Deck Cargo – the “Elin”

A valiant attempt to circumvent a deck cargo exclusion clause has recently been heard in the Commercial Court under reference, Aprile SpA and Others v Elin Maritime Ltd (The “Elin”) [2019] EWHC 1001 (Comm)

Cargo interests brought a claim against the owners of the vessel following the loss of a deck cargo overboard in heavy seas, alleging:

  • the owners failed to deliver the deck cargo in the same good order as on shipment,
  • failed properly and carefully to load, stow, carry, care for and discharge the deck cargo,
  • failed properly to lash and/or stow the deck cargo; and
  • failed to exercise due diligence to make the ship seaworthy at the commencement of the voyage.

 

Owners denied liability, relying on provisions in the bill of lading:

“The Carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising … in respect of deck cargo”,

and

[the packages identified on the attached list are] “loaded on deck at shipper’s and/or consignee’s and/or receiver’s risk; the carrier and/or Owners and/or Vessel being not responsible for loss or damage howsoever arising.”

A preliminary issue was ordered as follows, as it would be determinative of liability:

“Whether, on a true construction of [the bill of lading], the defendant is not liable for any loss or damage to any cargo carried on deck howsoever arising, including loss or damage caused by unseaworthiness and/or the defendant’s negligence.”

Certain assumptions were agreed between the parties. Neither the Hague Rules nor the Hague-Visby Rules applied; owners’ obligations in respect of the deck cargo were found in the bill of lading and at common law; at common law, there was likely to be an implied term that the vessel would be seaworthy before and at the commencement of the voyage, being an “absolute” warranty of seaworthiness; and that it was arguable that owners were strictly liable to deliver the goods at the destination in as good a condition as that in which they were when delivered to it.

Owners contended that although clear words would be necessary to limit or exclude liability, there was no need to construe words of limitation or exclusion narrowly or artificially.

The terms of the bill of lading upon which owners relied were to be interpreted as excluding all liability for carriage of deck cargo as “howsoever arising” referred to all causes of loss or damage (The “Danah” [1993], The “Imvros” [1999] and The “Socol 3” [2010]).

Cargo interests argued that the implied obligation of seaworthiness was a fundamental and overriding obligation and an exclusion clause did not affect it unless clearly worded. The words relied on by the owners did not specifically refer to liability for unseaworthiness or negligence.  As to negligence, the words of exclusion relied on by owners should not be interpreted as covering the owners’ liability arising from its negligence.  Owners were liable for any loss of or damage to the deck cargo caused by:

(1)          unseaworthiness of the vessel or the owners’ negligence; alternatively

(2)          the owners’ negligence; alternatively

(3)          the owners’ failure to exercise due diligence to make the vessel seaworthy before and at the commencement of the voyage.

 

The Court held on issue of construction that the words “howsoever arising” were effective to exclude liability for both negligence and unseaworthiness. The words were clear. Owners had no responsibility for cargo carried on deck whatever the cause.  The exclusion covered any and every cause and there was no justification for excluding either negligence or unseaworthiness as a cause.

As the Judge put it:

“Words of exemption which are wider in effect than “howsoever caused” are difficult to imagine and, over the last 100 years, they have become “the classic phrase” whereby to exclude liability for negligence and unseaworthiness.”

Club Commentary

We see frequent carriage of deck cargo and the wording used by owners is common throughout most trades. While certain jurisdictions like Singapore and Canada have held that a Carrier would not be able to avoid liability for unseaworthiness and negligence under similarly worded exclusions, this would not be the case in England where the Courts will give full value and effect to industry standard words of exclusion used in the carriage of deck cargo.