Clean Bills Of Lading - Live Weevils

June 2003

(Sea Venture Volume 21)

A few hours after the commencement of loading of a cargo of bagged rice at Kakinada, the Duty Officer of a vessel found live weevils on the bags. Based on a quite common provision in the Charterparty for the vessel only to load cargo for which "clean on board" Bills of Lading could be issued, the Master stopped loading and requested that Charterers tender fresh cargo.

Charterers objected and relied on a clause of the Charterparty (on the Synacomex 90 form) dealing with fumigation. The standard clause 11 had been amended such that Owners certified that the vessel was in all respects capable of, and agreeable to, in transit fumigation. In addition, pursuant to the clause, Owners and/or the Master agreed not to clause Bills of Lading as a result of, "said fumigation". Charterers said that the cargo was always going to be fumigated after completion of loading and as a result, the weevil infestation would be dealt with such that clean Bills of Lading could be issued.

That was the core of the dispute which went to Arbitration in London. The three member Tribunal was split with the majority holding that whilst a reasonable Owner/Master would be aware that all rice cargoes contained insects and that the invariable practice was to fumigate such a cargo regularly (including after completion of loading), it was difficult to accept that all such cargoes would contain live insects to the extent that they were readily detectable as the cargo came on board.

The Tribunal noted that for the purposes of the Bill of Lading, the Master's duty in a situation such as this was to state his honest assessment of the apparent order and condition of the cargo. The Master was not required to be a surveyor or expert or to conduct tests or detailed examinations. Importantly, the time at which the Master has to judge the condition of the cargo is on loading. So, the fact that the Master is aware that the cargo will be fumigated after shipment was not relevant and the question was not whether the cargo was sound or was to become sound. Rather, the important issue was the appearance of the cargo (ie apparent order and condition) as it came on board.

Beyond that, whilst not necessary for the decision in this case, the majority also accepted two further arguments. First, the issuing of Bills of Lading which do not correctly state the apparent good order and condition of the cargo on loading is contrary to Article III Rule 3(c) of the Hague Rules¹ and also has the effect of relieving Owners of their responsibility under those Rules. On that basis, clause 11 was liable to be struck down pursuant to Article III Rule 8 of the Hague Rules. Second, to the extent that the amended clause 11 was to be interpreted as requiring the condition of the cargo to be mis-stated on the Bill of Lading, that was likely to deceive somebody, most likely the Receivers and on that basis, clause 11 was unenforceable. This was a variation of the principle in Brown Jenkinson² that an agreement to commit a fraud on the Receiver was unenforceable.

So, whilst each decision depends on the facts of the case, if an Owner agrees to a Charterparty by which he is required to load only cargo for which clean on board Bills of Lading can be issued, it is up to the Master to decide what the apparent order and condition of the cargo is as it comes on board. Charterers relying on fumigation at the completion of loading to remedy any problems such as insect infestation are likely to face real problems.

With thanks to Graeme Lloyd of Fishers for preparing this article.

1.The Hague Rules applied in this case but the same principles would equally apply to Bills of Lading subject to the Hague-Visby Rules. 

2.[1957] 2 QB 621