Lloyd's Maritime and Commercial Law Quarterly
LIABILITY FOR DANGEROUS GOODS
The Giannis N.K.
The precise nature of a shipper’s liability for dangerous goods has long rested upon assumption rather than authoritative statement. To assert that he should not ship dangerous goods is both oversimplified and inaccurate. All cargoes involve risks; dangerous goods are commonly, and legitimately, carried by sea; and carriers should generally not complain about risks of which they were or should have been aware. It is therefore patently misleading to describe the shipper as being absolutely liable not to ship dangerous goods. The basic questions, though leading on to more specific issues, are more general: how are the risks of carrying cargo allocated between shipper and carrier; and in respect of what dangers do special rules on dangerous goods apply?1 This matter has now been considered by the House of Lords, in Effort Shipping Co. Ltd v. Linden Management SA (The Giannis N.K.),2
and the law has become more certain.3
The background
The shipper shipped a cargo of ground-nut extractions from Dakar, Senegal, for carriage to Rio Haina in the Dominican Republic. Unknown to both parties, the cargo was at the time of shipment infested with Khapra beetle. There was no danger of the infestation spreading to the cargo of wheat also being carried but it rendered the vessel and all of its cargo subject to exclusion from the countries where the cargo was to be discharged. The vessel had no practical alternative but to dump the whole cargo at sea. The vessel then put into San Juan, Puerto Rico, and had to be fumigated, eventually being cleared to load her next cargo after 2½ months. The shipowner’s claim to recover damages for delay and expenses succeeded at all levels.4 It depended on the effect of Art. IV, r. 6 of the Hague Rules, which governed the contract:
Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for all damages and expenses
1. F.D. Rose, “Cargo Risks: ‘Dangerous’ Goods” [1996] C.L.J. 601. See also S.D. Girvin, “Shipper’s Liability for the Carriage of Dangerous Cargoes by Sea” [1996] LMCLQ 487.
2. [1998] 2 W.L.R. 206 (H.L.: Lords Goff of Chieveley, Lloyd of Berwick, Steyn, Cooke of Thomdon and Clyde). The two main speeches were delivered by Lords Lloyd (with whom Lords Goff and Clyde agreed) and Steyn. The reasoning of Lords Lloyd and Steyn were essentially the same, though they disagreed in respect of US case law. Lord Cooke stated himself to be fully in agreement with the essential reasoning of both Lords Lloyd and Steyn but added some observations on the relationship between the Hague Rules, Art. IV, rr. 3 and 6.
3. Also, over five years after the repeal of the Bills of Lading Act 1855, the House rejected judicial dicta (Smurthwaite v. Wilkins (1862) 11 C.B. (N.S.) 842, 850, per Williams, J.; Ministry of Food v. Lamport & Holt Line Ltd
[1952] 2 Lloyd’s Rep. 371, 382, per Sellers, J.; contra Fox v. Nutt (1861) 6 H. & N. 630, 636, per Pollock, C.B.) and conferred its authority on the view of most text writers (in particular Scrutton on Charterparties, 19th edn (1984), 28, 20th edn (1996), 40; but disapproving Carver’s Carriage by Sea, 13th edn (1982), para. 95) that, despite the specific retention only of the shipper’s most obvious liability (to freight), the Act did not divest the shipper of his liabilities, in particular for shipping dangerous goods) on transfer of his rights under the Act. This remains the case under the Carriage of Goods by Sea Act 1992, s. 3(3).
4. [1994] 2 Lloyd’s Rep. 171 (Longmore, J.); affd
[1996] 1 Lloyd’s Rep. 577 (C.A.: Hirst, Morritt and Ward, L.JJ.); affd [1998] 2 W.L.R. 206 (H.L.).
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