TT Talk - Proper care and industry practice

TT Talk - Proper care and industry practice

Lawyers can become excited about who has the burden of proof and when it might pass or be discharged. Nevertheless, a convoluted interpretation can give rise to  pragmatic judgements.

Factual background
CSAV carried a cargo of bagged coffee beans in dry, unventilated containers lined with kraft paper from Colombia to Northern Europe. CSAV’s stevedores were responsible under the bills of lading for preparing and stuffing the containers.  During the carriage moisture in warm air rising from the stow had condensed on contact with the cold roof of the container wetting the bags at the top and the sides.

It was common ground that condensation of this type is inevitable when this cargo is carried from a warm to a cold climate and that industry guides recommend carriage in ventilated containers.  However, it was also common ground that carriage in lined, unventilated containers was a widespread commercial practice.

Applicable law
The bills of lading applied Hague Rules.  The resulting claim against the carrier for damage turned on the relationship between Hague Rules Article III(2), requiring the carrier to ‘properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods’ and  Article IV(2)(m), to which Article III is subject and which exempts the carrier from liability loss or damage arising from inherent vice.

The claimant succeeded at first instance.  The Court of Appeal reversed this judgment and found in favour of CSAV, because it disagreed with the Mercantile Court at first instance on three main grounds. 

Firstly, once the carrier had shown a prima facie case of inherent vice under Article IV(2)(m) – or any other Article IV(2) exemption, except IV(2)(q) ‘any other cause without actual fault’ – the burden shifted to the claimant to prove the carrier’s negligence or breach of Article III(2). The burden did not remain with the carrier to show that it was neither negligent nor in breach. This reflects an issue which has been debated in the courts and the textbooks since the introduction of the Hague Rules.

Secondly, the inherent vice exception can apply to entirely normal (that is to say not defective) cargo, as long as the loss results from the natural properties of the goods.

Thirdly, while there is clear law that ‘properly’ as in Article III(2) means ‘in accordance with a sound system’, the law does not require that a carrier adopt a system that is based on scientific or empirical investigation or that did actually prevent damage.  Instead, following the Albacora ([1966] 2 Lloyd’s Rep 53), the system only has to be sound under all the circumstances in accordance with industry practice.

A further finding at first instance was endorsed on appeal: Where the obligation to stuff its own containers was assumed by the carrier, the contract of carriage will include this as part of the loading, and Hague Rules will apply. 

This case is of obvious importance in the interpretation of Hague Rules, and Hague-Visby Rules to the extent that the wording is the same.

Volcafe & others v Compania Süd de Vapores (CSAV)
[2016] EWCA Civ 1103

We are grateful to Ian Hyslop who has provided valuable contributions.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.
We look forward to hearing from you.

Michael Yarwood
Senior Loss Prevention Executive, TT Club

Through Transport Mutual Insurance Association Limited and TT Club Mutual Insurance Limited, trading as the TT Club. TT Club Mutual Insurance Limited, registered in the UK (Company number: 02657093) is authorised by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and Prudential Regulation Authority. In Hong Kong, TT Club Mutual Insurance Limited is authorised and regulated by the Hong Kong Insurance Authority, in Singapore by the Monetary Authority of Singapore and in Australia by the Australian Prudential Regulation Authority. In the United States, TT Club Mutual Insurance Limited is approved as a surplus lines insurer in all states and is accessible through properly licensed surplus lines brokers. The registered offices are: 90 Fenchurch Street, London, EC3M 4ST.

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