Bunge SA v. ADM do Brasilia
Steven Berry QC and Jeremy Brier (instructed by Holman Fenwick Willan) for the Time Charterer, Bunge
Michael Ashcroft (instructed by Middleton Potts) for the 1st to 4th Shippers
Sara Cockerill (instructed by Reed Smith) for the 5th Shipper
Nevil Phillips (instructed by Pysdens) for the 6th to 8th Shippers
BILLS OF LADING: CONTRACTS OF CARRIAGE: LIABILITY OF SHIPPERS: FACTUAL CAUSATION: DANGEROUS GOODS: WHETHER RATS ARE DANGEROUS GOODS: HAGUE RULES, ARTICLE IV, RULE 6: COMMON LAW IMPLIED TERM AS TO SHIPPING OF DANGEROUS GOODS
The Hague Rules, Article IV, Rule 6 and the common law implied term meaning of ‘dangerous’ goods was limited to goods likely to cause physical or legal danger to the vessel or the other goods onboard and did not extend to goods that were merely likely to cause delay to the voyage and additional expense without more. On the facts, the presence of mummified rats in the cargo (which were no more than a cosmetic problem) did not make the cargo ‘dangerous’ goods.
DMC Category Rating: Confirmed
Case note contributed by Jim Leighton, BSc (Hons), LLB (Hons), LLM (Maritime Law), International Contributor to DMC’s CaseNotes
Each bill named the port of discharge as "Bandar Imam Khomeini or Bandar Abbas, Persian Gulf – Iran". Each bill incorporated the Hague Rules. The Hague Rules provide by Art. IV, Rule 6:
Bunge said in the arbitrations that the shippers were liable for the losses which it had incurred as damages and expenses directly or indirectly arising out of or resulting from the shipment of the cargo. In the alternative, Bunge relied upon the term classically regarded as implied into a contract of affreightment, that the shipper of goods will not ship goods of a dangerous character of which the carrier could not by reasonable diligence have become aware before loading.
The arbitrators considered a considerable body of both factual and expert evidence and found that the rats had entered the ship with the cargo, rather than being present on board before loading commenced or having boarded the vessel via inadequately protected mooring ropes and gangways (a finding against which there could be no appeal).
However, the arbitrators unanimously concluded that Bunge’s claims against each shipper failed, for two independent reasons, each of which was fatal to the claim:
(1) Bunge was unable to prove that any of the shippers, who were
wholly independent of each
(2) The arbitrators concluded that in this case a cargo
"loaded with a rat" was not a dangerous
The principles for determining whether a cargo was ‘dangerous’ had in large part recently been explored and restated by Longmore J, the Court of Appeal and the House of Lords in The "Giannis NK". There were two distinct but allied principles: (1) a shipper undertakes not to ship goods which are liable to cause damage to the vessel or other cargo shipped thereon without giving notice to the shipowner of the character of the goods, and (2) the shipper undertakes not to ship goods which are liable to cause delay to the vessel. The "Giannis NK" had held that goods may be ‘dangerous’ for the purposes of the Hague Rules if they have the capacity to cause physical damage in either a direct or an indirect manner.
Since all three courts in which The "Giannis NK" was considered concluded that the ground-nut cargo was the indirect cause of physical damage to the wheat cargo, it was unnecessary to decide whether goods which merely cause delay to the carrier fell within the Hague Rules definition of ‘dangerous’ goods. However nothing said in any of the judgments or speeches in The "Giannis NK" gave any encouragement to the view that the word ‘dangerous’ could in the Hague Rules carry this wider meaning. In both Carver and Scrutton it was considered that ‘dangerous’ in Article IV, Rule 6 probably meant physically dangerous, and did not extend to those cases where the ship suffered loss owing to legal obstacles to the carriage or discharge of goods.
The Judge considered that it was most unlikely that the word ‘dangerous’ could be intended, when used in Article IV, Rule 6 of the Hague Rules, to bear a meaning going beyond physical danger. As the Judge pointed out, the owner has the right under the Rule, at any time before discharge and without incurring a liability to pay compensation, to land ‘dangerous’ cargo at any place or to destroy it or to render it innocuous. Quite apart from the obvious pointer given by the expression "render it innocuous", it would be very surprising if the owner had the right without incurring any liability whatsoever either to land at a non-contractual destination or even to destroy cargo which posed no physical threat to either ship or other cargo carried.
Irrespective of the Hague Rules, there was at common law in a contract of carriage an implied term to the effect that the shipper would not ship dangerous goods without notice to the carrier. For the Judge, it was clear that the meaning of the word ‘dangerous’ in that term implied by the common law was the same as that which had been given to the same word in Article IV Rule 6 of the Hague Rules.
In relation to goods that were liable to cause delay to the vessel, Bunge had sought to rely upon Mitchell Cotts v Steel where Atkin J had said "upon a voyage that cannot be performed without the violation of the law of the land of the place to which the goods are to be carried – a shipment of goods which might involve the ship in danger of forfeiture or delay – is precisely analogous to the shipment of a dangerous cargo which might cause the destruction of the ship. I do not think there is any distinction between the two cases." However, the Judge considered that Atkin J.’s words should be read in their context and limited to the case where performance of the carriage contract became illegal. This approach was supported by other case law and a wider principle would in any event "open a wide vista of responsibility", which was undesirable.
As the Judge pointed out: "In truth, all or most cargo is at risk of rejection on discharge, whether justifiably or not, and the allocation of the risk of delay arising therefrom is dealt with in contracts of carriage quite independently of the regime as to dangerous cargo."
The arbitrators had asked themselves "whether, if the rats had come on board the vessel with the cargo, there were rats present in every shipper’s cargo, or only some of them, and if so which?" The Judge considered this to be precisely the issue that the arbitrators had to decide and their findings were not to be disturbed. Bunge submitted that the proper test was to ask whether on the balance of probabilities each shipper probably loaded one rat. The Judge considered that there was no difference in substance between the two tests.
At first sight, the result perhaps seems unduly harsh because, as a matter of fact, the rats were loaded with the cargo and some shippers loaded more parcels and received more bills than others. But each shipper is only responsible for its parcels and not for those of other shippers. The law does not attribute collective responsibility to shippers in such circumstances, so the loss had to lie where it fell. It was, after all, only right to require a clear factual connection to be established between a parcel, a rat and a shipper, if a breach of contract was to be proven.
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