What Should Be The Obligation Of The Soya Bean Carriers In Respect Of The Cargo Description In The Bills Of Lading

Over the last twenty years, the cargoes of Brazilian soya beans have been the subject of numerous claims for mould and/or heat damage in China. Many of these claims were based on the evidence provided by the discharge port surveyors that the mould and/or heat damage was caused by the condition of soya beans at the time of shipment. The claims have been upheld by the Chinese courts on the ground that the carriers had failed to properly describe the condition of soya bean cargoes in the Bills of Lading¹.
Apparently, the Chinese maritime courts do not distinguish between the actual condition and the apparent condition of the goods in the case of soya bean cargoes.
The carrier`s obligation to ascertain the actual condition of the goods would require in the case of the soya beans to take samples and analyse the moisture content. The crews of the bulk carriers that transport soya bean cargoes have no possibility of analysing the moisture content of the soya beans on board. This can only be done by local surveyors specialised in soya beans.
Under the Hague Rules, Hague-Visby Rules and Hamburg Rules, the carrier`s obligation is to ascertain only the apparent condition of the soya beans that is based on their external appearance and not on their quality characteristics. Therefore, in the contracts of carriage that are subject to such rules, the carriers of soya bean cargoes should not be required to sample the cargo and analyse its moisture content nor they should be held liable in the case of failure to do that because the moisture content does not relate to the apparent condition of the soya beans.
The carrier`s obligation to ascertain the apparent condition of a soya bean cargo would require the vessel`s crew only to visually inspect the cargo at the time of loading, take pictures of the cargo and notice if there are any portions of the cargo that visibly differ from the cream colour of the sound soya beans. For instance, a visible change in the colour of the soya beans from cream to dark blue is a sign that the respective beans are mouldy. A visible change in the colour of soya beans from cream to brown is a sign that the respective beans have been damaged by heat. At high temperatures, soya beans become black.
ANEC Contract forms No.41 and 42 used for the FOB sales of the Brazilian soya beans provide that the soya bean cargoes may have a maximum 6% content of mouldy beans and a maximum 4% content of heat damaged and burned beans of which the content of burned beans must be maximum 1%. However, the Master of a vessel is not concerned with the quality specifications for the cargo but with its apparent condition and the way this is described in the Bills of Lading. Whether the cargo is within the quality specifications of the sale contract, it should be irrelevant to the Master.
Therefore, if the Master considers that a soya bean parcel contains an abnormal quantity of mouldy and/or burned beans, he is entitled to ask the replacement of the respective parcel or, if the unloading of the cargo is not possible, instruct the carrier`s local agents to add a remark to the shipper`s description of cargo specifying the nature and estimated quantity or proportion of the visibly damaged beans.

by Vlad Cioarec, International Trade Consultant

This article has been published in Commoditylaw`s Grain Trade Review Edition No. 7.

Endnotes:

1. See the English case Priminds Shipping (HK) Co Ltd v. Noble Chartering Inc, [2020] EWHC 127 (Comm), [2020] 2 Lloyd`s Rep 333.