Deck Carriage: Contracting For The Carriage Of Goods On Usual Terms And Obtaining Appropriate Insurance

Geofizika DD v MMB International Limited 2009] EWHC 1675 (Comm)

The English Courts have recently considered a deck carriage case in a world where the containerisation of the carriage of manufactured goods is now well established. The case, which gave rise to what the Judge described as an "unusual combination of facts", is interesting not only for the points that were decided but also those that were not. Any party to a contract of carriage should never make assumptions as to the manner in which the contract of carriage is to be carried out. This case also highlights the fact that, where cargo insurance procured by a CIP seller does not cover the carrier's breach of the contract of carriage (on the basis that a seller ought not to be responsible for events occurring after the policy's inception), it is the buyer who is most exposed.

The facts

In early October 2006, the claimant, Geofizika DD ("Geofizika"), agreed to buy from the defendant, MMB International Limited ("MMB"), three Land Rover ambulances for delivery to Libya. The contract was "CIP Tripoli" and subject to Incoterms 2000, such that MMB was to contract for the carriage of the goods "on usual terms" and "in a customary manner", and was obliged to "obtain...cargo insurance...such that the buyer...shall be entitled to claim directly from the insurer". MMB approached the Third Party, freight forwarder Greenshields Cowie & Co. Ltd ("GSC"), for a quotation. GSC in turn contracted with a line it had not used before, Brointermed Lines Ltd ("Brointermed").

On 14 November, Brointermed sent GSC a booking confirmation stating, amongst other things, that "ALL VEHICLES WILL BE SHIPPED WITH 'ON DECK OPTION' this will be remarked on your original bills of lading..." Around 28/29 November, GSC was sent the draft bills of lading containing the usual details only. GSC did not ask to see Brointermed's standard terms, to be included on the reverse of the bills. The original bills subsequently arrived with Brointermed's standard terms printed on the back, clause 7 of which gave the carrier liberty to carry the cargo on deck. The vessel sailed on 29 November. The vehicles were stored on deck and two were washed overboard in the Bay of Biscay. On 4 December, GSC sent the normal documents to MMB, including an insurance certificate and an invoice for insurance cover. The insurance certificate stated "Warranted shipped under Deck".

The issues and the decision

In the litigation, all three parties agreed...