Northern Shipping Company v Deutsche Seereederei GmbH & Ors

Under the Hague Rules, a claimant must prove its case on the balance of probabilities. It cannot succeed merely because its explanation is the least improbable of several possibilities. The court may, however, assess the evidence as a whole, including the relative weight of incomplete or improbable strands of evidence.

A vessel is unseaworthy where highly inflammable cargo is stowed below deck in an inadequately ventilated hold. Compliance with a regulatory code, or a genuine misunderstanding of it, does not necessarily establish due diligence. Obvious and potentially catastrophic risks may independently demonstrate a failure to exercise reasonable skill and care.

A carrier whose lack of due diligence is an effective cause of loss cannot invoke the shipper’s dangerous-goods indemnity for that loss, regardless of which concurrent cause was dominant.

The claimant’s container vessel sank after an explosion and fire during a short voyage. The trial judge found that the initial explosion was caused by undeclared dangerous cargo in a container shipped by Deutsche Seereederei, but that the vessel’s loss was also caused by the claimant’s negligent stowage below deck of highly inflammable isopentane shipped by Cho Yang Shipping.

The claimant recovered against Deutsche Seereederei for loss caused by the initial explosion and fire, but not for the vessel’s total loss or related third-party claims. Cho Yang recovered for loss caused by the isopentane fire. The appeals concerned the cause of the initial explosion, unseaworthiness and due diligence, the operation of the Hague Rules’ dangerous-goods indemnity, causation, and the carrier’s responsibility for concealed dangerous cargo in sealed containers.

1. Initial explosion. The appeal court upheld the finding that the initial explosion occurred on deck and was caused by undeclared dangerous cargo in a Deutsche Seereederei container. The trial judge had not impermissibly selected the least improbable explanation. He had assessed the evidence as a whole, including the explosion site, container stowage, debris, witness evidence and the absence of any declared explosive cargo at the relevant location. Rhesa Shipping S.A v Edmunds (The Popi M) and The Marel did not prevent that assessment.
2. Unseaworthiness and due diligence. Stowing isopentane in an unventilated hold contravened the applicable SOLAS, IMDG and MOPOG requirements and was not authorised by the vessel’s technical certificate. The vessel was consequently unseaworthy. The objective question under Article III, Rule 1 was whether the carrier had exercised all reasonable skill and care to make the vessel reasonably fit for the ordinary incidents of the voyage. A genuine misunderstanding of MOPOG did not establish due diligence where the conduct was plainly unreasonable and the risks of leakage, vapour accumulation, ignition and catastrophic fire were obvious.
3. Dangerous-goods indemnity. The claimant could not recover from Deutsche Seereederei under Article IV, Rule 6 for loss to which its own want of due diligence was an effective cause. The principle in The Fiona applied whether the causes operated concurrently or successively, and regardless of which cause was dominant. Article III, Rule 1 was the overriding obligation.
4. Causation. The court stated obiter that the claimant’s stowage of the isopentane would not have constituted a novus actus interveniens breaking the chain of causation. Whether an intervening act is the sole effective cause is a question of fact assessed on common-sense principles.
5. Concealed dangerous cargo. Bad stowage or dangerous cargo may make a vessel unseaworthy, but the carrier’s personal duty of due diligence does not extend to physical verification of the contents of a shipper-packed and sealed container unless the carrier is put on notice. The claimant had therefore exercised due diligence in relation to Deutsche Seereederei’s concealed cargo.
6. All appeals were dismissed. Each appellant was ordered to bear its own appeal costs and to pay the respondents’ costs.

• Court of Appeal (Civil Division): dismissed the appeals from the Admiralty Court’s judgment. The court upheld the findings concerning the initial explosion, unseaworthiness, lack of due diligence in stowing isopentane, the dangerous-goods indemnity, and the carrier’s due diligence concerning the concealed cargo.
• House of Lords: all appeals were refused permission.