Volcafe Ltd & Ors v Compania Sud Americana De Vapores SA (t/a CSAV)

Under Article III (2) of the Hague Rules, a carrier must employ a sound system for protecting ordinary cargo against reasonably foreseeable risks and must implement that system carefully. A sound system requires a rational, adequate and reliable basis for concluding that it will prevent the threatened damage during the contracted carriage. Delivery damage to goods received in apparent good order may justify an inference of breach and require rebuttal evidence from the carrier. The carrier cannot answer a failure to establish a sound system by asserting that damage was inevitable. Nor can a general industry practice, without appropriate theoretical or empirical support, establish that a system is sound.

The claimants sought damages for condensation affecting nine consignments of Colombian green coffee beans carried in containers from Colombia to North Germany. The carrier had supplied and stuffed the containers, which were lined with Kraft paper. The bills of lading incorporated the Hague Rules and imposed responsibility for the intermodal carriage.

The central issues were whether the Hague Rules applied to the container-stuffing operation, whether the carrier had employed and carefully implemented a sound system to prevent condensation damage, whether the damage was inevitable, and whether the configuration of the stow was defective. The claimants also sought permission to amend their case concerning delay during transhipment.

1. Application of the Hague Rules. The stuffing of cargo into containers which were subsequently loaded on the vessel formed part of a single loading process for Article I (e) purposes. In any event, the parties could agree what constituted loading. The contractual conditions relied on by the carrier did not exclude the relevant obligations.
2. Carrier’s duty. Article III (2) required the carrier properly and carefully to load, handle, stow, carry, keep and care for the goods. Proper performance required a sound system. For ordinary coffee cargo exposed to a known risk of condensation, the carrier had to show a rational, adequate and reliable basis for believing that its lining arrangements would prevent damage during the contracted carriage.
3. Burden of proof. The goods had been received in apparent good order and were delivered damaged. That was sufficient to justify an inference of breach and required evidence from the carrier to negate it. The forensic technique of res ipsa loquitur was available. The carrier failed to rebut the prima facie case.
4. The carrier failed to establish that the damage was inevitable. It provided no adequate evidence concerning the absorption and retention capacity of the paper or card, or the time required for saturation. Even if prevention were impossible, that would not answer the Article III (2) obligation or provide a meaningful counterfactual for causation.
5. The evidence did not establish that any general practice concerning Kraft paper constituted a sound system. The evidence also failed to show that the system used had been carefully implemented.
6. The issue concerning stow configuration was unnecessary to decide. Permission to amend the Particulars of Claim to allege unreasonable delay during transhipment was refused because the allegation was late, required targeted evidence, and would not have affected the result.
7. There was judgment for the claimants in the agreed sum of US $62,500 plus interest. The parties were directed to agree its apportionment and draft the order.