UK: Going Rogue - An Important New Case on Dangerous Cargo.

Last Updated: 11 January 2011
Article by Jeb Clulow

At 21.00 on Wednesday 7 July 2010, while off Port Klang, Malaysia, the Master of the 8,000 TEU containership, MV "CHARLOTTE MAERSK", reported a fire on the foredeck of the vessel. The vessel and her cargo were badly damaged by the fire which reached 1,000º C in some places. Around 150 containers had to be opened and "surgically" extinguished (i.e. one container at a time). The fire could have resulted in the total loss of the vessel and her cargo.

It is believed that the fire originated in a container of calcium hypochlorite stowed below deck which was a "rogue" batch with a tendency to ignite at a lower temperature than would ordinarily be expected. Due to the incident, Maersk currently refuses to carry any calcium hypochlorite cargos from China.

Over the past decade, there have been a number of containership casualties involving calcium hypochlorite shipped out of China. In Compania Sud Americana De Vapores SA v Sinochem Tianjin Import and Export Corporation (The "ACONCAGUA") (2010)1, the English courts considered for the first time whether a rogue batch of calcium hypochlorite constituted a dangerous cargo and would therefore permit owners to recover their losses from the charterers or shippers.

The bill of lading and/or charterparty will generally contain an express or implied term prohibiting the shipment of dangerous cargo. The shipper and/or charterer is required not to ship cargo of an inflammable, explosive or dangerous nature which the owner did not agree to carry with knowledge of its nature and character and which damages directly or indirectly the vessel or other cargo on the vessel. In the "ACONCAGUA", CSAV, as disponent owners, claimed against Sinochem, the shippers of the calcium hypochlorite, following a fire onboard the vessel while off the coast of Ecuador. The fire severely damaged the vessel and her other cargo. The cause of the fire was the self-ignition of the calcium hypochlorite cargo. Calcium hypochlorite is a known dangerous cargo which the International Maritime Dangerous Goods ("IMDG") Code requires to be stowed away from sources of heat and with a space of at least one container from any bunker tanks.

At the time of shipment, Sinochem had declared the cargo as calcium hypochlorite and cited the relevant part of the IMDG code. On its face, Sinochem had complied with its obligations to declare the contents of the container. Sinochem therefore argued that CSAV had agreed to carry the calcium hypochlorite and therefore could not claim against it for the damage to the vessel or its liability to other cargo owners.

Both parties put in extensive expert evidence concerning the characteristics of calcium hypochlorite generally and the characteristics of the cargo shipped. On the basis of the expert evidence, it was found that the cargo shipped was a rogue batch which would have ignited at a temperature of 25º C to 30º C rather than 60º C as would ordinarily be expected. Accordingly, it was found that CSAV had not agreed to the carriage of this cargo with knowledge of its characteristics and CSAV were able to recover from Sinochem.

It should be noted that CSAV had been at fault as, in breach of the IMDG Code, they had stowed the container adjacent to bunker tanks which were heated during the course of the voyage. It was found however that, had CSAV complied with the IMDG Code in this respect, the cargo would still have been stowed below deck where temperatures would have exceeded 30º C. In the circumstances, it was found that the fault in relation to the stowage of the container was not causative of the loss (i.e. the cargo would have caught fire anyway).

The operative fault was in relation to the decision to heat the bunker tanks. This was an error in relation to the management of the vessel and an excepted peril under the Hague-Visby Rules. Accordingly, even if the fault had been causative, this would not have prevented CSAV from making a recovery. The position would have been different if the loss had been due to unseaworthiness.

The shipment of rogue cargo is a major problem for the container industry. Readers will be reassured that English law is sufficiently flexible to deal with this issue in a way which is fair to the container operator. In this case, CSAV made a full recovery from Sinochem.

An obvious problem that can arise in similar situations is where the shipper of the dangerous cargo is much smaller than Sinochem and does not have the financial resources to meet the claim. In these circumstances, the owner may be able to claim instead against the charterer. The owner may also claim against the receiver, but only where the receiver has presented the bill to obtain delivery of the cargo. It is of course unlikely that the receiver would do this if there has been a major fire or a total loss.

In certain circumstances, an owner may be able to claim direct against the liability insurers of the shipper/charterer, under the Third Parties' Rights against Insurers Act 2010, or against a parent/group company using the South African associated ship arrest rules or the United States "alter ego" rules.

Summary

The shipment of an undisclosed dangerous cargo or a rogue cargo can be an owner's worst nightmare. While it is a particular problem for container vessels it is also a problem for bulk carriers, illustrated by the recent complications with the carriage of iron ore and nickel ore from India and Indonesia. In the event that damage is caused or additional expenses incurred, an owner will generally have a right to recover against the shipper and/or charterer. In certain cases, the owner may be able to enhance his recovery prospects by claiming against third parties such as receivers, insurers and parent companies.  

This article was first published in The Swedish Club Triton Newsletter – no. 3 – November 2010.

Footnote

1. The Court of Appeal dismissed the shipper's appeal on 9 December 2010

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.