Hong Kong: Collisions And Reserve Ships: Liner Operators Beware!

Last Updated: 13 November 2014
Article by Harry Hirst

Darya Bhakti [2013] 2 HKLRD 926

The quantification of damages for the loss of use of a ship damaged in collision where her owner maintains and substitutes a reserve ship for his damaged ship came up for determination recently in Hong Kong, and in the modern day setting of a liner operation run by a consortium of container ship owners. The case in question was The Darya Bhakti in the Hong Kong Court of Appeal.

Reserve ships

Liner operators of container ships are committed to providing regular services with scheduled sailing times and port rotations. In order to maintain such services, they must have similar, and ideally identical, ships available as replacements to provide cover for those occasions when one of the ships in service has to be withdrawn for repair. In earlier years, a suitable replacement ship would often be readily available in the market for short-term charter but the option of chartering-in has become considerably more difficult with the increasing specialization of container ships in terms of their carrying capacities, speeds and fuel efficiencies. An increasing number of liner operators today therefore are investing in reserve ships; that is, a sister ship that is kept deliberately idle in order to be readily available for use as a replacement when another of her sisters in service has to be withdrawn for any reason, such as after collision.

Loss of use

Where a ship is damaged in collision, her owner is entitled to claim damages for the loss of the use of that ship during the period it is out of service undergoing repair (the period of detention). Where the owner has no other ships available and charters in a replacement ship to substitute for his damaged ship during the period of detention, he can recover these chartering-in costs as damages. What is the position, however, where the owner keeps a reserve ship and elects not to charter in but to substitute the reserve ship for the damaged ship?

The authorities

Surprisingly, there are very few reported shipping cases that directly address this issue and such cases as there are date back to the early part of the last century and involve claims for loss of use by non-profit making organizations. These cases do suggest, however, that the owner of a reserve ship trading commercially for profit is entitled to recover loss of use based upon the market rate of hire for such a ship at the time of the collision. As the authors of the leading textbook on collisions note:

"The case where a sister ship otherwise idle takes the place of the damaged vessel must be distinguished from the situation where a stand-by or reserve vessel is specifically kept for that purpose. Here a claim will lie for substantial damages for detention...

There is no clear English authority on the measure of recovery, but US authority tends to give the reasonable rate of charter hire for the 'spare boat'."

The Darya Bhakti

OOCL's vessel, OOCL China, was damaged in collision with the Darya Bhakti whilst on time charter to MISC, following which MISC stopped paying hire to OOCL. The liner consortium of which both MISC and OOCL were then members – the Grand Alliance -substituted the OOCL Japan, another OOCL vessel and identical sister ship that the members of the Grand Alliance had been keeping in reserve. OOCL subsequently claimed damages for the loss of the use of the OOCL China based upon the lost time charter hire for the period that the OOCL China was out of service undergoing repair.

The owners of the Darya Bhakti argued that as OOCL had sub-chartered back some of the slots on the OOCL China from MISCand had not paid slot charter hire to MISC during the detention period, and as all of the containers on board the OOCL China were carried to destination by the OOCL Japan so that the collision did not cause OOCL to suffer any loss of freight income, OOCL's claim for loss of use had to be reduced accordingly to take account of the "saved" slot charter hire. The Court at first instance agreed, and this decision was upheld by the Court of Appeal.

In reaching this conclusion, the Court at first instance appears to have treated the OOCL Japan as an idle sister ship rather than as a reserve ship; and the Court of Appeal considered this approach to be correct, surprisingly concluding that if the OOCL Japan was a reserve ship, it was a reserve ship of the Grand Alliance and not a reserve ship of OOCL.


The decision in this case is a particularly disappointing one, not only for OOCL but for all liner operators. It is to be hoped that there will soon be another opportunity for the common law courts to re-visit this issue of reserve ships and the appropriate method for assessing loss of use following a collision, but until then...liner operators beware!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions