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The liability of the carrier will arise here, first of all, due to the clean bill of lading that the master signed despite substantial rodent contamination damage on the cargo in hold number one of the ship.  A bill of lading presents goods shipped on board a vessel, signed by the master of the vessel or by a person who was not the master with express, implied, or apparent authority of the carrier to sign bills of lading.[1]  As to the person who becomes the lawful holder of the bill, such bill of lading is considered as conclusive evidence against the carrier of the shipment of the goods, or their receipt for shipment.  The contract of carriage between the carrier and the owner of the goods, in relation to the bill of lading, means the contract contained in or evidence by that bill.[2]  The cargo receivers in this case are entitled to receive the goods in accordance to the conditions specified in the bill of lading, which constitutes a binding contract between the receivers and the carrier.  The problem in this case is that the master signed a clean bill of lading, purportedly pursuant to the terms and conditions of the contract and carriage, but it turns out that some of the goods were damaged due to rodent contamination.In other words, on its face, the carrier, as represented by the Ship Master, committed a breach of the contract for failing to deliver the goods pursuant to the conditions specified in the contract of carriage.  It should also be noted that the damage that occurred on the goods was something that already came to the attention of both the second mate and the chief officer, with the latter failing to make comment on the mates receipt or to inform the master.  If the chief officer exercised due diligence in reporting the presence of rats in hold number one to the master, they could have taken appropriate measures to prevent any future damage to the goods.   For failing to do so, the chief officer was negligent.  Unfortunately, the master exercises control and authority over the chief officer, and negligence of his agent is imputable to the master, especially as the latter, in signing a clean bill of lading, provided conclusively that the cargo was indeed in accordance to the conditions of the contract of carriage.  Furthermore, the carrier also has the responsibility, before and at the beginning of the voyage, to exercise due diligence to make the holds, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.[3]As such, the carrier in this case cannot even claim exception under the Hague-Visby rules for unseaworthiness, since the rules provide that want of due diligence on the part of the carrier to make the ship seaworthy, and to make sure that the holds and all other parts of the ship in which goods are carried are fit and safe for the reception, carriage and preservation of the goods, makes the carrier or the ship liable for loss or damage.[4] In this case, the rats were apparent in hold number one at the time the goods were being loaded.   The ship should have exercised due diligence in making sure that their holds were fit and safe for the reception, carriage, and preservation of the goods.  However, one exception the carrier can raise under the Hague-Visby rules is under Article IV, paragraph 2, which provides that neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from the act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship.  The carrier can claim that the damage to the goods was due to the neglect of the master, or the servants of the carrier (particularly the chief officer) in failing to report the matter to the master.  As such, should the carrier be liable for paying indemnity to the owner of the goods, they can claim reimbursement from the master due on the latter’s personal liability for neglect in the management of the ship.A contract of insurance is uberrimæ fidei, meaning it is a contract based upon utmost good faith which, if not observed by either contract, may allow the other party to avoid the contract.[5]  The insurer of the shipper of the cargo in holds number one and two undertook to indemnify the shipper, who is the assured, against losses incident to marine adventure.  The insurable interest of the shipper in the cargo so loaded in holds number one and two is the prime cost of the property insured, plus the expenses of and incidental to shipping, and the charges of insurance upon the whole.[6]  Since the cargo or goods insured arrived with substantial rodent contamination damage to the goods in hold number one, the insurer becomes liable to the damage sustained to the goods, if not for the prime cost of the entire property insured if actual loss occurred.  The insurer must turn to the law on marine insurance to prove that the cause of the loss or damage to the goods would exempt him, the insurer, from any liability thereon.The problem in this case is that this involved a time charter party, and there was a 3-day delay in the ship’s planned arrival time.  Pursuant to Article 25 of the Marine Insurance Act 1906, a time policy is to insure the subject-matter of the contract (in this case the cargo in holds number one and two) for a definite period of time as stated in the policy.  