DANGEROUS CARGOES
JUNE 2015
Michael Buisset, Partner – HFW Geneva
T: +41 (0) 22 322 4801
[email protected]
Introduction
Introduction
Dangerous Cargoes
 Liability of shipper or charterer
 Constant problem over 150 years
 Cases quite often devolve into patterns as type of cargo or methods
of carriage change.
 Coal in the 1970's
 Fishmeal in 1980's
 Sulphur in 1980's
 Infestation in 1990/2000's
 Calcium hypochlorite in 1990/2000's
 2011 onwards – Iron Ore / Nickel Ore?
Key Cases
 1856 BRASS V MAITLAND – Bleaching powder
 1957 ATLANTIC DUTCHESS – Butanised Crude Oil
 1968 AGIOS NICOLAS – Iron Ore Concentrate
 1991 ANTHANASIA COMNINOS – Coal- Methane
 1994 FIONA – Fuel Oil
 1998 GIANNIS NK – Groundnut pellets – beetles
 2000 KAPITAN SAKHAROV – Explosion and fire
 2002 CMA DJAKARTA – Bleaching Powder
 2009 THE ACONCAGUA – calcium hypochlorite
English Law Position
 Common law obligation- key point is that it is absolute.
 A shipper or charterer who does not give notice of the dangerous
character of the goods shipped is taken to warrant that they are fit
for carriage in the ordinary way and are not dangerous.
 If the goods endanger other goods, but not the ship itself they may
still be dangerous (The GIANNIS NK).
 Includes legal or political risks likely to cause delay or confiscation
Hague/Hague Visby Rules – Article IV Rule 6
 Hague/Hague Visby Rules can apply compulsorily to some bill of
lading contracts.
 Many forms of charterparties also expressly incorporate the Rules.
 "Goods of an inflammable, explosive or dangerous nature to the
shipment whereof the carrier, master or agent to the carrier has not
consented with knowledge of their nature and character may... be
landed at any place or rendered innocuous by the carrier... and the
shipper of such goods shall be liable for all damages and expenses
directly or indirectly arising as a result out of or resulting from such
shipment"
 Right to land and destroy without compensation
 Express indemnity for all damages and expenses directly or
indirectly arising our of or resulting from the shipment.
Difference between Common Law and Statutory Provisions
 Meaning of dangerous
 Under the Hague and Hague-Visby Rules Art IV, r 6, a cargo can be
dangerous if it is liable to cause physical damage.
 In the GIANNIS NK the Court held that the common law liability for the
shipment of dangerous goods is wider and includes goods not only that
are physically dangerous but also goods that cause delay and expense.
 The penalties
 Under the Hague-Hague-Visby Rules the carrier has the right to dispose
of dangerous goods without compensation and is indemnified by the
shipper against any damages or expenses directly or indirectly arising
from the shipment.
 At common law, the uninformed shipowner has a right to damages from
the shipper for expenses resulting from the shipment.
Competing Causes - Unseaworthiness
 Under Art III, r.1 of the Hague and Hague-Visby Rules, the carrier
has an overriding obligation to provide a seaworthy ship.
 Where an effective cause of the loss, damage or expense is the
shipowners' own breach of contract, the owners should not be
entitled to recover damages.
 For example if the loss of a vessel was caused by the actionable
unseaworthiness of a vessel, the owners would not be entitled to
compensation under Article IV r 6. This is so even if one other
contributory cause of the loss was the shipment of dangerous
goods.
 See the "FIONA" [1994] 2 Lloyds Rep. 506.
Dangerous Goods Claims – Case study
“THE GIANNIS NK” [1998]
The GIANNIS NK - 1998 1 Lloyds Law reports 337 - HL
 The shipper loaded a cargo of ground nut extraction meal pellets at
the port of Dakar, Senegal into hold 4.
 Cargoes of bulk wheat pellets had been loaded into other holds at
previous ports.
 The "GIANNIS NK" arrived in the Dominican Republic and was
inspected by the agricultural authorities, which discovered live
insects (Khapra Beetle) and shed skins in the cargo and the vessel
was quarantined.
 The vessel was fumigated twice but after each fumigation live
insects were still found in the holds.
 The vessel was ordered to leave the port with the ground nut cargo
and the wheat cargo still on board.
The GIANNIS NK - 1998 1 Lloyds Law reports 337 - HL
 Several countries where the beetle is not endemic regarded it as
highly undesirable and took serious steps to prevent its entry.
 The "GIANNIS NK" then sailed to US, where the US Department of
Agriculture inspected the cargo and identified Khapra beetle in the
ground nut cargo
 Notice was serve on owners to leave US waters, to return the cargo
to its county of origin or to dump it at sea.
 Eventually both wheat and ground nut cargoes were dumped at sea
The Giannis NK
 The courts found as a matter of fact that:
 The khapra beetle originated from the ground nut cargo loaded in
Senegal.
 There was no danger of infestation spreading from hold no. 4 to any
other hold.
 The shippers neither knew nor ought to have known that the cargo was
infested at the time of the shipment.
 Notwithstanding the above the shippers were found liable to the
shipowners for the time of the vessel and the owners expenses in
disposing of the cargo.
 The House of Lords found that, in breach of the contract of carriage,
the shipper had shipped goods of a dangerous character under
Article IV, Rule 6 of the Hague Rules.
The Giannis NK – Consequences for Shipper
 The courts decided that:
 liability at common law was strict (i.e. not dependant on “fault”) whether
the goods were physically or legally dangerous.
 a shipper would remain liable for the shipment of dangerous goods after
transfer of the bill of lading.
 the common law liability for the shipment of dangerous goods is wider
than under the Hague / Hague–Visby Rules.
 "Dangerous" was to be given a broad meaning. The danger can be to
either the ship or other cargo. A cargo of groundnuts infested with
Khapra beetle was physically dangerous and had caused damage to the
other cargo in that it had to be dumped overboard.
Recent Developments in Liquefaction Issues
 Branded the Deadliest Threat at Sea in recent years
 Between 2010 and 2013, loss of 6 ships and 81 lives each travelling
from Indonesia to China carrying nickel ore: "JIAN FU STAR",
"NASCO DIAMOND"; "HONG WAY"; "VINALINES QUEEN ";
"HARITA BAUXITE" and "TRANS SUMMERS"
Recent Developments in Liquefaction Issues
 Nickel Ore from Indonesia :
 Indonesia's Mining Law No. 4/2009 contained a requirement that mineral
ores (including nickel and iron ore) should be processed in Indonesia.
 The ban was eventually enforced with effect of 12 January 2014, but was
eased at the last minute to allow exports of many mineral concentrates
including iron ore.
 In order to circumvent the ban, Chinese importers are said to be buying
cargo with low nickel ore content and high iron ore content and declaring
the cargo as iron ore, which is not subject to the ban.
 The risk of dry bulk cargo liquefaction, therefore, remains very real in the
nickel ore trade between Indonesia and China.
Practical Considerations
 How to reduce exposure?
 Retention of team
 Investigation/evidence gathering
 Security
 Insurance
Lawyers for international commerce
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