First time the effect of the owners’ failure to obtain in due time an oil major approval came in sight in The Seaflower  1 Lloyd’s Rep 341 case. Although the main difficulty met in this case was the clause drafted with insufficient consideration given to the precise meaning and effect of the terms, this decision attracted general attention to the importance of oil majors’ approval rather than to the importance of careful drafting.
First of all, majors’ approvals or rather their absence negatively affect tradability of the vessel, i.e. vessels which do not have an approval simply cannot carry products of that oil major.
Secondly, an approval is a matter of status, as Rix LJ stated at para 64:
An oil company’s approval may reflect the vessel’s condition, but it is a matter of status rather than condition. Similarly, a vessel’s class is a matter of status – although that status may be affected in many different ways: at one extreme a vessel may be completely out of class, which is a most serious matter, because such a vessel cannot trade, but at another extreme there may be only a recommendation or even a mere notation of class that something relatively minor be attended to within a certain date. In the case of an oil majors’ approval, however, the vessel either has it or it does not. In that respect it is like a term as to the vessel’s class at the time of contract: if the vessel is out of class, the condition as to her class is broken.
The Seaflower decision is, however, of limited application nowadays, since in the aftermath of The Erika incident all oil majors has changed its the vetting practice and clauses similar to one examined in The Seaflower case are no longer in use. As some industry experts feared The Erika judgment brought an ambivalent result. Although it led oil companies to strengthen safety standards of sea transportation of crude oil and petroleum products in order to improve the prevention of maritime accidents, but it also prompted oil majors to review their monitoring systems to remove from it any basis for liability under existing legislation.
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.