Effective transfer of responsibility for stowage from a contractual carrier under a bill of lading
Yuzhny Zavoid Metall Profil -v- Eems Berheerder B -V- The “EEMS SOLAR” 2013
The Admiralty Court was asked to consider whether an owner was liable toward a bill of lading holder for losses resulting from the movement of cargo during the voyage. Hill Dickinson acted for the successful owners and their P&I insurers.
The case arose from damage to a consignment of 411 steel coils loaded in Xingang, China for Novorossiysk, Russia. The cargo was shipped under a Congen 1994 bill of lading containing a ‘General Clause Paramount’ and incorporating a Gencon 1994 charterparty entered into with a third party. The cargo was stowed by Charterer’s appointed stevedores in some haste over a period of approximately seven hours. Some coils were subsequently damaged on passage when the stow shifted during heavy weather encountered in the Indian Ocean.
The claimants were the Russian receivers and bill of lading holders. It was alleged that the damage was caused by the unseaworthiness of the vessel, in that she had not been properly equipped with additional lashing material and also that the crew had failed to carry out proper cargo inspections during the voyage and/or properly re-secure the cargo following the breaking of a strap during adverse weather. The claimant’s expert considered the stow to be adequate and suggested that it was the responsibility of the crew to rectify basic errors in the stow which they had failed to do.
The court found that adequate inspections of the cargo had taken place. Furthermore, neither owners nor crew could be criticised for failing to re-secure the cargo as it was unrealistic to expect the crew to re-lash coils each about four to five tonnes in weight while the vessel was at sea. The primary cause of damage was the failure to use locking coils to secure the stow as recommended by the Vessel’s Cargo Securing Manual.
The question therefore was whether owners were responsible for the poor stowage.
Clause 5 of the charterparty provided as follows:
‘The cargo shall be brought into the holds, loaded, stowed and/or trimmed, tallied, lashed and/or secured by the charterers, free of any risk, liability and expense whatsoever to the owners.’
Article III Rule 2 of the Hague Rules provides that:
‘Subject to the provisions of Article 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.’
The claimant receivers argued that clause 5 was not incorporated because it did not make sense in the context of a bill of lading contract. Although a degree of verbal manipulation may be permissible where the parties had intended or where it made commercial sense (the “MIRAMAR “ AC 676; the “SPIROS C”  2 Lloyd’s Law Rep 319), the claimant receivers countered that manipulating the language by substituting ‘consignee’ for ‘charterer’ would result in a commercial absurdity, requiring the consignee to perform loading and stowing operations.
Even if clause 5 were incorporated, the claimant receiver argued that it was attempting to relieve the owner of responsibility for carrying the goods under Article III Rule 2 and therefore should be struck down by Article III Rule 8 which provides:
‘Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with goods arising from negligence, fault, or failure in the duties and obligations provided in [Article III] or lessening such liability otherwise than as provided in this convention shall be null and void and of no effect.’
However, the Admiralty Registrar, HHJ Jervis Kay Q.C., held that no verbal manipulation was required. The parties must have intended responsibility for stowage to be transferred to the shippers / cargo receivers. That was the natural consequence of the agreement that the owners would not be responsible. The decisions by the House of Lords in the ‘Jordan II’  2 Lloyd’s Rep. 319 and GH Renton -v- Palmyra Trading Corporation  AC 149 provided guidance on the effective transfer of responsibility for loading and stowing to a third party bill of lading holder.
Article III Rule 2 does not impose a duty on the owner to undertake all of the listed acts, rather to undertake those acts which he has agreed to undertake in a proper and careful manner. Clause 5 was not invalidated by Art. III rule 8 of the Hague Visby Rules unless the owner or master had significantly intervened in the loading of the cargo.
In fact, the Master and Chief Mate had prepared a stowage plan incorporating three rows without locking coils, although owners submitted that it was created after loading. As the vessel departed with the stow being in accordance with the stowage plan, the court held it to follow that it must have depicted the stowage plan which was actually provided by the vessel to those ashore prior to loading.
The court found that the lack of locking coils was the effective cause of the cargo movement and therefore the damage to the cargo. Nevertheless the court found no evidence that the stevedores had paid any attention to the stowage plan provided. As such there was no evidence of significant intervention which would have operated to return responsibility for cargo stowage to the owners (see Canadian Transport Co Ltd -v- Court Line Ltd  AC 934, Transocean Liners Reederei GmbH -v- Euxine Shipping Ltd (the “IMVROS)  1 Lloyd’s Rep. 848 and Compania Sud America Vapores- v- MS ER Hamburg  2 Lloyd’s Rep. 66).
The court provided the following helpful summary of the law:
‘Where the responsibility for the stowage has been contractually passed from the ship owner to the charterer (or the cargo owner) the shipowner will not be liable for damage arising from improper stowage even if it renders the vessel unseaworthy unless it is established that the bad stowage leading to the damage arose from a significant intervention by the shipowners or their master.’
The “EEMS SOLAR” decision breaks new ground by extending the effect of the Jordan II to clauses where shippers and consignees are not specified. It should accordingly be welcomed by owners and their P&I insurers.
Should you have any questions on this case, please contact Stuart Kempson or Peter McNamee: