According to the English law, the position has always been that all documents, correspondence and other materials regarding a case are disclosable, unless a narrow exception such as 'privilege' applies. Disclosure in court litigation occurs when legal pleadings are closed. The new rules on disclosure now mandate disclosure of documents at a much earlier stage.
The Volcafe case is important to the question of 'who has the burden of proving what' when damage takes place to cargo during carriage. The Supreme Court analysed the relevance of the English common law of bailment, the burden of proof under the Hague and Hague-Visby Rules (the Hague Rules) and the interplay between a carrier's duties and the defences/exceptions available to the carrier under the Hague Rules.
Despite the fact that the rules on disclosure in arbitration proceedings have not changed, the Volcafe case could have an impact on how arbitrations are run as the decision brings in a shift in the parties’ burdens of proof.
As the UK P&I Club explains, the claim in Volcafe was a typical cargo claim involving bagged coffee shipped in standard unventilated containers from Colombia to Bremen in Germany during the winter of 2012.
Upon outturn, a small number of bags had sustained wet damage. The carrier was obliged under the contract of carriage to line the containers with paper to protect the cargo against condensation damage. The claimants claimed that the carrier was breaching its obligation in failing to carefully and adequately prepare the containers.
The trial judge concluded that the evidence did not establish what thickness of paper, nor how many layers were used, nor what ought to have been done to protect the cargo. As a result, he could not determine if the steps taken to protect the cargo were meeting the industry practice or were enough.
The Supreme Court stated that a bill of lading contract is a contract of bailment and the burden of proof in bailment is not changed by the Hague Rules, which are concerned with the standard of performance.
The court decided that the carrier had the legal burden of proving that it had not been negligent in its care of the cargo before it could rely on an Article IV Rule 2 Hague Rules exception. It was not for the cargo owner to prove that the carrier had been negligent.
The new Disclosure Scheme under the Civil Procedure Rules
The main purpose behind the new disclosure rules is to limit the costs and the time burdens under the current rules. The duties owed by parties and their legal representatives on disclosure and preservation of documents are now expressly set out in the rules. Namely:
- Parties must now provide written confirmation that they have preserved all documents that may be relevant to the proceedings;
- Parties will now normally have to provide disclosure – known as Initial Disclosure – with their particulars of claim or defence.
In brief, disclosure of evidence by parties must now generally take place at a much earlier stage in proceedings. Relevant documents may include communications by text messaging, social media and/or instant messaging platforms such as WhatsApp, WeChat and Line. These are disclosable even if the mobile phone in question is not in the control of the defendant or plaintiff company. Companies must therefore ensure that they have a policy for employees to save and preserve communications on their electronic devices.
'Initial Disclosure' requires a party to prepare a list which contains electronic copies of key documents on which that party seeks to rely in support of its claim or defence. It also includes key documents which are necessary to enable the other party to understand the claim or defence to be met. Previous requirements for searches to be made for further documents no longer apply. Instead, parties now have to give brief descriptions of the searches they conducted in creating the lists of documents served with their submissions.
Do adverse documents need to be disclosed at Initial Disclosure? The rules are not clear on this point but the current view is ‘no’, although such documents will need to be disclosed later in proceedings if the claim progresses.
Either party can apply for “Extended Disclosure” if it wants to seek documents in addition to what is provided under Initial Disclosure, but it is worth noting that the new equivalent of the old “standard disclosure” is no longer to be considered the default option. Instead, parties are expected to look to the request-based model of disclosure seen in arbitration proceedings.
In arbitration cases involving cargo damage resulting from a breach of an Article III Rule 2 obligation, parties now have to be prepared for wider and earlier disclosure as a result of the decision in Volcafe.
Concluding, the UK Club says that in order to deal with claims effectively, the following measures should be taken:
- Gather as much evidence of any incident as soon as possible;
- Obtain comprehensive contemporaneous survey reports, with photographs;
- Request surveyors/agents to retain any physical evidence that may be relevant;
- In the case of containerised cargoes, check containers regularly and, if relevant, download any data logs at an early stage; ensure that all container and pre-trip inspections are well documented;
- Note and retain any guidelines and/or industry practice on the carriage of the particular goods and check whether any industry practices and/or loss prevention guidelines were, in fact, complied with;
- Consider whether it is appropriate to ask the shipper for information on how to care for the goods – and retain a written record of their comments;
- Consider whether any actions of other parties may have contributed to the damage caused e.g. terminal operators, stevedores etc. Again, any documentary evidence should be requested and retained.
The effect of Volcafe and the new disclosure rules is that more upfront work may be required to ensure that all relevant documents are considered and collected timely. This change may prompt earlier settlement discussions as parties consider potential costs savings in avoiding earlier disclosure requirements
the Club stated.