Duties of the Carrier
The obligations of the carrier are governed by the contract and the Hague-Visby or more modern rules, depending on the Convention which governs the carriage.
The shipper must make space on the designated vessel available. The contract may provide that the shipper has no responsibility if the vessel is already full. In this case, any prepaid freight is refunded but without compensation.
The carrier must exercise due diligence to make the ship seaworthy. This requires that it might be properly equipped, supplied and manned. It requires that the relevant holds, refrigerating or cool containers are fit for the reception, carriage and the preservation of the goods. The carrier must properly and carefully load, handle, stow, keep care for and discharge the goods.
The carrier must take reasonable care to ensure the cargo is not damaged by the dangerous or deleterious cargo of other shippers. What is reasonable depends on the carrier’s knowledge of the risks and hazards concerned. The contract need not necessarily provide that the carrier must load or stow the goods. The shipper or cargo owner may do so.
Apart from issues under the contract, bailment and negligence, property and civil liability issues may also arise. The property in the goods may pass to the buyer when the contract is made. Alternatively, the title may be retained by the seller. Commonly it passes with the delivery of the bill of lading. The party with the property in the goods has an inherent right to recover them.
Obligations of Shipper
The shipper must make the goods available at the time and place and in the number, quantity and weight provided by the contract. If he fails to do so, he may still have to pay full freight. The shipper warrants the truth of the accuracy of the marks, number, quantity and weight, as furnished at the time of shipment. He must indemnify the carrier against loss and damage arising from inaccuracy. If he fails to declare the nature and value of the goods and have them inserted in the bill of lading, the carrier may claim a limitation of liability to a single unit.
Where goods are actually or potentially dangerous, and this is not known to the carrier, the shipper must so disclose. If he does not do so, he would be liable to the carrier for loss and damage which arises, except where the carrier should have known the position.
The shipper in effect warrants that the cargo is free from undisclosed, dangerous and deleterious effects. Therefore, he must disclose potential hazards and risks. Otherwise, he would be liable for all damages and expenses arising directly out of the risks concerned. The carrier may have the right to destroy the goods or render them innocuous. There are statutory provisions regarding the marking of dangerous goods and their carriage.
Issue of the Bill of Lading
After receiving the goods, the carrier, the master or its agent must issue a bill of lading which identifies the goods as furnished by the shipper prior to loading, together with the number of packages, pieces or quantity of weight as furnished. The particulars need not be stated where the carrier has reasonable grounds to believe that they do not accurately represent the amounts actually received and there are no means of checking.
The bill need state only the apparent condition of the goods. If the carrier honestly believes that the goods are not in good order and a reasonable observant carrier would reach this opinion, then he can qualify the statement provided that the qualification reflects the apparent condition and the extent of the apparent defects.
The bill of lading may state certain qualifications such as “shipper’s load and count”, “weight, quality and condition unknown”. If the carrier does not “clause” or qualify the bill of lading, it may be prevented from disputing that the goods were shipped in apparent good order.
Responsibility for Goods
The carrier is responsible for the goods as a bailee under common law principles. This creates duties at common law. The classic carriage of goods by ship developed in the context of a single voyage during which the carrier was responsible from loading to discharge. However, carriage and responsibility commonly now extend from acceptance of the goods at a warehouse or terminal of origin to delivery to a warehouse or terminal at the destination.
If the goods have not been delivered, are damaged in the course of transit, misdelivered or delivered late, the seller or the buyer (depending on who carries the risk) is likely to seek to recover for loss and damage. There are modest limits on the carrier’s liability in the absence of a specific declaration and agreement.
The ship owners should be covered by liability insurance (protection and indemnity insurance). The ship owner’s liability for deviation, misdelivery and issuing of a clean bill of lading for damaged goods will not generally be covered.
The shipper’s liability in respect of cargo claims will usually be covered by marine insurance. This is usually necessary in view of the carrier’s limited liability. In the event of a successful claim against the carrier, the insurer may seek to recover damages from the carrier after making payment to the insured, in the exercise of its right of subrogation.
The carrier must commence and complete the voyage with reasonable dispatch. It must follow the contractual route or if none is specified, the usual and reasonable route. It must not unjustifiably deviate. If the carrier deviates from the route, he may fall outside the terms of the contract and lose the limitations of liability.
