Sea Water Ingress and Unseaworthiness

September 2006

Article III of the Hague Rules obliges the Carrier to exercise due diligence before and at the beginning of the voyage to make the ship seaworthy. This point is reiterated in Article IV:

"Neither the Carrier or the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the Carrier to make the ship seaworthy."

Despite the provisions in the Hague Rules when cargo damage is alleged and the bills of lading have been issued without remarks most cargo interests seek to argue the liability for such damage necessarily should rest with the vessel.

In fact, the legal position under the Hague Rules, as confirmed by cases such as the "Eurasian Dream" is that, in the event of loss or damage to cargo, a claimant has to establish that the vessel was unseaworthy in order successfully to claim against the ship owner. It is only when causative unseaworthiness is established that the onus falls on the ship owner to show that due diligence was exercised to make the vessel seaworthy.

On this basis, and providing that the ship owner can establish seaworthiness at the start of the voyage, there is potential for the Carrier to avoid liability for alleged cargo damage during the voyage.

The English High Court addressed precisely these issues in the recent case of Ceroilfood Shandong Cereals and Oils (2) Jose A Y Gerardo E Zuluaga Limited v. Toledo Shipping Corporation*, a decision published in early August.

The MV "Toledo Carrier" carried a consignment of garlic under a clean bill of lading from Qingdao, China to Cartagena & Mamonal, Colombia. Upon arrival at the discharge port (February 2002) three quarters of the consignment was unfit for use on the basis of preshipment germination.

A dispute arose over the remaining quarter of the consignment, which was not affected by pre-shipment germination but was moisture damaged. The shipper and the consignee (the Claimants) contended that the shipowner was responsible for the damage which, they alleged and sought to argue was caused by sea water ingress; a clear indication of unseaworthiness.

The Claimants alleged that silver nitrate tests conducted on samples taken from the moisture damaged cargo were positive, thereby confirming the presence of chlorides (and indication of contact with sea water). They sought to rely on the silver nitrate tests as proof of sea water ingress through the hatches which, according to the Claimants, meant the vessel was unseaworthy and the burden therefore fell on the ship owner to show the exercise of due diligence prior to and at the beginning of the voyage as well as that reasonable care had been taken of the cargo (in line with its obligations under Article III Rules 1 and 2 of the Hague Rules) during the voyage.

The Claimants alleged the damage was caused as a consequence of faulty hatch covers, and/or a backflow in the bilges, and/or water ingress through the vent pipes. The ship owner argued that this was mere speculation, that the silver nitrate tests were unreliable, and that there was no evidence of sea water ingress on the hatch covers. Further, it was puzzling how, if there had been sea water ingress, only the cargo not suffering from preshipment germination was affected.

Judge Mackie QC concluded that the case was fraught with uncertainties. He did not rule out the possibility of sea water ingress but concluded:

"the Court does not accept that the vessel was in any causative respect unseaworthy at the start of the voyage or in any other state that can give rise to liability under Articles 1 and 2"

The claim was rejected, and the question of the exercise of due diligence to make the vessel seaworthy did not arise.

Of particular interests was Judge Mackie QC's obiter comments in relation to sea water ingress. Provided that a carrier is able to demonstrate any loss or damage was solely caused by any of the 17 exceptions to liability set Article IV r. 2 of the Hague Rules the ship owner should be ale to defend a consequent claim. "Perils of the Sea" is one of these exceptions and in this respect Judge Mackie QC commented:

"If the claimants establish that there was an unexpected ingress of sea water into the vessel's holds then that will be a peril of the sea within Article IV Rule 2c and the defendants will not be liable unless the Claimants have established either causative negligence or shown that the vessel was unseaworthy at the start of the voyage and that the loss or damage was caused by that unseaworthiness."

These comments are a reminder to cargo interests, who routinely attempt to argue on the basis of speculative theories on causation, that any sign of sea water ingress makes a finding of unseaworthiness a fait accompli. Logically without more ingress of sea water is nothing more than a peril of the sea.

*[2006] EWHC 2054 (Comm)