Effort Shipping Company Ltd v Linden Management SA
| Jurisdiction | UK Non-devolved |
| Judge | LORD GOFF OF CHIEVELEY,LORD LLOYD OF BERWICK,LORD STEYN,LORD COOKE OF THORNDON,LORD CLYDE |
| Judgment Date | 22 January 1998 |
| Date | 22 January 1998 |
| Court | House of Lords |
And Others
[1998] UKHL J0122-1
Lord Goff of Chieveley
Lord Lloyd of Berwick
Lord Steyn
Lord Cooke of Thorndon
Lord Clyde
HOUSE OF LORDS
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Lloyd of Berwick. For the reasons he gives I would dismiss this appeal.
My Lords,
Three questions arise in this case. The first is as to the meaning of the words "goods of an inflammable, explosive or dangerous nature" in Article IV, r. 6 of The Hague Rules. The second is whether the shipper's liability for shipping dangerous goods under Article IV, r. 6 is qualified by the provisions of Article IV, r. 3. The third is whether, if the shipper is otherwise liable to the carrier on the facts of this case, he can escape such liability by relying on section 1 of the Bills of Lading Act 1855.
There is a fourth question. What is the nature and scope of any implied obligation at common law as to the shipment of dangerous goods? For reasons which will appear later, the fourth question does not need to be decided. But as it has been the subject of differing views over many years, and as we have heard full argument on the point, it seems desirable for us to express an opinion. Even though that opinion will not form part of the ratio decidendi, it may at least help to resolve a long-standing controversy.
The relevant facts are all agreed. On 18 November 1990 the appellant shipped a cargo of ground-nut extractions at Dakar, Senegal, for carriage to Rio Haina in the Dominican Republic. The ground-nut cargo was loaded in number 4 hold of the respondents' vessel "Giannis N.K." under a bill of lading which incorporates The Hague Rules. It is agreed that the groundnut cargo was infested with khapra beetle at the time of shipment. But this was unknown to the appellant shippers as well as the respondent carriers.
The vessel had previously loaded a cargo of wheat pellets in numbers 2 and 3 holds for carriage to San Juan, Puerto Rico and Rio Haina. There was no danger of the beetle infestation spreading from the ground-nut cargo in number 4 hold to the wheat cargo in numbers 2 and 3 holds. But the beetle infestation in number 4 hold nevertheless rendered the vessel and its cargo (including the wheat cargo) subject to exclusion from the countries where the cargo was to be discharged.
After discharging part of the wheat cargo at San Juan, the vessel proceeded to Rio Haina where she was placed in quarantine after the discovery of insects in number 4 hold. It was thought that the insects might be khapra beetles. The vessel was fumigated twice. But it did not eradicate the insects. Accordingly on 21 December the vessel was ordered to leave port with all her remaining cargo.
Meanwhile the vessel had been arrested by the receivers. It was only when the arrest was lifted on an undertaking given by the vessels P. & I. Club that the vessel was able to leave port. She returned to San Juan, in an attempt to find a purchaser for the cargo, in accordance with the Club's undertaking. But when she arrived at San Juan, the U.S. authorities identified a khapra beetle and a khapra beetle larva, both dead, in number 4 hold. On 31 January 1991 the U.S. authorities issued a notice requiring the carrier to return the cargo to its country of origin, or to dump it at sea, but at all events to leave U.S. ports. It is common ground that in those circumstances the carrier had no practical alternative but to dump the whole of the cargo at sea, including the wheat cargo. The vessel sailed on 3 February, and the cargo was dumped between 4 and 12 February.
When the vessel returned to San Juan after dumping her cargo there was a further inspection. Eighteen live khapra beetles and khapra beetle larvae were found in number 4 hold. There was a further fumigation. The vessel was eventually cleared to load under her next charter, at Wilmington, North Carolina after a delay of two-and-a-half months. The question is who is to pay for the delay?
