The International Transport Intermediaries Club (ITIC) emphasized the significance of robust vessel design reviews and related insurance coverage during construction, prompted by a recent dispute involving a naval architect, a ship owner, and a shipyard regarding a vessel’s operational performance post-delivery.
In particular, a 24-meter catamaran servicing the offshore oil and gas sector, encountered significant operational challenges due to unanticipated vibration problems in the vessel’s rudders, resulting in hull stress and subsequent structural cracking.
Despite the best efforts of the naval architect to address the issue and the collaborative efforts of the ship owner and shipyard to resolve the underlying causes through various adjustments, there was no significant reduction in vibration achieved.
Upon further investigation, it was revealed that the vibrations in the rudders were caused by cavitation induced by the original propeller designs. Cavitation is the formation of bubbles from a nearby moving blade, such as the propeller, which results in the pitting of the rudder and/or blades’ surface.
Despite the naval architect’s recommendation to change the propellers, which was covered by ITIC, the modifications only slightly reduced the vibrations, and the vessel still fell short of meeting its intended speed and performance criteria.
“The agreement reached between the parties involved in the dispute not only resolved the matter at hand but also emphasised the intricate interdependencies involved in maritime design and construction. It highlights the significance of conducting a thorough design review, and, where possible, making sure the builders adhere to the design specifications. It is important for the designer to have insurance coverage in place to manage the risks that come with maritime design. The designer potentially faces claims from both the end user and the shipyard if the vessel fails to perform. The costs of defense, even if the designer hasn’t made an error, can be incredibly high. Proper insurance can help the designer rest easy,” stated Mark Brattman, Claims Director at ITIC.
After a comprehensive analysis, third-party experts concluded that the primary issue stemmed from inadequate clearance between the propellers’ tips and the vessel, a flaw originating from the original design by the naval architect.
However, the experts also advised replacing the rudders and rectifying the rudder support structure, which was not constructed according to the naval architect’s specifications. These corrections were deemed necessary before addressing the propeller issue.
Furthermore, the vessel’s owners encountered operational and financial difficulties due to these issues and pursued legal action against both the naval architect and shipyard. They sought compensation for rectification expenses, loss of income, depreciation in the vessel’s value, and other associated costs, totalling a claim of US$5 million plus legal fees and interest.
Following an extensive legal process, which involved challenges in securing expert evidence to support their claim, all parties agreed to mediation. Due to limited personal resources and policy coverage constraints, the naval architect agreed to settle for US$400,000, indemnified by ITIC. This amount represented less than 10% of the initial claim.
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