Milan Nigeria Ltd v Angeliki B Maritime Company

In a cargo-damage claim under bills of lading incorporating the Hague Rules, the carrier bears the burden of proving that loss or damage, or an identified part of it, resulted from an excepted peril. A cargo owner need not prove that all damage was caused by the carrier before recovering. An arbitral tribunal commits an error of law if it reverses that burden, and the award may be remitted where the error may have affected the apportionment of loss.

A challenge under section 68 requires procedural unfairness causing substantial injustice. A tribunal may determine the currency of an award under section 48(4), but the currency in which loss was felt is ordinarily a question of fact. Such a finding is generally outside an appeal under section 69.

Milan claimed damages for short delivery and wet or caked bagged rice carried from Bangkok to Nigeria under bills of lading incorporating the Hague Rules. The arbitral tribunal rejected the short-delivery claim but awarded US$150,000 for cargo damage.

Milan appealed on a point of law under section 69 of the Arbitration Act 1996, alleging that the tribunal had wrongly placed on it the burden of proving the causes of the damage. The Owners challenged the award under section 68 concerning Milan’s title to sue and the currency of the award, and sought leave to appeal on the currency issue.

The court had to determine the correct burden of proof, whether the title-to-sue procedure caused serious irregularity and substantial injustice, and whether the currency decision raised an appealable question of law.

1. Burden of proof. The tribunal had expressly placed on Milan the burden of showing that the Owners were completely responsible for the caking. That was wrong. Under the Hague Rules, once the cargo owner establishes receipt in good order and damaged delivery, the carrier must prove the cause of the damage and establish the extent to which an excepted peril caused it. The tribunal’s error almost certainly affected its conclusion that Milan should bear approximately 62 per cent of the loss.
2. The appeal on the burden of proof was allowed. The award was remitted to the tribunal for reconsideration on the basis that the Owners bore the burden of establishing what part, if any, of the damage resulted from an excepted peril.
3. Title to sue. Milan had pleaded and proved the factual ingredients of a claim based on endorsement and possession of the bills of lading. It was unnecessary expressly to plead the relevant provisions of the Carriage of Goods by Sea Act 1992 where the factual basis of the claim was clear to experienced commercial parties and their lawyers. The tribunal acted fairly, and the Owners had ample opportunity to address the issue and seek disclosure. No serious irregularity or substantial injustice was established. The section 68 challenge was dismissed.
4. Currency. The tribunal was entitled to determine, on the evidence, that Milan felt its loss in US dollars. The currency in which loss was felt is a question of fact, assessed in light of all the circumstances. Contractual intention, currency of account, the claimant’s business and the nature of the transaction may be relevant; the currency of replacement goods or the available market is only a factor and does not establish a universal rule.
5. The application for leave to appeal on the currency issue was refused. The proposed question challenged a factual finding, was neither obviously wrong nor seriously doubtful, raised no question of general public importance, and it was not just and proper for the court to determine it under section 69.

This was a first-instance decision on arbitration applications concerning an award dated 16 June 2010. Leave had previously been given for Milan’s section 69 appeal on the burden of proof issue.