536. Effort Shipping Co Ltd v Linden Management SA (the “Giannis NK”) [1998] 1 Lloyds Rep 337

Hague Rules – “dangerous goods” include those dangerous to the venture, not only vessel – shippers strictly liable – right to sue transferred by Bills of Lading Act 1855 not affecting liability of shippers – carrier’s liability for dangerous cargo at common law also strict.

The Facts

On 18 November 1990, a cargo of ground-nut extractions was loaded at Dakar, Senegal, for carriage to Rio Haina in the Dominican Republic. The cargo was infested with khapra-beetle. The vessel had previously loaded a cargo of wheat pellets in separate holds for carriage to San Juan, Puerto Rico and Rio Haina. There was no danger of beetle infestation spreading from the ground-nut cargo to the wheat cargo.

After discharging part of the wheat cargo at San Juan, the vessel proceeded to Rio Haina where she was placed in quarantine after the discovery of the insects.

After fumigation, the vessel was ordered to leave the port.

The vessel went back to San Juan and was ordered by the US authorities to leave the port and either to return the cargo to its country of origin or to dump it at sea.

The owners had no practical alternative but to dump the whole of the cargo at sea including the wheat cargo.

On returning to San Juan the vessel was further fumigated. Eventually it was cleared to load, after a delay of 2½ months.

Findings

Longmore J and the Court of Appeal (Hirst, Morritt and Ward LJJ) and the House of Lords (Lords Goff, Lloyd, Steyn, Cooke and Clyde) held that the shippers were liable under art.IV(r)6 of the Hague Rules.

Even though beetle infestation was not dangerous to the vessel or the other cargo on board its presence was the direct cause of the other cargo being dumped at sea and it was therefore dangerous cargo for the purposes of art.IV(r)6.

Art.IV(r)6 was not qualified by art.IV(r)3 requiring fault on the part of the shipper.

The Bills of Lading Act extended the right to sue, but did not limit, the obligations of the original shipper.

At common law, the shippers would also have been strictly liable.

Commentary

The speech of Lord Lloyd contains a useful illustration of the distinction between ratio decidendi and obiter dictum.

He mentions the reluctance of the House to decide obiter points such as the 4th point – common law liability. He justifies making the decision nevertheless by the fact that the point was fully argued.

Lord Steyn’s speech contains reference to an article by Lord Roskill in (1992) 108 LQR 501 in which Lord Roskill describes the evidence given by Scrutton LJ and MacKinnon QC to a British Parliamentary Committee in regard to the adoption of the Hague Rules:

They (Scrutton and MacKinnon) gave dire and, in the event, wholly unwarranted warnings of the problems which would arise as to their construction, with uncertainty and endless litigation replacing what they saw as the clarity of the existing law based upon freedom of contract. In truth, as every commercial lawyer knows, it is remarkable how few cases there have been in this country upon the construction of the Rules.”

Lord Steyn clarified the correct approach to the travaux préparatoires: reliance on them could be placed only in the clearest of circumstances: “only a bull’s eye counts. Nothing less will do.”

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