Law of International Carriage by Sea - Research Paper Example

 O time-chartered his bulk vodka carrying tanker ship, The Boozer, to TC, who in turn sub-chartered it out on a voyage charter to Susan (a vodka exporter), to carry a consignment of Russian Flagship vodka, from Russia (a signatory to the Hague-Visby Rules) to London. The voyage charter between TC and Susan expressly incorporated the Hague Rules and contained a clause stating that the carrier was not to deviate for any reason whatsoever other than to save life. Susan had impressed upon TC the need to get the vodka to the UK as quickly as possible, in order to catch the London summer vodka-drinking season. The vodka was shipped on board at the Russian port of Kem into the five cargo-receiving tanks, and the master issued a set of clean bills of lading in respect of each tank. The bills of lading made no mention of the “no deviation” clause. The ship started her agreed voyage to the UK by entering the White Sea, going on through the Barents Sea and into the Arctic Ocean. She was then to proceed via Scandinavia to the UK. Susan sold part of the vodka to Janet, a well-known model, who runs a trendy cocktail bar in London, and indorsed the relevant bills of lading in respect of the vodka in tanks three and four in the Janet’s bar’s favour. Janet accepted and paid against the sale invoice and the bills of lading. On the reasonable assumption that the vodka would arrive before the end of the academic year, the Janet advertised a series of vodka drinking events, in the hope of attracting fun-loving students during their post-exam celebrations. One hard-working student, Robert, had said that he and his friend Niccolo would certainly be interested in going to the trendy bar for the vodka-drinking activities. Susan intended to sell the remaining vodka on the open market once the ship arrived in London. During the voyage, the master responded to urgent “mayday” calls to go off course to Greenland in order to rescue some British and US Marines who had been hijacked by Damnesty International Society (“DIS”), an anti-war movement group well-known for its peace-promoting activities. DIS had announced that it would subject all those captured to enforced reading of Suzanna and Trinny self-improvement books and “other horrors” unless its demands for world peace were met. The master was persuaded to attempt the rescue by Patrick, one of the crew, who is highly trained in negotiating with such activists. This sensitive operation took about a month (it was successful), during which The Boozer was anchored in the Denmark Strait, just off the coast of Greenland. Unfortunately during this time the vodka in tanks four and five was stolen by local bandits, who were able to gain access to the tanks due to the vessel not being manned properly whilst the rescue took place. By the time the ship eventually arrived in London, the summer vodka-drinking season had ended, all post-exam celebrations were long finished, and all vodka drinkers had left London for Ibiza. The task: The marks for the questions will be awarded for overall merit and will not be divided equally between each one. Advise BOTH Susan and Janet of any claims they might have in respect of their loss and damage. Against whom should any claims be brought? A. General Framework The identification and the evaluation of the potential responsibility of TC or the master of the carrier should be based on the relevant principles of the Hague Convention – as arranged between the parties of the particular trade agreement: In this context it should be noticed that ‘(e) “Carriage of goods” covers the period from the time when the goods are loaded on to the time they are discharged from the ship’ (article I, the Hague Rules). On the other hand, in the article IV of Hague Rules it is made clear that ‘neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from — (l) Saving or attempting to save life or property at sea’ (article IV, par.2). The fact that the carrier has no liability for the deviation in order to save life is highlighted in article IV of the Hague Rules. In the specific article it is mentioned that ‘any deviation in saving or attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting there from’ (article IV, par.4). In accordance with the above provisions the carrier would have no responsibility for any damage that was probably caused to the other party (receiver of the consignment) as the deviation in order to save life is imposed directly by the law. However, responsibility of the carrier for the damages caused to the consignment could be justified if it is proved that the carrier did not show the appropriate care for the preservation or the protection in general of the consignment and acted in a way that could be expected by the circumstances to put the consignment under risk. The specific issue is highlighted in the article IV par. 5e of the Hague Rules where it is noticed that ‘(e) neither the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result’ (article IV, par. 5e). The responsibility of the carrier for the consignment is clearly stated in the article III of the Hague Rules where it is noticed that ‘article 3 1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to: c) make the holds … and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation; 2. Subject to the provisions of Article 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried’ (The Hague Rules). The particular conditions related with the potential claims of Susan and Janet against TC or the master of the ship will be