Summary
Where cargo is stated in the contract of carriage to be carried on deck and is so carried, it falls outside the Hague or Hague-Visby Rules. The carrier’s obligations are therefore determined by the contract and any applicable common-law terms. An exclusion clause covering loss or damage to deck cargo howsoever arising may exclude liability for both negligence and unseaworthiness. Such clauses are construed as commercial contractual provisions. The words must be clear, but need not be construed narrowly or artificially. The Canada Steamship guidelines are aids to construction, not a mechanical code. Fundamental breach does not automatically prevent reliance on an exclusion clause.
Factual background
The claimants, cargo interests and insurers, claimed in contract, tort and bailment for cargo lost or damaged during a voyage from Thailand to Algeria. For determination of a preliminary issue, the parties agreed that the disputed cargo had been carried on deck and that relevant charterparty terms had been incorporated into the bill of lading.
The bill of lading stated that the carrier was not responsible for loss or damage to deck cargo, howsoever arising, and that specified packages were carried on deck at the shipper’s or consignee’s risk. The central question was whether those provisions excluded liability for loss caused by the vessel’s unseaworthiness or the owner’s negligence.
Held
Preliminary issue answered in the affirmative. On the true construction of the bill of lading, the owner was not liable for loss of or damage to cargo carried on deck, including loss caused by unseaworthiness or negligence.
For the purposes of the agreed assumptions, cargo stated to be carried on deck and in fact so carried was outside the definition of “goods” in Articles I(c) and II of the Hague and Hague-Visby Rules. The Rules therefore did not govern the deck cargo. The owner’s obligations were found in the bill of lading, the incorporated charterparty terms and any applicable common-law terms.
At common law, absent contrary contractual terms, carriage contracts may contain an absolute implied obligation of seaworthiness before and at the commencement of the voyage. Those default obligations were subject to the proper construction of the express exclusion provisions.
Exclusion clauses are construed by the ordinary principles applicable to commercial contracts. Clear words are required, but there is no justification for a narrow or artificial construction. The Canada Steamship principles are useful aids to construction and must not be applied mechanically.
The words “howsoever arising” and “howsoever caused”, read in their contractual context, were exceptionally wide. They included negligence. There was no justification for excluding unseaworthiness from the causes covered.
The authorities concerning clauses limited to events during transit, including Steel v State Line S.S. Co. and The Maori King, did not conflict with The Imvros. They were distinguishable because the clauses there were construed as applying only after sailing, whereas the clause in The Imvros was capable of applying before and during transit.
Whether an exclusion applies to authorised or unauthorised deck stowage is a matter of construction. There is no general rule that fundamental breach prevents reliance on an otherwise applicable exception.
Consequential orders were left for further argument.
The court’s approach to earlier authorities
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Key cases cited
24 authorities cited.
- Wood v Capita Insurance Services Limited [2017] UKSC 24
- Arnold v Britton and others [2015] UKSC 36
- Rainy Sky S. A. and others v Kookmin Bank [2011] UKSC 50
- HIH Casualty and General Insurance Limited and others (Respondents) v. Chase Manhattan Bank (Appellants) and others HIH Casualty and General Insurance Limited and others (Appellants) v. Chase Manhattan Bank (Respondents) and others (First Appeal) HIH Casualty and General Insurance Limited and others (Appellants) v. Chase Manhattan Bank (Respondents) and others (Second Appeal) (Conjoined appeals) [2003] UKHL 6
- Smith v South Wales Switchgear Co Ltd [1978] 1 WLR 165
- Persimmon Homes Ltd v Ove Arup & Partners Ltd & Anor [2017] EWCA Civ 373
- Mir Steel UK Ltd v Morris & Ors [2012] EWCA Civ 1397
- Shell UK Ltd & Ors v Total UK Ltd & Ors [2010] EWCA Civ 180
- Brown v Drake International Ltd & Anor [2004] EWCA Civ 1629
- White v Blackmore [1972] 2 QB 651
- SUNLIGHT MERCANTILE PTE. LTD. AND ANOTHER v. EVER LUCKY SHIPPING COMPANY LTD. [2004] 2 Lloyd's Rep 174
- HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2001] C.L.C. 48
- Belships v Canadian Forest Products Ltd (1999) A.M.C. 2606
- TRANSOCEAN LINERS REEDEREI G.m.b.H. v. EUXINE SHIPPING CO. LTD. (THE “IMVROS”) [1999] 1 Lloyd's Rep 848
- EE Caledonia Ltd v Orbit Valve Co Europe [1994] 1 WLR 1515
- KUWAIT MARITIME TRANSPORT CO. v. RICKMERS LINIE K.G. (THE “DANAH”) [1993] 1 Lloyd's Rep 351
- LAMPORT & HOLT LINES LTD. v. COUBRO & SCRUTTON (M. & I.) LTD. AND COUBRO & SCRUTTON (RIGGERS AND SHIPWRIGHTS) LTD. (THE "RAPHAEL") [1982] 2 Lloyd's Rep 42
- Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd [1973] QB 400
- Canada Steamship Lines Ltd v The King [1952] AC 192
- Alderslade v Hendon Laundry Ltd [1945] KB 189
- Travers (Joseph) & Son Ltd v Cooper [1915] 1 KB 73
- The Galileo [1914] P. 9
- Owners of the Cargo on Ship “Maori King” v Hughes [1895] 2 QB 550
- Steel v State Line S.S. Co. [1877] 3 App. Cas. 72 (H.L. Sc)
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Cases citing this case
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