The Division of Responsibility for Maritime Cargo - Research Paper Example

The division of Responsibility for Maritime Cargo Name Course Professor Institution Date Abstract Various marine shipping regulations regulate the nature of shipping activities. The law states liabilities that various parties are supposed to handle the event of damage or loss g goods. In this case, SS lost PPs goods when shipping them to their destination. Following the loss PP sued, claiming compensation for the values of the good lost at the wholesale price. PP cited SS negligence and violation of the law. On the other hand, SS claimed the containers had been lost due to the act of God and therefore, eh liability for the lost goods had to be shared. Table of contents Abstract 2 1.The facts 4 2.Issues 5 3.Law 5 Overview of the law of marine shipping 5 Obligation of the career 5 Liability of the career and allocation of the burden of proof 6 The shipper’s obligation 6 Seaworthiness of the vessel 6 Provision under Carriage of Goods by Sea Act 1991 6 The bill of lading 8 Liability for Cargo loss or Damage 8 Agreed Value: The limitation of the carrier's liability 8 New Jason/General Average clause 8 PP arguments 8 SS argument 9 4.Application 10 Introduction Marine shipment laws ensure fair distribution of marine cargo responsibility. In a case such as Premium Producers Pty Ltd (PP) vs. Sea Sure Pty Ltd (SS) the law help to amicably come to a conclusion on how the responsibility for the lost marine cargo will be handled. This presentation will explore to the facts surrounding the loss of cargo and seek into the relevant legal provisions that apply to this circumstance. Based on the facts and the legal provisions, this presentation will make an amicable application of the law to generate and acceptable responsibility sharing resolution acceptable to both parties. 1. The facts The Grand Kappel a ship register in Australia and owned by Sea Sure Pty Ltd (SS) an Australian company encountered heavy weather on 15 November 2015 after leaving the port of Melbourne. The ship engine failed and due to the rocking of the sea. The combined effect of the rocking and the wild weather lead to failure of several cargo lashing leading to a loss of 12 containers before the ship got back to the port. Australian Transport Safety Bureau (ATSB) revealed that the ship’s engine failure was a product of blockages in the fuel lines. The report indicated that the blockages were probably a product of poor servicing and maintenance of the engines. One of the 12 contained a valuable cargo of bottles of premium first pressing Olive Oil owned by Premium Producers Pty Lty (PP), a shipper. PP had a bill lading issued in respect to the carriage of the container. The bill was in the form of the BIMCO Conlinebill 2000. PP commenced an action against SS for breach of contract in the federal court of Australia seeking substantial damages for loss of the oil. PP seeks a value equivalent to the oil’s wholesale value as damages in its action. The two parties accept Australia’s amended Hague Rules (aHR) application to the cargo carriage. 2. Issues Based on the facts of this case, there are various arising issues. First is the issue of responsibility for marine cargo while on transit and second, negligence where by the transportation company lost cargo due to its negligence to take care of its ships. Therefore, it failed in its role to deliver PP’s cargo at the designated port and thus did not fulfil its end of the deal. 3. Law There are various laws that apply to the issues that arise based on the facts of this case. The laws have various provisions that may lucidity the sharing of responsibility for the lost cargo. Overview of the law of marine shipping Obligation of the career The carrier has an obligation to the consignee to deliver goods to the stated destination port or location (Berlingier, 2009, p6). Article 5(1) of the Hamburg rule implies that it is the duty of the shipping company to deliver goods at the stipulated destination. Hague-Visby Rules make provisions for this obligation, article 2. In addition, in exercise of article 3, the carrier has to ensure that the ship is seaworthy and further take care of the goods. Based on Hamburg Rules article 5(1), the carrier may only exonerate himself in he can prove that he and his servant took adequate measures to protect the goods as well avoid any negative occurrences (Hamburg Rules, 1978, 10). Hague-Visby Rules also state the carrier must also issue a bill of lading (David & Auckland, 2010, p121).. Liability of the career and allocation of the burden of proof Hague-Visby Rules Article 4 exonerated the carrier from any form or liability if a. If the damage of cargo or loss arise or result from unseaworthness unless it is a product of the careers breach of his due diligence obligation article 4 (1); and b. Likewise for a loss or damage of cargo arising due to the pilots, master, mariners, or servers of the career in navigating or managing the ship as well as loss or damage resulting from fire caused by a crew’s fault, article 4(2). Contrary to this Humburg Rule holds the carrier liable for any damage, loss, or delay caused by the mistakes of the carrier or his agents or servants (Berlingier, 2009, 8). The shipper’s obligation That law is clear on the obligation of the shipper. Under Hague-Visby Rules, the shipper is liable for any loss or damage resulting from his negligence (Berlingier, 2009, 18). Seaworthiness of the vessel The Australian Navigation Act 2012 addresses seaworthiness of a vessel in s108 (a) and (b). The owner of a