UK P&I Club has provided a summary of Glencore Energy UK Ltd & Anor v Freeport Holdings Ltd (The “Lady M”) held in the Commercial Court in front of Popplewell J on December 21st 2017.
The claim for damages was brought by cargo owners against the shipowners. A fire on board Lady M immobilized her while the cargo was being shipped. The shipowners hired salvors and declared general average. The cargo owners agreed to pay the salvors and then sought to recover these costs from the shipowners, alleging a breach of the bills of lading or the bailment of the cargo.
The Hague-Visby Rules 1968 applied, and the shipowners relied in particular on Article IV Rules 2(b) and/or 2(q) to avoid liability. It was agreed that the fire was started deliberately by the Chief Engineer, while his state of mind at that time was undetermined.
The issues to be determined by the court were:
- whether the conduct of the Chief Engineer constituted barratry and;
- if it did, whether Article IV Rule 2(b) or Article IV Rule 2(q) exempted the shipowners from liability.
The judge held as follows:
For the Chief Engineer’s act to qualify as barratry, he must have had the necessary knowledge or intent that what he was doing was either a crime or a serious breach of duty owed towards the ship owners, or at least recklessness in that regard.
The state of mind of the Chief Engineer was undetermined in the present case, therefore the conduct of the chief engineer in starting the fire might or might not constitute barratry; however, this issue was not determinative of whether the shipowners were exempt from liability for the fire under Article IV Rule 2(b) or Rule 2(q).
- Article IV Rule 2(b)
The Court construed the word “fire” to mean fire howsoever caused, including in particular fires deliberately or negligently started by the servants or agents of the carrier. Article IV Rule 2(b) was therefore capable of exempting the shipowners from liability however the fire was caused—even if the fire had been set deliberately or barratrously.
- Article IV Rule 2(q)
The shipowners were not exempt from liability for the fire under Article IV Rule 2(q). This exemption applied to “any other cause” arising without the fault of the carrier or his servants or agents. Applying an agency test, the Court held that the Chief Engineer in the present case was acting as a servant of the shipowners when setting fire to the engine control room, thus the Article IV Rule 2(q) exemption did not apply.
UK P&I said that the case provided a definition of barratry and important guidance on the interpretation of the following two exemptions available to ship owners under Article IV Rule 2 of the Hague/Visby Rules:
(b) Fire, unless caused by the actual fault or privity of the carrier.
(q) Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.