Legal Navigation in Maritime Waters: Analyzing the Title to Sue in Cargo Claims

Introduction

This essay will critically analyse the title to sue carriers in case of non-delivery, short delivery or damage of cargo. Cargo claims are usually brought when either of the three events occur. They are brought by cargo interests, which can be the shippers, receivers, charterers or sub-charterers, or banks that have extended a line of credit against the security of the cargo. The claims can be brought on the terms of the bill of lading or on the terms of the counterparty

The title to sue indicates the locus standi of the claimant without which the claim will not stand. In the light of the remedial or defence routes, the notion of or the need to establish the title to sue is important. For the claimant, the title validates the legitimacy to sue. For the carrier, it entitles the defence to disprove the legitimacy or use the contractual terms.

Importance of the notion of the title to sue

The title to sue is the legitimacy to claim, which arises usually from the contract of carriage, or may arise in the torts of law, which may be either conversion or negligence.

Conversion arises when there is failure to deliver the goods in which the claimant has certain rights. For instance, claimant can sue if the possession of the bill vests in him sufficient possessory rights in the cargo at the relevant time, which is the time the delivery was breach. Negligence arises in case there is short deliveries or damages to the goods to which the claimant has certain rights. Claim can also be brought through bailment where the carrier is the cargo interest’s bailee and it is holding possession of the goods that the cargo interest has the right to possession (constructive possession). This is outside the contract of carriage. The tort and bailment options are not special to the law of carriage of goods by sea. They are outside the contract of carriage and may be in addition to the remedial option arising out of the contract.

1. Charles Debattista, ‘Cargo Claims and Bills of Lading’ in Yvonne Baatz, Maritime Law (Taylor & Francis) 188.
2. Ibid
3. Ibid
4. Ibid, 190.
5. Ibid, 188.
6. Ibid
7. Sir Richard Aikens, Richard Lord QC, Michael Bools QC, Michael Bolding, and Kian Sing Toh SC, Bills of Lading (Taylor & Francis 2020) 5.47
8. Charles Debattista, ‘Cargo Claims and Bills of Lading’ in Yvonne Baatz, Maritime Law (Taylor & Francis) 188.
9. Charles Debattista, ‘Cargo Claims and Bills of Lading’ in Yvonne Baatz, Maritime Law (Taylor & Francis) 188.

Conversion arises when there is failure to deliver the goods in which the claimant has certain rights. For instance, claimant can sue if the possession of the bill vests in him sufficient possessory rights in the cargo at the relevant time, which is the time the delivery was breach. Negligence arises in case there is short deliveries or damages to the goods to which the claimant has certain rights. Claim can also be brought through bailment where the carrier is the cargo interest’s bailee and it is holding possession of the goods that the cargo interest has the right to possession (constructive possession). This is outside the contract of carriage. The tort and bailment options are not special to the law of carriage of goods by sea. They are outside the contract of carriage and may be in addition to the remedial option arising out of the contract.

Carrier can defend itself using the contractual terms. Such terms may usually be dictated by the carriers. In such a situation, the question is to determine the efficacy of the remedial routes of torts or bailment which is limited by the rules of causation, remoteness or limitation of time period.

Non-delivery, short delivery and damaged delivery

The title to sue in case the interest is not delivered will be governed by the principle of conversion. At the same time, if there is a contractual term or a claim, the route of conversion may not confer much advantage. Following Midland Bank Trust Co. Ltd v Hett, Stubbs, and Kemp and Henderson v Merrett Syndicates Ltd, the concurrent or alternative liability in tort cannot be allowed if it makes the claimant circumvents or escapes a contractual exclusion or limitation of liability for a tort.

Citing the Convention On The Contract For The International Carriage Of Goods By Road 1956 (CMR), Article 20 provides for the right of the claimant to make a claim for any goods not delivered within 30 days following the agreed time limit of within 60 days in absence of a time limit. Such non-delivery is a conclusive proof. Article 17(1) makes the carrier liable for the total or partial loss of the goods that occurred between the time it took over the goods and the time of delivery. Article 17(2) stated that the carrier is exempted from liability if the loss was due to the wrongful act or neglect of the claimants, by his instruction, or by circumstance it could not avoid and consequences it could not prevent. Thus, if a contract provides for actionable terms and remedies, such as incorporating the Conventions provisions, the defences will be according to the contract. The issue of applicability of a convention was seen in the case of Mediterranean Shipping Company SA v Trafigura Beheer BV-“MSC Amsterdam”, the court considered the issue of whether the Hague-Visby Rules only applied if compulsorily applicable under English law or as a matter of contractual incorporation. The Court of Appeal ruled that “compulsorily applicable” meant applicable according to the English law of the contract.

1. Charles Debattista, ‘Cargo Claims and Bills of Lading’ in Yvonne Baatz, Maritime Law (Taylor & Francis) 188.
2. Ibid, 190.
3. Ibid, 188.
4. Paul Todd, Bills of Lading and Bankers' Documentary Credits (Taylor & Francis 2013) 195.
5. Midland Bank Trust Co. Ltd v Hett, Stubbs [1995] 2 AC 145, 191.
6. Kemp and Henderson v Merrett Syndicates Ltd [1979] Ch. 384, 522.
7. Paul Todd, Bills of Lading and Bankers' Documentary Credits (Taylor & Francis 2013) 195.

