Dangerous Goods Cargo of some special and not obvious characteristic

Shipper’s duty under the common law – the boundary between the shipowner’s risks – shipper’s duty under the Hague and Hague-Visby Rules – what a carrier has to prove in order to recover under Art. IV, r. 6 – qualifications to a right for indemnity under Art. IV, Rule 6

Under Common Law, the Hague and the Hague-Visby Rules

Under the common law the shipper owes an absolute duty not to deliver for the shipment the goods of a dangerous nature without expressly giving notice that they are of a dangerous nature.

… it clear law that it is the duty of a person putting on board a ship a dangerous commodity to give notice to the master, or other persons employed in the navigation, of its dangerous nature, without any question being put…
Per Lord Campbel CJ in Brass v Maitland (1856) 6 E & B 470 at pp.482 and 484

It was, however, disputed for many years whether absence of knowledge or means of knowledge on the part of the shippers is a good defence against the owners’ claim. This issue was specifically addressed by Lord Lloyd of Berwick in Effort Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998] 1 All ER 495 when he hold at p.506 that:

…the liability of a shipper for shipping dangerous goods at common law, when it arises, does not depend on his knowledge or means of knowledge that the goods are dangerous.

In Mitchell, Cotts & Co v Steel Bros & Co Ltd [1916] 2 KB 610 it was held that the shipper’s obligation as to shipment of goods amounts at least to an undertaking by him that he will not ship goods likely to involve unusual danger or delay to the ship without communicating to the shipowner facts which are within his knowledge indicating that there is the risk, provided that the shipowner does not and could not reasonably know those facts.

In cases when particular difficulty which may arise during shipment is known to both parties at the time of concluding contract, the charterer is not liable for any damage or delay caused by the shipment of cargo, unless the cargo possesses some special and not obvious characteristic which creates a danger outside the range of the dangers which a carrier of that type of cargo should foresee and guard against.

Mustill J in The Athanasia Cominos [1990] 1 Lloyd’s Rep 277 at pp.283-284 considered the boundary between those risks which the shipowner contracts to bear and those which he does not. The learned judge said in particular that:

One possibility is to draw the line by reference to the proper method of carriage. According to this view, a shipowner who consents to carry goods of a particular description contracts to perform the carriage in a manner appropriate to goods of that description, and thereby assumes all risks of accidents attributable to a failure to carry in that manner. This approach will be sufficient to deal with most problems relating to dangerous cargoes, for in respect of the great majority of goods, the normal precautions will suffice to eliminate the risk of carrying normal goods of the description stated in the contract. Leaving outside casualties from wholly extraneous causes, one can say that proper carriage and dangerous nature are opposite sides of the same coin.

There are, however, cases to which this simple analysis cannot be applied: i.e. those where the nature of the goods is such that even a strict compliance with the accepted methods of carriage will not suffice to eliminate the possibility of an accident. Whether consciously or not, seafarers and those who advise them have chosen to adopt methods of carriage which involve an element of risk…

Who is to bear the risk of accidents falling into this category? In my judgment, the risk must fall on the carrier. By contracting to carry goods of a specified description, he assents to the presence on his ship of goods possessing the attributes of the goods so described; and in the case under discussion, those attributes include the capacity to create dangers which the accepted methods are not always sufficient to overcome.

Both the Hague and Hague-Visby Rules contain identical provisions on dangerous cargo in Art IV(6), which provides:

Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any.

As it was held in The Giannis NK [1998] 1 All ER 495, at p.502 article IV, r 6 is a free-standing provision dealing with a specific subject matter and imposes strict liability on shippers in relation to the shipment of dangerous goods, irrespective of fault or neglect on their part (art IV, r 3).

This strict liability is, however, not absolute when comparing with the common law approach. In decision of commercial court in Compania Sud Americana De Vapores SA v Sinochem Tianjin Ltd (the Aconcagua) [2009] EWHC 1880 (Comm) Clarke J in the Commercial Court referred in his judgment to Judge Diamond, QC, detailed statement in The Fiona [1993] 1 Lloyd’s Rep. 257 at p. 268, in which the later identified what a carrier has to prove in order to recover under Art. IV, r. 6 from the shipper for the loss sustained by him as the result of the shipment of a dangerous cargo. Diamond, QC enumerated three items as below:

(a) that the shipper shipped goods of an "inflammable, explosive or dangerous nature";
(b) that neither the carrier, the master nor any agent of the carrier consented to the shipment of such goods with knowledge of their nature and character and
(c) that the carrier suffered damages or expenses "directly or indirectly arising out of or resulting from such shipment" (i.e. from the shipment of the goods of the described class).

It was furthermore affirmed that the carrier’s right to an indemnity does not depend on whether the shipper knew of the dangerous nature and character of the goods or was at fault in permitting their shipment or not warning the carrier of their dangerous nature. But a carrier, would loose its right to an indemnity under Article IV, Rule 6 if the carrier’s loss results from two causes, namely:

(a) the shipment of dangerous goods not knowingly consented to;
(b) the carrier’s overriding obligation of seaworthiness under Art. III, Rule 1(see The Fiona [1994] 2 Lloyd’s Rep. 506; The Kapitan Sakharov [2000] 2 Lloyd’s Rep 255).

If one of the options above has been satisfied it is not necessary to determine whether the carrier’s breach was the dominant or merely an effective cause, but it is sufficient that it was just a cause. Crew’s negligence in stowing falls short of these two causes because the obligation to take care to make the vessel seaworthy does not mean that the ship must be immune from the negligence of her crew.

Summarising, it can be noted that under both the common law and the Hague and Hague-Visby Rules the shipper is likely to find himself liable for damages caused by transportation of dangerous goods if either through his fault or otherwise dangerous nature of goods shipped was not disclosed to the carrier when the parties negotiated contract. When contract is subject to the Hague and Hague-Visby Rules this liability will be qualified by the carrier’s absolute obligation to exercise due diligence in providing seaworthy ship at the beginning of the voyage. When the owner consented to carry dangerous cargo extend of this undertaking would depend on whether the cargo possesses some special and not obvious characteristic and, as suggested by Mustill J in The Athanasia Cominos, whether the nature of the goods is such that even a strict compliance with the accepted methods of carriage will not suffice to eliminate the possibility of an accident.

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