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Introduction
The carriage of goods on deck is the most hazardous form of sea transport, with the goods being exposed to the risks associated with wind, waves and weather. For this reason, for many years it was accepted practice for vessel owners and charterers to exclude any and all liability for loss of or damage to goods carried on deck, provided the shipper agrees to his goods being carried on deck. But what protection is there for a carrier who carries goods on deck without the knowledge of the shipper, or even against the shipper's express request for below-deck stowage?

The Chanda
Under English law, unauthorised deck stowage has been traditionally viewed as a fundamental breach of the contract of carriage, the consequence of which is that the carrier loses his entitlement to rely on any other defence that may be available to him under the contract, and in particular, any right to limit his liability. In the CHANDA1 Mr Justice Hirst stated:
"Clauses which were intended to protect the ship-owner provided he honoured his obligation to stow goods under deck did not apply if he was in breach of that obligation; the package limitation fell within this category since it could hardly have been intended to protect the ship-owner who as a result of the breach exposed the cargo in question to such risk of damage; the package limitation clause being repugnant to and inconsistent with the obligation to stow below deck was inapplicable."

Issue re-addressed
Although criticised by many commentators, this decision has stood firm for 13 years. However, in a recent case in the Commercial Court in London concerning the vessel KAPITAN PETKO VOIVODA,2 the issue of unauthorised on-deck stowage and limitation was re-addressed. The shippers had contracted pursuant to the Hague Rules for the carriage of 34 new excavators from South Korea to Turkey. The excavators were stowed below deck. At an intermediate port, they were re-stowed, and 26 excavators were stowed on deck without the shippers' knowledge or consent. During subsequent heavy weather, eight excavators were lost overboard and others suffered wetting and rust damage. Shippers claimed for loss and damage in the amount of USD 785,000 plus interest and costs.

It was agreed by the parties that the carriage of the cargo on deck was a breach of the terms of the contract.

On the assumption that deck carriage was the effective cause of the loss and damage, and that the loss and damage was caused by deck carriage and one or more of inadequate lashing, perils of the sea, or insufficiency of packing, a preliminary issue was tried as to whether the defendants were precluded from relying on the Hague Rules limitation provisions and other defences by reason of the unauthorised deck carriage.

Arguing the principles adopted by the court in the CHANDA, shippers averred that they were entitled to recover in full.

The decision
In his judgment, Mr Justice Langley accepted the defendant carriers' comparison of the obligation to stow goods below deck with the obligation to comply with any other express instructions of the shipper for the care of cargo, such as temperature control. In the latter case, there is no question that the carrier would be entitled to limit liability if he failed to observe the instructions of the shipper to maintain the cargo below a specified temperature. Taking this line of argument further, the carriers also referred to the lack of authority for denying the right to limit liability even in cases where the over-riding obligation as to seaworthiness had been breached.

The carriers argued that the CHANDA produced the absurd result that the more careless the carrier was, for example by allowing the cargo to fall overboard during re-stowage operations, the more chance he would have to limit liability, than if he had taken all necessary care to properly stow and lash the cargo on deck but it washed overboard during heavy weather.

Mr Justice Langley rejected the arguments of the cargo interests that unauthorised deck stowage was a breach of the contract of carriage so serious as to deny the carrier the right to limit liability for loss or damage. In doing so he referred to the comments of the Court of Appeal in the HAPPY RANGER decision,3 a case in which the limitation provisions of the Hague-Visby Rules were considered in relation to a breach of the over-riding obligation of seaworthiness in Article III Rule 1. In that decision, Lord Justice Tuckey interpreted the limitation provisions in Article IV Rule 5(a), which provides:
"… neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding 666.67 units of account per package or unit …"

In that case it was held that the words "in any event" are clear and mean what they say - there is no restriction on the scope of application of the limitation provided therein. In the KAPITAN PETKO VOIVODA, Mr Justice Langley applied this reasoning to the similar provision in the Hague Rules, and agreed that the carrier was entitled to limit his liability for loss or damage to deck cargo, even in cases where the shipper had not agreed to the goods being stowed on deck.

Cargo interests have been granted leave to appeal this decision. Gard News will report further developments of this issue as they occur.

1 1 [1989] 2 Lloyd's Rep. 494.
2 2 Daewoo Heavy Industries Ltd and Anr v. Kilpriver Shipping Ltd (The KAPITAN PETKO VOIVODA) - QBD (Com Ct) (Langley J) - 11th July 2002. LMLN 593 of 8th August 2002.
3 3 [2002] 2 Lloyd's Rep 357. See article "The case of the damaged reactor - The HAPPY RANGER" elsewhere in this issue of Gard News.

 

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