The default common law position was that deviation was permitted is only to save life, but not property. Deviation to save property is expressly permitted under the rules.
The Hague-Visby Rules provide that the owner of the ship is not responsible for loss and damage arising out of the act, neglect, or default of the master in navigation or in the management of the ship. This does not cover cases, where in breach of the obligation to proceed with utmost dispatch and to take the shorter or alternative routes, the master takes a different or longer route, for reasons unconnected with navigation or without justification. This is a breach of duty in relation to the use / employment of the vessel rather than navigation or management.
Warranties of Carrier
There are a number of implied obligations in a contract of carriage by sea;
- that the vessel is seaworthy at the commencement of the voyage;
- that the carrier will take reasonable care of the cargo;
- that carrier and cargo will proceed on the voyage without deviating.
Breach of the implied warranties gives rise to a right to damages. If the breach is very serious, it may be such as to entitle the shipper to terminate the contract. General contractual principles apply.
Warranty of Seaworthiness I
Seaworthiness requires that the vessel be in a seaworthy state at the commencement of the voyage. The obligation covers both the vessel itself and its cargo. The warranty of seaworthiness is theoretically absolute in nature. It requires the shipowner to make the ship fit for the particular voyage for the particular cargo.
Breach of the warranty may arise from defects in the vessel or which affect the safety of the cargo. It may include such things as a leaky hull. Seaworthiness may include the lack of required documentation and non-compliance with the laws and customs and laws at the port of call. Failures of refrigeration, failures of storage and other equipment may constitute a breach of the warranty.
The claimant must prove unseaworthiness. Unseaworthiness may be inferred from matters such as the fact that an incident has occurred which would not otherwise occur, but for unseaworthiness. In this case, the onus is on the ship-owner to prove seaworthiness.
The warranty is absolute in nature at common law. However, the Hague Visby Rules reduce it to an obligation of due care and diligence.
Warranty of Seaworthiness II
The doctrine of stages applies to the duty of the carrier through various phases of the journey. Accordingly, a breach at one stage, need not constitute a breach at a later stage. Breaches which occur at an earlier stage may be later rectified. The journey itself may be broken with calls at different ports. Remediation of the breach may rectify the position in later stages.
It must be proved that unseaworthiness is a cause of the loss. It need not be the sole cause. However, the loss must not be too remote. Generally, it is sufficient that the unseaworthiness is a cause even if it is compounded by the negligence of the crew.
Where there are two types of damage, for example, one caused by crew negligence, and another by unseaworthiness, only the damage referable to the unseaworthiness may be recovered under the warranty. This may apply where there are different types of damage. It may apply to different types of cargo.
Negligence on the part of an otherwise competent crew does not of itself constitute a breach of the warranty. In extreme cases, the crew’s incompetence may itself constitute unseaworthiness. Incompetence may be due to lack of experience or knowledge such that they cannot deal with an incident that occurs.
Modern Management System
The failure to have a proper system of management may constitute unseaworthiness in some cases. The International Safety Management Code is part of SOLAS and became applicable to cargo ships over 500 gross tons in 2002. It requires safety management systems to be established by ship-owners and other ship operators.
There must be policies for achieving the requirements of the code. Persons with direct access to the highest level of management must be responsible for its implementation. There must be a safety management manual which is onboard.
The modern international standards are likely to inform the standards required by common law. Failure would be more likely to be regarded as systematic and to constitute unseaworthiness where it breaches legal requirements.
Warranty to take care of Cargo
There is a common law implied warranty that the carrier will take reasonable care of the cargo. This extends from the time of loading until discharge at common law. It may be extended by contract or custom.
Unloading is traditionally undertaken by stevedores and other independent entities outside the carrier’s control. The ship-owner may remain liable under the bill of lading. The carrier may be vicariously liable for their negligence.
The carrier’s duty of care in relation to loss or damage to the goods, will be usually limited by the terms of the contract of carriage and the applicable Convention.
The owner of goods may have a right to compensation for interference with them or for their damage or destruction.
Delivery of Goods to Bill Holder
The carrier is obliged to surrender the goods at the specified place of discharge to the holder of the bill of lading. He may not deliver to a third person unless he is given a reasonable explanation for the absence of the bill. If there is a delay on the bill being available, goods may be released against an indemnity. Where the goods are released against an indemnity, this is done at the risk of the party who so releases them.
