Special Drawing Right

In the case at hand, MV Food Traders is a specialised ship which carries fruits between Australia and Asia. In the particular journey in question, the goods carried by the ship was 100 tonnes of gourmet Queensland pineapple. This was split into two sets of fifty tonnes one of which was stored in the forward hold and the other in the aft hold. The aft hold is towards the stern of the ship. In the course of journey, the ship met with an accident and the goods in the forward hold were damaged as a result.

On reaching the port of destination in Korea, the quarantine officer informed that the contents of the aft hold was contaminated by fruit fly and thus, it could not be unloaded in Korea. As a result of this, Sweet Imports which is the consignee orders the carrier to dump the goods 10 miles into the sea. The Consignee wants compensation from the carrier for this. The applicable rules in this instance are the Hamburg Rules since as per Article 2, the port of loading is in the contracting states and the bill of lading was issued in the contracting state.

It is pertinent to note that in the first place, there were two bills of lading that were issued: one for the fruits stored in the forward hold and the other for those that were stored in the aft hold. As per Article 15, amongst other things, the bill of lading states the general nature of the goods and their apparent condition. As per the Bills of Lading the goods in both the consignments were described as being loaded in “apparent good order and condition. ” Article 4 of the Hamburg Rules deals with the responsibility of the carrier.

It essentially prescribes that the carriage is responsible at the port of loading, during carriage and at the port of loading. Paragraph 2 of the Article specifies “deemed to be in charge” from the moment the goods are taken over from the shipper until the goods have been delivered to the consignee or its placed at his disposal in accordance with contract, law or usage. Let us first deal with the case of the cargo in the forward hold. In this case there were rough seas and the ship collided with an undiscovered submerged wreck which caused sea water to flow into the forward hold and thereby damage the contents stored therein.

The crew tried their best to avert this. However, they were not able to prevent the damage from occurring. Article 5 of the Hamburg rules lays down that the carrier can be liable for loss resulting from loss or damage of goods or due to delay. The causative factor leading to such loss or damage must have occurred while the carrier was in charge. The collision with the submerged wreck occurred in the course of the voyage and while the goods were in the charge of the carrier. The crew tried their best to prevent damage to the cargo yet despite their best efforts.

However, such liability is subject to the caveat that should the carrier show that he or his agents/servants took all reasonable measure to avoid its occurrence and consequences, then, the carrier cannot be liable. In this case, the crew of the ship did their best to prevent the damage. In the first place, the accident happened with a shipwreck that was submerged and during rough seas. Added tot his is the fact that the shipwreck had not been discovered so it was not possible for the ship to have avoided it despite due diligence on their part.

Thus, it can be argued that the carrier is not liable for the damage to the goods in the forward hold. As regards the carriage in the aft hold, on reaching the port of destination in Korea, the quarantine officer sent a notice stating that the cargo was infested with fruit fly. The problem for the carrier in this case is that both Korea and Australia are fruit fly free zones which lead us to the assumption that the infestation could have only taken place during the course of voyage. Clearly, in this case it has to be established that the infestation of the fruit fly happened in the course of the voyage or due to the negligence of the carrier.

In this case, the Bills of lading state that the goods were in apparent good condition and order. Now, note the usage of the term “apparent”. Clearly, the carrier is not an expert to determine the state of the cargo. Without evidence to show that infestation happened due to the negligence or fault of the carrier it would not be possible to fix them with liability. However, the chances of infestation in Australia is next to nothing given that it is a fruit fly free zone which would mean that logically it could have only happened in the course of trade.

Further, infestation could not have been apparent to the carrier while issuing the bill of lading and therefore it would be iniquitous to hold him liable on that basis. The problem in this case is that neither inherent vice, which is the defence taken by the captain nor can infestation in the course of voyage can be directly proved. In such a case, where inherent vice to be proved, then the liability may be shifted to the shipper as per Article 17 of the Hamburg Rules which provides for the guarantees of the shipper.

It would, therefore, that the power of the better argument would be in favour of the Korean consignee as regards the cargo in the aft hold. Given that the fruit fly is quite predominant in other parts of Asia, it could have perhaps been possible for the carrier to deposit the cargo at the closest such port where fruit fly presence would not have caused quarantine problems. However, in this case, the consignee themselves ordered that the goods be dumped at sea in pursuance of which the carrier dumped the goods at sea.

Therefore, the carrier cannot be sued for compensation for dumping the goods at sea but may be open to a suit asking for compensation for bringing cargo which was defective to the port of destination when the bill of lading clearly states that the goods were in good condition when they were loaded in the ship. Given that the total value of the cargo of 100 tonnes was AUD 400,000; the value of the fifty tonnes stored in the aft hold would be AUD 200,000. One tonne is equal to a thousand kilograms. Now as per the provision of article 6 of the Hamburg Rules, the carrier is liable to the extent of 2.

5 units of accounts per kilogram of gross weight of goods loss. Therefore the maximum liability of the carrier can be for 50 multiplied by 1000 multiplied by 2. 5 = 125,000 units of account. This unit of account as per article 26 of the Hamburg rules is the Special Drawing Right as defined by the International Monetary Fund which has to be converted to the currency of the relevant state at the time of judgment or on the date agreed upon by both parties. As per the exchange rat on April 1, 2009 that will be AUD 271,910. 55 .