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Liability for Damage to Sea-Borne Cargoes – Court of Appeal Test Case

Container PortIn a test case of importance to those involved in the international trade in perishable goods, the Court of Appeal has given guidance on the correct interpretation of the Hague Rules – the international convention which for almost 100 years has regulated liabilities in respect of damage to sea-borne cargoes.

The case concerned nine consignments of Colombian coffee beans that had arrived at their destinations having suffered condensation damage. The cargo owners sued the sea carriers on the basis that the beans had been improperly packed in containers and a judge found the latter liable for the $62,500 loss.

The carriers agreed that they owed a duty under the contracts of carriage to take reasonable care of the cargo, but denied that they owed an absolute duty to deliver the cargoes in good order and condition. In upholding their appeal, the Court found that the judge had misconstrued the relevant parts of the Hague Rules.

Expert evidence established that coffee beans are prone to condensation damage when being transported from a hot climate to a cold one. That was an ‘inherent vice’ within the cargo, within the meaning of the Hague Rules, and it was thus incumbent on the cargo owners to show that the particular damage had been caused by the carriers’ negligence. Had the judge employed the correct burden of proof, he would have found that the damage to the cargo was inevitable and that the carriers had employed a sound system in packing the beans.