The Maersk Klaipeda – is the carrier obliged to protect the receiver against fraud by the shipper?

The English High Court has issued a judgment concerning a carrier’s duty when issuing a bill of lading to check the declared weight of a container.

Maersk agreed to carry a number of containers onboard the Maersk Klaipeda said to contain valuable copper wire scrap. The shipper declared the gross and tare weight of each container. Maersk received the containers stuffed and sealed. SOLAS requires the shipper to verify the gross mass weight (VGM) of containers to be shipped. The VGM of the containers was measured by DP World at the loading terminal in Jebel Ali and was between 30% and 40% of the shipper’s declared weights. When the vessel arrived in Piraeus to discharge, the containers were opened and it was discovered they did not contain copper scrap but cement blocks.

Having failed to make a recovery against shippers, receivers brought a claim against Maersk alleging that Maersk should not have issued bills of lading stating the shipper’s declared weights given the discrepancy between that declaration and the VGM. Receivers alleged Maersk breached Article 3, rule 3(c) of Hague Rules which requires a carrier to assess and state in a bill of lading the apparent order and condition of the goods. The receiver alleged that the weight discrepancy was so serious that it put Maersk on a duty not to record the cargo as shipped in apparent good order and condition. The receivers also claimed against Maersk for negligent mis-statement and for breach of an implied contractual duty of care not to issue clean bills of lading which included a shipper’s declaration of weight that a reasonably competent carrier would know or suspect on reasonable grounds to be fraudulent.

The claim failed on all three grounds.

There was no duty on Maersk to cross-check shipper’s declaration of weight against certified VGMs, which were produced to ensure safe stowage. The fact that Maersk could have cross-checked the weight did not, the judge concluded, mean that it had to check the weights. Although the traditional role of the master and mate have been superseded in the container trade by shore-based systems, as stated in several legal cases the legal theory is that a master determines the apparent order and condition of goods based on what is observable from a reasonable external examination of those goods. The weight of a container would not be apparent from an inspection of the external condition of that container. On the other hand, if a carrier in fact knew there was a discrepancy between the shipper’s particulars and the actual weight of the containers, it could be under a duty to draw attention to this fact in a bill of lading.

An interesting point arose as to whether the obligation to issue an accurate bill of lading is transferrable under the Carriage of Goods by Sea Act 1992 (COGSA) from the shipper to the receiver. There was no previous authority on this point. The judge concluded COGSA was wide enough to transfer any obligation originally owed to the shipper under Article 3, rule 3(c) of the Hague Rules. With respect, that conclusion seems questionable and would merit closer examination in future cases.

Maersk was, in particular, protected against the negligent mis-statement claim due to the ‘weight unknown’ clause on the face and reverse of its bill of lading which had the effect that Maersk had made no representation as to the weight of the cargo shipped at all. The judge noted in passing that a carrier may not be entitled to rely on a ‘weight unknown’ clause in their bill of lading once the discrepancy between cargo loaded and the amount of cargo alleged to have been loaded becomes so great that it should be obvious to any master that the bill of lading quantity provided by the shipper is incorrect. However, on the evidence in this case, the judge was not prepared to conclude that Maersk knew or ought to have known that there was a considerable discrepancy between cargo actually loaded and cargo alleged to have been loaded.

On the third argument, the judge concluded that it would be fair, just and reasonable to impose a duty of care upon a carrier, owed to a named consignee under a straight bill, to ensure that its bills are not used as an instrument of fraud. However, whilst that was a legally tenable argument, it failed on the evidence in this case.
Source: NorthStandard