The party entitled to the goods may obtain a court order to the effect that on tendering an indemnity to the carrier, the loss of the bill may not be used as a defence.
The shipper must arrange collection at the port of destination. If the consignee or bill holder does not claim them in a reasonable time, the master is entitled under the terms of the bill or at common law, to warehouse the goods at the owner’s expense. His responsibility terminates at that point. The shipowner has a lien for freight and charges. The warehouse man is obliged to preserve the lien and is itself entitled to charge for the storage.
Where the goods are stopped in transit on account of the buyer’s insolvency, the carrier must obey the notice. However, the seller is liable for freight. The carrier has a lien for this freight.
A deviation is an unjustifiable departure from the normal route. It is an implied obligation in the absence of a stipulation otherwise that the owner of the vessel shall proceed by the usual and reasonable route without unjustifiable departure. A deviation includes a straying from the route as such but also the deliberate reduction in speed.
Many deviations will be justifiable, such as for the purpose of life-saving and saving cargo carried. Compliance with the usual commercial practice will not constitute a deviation. It appears that departures for the purpose of giving assistance outside of the above parameters are not permissible at common law in this context.
The Hague and Hague Visby Rules allow the carrier to make a reasonable deviation. Reasonableness is to be interpreted, having regard to the interests of the ship-owner and the cargo. A deviation may be permissible it was contemplated at the time the bill was entered. A deviation for the purpose of repairs may be reasonable in context. It is wider than the common law principle.
A breach of the obligation not to deviate prevents the ship-owner from relying on exception clauses and the terms of the contract by way of defence. Generally, this is so, regardless of whether there is any causative link between the loss and damage and the deviation. The courts have interpreted the obligation as a condition precedent to the entire contractual obligation.
Some cases have held that following a deviation, the ship-owner becomes a common carrier with a correspondingly enhanced obligation. The common carrier defences appear to be available. A common carrier is entitled to quantum meruit freight.
The principle has been justified by reference to the effect that deviation may have on insurance. It may cause insurance to be avoided. A deviation may entitle the shipper to terminate the contract of carriage. Alternatively, he may elect to keep it in being, by waiver.
Some cases have held, the principle of deviation applies, notwithstanding that Hague Visby Rules may apply. The benefit of the rules may be available to a carrier notwithstanding a deviation. On another view, a deviation may terminate the contract in which event the rules may cease to apply to the contract of carriage replaced, by common carrier status and restitution principles.
References and Sources
Consumer Law Long 2004
The Law of Transport and Road Haulage (1999) Canny
Consumer Law Rights & Regulation Donnelly & White 2014
Commercial Law White 2nd ed 2012
Commercial & Economic Law in Ireland White 2011
Commercial Law Forde 3rd ed 2005
Schmitthoff: The Law and Practice of International Trade 13th ed Carole Murray, David Holloway, Daren Timson-Hunt, Schmitthoffs 2018
Bills of Lading in Export Trade 4th ed Charles Debattista 2018
Arnould’s Law of Marine Insurance and Average 19th ed Jonathan Gilman, Robert Merkin, Claire Blanchard, Mark Templeman 2018
O’May on Marine Insurance 2nd Ed Julian Hill 2018
Shipping Law 3rd ed Sweet & Maxwell Ltd 2018
The UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2nd ed Michael Sturley, Tomotaka Fujita, Gertjan van der Ziel 2018
Commercial Maritime Law Edited by: Melis Ozdel 2018
Springer-VerlagScrutton on Charterparties and Bills of Lading 23rd ed: 1st Supplement
Scrutton on Charterparties and Bills of Lading 23rd ed: 1st Supplement (Book & eBook Pack) Scrutton on Charterparties and Bills of Lading 23rd ed: 1st Supplement (Book & eBook Pack)
Bernard Eder, Howard Bennett, Steven Berry, David Foxton, Christopher Smith 2017
The Bill of Lading: Holder Rights and Liabilities The Bill of Lading: Holder Rights and Liabilities
Frank Stevens 2017
Charterparties: Law, Practice and Emerging Legal Issues Edited by: Baris Soyer, Andrew Tettenborn 2017
Shipping and Trade Law 2017
Multimodal Transport Law Michiel Spanjaart 2017
Maritime Law 4th ed Edited by: Yvonne Baatz 2017