Key takeaways
Carrier not liable for clean bills
Court upheld disclaimers in bill of lading.
No duty to verify cargo weight
Carrier not required to cross-check VGM data.
Fraud risk lies with consignee
Due diligence expected before making payments.
Stournaras Stylianos Monoprosopi EPE -v- Maersk A/S (Maersk Klaipeda) [2024] EWHC 2494 (Comm)
This was a dispute between the Carrier and the Consignee under bills of lading. The Consignee was also the buyer of three consignments of copper scrap from the Shippers. The Consignee sought to recover its losses from the Carrier when it was discovered that the containers shipped from Dubai to Piraeus contained concrete blocks instead of copper scrap.
The Consignee obtained default judgment against the Shippers in Dubai court proceedings but was unable to enforce it because the Shippers could not be found. The Consignee, therefore, commenced proceedings in the English Court against the Carrier on the basis that the Carrier had issued clean bills of lading (B/Ls) despite a significant discrepancy between the Shippers’ declared weights and the containers’ Verified Gross Mass (VGM).
The Court dismissed the Consignee’s claims and allowed the Carrier’s claim for an indemnity for its losses.
The background facts
In brief, the Shippers submitted shipping instructions to the Carrier, which included declared weights of the cargo. In Dubai the loading terminal, DP World, independently weighed and issued (VGM) certificates which showed that the actual weights of the containers were significantly lower (approximately 40% overall) than the weights declared by the Shippers.
The Consignee made payments to the Shippers of US$ 459,000 for the first two consignments, relying on the two clean B/Ls presented by the Shippers. Once the Consignee accessed the Carrier’s customer portal, it noted the VGM certificates and the significant weight discrepancy between the VGMs and the weights stated on the B/Ls. The VGM certificates for the two B/Ls were confirmed as accurate when the containers arrived in Piraeus and were independently weighed. That survey also confirmed the contents as concrete blocks. As to the third B/L, the documents were not accessible by the Consignee within the Carrier’s customer portal and, by this point, the Shippers had disappeared.
The Consignee sought recovery of the balance monies paid for the first two shipments on the basis that the Carrier knew or ought to have known that the goods in the containers weighed significantly less than what was stated in the shipping instructions and should not, therefore, have issued clean B/Ls.
The Carrier stated that its systems at the time did not cross-check shipper-declared weights with VGM data. It submitted that the VGM data was intended for safety and stowage planning in line with SOLAS requirements, and that its VGM data was handled by a different team to the one issuing draft B/Ls. It was not for carriers to “police” each shipment and fraud could have been prevented if the Shippers had arranged for a surveyor to attend when the containers were sealed. Furthermore, it was for the Consignee to decide whether to purchase against B/Ls that contain limited representations from the Carrier. The Carrier counterclaimed for an indemnity in respect of its losses including cargo destruction and container demurrage.
The Commercial Court decision
As a starting point, the Court found that there was no evidence to show that the Carrier was aware that the Shippers would provide fraudulent weight data, such that the Carrier ought to have checked the Shippers’ weights against the VGMs.
The Court then dealt with the Consignee’s three principal arguments against the Carrier as follows.
Breach of Article III.3 (c) Hague Rules
The Consignee had failed to prove that the Carrier in fact knew that there was an obvious weight discrepancy. At the time, the VGM system was in place for safety and stowage purposes and it was not cross-checked against declared weight data.
Furthermore, the “apparent order and condition” of the containerised cargo as stated in Article III rule 3(c) refers to its external condition, and a visual inspection would not reveal the weight of the contents of a sealed container. Therefore, the Carrier was not in breach of this provision by issuing clean B/Ls. The B/Ls accurately reflected the Shippers’ declarations, and the Carrier was entitled to rely on the disclaimer in its B/L terms (Clause 14.2) to the effect that the information was provided without responsibility or representation by the Carrier.
Negligent misstatement
The Consignee contended that even though the Carrier had not explicitly guaranteed the weight of the cargo, the B/Ls contained an implied representation to the effect that the Carrier had no reason to suspect the declared weights were inaccurate.
The Court rejected this argument. The Carrier had not made any implied representation about its knowledge of the discrepancy between the declared weight and the actual weight. The B/Ls clearly stated that the information provided was “as declared by the Shipper but without responsibility of or representation by the Carrier.”
Article III.3 of the Hague Rules does not create room for an implied representation by a carrier regarding the particulars of cargo and Clause 14.2 of the Carrier’s B/L terms explicitly disclaim responsibility for the weight information.
Breach of duty of care
The Consignee argued that the Carrier owed it a duty of care to take reasonable steps not to issue clean B/Ls when a reasonably competent carrier would know or suspect that the information provided by the shipper is likely fraudulent. The Consignee submitted that to do otherwise was to allow a B/L to be used as an instrument of fraud.
The Court acknowledged that the substantial discrepancy between the B/L weight and the VGM weight could give rise to an assumption that the B/L was being used as an instrument of fraud. In this instance, however, the Carrier did not owe a duty of care to prevent fraud. On the facts, the Carrier did not have reason at the time to suspect that the Shippers would provide fraudulent data. Therefore, it was not obliged to cross-check the Shippers’ declared weights with VGM data.
The Court dismissed the Consignee’s claims and allowed the Carrier’s claim for an indemnity. The Carrier’s losses arose from the Shippers’ breach of warranty regarding the accuracy of the information provided in the B/Ls. The Consignee was jointly and severally liable for those losses given the wide definition of “Merchant” under the Carrier’s B/L terms.
Comment
Whilst the court did not find the carrier liable in this case, it recognised the possibility of a duty of care owed by the carrier when issuing a B/L and the carrier is aware of a substantial discrepancy between declared and verified weights.
The case also addresses the importance and effect of understanding the contractual provisions and any express exclusions/disclaimers made by carriers in B/Ls. Here, the Carrier was able to assert that it acted on the Shippers’ instructions and that it would not have been able to identify that the goods were not in “apparent order and condition” on a visual inspection of the containerised cargo.
