On-deck containers overboard: Can the carrier rely on Hague-Visby limitations?

By BCShippingNews
March 30 2017
Thomas S. Hawkins, Maritime Lawyer with Bernard LLP
By Thomas S. Hawkins, Maritime Lawyer with Bernard LLP

Somewhat in keeping with the theme of this month’s issue, namely vessel safety, the Federal Court released a decision in January dealing with a loss of containers at sea and questions regarding application of the Hague-Visby Rules to on-deck carriage. The Hague-Visby Rules are enforced in Canada by virtue of the Marine Liability Act and establish a regime for the distribution of risks and responsibilities in the carriage of goods by sea between cargo owners and ocean carriers, and their servants and agents.

The Hague-Visby Rules apply to goods “of every kind whatsoever, except live animals and cargo which by the contract of carriage is stated as being carried on-deck and is so carried.” The allocation of risks set out by the Hague-Visby Rules did not seem appropriate to deck cargo and live animals reflecting their greater risks of damage at sea. However, it has been recognized in recent times that the exponential growth in the containerization of cargo and the use of modern container ships, where containers are stowed above and below deck, makes the exclusion of deck cargo under the Rules less appropriate.

A clean bill of lading implies a situation where the cargo owner is entitled to assume the goods are being carried under deck, and therefore protected with the Rules applying to them. In order for the Rules to be excluded from operation, two criteria are required: carriage on deck and contractual statement of this fact. Older cases — and the late professor William Tetley — asserted that the carrier cannot avail itself of the limitation of liability contained in the Rules if the carrier omitted to declare the on-deck stowage. More recently, English cases have held that, indeed, while on-deck carriage is a breach of the Rules, the defaulting carrier was nevertheless entitled to limit liability in accordance with the Rules.

The decision

The Federal Court in De Wolf  Maritime Safety B v. Traffic-Tech International Inc. 2017 FC23 rendered a decision on January 11, 2017, dealing with this specific issue. The case involved a container ship voyage from Vancouver to Rotterdam. The Plaintiff De Wolf was the owner and consignee of a shipment described as “one piece zodiac and spare parts,” which was stuffed into a container and loaded onboard the ship Cap Jackson in Vancouver. It turned out that the container was loaded on-deck, with other containers as is typical. The bill of lading did not declare that the container that included De Wolf’s zodiac was to be carried “on-deck,” although it was in fact so carried. Neither was there included in the bill of lading a liberty to stow on-deck clause. De Wolf contended that it was never made aware that its shipment could be stowed on-deck. The container was lost overboard during the voyage, did not arrive in Rotterdam, and De Wolf’s loss was approximately $100,000, although the value of the goods had not been declared by the shipper before shipment.

Issues for the court

The Federal Court was asked to decide two questions: Does the undeclared on-deck carriage of the cargo under the bill of lading prevent the Defendant from relying on the Hague-Visby Rules? If the answer to the first question is no, what then are the limitations applicable to the contract of carriage under the Hague-Visby Rules

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