Frazer Hunt, Mills Oakley, Australia
SUMMARY: The recent explosion in Beirut is a timely reminder to anybody who is involved in the handling of dangerous goods that it is not only necessary to know what you are handling but who you are dealing with both up and down the supply chain. All insurers who cover property and marine risks will want to ensure that their insureds are minimising their exposure to the consequences of mishandling dangerous goods.
The recent devastating explosion in Beirut is a timely reminder to those carrying, handling and storing dangerous goods to exercise due diligence and to comply with regulations when handling dangerous goods.
The IMDG code is the internationally accepted guide for the identification and safe transportation of dangerous goods in packaged form. The code is mandatory under SOLAS regulations and provides advice on the packaging, labelling, stowage, segregation, handling and emergency response for each hazardous substance. In particular, it requires the issue of a compliant Dangerous Goods Transport Document and a Dangerous Goods Container Packing Certificate for each container. The code also imposes mandatory training on dangerous cargoes for shore-based personnel including shippers, freight forwarders, container packers and shipping line operators. Each dangerous good listed in the code has a ‘proper shipping name’ and one or more four-digit United Nations (UN) identification numbers and the code identifies subsidiary risks, UN packing group(s), special provisions, limited quantity per inner packaging, packing instructions, special packing provisions, emergency schedules for fire and spillage, stowage and segregation provisions, and cargo properties and observations. In short, it is a guide on handling dangerous goods by description and categorisation.
It is particularly important that the relevant dangerous goods are properly identified, declared and documented, as they will then be appropriately handled by the carrier, protecting not only the shipment itself, but also the carrier, warehouse and dockworkers and the general public. Otherwise, undeclared dangerous goods will handled by carriers as non-hazardous cargo, with obvious risks, and misdeclared goods will not be handled correctly, creating dangers for the ship and crew and other cargos. The shippers and forwarders involved in the misdeclaration will be held liable for the consequences, so here is a brief guide as to possible steps that can be taken to minimise your exposure to such claims.
- Implement “Know Your Customer” policies and procedures that will verify that new customers are reputable organisations and have a history of shipping the relevant cargo on the route requested. Make sure that they are a proper legal entity and that the relevant manufacturer (if not the customer) is identified and uses an independent testing laboratory. Then the new customer should be required to complete a form that includes full organisation details, their insurance arrangements, supply chain details and trade references. They should also be asked to sign a copy of your up to date standard terms and conditions with appropriate indemnities and agree to be bound by them.
- Review your customer’s description of the goods to identify vague descriptions that might identify dangerous goods. One actual example is the description “computer parts” that turned out to be lithium batteries that were shipped LCL and caught fire in transit, destroying the other goods in the container and putting the vessel at risk.
- Scrutinize any changes to documents and descriptions of goods after the shipment has been booked and/or is already in transit. For example, changes to the parties to a bill of lading should involve further “Know Your Customer” investigations and changes to goods descriptions should be scrutinised and explanations sought.
- Do not accept guarantees or letters of indemnity unless supported by a bank and also for a legitimate purpose – for example, an offer by shippers to indemnify you for the consequences of issuing shipping documentation with a clear misdescription of goods should be rejected – such conduct is fraudulent and the indemnity will be unenforceable.
If you have questions or require legal advice in this area, our team is available to assist.