Cargo claims: who bears the burden of proof under the Hague-Visby Rules?

Updated: Sep 13, 2020

Tracing back from the highlight of the Supreme Court decision in Volcafe v. CSAV [2018] UKSC 61


This is deemed a remarkable case as it addresses the issue of which party in a cargo claim, within scope of the Hague-Visby rules of 1968, bears the burden of proof when it comes to the breach of the duties of the carrier set forth under Article III(2) of the Rules, as the Rules are silent on that matter.



Factual Background


The case entailed a contract of carriage which involved the shipping of nine consignments of green coffee beans which are hygroscopic meaning that the create moisture when in transit between warmer environments to cooler environments in this case the cargo was from Colombia to Germany which is in northern Europe.


It was specified by the shipper that the nine consignments that the coffee beans were kept must be in unventilated containers covered by paper or card to avoid condensation, which would cause damage to the goods. The carrier complied by shipping the coffee beans; however, against the shipper’s expectation, the carrier used Kraft paper to try to achieve the requested result only in two consignments, which resulted in the cargo owner to seek damages to meet the suffered loss.



















In instituting the claim, the shipper claimed that the carrier did not take reasonable care to the goods and was, on that note, negligent, relying on Article III(2) of the Hague-Visby rules which entails:

“Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried”

The carrier, acting in his defence claimed that the damages were caused by inherent vice of the goods and relied on Article IV(2)(m) of the Hague-Visby rules, which entails:

“Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from: (m) Wastage in bulk of weight or any other loss or damage arising from inherent defect, quality or vice of the goods”.


Hence as a result this case came to answer what is commonly ascertained to be a confusion on which party in the contract of carriage is to bear the burden of proof in terms of where the defences under Article IV(2) of the Hague-Visby rules are raised by the carrier concerned in respect to a cargo claim.


Earlier decisions leading up to Volcafe v. CSAV


The Court of first instance, presided by judge David Donaldson QC, found that the carrier did not to meet his obligations which are specified under Article III(2) of the Hague-Visby Rules and that he couldn’t rely on the defence under Article IV(2)(m). The court found that ‘inherent vice of the goods’ itself to be insufficient to evade a negligence claim and characterised ‘inherent vice of goods’ as ‘unimportant’ but defined the concept as;

“the unfitness of the goods to withstand the ordinary incidents of the voyage given the degree of care which the ship owner is required by the contract to exercise in relation to the goods.”

In its reasoning the court denied the carrier to raise the defence and concluded that the carrier had a burden to prove that he took reasonable care under Article III (2).


The Court of Appeal, presided by Lord Flaux, in making its decision out ruled the decision made by the first instance court and made significant changes in accepting the carriers use of the defences under Article IV(2) of the Hague-Visby Rules. In addition, the Court relied on the decision of Glendarroch [1894] P226, and concluded that the cargo owner had the burden to prove that the carrier acted negligently in a claim raised under Article III(2) of the Hague-Visby Rules and upon such a defence under Articles IV(2) of the Hague-Visby rules is raised the cargo owner had the burden of proof to show negligence occurred on the carriers fault.

The relevance of the Supreme Court's decision to the application of the Hague-Visby rules


Presided by Lord Sumption, the Supreme Court set aside the appeal and overturned the Court of Appeal’s decision, establishing that, for the carrier to seek for defences under Article IV(2) of the Hague-Visby rules, he had to first discharge the burden of proof to show that he took reasonable care to protect the goods from harm. The Supreme Court justified its decision on grounds that, a claim arising from Article III(2) accords the carrier that duty. The cargo owner, then no longer bears a burden of proof, as was established in the Court of Appeal on bases seen in the Glendarroch case.


In this regard, the Supreme Court opted to set aside the claim, in reference to the Glendarroch case because it deemed 'an exception to an exception' approach as 'unsatisfactory' and as not meeting the purpose of contract of bailment. As the contract of carriage meets this standard, the carrier had the sole duty to show he took reasonable care of the goods before invoking the defences set forth under Article IV (2) of the Hague-Visby rules.


The Supreme Court, in absence of clarification in the Hague-Visby rules of which party is to bear the burden of proof, with both Article III (2) and IV (2) silent on the matter, uplifted the common law principles of bailment, which entailed the carrier being a bailee (as found the case of China Pacific S.A. v. Food Corporation of India, where the house of lords noted that:

It is sufficient that the bailee acts reasonably in pursuance of his duty to take reasonable care of the goods.”

On that account, the carrier is liable for his duty to care for the goods and, in order to rely on any of the exception, he must show and prove the damage or loss occurred in absence of fault on his part as far as Article IV(2) defences are concerned.


The Court established key criteria's in application of the Article IV (2) defences of the Hague-Visby rules which are:


(i)The carrier has to show and prove he did not breach his duty to care.

(ii)The carrier must be beyond reasonable doubt not be negligent.


In regards to ‘inherent vice,’ in this case, the carrier had the duty to prove he took reasonable care and that he did not breach his duties set forth under Article III (2) of the Rules. In that regard, on raising the defence under Article IV (2) (m) of inherent vice of the goods, the carrier did not breach this duty and he took the necessary care of the goods; nothing else than inherent vice caused the damage of the goods.


The Supreme Court set a great standard for carriers in regards to burden of proof in claims relating to the carriers’ negligence under Article III(2) of the Hague-Visby Rules. This was significant because, prior to the ruling, it was a hard case to prove the carrier’s negligence as carriers could easily raise the defences set forth under Article IV(2) and leave the burden of proof to the cargo owners to prove the carriers’ negligence or, in this case, to show that goods were damaged due to their part. The Supreme court fixed that defect and reversed the burden of proof to the carriers, to prove that the negligence was not on their part as for the rules and the defences vested in the Rules. Now, the carriers bear the burden of proof for the defence that they seek to rely on under Article IV(2) and must show that it was not a result of breach on their part but the defence meets the ground for their innocence as per the Hague-Visby rules.

Remarks from the author


Volcafe v. CSAV sets a great standard in practice for cargo claims as far as the global application of the Hague-Visby Rules is concerned. It is only fair that the carriers are held liable for breach of their duties vested under the Rules; it is not a great balance of justice to shift the burden of proof to cargo owners to prove negligence on the fault of the carrier. The Supreme Court’s decision makes great clarifications on who should bear the burden of proof and on this case, sets forth that it is the carrier who has to bear the burden of proof in seeking to use the defences set under Article IV (2) of the Hague-Visby rules for cargo claims instituted under Article III (2) on the account of negligence and not the other way around as instigated by the Court of appeal before the decision was overturned.


The case is deemed essential in determining the burden of proof under Article IV (2) of Hague-Visby rules which lacks a clear evaluation on that regard. Today, parties have a clear stand in assessing the burden of proof as the rules are relieved from doubts that the carrier is deemed to bear that burden as per the case and Article IV (2) of the Hague-Visby rules.


Bibliography

Volcafe v. CSAV [2018] UKSC 61

Glendarroch [1894] P226

China Pacific SA v Food Corpn of India (The Winson) [1982] AC 939

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