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1. More on thefts of containers
in Hong Kong
TT Talk Edition 112 (item 1) of 21 October 2008 reported the thefts of reefer
containers in Hong Kong. A few days ago Sandy Ip, Claims Executive in the
Thomas Miller (TT Club) Hong Kong office, alerted us to the theft of 45 foot
dry containers.
In this latest case, the shipping line was approached by a shipper who booked
six 45 foot dry containers all in one order. The shipper was a new client. In
spite of this, the shipping line neither visited the shipper's premises to
check whether he might be genuine nor obtained a bank guarantee for the value
of the containers. Instead, the shipping line released all six containers to
the shipper’s named trucking company on the day of the order.
The shipper and all six containers disappeared three days later without a
trace. The shipping line reported the case to the police who started a
criminal investigation and made known that other carriers had reported
similar thefts recently.
It is likely that such thefts will be attempted much more frequently in the
current economic downturn. In Hong Kong, thefts specifically of 45 foot dry
containers are increasing.
Most carriers have drafted internal procedures on the handling of larger
bookings from new customers, but it is essential that these procedures are
actually put in place. Sandy Ip comments: ‘In order to prevent this type of
container theft, we strongly urge operators to communicate procedures to all
employees who deal with customers’.
The TT Club’s sheet ‘Stop Loss 7 - Container Loss’ provides more information
on how to prevent container theft. It can be downloaded free of charge from
the Club’s website in English, Russian and Chinese:
TT Club
Stop Loss Sheet 7
In summary: ‘know your customer’. A Member who has reliable information
on its customers will much better be able to protect its own assets.
2. UK - deregulation
of freight forwarders’ retail cargo insurance
TT Talk Edition 117 (item 1) of 25 March 2009 reported the deregulation in
the UK of retail cargo insurance that can be offered by freight forwarders
and storage firms. Craig Neame, partner at HFW (London), kindly referred us
to the newly published ‘Financial Services and Markets Act 2000 (Exemption)
(Amendment) (No. 2) Order 2009’, Statutory Instrument 2009 No. 264, which
entered into force on 6 April 2009:
www.opsi.gov.uk/si/si2009/uksi_20090264_en_1
In 2007, Statutory Instrument 2007 No.1821 exempted freight forwarders
and storage firms from the general prohibition imposed by the Financial
Services and Markets Act 2000 concerning cargo insurance offered to
commercial customers. The new Statutory Instrument 2009 No. 264, by deleting
the passage ‘who is not an individual’ from the definition of ‘customer’,
i.e. by defining customer simply as 'a person who uses the service of a
freight forwarder or storage firm', widens this exemption to insurance
offered to retail customers. The ‘Explanatory note’ states that Statutory
Instrument 2007 No. 1821 extends the exemption so that freight forwarders and
storage firms ‘may extend rights under their insurance policies to both their
commercial and their retail customers’ without becoming subject to regulation
under the Financial Services and Markets Act 2000.
3. Wheel maintenance
on cargo handling machinery
ICHCA International recently published Information Paper 38a/2009 as an
addition to the paper on Split Rim Wheels which was included in TT Talk
Edition 115 (item 2) of 27 January 2009. The new Information Paper is as
follows:
‘Information Paper 38/2008 gave details of a fatal accident arising from work
on a split rim wheel on an item of mobile cargo handling machinery and
referred to the fact that this arose from a known hazard. The Information
Paper said that such assemblies can come apart due to a variety of reasons
including:
- Damaged or mismatched rim parts
- Corroded or dirty rim parts
- Failure to deflate tyre before removal
- Incorrect tyre size
- Over inflating tyres
- Fitting tubed tyres on a rim designed for tubeless tyres
- Removing the nut which holds the wheel rim together (on some designs of
split rim).
It has been pointed out to ICHCA International that there is another cause of
wheel accidents which, although not directly related to split rims, is
concerned with wheel maintenance.
All maintenance provisions regarding wheels involve regularly ensuring that
they remain securely attached to the vehicle/machine. Ideally, this should be
checked by the use of a torque wrench set to the value established by the
manufacturer. However, it has been known for fitters to give the wheel nuts
yet another tightening movement on them instead as a substitute. This can
have the effect, over a period of time, of overstressing the studs and that
has resulted in the studs failing and in at least two instances reported to
ICHCA International causing a wheel to come off when in use.
The only way to avoid such an occurrence is to ensure that a torque wrench is
used for such checks, ensuring that it is set to the manufacturer’s
recommendations and it is recommended that those members concerned review
their procedures and arrangements accordingly.’
4. New Zealand Court
of Appeal divided on ‘navigation or management of the ship’ defence
a) Introduction
The ‘Tasman Pioneer’ grounded in 2002 in a narrow passage between the two
Japanese Islands of Biro Shima and Shikoku. It was held, with regard to this
grounding, that the ocean carrier could rely on Article IV rule 2(a) of the
Hague-Visby Rules, which states that ‘Neither the carrier nor the ship shall
be responsible for loss or damage arising or resulting from: (a) Act,
neglect, or default of the master, mariner, pilot, or the servant of the
carrier in the navigation or in the management of the ship’.