analytically presented and evaluated taking into account the fact that in the specific agreement the breach of its rules has been only partially justified. It should be noticed that even if responsibility of TC and the master of ship was considered as existing, the shipowner is protected by the law if it is proved that the ship he provided for a particular voyage had the necessary quality standard – responsibility for the qualifications or the skills of the persons chosen for conducting a specific carriage of goods cannot be established against the shipowner – rather it belongs to the responsibility of the master of the ship. The specific issue is highlighted by the Court in the "Starsin", Owners of cargo & Ors v. "Starsin", Owners and/or demise charterers where it is noticed that ‘the second issue arising in these appeals is whether, assuming CPS to be the contractual carrier under these contracts of carriage, the terms of the contracts are effective to protect the shipowner against liability to the cargo owners; the answer must turn on the terms and applicability of clause 5 of the printed conditions on the reverse of the bills, which is headed "IMMUNITIES"’ ( "Starsin", Owners of cargo & Ors v. "Starsin", Owners and/or demise charterers of [2003] UKHL 12 (13 March 2003), par. 19). In accordance with the above any potential claim for damages during the carriage of goods by sea could be evaluated by the Court using the terms of the relevant contractual agreement while any relevant responsibility of the shipowner is not justified – at least under the terms described above. All these issues should be taken into account in order to identify and evaluate the potential claims of Susan and Janet for compensation because of the damage they suffered as a result of the delay in the delivery to them of the consignment. Regarding the bill of lading related with the particular voyage it could be stated that its value on the resolution of the relevant conflict is rather limited. At a first level, there was no particular involvement of the specific document to the whole dispute. The damages caused to Susan and Janet because of the delay – the first of them has also suffered the loss of part of the consignment while it is not clear while the remaining amount was sufficient for Susan to meet the needs of the order made by Janet. In most cases, in such disputes the bill of lading cannot offer particular assistance in the identification and the evaluation of responsibilities among the parties. The specific fact is highlighted by the court in JI Macwilliam Co Inc v Mediterranean Shipping Company S.A. where it is noticed that ‘in C P Henderson & Co v. The Comptoir D'Escompte de Paris (1873-74) LR 5 PC 253 the Privy Council had to consider a "bill of lading…in the usual form, with this difference, that the words "or order or assigns" are omitted" (at 259/260); the Privy Council was prepared to assume that such a bill was not a negotiable instrument’ (JI Macwilliam Co Inc v Mediterranean Shipping Company S.A. [2003] EWCA Civ 556 (16 April 2003), par. 39). For the above reasons, no particular reference to the bill of lading as a document explaining the potential responsibility of parties in the specific dispute will be made. B. Claims that could be brought by Susan Susan made a contract with TC; there was no direct arrangement with O (the owner of the tanker ship). Moreover, no indirect arrangement between Susan and O exists. Susan made the arrangement for the transfer of Russian Flagship vodka with TC; there was no reference to O in the agreement (contract) between Susan and TC for the transfer of the above consignment. Under these terms, it can be assumed that there is no claim of Susan against O (the owner of the tanker ship). The specific issue has also been explained above where it is noticed that only under specific circumstances the responsibility of shipowner for the delay in delivering the consignment can be justified. Every potential claim for the damage that Susan suffered should be brought against TC as well as against anyone else that was involved – either directly or indirectly – in the specific damage. Regarding the responsibility of TC for the damages caused to Susan the following comments could be made: a. In the voyage charter there is a clause that is crucial for the justification of the responsibility of TC – if any – regarding the initiative of the master of the ship to attempt the rescue of another ship losing the deadline for the delivery of the consignment in London; in accordance with the voyage charter ‘the carrier was not to deviate for any reason whatsoever over than to save life’ (case study). On the other hand, any potential claims of Susan against TC could be justified only if a breach of the term of their agreement had been occurred. In order to identify the existence of such a violation it should be necessary to refer to the terms of the specific agreement and the events that took place during the carriage of the consignment (Russian vodka) to London. All rights and responsibilities of both the parties (TC and Susan) are described analytically in the agreement (contract) signed by them in order for a specific consignment to be carried by sea to London. In accordance with the case study the voyage charter was not differentiated from the Hague Rules (in fact it incorporated all the principles included in the specific convention); however, there was a clause referring clearly to the right of the master of the ship to decide to deviate if there was an issue of danger of life (as mentioned