Chapter 13: Loading and Stowage

13.3

The whole operation of loading and discharging the cargo gives rise to at least three questions:

• — Who has the responsibility to arrange for and actually to perform the operations?

• — Who has to bear the expense of the operations?

• — Who is liable for the consequences of the operations, e.g. damage to ship and cargo?

13.4

The answers to these questions are not always clearly to be found in the bill of lading clauses, which often run them together.

13.5

There are numerous liability problems concerning, e.g., the application of the Hague and Hague-Visby Rules 5 and the position of stevedores. 6 Some bills give the carrier a wide liberty in the way in which it can load and set out sanctions for when the shipper fails to co-operate. 7

13.6

It seems to be settled in English law that even where the Hague Rules are applicable they do not preclude the parties from agreeing that some of the Art. III r.2 functions are to be transferred to the shipper or receiver of the cargo and also (somewhat questionably) that the carrier will not necessarily be responsible for their proper performance. 8 There are particular problems where cargo is carried subject to bills of lading issued under the NYPE time charter form, as cl.8 gives rise to problems of interpretation over the responsibility of the carrier and charterer for damage to the cargo. 9 It was partly in order to solve such problems that the Inter-Club Agreement 10 was introduced, which seeks (as between shipowner and charterer) to produce an apportionment of cargo claims for matters such as bad stowage.

13.7

Separate, although linked, is the question of who should pay for the cost of loading, stowage and discharging operations. A variety of clauses can be used to allocate costs, but often the clauses run together questions of liability for such operations with the question of who must pay for them. 11 In general, in liner operations the carrier will expect to make arrangements for loading and discharging operations, as it would be impractical for owners of individual parcels of cargo to make separate arrangements. In a liner bill, the carrier might be expected to pay for loading and discharging, 12 but in the case of charterparty bills the position may be complicated by the incorporation of provisions from the charterparty which allocate the costs between shipowner and charterer. 13

13.8

When a shipment is said to be made on “liner terms” it is clear that the expression has no precise legal meaning and care must be taken to examine the facts of each case. 14 In general, the shipowner undertakes both to load and discharge the goods and to bear some or all of the cost of so doing. 15 The shipowner may also accept responsibility and the question arises whether that undertaking, as regards risk or expense, or both extends beyond the ship’s rail (in the case of discharge), until the goods are loaded or delivered ashore. Usually, “liner terms” means always that the shipowner undertakes to arrange and bear the costs of discharge at least to the ship’s rail. 16 Variations are FIO (free in and out) where the loading and discharging operations are to be free of expense to the vessel; FIOST (free in and out stowed and trimmed) where the stowage and ancillary levelling operations of, e.g., grain, are also free of expense to the vessel; 17 and FILO (free in liner out), where the shipowner bears the costs of discharging. 18

13.9

The date of issue of the bill of lading may have enormous commercial significance. It may be used, for example, in the sale contract to determine the range of dates within which it is permissible for a seller to ship goods, or to calculate the price of those goods; 19 banks may rely on it before paying under a documentary credit; 20 it may determine when demurrage is payable under a charterparty; 21 or it may determine which laws will operate. 22 In all of these cases, there will be enormous commercial pressures on the shipper (often a charterer) to have a particular date inserted in the bill, if necessary by ante-dating or post-dating the actual date of shipment for the cargo (or portion of cargo) represented by the bill. It is clear that a master (or agent) who does put in a false date could render the carrier liable for fraud or misrepresentation to a person who relied on the statement, e.g. a bill of lading holder or bank.

13.10

In The Saudi Crown, 23 purchasers of a cargo who relied on falsely-dated bills were able to claim damages in fraud for the lost opportunity to reject the bills under the sale contract. Moreover, the claimants were able to claim from the shipowner even where the bills were signed by the ship’s agents. 24 The court found that if there was authority to sign bills, then there was authority to insert the place and date of shipment in them. 25 This decision was followed in The Starsin 26 where it was held that the local agents had ostensible authority to issue bills of lading which were ante-dated and failed to conform with notations on the mate’s receipt and that the shipowner-carrier was bound by them. See also Standard Chartered Bank v. Pakistan National Shipping Corporation and Others (No.2) 27 where the shipowner was liable in deceit to a bank when, at the request of the charterers, it permitted its agents to issue ante-dated bills in order to ensure that the charterers could obtain payment under a letter of credit and thereby pay the freight and demurrage. The charterers and the agents were also liable. 28 The Court of Appeal indorsed the words of the trial judge, who had described ante-dated and false bills of lading as a cancer in international trade. 29 It was no defence to an action in deceit that the maker of the misrepresentation was not dishonest, in the criminal law sense, and that the master issued the ante-dated bill in the genuine but careless belief that it would facilitate the particular transaction or maritime trade generally. The relevant intention is that the false statement should be acted upon and that it is made knowingly or recklessly. 30 The case is also relevant to the extent of the carrier’s liability to a bank receiving the false bill. It applies the principle that there is a different test of causation for fraud cases than those where mere negligence is proved. In fraud cases the claimant’s contributory negligence was ignored. 31 In the Standard Chartered Bank case, one cause of the claimant bank’s loss was its reliance on the false bill and the other was a decision to pay the beneficiary, despite a late presentation of documents, and then to try to claim an indemnity from the issuing bank on a somewhat deceitful basis. On the facts the court declined to apply the doctrine of ex turpi causa non ontur actio and the carrier was liable in full.

13.11

Fraud requires deliberate or reckless conduct, but it is conceivable that the wrong date is inserted carelessly. If such a misrepresentation has been made negligently, the claimant would have to put its claim on other misrepresentation-based grounds, e.g. for negligent misstatement, 32 or under the Misrepresentation Act 1967. 33 For the 1967 Act to apply it would need to be shown that the claimant entered into a “contract after a misrepresentation made by another party thereto”. The assumption of s.2 is that the person entered the contract with the misrepresentor, and not into some third contract. Where an indorsee of a bill wished to sue the carrier, it would have to argue that it was induced to enter the bill of lading contract and not, for example, a sub-sale contract. The legal problem concerns how and when the indorsee enters the contract with the carrier evidenced by the bill. Strictly, its rights derive from the Carriage of Goods by Sea Act 1992 34 under s.2(l) of which rights are transferred to a person under the contract of carriage “as if he had been a party to that contract”. It has already been suggested that there are difficulties in the indorsee relying on a misrepresentation made to the shipper 35 but where the misrepresentation is contained in the bill it can be made to the indorsee. If that misrepresentation induced the indorsee to take steps which resulted in it becoming the holder of a bill (e.g. by accepting it under a sale contract), so as to have contractual relations with the carrier, there seems little reason...