International Max Planck Research School, Max Planck Institute for Comparative and International Private Law, Hamburg, Germany
Through the introduction of the 1994 NMCs, the carrier has been deprived of his former possibility under Nordic law to contract out of liability for deck cargo. The Codes essentially adopt the special liability regime for deck cargo under Art. 9 of the Hamburg Rules, based on a division into authorised and unauthorised deck cargo. As the mandatory scope, moreover, now extends to all contracts of carriage during the whole period that the cargo is in the carrier’s care, the carrier’s ability to lessen the statutory liability is essentially gone.
Under English law, conversely, the carrier is entitled under certain circumstances to exclude deck carriage from the mandatory scope of the 1971 COGSA. A contract not covered by the Act will be subject to the underlying dispositive common law regime. For this reason, the primary question to be asked under English law, is not whether the cargo was stowed on deck with authorisation or not, but whether the contract is governed by the 1971 COGSA or common law.1
There is reason to proceed from these various starting points in Nordic and English law when giving account of the carrier’s liability for deck cargo. Thus, whereas under Nordic law the following study shall be based on a division into deck carriage with or without authorisation, under English law it shall be based on a division into contracts of carriage governed by either the 1971 COGSA or common law.
6.1 The Nordic (Statutory) Approach: A Special Deck Cargo Liability Regime
13:34 (284) Liability for Deck Cargo
If goods are carried on deck in breach of section 13 (263), the carrier is liable, irrespective of the provisions of sections 25-28 (275-278), for damage which is exclusively the consequence of the carriage on deck. For the extent of the liability, sections 30 (280) and 33 (283) apply.
If goods have been carried on deck against an express agreement of carriage under deck, there is no right to limitation of liability according to this chapter. 2
13:34 (284) of the 1994 NMCs is based on Art. 9.3 and 4 of the Hamburg Rules. It is closely connected with 13:13 (263) (based on Art. 9.1. and 2 of the Hamburg Rules),3 in which the situations in which cargo may be carried on deck are stipulated, as given account of in Chap. 5. The title “Liability for Deck Cargo” attached to 13:34 (284) is somewhat misleading, as the provision truly only deals with the carrier’s liability for unauthorised deck carriage. The silence as to liability for authorised deck carriage means that such carriage will be covered by the general liability regime in 13:25–28 (275–278).4
In total, three levels of liability for deck cargo can be distinguished under the 1994 NMCs: (1) liability for deck carriage with authorisation, (2) liability for deck carriage without authorisation and (3) liability for deck carriage against an express agreement on stowage under deck (a more severe contractual breach than a mere carriage without authorisation). In the following discussion, these three various degrees of liability shall be dealt with separately.
A main novelty in comparison with the Earlier Nordic Maritime Codes is that the carrier can no longer exclude liability for deck cargo. As stated above,5 the Nordic legislator has extended the scope of application of the 1994 Codes to correspond essentially with that of the Hamburg Rules. Thus, also deck cargo excluded under Art. I(c) of the Hague-Visby Rules is now encompassed by the 1994 NMCs’ mandatory scope of application, as are all contracts of carriage whether covered by a bill of lading or not.
The legislator of the 1994 NMCs, recognising how deck carriage had developed into a much more common and safer manner of carriage, held it inadequate in modern trade to grant the carrier the freedom to exclude the liability for deck cargo merely for the sake of it being deck cargo. The fact that deck cargo still – despite the technical improvements – remains subject to certain special risks involved in stowage on deck6 was held to be sufficiently taken into consideration under the presumed fault regime in 13:25 (275), under which a carrier stowing cargo on deck with authorisation will not be liable for damage caused by the special risks involved in the stowage on deck, as these per definition are not caused by his negligence.7
The new liability regime for deck cargo in effect means that standard terms stating something similar to: “The carrier shall in no case be responsible for loss of or damage to cargo arising […] with respect to deck cargo and live animals”,8 will be null and void under the 1994 NMCs.9
As Honka points out, the effect of the abolishment of the possibility to exclude deck cargo from the law’s mandatory scope of application is limited in practice, as only a bill of lading containing a statement of the deck stowage would have had this effect under the Earlier Nordic Maritime Codes.10 Where, as would often be the case, cargo was carried on deck under a liberty clause, the contract of carriage would be authorised under the Earlier Nordic Maritime Codes but would not be excluded from their mandatory scope of application.11
6.1.1 Liability for Authorised Deck Cargo
When comparing the general liability regime under the 1994 NMCs with that under the Earlier Nordic Maritime Codes, it becomes clear that the lengthy Section 118 of the Earlier Codes has been split up into three provisions; namely into 13:25 (275) (the basic rule on presumption of liability), 13:26 (276) (on the carrier’s ability to escape liability for loss or damage due to fault in navigation or fire in certain cases) and 13:28 (278) (on liability for delay) of the 1994 NMCs. No material change was intended, however.12 This may sound strange to a common law lawyer in the light of how the “Hague-Visby catalogue” has been essentially abolished in favour of a general presumed fault liability regime. Yet as shall be developed in the following sections, the Nordic countries have always looked differently on the catalogue and its function than the jurisdictions adhering to the common law tradition.
This is possible as the Hague-Visby Rules, with exception of seaworthiness and the “catch-all” exception in Art. IV.2(q), do not provide a general rule for the division of the burden of proof, leaving this matter to be settled under the national law of civil procedure. The same goes for the degree of proof, which, as shall be seen in what follows, has also been differently established in the Nordic countries and England.13
18.104.22.168 Presumption of Liability
13:25 (275) Liability for Physical Loss or Damage
The carrier is liable for loss resulting from the goods being lost or damaged while in his custody on board or ashore, unless he proves that neither his fault or neglect nor the fault or neglect of any person for whom he is responsible has caused or contributed to the loss.
The carrier is not liable for damage caused by measures to save persons or reasonable measures to salvage vessels or other property at sea.
If the fault or neglect on the carrier’s part has contributed to the loss, the carrier is liable only to the extent the loss can be attributed to such fault or neglect. The carrier must prove to what extent the loss is not attributable to the fault or neglect on his side. 14
The initial burden of proof in a cargo claim rests with the shipper, who must prove that the cargo was damaged during the carrier’s period of responsibility.15 This is generally done by a comparison of the description of the goods in the bill of lading or other transport document upon delivery with the actual condition upon discharge. If the transport document is silent as to damage or similar matters, the goods are presumed to have been delivered to the carrier in a sound condition pursuant to 13:49 (299) and 13:59 (309).16 The practice in container trade of delivering fully loaded and sealed containers to the carrier entails problems in this aspect, as the carrier cannot reasonably undertake an inspection of the content of each container.17
Once the shipper has established a prima facie case, the carrier pursuant to 13:25 (275) has to prove that “neither his fault or neglect nor the fault or neglect of any person for whom it is responsible has caused or contributed to the loss”. 13:25 (275), in other words, imposes on the carrier the burden of proving that the damage cannot be attributed to his negligence, with the effect that the risk for any unexplained damage falls upon the carrier.18 This reversed burden of proof19 originates in the recognition that the carrier, being in possession of the goods, is better positioned to disprove the key question – whether negligence in the handling of the cargo caused the damage or loss – than the cargo interest is positioned to prove the opposite. This holds true particularly where the cause of the damage is unclear.20
The general degree of proof in Nordic law is preponderant evidence.21 However, the degree of proof for the absence of negligence under 13:25 (275) is higher:
In ND 2003.374 “Pergamos”,22 the Norwegian Court of Appeal stated that the word “prove” (Norwegian “godtgjøre”) in Section 275 (13:25) meant something more than to show that something was more likely than not. Such a rule was fair, the court held, taking into account how the cargo interest has little or no possibility at all to supervise the carrier and those for whom the carrier is responsible.23
This is in line with the tradition in Nordic law of requiring a higher degree of proof where it can be supposed to have a general preventive effect. The reversed and raised burden of proof under 13:25 (275) gives the carrier a strong incentive to organise tests, inspections etc., as he knows that he will lose the case unless he is able to prove a fact to a certain degree; this, in turn, is likely to lower the number of disputes.24
As in practice it is hard, if not impossible, for the carrier to prove that he and his servants were not negligent in any aspect: the exculpation is generally carried out by proving: (1) that the loss or damage was the result of an external event (e.g. deck cargo went overboard due to extreme weather conditions), and (2) that the carrier cannot be blamed for that event coming into play or for contributing to the damage (e.g. the storm could not have been predicted (in which case it can be argued that the carrier should have stayed in port) and the goods were properly secured).25
As indicated above, the so-called Hague-Visby catalogue has no legal function under Nordic law. It is neither held to except the carrier from liability nor, as under English law,26 shift the allocation of the burden of proof. The catalogue events in Art. IV.2(c)–(p) are merely some examples among others of external causes of damage that may be invoked by the carrier to prove point (1) above. The carrier may, however, equally invoke a non-listed external cause, such as theft. In either case, he must prove in addition under point (2) that it was not negligence on his part that caused the event and that he did not contribute to the damage.27 Under this perception, the Hague-Visby catalogue has been criticised in the Nordic countries for giving the impression that it involves a particular advantage when it in reality does not.28 The legislator for this reason chose to omit the catalogue under the 1994 NMCs.29
It is recognised, however, that the catalogue events in Art. IV.2(a) and (b) of the Hague-Visby Rules for error in navigation and fire are of a different character in that they allow the carrier to escape liability in certain cases in spite of negligence. In comparison with the general liability regime in 13:25 (275), they thus involve a relief of the carrier’s liability. In order not to violate the Hague-Visby Rules, these liability reliefs have been detached from 13:25 (275) and placed in 13:26 (276) of the 1994 NMCs. They shall be dealt with separately below.30
The rule in 13:25 (275) paragraph 3 that the carrier can escape liability for part of a damage or loss is a novelty under the 1994 NMCs in comparison with the Earlier Nordic Maritime Codes. The provision is based on Art. 5.7 of the Hamburg Rules.31 Indeed, under the Earlier Nordic Maritime Codes, the liability could be mitigated, but only when the shipper’s negligence had contributed to the damage.32 Although it will generally be difficult for the carrier to prove the relative impact of each cause in the case of concurrent causes,33 the Nordic courts (unlike the English)34 may be willing to distribute the damage also without the carrier having proven the exact extent that the loss was caused by something other than his negligence.