Mr. Johnson Q.C., on behalf of the shippers, submits that the loss should lie where it falls. Mr. Schaff, on behalf of the carriers, submits that the carriers are entitled to recover damages for delay to the vessel, and the cost of the fumigations, either under Article IV, r. 6 of The Hague Rules, or by virtue of an implied term at common law. Longmore J. decided all questions in favour of the carriers, and so did the Court of Appeal. The shippers now appeal to the House by leave of your Lordships.
Dangerous goods and The Hague Rules
Article IV, r. 6 of The Hague Rules provides:
"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."
It is convenient to get two preliminary points out of the way. They are not in dispute.
First, it has been settled law since Chandris v. Isbrandsten-Moller Co. Inc. [1951] 1 K.B. 240 that the word "dangerous" in the expression "goods of …[a] dangerous nature" must be given a broad meaning. Dangerous goods are not confined to goods of an inflammable or explosive nature, or their like. In Chandris v. Isbrandsten-Moller Co. Inc. the question arose in relation to a consignment of turpentine. In that case the charter party prohibited the shipment of "acids, explosives, arms, ammunition or other dangerous cargo." The shippers argued that "other dangerous cargo" should be given a restricted meaning. This was, they said, indicated by the context in which the words appear. Devlin J. said, at p. 246:
"I can find no such indication. It seems to me that the only reason why the owner is objecting to acids, explosives, arms or ammunition is because they are dangerous; and that being so he may be presumed to have the same objection to all other dangerous cargo."
Secondly, goods may be dangerous within the meaning of Article IV, r. 6 if they are dangerous to other goods, even though they are not dangerous to the vessel itself.
What then is the meaning of the word "dangerous" in this context? Mr. Schaff argues that "dangerous" means, or at any rate includes, cargo which is physically dangerous to other cargo. Even though there was no risk of the infestation spreading from the groundnut cargo in number 4 hold to the wheat cargo in numbers 2 and 3 holds, nevertheless the groundnut cargo was physically dangerous to the wheat cargo because the dumping of the wheat cargo at sea was "a natural and not unlikely consequence" of shipping the groundnut cargo infested with khapra beetle: see para. 7(1) of the Agreed Statement of Facts.
Mr. Johnson, on the other hand, while conceding that the groundnut cargo caused physical damage to the wheat cargo in that sense, submits that there was no direct physical damage to the wheat cargo. Cargo is only dangerous within the meaning of Article IV, r. 6 if it causes, or is likely to cause, direct damage to other cargo by its own physical operation, for example, by overheating or leakage. Here, the only physical damage to the wheat resulted from the decision to dump the cargo at sea. That was a decision which was taken for commercial reasons. No doubt the decision was sensible, and perhaps unavoidable. But at the time the wheat was dumped it was sound. It had not been affected in any way by the inherent characteristics of the groundnut cargo.
I prefer Mr. Schaff's argument. I can see no reason to confine the word "dangerous" to goods which are liable to cause direct physical damage to other goods. It is true that goods which explode or catch fire would normally cause direct physical damage to other cargo in the vicinity. But there is no need to qualify the word "dangerous" by reading in the word "directly", which is what Mr. Johnson's argument in effect requires. Indeed the reference to "all damages or expenses directly or indirectly arising out of or resulting from such shipment" point in the other direction.
Longmore J., in an admirably clear and succinct judgment ( [1994] 2 Lloyd's Rep. 171), found that the groundnut cargo was of a dangerous nature on shipment, on the ground that it was liable to give rise to the loss of other cargo loaded on the same vessel by dumping at sea. This finding was upheld by Hirst L.J. in the Court of Appeal: [1996] 1 Lloyd's Rep. 577. I find myself in complete agreement with their reasoning. Accordingly it is unnecessary to consider a further argument that goods may be of a dangerous nature even though they do not present any physical danger to ship or cargo, but are "legally" dangerous in the sense that they are liable to cause delay to ship and cargo through the operation of some local law.
