Ship managers are facing growing litigation risks linked to inherited ship defects after a recent case saw claims of more than US$2.5 million filed against a manager following the takeover of a defective vessel.
The claim was later reduced to US$250,000 with support from International Transport Intermediaries Club (ITIC), highlighting the potential exposure managers face even when known deficiencies are disclosed before contracts begin.
The case involved a ship manager that took over a vessel in June 2023 with more than 150 acknowledged defects. A phased rectification programme was agreed with the shipowner, including additional crew deployment and repair works scheduled throughout 2023 and 2024.
However, delays to operations, including a six-week drifting period, disrupted the repair schedule and postponed critical maintenance. In March 2024, the vessel was detained following a Port State Control inspection.
The shipowners subsequently alleged negligence by both the ship manager and crew, seeking damages significantly above the US$1.5 million liability cap set under SHIPMAN terms.
The manager denied liability, arguing that the detention and resulting losses were not caused by negligence and disputing responsibility for alleged crew shortcomings. Questions were also raised over the effectiveness of the agreed repair schedule and crew readiness.
Mark Brattman of International Transport Intermediaries Club said the case reflected a growing trend of substantial claims being pursued without clear supporting evidence, often linked to wider commercial disputes.
ITIC said the incident demonstrates the importance of detailed documentation, strong contractual protections and proactive claims management when taking over vessels with existing deficiencies.
