Make Clear Any Transfer of Contractual Responsibility for Cargo Operations

The Sea Master was delayed for months in discharging its cargo of corn and soya.  After voyage charterers went bankrupt, the shipowner looked to the cargo receivers to recover damages for delay.  To achieve this, the shipowner argued that it was an implied term of the contract of carriage that the receiver would take all necessary steps to enable cargo to be discharged and delivered within a reasonable time.

The Court started by looking at the express terms of the voyage charter (which had been incorporated into the bill of lading contract).  Owners argued that two provisions in the recap – “cargo is to be discharged free of expense to the Vessel” and “stevedores at discharging ports are to be appointed and paid for by the Charterers/Receivers” – had the effect of allocating contractual responsibility for discharge of cargo to charterers and receivers.

The Judge looked back at the previous decision of the House of Lords in The Jordan II where it was decided that responsibility for discharge operations had been transferred away from the shipowner, and so the owner had no obligation under the Hague Rules to discharge cargo “properly and carefully”.  The general rule is that responsibility for cargo discharge rests with the owner in the absence of a clear contractual provision to the contrary.

There are three parts to any cargo operation: who pays for it, who physically carries it out and who is liable if it is not done properly and carefully.  Where the terms of the bill of lading only deal with who was to pay for discharge, the natural inference is that responsibility for cargo operations remains with the shipowner.

The Judge concluded that the terms of the bill of lading in the present case were clear: cargo was to be discharged free of expense to the owner but the responsibility for doing so had not been delegated to the receiver or charterer.  The Judge was reinforced in his conclusion by the existence of a stevedore damage clause in the voyage charter/ bill of lading contract, and another provision saying that “stevedores shall be deemed to be the servants of the Owners and shall work under the supervision of the Master”.

The lesson for shipowners is that if you want charterers or receivers to be responsible for the negligence of their stevedores, then you need to make that plain in the bill of lading or voyage charter.

The Judge then went onto conclude there was no implied term under the bill of lading contract requiring receivers to ensure the cargo was discharged or delivered within a reasonable time.  Where a bill of lading holder does not claim delivery within a reasonable time, the Master is entitled to land the cargo and charge the cargo owner with the costs, but the owner is not usually entitled to damages.