AMS Ameropa Marketing Sales AG & Anor v Ocean Unity Navigation Inc

A cargo claimant may recover under a bill of lading notwithstanding compensation received from its contractual seller. Such recovery does not ordinarily require credit for the settlement, which is treated as arising from the sale contract rather than mitigation of the carrier’s breach.

The claimant bears the legal burden of proving loss and causation. A defendant alleging failure to mitigate must establish unreasonable conduct, applying a high standard. A salvage sale may be reasonable where damaged cargo has been segregated, its condition is uncertain, delay risks deterioration, and the sale price is supported by a bidding process.

The claim concerned damage to a bulk soybean cargo carried from Louisiana to Egypt under bills of lading issued by the defendant shipowner. The owners admitted breach of their contractual duty to take reasonable care of the cargo, accepting that excessive heating of fuel in a tank adjoining hold 4 caused some damage.

The first claimant, as assignee of the receiver’s rights, claimed the difference between the cargo’s sound value and its salvage-sale value, together with transport, storage and survey costs. The owners disputed title to sue, causation, the quantity of damaged cargo, the reasonableness of the segregation and salvage sale, and the proof of loss.

1. Title to sue and recoverable loss. The first claimant was entitled, as assignee, to pursue rights available to the receiver under the bills of lading. Under The Baltic Strait [2018] 2 Lloyd’s Rep. 33, recovery under the sale contract did not deprive the receiver or its assignee of title to sue the carrier, nor require credit for the recovery. The settlement was linked to rights under the sale contract and was not a mitigation benefit for the owners.
2. Causation and mitigation. The claimant retained the legal burden of proving that the breach caused the claimed loss. Where failure to mitigate was alleged, the owners bore the burden of proving unreasonable conduct, applying a high standard because they were the wrongdoers. The principles in Borealis v Geogas Trading [2011] 1 Lloyd’s Rep. 483 were accepted: claimant conduct breaks causation only where it effectively obliterates the breach; concurrent causes ordinarily do not break the chain; and conduct less than unreasonable is unlikely to do so.
3. Damage and mitigation. The evidence established physical damage of 70–80 metric tons. The owners failed to show that further manual or grab segregation was reasonably practicable or that the cargo interests acted unreasonably in stopping segregation. The salvage sale at USD 355 per metric ton was a reasonable response to known damage, uncertainty about deterioration, delay, storage conditions and the commercial circumstances. A laboratory certificate before sale was not required.
4. Quantum. The sound CIF invoice value of USD 435 per metric ton and the salvage price adequately proved the recoverable loss. The first claimant therefore recovered USD 293,755.10. The ancillary costs were rejected because the claimants did not prove that those losses had been suffered by, or were payable by, the receiver.
5. The claim succeeded in part. The claim for ancillary costs was dismissed. The owners’ limitation defence under Article IV rule 5(a) of the Hague Visby Rules was not pursued.