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Web alert: The New Jason Clause: a reminder of its importance

18 March 2015

Carriers have an absolute implied obligation under English common law to provide a seaworthy ship. This obligation is modified by the application of the Carriage of Goods by Sea Act 1971 (‘COGSA 1971’) and / or the Hague Visby Rules, by which this obligation is diluted to exercise due diligence before and at the commencement of the voyage to make the ship seaworthy. Further, under COGSA and the Hague Visby Rules where there is loss or damage which results from unseaworthiness, a carrier will be held liable if the loss has resulted from its failure to exercise due diligence to make the ship seaworthy.
 
Equally, when there is a General Average (GA) event and, by virtue of a GA adjustment issued, all interests to the adventure are called upon to contribute to the GA expenses, the only way for cargo interests to escape liability would be to prove causation between the loss which gave rise to the GA act and to the unseaworthiness (to which the due diligence test would still apply [1]).
 
Conversely, the position under US law is governed by the provisions of the ‘Harter Act’ of 1893. Section 1 and 2 of the Act prohibit clauses which relieve the shipowner from the duty to take care of the cargo and to provide a seaworthy ship. On the other hand, section 3 of the Act provides that, if the shipowner has exercised due care to make the ship seaworthy, neither the owner, the ship, its agent, nor its charterers shall be liable for damage or loss arising from (inter alia) faults or errors in navigation or in the management of the ship. This contradiction between sections 1 and 2 and section 3 was clarified by the decision of The Irawaddy[2] where it was made clear that section 3 of the Harter Act should not be construed so as to entitle a shipowner to claim contributions in GA from other interests on occasions where its servants have been negligent.
 
As a result of this strict position under the Harter Act, the US courts have allowed the incorporation of contractual terms into contracts of carriage (often bills of lading) to mitigate against this position. The wording of the ‘Jason Clause’ had the effect of entitling shipowners to receive contributions in GA, so long as they had exercised due diligence to make the ship seaworthy. However, if they had failed to comply with this obligation they were not entitled to a contribution from cargo interests, irrespective of whether there was a causal connection between the loss and the unseaworthiness.
 
The ‘New Jason Clause’ was introduced to bring US law more into line with English law on this subject. Its wording, therefore, now clarifies that the shipowner is entitled to receive GA contributions from other interests in the maritime adventure even if it failed to exercise due diligence to make the ship seaworthy, provided the particular unseaworthiness was not the cause of the casualty.
 
The key lesson to take away from reading this article is that shipowners should ensure that the standard, unamended, wording of the 'New Jason Clause’ is always incorporated into their bills of lading / waybills when US Law may be applicable, or if the contract concerns shipment of cargoes from or to the United States. P&I clubs require such an incorporation and if this does not take place, P&I cover for otherwise unrecoverable GA contributions from cargo interests will be rendered discretionary.
 
This article intends to provide general guidance on the issues arising as a matter of English law. It is not intended to provide legal advice in relation to any specific query. Members requiring further information on this topic should direct their enquiries to either the authors of this article, or their usual club contact.

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1.       The Oak Hill [1970] 2 Lloyd’s Rep. 332; affirmed [1975] 1 Lloyd’s Rep. 105 Sup Ct (Can)
2.       (1898) U.S. 187.