In ND 2005.574 “MacKenzie”,35 for example, the shipper was found to have contributed to the loss by not providing the cargo (a converter basket) with sufficient attachment devices and by giving the carrier faulty information as to the securing of the cargo on board. The court reduced the carrier’s liability by a third based on what seems to have been a rather arbitrary division of the fault.36
22.214.171.124 The Carrier’s Obligations Towards the Shipper
13:12 (262) contains the foundation for the carrier’s obligations towards the shipper. The generally formulated obligations in 13:12 (263), to quote Honka, do not “advance the clarification of the fault concept in any particular fashion, but at least it is realised that there exists a duty before liability.”37
13:12 (262) The Carrier’s Obligation to Safeguard the Cargo Owner’s Interests
The carrier shall perform the carriage with due care and despatch, care for the goods and in other respects safeguard the cargo owner’s interests from the reception until the delivery of the goods.
The carrier shall ensure that the vessel used for the carriage is seaworthy, which also includes her being duly manned and equipped and that her cargo holds, cold-storage rooms and other rooms, in which goods are loaded, are in proper shape for the reception, carriage and preservation of the goods.
If goods have been lost, damaged or delayed, the carrier shall notify the person indicated by the sender at the earliest opportunity. If such notice cannot be given, the cargo owner or, if he is unknown, the sender shall be notified. The same applies if the carriage cannot be performed in the manner indented. 38
The duty of care was further developed in Section 101 of the Earlier Nordic Maritime Codes as a duty for the carrier to properly and carefully load, stow, handle, carry, keep and discharge the goods – a formulation corresponding essentially to Art. III.2 of the Hague-Visby Rules. Although under the 1994 NMCs the carrier’s duties are no longer specified, no material changes were intended.39
Also the carrier’s duty to provide a seaworthy vessel in paragraph 2 is part of the obligation to safeguard the cargo owner’s interests. It becomes clear from the definition in paragraph 2 that the term includes not only “technical seaworthiness” (this is presupposed and only indirectly stated by the wording “also includes”) but also the vessel’s “cargoworthiness” (e.g. the fitness of the stowage space, including also containers provided by the carrier,40 to carry the cargo in question) and her “voyageworthiness” (e.g. whether there is sufficient food supplies for the crew).41 As to the sometimes unclear delimitation between uncargoworthiness and improper stowage, it can be said in general that whereas insufficiency in relation to equipment which forms part of the vessel’s more or less permanent configuration gives rise to uncargoworthiness, the insufficiency of equipment of less severe nature, which can rather be attributed to the stowage, will be a matter of improper stowage. Where the faulty stowage affects the safety of the vessel, however, the vessel will be (technically) unseaworthy.42
Due to the Nordic perception of the Hague-Visby catalogue given account of above, the question of whether carrier exercised due diligence in making the vessel seaworthy, with exception for the cases of error in navigation and fire,43 adds nothing to the general liability rule in 13:25 (275). A failure to act with due diligence in making the vessel seaworthy (whether at the commencement of the voyage or at a later stage) will amount to negligence under the main rule.44
126.96.36.199 The Standard of Care
The standard of care – i.e. what is required by the carrier in order to live up to the obligations under 13:12 (262) and consequently in order to avoid being labelled as negligent under 13:25 (275) – must be established in light of the individual circumstances of each case.45
It is to be noticed that in Nordic law, the standard of care in relation to the duty to provide a seaworthy vessel is presumably the same as that in relation to the duty to care for the cargo. The breach of either amounts to negligence under 13:25 (275).46
The required standard of care is a professional standard relating to the particular trade.47 A carrier is generally expected to have knowledge of the cargo that he has undertaken to carry or to acquire it. This requirement varies, however, with the trade in question. In liner trade, the carrier is expected to be familiar with a wide range of goods but not all.48 The carrier is, for example, not expected to have knowledge of unusual cargo requiring special care. This has to be seen against the shipper’s corresponding duty in 13:8 (258) to inform the carrier of cargo requiring special care and, when necessary, mark the goods in a suitable manner.49 A similar line of reasoning applies as to the packaging of goods packed by the shipper in closed units.50
Factors other than the cargo characteristics may be relevant for the standard of care. Clearly, a transatlantic voyage requires higher safety measures than a voyage in protected waters. Additionally, previous experience may affect the standard of care. In NJA 1977 s. 49 “Tor Mercia”,51 the standard of care increased when the carrier had previously experienced similar problems with the discharger.52
Where there are public regulations on the handling of the type of goods in question, a carrier in breach of the regulations can generally be presumed to be in breach of his obligations under 13:12 (262). The issue, however, has to be seen against the interest that the regulation in question aims to protect.53
In ND 1995.76 “Ra”, pig iron had been loaded contrary to the instructions in the 1987 IMO Code of Safe Practice for Solid Bulk Cargoes. The court held that the rules embodied good seamanship, of which the master was obliged to have knowledge. Thus, the faulty stowage, which had made the vessel unseaworthy at the beginning of the voyage, was caused by a lack of due diligence on part of the carrier, who was held liable.54
It should be emphasised finally, that perfection is not required. In ND 1975.85 “Sunny Lady”55 – a case on unseaworthiness – the Norwegian Supreme Court stated that not every trivial error can be taken into consideration and cited the US Supreme Court in “Racer”56 in holding that the “the standard is not perfection, but reasonable fitness”.57 In ND 1976.364 “Høegh Heron”,58 the same court similarly held that with regard to the on board routines for electric cables and lamps, one cannot require such a thorough examination and control that no errors whatsoever may later be revealed.59
188.8.131.52 Special Risk Involved in Deck Stowage v. Negligence
As given account of initially in Chap. 2, stowage on deck unavoidably exposes the cargo to special additional risks such as sea spray, rainwater and waves. These are perils for which none of the parties can be blamed.60 Where the cargo has been stowed on deck with authorisation,61 the shipper bears the risk for these types of damages.62 It is another matter that the carrier has naturally to fulfil his duty to care for the cargo and provide a cargoworthy vessel, for he will still be liable for any loss caused by his negligence pursuant to 13:25 (275). As a matter of fact, Krüger presumes that the standard of care may even increase for deck cargo in comparison to cargo stowed in the hold because of the additional risks that such cargo is exposed to.63 The carrier may, for instance, have to tend the lashings more thoroughly for cargo carried on deck.
Certain types of damages or losses, such as damage caused by sea spray or moisture, must generally be presumed not to involve the carrier’s negligence; at least when the goods are packed in enclosed containers, there seems not to be much the carrier could possibly do to diminish the risk for such damage.64 Cargo may in the end only be stowed on deck with authorisation because it is recognised that it will unavoidably be exposed to special risks involved in the stowage on deck, arising without either party’s fault. By accepting deck stowage the shipper accepts also these additional risks.65
Yet other types of damages or losses are of such character that they must be presumed to raise the question whether the damage or loss could not have been reasonably prevented by the carrier. In particular damage or loss caused by physical force of various kinds (as opposed to damage caused by sun, moisture or the like) ought to be subject to such considerations, with the effect that it will de facto be more difficult for the carrier to exculpate himself, although the degree of proof in theory remains the same.
