Gard warns on soya beans claims

Norway-based marine insurer Gard has advised members that, over the course of the past several years, Gard had experienced “an alarming increase in large claims arising from damage to soya beans shipped in bulk from Brazil to China”.

Gard said that owners and their Clubs had faced detentions and high demands for security resulting in Letters of Undertakings being issued in the millions of dollars. “In these cases, the damage is most often caused by microbiological instability and resulting self-heating of the cargo.”

Gard has released a video in which the club speaks with cargo scientist Dr Tim Moss of Brookes Bell.

Dr Moss explained that soya beans, like all grain products, carried mould spores that grew under certain conditions. The safe storage time for the cargo decreased as the moisture content and the temperature of the beans at loading increased.

Voyage times from Brazilian ports to Chinese ports averaged between 35 to 45 days, while voyage times to central European destinations were between 14 and 20 days. Dr Moss explained that the same product that would meet sale contract specifications would arrive without damage at European destinations, but could well exceed safe storage times when arriving in China.

Gard said that where the cause of the damage was microbiological instability the loss should not be borne by the shipowner because the damage was inevitable and caused by an inherent property of the cargo itself.

Although China is not a signatory to the Hague-Visby rules, the Chinese Maritime Code does recognize an inherent vice exception and follows the Hague-Visby principle that it is the burden of the carrier to show that he took reasonable care of the cargo.

Gard said that in its experience the Chinese Courts might find the burden of proof had not been met due to ventilation not being sufficiently recorded or properly performed, despite expert evidence that the damage was inevitable due to microbiological instability. By contrast, English Courts and arbitration panels that had been provided with the same or similar expert evidence have tended to side with the carrier.

In the second video with Dr Moss he will focus on the causes of ship sweat, ventilation procedures and best practices for ventilation record keeping, in order to assist owners in defending claims. In the third and final video in the series he will explore the commercial and legal landscape underpinning these soya bean claims.