M/V Maersk Chennai: Carrier’s liability for cargo under the Hague Rules

This case is a welcome reminder of some well-established principles relating to the interpretation of contracts and the temporal extent of carrier’s liability for cargo pursuant to the Hague Rules.

Background

A cargo of containerised cocoa beans was carried on board the M/V Maersk Chennai from Lagos, Nigeria, to Tanjung Pelepas, Malaysia. The cargo was discharged by 1 October 2017 but was not collected until around 28 November 2017, when it was found to be suffering from condensation and mould damage.

The Court found that the cocoa beans were damaged by prolonged containerisation of the cargo between discharge and devanning at Tanjung Pelepas. The cocoa beans were not found to suffer from inherent vice.

A claim was made in respect of this loss by the cargo interests, both under the bill of lading terms and the tort negligence. It was held that the carrier’s responsibility for the beans under the Hague Rules, which applied only as a matter of contract, ended upon discharge from the vessel, and therefore this claim was dismissed.

Carriers' responsibility

Had carriers remained responsible for the cocoa beans as a matter of contract between discharge and devanning, then they would have faced liability on the basis that they had failed to take reasonable care of the cocoa beans by neglecting to ventilate the containers. The legal burden is on the carrier, as bailee, to prove that it used reasonable and proper skill and care for the goods or that, even if it had used reasonable skill and care, there would still have been loss or damage to the cargo (Volcafe Ltd v Compania Sud Americana de Vapores SA [2019]).

In this case, Clause 5 of the bill of lading limited the carrier’s liability for loss of or damage to the goods to that occurring in the period to which the Hague Rules apply, namely from loading to discharge. As the recent case Fimbank Plc v KCH Shipping Co Ltd (The Giant Ace) [24.05.23] highlights, the Hague Rules apply to contracts of carriage only between loading and discharge. The carriers’ responsibility before loading or after discharge will depend on the terms of their contract. The essential relationship is one of bailment and the incidents of the bailment will be modified by the contract.

Bill of Lading terms

The carrier relied on clauses 5 and 22 of the Bill of Lading. Clause 5 purported to exclude the carrier’s liability for any damage to the goods occurring after the time they tendered the goods for delivery at the port of discharge. Clause 22.2 provided that, if the consignee fails to take delivery within the time provided for in the carrier's "applicable tariff", the carrier is entitled to store the goods and such storage shall constitute due delivery of the goods and the carrier shall have no ongoing liability for them.

Cargo interests contended that the carrier’s failure to send an arrival notice was a failure to tender the cargo for delivery and that on the true construction of clause 5, articles 1-8 of the Hague Rules would continue to apply after discharge of the cargo from the vessel until the cargo was tendered for delivery by the carrier to the party entitled to delivery.

Court's decision

The Court held that the carrier was not liable for loss of or damage to the cocoa beans after they were discharged from the vessel.

On a careful reading of clauses 5 and 22, the court found that these clauses were consistent with each other. The Court relied on the basic principles of construction, including that a written contract is to be construed as a whole, with each provision having its meaning in the context of the entire document and the understanding of each provision being informed, at least in principle, by each other provision.

Cargo interest’s claim for negligence also failed on two bases:

1. They failed to establish the requisite title at the time of the damage and;
2. They had not demonstrated any basis on which the carrier could be liable in tort outside the terms of the bill of lading.

Comment

This case is a welcome reminder that the English courts remain unlikely to find that professionally drafted commercial contacts - such as a Bill of Lading - contain inconsistent provisions.

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