The liability of shippers and receivers of goods:

and inconvenient danger

Bernard Insel

Consider this:

a ship is insured

a shipowner’s liability is insured

container units are insured

cargo is insured

but ….

most shippers and receivers of goods carry no liability insurance whatsoever

Some facts:

more than 50% of goods shipped by sea can be regarded as dangerous, hazardous or harmful

over 5.000 substances are legally classified as dangerous

random checks suggest that as many as 1 in 3 containers has contents that have been mis declared or do not comply with regulations in some other way

The consequences:The Hyundai Fortune suffered a huge explosion on 21st March 2006.The combined costs: over $ 300.000.000. Probable cause: a single mis-declared container.

The Hanjin Pennsylvania exploded in November 2002.

Losses: over $ 100.000.000.

Cause: a non-declared cargo of fireworks.

Article IV (6) of the Hague (Visby) Rules

“Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any”

The Giannis N.H.

The principal questions addressed:

the meaning of “goods of an inflammable, explosive or dangerous nature” in art. IV (6) HVR

is the liability under art. IV (6) qualified by the provisions of art. IV (3) or strict?

What is “dangerous”?

The House of Lords questionably held that the meaning of “dangerous“ is not confined tointrinsically dangerous cargo liable to cause

directphysical danger, but extends to non-physicaldangerous cargo, bringing the HVR in line with

thecommon law.

The means of constructing international conventions.

A continental view: narrow interpretation. Need to consider (i) the intrinsically physical properties and normal effects of the cargo and (ii) the direct danger caused to the integrity of the vessel and her cargo

Strict liability?

Art. IV (6) versus Art. IV (3) HVR.

Article IV (3) does not take precedence over thespecific provisions of Art. IV (6).

Strict liability for shipping dangerous goods whatever the state of the shipper’s knowledge.

The Berge Sisar

The liability of the transferee.

Adding to the HVR through “The principle ofmutuality”

The Rotterdam Rules: a bleak future

“When goods by their nature or character are, or reasonably appear likely to become, a danger to persons, property or the environment:

(a) The shipper shall inform the carrier of the dangerous nature or character of the goods in a timely manner before they are delivered to the carrier or a performing party . If the shipper fails to do so and the carrier or performing party does not otherwise have knowledge of their dangerous nature or character, the shipper is liable to the carrier for loss or damage resulting from such failure to inform; and(b) The shipper shall mark or label dangerous goods in accordance with any law, regulations or other requirements of public authorities that apply during any stage of the intended carriage of the goods . If the shipper fails to do so, it is liable to the carrier for loss or damage resulting from such failure”

Article 32 provides:

The Rotterdam Rules:

A badly drafted and ambiguous instrument, rightly criticised by William Tetley, the

European Shippers Council, etc.

A missed opportunity to set aside the imbalance of a strict unlimited liability