Court backs Imvros ruling, shipowner found not liable for cargo lost overboard

North of England Club has referred to a recent decision in the English Courts which was good news for shipowners, concerning the effectiveness of a clause in a bill of lading that excludes a carrier’s liability for loss or damage to cargo carried on deck.

In a case involving several claimants (including Generali, AIG Europe and L’Algérienne Des Assurances 2A) v Elin Maritime Ltd, the Elin loaded 201 packages of project cargo for carriage from Thailand to Algeria. The front of the bill of lading stated:

“70 pckgs… loaded on deck at shipper’s and/or consignee’s and/or receiver’s risk; the carrier and/or Owners and/or Vessel being not responsible for loss or damage howsoever arising”.

There was a similar term on the back of the bill of lading.

During the voyage in early July 2016 the vessel encountered heavy weather and some of the deck cargo was lost or damaged.

The Cargo interests claimed that the shipowner had failed to care for the deck cargo or, alternatively, had failed to exercise due diligence to make the ship seaworthy at the commencement of the voyage, due to inadequate lashings and stowage.

As a preliminary issue the Court was asked to consider whether the exceptions clauses in the bill of lading were sufficient to exclude liability for loss or damage caused by negligence or unseaworthiness.

The Owner raised previous legal cases (including The Imvros) to the effect that, where exclusionary words in a bill of lading are clear, then they mean what they say. They argued that the Court should not re-write the contract to give a different meaning to an exclusion clause.

The Cargo interests argued that, for it to operate in this case, exceptions clauses must specifically refer to liability for unseaworthiness or negligence. They suggested that the case of The Imvros should not be applied because that decision had been forcefully criticised by academics and the Singapore courts had decided it was wrong.

Judge Stephen Hofmeyr QC rejected the criticisms of the decision in The Imvros. The phrase “howsoever arising” is, the Judge said, the “classic phrase” used to exclude liability for negligence and unseaworthiness.

The shipowner was therefore not liable for any loss or damage to any cargo carried on deck, including loss or damage caused by negligence and unseaworthiness.

“The words of exclusion are clear. The Owner has no responsibility for cargo carried on deck whatever the cause. It is difficult to conceive of wider words of exemption. The exclusion covers any and every cause and there is no justification for excluding either negligence or unseaworthiness as a cause”, said the judge.

The judge noted that The Owner alleged that the balance of the cargo which was lost and/or damaged was carried on deck, while the Cargo interests did not admit that this was so. “That dispute may need to be determined hereafter” said Judge Hofmeyr.

He further noted that “perhaps surprisingly”, where the bill of lading states that the goods are carried on deck but, in fact, the goods are carried below deck, the Hague Visby Rules apply. Similarly, the Rules apply where the bill of lading is silent as to the location of the goods but, in fact, the goods are carried on deck.

North of England Club said that this was “a very useful decision” for shipowners who routinely carried cargoes on deck. It confirmed that parties to a contract of carriage were free to agree a carrier has no liability for loss or damage to deck cargo.

North said that Judge Hofmeyr’s rejection of criticisms of the decision in The Imvros was also helpful to shipowners. In addition to dealing with exceptions clauses, The Imvros also stated that, where a charterer was responsible for stowage, liability for damage caused by inadequate stowage is not transferred back to the owner where the stowage is performed so badly it renders the vessel unseaworthy.

Max Davidson (instructed by Roose+Partners) for the Claimants

James Leabeater QC (instructed by Reed Smith) for the Defendant

http://www.nepia.com/insights/signals-online/cargo/deck-cargo-exclusion-clauses-the-elin/deck-cargo-exclusion-clauses-the-elin/

Judgement at: http://www.nepia.com/media/1026370/APPROVED-JUDGEMENT.pdf cent 6;\lsdp