Cargo Damage Claims - The Angeliki B

Milan Nigeria Ltd v Angeliki B Maritime Company [2011] EWHC 892 (Comm)

Who has the burden of proving the cause of cargo damage when the shipowner relies on a defence to avoid liability? What is the effect of a Tribunal's order that certain arguments be shut out? And should cargo damage should be paid for in the claimant's local currency or U.S. dollars? These questions were considered in The Angeliki B.

Facts

The Court was asked to consider issues arising from an Award of the London arbitration Tribunal in favour of Milan Nigeria Ltd for damage to cargo carried on the Angeliki B. The English law bills of lading were subject to the Hague Rules. Milan said the ship-owner carriers had breached Article III rule 2 of the Rules by failing to "properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried". The shipowners sought to avoid liability under Article IV rule 2(m) on the basis that the cargo damage was due to an "inherent defect, quality or vice of the goods". The Tribunal granted Milan US$150,000 – just 38% of their claim. Milan appealed to the Court.

The Commercial Court decision

Question 1 – burden of proving the cause of the cargo damage

Milan appealed to the Court. They said the Tribunal had reduced their damages by 62% mistakenly believing Milan had the burden of proving the causes of the cargo damage and that the shipowners were responsible for them – which the Tribunal found they had not done. But since the shipowners were relying on a defence (Article IV rule 2(m)) to avoid liability for damage, they had to prove what damage was due to an "inherent defect, quality or vice" – and could only avoid liability for that damage. It was unlikely that 62% of the damage was due to an "inherent defect, quality or vice", so the damages had clearly been discounted too much. The Court agreed. This was an error of law. It directed the Tribunal to reconsider the question.

Question 2 – was the Tribunal wrong to decide that Milan had the right to sue under the bills of lading?

Under the Carriage of Goods by Sea Act 1992 (COGSA), only the shipper or a lawful holder of a bill of lading – someone to whom it is endorsed and delivered – can sue under it. The cargo claimant must prove its title to sue for the purposes of COGSA. So if the cargo had been delivered before Milan received the endorsed bills, Milan could not sue for the cargo damage. But, as an exception under COGSA, they could do so if they took the bills...