First judgement of Hague and Hague Visby rules tested in the English courts

Britannia P&I Club referred to the English supreme court that presented its first authoritative judgement in English law, addressing the question of whether it is the carrier or cargo interests who bears the burden of proof under the Hague and Hague-visby rules.

The case had to do with a low value claim for condensation damage to coffee beans.

In the first trial the judge ruled in favour of the cargo deciding that where goods shipped in apparent good order and condition show loss or damage on discharge, there is an evidential inference that the loss or damage is caused by the fault of the carrier.

The carrier then has the burden of showing that it has not breached any of its obligations.

Yet, the Court of Appeal overturned that decision, resulting to the fact that once the carrier had made out a defence (in this case inherent vice), the burden of proof then shifted to the cargo owners to prove that the carrier had not employed a sound method for carrying the cargo.

The Supreme Court upheld cargo interests’ appeal and restored the findings made by the judge at the first instance. The Court held that a contract for the carriage of goods by sea is one of bailment.

As bailee, a carrier is liable under Article III rule 2 of the Hague or Hague Visby Rules for loss or damage to goods in its possession during the course of the voyage unless it can prove that (i) it is more likely than not that what happened was not caused by a breach of any of the carrier’s duties to care for the cargo or (ii) one of the Hague or Hague Visby defences applies.

To rely on a defence under Article IV rule 2 of the Hague or Hague Visby Rules, as well as proving that the defence applies, the carrier must also show that no fault on its part caused the damage.

Specifically, the Club highlights that when facing claims on alleged failure to carefully load, handle, stow or carry the cargo, the carrier must now show that suitable care was exercised and that the loss or damage happened despite all necessary steps being taken.

When a cargo was sound to loading but then it is damaged or lost, the carrier will be required to provide and substantiate an explanation. The practical impact of the judgment is that the pleading of cargo claims is likely to change.

Cargo interests may now present their claims differently, proceeding on the basis that they can rely on proof of damage to the cargo as constituting a sustainable cause of action in itself. The legal burden will then be placed on the carrier to disprove negligence.

A carrier’s defences will need to be presented in a more specific, positive and detailed manner, particularising how the goods were carried and cared for. In some cases it may be that this actually results in quicker settlement, by helping to focus the parties’ minds.

Gathering and preserving all relevant evidence to show what was done to care for the cargo and when it was done will be more critical than ever. Carriers should also conduct regular reviews of procedures and systems for handling cargo and evidencing the steps taken to care for cargo may need to be re-assessed.

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