What are the consequences of the finding that the groundnut cargo was physically dangerous to the wheat cargo? Since the carriers did not consent to the shipment of the groundnut cargo with knowledge of its dangerous character, the shippers are prima facie liable for all damages and expenses suffered by the carriers. But this brings me to the second question. Mr. Johnson argues that the shippers' liability under Article IV, r. 6 is...
To continue reading
Request your trial
-
Jindal Iron and Steel Company Ltd and Others v Islamic Solidarity Shipping Company Jordon Inc.
...first recognised as legitimate long after Pyrene v Scindia was decided; see Forthergill v Monarch Airlines [1981] AC 251. In Effort Shipping v Linden Management [1998] AC 605 Lord Steyn described the correct approach to the construction of an international convention in these terms: Altho......
-
Vinnlustodin HF and Another v Sea Tank Shipping as (formerly known as Tank Invest as)
...21 The parties were agreed that the right approach for the Court was to be found in the words of Lord Steyn in The Giannis NK [1998] 1 Lloyd's Rep 337 at 437–8, where, he said: "Following Fothergill v Monarch Airlines Ltd., [1980] 2 Lloyd's Rep 295; [1981] AC 251, I would be quite prepar......
-
Glencore Energy UK Ltd v Freeport Holdings Ltd
...Inc (The Jordan II) [2005] 1 Lloyd's Rep 57, Lord Steyn at 63–4; Effort Shipping Co Ltd v. Linden Management S.A. (The Giannis N.K.) [1998] AC 605, Lord Lloyd at 615 and Lord Steyn at 623; and Serena Navigation Ltd v. Dera Commercial Establishment (The Limnos) [2008] 2 Lloyd's Rep 166, B......
-
Borealis AB v Stargas Ltd
...not to ship a dangerous cargo. The nature and extent of this obligation is discussed in the speech of Lord Lloyd of Berwick in Effort Shipping v Linden Management [1998] AC 605. Bergesen have made a corresponding claim directly against Saudi Aramco and this has, at Saudi Aramco's insistenc......
-
Recent Authority Of Particular Relevance In The Fields Of International Trade And Transport: Dangerous Cargo
...vessel or other cargo in either a direct or an indirect manner (see Effort Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998] 1 Lloyd's Rep 337 and [1998] AC 605). (ii) The implied term at common law contemplates a wider category of dangerous cargo insofar as it encompasses not ......
-
Vinnlustodin HF & Another v. Sea Tank Shipping AS ('AQASIA')
...Rules The parties were agreed that the right approach for the Court was to be found in the words of Lord Steyn in The Giannis NK [1998] 1 Lloyd's Rep 337 at 437-8, where he "Following Fothergill v Monarch Airlines Ltd., [1980] 2 Lloyd's Rep 295; [1981] AC 251, I would be quite prepared, in ......
-
Bull's-eye! The Hague-Visby Rules Time Bar Applies To Post-Discharge Misdelivery
...the purposes of Article 32 of the Vienna Convention on Interpretation of Treaties and the English law threshold (see e.g. The Giannis NK [1998] AC 605) and made it clear that this was the intention of the The decision confirms the closing of the "gap" left by the previous decision (on the H......
-
SHIPMENT OF DANGEROUS CARGO BY SEA
...Cir, 1969). 110 Supra n 2. 111 Id, at 147—148. 112 Insurance Co of North America v M/V Tokyo Senator 2001 WL 238293 (SDNY, 2001). 113 [1998] AC 605 (HL). 114 Supra n 2. 115 It should be observed that Borgships was decided under COGSA. 116 Supra n 2, at 168, fn 37. 117 Id, at 166. 118 362 F ......
-
INTRODUCTION
...Code for the Safe Operation of Ships and for Pollution Prevention. 15 Effort Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998] AC 605, followed in Senator Linie GmbH & Co KG v Sunway Line, Inc219 F 3d 145 (2d Cir, 2002). 16 Kodros Shipping Corporation of Monrovia v Empresa Cuba......