Implications Of The Carrier`s Failure To Provide Adequate Evidence In Claims For Mould Damage
The Article III Rule 2 of the Hague – Visby Rules imposes on the carriers a general duty to take reasonable care of the cargo during the sea carriage.
In the English law case Volcafe Ltd & Ors v. Compania Sud Americana De Vapores S.A.1, the UK Supreme Court held that in case of claims for mould damage to hygroscopic cargoes the carrier has the legal burden of proving that he took due care to protect the goods from damage, including due care to protect the cargo from damage arising from inherent characteristics such as its hygroscopic character and must provide adequate evidence in this regard. If the carrier is unable to provide adequate evidence, he cannot rely on the inherent vice defence and will be held liable for cargo damage. This rule was upheld by the English Commercial Court in a recent case.
In Alianca Navegacao E Logistica LTDA v. Ameropa S.A.2, the bulk carrier "Santa Isabella" was voyage chartered by the grain trading company Ameropa for the carriage of a cargo of maize in bulk from Topolobampo, in Mexico to Durban and Richards Bay, in South Africa.
Upon loading of cargo at Topolobampo the disponent owners of the ship (time charterers) instructed the Master to proceed to Durban via Cape Horn, a route with predictably and significantly colder ambient temperatures than the cargo temperature from the time of loading at Topolobampo.
The maize cargoes have a natural moisture content and are hygroscopic which means that they will release water vapour in case of rising air temperatures and absorb the humidity from the surrounding air (i.e. the air in the head space above the cargo in the holds).
When the maize cargoes are loaded at ports with a warm climate (and humid air), it will release water vapour in the holds after the hatch covers are closed. If the maize cargoes are transported from a warm climate through or to a cooler climate, the water vapour released from the cargoes at the time of the commencement of voyage will condense in contact with the underside of the hatch covers and the condensed water will drip down and wet the cargoes.
The greater the cargo`s moisture content and the difference between the temperature of the air in the head space of the holds and the temperature of the air outside the holds, the greater the condensation of moisture and resulting mould damage will be, unless the cargo holds are properly ventilated to prevent or at least to minimise this. The hatch covers of bulk carriers have ventilation openings which, if opened, will permit the cool air from outside to enter inside the cargo holds and remove the warm moist air from within the hold headspace to the outside, thereby preventing the formation of condensation water onto the underside of the hatch covers.
In the case of maize cargo carried on board the ship "Santa Isabella" it was predictable that the differences between the cargo temperature and the temperature of the air outside the holds will lead to condensation and the ventilation will be necessary to prevent the formation of condensation within the cargo holds.
Upon the ship`s arrival at Durban, the first port of discharge, on 1 August 2016, it was discovered that the cargo had been severely and very extensively damaged by mould caused by moisture condensation. The cargo contained significant quantities of mould that had to be removed in order to recover the sound cargo. The skimming operations delayed the discharge of sound cargo at Durban with three months. There was a further delay in the discharge of the remaining cargo at Richards Bay.
The disponent owners of the ship (time charterer) claimed demurrage for delays at Durban and Richards Bay. The voyage charterer (Ameropa) contended that it should not be held liable for demurrage because the discharge of cargo was delayed due to the fault of the ship`s crew who failed to properly ventilate the cargo during the transportation by sea.
The case was a dispute as to whether the delays at discharge ports (Durban and Richards Bay) were caused by the carrier`s breach of the Article III Rule 2 of the Hague – Visby Rules incorporated into the voyage charterparty whereby the carrier had a duty to properly care for the cargo.
Under the Article III Rule 2 of the Hague – Visby Rules, incorporated into the voyage charterparty, the disponent owners of the ship as carrier had a duty to properly care for the cargo during the voyage, that including the obligation to properly ventilate the cargo when it was necessary to do so.
In the event of claims for mould damage to hygroscopic cargoes evidence showing that the ship`s crew ventilated properly the cargo is essential to carriers in defending the claims.