The existence of this contract will disable a claimant from suing the carrier in conversion. This means the title to use is determined by the contract. However, this will not cease the application of conversion as was seen in the case of Glyn Mills Currier & Co v East and West India Dock Co, where the carrier had the defence of delivery on the production of original bill of lading, but a conversion action was allowed as there was a wrongful interference that is also without lawful justification. The title to sue will still arise in conversion in the absence of an alternative contractual claim. This may be possible in cases where, for instance, the bill of lading is lost or has not reached the claimant; a document is used that does not come within the purview of the 1992 Act; or where the cargo owner is a f.o.b. seller with the bill of lading or the property or both and not the shipper that do not have any contract with the carrier. Similar situation occurred in the case of The Captain Gregos (No. 2) where the oil cargo was not delivered and the claimant did not have title to sue under the Bills of Lading Act 1855; or in the Brand v Liverpool where the claimant was not party to the contract as the ultimate receivers who took the delivery. In such case, a conversion route could be taken beyond the contract or the bill of lading as the action will be based on the title to the goods conferred upon the shipment of the cargo.

Delivered short

Short delivery claims can be brought under an action for negligence arises and the claimant must have certain rights to the goods. Article 17(1) and (2) and Article 20 of the CMR, as mentioned earlier, could be referred here to determine the title to sue where they provide for liability of the carriers and their defences. When the goods are taken over by the carrier, CMR becomes applicable to govern the liabilities of the carrier for loss. The CMR, does not, however, govern loss after delivery. Thus, the responsibility for short delivery falls on the carrier and the burden is upon the carrier to prove that the cause of short delivery was not due to his negligent act or omission.

1. Mediterranean Shipping Company SA v Trafigura Beheer BV - “MSC Amsterdam” [2007] EWCA Civ 794 27th July 2007
2. Paul Todd, Bills of Lading and Bankers' Documentary Credits (Taylor & Francis 2013) 200.
3. Glyn Mills Currier & Co v East and West India Dock Co (1881) 7 App. Cas 591.
4. Ibid, 91ff and 7.91ff
5. Paul Todd, Bills of Lading and Bankers' Documentary Credits (Taylor & Francis 2013) 194.
6. The Captain Gregos (No. 2) [1990] 2 Lloyd’s Rep. 395.
7. Proper Law of a Brandt v. Liverpool Contract (The Elli)” [1985] Lloyd's Maritime and Commercial Law Quarterly 188–190.
8. Paul Todd, Bills of Lading and Bankers' Documentary Credits (Taylor & Francis 2013) 195.
9. Charles Debattista, ‘Cargo Claims and Bills of Lading’ in Yvonne Baatz, Maritime Law (Taylor & Francis) 188

There is a link between the title to sue as provided in a contract of carriage and the proprietary issues regarding the goods. In the case of Delfini, there was a short delivery of a cargo of crude oil sold on c.i.f. terms where the bill of lading was not delivered to the purchaser at the time the cargo was discharged. The Court of Appeal declined the buyer’s right to claim as by the time the bill was transferred, it was already spent. Here, the bill stopped being effective as a transferable document of title when once the cargo got delivered.

Hamburg Rules, Article 4(1) provides for the period of responsibility of the carrier starting from the time during which the carrier is in charge of the goods “at the port of loading, during the carriage and at the port of discharge”. Article 4(2) stated that the carrier responsibility starts from the time he has taken over the goods from the shipper or an authorised party until the time he has delivered the goods. Article 5(1) provides that the carrier is liable if the goods are lost and Article 5(4) provides for liability arising out of the negligent act or omission of the carrier resulting in the loss.

For liability, Article 5(4)(a), the loss should only be caused by the fault or neglect of the carrier. This means that the carrier can contract out the liability to the extent that the short delivery was not caused by their fault or neglect of their duty. In other words, as Article 12 also provides,

the shipper will be liable for loss sustained by the carrier if that loss is caused by the shipper’s fault or neglect of the shipper, or his authorised person. Thus, in cases involving bailment, the right to claim is subject to the claimant’s right to the immediate possession of the goods bailed. The delivery of goods to the bailee for rewards gives rise to duties that are enforceable in tort. Such duties except the duties arising out of tort as the bailee is under a duty of care to protect the goods against misappropriation or damage. Thus, in case the bailor proves the delivery to the bailee of the good in good condition, the mere failure by the bailer to deliver either at all or in the same condition constitutes the breach of bailment. This can be rebutted by the bailee by proving the cause of the failure that it was not caused by him. This prove is subject to the circumstance, terms and the type of the bailment.