“Perils of the sea” ought to be a common defence for the types of damages of the latter kind. The definition of “perils of the sea” in Nordic law is characterised by the absence of negligence.66 This means that the carrier has the burden of proof not only for showing that the direct cause of damage was not his negligence but also for establishing that the cause was not triggered or contributed to by his negligence. If, for example, a container is washed overboard, the carrier in a particular case may have to prove in order to exculpate himself under 13:25 (275) that the loss was a result of the container lashings giving out, that the cargo was sufficiently secured but that the sea was so exceptionally rough that the lashing nevertheless gave out.67 It is noted that, in practice, the court seems quite willing to accept “perils of the sea” as the cause of the loss, once the securing of the cargo is proven to have been proper.68
“Perils of the sea” in more general terms describes elemental forces of the sea of a certain degree of graveness and unforeseeability. Thus, not all perils, dangers and accident at sea qualify as perils of the sea in the meaning used here. Brækhus characterise perils of the sea as events of force-majeure nature in the widest meaning of the term.69 The requirement of unforeseeability means that the carrier has only fulfilled the standard of care where he was unaware of the upcoming conditions and had no reason to be aware of them. Predictable weather thus – no matter how severe – will never be considered a peril of the sea under Nordic law.70 This necessarily means that Nordic law will under certain conditions expect the carrier not to set out.71
In ND 1996.164 “Anthony Rainbow”,72 timber stowed on deck was lost as the chains securing the timber burst. The Danish Supreme Court accepted the presumption made by an expert witness based, among other things, on the logbook data that cause of the loss was the ramming of a so-called freak wave (Danish “forkert sø”), a phenomenon which can neither be foreseen nor protected against. The vessel was described to have first made a powerful heeling to starboard against the wind – almost as if falling into a hole – only then to be slung back with even more power to port, with the consequence that the chains securing the timber burst. The fact that unsecured timber remained laying on the deck supported the presumption that the vessel had encountered only one such big wave. As the carrier had proven also that the cargo had been sufficiently stowed, the Danish Supreme Court concluded that the carrier had proven that the loss did not involve negligence on his part.73
184.108.40.206 The Carrier’s Duty to Examine Containers Packed by the Shipper
Although the issue of the carrier’s duty to examine packing is of relevance for containerised cargo in general and not only for units carried on deck, faulty packing, as seen in Chap. 2, is a common cause of damage and loss of containers stowed on deck, which may also put the cargo of other owners and ultimately the vessel’s safety at stake. Conversely, it ought also to be a common carrier defence.
Pursuant to 13:12 (262) of the 1994 NMCs (read together with Art. III.2 of the Hague-Visby Rules), the carrier bears the ultimate responsibility for cargo having been properly and carefully stowed. The provision was drafted at a time when solely the carrier was in charge of all stowage operations. Today, an important part of the stowage is carried out by the shipper in FCL transports, where the containers are packed and sealed by the shipper prior to delivery for transport.74 Questions arise in respect of this practice as to what the carrier is required to do in order to fulfil his duty to stow under the Hague-Visby Rules.75 For obvious reasons it seems rather unimaginable that the carrier could be expected to inspect the inner packing of each container. A provision on this explicit matter has been introduced in the 1994 NMCs.
13:6 (256) Examination of package
The carrier shall to a reasonable degree, examine whether the goods are packed in such a way that it will neither be damaged nor cause damage to any person or property. If the goods have been delivered in a container or similar transport device, the carrier is not, however, obliged to investigate the latter internally unless there is reason to suspect that the transport device is stuffed in a faulty manner.
The carrier shall inform the sender of any deficiencies which he has noticed. He is not obliged to carry the goods if he cannot make them fit for transportation by reasonable means. 76
The introduction of 13:6 (263) must be seen against the background of a prior decision by the Swedish Supreme Court in the case NJA 1977 s. 49 “Tor Mercia”,77 where the carrier was assigned with what many held to be an unreasonably far-reaching duty to control the inner packaging. The background facts in that case were that cargo had become damaged as pallet boxes from a nearby semi-trailer collapsed on it. Although it was unclear which single or combined cause(s) had triggered the collapse, the Swedish Supreme Court established that the cause was deficient inner packing – either of the content in the pallet boxes or of the pallet boxes on the trailer. The carrier pleaded in his defence that the trailer arrived pre-packaged at the terminal and that he had therefore not been able to inspect the inner packing. The court stated that also in relation to FCL transports, the starting point must be that the carrier had a duty to ensure that the cargo is stowed in a satisfactory manner and that he could not be exempted from the duty to ensure that the inner packing of the units had been performed so that the cargo was fit for sea transportation. This, the court elucidated, included a duty to ensure that a proper method had been used to pack the cargo inside a unit, that the material used was of acceptable quality, that the safety devices were satisfactory and that the unit in other aspects fulfilled all safety requirements. Where there was reason to suspect insufficient packing and the insufficiency was not attended to by the shipper, the carrier had a duty to refuse the cargo. With regard to the present case, the court established that the carrier had experienced similar problems of faulty stowage in previous instances where the same discharger had been in charge of the packaging of semi-trailers. With this knowledge, the carrier should have undertaken a closer examination of the inner stowage of the trailer. The court concluded that although the carrier had not been obliged in the present case to undertake an examination of how the cargo was packed in the pallet boxes, he should have examined the inner packing of the pallet boxes on the trailer. As it could not be excluded that the carrier’s omission to do so had enabled or contributed to the damage, the carrier was held liable.
The general principle established in “Tor Mercia” was not viewed with welcome by the Nordic shipping and insurance market, which recognised that it would be nearly impossible to inspect the packing of every container and trailer.78 Also the legislator of the 1994 NMCs considered the general duty of examination laid down in “Tor Mercia” to be “very strict”. 13:6 (256), as stated above, was introduced with the aim of restricting the duty to undertake an internal examination of closed units to instances where there is reason to suspect faulty packing.79
Tiberg holds, however, that the legislator overinterpreted the 1977 judgment. The decision, he states, did not impose upon a carrier a duty to always examine the inner packaging. In “Tor Mercia”, the carrier had experienced similar problems with the discharger before, and for this reason had particular reason to check the inner packaging. 13:6 (256), Tiberg concludes, has not changed the state of the law and would not hinder the Swedish Supreme Court from rendering the same judgment all over again.80
No matter whether 13:6 (256) has changed the state of law or not, it has certainly clarified it. The carrier has no obligation to examine the packaging inside a closed unit, unless there is reason to suspect faulty stowage. Reason to suspect faulty stowage may, for example, be at hand where a container is externally damaged or, as in “Tor Mercia”, the carrier has had a previous bad experience with a certain shipper.81 Other indicators of a wrongly packed container may be leakage or that the unit is top-heavy.82 Honka, recognising that the courts have a certain discretion as to the carrier’s duty to examine the inner packing in the particular case, emphasises the importance of shipping realities and practical possibilities being taken into consideration in the decision.83
The carrier’s obligation to examine packing must be seen in the light of 13:5 (255) of the 1994 NMCs, imposing in the second sentence a duty on the shipper to deliver the cargo fit for carriage:
It shall be delivered in such a way and in such a condition that it can be conveniently and safely brought on board, stowed, carried and discharged.84
The general starting point, thus, is that the shipper shall deliver the cargo fit for carriage. This applies also to closed units.85 The shipper must not only adequately wrap or pack each individual piece of cargo in order to fulfil his duty but also ensure that the packaging of the goods in the unit is performed as to prevent the goods from shifting during the transport.86
The carrier will only be liable for damage caused by the cargo in a closed unit where he had reason to suspect faulty stowage but omitted undertaking a closer examination. Ultimately, however, the burden of proof for establishing that (or to which extent) the loss or damage was caused by the shipper’s failure to deliver the cargo fit (and that the carrier had no reason to suspect faulty packing) will be on the carrier under the general liability regime in 13:25 (275); and as stated under Chap. 2, it may be difficult in hindsight to establish the cause of a damage in relation to containerised cargo.
In ND 2001.9 “Götaland”,87 the carrier had failed to live up to his duty to examine the packing of rebar on a container platform under 13:6 (256). The court held that even if the carrier would have proven (which he had not) that deficiencies in the shipper’s securing of the cargo on the loading platform had caused the damage to the goods, the carrier would not have been able to escape liability, for he rightly should have discovered any such deficiencies at the mandatory external inspection of the cargo. The carrier was fully liable.
Although the case did not concern a closed unit, it shows the effect of the carrier’s failure to comply with 13:6 (256). The statement made by the court in obiter moreover, suggests that a carrier failing his duty to inspect the cargo pursuant to 13:6 (256) may be made solely liable vis-à-vis a shipper in breach of 13:5 (255), despite the general possibility to distribute the damage pursuant to 13:25 (275) paragraph 3.
The carrier’s duty to inspect the packing relates not only to his transport liability. The carrier has a duty also to ensure that the description of the goods in the transport document corresponds with the goods delivered, and he is precluded from invoking proof contrary to the description in a bill of lading vis-à-vis a third party holder in good faith pursuant to 13:49 (299) paragraph 3. The carrier, furthermore, will be unlimitedly liable for damage suffered by a third party holder in good faith pursuant to 13:50 (300) if he realised or should have realised that the description in the bill of lading was misleading.88 Under a sea waybill, the description in the bill constitutes prima facie evidence only, pursuant to 13:59 (309) paragraph 2. The 1994 NMCs contains no sanction for misleading statements in sea waybills similar to that under 13:50 (300), but it has been suggested that this culpa rule is a general legal principle (Swedish “allmän rättsgrundsats”) in Nordic law and thus can be invoked also by a holder of a sea waybill.89
The standard of care in relation to misleading statements is presumed essentially not to deviate from the standard of care in relation to the transport liability under 13:6 (256).90
A similar complex of problems as that given account of above arises in connection with dangerous goods and goods requiring special care. A carrier, who is not informed of the content of a closed container will obviously be unable to meet any special needs beyond what can be generally expected. The shipper has a corresponding duty to inform the carrier of the goods’ dangerous or otherwise special character pursuant to 13:7 (257) and 13:8 (258).91
220.127.116.11 Two Carrier Liability Reliefs
Based on the Hague-Visby Rules, the carrier under the 1994 NMCs enjoys two liability reliefs, one by which he can escape liability for negligence in relation to error in navigation and fire and one by which he can limit liability.
