Serena Navigation Ltd & Anor v Dera Commercial Establishment Standard Chartered Plc

Under Article IV rule 5(a) of the Hague-Visby Rules, the liability limit is calculated by reference to the gross weight of goods physically lost or damaged while in the carrier’s custody. Economic and consequential loss may remain recoverable, but the limit is tied to the physically lost or damaged goods. Unusual consequences, including a low limit after extensive mitigation, do not justify departing from the ordinary construction on business-common-sense grounds.

The claimants, the owner/carrier and its mutual insurer, faced a counterclaim by the lawful bill of lading holder for damage to corn carried from Louisiana to Aqaba on the Limnos. The bill of lading incorporated the Hague-Visby Rules.

The preliminary issue concerned the meaning of “goods lost or damaged” in Article IV rule 5(a). The carrier contended that the limit was calculated by reference to physically damaged cargo. The cargo owner contended that it was calculated by reference to the whole cargo, or goods economically affected by the physical damage and consequential losses.

1. Preliminary issue resolved for the owner/carrier. The counterclaim was limited by the gross weight of the physically damaged cargo, subject to resolving whether the conceded tonnage was 7, 12, or up to 262 tons.
2. Article IV rule 5(a) was construed according to ordinary meaning and internationally accepted principles of construction. “Goods lost or damaged” refers to goods physically lost or physically damaged. It does not include undamaged goods whose market value has been depressed.
3. Economic and consequential loss may be recoverable under the Rules. In the limiting part of Article IV rule 5(a), however, the relevant weight is that of the same goods lost or physically damaged in the carrier’s custody.
4. The relevant condition of the goods is assessed at discharge or delivery. Later consequential loss, or damage occurring after discharge, does not enlarge the weight-based limit.
5. The court rejected the argument that economic depreciation constituted damage to the goods and held that anomalies concerning delay and mitigation did not justify applying the Antaios business-common-sense canon.
6. The parties were invited to address directions for the trial and venue of the remaining factual issue.