Volcafe Ltd and another v Compania Sud Americana de Vapores SA concerned a cargo of coffee beans shipped in containers from South America to North Europe. The coffee beans were in unventilated containers by stevedores contracted by the carrier.

As Gard notes:

Coffee beans will emit moisture when carried from a warm to a cool climate. Stevedores contracted by the carrier lined the containers with kraft paper as a precaution against moisture damage. In spite of this precaution, the coffee beans showed evidence of condensation damage at discharge

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Cargo interests claimed against the carrier based on the fact that the damage was proof the carrier did not care for the cargo, thus breaching the Article III, Rule 2 of the Hague Rules. Especially, cargo interests claimed that the carrier had not used the proper amount of lining paper to conform to industry practice.

For the carrier's side, they argued that they had enough evidence the moisture damage was inevitable because of the characteristics of the cargo. For this reason it could rely on the inherent vice exception in Article IV Rule 2(m) of the Hague Rules.

The Supreme Court then considered the question of which party is responsible for the proof:

  • The cargo interests, to prove that the cargo was damaged by the carrier’s breach of Article III Rule 2 rather than the inherent defect, quality or vice of the cargo; or
  • The carrier, to prove they were not in breach of the duty to care for the cargo in their possession.

It decided that the application of the Hague Rules should be considered against the background of the common law of bailment. This means that if one party agrees to take possession of another party’s property, that person is responsible of taking enough care of that property. If it is returned damaged, it is that person’s burden to prove the absence of negligence.

Article III Rule 2 of the Hague Rules puts a responsibility on the carrier to 'properly and carefully to load, handle, stow, carry, keep, care for and discharge' the cargo. The Court also considered that this duty is similar to the common law position, and the carrier must prove they are not breaching this provision before they can rely on the inherent vice exception.

Gard also added that according to Lord Sumption JSC, who delivered the  judgement for the Court, the availability of the Article IV Rule 2(m) defence should not be considered as contradictory to the fundamental duty of care owed by the carrier under the general scheme of the Hague Rules. In order for a carrier to depend on the vice exception, they must prove:

  • Either that they were not in breach of Article III Rule 2 and the damage occurred anyway, or;
  • That the cargo would not have survived the voyage regardless of whether the carrier discharged the duty of care; i.e. the loss was inevitable.

Commenting on this decision for Volcafe, Gard said that it is an important decision, as it affects daily litigation practice. Nonetheless, it is not an extraordinary shift in the law far and beyond its very specific context.

Specifically, Volcafe establishes an important principle: that 'the carrier ha[s] the legal burden of proving that he took due care to protect the goods from damage, including due care to protect the cargo from damage arising from inherent characteristics such as its hygroscopic character' (Volcafe, at [43]).