18.104.22.168.1 Exclusion of Liability: Damage Caused by Error in Navigation or Fire
As seen in Chap. 4, the Nordic countries did not officially, but nevertheless essentially adopt the Hamburg Rules’ liability regime into the 1994 NMCs. Since the Nordic countries are de facto bound by the Hague-Visby Rules, however, the exclusions of liability for error in navigation and fire based on Art. IV.2(a) and (b) of the Hague-Visby Rules could not be abolished under the 1994 NMCs in line with the Hamburg Rules.92 In effect, the general liability system under the 1994 NMCs are more beneficial to the carrier compared with a system purely based on the Hamburg Rules’ liability regime.93 Moreover, one must conclude that in the absence of a limitation of the application of 13:26 (276) to the mandatory scope of the Hague-Visby Rules, the liability exceptions for error in navigation and fire have now in effect been made available to the carrier under any contract of carriage (whether governed by a bill of lading or not) and extended to comprise damage occurring also during the terminal periods and to deck cargo.
13:26 (276) Liability for loss or damage due to fault in navigation or fire
The carrier is not liable if he proves that the loss or damage is caused by
1. fault or neglect of the master, any member of the crew, pilot or other person performing work in the ship’s service and committed in the navigation or management of the vessel, or
2. fire not caused by his personal fault or neglect.
The carrier is, however, liable for loss arising out of his failure or the failure of any person he is responsible for to exercise due care in making the ship seaworthy before the beginning of the voyage. In order to relieve himself from liability, the carrier must prove that such care has been exercised. 94
Thus, in the cases of error in navigation and fire, the carrier is liable only where the negligence can be attributed to him personally or the senior management personnel.95 The shipper’s only recourse is to show that the error in navigation or the fire was caused by initial unseaworthiness. Initial unseaworthiness is a conditioned form of the objective unseaworthiness described in 13:12 (262) paragraph 2.96 If the shipper successfully proves that (1) unseaworthiness (2) existing at the beginning of the journey (3) caused the damage or loss, the burden of proof shifts to the carrier who has to show that he exercised due diligence in making the ship seaworthy.97
The line between an error in navigation (an error committed in the navigation or management of the vessel) and a commercial error (an error committed in the management of the cargo) is sometimes hard to draw. The difference, however, is crucial for the liability issue, since whereas an error in navigation allows the carrier to take avail of 13:26 (276), a commercial fault has the result that the carrier cannot escape liability for culpa.98 Improper stowage in most cases will be deemed a commercial fault, as the stowage generally relates to the cargo. Sometimes, however, proper stowage is in the interest of both the cargo and the vessel, such as in the case of the stowage of containers, which may if faultily stowed, shift and jeopardise the safety of the vessel. The delimitation in such a case will have to be based on whether the act (or omission) is primarily undertaken in the interest of the cargo or the vessel.99
In ND 1961.282 “Malevik”,100 bales of paper pulp were damaged due to the carrier having omitted to close two valves adjacent to the hold in which the bales were stowed. The Swedish Supreme Court held that the valves were a device serving in the interest of both cargo and vessel. However, whereas the main interest in relation to the cargo lay in the possibility to lead out water gathered in the gutter by opening the valves, the closing of the valves was mainly in the interest of the safety of the vessel (although it was recognised that the vessel’s safety was naturally also indirectly in the interest of the cargo). Error in navigation (read in management of the vessel) was established and the carrier not liable.
In FED 2000.3023,101 wind-power stations stowed on deck with authorisation were damaged in heavy seas. Some argument was made from both sides as to the effect of the vessel’s speed on the securing of the cargo. The court rejected an allegation made by the carrier that the matter was an error in navigation, because the issue related primarily to the cargo. The liability issue thus was to be settled under the general liability scheme in Section 275 of the 1994 Danish Maritime Code.
22.214.171.124.2 Limitation of Liability
The liability limitation in 13:30 (280) of the 1994 NMCs involves commercial certainty and foreseeability, which is important not least from an insurance perspective.105 The limitation means in practice that the cargo interest and his insurer carry a substantial part of the damage.106 Both carrier and shipper, however, benefit from such a risk allocation since without it the carrier would be exposed to higher risks, resulting in turn in higher freight rates.107
13:30–33 (280–283) of the 1994 NMCs are based on Art. IV.5 of the Hague-Visby Rules. The higher limitation in the Hamburg Rules could not be adopted, despite the general adaptation to the Hamburg Rules, as this would violate the express provision in Art. IV.5 of the Hague-Visby Rules.108 The parties are however entitled to agree on a higher liability limitation.109 This option however has been held to be of little practical importance as the shipper generally profits from taking out additional insurance instead of paying the higher freight that a raised liability limitation is likely to involve.110
Pursuant to 13:33 (283) the carrier is deprived of the right of limitation if the shipper proves that the carrier personally caused the loss or damage intentionally or by gross negligence and with knowledge that such damage would probably occur. However, not only is the circle of persons who can be attributed to the “carrier personally” narrow,111 the shipper also has the burden of proof, and to show that subjective qualified culpa on part of the carrier caused the damage ought generally to be difficult. In ND 1992.337 “Ni-Nu”,112 the Court of Appeal stated that (in comparison with the prerequisites of “regular” gross negligence) the additional requirements set up in the provision were intended to deprive the carrier of the right of limitation only in cases so exceptional that the culpa bordered on dolus.
It is to be noticed, finally, that Chapter 9 of the 1994 NMCs provides a maximum total limitation (Swedish “globalbegränsning”) for the carrier’s liability for damages arising in connection with the operation of the vessel. The regulation is based on the 1976 Convention on Limitation of Liability for Maritime Claims as amended by the 1996 Protocol. The maximum limitation under the Convention depends on the vessel’s carrying capacity and, it must be presumed, is unlikely to be reached in an accident involving nothing more than damage to or loss of cargo.
126.96.36.199.2.1 Package or Unit?
Pursuant to 13:30 (280), the liability shall be limited to whichever the highest of 667 SDRs113 per package or other unit, or 2 SDRs per kilogram.114 The 1994 NMCs do not provide a closer definition of the terms package or unit but leave the issue to be resolved by case law.115 Certain issues, which have not yet come before court, thus remain uncertain.
“Package”, quite naturally, is held to signify goods that are packed in one way or another. It has been held that the Swedish word “kolli” and the Danish and Norwegian word “kollo” (similar to the French “colis”) may include also goods shipped in wrapping or containers without being packages in a narrow use of the word.116
The meaning of “unit” is more unclear. Although not explicitly stated, the term is to be understood as secondary to package.117 It was introduced subsequent to “package” during the drafting of the 1924 Hague Rules with the aim of extending the limitation of liability to goods not shipped in packages.118 In Nordic law, a unit – like a package – is held to refer to a physically delimited thing, such as a car119 or a barrel of vaseline.120 This is consistent with the wording of 13:30 (280) whereby the limitation applies to “each package or other unit of the goods” (emphasis added). It also corresponds with the law in the majority of countries,121 including England.122 Not any unit within the word’s linguistic meaning, however, may be a unit for the purpose of 13:30 (280). The limitation is generally held to relate to each shipping unit, i.e. to the practical unit in which the cargo is shipped.123
In jurisdictions where, as in the Nordic countries, a unit is held to refer to a physically delimited unit, the classification of cargo into packages or units ought mainly to be of theoretical interest, as for the purpose of liability limitation, the limitation will be multiplied with the same number of units, whether titled packages or units.124 The co-existence of “unit” and the – in the light of the definition of “unit” – superfluous term “package” seemingly originates in the order in which the terms were introduced into the Hague Rules as described above.
188.8.131.52.2.2 The Relevant Package or Unit in the Case of Consolidated Goods
Where cargo is bundled up or packed in one way or another, the individual pieces of cargo as well as the package or bundle may be “packages” or “units” as the terms have been defined above. The question here is by which sub-division of packages or units the limitation shall be multiplied; or in other words, which is the relevant package or unit under the contract for the purpose of liability limitation?
With the exception of containerised cargo that shall be dealt with separately below, the law contains no guidance on how to identify the relevant package or unit. Nordic case law is scant, but in ND 1970.281 “Lyngenfjord”,125 a decision delivered by the Norwegian Supreme Court (however, decided under Canadian law) the parties’ agreement as to how the units were to be shipped was given decisive weight.126 The background facts in that case were that copper coils packed in bundles of seven had gone overboard. The carriage was governed by the 1936 Canadian Water Carriage of Goods Act, implementing the Hague Rules.127 The shipper claimed that the copper coils were the relevant units, referring to a clause in the bill of lading, stating that the liability was to be limited to 500 US dollars “per article or piece of merchandise”. The carrier objected and held that the bundles were the relevant units. The court held with some hesitation that the object of the clause was not to denote the relevant unit in the case of more than one alternative as claimed by the shipper, but to enable a calculation of the liability limitation based on the number of shipping units also in carriages to and from the US, as under US law, “unit” in Art. IV.5 is held to refer to a freight unit (as opposed to a shipping unit as in most other countries). Similar clauses were for this reason commonly included in the general terms of bills of lading. This interpretation was supported also by a boilerplate clause, stating that nothing in the bill of lading was to be understood to restrict the carrier’s right under the applicable law. When the clause was given this meaning (and thus could be disregarded for the purpose of the construction in question), it was clear that the bundles were intended to be the relevant shipping units; The parties had agreed that the coils were to be shipped in bundles and inserted the number of bundles under the heading “number of packages”, a fact that at the same time indicated that the parties considered a bundle to be equal to a “package”.128
Thus, under Nordic law the relevant package or unit is likely to be established based on the parties’ intention. This should be compared with English law, where as a principle of law, the smaller unit will always be the relevant unit.129 It may be observed in this regard that other European countries, however, such as Germany130 and France,131 have proven willing to take into consideration the parties’ description of the goods in the bill of lading.
