Shipowner Not Liable For Cargo Damage Resulting From Poor Stowage

Posted on: 18 Oct 2014

Category: Articles

in Shipping Law News 15.10.2014

Russian metal trading company Yuzhny Zavod Metall Profil (YZMP), the holder of a CONGEN 1994 bill of lading, took delivery of 411 coils of steel sheets at Novorossiysk, Russia, all with varying degrees of damage. YZMP decided to claim under the bill of lading against the owner, Eems Beheerder B.V., as carrier under the bill of lading. YZMP maintained that the owner was in breach of Article III Rule 2 of the Hague Rules 1924 (incorporated into the bill of lading) whereby the owner is required to properly and carefully load, carry and discharge the goods.

It was the owner’s defence that the Gencon 1994 charterparty was incorporated into the bill of lading. Crucially, the charterparty contained an Owner’s Responsibility clause and a Loading and Discharging clause which stated that the cargo was to be loaded by the Charterers, free of any risk, liability or expense whatsoever and owners were only to be liable for want of due diligence.

Facts

Charterers appointed stevedores at load port to load the cargo but their failure to use locking coils meant the stow was not appropriate. The Master was not satisfied with stowage but decided to sail regardless

During the voyage, the vessel experienced heavy weather which led to a strap breaking and a shift in the cargo; the crew were unable to secure the shifted cargo for lack of additional lashing straps, resulting in damage to a number of coils.

The key question was who was responsible for the shifting:
Stevedores: in failing to load and stow the cargo safely and correctly; or Owners: in failing to provide the necessary lashings, equipment and/or crew.

Decision

The judge concluded that the sole effective cause of damage to the cargo was the vessel not being properly loaded and stowed when she left the port. Locking coils were not used appropriately, and the lashing was not systematic. On a true construction of the bill of lading, owners were not responsible for stowage because the charterparty was incorporated into the bill of lading, and the terms of the charterparty made it clear that owners were not responsible for improper stowage. The Judge noted:

Where the responsibility for the stowage has been contractually passed from the shipowner to the charterer (or the cargo owner) the shipowner will not be liable for damage arising from improper stowage even if it renders the vessel unseaworthy unless it is established that the bad stowage leading to the damage arose from a significant intervention by the shipowners or their master.

The Judge also found that there was no basis for the contention that the ship should have carried additional lashings on board, and the failure to do so did not render the vessel unseaworthy or uncargoworthy.

Comment

This case illustrates the protection afforded to owners by the incorporation of charterparty clauses into the bill of lading. The EEMS SOLAR goes beyond the JORDAN II by protecting owners even where the incorporated charterparty does not refer to the Shipper, Receiver or Consignee.

The decision also raises a number of questions that may cause difficulties in future cases. For example, where the bill of lading is in the hands of a third party receiver, it raises the possibility of indemnity proceedings against charterers (as being the party responsible for the stowage). Such claims could be very significant where, for example, stowage issues resulted in the loss of vessel and cargo. In all cases of this type the evidence and contractual provisions relating to the appointment of stevedores will remain a key issue and, very likely, a significant area of dispute.

Source: Clyde & Co.