UK: Recent Authority Of Particular Relevance In The Fields Of International Trade And Transport: Dangerous Cargo

Last Updated: 19 May 2010
Article by Nevil Phillips

A recent decision of the Commercial Court has affirmed the distinction between the scope of liability for the shipment of dangerous cargo under the English common law and under the Hague and Hague-Visby Rules respectively. Further, as well as helpfully defining the parameters of liability in each such case, the decision also grappled with the issue of how the burden of proof upon a claimant is intended to operate where contractual loss and damage arises from simultaneous causative breaches of contract by more than one contractual counterparts.

In The Darya Radhe [2009] 2 Lloyd's Rep. 175, Tomlinson J. addressed the question of what constitutes a dangerous cargo for the purposes of both Article IV, rule 6 of the Hague and Hague-Visby Rules and the common law. The Judge also addressed the question of what, in circumstances where loss may be suffered by a claimant as a result of breaches of contract by several independent contractual counterparts, that claimant must establish in order to recover against one or more of those counterparts.

Key facts

The Vessel loaded a number of parcels of Soya Bean Meal Pellets (SBMP) in Brazil for carriage to Iran. The parcels were loaded across several different holds and shipment was acknowledged by the carrier (Bunge) by way of several different bills of lading (all on identical terms). The parcels were shipped by a variety of shippers.

Prior to the loading of the SBMP parcels, the Vessel had already loaded (into separate holds) a cargo of maize. That cargo was not shipped by any of the shippers of the SBMP parcels. By the time that loading of the SBMP parcels commenced, the loading of the maize was complete and the holds containing the maize were closed.

In the course of loading of the SBMP (but not the maize), a number of live rats were loaded with the cargo. This resulted in stoppages to loading and lead to delay. However, it was not possible on the evidence to identify a particular rat with a particular parcel of cargo. Accordingly, it was not possible to establish whether any particular rat had been loaded by any particular shipper. As it was, the number of SBMP parcels was greater than the number of rats recorded, albeit that the number of SBMP shippers was less than the number of rats.

Following the completion of loading of the SBMP parcels, the cargo was fumigated. The consequence of this was that any live rat that might have found its way into the cargo was killed and mummified, with the result that it posed no hazard to the health of the cargo. Thus, to the extent that the rats posed any problem at all to the cargo, it was purely cosmetic.

Bunge nevertheless contended that, by reason of the shipment of the rats with the SBMP parcels, it was necessary for the Vessel to call at Lisbon in order to re-fumigate en route to Iran. Bunge also contended that it was necessary to despatch a cargo superintendent to Iran in order to attend the discharge of the cargo and to guard against any difficulties which might arise from the presence of the dead rats in the cargo. As it was, the cargo was discharged in Iran without incident.

Bunge therefore contended that the shipment of the rats had thereby exposed the Vessel to delay and had thereby resulted in expense.

The claim

Bunge sought to recover the loss which it was alleged had been incurred as a result of the delay to the Vessel and the other expense which resulted from the presence of the rats in the SBMP cargo.

In this regard, Bunge contended that the various shippers of the SBMP parcels were in breach of the terms of the bills of lading in that, in breach of an implied term at common law or Article IV, rule 6 of the Hague Rules (which were incorporated into the bills of lading), they had shipped cargo which was dangerous without giving notice of such danger to the carrier.

The issues

Bunge contended that the shipment of the rats with the cargo rendered the cargo dangerous. They also contended that, as regards the burden of proof, it was only necessary for them to establish that, on the balance of probabilities any one shipper loaded at least one rat. In that regard, Bunge contended that their claim succeeded on the basis that there were more rats than shippers and that, accordingly, a straightforward statistical approach compelled the conclusion that each shipper had shipped at least one rat and was therefore liable to Bunge.

The issues were therefore, essentially:

(i) Is a cargo (of SBMP) loaded with a rat, alive or dead, a dangerous cargo ?

(ii) If so, and if the rats had come on board the Vessel with the cargo, was it sufficient to show that, on average (comparing the number of rats with the number of shippers) each shipper must have shipped a rat, or was it necessary to ask whether there were rats present in every shipper's cargo, or only some of them, and if so which?