As for cargo consolidated in containers or similar articles of transport, 13:31 (281) lays down the specific rule that the number of packages and units stated in the transport document is the number by which to multiply the 667 SDRs.132 A reservation by the carrier that the container is “said to contain” a particular number of packages or units is without effect in this regard.133 Where the transport document does not contain an enumeration, the transport unit itself will be the relevant package, resulting in a maximum of 667 SDRs for the whole container and its load. This must be compared with the situation where the container load is stated in the transport document to consist of, say, 100 packages, in which case the total liability cap would be increased by a factor of 100. The difference is significant. The alternative kilo limitation rule,134 however, counterbalances the inequality to a certain extent, as the weight limitation will in effect be applied whenever a lost package or unit of cargo weighs more than 333 kg (as of 2011).135 This should be compared with the dead weight of a standard 20 ft container of just over 2,000 kg.
One should further be aware of that an enumeration in the transport document under 13:31 (281), unlike under English law,136 is not conclusive evidence vis-à-vis the cargo interest. Indeed, it may not be easily done, but if the cargo interest shows that the number of units, in, a container for instance, was higher than stated in the transport document, that higher number will be taken as the basis for the liability limitation.137
This was the case in ND 1996.196,138 where a container filled with personal property belonging to the shipper had gone overboard on the Irish Sea. The shipper had packed the container put at his disposal by the carrier. As the carrier picked up the container, a waybill was issued, in which the container’s estimated weight was stated to be 6,000 kg and the content described as “shippers own cargo”. The same information was included in the sea waybill issued upon loading of the container on the carrier’s vessel some days later. Between these two points in time, the shipper had compiled and delivered to the carrier a list specifying the contents in the container upon the carrier’s request. The carrier had given the shipper his permission to hand over the list after the pick-up of the container from the shipper. The list specified the content as 284 boxes (Danish “kasser”). In the subsequent cargo claim, the shipper claimed that the liability limitation should be calculated based on the 284 boxes mentioned in the list. The carrier objected that the relevant package was the container (effectively resulting in that the liability would be based on the alternative kilo limitation), arguing that the list had been issued for reasons of insurance only and should not be incorporated into the contract. The court held, however, based on how the waybills were silent as to the number of packages and how the weight had been discretionarily estimated, that the carrier had left the issue as to the number of packages open. Upon the subsequent receipt of the packing list, the carrier should have objected if he disagreed with the enumerated number of packages. Having omitted to do so, the enumeration in the packing list formed part of the contract and the liability limitation was thus to be multiplied by 284.139
6.1.2 Liability for Unauthorised Deck Cargo
13:34 (284) paragraph 1 imposes a strict but limited liability on the carrier for cargo carried on deck contrary to 13:13 (263), i.e. without authorisation. The carrier loses the right to exculpate himself but can still limit liability as given account of above. The provision is based on Art 9.3 of the Hamburg Rules.140 Although 13:34 (284) does not, unlike Art. 9.3, explicitly state that the carrier is also strictly liable against a third party who has acquired the bill of lading in good faith if the agreement on deck cargo is not evidenced in the bill of lading, this follows from a careful reading of 13:34 (284), as the goods are then also “carried on deck in breach of 13:13 (263)” and namely in breach of 13:13 (263) paragraph 2.141
184.108.40.206 “Exclusively” a Consequence of the Deck Carriage
The liability is settled under 13:34 (284) paragraph 2 only if the damage has been exclusively 142 (emphasis added) the consequence of the carriage on deck. This means that if the damage may just as well have occurred if the cargo had been carried under deck, the carrier’s liability shall not be settled in accordance with the provision (on strict liability) but in accordance with the general liability regime.143 For example, if a vessel runs aground and sinks, it does not matter where the goods were stowed. In such a case, the carrier may exculpate himself in accordance with the general liability provisions in 13:25–28 (263–268). If on the other hand, cargo stowed on deck is washed overboard, strict liability is inflicted on the carrier since the cargo would not have been lost should it have been correctly stowed in the hold.144
Tiberg questions the meaning of “exclusively” in the legal text. If goods carried on deck without authorisation are washed overboard as a consequence of an error in navigation, have the goods then not been lost only partly as a consequence of the deck carriage and, as for the rest, as a consequence of the error in navigation? If so, the general liability regime in 13:25–28 (258–258) would apply with the consequence that the liability would no longer be strict.145
Falkanger et al. consider a loss so caused to fall under 13:34 (284) paragraph 1: “For example, if a container placed on deck is washed overboard, the carrier will not be able to avoid liability by showing that neither he nor his servants were culpable with respect to the lashing of the container. Nor can he avoid liability by showing that the damage resulted from a navigational error, unless the error would also have affected the container if it had been placed under deck.”146
It is contended that this latter view is the correct one. “Exclusively the consequence of the carriage on deck”, as given account of above is used to restrict the applicability of the strict liability under 13:34 (284) to such damage that would not have occurred should the cargo have been stowed in the hold.147 One must hold contrary to Tiberg’s suggestion that the stowage of the cargo on deck can never in itself be the actual cause; it can at a maximum be the indirect cause inasmuch as the cargo would not have been damaged, should it have been stowed in the hold, and this is what the provision aims at. The scenario put forward by Tiberg thus, must be a clear case of damage being “exclusively the consequence of the carriage on deck”. The cargo would not, as a comparison, be covered by the provision where the whole vessel with cargo was lost as a consequence of an error in navigation, because then the loss would have occurred in spite of the place of stowage.148
It is another matter that the phraseology might suggest that a damage or loss partly caused by the stowage on deck (in the meaning described above and not that of Tiberg) and partly caused by another cause, such as faulty packing of the shipper or inherent vice, would wholly be dealt with under the general liability regime in 13:25 (275) on the basis that 13:34 (284) requires exclusive causation. The optional (and according to the author preferable) approach, however, is that the damage in such a case will be subject to the strict liability in 13:34 (284) to the extent that the damage or loss was exclusively caused by the stowage on deck.149 In practice, however, the distinction ought to make a small difference for the actual liability.150
The case ND 1954:183 “Brødrene”,151 given account of already in relation to the Earlier Nordic Maritime Codes, sheds light on the distinction between damage caused exclusively or solely by the special perils involved in deck stowage (although the case predates the Hamburg and Rotterdam Rules and any such formulations) and damage that would have occurred also if the goods had been stowed under deck. The case, it may be remembered, involved sheet metal stowed on deck without authorisation. The cargo arrived at its destination severely damaged by rust. The carrier presented evidence that also the part of the sheet metal stowed under deck had suffered similar damage. The court, however, disregarded this fact on the grounds that it could not be excluded that that damage was due to different causes than that of the damage to the cargo on deck. It held that the cause of the damage to the cargo on deck was temperature fluctuations and that the loss, accordingly, was exclusively caused by the stowage on deck.
Again, the case has been held to illustrate that the carrier faces a high evidentiary threshold in proving that an incidence of damage is not exclusively linked to the stowage on deck.152
220.127.116.11 Unauthorised Deck Stowage: A Fundamental Breach of Contract?
Unauthorised deck carriage may allow the shipper to terminate the contract of carriage. Pursuant to 13:14 (264) the shipper may terminate the contract because of delay or another fundamental breach. This comes across as an expansion of the shipper’s right to terminate the contract under the Earlier Nordic Maritime Codes,153 under which delay was the only breach justifying termination. As a matter of fact, however, cancellation of the contract of carriage for reasons other than delay – seaworthiness being the standard textbook example – was permitted already before 1994 as a general principle of contract law.154
Unauthorised deck stowage is explicitly given as an example in the travaux préparatoires of the 1994 NMCs of a fundamental breach other than delay that may now entitle the carrier to cancel the contract under the new formulation.155
It is to be observed, however, that since termination presupposes that the parties are able to restore their contractual performances, the possibility of terminating a contract of carriage is limited as soon as the goods have been loaded. In addition, the shipper is barred under the second sentence of 13:14 (264) paragraph 1 from terminating the contract after delivery where the unloading of the goods would involve fundamental loss or inconvenience to any other shipper. Termination may, however, still be an effective remedy where the parties have contracted for more than one voyage so that future carriages can be cancelled.156
A novelty compared with the Earlier Nordic Maritime Codes is that the prior requirement for knowledge (Swedish “insikt”) on part of the carrier that the breach would frustrate the commercial purpose of the contract has now been abolished. The legislator anticipated, however, that the effect of the amendment would have limited impact, due to how the requirement in English law on frustration of the commercial adventure 157 now promotes an international standard.158
Pursuant to 13:14 (264) paragraph 2, the shipper must notify the carrier of the termination within a reasonable time after he has become aware of the contractual breach or his right to terminate the contract is lost.
