Expert commentary: Aprile SpA and Others -v- Elin Maritime Ltd (the “ELIN”) [2019] EWHC 1001
Details
This article was authored by Edward Liu, legal director of Hill Dickinson and first appeared in Lloyd’s Shipping and Trade Law, 27 June 2019, Vol 19 No 05
Perils of deck carriage
The facts
By a non-negotiable bill of lading numbered EL1601LCBDJD01 issued at Bangkok, Thailand on 10 June 2016, the defendant owner acknowledged shipment on board the “ELIN” (the Vessel) of 201 packages of cargo, said to weigh 838,821 kg and to measure 3,937.69 CBM. The cargo was described as being in apparent good order and condition for carriage from the port of Laem Chabang, Thailand, to the port of Djen-Djen, Algeria.
The provision on page one of the bill of lading provided, inter alia, that: ‘The Carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising…in respect of deck cargo’. The provision on page two of the bill of lading stated, inter alia, that 70 packages identified on the attached list were ‘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’.
During the voyage, between around 2 July and 6 July 2016, the Vessel encountered heavy seas and some of the cargo was lost and/or damaged. A part of the cargo which was lost and/or damaged was indisputably carried in the Vessel’s holds and, thus, was not relevant for this present case. There was a dispute as to whether the balance of the cargo which was lost and/or damaged was carried in the Vessel’s holds or on deck.
The owner alleged that the balance of the cargo which was lost and/or damaged was carried on deck. The cargo interests did not admit that this was so. For present purposes, however, the parties had agreed that the court must assume that the balance of the cargo which was lost and/or damaged was in fact carried on deck.
Certain further assumptions were also agreed between the parties:
- neither the Hague Rules nor the Hague-Visby Rules applied to packages stated in the bill of lading to have been loaded on deck, provided that they were in fact so loaded
- as a consequence, the owner’s obligations in respect of the deck cargo were those found in the bill of lading and terms, if any, implied at common law
- at common law in the absence of any express term to the contrary and subject to the proper construction of the relevant contract, there was likely to be an implied term in the contract of carriage that the ship would be seaworthy, before and at the commencement of the voyage, to undertake the contractual voyage, being an ‘absolute’ warranty of seaworthiness; and
- it was arguable that the carrier was strictly liable to deliver the goods at destination in as good a condition as that in which they were when delivered to it
The cargo interests’ claim was brought in contract, tort and bailment. They alleged that the loss of and/or damage t the deck cargo was caused by the owner’s breach of duty and/or the contract contained in or evidenced by the bill of lading.
In particular, they alleged that the owner had failed:
- to deliver the deck cargo in the same good order in which it had been on shipment
- properly and carefully to load, stow, carry, care for and discharge the deck cargo in breach of contract and/or duty and in breach of article three, rule two of the Hague, alternatively Hague-Visby, Rules
- properly to lash and/or stow the deck cargo sufficiently for the voyage; and/or
- to exercise due diligence to make the ship seaworthy at the commencement of the voyage and, in particular, to make the ship and her holds fit for the reception, carriage and preservation of the deck cargo stowed in it
The owner denied liability on the ground, among others, that liability for the carriage of deck cargo was excluded by express terms in the bill of lading. The owner argued that the two provisions of the bill of lading as quoted above must be interpreted as excluding all liability for carriage of deck cargo, including liability for negligence and unseaworthiness. The phrase ‘howsoever arising’, which appeared in each of the clauses referred to all causes of loss or damage. The owner relied on the decisions in The Danah [1993] 1 Lloyd’s Rep 351, The Imvros [1999] 1 Lloyd’s Rep 848 and The Socol 3 [2010] 2 Lloyd’s Rep 221.
The cargo interests contended that the implied obligation of seaworthiness was a fundamental and overriding obligation and an exclusion clause did not affect it unless clearly worded. The words relied on by the owners did not specifically refer to liability for unseaworthiness or negligence. The obiter decision of Langley J in The Imvros had been forcefully criticised academically and by the Singapore Court of Appeal in Sunlight -v- Ever Lucky Shipping Co [2004] 2 Lloyd’s Rep 174, was wrong and should not be followed. As to negligence, the words of exclusion relied on by the owner should not be interpreted as covering the owner’s liability arising from its negligence. Instead, the words of exclusion could and should be given a restricted meaning by excluding the owner’s arguable strict liability for any loss or damage to the cargo, or by varying the owner’s obligation from an absolute obligation to one of due diligence (see the guidance given by the Privy Council in R -v- Canada Steamship Line [1952] 1 Lloyd’s Rep 1). Thus, the cargo interests argued that on a true construction of the bill of lading, the owner was liable for any loss of or damage to the deck cargo caused by: (a) unseaworthiness of the Vessel or the owner’s negligence; alternatively (b) the owner’s negligence; or (c) the owner’s failure to exercise due diligence to make the Vessel seaworthy before and at the commencement of the voyage.
