John Habergham, Myton Law, Hull U.K.

A number of claimants all named as ‘shipper’ on a bill of lading for a shipment of 201 packages of cargo described to be in ‘apparent good order and condition’ at the time of inspection, collectively brought a claim against the ship owner for loss of deck cargo in heavy seas. Their main contentions against the owner were the usual Hague/Hague Visby Rules sins of:

  • Failing to deliver deck cargo in the same good order as on shipment;
  • Failing to properly and carefully load, stow, carry, care for and discharge deck cargo;
  • Failing properly to lash/stow the deck cargo;
  • Failure to exercise due diligence to make the ship seaworthy – particularly making the ship and hold fit for reception, carriage and preservation of deck cargo stowed in it.

The owner relied on the following provisions in the bill of lading that ‘carrier shall in no case be responsible for loss or damage to the cargo, howsoever arising .. in respect of deck cargo’ and ‘loaded on deck at shippers/consignees/receivers risk; carrier/owner/vessel being not responsible for loss/damage howsoever arising’. Reluctantly, the parties agreed that the provisions in the bill of lading should take precedence over the Hague Visby Rules in this regard because goods stated as being ‘on deck’ are not ‘goods’ within the meaning contained in the Hague/Hague Visby Rules and therefore the claimants could not rely on the latter in rendering the clause void.

The owners relied predominantly on the term ‘howsoever arising’ claiming that this was an absolute exclusion covering all liability, asserting that words used in a bill of lading should be given their literal meaning.

The claimants asserted that, irrespective of the exclusion clause contained in the bill of lading, there is an implied term in the contract of carriage at common law that the ship will be seaworthy and this is an overriding obligation which provides an ‘absolute warranty’ over express exclusion clauses.

The High Court disagreed with the claimant’s position and confirmed that words of exclusion contained in a bill of lading are effective to exclude liability, even if this was allegedly as a result of negligence or unseaworthiness. In concluding, the court stated ‘as a matter of plain language and good commercial sense, the owners were right’.

This decision will be a welcome one for owners and carriers as it has reaffirmed that exclusion clauses containing ‘howsoever arising’ or similar wording, would be enough to avoid liability for loss or damage to cargo, providing that the cargo is in fact, on deck,  even where this is allegedly due to a negligent act or unseaworthiness.

Note that although the present case referred to ‘deck cargo’, the claimants did not agree that the balance of the cargo which was lost was carried on deck, and only agreed that this should be regarded as so for the purpose of ascertaining whether unseaworthiness is an overriding obligation. The judge insisted that the question of whether the cargo was in fact ‘deck cargo’, could be a matter for a later date. I therefore suspect there may be a sequential hearing to address this matter.