The ship deviated for two reasons – there was a required part missing which lead to steering failure, and it deviated from its planned route to respond to a Mayday (which was subsequently cancelled).  These two factors led to the delay of the ship’s arrival, and this was in contravention of the insurance policy, the latter being a time policy in particular.   Generally, a ship which without lawful excuse deviates from the voyage contemplated in the policy discharges the insurer from any liability as of the time of the deviation, and it is immaterial that the ship regained her route before any loss occurs.[7]  In this case, the ship deviated from its specifically designated course of voyage in the policy.   The cargo insurer can raise this as a defence to discharge his liability under the contract – intention to deviate is immaterial.  The insurer can point to the deviation in fact by the ship when it departed from its planned course of voyage to respond to a Mayday.The insurer can also raise the defence of delay to exempt himself from the liability of paying for the actual loss or damage sustained by the goods in hold number one.  Article 18 of the Marine Insurance Act provides that in the case of a voyage policy, the adventure insured must be prosecuted throughout its course with reasonable dispatch, and if without lawful excuse it is not so prosecuted, the insurer is discharged from liability from the time when the delay became unreasonable.  In this case, the delay was only 3 days, and may be argued as not constituting unreasonable delay, depending on the perishable quality of the goods stored.   The insurer can argue that the reasons for deviation or delay by the ship are not excepted by law – they were not authorised by any special term in the insurance policy, they were not caused by circumstances beyond the control of the master and his employer, they were not reasonably necessary to comply with an express or implied warranty, they were not for the purpose of saving human life, or aiding a ship in distress where human life may be in danger, or they were not reasonably necessary for obtaining medical or surgical aid for any person on board the ship, and it was not caused by the barratrous conduct of the master or crew.[8]The assured (or the shipper) in this case may then raise the defence that the deviation to respond to the Mayday is in fact a valid excuse for deviation as provided for by the Marine Insurance Act 1906.  The assured can argue that the ship, in deviating from its planned course, was responding to a Mayday and thus deviated for the purpose of aiding a ship in distress where human life may be in danger – and this is a reason for deviation that is excused by the law, thus it would not exempt the insurer from his liability.Even if the assured successfully argues that the insurer would still be liable for the cargo damaged despite the lawful deviation, however, it will have difficulty in defending the cause of delay.  The delay in this case was due to steering failure which could not be repaired as the part required was missing.  To be excusable delay, such a circumstance should have been beyond the control of the master or crew.  However, obtaining an essential or required part of the ship, vital for steering it, is something that is within the control of the master or crew.  In failing to get the required part for steering, the master and the crew were negligent.  Ensuring that the required parts of the ship are all in place are part of the warranty on the ship’s seaworthiness.  The reason for the delay thus cannot be excused.  The insurer cannot be discharged from his liability by reason thereof.It should be pointed out however that the insurer is not liable to pay any general average loss that the assured (shipper) may have been required to pay for the damaged goods.   This is loss caused by or directly consequential on a general average act, and includes a general average expenditure and general average sacrifice.  A general average act on the other hand is where any extraordinary sacrifice or expenditure was voluntary and reasonably made in time of peril for purpose of preserving the property imperilled in the common adventure.[9]  In this case, there was no general average act involved – the act of deviating was to aid another ship in distress and was not to preserve the property insured, while the delay was caused to negligence of the master and crew in obtaining a required part for steering.  The assured then would not be entitled to a rateable (general average) contribution from the insurer, as there was no general average loss.Lloyds Open Form (LOF) is a standard legal document for a proposed salvage operation, a four page long contract published by the Lloyds of London  (Wikipedia, 2007).  A salvage operation, on the other hand, means “any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever.”[10]  In this case, the ship had to undergo a salvage operation since it had steering failure upon entering the English Channel, and had to be towed under Lloyds Open Form to Rotterdam.  The LOF is describe as “open” since it is literally open – there is no amount of money stipulated for the salvage job.  The sum to be paid is determined later in London by a professional arbitrator.  