Two (2) types of cargo are expressly excluded from the application of the Hague-Visby Rules. These consist of live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried. In both cases the parties are free to negotiate their own terms of carriage for such cargoes.
The exclusion is justified by the peculiar risk attached to the carriage of both categories of cargo, arising in the first case from the nature and inherent propensities of the animals involved and in the second from the exposed position in which the cargo is stowed. As has already been noted, the parties are also entitled to contract on their own terms in relation to the carriage of particular goods, provided that these terms are incorporated into a non-negotiable receipt and no bill of lading is issued.
(I) Deck Cargo – Exclusion of Hague-Visby Rules
Two requirements need to be satisfied in order to avoid the operation of the Rules. First, the cargo must actually be stowed on deck and, secondly, this fact must be clearly stated on the bill of lading. Unless both requirements are met, the contract of carriage will still be con- trolled by the Rules. So they will continue to be applicable where the bill makes no reference to deck carriage but the goods are nevertheless stowed on deck, or where the bill contains a statement that the goods are to be carried on deck but in fact they are stowed in the hold.
Whether or not the goods are stowed on deck is a question of fact which can be easily ascertained. It is, however, more difficult to satisfy the requirement that a statement to that effect should appear on the bill of lading. The acid test appears to be whether an innocent transferee can ascertain, merely by scrutinising the provisions of the bill, whether the cargo has been stowed on deck. For this reason, a clause in the bill conferring a liberty on the carrier to stow cargo on deck would be insufficient, since the transferee would not know whether that liberty had been exercised. So in the case of Svenska Traktor v Maritime Agencies a consignment of tractors had been shipped from Southampton under a bill which conferred a liberty on the carrier to stow the cargo on deck. When one of the tractors was washed overboard during the voyage, the shipowner sought to rely on a clause in the bill excluding his liability for loss or damage to deck cargo.
The court held that he was unable to do so since ‘A mere general liberty to carry goods on deck is not, in my view, a statement in the contract of carriage that the goods are in fact being carried on deck.’ The trial judge pointed to the fact that ‘Such a statement on the face of the bill of lading would serve as a notification and a warning to consignees and endorsees of the bill of lading, to whom the property in the goods passed under the terms of s 1 of the Bills of Lading Act 1855, that the goods which they were to take were being shipped as deck cargo. They would thus have full knowledge of the facts when accepting the documents and would know that the carriage of goods on deck was not subject to the Act.’ Without such warning, the transferee of the bill would presume the Rules to be applicable. Accordingly, the carrier was held liable for a breach of Art III rule 2 in failing to look after the cargo properly and carefully during transit.
Nor is the requirement satisfied by a clause in the bill providing that the carrier is entitled to carry the cargo on deck unless the shipper objects. Here again the transferee of the bill is not to know whether or not the shipper has lodged an objection. This situation arose in the US case of Encyclopaedia Britannica v Hong Kong Producer in which a consignment of encyclopaedias was shipped in containers under a bill which authorised the carrier to stow the cargo on deck ‘unless shipper informs carrier in writing before the delivery of goods to carrier that he requires under deck stowage’.
A further clause in the bill then excluded the carrier from all liability for loss or damage to the goods during transit. When the goods arrived at their destination, and were found to have been damaged by seawater, the carrier sought to rely on the exclusion clause. In these circumstances the US Court of Appeals held Art I(c) not to be applicable since ‘it nowhere states that the cargo is being carried on deck. Clause 13 says it may be so carried but not that it is being so carried. No consignee or assignee could tell from the bill whether it was below deck or on deck cargo.’ Finally, it must be noted that the mere fact that it is customary in the trade for certain cargoes, such as timber or inflammable goods, to be carried on deck is irrelevant to the question of the applicability of the Hague-Visby Rules. If a carrier wishes to take advantage of Art I(c) and avoid their operation, it is essential that the bill contains an express statement that the goods have been shipped on deck.
