Geofizika DD v MMB International Ltd

Under a CIP sale, the seller must arrange carriage on usual terms and in a customary manner, and must procure insurance which is valid when obtained and matches the contract of carriage. A liberty allowing deck carriage is inconsistent with usual and customary carriage where the parties agree that the goods should travel under deck. A freight forwarder instructed to arrange the transaction must exercise reasonable skill and care. Giving an unconditional under-deck warranty without checking ambiguous shipping documents may constitute breach. A contractual limitation does not protect the forwarder where the breach falls within an express obligation to effect insurance.

Geofizika bought three customised ambulances from MMB for delivery to Libya under a CIP contract. MMB engaged GSC, a freight forwarder, to arrange carriage and insurance. The carrier’s bill of lading permitted deck carriage, while the insurance certificate warranted under-deck shipment. The vehicles were carried on deck and lost.

Geofizika claimed against MMB for breach of the CIP carriage and insurance obligations. MMB sought reimbursement from GSC for breach of its duties as freight forwarder. The principal issues were whether the carriage terms were usual and customary, whether the insurance properly matched the carriage contract, whether GSC had exercised reasonable skill and care, and whether its contractual liability limit applied.

1. Disposition. Geofizika’s claim against MMB and MMB’s claim against GSC succeeded. Damages were to include the insured value of the lost vehicles, reasonable hire costs up to 31 March 2007 and smaller uncontroversial items, subject to credit for the £50,000 recovered from the carrier, less £9,000 allowed for associated legal costs.
2. Carriage. The bill of lading was excellent evidence of the contract’s terms. Its clause 7 permitted deck carriage. The booking confirmation was ambiguous and did not amount to an antecedent agreement overriding the bill. The references to RORO and the telephone discussions were too vague to establish an agreement for under-deck carriage.
3. Nevertheless, the seller’s CIP obligation to contract on usual terms and in a customary manner was breached. Terms permitting deck storage were not usual, and carriage on deck was not customary, where all parties agreed that the vehicles should be carried under deck. Expert evidence was unnecessary.
4. Insurance. The seller had to procure insurance which matched the contract of carriage. The policy was invalid when procured because the under-deck warranty was false from the outset. The facts also supported an agreement, or conduct evidencing an agreement, to provide cover wider than the CIP minimum.
5. GSC’s duty and limitation. GSC failed to use reasonable skill and care. The ambiguity in the booking confirmation and the absence of confirming clausing made it unsafe to warrant under-deck shipment without further checking. BIFA clause 11(b), read with clause 11(a), applied to the breach because the central omission was failure properly to check before giving the insurance warranty. Clause 26 therefore did not limit liability.
6. The court declined to decide the additional Hague-Visby argument without further pleadings and oral submissions, since it had not been pleaded and was unnecessary to the conclusions reached.

First-instance decision in the High Court. The judgment does not state any subsequent appellate decision.