The consequences of a termination are not defined in the 1994 NMCs and only briefly considered in the travaux préparatoires, where it is stated that the shipper may, depending on the circumstances, be entitled to damages under the liability regime in Chapter 13 of the 1994 NMCs or the general principles of contract law.159 The discharge of the contract, however, ought not to affect the degree of liability.160 This means that the carrier will not lose the right to limit liability – irrespective of whether the unauthorised deck stowage in a particular case is considered a fundamental breach or not – unless the cargo was also stowed on deck contrary to an express agreement on under-deck stowage.161
As the contract is terminated ex nunc, the shipper will have to pay distance freight if the contract is terminated after a part of the transport has already been carried out.162
6.1.3 Liability for Cargo Carried on Deck Contrary to an Express Agreement
A carrier stowing cargo on deck contrary to an express agreement on under-deck carriage will not only be held strictly liable in accordance with what has been said above but will additionally lose the right to limit his liability pursuant to 13:34 (284) paragraph 2. The provision is based on Art 9:4 of the Hamburg Rules.163 Damage resulting from deck stowage contrary to an express agreement is in other words treated per se as damage caused intentionally or recklessly and with knowledge that damage would probably result.164
Because of the identification problems and swift handling routines involved in container trade,165 it cannot be precluded that a container expressly agreed to be stowed under deck is by mistake placed on deck.166 The legislator in the travaux préparatoires for this reason underlined the importance of making in the transport document a note of such an agreement.167
6.2 The English (Judicial) Approach: Freedom of Contract with Certain Restrictions
As already stated, a contract on deck carriage can be excluded from the mandatory scope of application of the 1971 COGSA in accordance with Art. I(c) of the Hague-Visby Rules. Indeed, the Hague or the Hague-Visby Rules are often incorporated by way of contract also under common law, but the common law regime is dispositive and the question of whether a particular clause forms part of the contract consequently a pure matter of construction. Thus, unlike under a contract covered by the mandatory scope of application of the 1971 COGSA, the parties in such a situation are free to amend or deviate from the Rules as they see fit.
It has been argued that the doctrine of deviation forms an exception to the freedom of contract under common law to the extent that in case of deviation, the shipper may repudiate the contract ab initio, with the result that the common law “default regime”, imposing a strict liability on the carrier, will apply. It has been argued also that unauthorised deck stowage is a “quasi-deviation” and that the doctrine on this basis may also prevent a carrier from relying on the contract in the case of unauthorised deck stowage. This argument, however, seems unlikely to be advocated or accepted by the English judiciary today.
The 1971 COGSA, unlike the Hamburg and Rotterdam Rules and certain modern national legislation, does not contain any special liability regime for deck cargo. The issue therefore has to be settled under the Act’s general liability regime.168
The following study on the carrier’s liability for deck cargo under English law is based on a division of liability under common law and under the 1971 COGSA. This requires initially a review on the situations in which a contract of carriage of deck cargo will be governed by the 1971 COGSA. The scope of application of the common law regime is negatively defined by the Act’s scope of application.
6.2.1 Deck Cargo Falling Under the Mandatory Scope of the 1971 COGSA
It is commonly said that deck cargo is excluded from the scope of application of the Hague-Visby Rules and, thus, the 1971 COGSA incorporating the Rules into English law. This is a statement that needs qualification. Deck cargo is excluded from the Rules’ application only if the requirements in Art. I(c) are met. If not, the Rules apply also to a contract of carriage of deck cargo. The parties may also make a contract of carriage subject to the mandatory scope of the 1971 COGSA by undertaking certain specific requirements of Section 1(6) of the Act. Where, in contrast, the parties incorporate the Rules or a part thereof under common law, the Rules do not apply with mandatory force.
18.104.22.168 First Exception: Application Through Art. I(c)
Pursuant to Art. I(c) of the Rules, deck cargo is excluded from the scope of application provided that it is stated as being carried on deck by the contract of carriage169 and is so carried. Here, “stated as being carried on deck” has to be read literally. A liberty clause in this regard is merely a form of consent, which although authorising deck stowage under English law, will never be a statement pursuant to Art. I(c),170 presumably also not where the bill of lading contains the additional announcement that the cargo by virtue of the liberty clause itself shall be considered as being stated as stowed on deck without any specific statement to this effect on the face of the bill of lading.171
Although not apparent from the wording of Art. I(c), a statement on deck carriage has to reflect the actual agreement made with the shipper. A carrier stowing cargo on deck without the shipper’s consent (and without support in one of the two other authorisation grounds custom or law)172 is in breach of the implied duty to stow on deck and cannot invoke Art. I(c) to exclude the application of the Hague-Visby Rules.173 The burden of proof to show that the statement in the bill of lading is not in conformity with the agreement, however, is on the shipper.174
Where the cargo is stated as being carried on deck in accordance with the parties’ agreement, custom or law, but is in the end stowed in the hold, an a contrario reading of Art. I(c) results in the contract of carriage being subject to the Rules. The state of law is unclear in relation to cargo which is initially stowed on deck but, as the journey proceeds, repositioned to the holds.175
The requirement of a statement is presumably not fulfilled if the bill does not sufficiently identify which part of the cargo load is to be stowed on deck, because then the shipper is unable to evaluate the risks.176
22.214.171.124 Second Exception: Application Through Incorporation
It should be reminded of in this aspect that the parties are additionally given the choice under Section 1(6) of the 1971 COGSA to incorporate the Hague-Visby Rules with the force of law also into a contract of carriage which would not otherwise be covered by the mandatory scope of application of the 1971 COGSA – e.g. because the parties have excluded deck cargo under Art. I(c) or because the contract is not covered by a bill of lading – by fulfilling certain formal requirements.177
6.2.2 Liability Under Common Law
Common law provides on the one hand certain principles of interpretation and on the other hand a default regime, applicable where the contractual terms are vestigial or where the contract lacks express or implied terms. Seen against how the majority of carriages are performed today under standard form transport documents, the default regime ought rarely apply in practice. It is nevertheless of importance for the understanding of the principles of interpretation, developed by the courts as a mean to restrict far-reaching liability exclusion clauses, by which carriers traditionally tried to escape the strict default regime.178
Not even the most far-reaching exclusion clause, however, can be set aside by the common law principles of interpretation if it is drafted in sufficiently clear wording. Despite some uncertainty as to the existence of the doctrine of deviation as a rule of law preventing the carrier from escaping liability in case of deviation, including possibly also cases of unauthorised deck stowage, the prevailing view now is that the doctrine is merely a principle of interpretation.
126.96.36.199 The Default Regime
Under the default regime, a (common) carrier is strictly liable179 for loss of or damage to the goods, unless he proves that the loss or damage was caused by an “act of the Queen’s enemies”, an “act of God” or by the “inherent vice of the goods”.180
The rationale behind the strict liability was explained by Sir John Holt C.J. in “Coggs v Bernard”181 in 1703: “And this is a political establishment, contrived by the policy of the law, for the safety of all persons, the necessity of whose affairs oblige them to trust these sorts of persons, that they may be safe in their ways of dealing; for else these carriers may have an opportunity of undoing all persons that had any dealings with them, by combining with thieves, etc., and yet doing it in such a clandestine manner as would not be possible to be discovered.”182
The three exceptions from strict liability are held to represent exclusively the dangers of navigation, for which it was reasonable to excuse the carrier in the past. None of the exceptions apply where the carrier’s negligence has been involved.183
Even if the carrier can prove that a loss or damage was caused by an event qualifying as an exception, he remains liable if the vessel was not in a seaworthy condition184 or if he has undertaken a deviation. Notwithstanding unseaworthiness or deviation, however, the carrier can rely on the exceptions if he proves that the loss or damage would have occurred in either case.185
It should be noted that it remains unclear whether the strict liability regime given account of above applies only to a common carrier186 or to any carrier transporting goods for compensation. If strict liability applies only in relation to a common carrier, any other carrier would be liable as a bailee and subject to a presumed fault liability only.187 This seems to be the prevailing opinion today.188
188.8.131.52 Principles of Interpretation
Three fundamental undertakings of the carrier can be distinguished in the default regime given account of above: the duty to care for the cargo, the duty to provide a seaworthy vessel and the duty not to deviate. These have also given rise to three corresponding principles of interpretation implied in all contracts of carriage of goods by sea.189 A fourth fundamental undertaking and general principle of interpretation is the duty to proceed with reasonable despatch. This duty, however, does not advance the matter of this study in any particular way and thus shall not be further dealt with here.190 Whereas the first two duties are commonly referred to as the carrier’s warehousing duties, as they relate to the usage of the ship for storage purposes, the two latter duties relate to the vessel as a moving entity and for this reason can be referred to as voyage duties.191
The principles of interpretation were developed by the courts a counter reaction to the long lists of liability exceptions that carriers started to include in their bills of lading around the end of the eighteenth century, undermining in effect the strict liability under the default regime.192
The principles of interpretation incorporate the above-mentioned duties as implied terms in every contract of carriage, with the effect that a liability limitation or exclusion clause will not affect them,193 unless the carrier has explicitly limited or excluded liability for the duty in question.194 The duty not to deviate has, in addition, given rise to a rule of law – the doctrine of deviation – whose continued existence is however today disputed.195
184.108.40.206.1 The Duty to Care for the Cargo
The duty to care as a principle of interpretation prevents the carrier from relying on a contractually excluded peril, where the peril or its consequences could have been avoided by reasonable care. Lord McNaughten in “Xantho” expressed the matter as such: “[E]ven in cases within the very terms of the exception in the bill of lading, the shipowner is not protected if any default or negligence on his part has caused or contributed to the loss.”196
A breach of the implied duty generally entitles the shipper to recover damages. As stated above, however, the duty is merely a principle of interpretation and may as such be set aside by a sufficiently clearly drafted clause.197
The burden of proof for the absence of negligence is on the carrier once the shipper has proved that the loss occurred while the cargo was in the carrier’s care.198 However, “if the loss apparently falls within the exception, the burden of shewing that the shipowner is not entitled to the benefit of the exception, on the ground of negligence, is upon the person so contending”.199 This is presumed to be the allocation of proof also under the 1971 COGSA.200
220.127.116.11.2 The Duty to Provide a Seaworthy Vessel
The duty to provide a seaworthy vessel is an innominate or intermediate term, meaning that the breach of it entitles the shipper to discharge the contract under certain conditions 201; The breach must be so serious that it goes to the roots of the contract.202 The meaning of seaworthiness is further developed below in relation to the 1971 COGSA.203 It must be observed, however, that the duty to provide a seaworthy vessel under common law differs from the duty under the 1971 COGSA in two aspects.