However, it was the master’s conduct after the grounding that caused
controversy. Apparently, in an attempt to save his own career, he tried to
conceal the occurrence of the grounding, in particular deliberately failed to
alert the Japanese coast guard. His conduct after the grounding resulted in
the loss of deck cargo for which cargo interests claimed a sum in excess of
US$3 million.
b) Williams J in the New Zealand High Court
Williams J in the New Zealand High Court held in 2007 that the carrier was
not entitled to the protection of Article IV rule 2(a), because the master
did not act in good faith. The judge found that the defence of ‘Act, neglect,
or default (...) in the management of the ship’ was based on the underlying
premise that the master's actions ‘must still have been undertaken in
furtherance of the master’s paramount duty of safely caring for the ship,
cargo and crew’.
This requirement of good faith caused a lively debate amongst commentators.
David Martin-Clark in his DMC’s Case Notes said: ‘(...) can it really be good
law that the subjective motivation of the master can change the quality of an
act in the navigation or management of the ship so as to render it not such
an act from the point of view of the Hague/ Hague-Visby Rules? Is this in
fact another example of 'hard cases' making 'bad law'?’
c) Court of Appeal - Baragwanath J
In its judgement of 9 April 2009 the New Zealand Court of Appeal upheld
Williams J’s decision by a 2:1 majority (Baragwanath J and Chambers J;
Fogarty J dissented) and referred the case back to the High Court. The
majority in the Court of Appeal reached the same conclusion as Williams J,
but without resorting to his ‘good faith’ argument.
Baragwanath J felt that the Hague/ Hague-Visby Rules had to be construed as a
comprehensive international convention, without constrains by any prior
domestic law. He conceded that the rise of the United Kingdom in shipping
continued until after the First World War and that the United Kingdom
remained influential in the drafting of the Hague Rules, but felt it would be
an error to ‘heark back’ to the old English common law and that the time had
come to ‘bury’ authorities which predate the Hague Rules. The Hague Rules
differed on purpose significantly from the lack of restrictions of the common
law and aimed to prohibit exorbitant exemption clauses. He held that the
carrier could not rely on Article IV, rule 2(a), because the master’s conduct
after the grounding was ‘fundamentally at odds with the purpose of both the
contract of carriage and the legislative regime’.
Baragwanath J also added that the defence of ‘error in the navigation or
management of the ship’ was not included anymore in the new ‘Rotterdam Rules’
(though he stressed that this fact was not part of his reasoning - of course,
there was no room for this defence in the Hamburg Rules 1978 either).
d) Court of Appeal - Fogarty J
Fogarty J dissented and would have allowed the carrier’s appeal. His approach
to interpreting Hague/ Hague-Visby differed fundamentally. Baragwanath J and
Fogarty J both referred to the ‘Bunga Seroja’ (1998) where the High Court of
Australia found that the Hague Rules had to be read (1) as a whole, (2) in
the light of the history behind them, and (3) as a set of rules devised by
international agreement as regulating contracts governed by several quite
different legal systems. Baragwanath J said that points (1) and (3) were
indisputable, but that point (2) ‘presented more difficulty’ Fogarty J, in contrast,
relied heavily on point (2).
Whereas Baragwanath J advocated an interpretation of the Hague/ Hague-Visby
Rules ‘without constraints by any prior domestic law’, Fogarty J cited McHugh
J in the ‘Bunga Seroja’ saying that it seemed likely that the English common
law rules provided the conceptual framework for the Hague Rules and that the
Rules should therefore be interpreted with that framework in mind. He
examined the deliberations of the Hague Conference in 1921 and found that the
contents of Article IV rule 2 were largely taken from provisions which had
commonly appeared in British bills of lading, in particular the phrase ‘act,
neglect or default’ which was qualified only by ‘in the navigation or
management of the ship’.
Fogarty J also emphasized that the interpretation should be ‘wholly faithful
to the text’. He held that the ‘natural meaning’ of the phrase ‘act, neglect
or default of the master’ included intentional conduct, because there was
nothing in Article IV rule 2(a) which would suggest that its application
depended on the master’s motive. The word ‘act’ was neutral as to quality and
applied independently of culpability.
e) Conclusion
One can argue that it would be unjust if a carrier could escape liability in
situations where the master deliberately puts his own personal interest above
the one of ship and cargo. But if the application of Article IV rule 2(a)
should be contingent on the master’s intention when navigating and managing
the ship, it will be necessary to determine in each case whether his conduct
was acceptable. This may introduce uncertainty and increase legal costs.
The judgment by the Court of Appeal illustrates that judges might take widely
differing (and even conflicting) approaches to the interpretation of the
Hague/ Hague-Visby Rules. It raises rather more questions than it answers.
Please use the following web links for the full texts:
- Decision by Williams J (New Zealand High Court) of 31 August 2007 in New
Zealand China Clays Ltd v Tasman Orient Line CV:
New Zealand China
Clays Ltd v Tasman Orient Line CV
- Judgment by the New Zealand Court of Appeal of 9 April 2009 in Tasman
Orient Line CV v New Zealand China Clays Ltd:
Tasman Orient Line CV
v New Zealand China Clays Ltd (CA)
Courts of New Zealand
5.
Conclusion
We hope
that you will have found the above items interesting. If you would like to
have further information about any of them, or have any comments you would
like to make, please email the editor at tt.talk@ttclub.com. We look forward to hearing from
you.
Peter
Stockli
Editor for the TT Club
You
can also read this newsletter and past issues on our website: http://www.ttclub.com
The
materials contained in TT Talk have been prepared for information purposes
only, and are not a substitute for legal advice. Whilst every care has been
taken to ensure the accuracy of the materials, the editor, any contributor or
the TT Club accept no responsibility for loss or damage which may arise from
reliance on information contained in TT Talk.
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