Nano Ltd (NL) arranges with the owners of “The Bloom” for the carriage of a consignment of steel coils from Malaysia to France. A bill of lading is issued to Nano Ltd which is incorporated in the UK. The bill expressly provides that it is subject to English law. However, a clause is inserted to the effect that the bill of lading is not subject to The Hague-Visby rules. On its previous voyage, The Bloom Vessel carried a cargo of salts. On 5 January 2017, the vessel had arrived in Malaysia. It discharged the salts five days later. The holds were flushed in an attempt to cleanse them.

The steel was loaded on board the vessel on 11 and 12 January 2017. The vessel sailed the next day. During the voyage, The Bloom ran into storm and sea water entered into the holds because the cargo holds had been left open. When the cargo was unloaded, it was found to be severely corroded. Upon investigation. It was revealed that the possible causes of the corrosion were the failure of the crew to pump out water that collected in the bottom of the ship. Advise the relevant parties. The first issue is which rules should be applied in this case.

According to Art 2(1)(e) Hamburg Rules, it mentioned that the provisions of Hamburg Rules are applicable to all contracts of carriage by sea between two different States, if the bill of lading or other document evidencing the contract of carriage by sea provides that the provisions of this Convention or the legislation of any State giving effect to them are to govern the contract. Therefore, Hamburg Rules can be applied since port of issuing the bill of lading is in UK and the bill expressly provides that it is subject to English law.

The second issue is whether “The Bloom” is liable for the damage of goods. According to Art 1(1) Hamburg Rules 1978, “carrier” means any person by whom or in whose name a contract of carriage of goods by sea has been concluded with a shipper. While Art 1(2) Hamburg Rules 1978 claims that “actual carrier” means any person to whom the performance of the carriage of the goods, or of part of the carriage, has been entrusted by the carrier, and includes any other person to whom such performance has been entrusted.

Therefore, The Bloom is considered as the real carrier. Also in Art. (1) Hamburg Rules 1978, the carrier is liable for loss resulting from loss of or damage to the goods, as well as from delay in delivery, unless the carrier proves that he, his servants or agents took all measures that could reasonably be required to avoid the occurrence and its consequences. Since “The Bloom” is act as the “actual carrier”, therefore, “The Bloom” is not liable for the damage of goods. The third issue is whether Nano Ltd has the responsible to bear the loss of the damages of goods? During the voyage, The Bloom ran into storm and sea water entered into the holds because the cargo holds had been left open.

When the cargo was unloaded, it was found to be severely corroded. Is that Nano Ltd need to bear the loss if The Bloom is not responsible to the loss of damages? According to Art. 4(2) in Hamburg Rules (1978), the carrier is deemed to be in charge of the goods which from the time he has taken over the goods from the shipper, or a person acting on his behalf; or an authority or other third party to whom, pursuant to law or regulations applicable at the port of loading, the goods must be handed over for shipment.

Until the time he has delivered the goods by handing over the goods to the consignee; or in cases where the consignee does not receive the goods from the carrier, by placing them at the disposal of the consignee in accordance with the contract/ with the law/ with the usage of the particular trade, applicable at the port of discharge; or by handing over the goods to an authority or other 3rd party to whom pursuant to law or regulations applicable at the port of discharge, the goods must be handed over.

According to Art. (1) in Hamburg Rules (1978), the carrier is liable for loss resulting from loss of or damage to the goods, as well as from delay in delivery, unless the carrier proves that he, his servants or agents took all measures that could reasonably be required to avoid the occurrence and its consequences. According to Art. 5 (4)(a)(ii) in Hamburg Rules (1978), the carrier is liable for such loss, damage or delay in delivery which is proved by the claimant to have resulted from the fault or neglect of the carrier, his servants or agents in taking all measures that could reasonably be required to put out the fire and avoid or mitigate its consequences.

According to Art. 6 (1) in Hamburg Rules (1978), the liability of the carrier for loss resulting from loss of or damage to goods according to the provisions of article 5 is limited to an amount equivalent to 835 units of account per package or other shipping unit or 2. 5 units of account per kilogram of gross weight of the goods lost or damaged, whichever is the higher. According to the case of Steel et Al. v The State Line Steamship Company (1877-78) L. R. 3 App. Cas. 72 at p. 0-91, an insured ship should be ‘in a condition to encounter whatever perils of the sea a ship of that kind and laden in that way may be fairly expected to encounter. ’

However, an express exception of negligence did not cover loss due to unseaworthiness. Lord Blackburn distinguished between (i) a port hole left open on the orlop deck with cargo piled up high against it, where no one could see whether the port hole had been left open or not, in circumstances where it would require a great deal to time to remove the cargo; and (ii) a porthole left open in a cabin which could be shut at a moment’s notice as soon as the sea became rough.

In the latter case the vessel would not be unfit to encounter the perils of the voyage because the matter could be set right within a few minutes and ‘if they did not put it right after such a warning, that would be negligence on the part of the crew, and not unseaworthiness of the ship’. In conclusion, Nano Ltd is liable to the loss for the damages of goods and the carrier needs to pay to an amount equivalent to 835 units of account per package or other shipping unit or 2. 5 units of account per kilogram of gross weight of the goods lost or damaged, whichever is the higher.