1. Malcom Clarke, International Carriage of Goods by Road: CMR (Taylor & Francis2014) 210.
2. Ibid, 301.
3. Enichem Anic SPA v Ampelos Shipping Co Ltd (The Delfini) [1990] 1 Lloyd’s Rep. 252.
4. Ibid.
5. Ibid.
6. David M. Sassoon, Yvonne Baatz, Lynne Skajaa, and C. Nicoll, C.I.F. and F.O.B. Contracts (Sweet & Maxwell 2012) 148.
7. Benjamin W. Yancey, ‘Carriage of Goods: Hague, Cogsa, Visby, and Hamburg’ (1982) 57 Tul. L. Rev. 1238.

Delivered damaged

A claim based on negligence can also be brought for damages to the goods to which the claimant has certain rights. In Western Digital Corp and Others v British Airways plc, the Court of Appeal dealt with the issue of whether an owner of lost items, who is not named a consignor or consignee, had the locus standi to sue for loss considering Article 302 of the Warsaw Convention, which provides for liability of the carrier for the act of its agent or servant. The Court held that the title to sue is determined by the domestic law. It held that owners and others are not without remedy. This is supported by the ruling in Gatewhite Ltd and Another v Iberia Lineas Aereas de Espana SA, where it was held that the owner has the title to sue in his own name.

The Carriage by Air Acts (Implementation of the Montreal Convention 1999) Order 2002, “SCHEDULE 1B, Article 18 provides for damages to cargos. Article 18(1) provides that the claimant can sue the carrier for damage sustained “in the event of the destruction or loss of, or damage to, cargo upon condition only that the event which caused the damage so sustained took place during the carriage by air.” Article 18(2) exempts the carrier to the extent it proves that the damage arises from the inherent defect or quality of the cargo, defective packing, or act beyond its control such as an act of public authority relating to entry, exit or transit of the cargo. The locus standing of the claimant will not arise in such cases. Also, it will also not arise in cases, where the carrier proves an absence of negligence demonstrating that it took all the reasonable care of the goods. This was held by the Supreme Court in Volcafe Ltd and others v Compania Sud Americana De Vapores SA, where the Hague-Visby Rules was read against the common law rule requiring the carrier to prove the absence of negligence.

1. Julian Cooke, et al., Voyage Charters (2014) 531.
2. Ibid
3. Ibid
4. Charles Debattista, ‘Cargo Claims and Bills of Lading’ in Yvonne Baatz, Maritime Law (Taylor & Francis) 188
5. In Western Digital Corp and Others v British Airways plc (2001) 1 All ER 109 (CA)
6. Gatewhite Ltd and Another v Iberia Lineas Aereas de Espana SA (1989) 1 All Er 944 (QB).

Conclusion

To conclude, the title to sue arises either out of the contractual terms as governed by the relevant international convention, or reading the convention provisions with domestic laws, such as tort rules.

The title to sue arises when the claimant proves that he has sufficient possessory rights or proprietary rights in the cargo. The right to claim arises or is declined based on determining who is responsible for the wrongful act or neglect or whether there are any circumstances that are beyond the control of the parties.

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Bibliography

Legislation

The Convention On The Contract For The International Carriage Of Goods By Road 1956

The Hamburg Rules (United Nations Convention on the Carriage of Goods by Sea (Hamburg, 1978)

The Carriage by Air Acts (Implementation of the Montreal Convention 1999) Order 2002

The Warsaw Convention (Convention for the Unification of Certain Rules Relating to International Carriage by Air, 1929)

Cases

Enichem Anic SPA v Ampelos Shipping Co Ltd (The Delfini) [1990] 1 Lloyd’s Rep. 252

Gatewhite Ltd and Another v Iberia Lineas Aereas de Espana SA (1989) 1 All Er 944 (QB).

Glyn Mills Currier & Co v East and West India Dock Co (1881) 7 App. Cas 591

Kemp and Henderson v Merrett Syndicates Ltd [1979] Ch. 384

Mediterranean Shipping Company SA v Trafigura Beheer BV - “MSC Amsterdam” [2007] EWCA Civ 794

Midland Bank Trust Co. Ltd v Hett, Stubbs [1995] 2 AC 145

Proper Law of a Brandt v. Liverpool Contract (The Elli)” [1985] Lloyd's Maritime and Commercial Law Quarterly 188–190

The Captain Gregos (No. 2) [1990] 2 Lloyd’s Rep. 395

Volcafe Ltd and others v Compania Sud Americana De Vapores SA [2018] UKSC 61

Western Digital Corp and Others v British Airways plc (2001) 1 All ER 109 (CA)

Books

Aikens R, Richard Lord QC, Michael Bools QC, Michael Bolding, and Kian Sing Toh SC, Bills of Lading (Taylor & Francis 2020)

Clarke M, International Carriage of Goods by Road: CMR (Taylor & Francis 2014)

Debattista C, ‘Cargo Claims and Bills of Lading’ in Yvonne Baatz (ed.), Maritime Law (Taylor & Francis)

Sassoon D, Yvonne Baatz, Lynne Skajaa, and C. Nicoll, C.I.F. and F.O.B. Contracts (Sweet & Maxwell 2012)

Todd P, Bills of Lading and Bankers' Documentary Credits (Taylor & Francis 2013)

Journals

Yancey BW, ‘Carriage of Goods: Hague, Cogsa, Visby, and Hamburg’ (1982) 57 Tul. L. Rev. 1238