Dangerous Cargo - The Chain of Causation

December 2001

(Sea Venture Volume 20)

A recent case in the English High Court dealing with both manifested and unmanifested dangerous cargo highlighted the importance in observing applicable regulations for the carriage of such cargoes, not least as regards stowage.

Containerised cargoes from various locations in Europe, America and the Far East were loaded on the feeder vessel "Kapitan Sakharov" in Khorfakkan in July 1993 for delivery to Dubai and Kuwait, the destination under the bills of lading.

About a day after leaving Khorfakkan, an explosion from a container on deck killed two crew members. A fire followed and the ship subsequently sank, with all its cargo.

Cargo claims were brought against the two carriers who had issued bills of lading covering the voyage from loading (in Europe, America, Far East) to the ultimate destination in Dubai or Kuwait. Depending on the jurisdiction in which the claims were brought, some were resisted using the fire defence, but others had to be settled.

These same carriers found themselves cast in the role of shippers and became defendants when "Kapitan Sakharov" shipowners, Northern Shipping of Archangel, filed suit in London against both carriers, arguing that one or the other had shipped unmanifested dangerous cargo causing the initial explosion.

The carriers counter sued "Kapitan Sakharov" owners to recover cargo claim settlements, fees, loss of containers and interest.

Claims for loss of life, loss of vessel, loss of profits and cargo claims were in the region of US$ 25 million.

Detailed investigations into the histories of the containers suspected of causing the initial explosion revealed that one container’s history could not be fully accounted for, indicating it could have been tampered with prior to it arriving at Khorfakkan. It was no longer possible to contact any of the parties involved in this shipment.

The Court ruled that this container had unmanifested dangerous cargo, and that this was the source of the initial explosion – but not the sinking. The Court ruled that the ship sank because it was unseaworthy, having stowed (manifested) dangerous cargo (isopentane) underdeck. This stowage contravened the Russian version of the IMDG code (which applied as "Kapitan Sakharov" was a Russian flag vessel). Tanktainers of isopentane may only be carried underdeck if mechanical ventilation was in operation, and "Kapitan Sakharov" had no mechanical ventilation underdeck. The heat from the fire created a second explosion underdeck amongst the isopentane containers. This allowed water to flood into cargo compartments. The vessel became unstable and sank.

The carriers found to have shipped the unmanifested cargo became liable for losses relating to the initial explosion, including damage to the ship, loss of life and some cargo losses.

However, "Kapitan Sakharov" owners, having breached Article III Rule 1 of the Hague Rules, by failing to exercise due diligence to make the vessel seaworthy, were unable to recover the loss of the vessel from the shippers/carriers. Owners were also liable for cargo losses resulting from the sinking (but not the initial explosion).

The Court found that the Shipowners were not liable to the "innocent" carrier for loss/damage to their cargo caused solely as a result of the initial fire/explosion, because the Court accepted that the Owners could not have found out about the unmanifested cargo and had therefore exercised due diligence.

Thus the Court ruled that there was a break in the chain of causation between the initial on deck explosion and the sinking (caused by the under deck explosion), and that had the isopentane been properly stowed, the ship would not have sunk. This demonstrates the importance of complying with the IMDG Code and any other applicable regulations/legislation, whether in the countries of shipment, destination, transit or elsewhere including, as in this case, the vessel's flag state..

The judgement was appealed, but the Appeal Court upheld the original judgement¹.

¹ [2000] 2 Lloyd's Rep. 255