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Duty of care on carriers where discrepancy between declared and verified container weights20 November 2024

The system of verifying the weight of shipping containers that came into force in July 2016 has recently come under scrutiny in the English Commercial Court. The regulations made pursuant to the International Convention for the Safety of Life at Sea require carriers to ascertain the verified gross mass (“VGM”) of each container and this information will be used in developing the ship’s stowage plan.

In Stournaras Stylianos Monoprosopi Epe v Maersk A/S [2024] EWHC 2494 (Comm), there was a significant discrepancy between the VGMs and the shipper declared weights with many of the shipper declared weights being only 30% or 40% of the VGMs. The case, as advanced at court, was that there was a duty of care obliging the carrier to cross-check the VGM and shippers’ declared weights and not to issue an unclaused bill where the discrepancy is significant.

"The Commercial Court concluded that Maersk was not liable to Stournaras because based on the facts, Maersk had no reason to suspect that the shippers’ weights might be fraudulent."

KEY FACTS

  • Maersk had received the containers already stuffed and sealed.
  • The VGMs of the containers in this case were measured by the operators of the Jebel Ali terminal, DP World, who issued VGM certificates recording the actual weights of the containers prior to issue of the bills of lading which were all received by Maersk.
  • Maersk issued clean bills of lading, stating the shippers’ declared weights.
  • Maersk did not, at the time, have a system in place to cross-check the VGM weights with the shippers’ declared weights, because those different sets of figures were dealt with by different departments.
  • Maersk do now perform manual checks to ensure the VGM and declared weights correspond and have a policy of fining shippers whose containers have a discrepancy of 5,000kg or more.
  • The containers here would have failed that test and resulted in a fine for the shippers.
  • The claimant obtained judgment in Dubai against the shippers, who subsequently disappeared. The claimant therefore sought alternative avenues of recovery and brought a claim against Maersk as owner of the ship on which the cargo was carried.

THE CLAIMS

Stournaras claimed that due to Maersk’s failure to clause the bills of lading or otherwise draw their attention to the weight discrepancy, they became a victim of the shippers’ container fraud. In particular, Maersk had breached Article III rule 3(c) of the Hague Rules in that it had not carried out an adequate assessment of the apparent order and condition of the goods – the weight discrepancy was so serious as to cast doubt on the order of the goods. In addition, Maersk owed it a tortious or implied contractual duty of care to take reasonable steps not to issue a clean bill of lading where a reasonably competent carrier would know or suspect on reasonable grounds that the shippers’ particulars were fraudulent.

THE DECISION

The Commercial Court concluded that Maersk was not liable to Stournaras because based on the facts, Maersk had no reason to suspect that the shippers’ weights might be fraudulent. As a result, they did not know nor ought to have known or been put on notice that there was a reason not to issue clean bills of lading.

The duty under Art III rule 3(c) of the Hague Rules was for Maersk to assess the “apparent order and condition of the goods”. The apparent order and condition of cargo refers to its external condition as would be apparent from a reasonable examination. The weight of a container would not be apparent from an inspection of the external condition of the container. The court acknowledged that if there was a significant discrepancy between declared and actual weights, the carrier should flag that and an unclaused bill of lading implied that there was nothing wildly at odds with the bill of lading quantity. However, given the court’s factual conclusions, Maersk was not in breach of this duty.

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"The position would have likely been different if the two weights were in front of the person who was issuing the bills of lading."

The court recognised that it was a natural and incremental extension of the carrier’s duty of care to consignees to prevent others from using the bill of lading as an instrument of fraud once a carrier is put on notice of that fraud. So, where a consignee under a straight bill of lading can establish that the carrier knew or ought to have known when issuing the bill that there was a substantial discrepancy between the shipper declared weights and the actual verified weights it has a strong case that the carrier ought not to issue an unclaused bill or ought not to have issued a bill at all. Such a discrepancy would give rise to an assumption on the part of the carrier that the proposed bill was being used as an instrument of fraud and it was fair, just and reasonable for the carrier to have a duty to prevent this, once they have been put on notice of that fraud. However, Stournaras’s claim failed on the facts as Maersk did not have the requisite knowledge to have been put on notice not to issue the clean bills of lading.

DISCUSSION

The scope of this novel duty of care will likely be developed further by case law. It took its final shape within a paragraph and was not discussed in too much detail in light of the court’s findings of fact. Whilst the court accepted that, in circumstances where the carrier knows of the discrepant weights they need to take action, the mere possession of the two discrepant weights was not sufficient in 2019 and on this particular occasion.

The position would have likely been different if the two weights were in front of the person who was issuing the bills of lading. If, for instance, the Master himself issued the bills, then there would be a strong case for invoking that duty as the Master would invariably be in possession of the VGM. The judge noted that the position of containerised cargo was potentially different to that of traditional bulk cargoes.

The effect of the judgment will also likely be that the usual clauses providing for exclusion of liability clauses, that are quite popular in the container industry, will be unlikely to offer protection in circumstances such as these.

It will also be interesting to see how the duty would apply to industries other than shipping as it concerns a duty to prevent others from using a document issued by the party owing the duty as an instrument of fraud.

The full judgment is available here.

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