The judgment

Tomlinson J. concluded as follows:

(i) In order to constitute dangerous goods within the meaning of Article IV rule 6 of the Hague Rules, goods have to have the capacity to cause physical damage to the vessel or other cargo in either a direct or an indirect manner (see Effort Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998] 1 Lloyd's Rep 337 and [1998] AC 605).

(ii) The implied term at common law contemplates a wider category of dangerous cargo insofar as it encompasses not only cargo which may cause physical damage in the sense described above, but also cargo which (or the carriage or discharge of which) would lead to the violation of or non-compliance with some municipal law which is of direct relevance to the carriage or discharge of the specific cargo in question (see Mitchell, Cotts & Co v Steel Brothers & Co Ltd [1916] 2 KB 610; Effort Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998] 1 Lloyd's Rep 337, [1998] AC 605; The Lisa [1921] P 38; Transoceanica Societa Italiana di Navigazione v H S Shipton & Sons (1922) 10 Ll L Rep 153).

(iii) However, neither Article IV, rule 6 nor the implied term at common law would recognise as dangerous a cargo which merely causes delay to the carrier.

(iv) Thus, on the facts found by the arbitrators, the presence of the rats in the SBMP parcels did not render it dangerous.

(v) Accordingly, there was no breach of contract by any of the shippers.

(vi) Even if the presence of the rats in the SBMP cargo had rendered it dangerous and constituted a breach of contract under the terms of the bills of lading, in order to make a recovery, the burden on Bunge was demonstrate either that there were rats present in every shipper's cargo (in which case Bunge would recover against each shipper) or at least that rats were present in certain cargoes (in which case Bunge would recover against the relevant shipper(s).

(vii) As regards the approach to discharging that burden, no doubt there might be cases where statistical evidence could be deployed in an effort to prove what on the balance of probabilities must have occurred. However, in the present case the number of rats involved was simply too small to permit any valid statistical approach.

(viii) Furthermore, the fact that certain shippers completed loading long before others, and in some cases before others had even started loading, and the fact that certain shippers loaded more cargo than others, meant that any attempt to show an even distribution of the introduction of rats over time could not give rise to an inference that all shippers were responsible for the introduction of at least one rat: the distribution of any rats in the parcels of cargo could not be assumed to be even, and it was possible that, whilst there might be several rats in one parcel, there would be many parcels which contained no rats.

(ix) Accordingly, Bunge's approach to discharging the burden of proof was flawed, and it could not have discharged the correct burden in any event on the evidence.

Insight & analysis

The decision is a helpful indication of the scope of the dangerous cargo prohibition contained in Article IV, rule 6 of the Hague Rules and established by way of the ordinary implied term at common law.

It confirms that, under the Hague Rules, the prohibition is confined to goods which pose a risk of physical danger to the vessel or other cargo on board and does not extend to those which pose a risk of "legal danger", while at common law the prohibition includes such goods and extends to those which would lead to the violation of or non-compliance with some municipal law which is of direct relevance to the carriage or discharge of the specific cargo in question.

It also underlines the fact that goods which pose a risk of mere delay to a vessel (e.g. by virtue of an arrest by the receivers on the basis that the cargo has been damaged or rendered out of contractual specification) are not dangerous for these purposes.

Further, the decision illustrates that, in circumstances where a claimant contends that loss and damage is the consequence of simultaneous breaches of contract by more than one contractual counterpart:

(i) The burden remains upon him to establish on the balance of probabilities that (a) each such counterpart was in breach and that (b) each such breach caused or contributed to the loss in question.

(ii) A simple statistical approach to discharging that burden is unlikely to succeed, save in the clearest of cases in which the overall number of instances of breach is such as to compel the inference that each counterpart was in breach and, therefore, probably did cause or contribute to the loss in question.

(iii) Thus, an averaging approach (i.e. simply dividing the number of instances of breach among the number of contractual counterparts) will rarely suffice of itself to discharge the burden of proof on a claimant in a contractual claim.

Originally published in International Trade and Transport Law Newsletter, December 2009

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.

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