability would still be covered under the Hull insurance. Such cover is restricted to the loss of or damage to the tug. If the collision with the towed ship caused the tug to contact and damage another ship or object, liability for such damage whether contractual or not, would be for the P&I Insurance to cover.

7.8.3.5 Extent of cover

This section thus deals with extensive contractual liabilities including those unrelated to the behaviour of the Member. The cover is, therefore, firstly restricted to such towage that is necessary and customary for the Member in the ordinary course of trading the entered ship. Liability arising under towage contracts or otherwise during towage to enter or leave a port, or to shift berth or proceed within the port area, is covered. The cover is extended to towage of such ships, which are habitually towed in the ordinary course of trading from place to place. This goes for barges or similar vessels with no propulsion and for ships which by mandatory local regulations or otherwise must be assisted by one or more tugs when proceeding coastwise from one port to another because of possibly hazardous navigation on account of heavy tide, strong currents, shallow waters, sharp bends or heavy traffic.

In such situations where the entered ship is being towed under what can be described as ocean towage, there is cover under this clause only if the towage is performed under a contract, the terms of which have been approved by the Club.

7.8.4 Where the entered ship is towing

7.8.4.1 Ship is not a tug

This part of the provision is intended for situations where a ship which is not a tug performs towage services.

The provision starts with the declaration that liability arising from towage undertaken during a voyage for the purpose of saving human life and ships in distress is covered. For salvage of human life see Rule 3 Section 9.

No other towage is covered unless the Club has agreed, in advance, not only to the towage operation being undertaken but also to the contractual terms of such towage. If the Club agrees to such a towage, the terms must protect the towing ship at least to the extent recognised in traditional towage contracts. Further consideration should be taken when drafting the contract to the fact that the towing ship is not a tug and probably lacks suitable equipment and a crew with enough experience to carry out a towage operation. Guidelines are to be found in Appendix V clause 16 of the Pooling Agreement.

7.8.4.2 Ship is a tug

If the entered ship is a tug professionally engaged in towage, the insurance cover has to be tailor-made to suit the risks which can materialise in the kind of service operated. The insurance conditions should be agreed at the time of entry. The same applies to other specialised ships where towage might be one of their purposes, such as salvage ships and supply vessels Liabilities, costs and expenses are covered for towage performed under

1. The United Kingdom Standard Towage Conditions (1986) and the Netherlands and Scandinavian towage conditions.
   
2. Lloyd’s Standard Form of Salvage Agreement 1990. See comments under 7.4.1.2.
   
3. A reasonable towage contract based on the knock-for-knock principle. See the comments under 7.8.3.2.

It is a condition for cover under 1 and 2 above that no amendments have been made to the contractual terms to extend the liabilities of the entered tug.

The BIMCO TOWCON and TOWHIRE contracts are based on the knock-for-knock principle in such a way that they are considered agreed contracts under 3 above in the sense of item (b) of the second part of Rule 7 Section 8.

Where no towage contract has been signed or where the tug is liable under a towage contract for loss, damage or expense caused by negligence on the part of the tug or her owner, there is no cover for liabilities in relation to the tow or to cargo carried in or on the tow. Liability (in tort) against third parties is, however, covered.