above). On the other hand, it is mentioned in the case study that Susan made clear to TC that the transfer of the consignment had to be completed as quickly as possible in order to reach the vodka drinking period in UK; however, it is not mentioned whether a relevant clause was added in the voyage charter; from the absence of a clear reference in the case study to such a fact it can be assumed that this issue of ‘emergent’ delivery was not included in the voyage charter; it could be characterized therefore as an oral agreement between Susan and TC. It should be noticed that the specific agreement despite the fact that it was oral it could be accepted by the court as binding the parties if it was proved as real and valid – using witnesses; in any case the specific issue is depended on the judgment of the court – the latter would have the power to decide on the validity of such a contractual term. On the other hand, even if the specific right would have been recognized by the court another problem could appear: the specific contractual term would be opposite with another contractual term: this of the right of the master of the ship to decide to deviate in case of a danger of life. In this context – if such a dispute would have been arisen – then it is clear that the court would have decided in favour of the possibility of the ship to deviate in order to save life; the latter is considered to be most important from all terms that are possibly included in a contractual agreement. On the other hand, it should be noticed that the existence in the voyage charter of the clause that the carrier could deviate in order to save life leads to the assumption – under the facts already explained above – that there is no responsibility of TC towards Susan for the particular fact, i.e. the deviation of the carrier. As a result, the delay in reaching London could be characterized as not having any influence on the rights of Susan for the damages caused because of the delay. It is clearly stated in the case study that because of the carrier’s delay, the drinking vodka period in UK was lost. At a next level, the value of the consignment was significantly reduced; however, no particular right could be arisen for Susan against TC because of the delay caused as a result of the deviation of charter in order to save life. On the other hand, the oral agreement made between TC and Susan regarding the date of the delivery – Susan asked TC to send her the consignment as soon as possible because of the time framework related with the disposal of Vodka in Britain – she had ‘to catch the London summer vodka – drinking season’ (see case study) could be evaluated by the Court with no particular limitations. A similar issue was arisen in Daewoo Heavy Industries Ltd. & Anor v Klipriver Shipping Ltd. & Anor where the court held that ‘(4) In Evans and Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078 the Court of Appeal held that the carrier could not rely on his usual exceptions (including a limitation of liability to £50 per ton) as a result of an express oral undertaking that the goods would be carried under deck’ (Daewoo Heavy Industries Ltd. & Anor v Klipriver Shipping Ltd. & Anor [2003] EWCA Civ 451 (03 April 2003), par.11, 4). In other words, Susan could not made use of the oral agreement made with TC in order for the delivery of the consignment to be made as quickly as possible, i.e. of the fact that the importance of the time of delivery was highlighted to TC and therefore a responsibility by his side could be existed. Moreover, the fact that the clause on justified deviation was not included in the bill of landing, does not have a particular importance in the identification and distribution of responsibility in the specific case. The specific condition is already included in the Hague Rules and it is applicable with no further clarification or condition. Of course, exceptions in the terms related with the specific contractual agreement could have been included in the specific agreement by the parties; then these exceptions should have been taken into consideration by the courts – apart from the case that such an exemption would be characterized as not valid by the law. In this context, it is held by the Court that ‘in the case of any on deck carriage the carrier could never rely on any exemption’ (Royal Exchange Shipping Co v Dixon (1886) 12 App Cas 1, in Daewoo Heavy Industries Ltd. & Anor v Klipriver Shipping Ltd. & Anor [2003] EWCA Civ 451 (03 April 2003), par.20) An issue that should be noticed here is the fact that no particular description of the terms of this ‘justified deviation’ is given in the case study. Because of the lack of any such term it can be assumed that all cases related with saving life could be incorporated in the specific clause – the parties could have made a specific agreement regarding the right of deviation, par example it could have been stated that only when no other carrier exists near the deviation of the carrier is justified; however no such terms were incorporated in the specific agreement. On the other hand, it is made clear in the case study that the deviation was decided because the role of a member of the crew was considered as critical in order for the specific event to be effectively faced – it is mentioned in the case study that one of the members of the crew was trained in order to negotiate with activists and in this context, his intervention in the specific event was regarded as necessary. In other words, the deviation of the carrier should be regarded as justified and no claim of Susan could be made against TC regarding the specific initiative of the carrier’s master (deviation from the ordinary destination). However, claims of Susan against TC could be justified because of the loss of part of the consignment – it is mentioned that ‘vodka in the tanks four and five was stolen by local bandits’ (case study). Moreover, it is made clear that the above event took place because of the lack of appropriate measures for the protection of the consignment during the rescue effort. Deviation of the carrier could be considered as justified under the particular circumstances but the lack of appropriate measures for the protection of the consignment is an action for which all persons involved should be promptly punished. Following the above, it should be stated that Susan has no claim for compensation regarding the deviation of the carrier as the specific action is imposed by the international authorities; however, Susan could justify her claims in relation with the loss of part of the consignment – if the amount of Vodka sent by Russia had reached on time London, then it would be easier for the local representatives to sell the particular amount through various social activities. Therefore, Susan could ask TC to compensate her for the damages she suffered because of the loss of part of the consignment. Regarding the responsibility of the carrier’s master for the damages caused to Susan the following comments could be made: As noticed before, the master of the carrier decided to deviate in order to save life. His initiative – which has been already characterized as justified – has caused to Susan significant financial loss because of the reduction of the amount of the consignment available in the British market – the carrier reached London with far less amount of consignment. The above described financial loss could be possibly asked by Susan – only if it is proved that not appropriate measures of protection had been taken by the carrier’s regarding the consignment transferred to London. In case that it is proved that the measures taken for the protection of the consignment were more than appropriate and adequate then there will be no case of claim by Susan against the master of the carrier. At this point the reference to the relevant case law would be necessary in order to understand the conditions under which the violation of the terms including in a contractual agreement will be evaluated: The responsibility of TC or any other person regarding the damages caused to the consignment should be evaluated using the Hague Rules – in accordance with the contract signed between Susan and TC. Only if clear reference to other legislative text had been made in the specific contractual agreement or if there was no reference to a specific legislative text then any dispute between the parties could be resolved using the law decided by the court – before of which the dispute would have been brought. As an example, using the CMR Convention in order to resolve a relevant dispute the Court decided in Quantum Corporation Inc. & Ors v Plane Trucking Ltd. & Anor [2002] EWCA Civ 350 (27th March, 2002) that ‘under article 17 of CMR, a carrier is liable for total or partial loss occurring between the time he takes over the goods and the time of delivery, the only relevant exception for present purposes being if the loss was caused “through circumstances which the carrier could not avoid and the consequences of which he was unable to prevent”; article 23(3) limits compensation to 8.33 units of account per kilogram of gross weight short’ (par. 5). In the particular case, the contract signed between Susan and TC refers specifically to the Hague Rules as the chosen legislative text for the resolution of any dispute that would possibly appear in the above trade agreement. The application of additional legislative texts (like the Carriage of Goods by Sea Act 1971) is also possible if a specific jurisdiction is considered by the Court as being appropriate for a relevant dispute. The application of the Hague Rules is possible even if there is no clear reference to theme in the contractual agreement through which the carriage of goods by sea is arranged. Regarding this issue in Daewoo Heavy Industries Ltd. & Anor v Klipriver Shipping Ltd. & Anor [2003] EWCA Civ 451 (03 April 2003) the Court held that ‘the starting point for resolution of these conflicting arguments must be that the Hague Rules are an international convention; although they must in this case be construed as incorporated into a contract governed by English law, their interpretation is "not to be rigidly controlled by domestic principles of antecedent date but they are rather to be construed on broad principles of general acceptation" see per Lord Macmillan in Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328, 350’ (par.13). As noticed above, the choice of the legislative text that will be used for the resolution of a particular dispute referring to the carriage of goods by sea belongs primarily to the parties of the relevant trade agreement; the Court can intervene and suggest supplementary legislative texts but only when the principles of the pre-arranged legal framework are not violated; in the case that there is no relevant reference to the trade agreement the Court is free to choose the legal texts that will be used for the resolution of a conflict in the particular field. It should be noticed that it is not made clear in the case study that the consignment was appropriately insured. It can be assumed that it was insured – as usually – up to a particular price. Regarding this issue it is noticed that ‘since goods are normally covered by insurance against loss or damage while in transit, the problem of title to sue is to a large extent a problem faced by cargo underwriters and P. & I. Clubs, rather than traders themselves; however, it is not obvious that cargo owners should bear the added cost of increased premiums while shipowners are allowed to rely on a technicality of the Bills of Lading Act’ (The Law Commission, [1991] SLC 130 (Report) (19 March 1991, article 2.14, 2.15). The specific fact is quite important because the compensation given to Susan by the insurance company – only for the loss of part of the consignment and not for the delay which is considered by the law as being justified under the terms explained above – could be used for the compensation of Janet or of other provider – who would not receive the amount of Vodka ordered – if accepting that Susan had already arranged the full disposal of the product in the market. C. Claims that could be brought by Janet Through the case study it is made clear that Janet has not made a direct agreement with TC. She rather contracted directly with Susan. However, the acts and the decisions of TC – and the persons employed by him affect the interests of Janet. More specifically, according to the case study, Janet had already arranged for the events in which the Vodka carried by the carrier of TC would be disposed. However, after the severe delay in delivering the consignment, TC and the master could be considered as having a responsibility not only towards Susan but also against Janet also. Under the circumstances of this case, TC was found as having no particular responsibility towards Susan – the deviation was decided in order to save life, a fact that leads to the elimination of responsibility for any damaged caused to the consignment during the relevant effort. Only the master of the carrier could be possibly considered as having responsibility towards Janet but again not because of the deviation – which was imposed by the circumstances – but for the lack of appropriate protection of the consignment and the loss of part of it. However, such a ‘chain’ in the contractual agreement would not be fair; TC made an agreement with Susan – no other party appeared then as having interests from the specific agreement. On the other hand, the master of the carrier had to deliver the consignment to Susan; there was no direct (or even) indirect agreement with Janet; therefore, it was impossible for TC and the master to have knowledge of the actual extension of rights in the specific case. Under these terms, Janet could seek for a compensation for the damages she suffered by the delay in delivery only against Susan. However, it is already noticed above that there could be no such liability (for the delay in order to save life) for all parties in the specific trade agreement. Therefore, such a claim of Janet would be rejected by the Court. Alternative legal principles for the establishment of responsibility of TC or the master of the carrier – like the principles referring to tort – could be regarded as not particularly effective in such an agreement. The specific issue is also highlighted in a relevant report of the Law Commission where it is noticed that ‘if claims are to be made against a sea carrier, it is desirable that they are contractual rather than tortuous; first, if the claim is in tort, the claimant has the onus of proving negligence and also that he had either the legal ownership of, or a possessory title to, the goods in question at the time when the loss of damage occurred’ (The Law Commission, [1991] SLC 130 (Report) (19 March 1991, article 2.14). The main issue here is the fact whether the amount of vodka finally reached London is adequate for Janet, i.e. whether Janet was given by Susan (even if with delay) the amount of the Vodka she ordered (no issue of damage in the quality of the consignment is mentioned in the case study; no such issue existed). More specifically, only if the amount of Vodka delivered to Janet by Susan was less from the arranged one Janet could seek for compensation by Susan because of the breach of the relevant contractual term; however, if Susan delivered to Janet the amount of the Vodka she ordered (even with severe delay) then there no claim of Janet against Susan could be justified. And as it is already explained above no claim against TC or the master could be also justified. Janet would have no right to ask for a compensation for the damages she suffered only by the delay itself. Legislation Carriage of Goods by Sea Act 1971 The Hague Rules as amended by the Brussels Protocol 1968 RIGHTS OF SUIT IN RESPECT OF CARRIAGE OF GOODS BY SEA (The Law Commission, [1991] SLC 130 (Report) (19 March 1991) Case Law Daewoo Heavy Industries Ltd. & Anor v Klipriver Shipping Ltd. & Anor [2003] EWCA Civ 451 (03 April 2003) Evans and Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078 Royal Exchange Shipping Co v Dixon (1886) 12 App Cas 11 Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328 Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd [1983] 1 WLR 964 Quantum Corporation Inc. & Ors v Plane Trucking Ltd. & Anor [2002] EWCA Civ 350 (27th March, 2002) JI Macwilliam Co Inc v Mediterranean Shipping Company S.A. [2003] EWCA Civ 556 (16 April 2003) C P Henderson & Co v. The Comptoir D'Escompte de Paris (1873-74) LR 5 PC 253 "Starsin", Owners of cargo & Ors v. "Starsin", Owners and/or demise charterers of [2003] UKHL 12 (13 March 2003) Read More