The fundamental premise of this contract is “no cure – no pay.”  The salvage award is determined by the values of the ship, its cargo and freight at risk, together with the extent of the dangers and the difficulty in effecting the salvage (Wikipedia, “Lloyds Open Form”, 2007).  LOF 80 however broke this fundamental principle of “no cure – no pay” by providing that if the salvage services involved a laden tanker, the salvor, even if unsuccessful, would at least recover the very minimum of his expenses plus an uplift of 15%.  Unfortunately, with the case on hand, the carrier was not a laden tanker, and thus could not recover even the very least of his expenses.It is deemed more advisable to resolve the salvage operation in this case by LOF rather than daily hire.   With LOF, each case is assessed in accordance with its own merits.  If no property is salved, there is no reward, and even when the property is salved, the reward cannot exceed its value even if the expenses of rendering a salvage service were more.  This is a strong incentive to salvage as much value as possible – to the benefit of the property owner.  In addition, the LOF imposes the obligation on the contractor to use his best endeavours to salvage ship and cargo, which continues until the property is in a position and condition of safety.   It also reinforces the obligations of both the contractor and ship owner, under the Salvage convention, that the contractor shall use best endeavours to prevent or minimize damage to the environment.  These elements are generally not applicable to daily hire contracts.  Furthermore, unlike daily hire contracts, the ultimate award in LOF is apportioned pro rata to value between ship, cargo, and other salved interest (Bishop, 2002).  It is thus more advisable to resolve the salvage operation in this case by LOF rather than daily hire.The UK and the Netherlands are both signatories in the EC Regulation – Regulation (EC) No. 725/2004 of the European Parliament and of the Council of 31 March 2004 on enhancing ship and port facility security.  Both countries are also signatories to the SOLAS Convention, meaning the International Convention for the Safety of Life at Sea 1974, as amended from time to time, and of the ISPS Code, meaning the International Ship and Port Facility Security Code, as amended from time to time.  Ships entering and departing from the UK thus has to follow the EU Regulation on Enhancing Ship and Port Facility Security, and the same goes for ships entering and departing from Rotterdam (a Dutch port city) since the Netherlands is likewise a signatory of these international agreements.   As such, the clearance inward procedure for the arrival in Rotterdam follows the Regulations.The clearance inward procedure undergoes 4 stages.  Stages 1 and 2 are relevant to the shipping industry and will be described here, but Stages 3 and 4, which are internal government processes, will not be detailed, but merely briefly outlined.  Under the SOLAS, vessels from countries that are signatories thereof have to comply with certain prior notification procedures before entry into a port of country which is also a SOLAS signatory. Non-SOLAS ships, or those under 500 gross tones or not engaged on an international voyage, are not required to submit such prior notification information.  At Stage 1, port security agents must collect security data from an incoming ship, usually through collation of the ships’ responses to the security questions and through a completed pro-forma submitted to the port agent.  The agent in turn must retain completed pro-formas for a period of three years from the date of issue.  Stage 2 involves considering the answers provided by the ship against a decision flow chart which will help to determine whether a ship can be allowed entry into the port in the normal way, or whether the local coastguard must be contacted for further advice.  Stage 3 is when the incoming ship does not have an International Ship Security Certificate, in which case the local coastguard must be informed immediately.  In Stage 4, the coastguard will then seek advice from the local transport department when pre-determined security related criteria are triggered (Department of Transport, 2007).The clearance inward procedure is similar for arrival in Rotterdam, wherein an electronic simplified customs declaration must be lodged by the ship, at least 24 hours before the arrival of the goods, by the importer or his agent at the customs office in Rotterdam.     The customs office at Rotterdam will then perform risk analysis, and on arrival of the goods shipped, will carry out any risk-based control deemed necessary for security and safety (European Commission, 2005).Goods may only be unloaded from a ship after presentation, lodging of a summary declaration and with customs permission at places approved by customs.  Details of approved places for unloading are available from national customs authorities of the member-states of the EU.  However, customs must be informed immediately once the goods have been unloaded since it may also require the unloading of the goods so that they may be examined (European Commission, 2005).

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