Pursuant to § 1, subpara. 2, of Art. 166 of the Merchant Shipping Code of the Russian Federation (hereinafter – MSC RF), Commercial Court concluded that there are no legal grounds for assignment of liability upon the Carrier for the loss of the deck cargo caused by a sudden wave whose destructive force exceeded estimated weather conditions. The court has taken into account that the Bill of Lading contains the “all risks and liability for the deck cargo are on the Shipper” clause.

Facts: PJSC “Rosgosstrakh” (Claimant) and JSC “Mezhregiontruboprovodstroj” (hereinafter – the JSC “MRTS”) entered into the insurance contract as evidenced by the issue of the General Cargo Transport Insurance Policy with the Cargo Transportation Declaration.

During the contract period, while transporting piling products by the motor vessel the eight of the pile shells overturned and got lost in the sea as a result of a sharp deterioration in weather conditions in the Barents Sea area.

Partial loss of the piles carried on the hatch cover of the m/v was caused by the breakage of all 4 nits, with which the pile stack was secured.

The lost cargo was transported by JSC “Northern River Shipping Lines” (hereinafter – the Defendant, JSC “NRSL”) on the basis of the contract for the carriage of goods by sea concluded between it and JSC “MRTS” (hereinafter – the “Contract for the carriage of goods by sea”) by the route from the port of Arkhangelsk to the port of Sabetta.

The Claimant recognised the above event as an insured one under the insurance contract and paid insurance indemnity to the policyholder, JSC “MRTS”.

Since the Claimant paid the insurance indemnity, it brought a claim against the defendant by way of subrogation as a person which was liable for the damages under the contract of carriage and pursuant to § 1 of Art. 166 of the MSC RF.

Judgements: the Judgment of the Commercial Court of the Arkhangelsk region of June 29, 2021, in favour of the Defendant.

The Judgement of the Court of the first instance was upheld by the Ruling of the Fourteenth Arbitration Commercial Court of October 28, 2021, the appeal of the PJSC “Rosgosstrakh” was denied.

Comment: under § 4 of Art. 166 of the MSC RF, the carrier is liable for the loss of or the damage to the cargo accepted for carriage or for the delay in its delivery from the time of accepting it for carriage to the time of its release.

Article 142 of the CMS of the RF establishes that after accepting the cargo for carriage, the carrier shall be obliged to issue a bill of lading to the consignor at the latter’s request.

In accordance with § 1, subpara. 2, of Art. 166 of the MSC RF, the carrier shall not be liable for the loss of or damage to the cargo accepted for carriage or for the delay in its delivery if it proves that the loss, damage, or delay has taken place due to hazards or pure chances at sea and in other shipping waters.

As established by the Court of the first instance, § 3.1.14.2 of the Contract for the carriage of goods by sea provides for the tight of the Carrier to enter a clause concerning the deck cargo in the Bill of Lading: “Loaded on deck with the permission/at the direction of the Shipper at his risk and responsibility”.

The bill of lading, issued in respect of the cargo lost subsequently, contains this deck cargo clause stating that the deck cargo is loaded onto the deck of the vessel at the risk and responsibility of the Shipper.

In such circumstances, the claim for liability for the loss of the deck cargo against the carrier is unfounded and contradicts the terms of the contractual obligation between the Defendant (Carrier) and the Third Party (Shipper).

At the same time, the court, rejecting the claims, did not only assess the terms of the concluded contract but also established the immediate cause of the loss of the deck cargo.

According to the information contained in the deck log, the captain’s protest, the preliminary surveyor’s report, the surveyor’s report, and in the Witnessed Inspection Certificate on the loss of the cargo during sea carriage, the events occurred as follows. The north wind increased to 26 m/s, wave direction was 3400, a “rogue wave” with a height of more than 8 meters hit the port side of the vessel suddenly from the direction 2600 at 00.49 AM Moscow time. The vessel tilted to starboard at an angle of over 15 degrees, at that all four nits of securing the deck cargo on the hatch cover were broken. This consequently led to the displacement and partial loss of 8 units of the cargo of the welded tubular sheet pile.

Under § 3.1.8 of Guidance Document No. 52.04.563-2013 “Instructions on the Preparation and Transmission of Storm Warnings”, approved by Order No. 730 of the Federal Service for Hydrometeorology and Environmental Monitoring of the Ministry of Natural Resources and Environment of the Russian Federation, a natural hazard is a hydrometeorological or helio-geophysical event, which by its intensity of development, duration or time of occurrence, may threaten the life or health of persons, and may also cause significant material damage. Paragraph 4.2 of the same Guidance Document No. 52.04.563-2013 states that when hydrometeorological phenomena and the corresponding critical values (observed or measured) are reached, such phenomena shall be recognised as Hydrometeorological Hazardous Phenomena (HHP).

Pursuant to the table of the Standard List and criteria of HHP, wave shall be qualified as a dangerous hydrometeorological phenomenon if its height in the high seas reaches at least 6m.

The same document establishes that strong winds in the high seas of 20 m/s and its gusts of at least 25 m/s shall be qualified as a storm.

Therefore, the hydrometeorological conditions accompanying the loss of the deck cargo were Hydrometeorological Hazards classified as hazards and accidents at sea in terms of their intensity of development and the time of occurrence.

If the Bill of Lading contains “all risks and liability for the deck cargo are on the Charterer/Shipper” clause, there are no legal grounds for assignment liability on the Carrier pursuant to § 1, subpara. 2, of Art. 166 of the MSC RF for the loss of the deck cargo taking into account that the actual cause of the loss of the cargo was a sudden wave whose destructive force exceeded the estimated weather conditions.

Conclusion

The judgment to dismiss the claim was based on a totality of the circumstances: the existence of a clause in the Bill of lading and the fact that hydrometeorological hazardous phenomenon has occurred.

Therefore, in order to minimise the legal risks of liability for the loss of the deck cargo, the Carrier shall be more meticulous in drafting and filling out the cargo documents but also in fixing hydrometeorological conditions. ■