‘The Aqasia’: No limit of liability in bulk cargo cases

The Stadard P&I Club has provided update on the case of the Aqasia, handed down by the Commercial Court on 13 October 2016 which clarifies that there is no limit of liability in bulk cargo cases because there is no relevant ‘package’ or ‘unit’ to which such limit can apply.

Article IV Rule 5 of the Hague Rules provides that the carrier’s liability for loss or damage to or in connection with goods shall not exceed £100 ‘per package or unit’.

The Facts

In September 2013 the vessel loaded 2,056,926 kgs of fishoil in bulk at Faskrudsfjordur and Vestmannaeyjar under a Congenbill bill of lading. About 550,000 kgs loaded into tanks 1P, 2P and 5S were commingled with further cargo of fishoil loaded at Lovund. The cargo was found to be damaged at the discharge port.

The dispute arose under a charterparty between the charterer, who was also the shipper under the bill of lading and the vessel’s disponent owner. The disponent owner was not the carrier under the bill of lading. The charterparty incorporated the Hague Rules.

The claimant charterer claimed damages for USD 367,836 together with interest and costs. The defendant owner accepted liability but argued that it was entitled to limit liability up to GBP 57,730.90 (i.e GBP 100 per mt of cargo damaged) pursuant to Article IV Rule 5 of the Hague Rules.

The High Court Decision

The Judge held that the word ‘unit’ in Article IV Rule 5 of the Hague Rules cannot apply to bulk cargoes and that even if it could apply, the only legitimate application would be by way of interpreting the word ‘unit’ as ‘freight unit’. This could not be done in the present case in a way which would provide a lower limitation figure than the claim due to the lump sum nature of the freight. The claimant charterer was successful in this instance.

Source: Standard P&I Club