DANGEROUS CARGO - SHIPPER

- Written by Anders Ulrik - Date: 07/03-1995

By the common law of England a shipper of goods impliedly undertakes to ship no goods of such a dangerous character or so dangerously packed that the shipowner or his agent could not by reasonable knowledge and diligence be aware of their dangerous character, unless notice be given to the shipowner or his agent of such a dangerous character (Scrutton p. 102).

This common law rule is reflected in the Hauge-Vis-by Rules, Article IV, rule 6 according to which the shipper of goods of a dangerous nature of which the master or the agent of the carrier has not consented with knowledge of the dangerous goods’ nature and character shall be liable for all damages and expenses directly or indirectly arising out of or resulting from the shipment.

For the cargo to be dangerous under the Hauge-Visby rules it must be a nature where it causes actual physical damage or pose a threat of physical damage to the ship or the other cargo on board. Common law goes a bit further and considers a cargo as "dangerous" if owing to legal obstacles as to the cargoes’ carriage or discharge they may involve detention of the ship.
The liability in common law as well as under the Hauge-Visby Rules is a strict liability for the shippers. However, the strict liability will not apply if the shipowner or his agent has full opportunities of observing the dangerous character of the cargo, and if the nature of the cargo is known to the shipowner or his agent, then the owner is treated as having received notice of the character of the goods, and the shipper is not liable unless the cargo possesses some special and not obvious characteristic which create a danger outside the range of dangers which the carrier of that type of cargo should foresee or guard against (Scrutton p. 103).

The legal principles described above have recently been tried in the GIANNIS NK case heard before the Court of Appeal in London.
The GIANNIS NK loaded a cargo of ground-nut extraction meal pellets at the port of Dakar into hold No 4. Cargoes of bulk wheat pellets had been loaded into other holds at previous loading ports. The ground-nut pellets were fumigated after loading, and a SGS certificate was issued.
The vessel proceeded to the discharge ports, discharged the first part of the grain pellets and then proceeded to the Dominican Republic to discharge the balance of the cargo.

Upon inspection in the Dominican Republic live insects were found, and the vessel was quarantined . the vessel was fumigated twice, however, after each fumigation live insects were still present, and the vessel was ordered to leave the port with both the ground-nut and wheat cargo onboard.

It was established that the live insects were Khapra Beetles, a beetle which multiplies rapidly, and the larvaes of which rapidly devour a cargo of foodstuffs. The vessel thereafter sailed to San Juan where an inspection by the United States Department of Agriculture took place. Following this inspection a notice was served on the owners requiring them either to return the cargo to its country of origin or to dump it at sea 25 miles from shore.

Finally both the ground-nut and the balance of the wheat cargo was jettisoned. The owners now claimed against the shippers, arguing that the ground-nut cargo was a dangerous cargo by reason of the fact that it contained Khapra beetles.

They claimed in damages for delays, bunker expenses incurred during the delay, fumigation and other costs, and an indemnity in respect of any liability they may have to the receivers. It was found by the Queens Bench and subsequently confirmed by the Court of Appeal that the Khapra infested cargo was a dangerous cargo in the sense that it was liable to give a rise to a loss in respect of other cargo shipped on the same vessel.

I do not believe that the same result could have been reached if the only cargo on board had been the Khapra infested cargo, as it was established in the Commercial Court that Khapra infested cargo is not physically dangerous to a vessel, and without other cargo onboard there would be no physical threat.

However the owners should still have had a good chance to proceed with their claim, but under the common law rules where goods are considered dangerous if owing to legal obstacles as to their carriage or discharge they may involve detention of the ship.

Before the Court of Appeal the shippers tried to argue that strict liability should not be imposed as article IV, rule 6 should be qualified by article IV, rule 3, according to which the shipper is not responsible for loss or damage sustained by the carrier unless caused by act, fault or neglect of the shipper or his servants, the argument being that the word "act" denoted intentional conduct.

The Court of Appeal concluded, however, that article IV, rule 3 is a general rule establishing responsibility for one’s negligence while article IV, rule 6 is a specific rule containing an absolute undertaking making the shippers liable for all damages and expenses irrespective of whether they have acted negligently or not. We understand that all issues dealt with in the Court of Appeal are subject to an application by the shippers for leave to appeal to the House of Lords, and we shall report if a House of Lord’s decision does not affirm the Court of Appeal decision.