vessel cannot take an unseaworthy vessel to the sea or allow another person to take such a vessel to the sea in s109(1). In section109(2) a ship owner who contravenes this commits an offense under subsection (1). It is a fault-based offense and the penalty is 10 years of imprisonment, or 600 penalty units or both. Under section 109(3) a person who contravened subsection 1 is liable to a civil penalty of 6, 000 penalty units (Navigation Act 2012, p78). Provision under Carriage of Goods by Sea Act 1991 The Australia Carriage of Goods by Sea Act 1981 Article 3, section 1, the carrier is bound to exercise due diligence in ensuring that the s1(a) the ship is seaworthy; and s1(b) man, equip and supply the ship properly. Article 3(2) based on the provision of Article 4 states that it is the duty the carrier to take care of good while in transit. Article 3(3) indicates that upon accepting good for shipping the carrier or his agent must issue to the shipper a bill of lading showing among other things s3(b) the quantity of the, weight, pieces or packages as stated by the shipper in writing and s3(c) the order and condition of the goods. The bill of lading is prima facie evidence that the carrier received the goods as stated in s3(a), (b), and (c). A proof contrary to what is stated is not admissible when the bill of lading is presented to a third party in good faith (s4). The carrier shall deem the information issues by the shipper to be accurate. The shipper indemnifies the carrier from any losses arising or resulting from inaccuracies. The indemnification does not limit the carrier’s responsibility under contract of carriage under other than to the shippers (s5). Article 4(1) limits the liability of the carrier or the ship from losses resulting unseaworthiness of the vessel unless it is a product of lack of due diligence to ensure that his vessel is seaworthy as well as secure the ship through proper manning, equipping or making necessary provisions. The burden of proving due diligence is on the carrier or other parties that calm exemption under article 4. Article 4(2) exempts the carrier from losses arising from s2 (c) perils, dangers and accidents and s2(d) Act of God. s5 (a) the carrier shall not bear responsibilities for loss of any packages not stated in the bill of lading, and any compensation of such goods shall not exceed 666.67 per unit or two units of account for every package. The value of the good shall be computed based on the original value at the time of dispatch. The value shall be fixed at the value of exchange of commodities, if there is no such value, they both the prevailing market value if these two values are not available then by the value of similar goods of similar quality. S 5(f) states that if the value is mentioned in s5(a) is present in the bill of lading it will be considered prima facie evidence, however it shall not be conclusive or binding to carrier. Carrier and the ship shall not be responsible for loss of good whose value was knowingly misstated by the shipper in the bill of lading, article 4 s 5(g). The bill of lading Liability for Cargo loss or Damage The bill of lading also stipulates that the carrier is responsible for any goods lost under his custody and bears all the liability (Rowbotham, 2014, p312). However, the carrier cannot be held liable in the absence of proven willful misconduct or negligence (Crowley). Agreed Value: The limitation of the carrier's liability The liability may be increased by the shipper’s declaration or payment of higher ad valorem values in regard the used tariff. The carrier’s liability may also be lowered based on certain release clause amount unique to the applicable tariff (BIMCO Liner bill of lading, 2000, p2). The carrier is also not liable for losses resulting from indirect incidents (Meurn, 2011) New Jason/General Average clause The carrier is not responsible for a loss resulting in an event that is not a product of his negligence, such as general accidents or acts of God. The carrier, the shippers and the owners of the goods shall contribute towards the value of the loss. PP arguments I. PP, the plaintiff claims for loss of good by the ship at sea by Admiralty Act 4.3(e) (Admiralty Act 1988, p4). In undertaking the responsibility to transport the shipper’s cargo from Australia to US, the carrier assumed various responsibilities and liabilities towards the PP’s cargo. The carrier SS was supposed to deliver PP’s shipment to the destination port, but failed to do so. II. It is the responsibility of the carrier SS to ensure that cargo gets to ensure goods get to the destined port. SS contravened his obligation stipulated by the bill of lading Humburg Riles artcle 5(1); Hague-Visby Rules article 3(2). III. One of the primary causes of loss of cargo was the poor state of the ship. The ship’s engine failed making the ship uncontrollable. As a result, they shipped got rocked severally by the heavy sea. It was during this rocking that the ship lost two containers to the sea. An investigation revealed that the ship engine did not fail because of the heavy weather. Australian Transport Safety Bureau (ATSB) investigation revealed that the engine failed due to blockages in the engine fuel lines. The reported noted that the blockages were a product of poor servicing and maintenance of the engine. IV. The failure to clean the ship's engine is a product of negligence to the carrier’s part. The carrier failed to ensure the seaworthiness of his vessel and also allowed an unseaworthy vessel to take the voyage. For this reason the carrier violated legal provisions