Société de Distribution de Toutes Merchandises en Côte d’Ivoire & Ors -v- Continental Lines NV & Anr (The ‘Sea Miror’) [2015]

In this case the Commercial Court in London had to decide a preliminary issue on a point of law on the basis of assumed facts. The question was whether, assuming that damage to cargo was caused by stevedore negligence during loading or discharge from the vessel, liability for such damage lay with the carrier.

The bills of lading incorporated the terms of a voyage charterparty on the Synacomex 90 form. Clause 5 of the voyage charterparty provided as follows:

‘Cargo shall be loaded, spout trimmed and/or stowed at the expense and risk of Shippers/ Charterers at the average rate of 1,500 metric tons per weather working day… Cargo shall be discharged at the expense and risk of Receivers/Charterers at the average rate of 1,500 metric tons per weather working day… Stowage shall be under Master’s direction and responsibility…’

It was accepted by the parties that by virtue of the words ‘Stowage  shall be under Master’s direction and responsibility’ the carrier was liable for damage caused by bad stowage. It was also common ground that whilst loading, stowage and discharge is the obligation of the carrier at common law, responsibility for those functions can by an express agreement be transferred to the cargo interests (both at common law and under a contract subject to the Hague Rules), as confirmed by the House of Lords in The Jordan II [2004]. For a term in a contract of carriage to result in such a transfer, it must be clear.

It was accepted by cargo interests that had the charterparty provided expressly for the charterers/cargo interests to perform the loading and discharge, that alone would have been sufficient to transfer responsibility to the charterers/cargo interests. However, the charterparty did not make any express provision as to who was to perform the loading and discharge.

Accordingly, the key question for the court was whether clause 5 of the Synacomex 90 Form, and in particular the words ‘at the expense and risk’, did indeed in clear terms transfer the common law responsibility for loading and discharge from the carrier to the charterers/cargo interests.

For cargo interests it was submitted that the mere fact that the expense of loading/discharge was to be for the account of cargo interests was insufficient to transfer the common law responsibility (which is clearly correct, based on House of Lords authority). As regards ‘risk’, it was submitted that risk should not be equated with responsibility, but should be interpreted as meaning the risk of loss/damage occurring fortuitously (without fault). In the alternative it was argued that it was to be interpreted as the risk of delay in the cargo operations.

The judge had scant regard for the second alternative (the risk of delay). Clearly the risk of delay was dealt with by the demurrage provisions in the charterparty, not by the provisions of clause 5.

As regards cargo interests’ primary argument, having considered a number of authorities, the judge concluded  that ‘risk’ should be equated with ‘responsibility’. Clause 5 therefore clearly transferred responsibility for loading/discharging operations to cargo interests.

The judge’s conclusion is not surprising.

He went on to state in the final sentence of the judgment:

‘It follows that, to the extent that it is established that damage to the bags of rice was caused by bad loading and/or discharge (as opposed to bad stowage) that damage is the responsibility of the cargo interests who cannot recover in respect of such damage from the carrier.’