(II) Consent to Deck Carriage
It may be appropriate at this point to raise another matter which is linked, and often confused, with the circumstances in which deck cargo is not subject to the provisions of the Hague-Visby Rules. This relates to the effect on the contract of carriage of the carrier deciding to stow the cargo on deck without first obtaining the consent of the shipper. The traditional view was that such conduct amounted to a fundamental breach of the contract of carriage which prevented the carrier, in the event of loss or damage to the cargo, from relying for protection on any of the contractual terms and exceptions.
The US Court of Appeals even went so far as to hold in Encyclopaedia Britannica v Hong Kong Producer that, in the event of such a breach, the carrier was not allowed to take advantage of the protection afforded by the Hague Rules and, in particular, the limitation of liability provisions. Neither of these assumptions would appear now to be justified so far as English law is concerned. On the one hand, it is doubtful whether the doctrine of fundamental breach can survive the decision of the House of Lords in Photo Production v Securicor Transport. Secondly, the Court of Appeal has now held in The Kapitan Petko Voivoda that carriage of cargo on deck, in breach of an express undertaking for underdeck carriage, will not prevent a carrier from relying for protection against a cargo claim on the limitation of liability provisions in the Hague Rules. Longmore LJ took the view that ‘the seriousness of the breach is no longer a self-sufficient yardstick for determining whether exemption or limitation clauses apply to particular breaches’. Approaching the problem ‘purely as a question of construction, the words “in any event” become very important. Their most natural meaning to my mind is “in every case” (whether or not the breach of contract is particularly serious; whether or not the cargo was stowed under deck).’
Accordingly, the carrier was able to limit his liability despite having committed what had been previously regarded as a ‘fundamental breach’ of contract. If such a breach of contract is to be avoided, the shipper must have consented, either expressly or impliedly, to the stowage of his cargo on deck.
In this respect it would appear that the inclusion of a general liberty clause in the bill of lading might suffice for this purpose, or even a clause to the effect that ‘carrier permitted to stow on deck unless shipper objects’, provided that the shipper has sufficient notice of the clause at the time of shipment. Thus in the Svenska Traktor case, the Court of Appeal, while refusing to permit the carrier to exclude the provisions of the Hague Rules in the absence of a statement in the bill that the goods had been shipped on deck, nevertheless held that, in view of the inclusion of a liberty clause in the bill, deck stowage did not amount to a breach of the contract of carriage.
Accordingly, the court was prepared to allow the carrier to take advantage of the defences provided by the Rules. Similarly, consent would normally be implied where it is customary in the trade to ship certain types of goods on deck. Examples of such cargoes include timber, certain types of inflammable or other dangerous goods and, more importantly, containers carried on a specially designed container ship. This view is strongly contested by Tetley who argues that the presence of a printed liberty clause in a bill of lading is insufficient to constitute implied consent unless it is accompanied by a clear statement on the face of the bill that the goods have in fact been shipped on deck.
In his view the liberty clause is no more than an option, while the absence of a clear statement in the bill amounts to an assurance that the option has not been exercised. Any resultant ambiguity is undesirable when the carrier can obtain complete protection by a clear statement on the face of the bill that the cargo has been stowed on deck. There is always the suspicion that the carrier’s reluctance stems from the fear that such a statement might result in a bank or a consignee refusing to accept the bill.
In these circumstances Tetley is prepared to treat shipment on deck as a ‘fundamental’ breach of contract. There seems little support for this approach in the British cases as is exemplified by the Court of Appeal decision in Svenska Traktor. Moreover, there are often good commercial reasons for the absence of any clear statement as to deck carriage on the face of the bill of lading. Thus in the container trade some 30 per cent of containers are normally carried on the deck of a container ship in an efficient operation. Rarely will the carrier be aware until the last moment of the identity of the containers which will eventually travel on deck. The final location of each container will be dependent on a variety of factors including the possible dangerous nature of its contents, the trim of the ship, or merely the time of its arrival at the dockside. In these circumstances the carrier will rarely have the time or the opportunity to notate each bill, but will in practice rely in each case on the inclusion of a liberty clause.