Court finds in favor of shipowner and DoJ in Athos I case

JULY 27, 2016 — U.S. Federal District Court Judge Joel Slomsky has ruled in favor of the shipowner and coplaintiff the U.S. Department of Justice, and against CITGO Petroleum and other CITGO-related parties, in a case involving a spill of 265,000 gallons of heavy crude oil from the tanker Athos I in 2004.

This latest court decision overturns the original Federal District Court decision issued in 2010, which had denied the shipowner and DoJ’s claims.

The spill occurred when, on November 26, 2004,  the 60,880 dwt tanker Athos I, struck an uncharted nine ton anchor on the river bed when berthing and about a ship’s length off the CITGO Asphalt Refining Company (CITGO) berth at Paulsboro, NJ, on the Delaware River.

The double sided , single bottom tanker sustained punctures to its No 7 port ballast tank and the No 7 center cargo tank, resulting in a catastrophic spill affecting some 280 miles of river shoreline, resulting in clean-up costs, natural resources and third party claims totaling about $300 million.  

Following an on-scene post casualty investigation, the U.S. Coast Guard determined that the spill was not caused by any violation by the ship of a relevant regulation that may have caused or contributed to the casualty.

No civil or criminal fines or penalties were levied against the shipowner, ship operator, agents or employees or against the ship’s pilots.

The ship was owned at the time of the accident by Frescati Shipping Company Ltd, and managed by Tsakos Shipping & Trading S.A. Its P&I liability insurer was the UK P&I Club.

Following appeals on the issues of law, in response to the unsuccessful 2010 lower court decision, the Third Circuit Court of Appeal determined that the shipowner was entitled to rely upon the protection afforded by the safe berth and safe port warranties contained in the sub-voyage charterparty that the Athos I was contracted under. Furthermore, the court decided that the warranties, which were on express terms with no due diligence qualification, was an absolute warranty of the vessel’s safety in calling at the CITGO Asphalt Refining Company (CITGO) berth at Paulsboro, NJ. The appeal court also determined that the terminal owner/operator had an obligation to use due diligence in its duty of care to the visiting ship, and that the anchor, upon which the ship was impaled, lay in the ship’s immediate approach to its berth.
However, the Third Circuit Court of Appeal was prevented from making a final determination of liability based upon the facts in the case due to the failure of the original district court judge to issue specific findings of fact on both the liability and damages despite evidence heard during 41 days of trial.
Consequently, the court of appeals remanded the case to a new district court judge (Judge Slomsky), with instructions to make factual findings in accordance with the Third Circuit’s decisions on the issues of law.Judge Slomsky reviewed the original trial evidence, and heard evidence from a selection of recalled fact and expert witnesses at a set of hearings in the spring and summer of 2015 that lasted 28 days, in order to determine the facts of the case in accordance with the findings of law and judicial guidelines determined by the Third Circuit.  Those fact-based issues included the question of whether the warranty of safety was breached, and whether the owner of the dock was negligent in its obligation to use due diligence in its duty of care to ensure that the Athos I could approach its dock safely. The Federal District Court has now reached a decision and has ruled in favor of the shipowner, and DoJ, on liability and damages. Importantly, the Court found that “Athos I was seaworthy and navigable and operated by an experienced team. No alleged statutory or regulatory violation caused or contributed to the allision with the anchor despite the considerable effort of CARCO to shift blame.” The detailed decision, which is welcomed by the shipowner and its P&I liability insurer following a lengthy pursuit of litigation in the US courts, is being studied following the successful result.