The law
The issue before Stephen Hofmeyr QC sitting as a judge of the High Court, was whether, on a true construction of the bill of lading, the owner was not liable for any loss or damage to any cargo carried on deck, howsoever arising, including loss or damage caused by unseaworthiness and/or the owner’s negligence.
The judge held that on a true construction of the bill of lading, the owner was correct in its contention that the words of exclusion were effective to exclude liability for both negligence and unseaworthiness. The judge considered that the words of exclusion were clear that the owner had no responsibly for cargo carried on deck whatever the cause. It was difficult to conceive of wider words of exemption. The exclusion covered any and every cause and there was no justification for excluding either negligence or unseaworthiness as a cause.
In order to support his conclusion, the judge carefully reviewed the relevant authorities (Joseph Travers & Sons Ltd -v- Cooper [1915] 1 KB 73, The Danah, and The Imvros) and determined that those were supportive of his decision.
In particular, the judge dismissed academic and judicial criticisms of Langley J’s decision in The Imvros. The judge refused to accept the cargo interests’ contention that the extension of the words ‘howsoever caused’ to cover unseaworthiness, not only conflicted with the previous first instance decision in The Galileo [1914] P 9, but was inconsistent with Steel -v- State Line Steamship Co (1877) 3 App Cas 72 where the House of Lords held that an express exception against negligence did not cover loss due to unseaworthiness.
Further, while the decision in The Imvros may be inconsistent with the judgment of the Canadian Court of Appeal in Belships -v- Canadian Forest Products Ltd (1999) AMC 2606, the judge noted that the Belships case appeared to have been decided upon a mechanistic application of R -v- Canada Steamship Lines, an approach which the English court had eschewed. It was beyond doubt that, in construing an exclusion clause and considering whether it provided relief from liability for negligence, the English court had traditionally paid significant attention to the approach espoused by Lord Morton giving the judgment of the Privy Council in the Canada Steamship case. In particular, the judge noted that subsequent judicial comments on the approach revealed that Lord Morton’s three propositions should not be applied mechanistically, as if they were a codifying statute, but rather as aids to construction, the court’s duty always being to construe the words in question to see what they plainly mean to an ordinarily literate and sensible person.
In the judge’s view, whilst a mechanistic application of the approach espoused by the Privy Council in the Canada Steamship case might lead one to interpret the exclusion clauses in the bill of lading in one of the ways entreated by the cargo interests, for him to adopt such an approach would be an error. The three propositions established by Lord Morton were not terms of a statute but were aids to construction. The duty of a judge was to construe the exclusion clauses in order to see what they plainly meant to any ordinarily literate and sensible person having all the relevant background knowledge which would reasonably have been available to the parties in the situation in which they were at the time the bill of lading contract was concluded.
Thus, the judge saw nothing in the authorities to justify departing from what in his view was a point of construction on which both as a matter of plain language and good commercial sense the owner was right. The same or similar words of exclusion have been held to be effective to exclude both liability for negligence and liability for unseaworthiness causing the loss of and the logic of the reasoning in those cases was compelling. Words of exemption which were wider in effect than ‘howsoever caused’ were difficult to imagine and, over the last 100 years, they had become ‘the classic phrase’ whereby to exclude liability for negligence and unseaworthiness.
Accordingly, the judge concluded that on a true construction of the bill of lading, the owner was not liable for any loss of or damage to any cargo carried on deck, including loss of or damage to any cargo carried on deck caused by the unseaworthiness of the Vessel and/or the owner’s negligence.
Comments
It is not uncommon in practice to deal with cargo claims arising out of carriage of deck cargo. Thus, the decision should be welcomed by the industry (and in particular by carriers and shipowners) as it clarifies the different interpretations of deck cargo exclusion clauses by different jurisdictions. The English courts have refused to follow the approach adopted by Singaporean and Canadian courts. But it is now reaffirmed, as a matter of English law, that a carrier would be able to avoid liability for any loss of or damage to deck cargo ‘howsoever arising’ or any similarly worded exclusions, even if the loss or damage is caused by unseaworthiness and negligence.
The detailed discussion by the judge in the decision also serves as a good reminder that the Hague or Hague-Visby Rules would apply where: (a) the bill of lading states that the goods are carried on deck but, in fact, the goods are carried below deck; or (b) the bill of lading is silent as to the location of the goods but, in fact, the goods are carried on deck. Therefore, the exclusion clause will effectively only be operating where the bill of lading states that the goods are carried on deck and in fact, the goods are indeed carried on deck.
Edward Yang Liu, LLM (Soton), MCIArb, Legal Director, Hill Dickinson Hong Kong
To read more expert commentary by Edward Liu take a look at the following articles: