Container carrier under no obligation to verify cargo mass
24 October 2024
STOURNARAS STYLIANOS MONOPROSOPI EPE v MAERSK A/S
Judgment has recently been handed down in the Commercial Court in this case, which examined the extent of a carrier’s obligation to verify the weight of containers against details provided in shipping documents, including draft bills of lading.
Background
The claim was brought by the purchaser of three consignments of copper, shipped from Dubai to Greece in 22 containers. The claimant was the victim of a fraud committed by the shipper of the goods, by which the copper that should have been in the containers was replaced with worthless breeze blocks. The resulting loss to the claimant was in excess of US$700,000.
The shipper vanished so the claimant sought recourse against the carrier, Maersk, pursuant to the terms of the relevant bills of lading.
The claim and counterclaim
The claim was advanced on three alternative bases:
- That the carrier had breached Article III Rule 3 of the Hague Rules (as contractually incorporated into the bills of lading), by failing to carry out its assessment of the apparent order and condition of the goods at loading with reasonable care and skill.
- A claim in tort for negligent misstatement by the carrier, based on an alleged implied representation by the carrier that it had no actual knowledge of facts that would lead to a suspicion that the particulars furnished by the shipper were inaccurate.
- A claim for breach of duty of care owed to the claimant (as consignee) by the carrier, the terms of which required the carrier to take reasonable steps not to issue a clean bill of lading where the carrier knew or suspected its terms to be fraudulent.
The claims under each cause of action were premised on the claimant’s assertion that the carrier knew, or ought to have known, that there was a significant discrepancy between the alleged weight of the cargoes set out in the shipping documents, and their actual weight. This in turn was based on the accepted position that the carrier received verified gross mass (“VGM”) data in relation to each container from the terminal operator, DP World, and that a comparison between the VGM data and the declared weights of containers in the shipping documents showed significant discrepancies, which the claimant failed to identify or act upon.
The claimant argued that this amounted to an “egregious failing” in the carrier’s systems and exposed the carrier’s customers to fraud of the type experienced in this case. Further, that the carrier’s failure to act (particularly by clausing the bills), meant that the effect of the fraud was irrevocable.
The carrier’s position was that it was simply not its practice to call up data in order to compare the shipper’s declared weight with the VGM and that the VGM data was analysed solely for safety purposes. It opposed the claimant’s contention that a reasonable inspection of the containers required the carrier to carry out a verification of the VGM of the type envisaged, or that this was standard industry practice in 2019.
The carrier also relied upon the “weight unknown” wording in the bill of lading terms.
The carrier advanced a counterclaim for freight, container demurrage and destruction costs.
The judgment
In dismissing the claim and allowing the counterclaim, the court made a number of findings in favour of the carrier:
- The claimant had not established that there was any appreciation by carriers at the time (2019) that could be discrepancies between VGM data and information in shipping documents, or that consignees might become the victims of the shipper’s fraud. Establishing the VGM was introduced purely for safety purposes.
- The fact that the carrier could have cross-checked the weight data did not, in the circumstances, mean that it should have. The carrier was not in breach of its obligation to carry out a reasonable inspection of the containers or to clause the bills of lading with any relevant observations regarding their weight.
- The obligation to carry out a reasonable inspection (see above) is not negatived by a “weight unknown” provision. A stage must be reached where the discrepancy between cargo actually loaded, and cargo alleged to have been loaded is so great that it must be obvious to any master that the bill of lading quantity is fallacious. However, this was irrelevant in the present case because of the finding above that a “reasonable inspection” did not require the carrier to compare the VGM data with the information set out in the shipping documents.
- The proviso in Article III Rule 3 of the Hague Rules, “Provided that no carrier, master or agent of the carrier shall be bound to state or show in the bill of lading any marks, number, quantity, or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking,” leaves no room for implied terms of the type suggested by the claimant as the foundation of its case on negligent misstatement. The claim under this cause of action also therefore failed.
- Maersk did not owe a duty to the claimant to compare the shipper-declared weights with the VGM-verified weights.
The Birketts view
This authority provides some helpful guidance on the court’s approach to claims of this type relating to containers, where previously the authorities related overwhelmingly to bulk cargoes. The case reinforces the position that a carrier’s obligation in relation to investigating the condition of containers is generally limited to an external inspection and may not extend to a detailed check of the extent to which the container complies with shipping information. This will come as a relief to the industry, where more onerous expectations of carriers could increase delays and drive up costs.
A word of caution however – the judgment emphasises that the court’s findings are based on practices in 2019, when these events occurred. Maersk itself now has more sophisticated systems in place to make use of VGM data and as technology and customary practices move on, it is possible that expectations on carriers to analyse and act upon data could also increase. Clearly it remains in the best interests of all to be as vigilant as possible and to respond proactively when any suspicion of fraudulent activity arises.
Sectors
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2024.