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Hague Visby Rules – cargo damage and the shifting burden

Milan Nigeria Ltd v Angeliki B Maritime Company [2011 EWHC 892 (Comm) (The "Angeliki B")

Milan Nigeria Ltd v Angeliki B Maritime Company [2011 EWHC 892 (Comm) (The “Angeliki B”)

When part of a bulk or bagged cargo is damaged in carriage, is it for the cargo owner to demonstrate precisely how much cargo has been lost/damaged due to carrier default, or is it for the carrier- in denying liability - to prove to what amount of damaged cargo is covered by the exceptions in Article IV Rule 2 of the Hague/Hague Visby Rules? The Commercial Court has now clarified the burden of proof in such claims.

The claims

The dispute involved claims by Milan Nigeria Ltd (‘Milan’) for short delivery and alleged caking/wetting damage to the cargo of bagged rice. Angeliki B Maritime Co (‘Angeliki’) carried the cargo under bills of lading incorporating the Hague Rules. The goods had been shipped from Bangkok to Lagos and Port Harcourt between May and September 2001. The bills of lading incorporated charterparty provisions providing for English Law and arbitration in London.

Milan alleged that Angeliki had failed to “properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried” as required by the Hague Rules. Angeliki countered by alleging that the cargo had suffered from “inherent defect, quality or vice” and therefore it was not liable pursuant to Article IV Rule 2.

Arbitration award

The tribunal rejected any shortage claim but upheld the damage claim in part and awarded Milan $150,000 (out of its total claim of $396,457.42) on the basis that it had not discharged the burden of proving that all of the damage suffered to the cargo was due to Angeliki’s breaches of contract. The tribunal also highlighted that Milan was aware that a vessel of this type and age, was unlikely to be mechanically ventilated and therefore Milan had to take some responsibility. On weighing the evidence, the tribunal concluded that Milan should accept the larger share of the responsibility for the cargo damage.

Milan then appealed pursuant to Section 69 of the Arbitration Act 1996.

The Commercial Court

The court relied on the proposition that it is the carrier- not the cargo owner - who bears the burden of proving the cause of the damage to the cargo. The carrier will only escape liability for damage if, and to the extent that, he establishes that such damage was caused by one of the exceptions set out in Article IV Rule 2 of the Hague Rules (Gosse Millerd v Canadian Government Merchant Marine [1929] AC 223, 234), and subject also to demonstrating the exercise of due diligence make the vessel seaworthy.

The court held that the tribunal had wrongly placed the burden of proof on Milan. Gloster J, concluded  that if the tribunal had applied the burden correctly, it would have been for Angeliki, the carrier, to establish how much of the damage was due to inherent defect, quality or vice or any other excepted peril under Article IV of the Hague Rules.  The court therefore allowed Milan’s appeal and remitted the award to the tribunal for reconsideration in accordance with the correct test, namely that the burden of proof is upon owners to establish that some part of the cargo damage falls within an excepted peril.    

This case serves as a useful reminder of who bears the burden of proof in establishing the cause of damage in sea carriage cases. Once there is prima facie evidence - to be produced by the cargo owner - of loss/damage having occurred within the period of carriage, the burden then shifts to the carrier to demonstrate the exercise of due diligence and (as appropriate) to prove with reference to the exception just how much cargo has been damaged due to the excepted circumstance.

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