First, the issue of seaworthiness under common law needs to be put in relation to the various stages of the voyage (this is the doctrine of stages). While upon loading the vessel needs to be fit to receive the cargo in question and to withstand the type of perils which the vessel may encounter in port, once setting out the vessel needs to be fit to encounter the perils that she may encounter at the first stage there. If, for instance, at a certain stage of the voyage the vessel enters into an ice-covered area, it is only upon commencement of this stage that she need be fit to break through the ice.204 This must be put in contrast to Art. III.1 of the Hague-Visby Rules as implemented by the 1971 COGSA, where the vessel’s seaworthiness to undertake the voyage in question is evaluated “before and at the beginning of the voyage”.205
Second, whereas under the 1971 COGSA, the carrier need only act with due diligence in making the vessel seaworthy, the duty under common law is absolute. The vessel, in other words, needs de facto to be seaworthy in order for the carrier to escape liability.206 Absolute must not be confused in this aspect with mandatory, however, because as with any other of the implied common law duties, the implied duty to provide a seaworthy vessel can be restricted or excluded by a clearly drafted clause.207
18.104.22.168.3 The Duty Not to Deviate
In the absence of terms to the contrary, the carrier is under a duty to proceed by the usual and customary route (the contract route). It is common that contracts of carriage contain liberty clauses, aiming at allowing the carrier to deviate from the agreed route. Although such a clause may justify a certain departure, it will always, no matter how widely phrased, be construed under the duty not to deviate (as a principle of interpretation) so as to be consistent with the contract route.208
The duty not to deviate has in addition given rise to a rule of law – the doctrine of deviation.209 This rule enables a shipper to treat a deviation, however slight the deviation, as going to the roots of the contract and declare himself as no longer bound by any of its terms.210 The contract, in other words, will be repudiated ab initio, with the consequence that the carrier will not be able to rely on any contractual defences, not even for a damage or loss occurring before the actual deviation.211 It must be noticed, however, that the doctrine of deviation only applies where the carrier deliberately departs from the contract route.212
As in case of repudiation, there will be no contractual terms, the liability will be settled in accordance with the common law default regime, given account of above, under which the carrier will become subject to the strict liability of a common carrier with the alteration that in the case of deviation the carrier will be deprived of the right to rely on the three excepted perils, unless he can prove that the damage would have occurred in spite of the deviation.213
The doctrine of deviation has its roots in early maritime insurance law, under which a deviation would render the insurance cover void. The carrier for this reason was assigned the unlimited liability of an insurer.214 As stated in “Lavabre v Wilson”215 in 1779: “The true objection to a deviation is not the increase of the risk. If that were so, it would only be necessary to give an additional premium. It is, that the party contracting has voluntarily substituted another voyage for that which has been insured.”216 The insurance aspect has lost much of its importance today, as the shipper’s ICC policy essentially covers the consequences of deviation and the carrier can protect himself by purchasing an additional SOL-cover for unauthorised deviation.217
As shall be developed in the following sections, it is unclear today whether the doctrine of deviation remains a rule of law in modern trade or has turned into a pure principle of interpretation. To the extent that the doctrine exists as a rule of law, it cannot be excluded that it extends to yet a number of contractual breaches sometimes referred to as “quasi-deviations”. These are the duty to proceed with reasonable despatch, the duty to prosecute the voyage in the same vessel and the duty to carry the cargo under deck.218
22.214.171.124 The Doctrine of Deviation: From Rule of Law to Principle of Interpretation?
The question whether the doctrine of deviation at all still exists as a rule of law and, if so, whether it can be extended to cases of unauthorised deck stowage as a “quasi-deviation” has become subject to discussion in particular in connection with two decisions of more recent date.
126.96.36.199.1 The Doctrine of Fundamental Breach
Before the introduction of the English 1977 Unfair Contract Terms Act (UCTA), courts struggled with unfair contractual terms, especially in relation to consumer contracts, which were often concluded on the seller’s general terms of business.219 Far-reaching exclusion clauses could only be read down by way of interpretation so far as the meaning was unclear. Where it was not, courts lacked means to restrict the contract.220
Recourse was found in the adoption of an extended version of the doctrine of deviation, referred to as the doctrine of fundamental breach. The doctrine would entitle an injured party to repudiate the contract (no longer limited to contracts of carriage) whenever a fundamental term (no longer limited to the duty not to deviate) of the contract was breached, no matter how clear the wording.221 As under the doctrine of deviation, the repudiation would have retroactive effect. The contract’s only remaining function would be to enable the innocent party to claim damages.222
As over time the legal and commercial settings changed, it became difficult to justify the far-reaching effects of the doctrine of fundamental breach. The doctrine was accused of being rigid and unfair.223 It was ultimately ruled out as a rule of law through the cases “Suisse Atlantique”224 and “Photo Production”.225
Lord Wilberforce in “Photo Production” stated: “I have no second thoughts as to the main proposition that the question whether, and to what extent, an exclusion clause is to be applied to a fundamental breach, or a breach of a fundamental term, or indeed to any breach of contract, is a matter of construction of the contract.”226
The House of Lords emphasised that commercial parties of equal bargaining powers should be able to allocate the risk as they see fit and noted that the risk is usually most economically insured by the person for whom the loss will be directly sustained.227 In addition, the consumer interest for which the doctrine was originally created had become vindicated through the introduction of the 1977 UCTA.228
It can be concluded thus, that the doctrine of fundamental breach today remains merely as a rule of interpretation, assimilated into the rule of contra proferentem.229
188.8.131.52.2 Does Deviation Compose a Special Case?
The rejection of the doctrine of fundamental breach did not for two reasons include a rejection of the doctrine of deviation: First, “Suisse Atlantique”230 (apart from the special circumstances mentioned above)231 was decided some months before a practice direction giving notice that the House of Lords would no longer be bound by their own decisions. The decision, therefore, did not overrule the leading case “Hain”232 from 1936 on geographic deviation,233 where Lord Atkin stated that a geographic deviation, no matter how minor, entitles the innocent party to treat the contract as repudiated ab initio. Second, a reservation by Lord Wilberforce in “Photo Production”234 left room for doubt as to the applicability of the doctrine of fundamental breach in cases of deviation (from the contracted voyage or adventure): “It may be preferable that they should be considered as a body of authority sui generis with special rules derived from historical and commercial reasons.”235
Today, however, the opinion in the English academic literature is unanimous. The doctrine of geographic deviation, if determined by the House of Lords today, would (and should) be declared buried alongside the doctrine of fundamental breach.236
184.108.40.206.3 The Further Issue of Unauthorised Deck Carriage as a “Quasi-Deviation”
Seen against modern maritime insurance law, one could argue that there is today a stronger case to uphold the doctrine of deviation in the case of unauthorised deck stowage than in the case of a geographical deviation. Whereas the ICC policy extends to a geographical deviation of which the shipper had no knowledge,237 it does not extend to deck cargo which has not been designated as such, irrespective of the shipper’s good faith.238 At the same time, goods stowed on deck are more likely to be exposed to risks different than those contemplated than are goods which become subject to a geographical deviation.239 Ultimately, however, one cannot overlook the fact that the doctrine of deviation originates in geographical deviation and that it has never de facto been extended to unauthorised deck stowage under English law. Although it has been suggested,240 neither “Dixon”241 nor “Evans”242 supports such an extension, the former’s decision being rightly based on causation and the latter’s on principles of construction.243
Conversely, two decisions of more recent date before the Court of Appeal (concerning however the application of such a rule to contracts governed by the Hague Rules regime) indicate a general reluctance to accept the doctrine of deviation as a rule of law in general or to accept an extension of it to “quasi-deviations” in particular.