There are two recognised methods for determining when the ventilation of the cargo holds is necessary: the “dew point rule” and the "three degree rule".
Under the "dew point rule" the cargo holds should be ventilated when the dew point temperature of the outside air is lower than the dew point temperature of the air inside the holds.
Under the "three degree rule" the cargo holds should be ventilated when the temperature of the air outside the holds is 3 degrees Celsius or more below the temperature of the air in the head space of the holds (the cargo temperature recorded at the time of loading).
One question in dispute in Alianca Navegacao E Logistica LTDA v. Ameropa S.A. was whether the maize cargo was properly ventilated in accordance with a sound system, given the degree and extent of mould damage.
A sound system of ventilation for a hygroscopic cargo would involve the use of either the dew point rule or the three degree rule. There was no evidence describing the nature of the ventilation system (whether based on dew point rule or on three degree rule) on board the ship "Santa Isabella".
The Chief Officer of the ship "Santa Isabella" during the voyage with maize cargo said that the crew ventilated the cargo holds using the three degree rule but he was unable to adduce any evidence that the crew actually measured and recorded the cargo temperature during loading or the outside air temperatures during the voyage.
The voyage from Topolobampo, in Mexico to Durban, in South Africa took 39 days. Of these, there were 792 hours (the equivalent of 33 days) during which, in the absence of ventilation, there were conditions conducive to condensation occurring in the cargo holds. Excluding the periods when the cargo holds were sealed for fumigation and when the weather conditions did not permit the ventilation and taking into consideration the safety concerns about ventilation during the night, the judge said that it was safe to ventilate the holds for an aggregate period of 308 hours (the equivalent of 12.8 days). According to the Ventilation Log entries, the actual ventilation of the cargo holds was carried out for 107 hours (the equivalent of 4.5 days, roughly one third of the time during which the ventilation was required and, subject to the night ventilation concerns, safe).
The Ventilation Log provided for the voyage showed that the ventilation did take place between 09:00 hours and 16:00 hours but it contained no remarks explaining why the ventilation was or was not being carried out and no records of the cargo temperature and the outside air temperatures during the voyage. For these reasons the Ventilation Log entries were considered unreliable.
Even if the Ventilation Log entries were accepted at face value that meant that the maize cargo was not ventilated for more than 7 hours a day.
The Chief Officer of the ship "Santa Isabella" during the respective voyage said that the vents were opened only during the day between 09:00 and 16:00 hours and were closed during the night for the safety of the crew (to avoid the risk of injury to crew members if it was necessary to close the vents).
The P&I Clubs` bulletins produced in evidence by Ameropa stated that ventilation should also occur at night if the temperature readings indicate that ventilation is necessary and weather permitting. The judge said that:
"to refrain, without sufficient reason, from ventilating at night in circumstances where the application of the accepted dew point and three degrees rules indicate that ventilation should occur could not, as a matter of logic, be described as a sound system."
Furthermore, there were periods of daylight between 06:00 and 09:00 hours and between 16:00 and 18:00 hours when the ventilation could have been done and it was not done with no reason.
The judge said that had the crew ventilated the cargo at all times when it was necessary and safe to do so including at night, the degree and extent of mould damage would have been far less than was sustained. There would have been between 6 to 12 inches of dried crust at the top of the cargo but no greater type or degree of level of cargo damage.
Accordingly, the judge held that the carrier was in breach of its duties to properly care for the cargo by failing to properly ventilate the cargo in accordance with a sound system. The carrier`s breach was the cause of damage to the cargo. That in turn was the cause of the long delays in discharging at Durban.
But for the carrier`s breach, the discharge process would have been completed within the laytime.
by Vlad Cioarec, International Trade Consultant
This article has been published in Commoditylaw`s Grain Trade Review Edition No. 6.
Endnotes:
1. [2018] UKSC 61
2. [2019] EWHC 3152 (Comm)