on the seaworthiness of vessels (Hague-Visby Rules, Australian Navigation Act 2012 s 108 and s109). The carrier is thus liable for fault-bases offense penalty (s 109.2) and civil penalty (s 109.3). Also, SS did not exercise due diligence as directed by the Carriage of Goods by Sea Act 1991. Base on these the carrier bears responsibility for the lost cargo because i. SS did not exercise due diligence and neglected his duty to maintain the ship; ii. SS allowed his unseaworthy ship to be driven into the sea; iii. The goods were lost due to the unseaworthy of the ship; and iv. SS thus failed to deliver the good the designated port. SS argument I. The main cause of the ship getting out of control was the heavy weather is an act of God. The shipper had no power over the weather. In this regard, neither the carrier nor his employees were responsible for the loss and those not of them should be held liable for the goods. II. If the SS is to compensate the PP, the composition cannot go over the stated value on the bill of lading. Therefore, PP cannot state a new valued irrespective of whether it’s the wholesale valued of the goods in the lost container. According to Carriage of Goods by Sea Act 1991, the shipper indemnifies the carrier from any losses arising or resulting from inaccuracies stated and recorded in the bill of lading III. If any, compensation is to be made, the SS and the PP must share the burden equally since the loss was due to bad weather which is an act of God, and does not make the carrier fully liable. IV. If the SS did not send an unseaworthy ship to the seas. The ship was functioning properly when it was released for the voyage and only experience engine failure due to heavy weather. SS exercised due diligence ensuring that his vessel is seaworthy and secured it through proper manning, equipping or making necessary provisions as demanded by the Carriage of Goods by Sea Act 1991. 4. Application Based on the facts and the legal provisions SS violated a number of regulations leading to the loss cargo. First, SS neglected his duty to ensure that the vessel was seaworthy. Poor maintenance makes a ship unseaworthy. A similar scenario was evident in Roberta [1938] LLR 85, when the court held that an incompetent engineer could make a ship unseaworthy. SS failed to ensure that the ship was in a properly serviced state thus making it unseaworthy. Second, SS allowed an unseaworthy vessel to go to the sea. In both failing to maintain the ship and allowing unseaworthy vessel to the sea, SS did not exercise due diligence as demanded by the Carriage of Goods by Sea Act 1991. The negligence and the letting of unseaworthy vessels into the sea are violations that should be penalized as stipulated by the Australian Navigation Act 2012 (Navigation Act 2012, p 78). In FC Bradley & Sons v Federal Steam Navigation Co (1926) 24 Ll. Rep 446 the court defined seaworthy as a “...that degree of fitness which an ordinary careful owner would require his vessel to have at the commencement of her voyage having regard to all the probable circumstances of it. Would a prudent owner have required that it (the defect) should be made good before sending his ship to sea, had he known of it?” In Smith Hogg v Black Sea (1940) AC 99 the court held that unseaworthiness only becomes relevant if it leads to loss. In this case it led to a loss and is thus relevant. Also in Smith Hogg v Black Sea (1940) AC 99 the court held that if loss originate partially from unseaworthiness and partially from a cause that the carrier has defense under the contract the carrier is not entitled to the defense. SS cannot exonerate himself based on the influence of the heavy weather and rough sea which as Acts of God. Through the bill of lading, SS had a duty PP to take care of PP’s cargo and deliver it at the designated port. This means that SS assumed the liability for any damage or loss that occurs while the good are still under its custody. For this reason SS ought to pay PP the value of the goods equivalent to the value stated on the bill of lading. PP’s claim for compensation for a value equivalent to the wholesale value of the goods lost. However, it is not clear whether the PP had disclosed to SS that the container contained valuable goods and if that value stated on the bill of lading is equivalent to the wholesale value of the good. If the PP did not state the actual value of the goods, SS will compensate the value stated on that bill and an addition amount of 666.67 for every package. References Admiralty Act 1988 Berlingier, F. (2009). Comparative Analysis of The Hague-Visby Rules, the Hamburg Rules and the Rotterdam Rules. AMD. BIMCO Liner bill of lading. 2002. Carriage of Goods by Sea Act 1991 Crowley. Bill of Lading Terms and Condition. David, J., & Auckland, B. 2010, The Hague-Visby rules back on course? New Zealand Law Journal189-192. Dut, J. 2012, Marine Cargo Insurance. CRC Press FC Bradley & Sons v Federal Steam Navigation Co (1926) 24 Ll. Rep 446 Hamburg Rules (1978). United Nations Convention on the Carriage of Goods by Sea ("Hamburg Rules"). Admiralty and Maritime Law Guide. Meurn, R. J. (2011). Marine cargo operations: a guide to stowage. Atglen, Penn, Cornell Maritime Press. Navigation Act 2012 Navigation Regulation 2013 Roberta [1938] LLR 85 Rowbotham, M. 2014, Introduction to Marine Cargo Management. CRC Press Schaffer, R. et al. 2014, International Business Law and Its Environment, Cengage Learning Smith Hogg v Black Sea (1940) AC 99 The International Convention for Safe Containers (CSC), 1972, Interpretations and Guidelines. Read More