In “Antares”,244 the claimants argued that the shipowner had been in breach of the contract by stowing goods on deck and was therefore not entitled to rely on the liability limitation in Art. IV.5(a) of the 1971 COGSA. Lord Lloyd L.J. stated: “Whatever may be the position with regard to deviation cases strictly so called, (I would myself favour the view that they should now be assimilated into the ordinary law of contract), I can see no reason for regarding the unauthorised loading of deck cargo as a special case.”245
This view was reiterated in “Kapitan Petko Voivoda”,246 where the parties had incorporated the Hague Rules as applied in Turkey through a clause paramount. Referring to a statement originally made by Lord Macmillan in “Stag Line”,247 Lord Longmore emphasised the importance of construing the language of rules originating from an international convention on broad principles of general acceptation (as opposed to domestic precedents of antecedent date). He then concluded that the principle for which the deviation cases are authority was very far from being such a principle.248
The following statement made by Treitel et al. seems to sum up the general standpoint on the matter well: “the English doctrine of deviation is […] so difficult to justify that it seems unsatisfactory to suggest in the twenty-first century that it should actually be extended.”249
220.127.116.11.4 As a Principle of Interpretation
To the extent that the doctrine of deviation does not exist as a rule of law (whether not at all or only in cases of “quasi-deviations”), the matter of whether the carrier, who has undertaken a deviation, can invoke a certain liability exclusion or limitation clause is a pure matter of construction, as decided in “Suisse Atlantique”250 and “Photo Production”.251 The issue in other words turns on whether the clause upon its true construction extends also to – in the case of unauthorised deck carriage – the substituted mode of carriage.252 The doctrine of deviation as a principle of interpretation (assimilated into the principle of contra proferentem)253 requires such a clause to be construed against the carrier.254
18.104.22.168 The 1977 UCTA
The 1977 UCTA has been referred to above as a reason behind the abolishment of the doctrine of fundamental breach. As the title indicates, the Act restricts the application of certain unfair contract terms. Pursuant to Section 2(2) of the Act, a clause by which a party excludes liability for negligence is only valid if reasonable. The same is true for a contractual term by which a party excludes or limits liability through his standard terms or vis-à-vis a consumer, pursuant to Section 3. However, although the 1977 UCTA extends to nearly all forms of contracts, in respect of contracts of carriage (and a number of other maritime contracts) the Act is limited to contracts where the shipper is a consumer.255 Consequently, the Act’s relevance for most contracts of carriage will be quite limited.
6.2.3 Liability Under the 1971 COGSA
The 1971 COGSA contains no provision similar to that of 12:34 (284) of the 1994 NMCs, making the carrier strictly liable for damage which is the consequence of unauthorised deck stowage. However, also under the general fault based liability regime of Hague-Visby Rules, a carrier, who stows cargo on deck without authorisation will generally be held liable for such damage. Even though also several of the theoretically deviating rules between the two systems can be presumed in practice to not provide an essentially deviating result when applied to the same circumstances; an important exception is the carrier’s right under the 1971 COGSA to rely “in any event” on the liability limitation. With regard to deck stowage, this means that even a carrier stowing cargo contrary to an express agreement on under deck cargo will as a starting point be entitled to limit his liability.
22.214.171.124 The Hague-Visby Catalogue
The Hague-Visby catalogue in Art. IV.2 of the Hague-Visby Rules consists partly of the traditional common law exceptions “act of God”, “act of the Queen’s enemies” and “inherent vice” (respectively numbered (d), (e) and (m) in the catalogue) and partly of a number of certain additional exceptions, presumably selected among the extensive exclusion lists that carriers used to incorporate into their bills of lading under common law through the Hague Rules compromise. The choice of the particular exceptions in question have been questioned by Treitel et al, who describe the list as a “curious one” and point out that it is not clear why all the exceptions are there and what role they are meant to play in the general scheme.256
Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship.
(b) Fire, unless caused by the actual fault or privity of the carrier.
(c) Perils, dangers and accidents of the sea or other navigable waters.
(d) Act of God.
(e) Act of war.
(f) Act of public enemies.
(g) Arrest or restraint of princes, rulers or people, or seizure under legal process.
(h) Quarantine restrictions.
(i) Act or omission of the shipper or owner of the goods, his agent or representative.
(j) Strikes or lockouts or stoppage or restraint of labour from whatever cause, whether partial or general.
(k) Riots and civil commotions.
(l) Saving or attempting to save life or property at sea.
(m) Wastage in bulk of weight or any other loss or damage arising from inherent defect, quality or vice of the goods.
(n) Insufficiency of packing.
(o) Insufficiency or inadequacy of marks.
(p) Latent defects not discoverable by due diligence.
(q) Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.
The carrier’s duty to care for the cargo in Art. III.2 is explicitly made “subject to the provisions of Art. IV”. This phraseology may initially appear to excuse a carrier for negligence. However, this is not the case. A carrier whose negligence has either brought the peril into operation or been a concurring cause of the damage will generally be unable to rely on the exceptions. An enlightening example is cargo damaged in a riot (an excepted peril under Art. IV.2(k)). If the carrier has started the riot or if his negligence enabled the rioters to get on board and destroy a part of the cargo, the carrier will not, according to the prevailing perception of the Hague and Hague-Visby member states, be able to rely on the catalogue exception.257 This, as shall soon be seen, is true also under the 1971 COGSA.
But if the listed events in the Hague-Visby catalogue do not excuse the carrier from liability, what is their function? The catalogue has been challenged on the grounds that it adds nothing to the “catch-all exception” in Art. IV.2(q) stating that the carrier is liable if the damage is caused by his negligence.258 In some jurisdictions, however, the catalogue serves a function in the allocation of the burden of proof.259 England is one of these.
126.96.36.199.1 The Allocation of Proof in Theory
The allocation of the burden of proof under the (English) common law as seen above260 was established in “Glendarroch”,261 where the Court of Appeal held that the burden to prove that the carrier was not entitled to benefit from the exception by reason of negligence lay on the cargo owner. Soon after the adoption of the Hague Rules into English law through the 1924 COGSA, an opposite view was taken in “Canadian Highlander”,262 concerning a carriage governed by the Act. There the carrier was allocated the burden of proof for the absence of negligence based on the common law rules of bailment. There is no binding House of Lords decision as to which of the competing principles is correct, but an obiter dictum by the House of Lords in “Albacora”263 supports the principle laid down in “Glendarroch”. This is recognised in the academic literature as the prevailing legal position, which does not mean that the legal scholars advocate this division of the burden of proof.264
Thus, the allocation of the burden of proof under the catalogue ought to be as follows. Once the shipper has established a prima facie case by showing that the goods were damaged during the carrier’s period of responsibility,265 the carrier has to prove that the damage was caused 266 by one or more “excepted perils”267 in order to shift the burden of proof back to the shipper. The degree of proof for the claimed causal connection has been held to be preponderant proof, i.e. establishing that something is more likely than not.268
The carrier cannot, however, rely on an excepted peril if that peril has been brought into operation by the carrier’s negligence.269 In the similar yet conceptually different situation where the carrier’s negligence has contributed to the damage or loss, the burden of proof to show “in money”270 to which extent the loss was caused by an excepted peril alone is on the carrier.271 In “Torenia”,272 Hobhouse J. stated that where the facts disclose that a loss is caused by the concurrent causative effects of an excepted peril and one non-excepted peril, the carrier has the burden of proof to establish not a but the causes of loss. It was recognised, also in “Albacora”,273 that although the carrier is not required to prove the absence of negligence in order to rely on an excepted peril, he may in a particular case have to give evidence excluding causation by his negligence in order to prove causation by such a peril. Thus, where the circumstances disclose that the carrier’s negligence has brought a peril into operation or contributed to the damage, the carrier ought to have to prove that or to which extent it did not. As recognised by Treitel et al, this may enable the court in a particular case to evade the full effect of the allocation of proof laid down in “Glendarroch”.274
It must be noted, however, that not all catalogue events are subject to the main allocation of the burden of proof given account of above. First, the two events error in navigation (a) and fire (b) are of a special nature, in that the carrier can escape liability even in the case of negligence. This is explicitly stated in the legal text. These provisions are further dealt with below in their capacity as true liability exceptions.275 Second, the definition of three (possibly four) further events are framed by the lack of negligence.276 The wording of the exception for latent defects not discoverable by due diligence (p) (emphasis added) clearly precludes any case where the carrier has not lived up to the required standard of care and so does the wording of the “catch-all exception” (q). This is true however, also for the act of God (d) exception.277 It has been claimed that also perils of the sea (c) would be framed by the lack of negligence but under English law this presumably is not the case.278
The degree of proof for the final question, whether (or to which extent) the damage was caused by negligence of the carrier, is preponderant probability.279
188.8.131.52.2 The Allocation of Proof in Practice
The order of proof as given account of above is often described as a “ping-pong” match between the parties.280 To have the burden of proof at a certain point of the proceedings means essentially that one would lose in the absence of further evidence.281
This might have provided the carrier with an advantage under the orthodox adversarial principles of consecutive presentation.282 Common law courts of today, however, will require each party to set forth the whole of its case at once. This means that the parties can only speculate as to whether the court would find a certain fact proven at a certain point of time in the proceedings. They have to adhere to the procedural order of proof in court – which generally requires the parties to set forth the whole case at once