Caroline Friis, claims executive at Skuld, has reported on a case involving damaged steel coils and a legal case that decided where responsibility lay.
Friis said that The Eems Solar was a leading legal authority concerning the allocation of responsibility for stowage of cargo between owners and charterers when such responsibility has been contractually shifted from one to the other.
The case involves a claim for damaged steel coils. Investigations revealed that the steel coils had shifted due to the absence of locking coils, meaning that it was sufficiently clear that bad stowage caused the damage.
The claimant, who was both charterer and receiver, made a claim against the owners. The charterparty was on Gencon 1994 terms, and the cargo was shipped under a Congenbill 1994 bill of lading. The Hague rules and the charterparty were both incorporated in the bill of lading.
The main issues in focus were whether owners had exercised due diligence in ensuring that the vessel was seaworthy and whether the owners had passed responsibility for stowage onto charterers.
The claimants argued that the owners were contractually liable for the stowage of the cargo. They further argued that the loss occurred was a breach of owner’s contractual duty under The Hague Rules. The defendants, the owners of the vessel, argued that they had successfully shifted the responsibility of stowage through the Gencon form 1994.
The court dismissed the claimant’s case and ruled in favour of the shipowner, dismissing the claimant’s arguments that The Hague Rules, art III, rule 2 should take precedence over contradictory contractual provisions. The court ruled that, provided that the intentions of the parties were sufficiently expressed in the contract. Art III, rule 2 was not meant as a provision superior to the agreements between the parties. Rule 2 was to be construed as a specification of the terms on which the service is be performed if that obligation is undertaken. In this instance, clause 5 of the charterparty, which purported to shift the legal responsibility from the owner to charterers, was sufficiently clear and effective.
The court concluded that the vessel was not unseaworthy and that any unseaworthiness was a result of a failure to properly stow the cargo, for which the charterer was liable. The owner could still be held liable if it could be established that the bad stowage was caused by a “significant intervention” by the shipowner or their servants, but this was not the case in the matter at hand.
Friis wrote that The Eems Solar decision strengthened the contractual certainty with respect to allocation of responsibility in the charterparty. “The judgement has made it clear that the court will adhere and give precedence to clear contractual provisions which diverge responsibility for cargo stowage from owners to charterers, even if the vessel was rendered unseaworthy due to bad stowage.”