Societe De Distribution De Toutes Merchandises En Cote D'Ivoire (t/a "SDTM-CI") & Ors v Continental Lines N.V. & Anor

Responsibility for loading, stowage and discharge ordinarily rests with the carrier. A contract of carriage may transfer that responsibility to charterers or cargo interests, but clear words are required. The court must construe the charterparty as a whole. Words placing cargo operations at a party’s expense and risk may, in context, transfer responsibility for bad performance, even without an express obligation to perform the operations. FIOST terms alone do not necessarily transfer responsibility for performance. A specific provision making stowage the Master’s responsibility may preserve the carrier’s responsibility for stowage while responsibility for loading and discharge is transferred. An arguable alternative construction does not prevent wording from being sufficiently clear.

The claimants brought cargo claims concerning moisture damage, torn bags and alleged short delivery of rice carried from Pakistan to the Ivory Coast. The bills of lading incorporated the Hague Rules and relevant provisions of a Synacomex 90 voyage charterparty. The parties agreed that responsibility for bad stowage rested with the carrier under the charterparty, but disputed responsibility for bad loading and discharge.

A preliminary issue was ordered concerning whether the carrier was liable for loss or damage caused by improper loading, stowage or discharge. The court was required to construe clause 5, including its provisions that loading and discharge were at the relevant charterers’ or receivers’ expense and risk, and that stowage was under the Master’s direction and responsibility.

1. Applicable principles. At common law, and under Article III rule 2 of the Hague Rules, responsibility for loading, stowage and discharge rests on the carrier unless the contract clearly transfers it. The three matters of expense, performance and liability for defective performance must be considered separately. Clear words are required, but separate ambiguity is not an additional requirement.
2. Construction of “expense and risk”. Construed in the context of the charterparty as a whole, wording that loading or discharge is at the expense and risk of charterers or receivers is capable of transferring responsibility for shortcomings in those operations. “Risk” may, in this context, be equated with responsibility. The alternative constructions advanced for the cargo interests would either add nothing to the common law and Hague Rules position or duplicate the separate laytime and demurrage regime.
3. Interaction with stowage provision. The words making stowage subject to the Master’s direction and responsibility were not inconsistent with the transfer of responsibility for loading and discharge. They gave meaningful effect to the allocation by preserving responsibility for stowage in the carrier. The other charterparty provisions did not alter that conclusion.
4. Related terms. FIOST wording did not, without more, transfer responsibility for performance of cargo operations, as distinct from payment. The court also rejected reliance on The Catharine Chalmers, which supplied no general proposition assisting the construction of clause 5. The reasoning in The Alexandros P and The Fantasy supported equating contractual risk with responsibility.
5. Result. The preliminary issue was determined for the carrier. Damage proved to have been caused by bad loading or discharge, as opposed to bad stowage, was the responsibility of the cargo interests and could not be recovered from the carrier.