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Dangerous cargoes

Law firm of the year. Dangerous cargoes. Odessa, 4 June 2010 Andrew Rigden Green. Outline. Basis of liability Hague/Hague-Visby Rules What is dangerous cargo Knowledge of the danger Competing causes of damage Conclusions. Basis of liability. Common law

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Dangerous cargoes

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  1. Law firm of the year Dangerous cargoes Odessa, 4 June 2010 Andrew Rigden Green

  2. Outline • Basis of liability • Hague/Hague-Visby Rules • What is dangerous cargo • Knowledge of the danger • Competing causes of damage • Conclusions

  3. Basis of liability • Common law • Implied term in contracts for the carriage of goods by sea that the shipper will not load dangerous cargo. • By statute • Merchant Shipping Act • Dangerous goods must be marked, written notice must be given to the carrier. If not goods can be thrown overboard. Penalties can be imposed. • Hague/Hague-Visby Rules • The nature of the obligation is absolute – it does not matter whether or not the shipper knew that the cargo was dangerous.

  4. Hague/Hague-Visby Rules • Article IV rule 6 • 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 or resulting from such shipment.

  5. Dangerous nature and character • Wide meaning of “dangerous” • It was argued in the past that the meaning of “dangerous” should be restricted to mean inflammable or explosive goods only. This was rejected by the English court who stated that dangerous cargo was cargo that was dangerous. • Physical Danger • Legal Danger

  6. Physical Danger • Goods which directly or indirectly causes some sort of physical damage to life, the ship or other cargo, or raises a threat of it leading to delay or other expense for the carrier (The Darya Radhe) • IMDG Code (other guides i.e. the BC Code) • Iron ore concentrate which liquefied and shifted threatening the vessel (Micada v Texim) • Chemical corroded the casks it was packed in and damaged other cargo (Brass v Maitland) • Cargo gave off poisonous gas which killed a crewman (Bamfield v Goole)

  7. Legal Danger • Where the condition of the goods on shipment is such that they are liable to cause …serious delay to the voyage, they fall within the category of dangerous goods (Cooke) • HOWEVER the Darya Radhe [2009] 2 Lloyd’s Rep 55 has clarified the question of legal danger

  8. Legal Danger – the Darya Radhe • Cargo of soya bean meal pellets loaded Paranagua for Iran • Nine shippers, 30 bills of lading • Bills of lading all incorporated Hague Rules • Live rats spotted in cargo during loading • Delay/expense caused by discussions about clausing the bills of lading and time for re-inspection • Carriers argued shippers liable for delay/expense because cargo “which was liable to cause delay” to the vessel was dangerous cargo

  9. Legal danger – the Darya Radhe • Cargo not dangerous • Goods are only dangerous if liable to cause physical damage • The routine fumigation (which was also demanded by the sale contract) would kill all the rats • Once dead the carcasses were “no more than a cosmetic problem” • Therefore no threat to the ship or other cargo

  10. Legal Danger – the Darya Radhe • HOWEVER • Shipper would be liable if such cost/delay arises from non-compliance with local law or regulation (Mitchell Cotts v Steel and Giannis NK) • Carrier also failed to show which shipper was responsible for the rats • THEREFORE • Legal danger is now a narrow concept

  11. Knowledge - shipper • Shipper’s obligation is absolute • It has been argued in the past that Article IV rule 3 of the Hague Rules limits the liability of the shipper • The shipper shall not be responsible for loss or damage sustained by the carrier or by the chip arising or resulting from any cause without the act, fault or neglect of the shipper, his agents or his servants • This argument failed and the court decided that the liability on the shippers was strict • The burden of care is heavily tilted against the shipper

  12. Knowledge - carrier • If carrier has actual or constructive knowledge of the dangerous nature of the goods he is deemed to have accepted the risks of carrying those goods • The carrier must take precautions as he will be held liable for any loss • BUT if the description of the goods is not sufficient so that the carrier knows tat the goods are dangerous, the shipper will be liable • The knowledge of the Master is critical. If he knows the nature of the goods, then this will override any clause in the contract of carriage prohibiting dangerous cargo

  13. Competing causes • Often competing causes to a casualty • Carrier’s obligations in respect to seaworthiness are central to the Hague-Visby Rules • Any attempt to exclude the seaworthiness obligation would be void • In The Fiona the court held that art. IV r. 6 does not apply to damage caused or contributed to by the negligence of the owners • This was repeated in The Kapitan Sakharov

  14. Competing causes • In The Kapitan Sakharov the carrier carried on board two cargoes • One cargo was an undeclared dangerous cargo, carried on deck – this rendered the vessel unseaworthy • The other cargo was stowed under deck, with inadequate ventilation – the poor stowage was lack of due diligence by the vessel and rendered the vessel unseaworthy • The deck cargo exploded and caused a fire. The underdeck cargo then caught light and the fire was the cause of the loss of the Vessel

  15. Competing causes • However, the poor stowage underdeck contributed to the fire and further explosions • The court held that this second fire and explosions were the effective cause of the loss of the ship • Carrier claimed against both shippers for its own losses and indemnities • The deck cargo shipper counterclaimed for its losses and indemnities • The underdeck shipper counterclaimed for its losses and indemnities

  16. Competing causes • The court held • Carrier’s claim against the deck shipper for losses from first explosion/fire succeeded • Carrier’s claim against the deck shipper for losses from the second explosion/fire failed • Deck shipper’s counterclaim was dismissed • Carrier’s claim against underdeck shipper was dismissed • Underdeck shipper’s claim against carrier for losses from first explosion/fire failed • Underdeck shipper’s claim against carrier for losses from second explosion/fire succeeded

  17. Competing causes • Why? • Two causes of the sinking: • Initial explosion for which the deck shipper was responsible under art. IV r. 6 • Unseaworthiness of the vessel (due to poor stowage) for which carrier was responsible under art. III r.1

  18. Conclusions • The duty not to ship dangerous cargo is absolute and there is little that the shipper can do to avoid such liability • The dangerous cargo must present a physical threat to the vessel • The concept of legal danger is now narrow • The state of knowledge of the carrier is important: • If he knows the dangerous nature of the cargo he will be liable • If he does not the shipper will be liable

  19. Law firm of the year Dangerous cargoes Odessa, 4 June 2010 Andrew Rigden Green

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