In a recent case Volcafe v CSAV  UKSC 61, the Supreme Court of the United Kingdom (the “Supreme Court”) discussed for the first time as to who shall bear the burden of proof in cargo damage claims against the shipowner under the Hague Rules.
The Claimants, who are the cargo owners and bill of lading holders, claimed against the Defendant, who is the shipowner and the carrier, for breach of Article III Rule 2 of the Hague Rules since it had failed to, among others, properly and carefully carry and discharge the goods carried, namely the bagged coffee beans. The Claimants argued that wet damage was caused to the beans and the Defendant had failed to use adequate or sufficient Kraft paper to the walls of the container to protect the coffee beans. On the other hand, the Defendant argued that the condensation damage to the coffee beans was caused by an inherent vice of the coffee beans. Coffee is hygroscopic which will absorb and emit moisture. The coffee beans will inevitably emit moisture and thereby cause condensation to form on the walls and roof of the container when they were carried from warm climates to cool climates in unventilated containers. Hence, the Defendant argued that it could rely on the defence under Article IV Rule 2(m) of the Hague Rules.
The High Court Judge held that the doctrine of res ipsa loquitur (a doctrine that infers negligence from the nature of an accident in the absence of direct evidence on how the defendant behaved) was available to the Claimants in the present case. Since the beans have been received in good order and condition but have later been delivered in a damaged state, there is a factual presumption that damage ascertained on discharge of the coffee beans was due to negligence. It is accepted by the High Court that there was an undisputed damage on the cargo, which therefore required the Defendant to produce evidence to prove the contrary.
The Court of Appeal set aside the decision of the High Court Judge and held that, if the Defendant shows a prima facie case for an “inherent vice” defence, the burden of proof shifts to the Claimants to establish negligence and prove that the defence under Article IV Rule 2(m) of the Hague Rules does not apply. Moreover, since the exception under Article IV Rule 2(q) of the Hague Rules provided a catch-all exception which expressly placing the burden of proof on the Defendant to disprove fault or negligence; therefore, in the case of other exceptions under Article IV of the Hague Rules, the Defendant does not bear the burden to disprove negligence so that the exception will apply.
The Claimants appealed against the Court of Appeal’s decision to the Supreme Court.
The relevant rules
Article III Rule 2 of the Hague Rules provides that, “subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried”.
Article IV Rule 2 of the Hague Rules provides that, inter alia, neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:
“… (m) Wastage in bulk of weight or any other loss or damage arising from inherent defect, quality or vice of the goods. …
(q) Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.”
The issues before the Supreme Court are:-
- Does the Claimants bear the legal burden of proving the breach of Article III Rule 2 of the Hague Rules or is it for the Defendant to prove compliance of the Article III Rule 2 of the Hague Rules once loss or damage to the cargo has been ascertained?
- Is it for the Claimants to prove that it was the negligence of the Defendant which caused the inherent vice to operate on the cargo after the carrier has proven the facts which render the case falling under the exception under Article IV Rule 2 of the Hague Rules?
The Court’s ruling
The Supreme Court overturned the Court of Appeal’s ruling and held that the Defendant bears the burden of disproving negligence under both Article III Rule 2 and Article IV Rule 2 of the Hague Rules. To start with, the Supreme Court said that the principles of bailment at common law are an essential background against which the Hague Rules were drafted. Therefore, even though the bill of lading in the present case incorporated Hague Rules, it is necessary to examine the common law principles of bailment, that is, a bailee of goods only bears limited duty to take reasonable care of the goods, and shall bear the legal burden of proving the absence of negligence. It is necessary for a bailee to show he has taken reasonable care of the cargo or the cause of the damage sustained is not the lack of reasonable care. Nevertheless, the bailee is not required to show how the damage or injury occurred.
Article III Rule 2 of the Hague Rules
The Defendant submitted that first, the burden of proving a breach of duty to take reasonable care of the cargo during the voyage should be on the Claimants since there is a general rule in the English law that he who asserts must prove. Also, the reason why the bailee has a common law obligation to disprove negligence was that a bailee has a strict obligation to redeliver the goods in the same condition as when delivered. However, under Article III Rule 2 of the Hague Rules, there is a qualified obligation to take reasonable care of the cargo.
The Supreme Court disagreed with the Defendant’s submission and held that the bailee’s common law obligation is not strict, and therefore, the bailee’s obligation to take reasonable care under common law is always treated as consistent with the rule which imposes the burden of disproving negligence on the bailee. The Court relied on the cases The “TORENIA”  2 Lloyd’s Rep 210 and Homburg Houtimport BV v Agrosin Pte Ltd  1 AC 715 to arrive at a conclusion that the burden of proof under the Hague Rules is the same as that in the case of bailment for carriage. Further, Article III Rule 2 of the Hague Rules has expressly been made subject to the exceptions in Article IV of the Hague Rules, and it is well-established that the burden to prove that the exceptions in Article IV should apply rests on the Defendant. As such, the Supreme Court concurred with the Claimants that the Hague Rules must logically impose the same burden of proof on the Defendant for the purpose of both Article III Rule 2 and Article IV of the Hague Rules, that is to disprove negligence in respect of the damage to the cargo sustained during the carriage.
The Defendant also submitted that the Hague Rules, as a complete international convention, shall not be construed in light of particular features of any domestic system of law, such as English law.
The Supreme Court also disagreed and held that, since the Hague Rules did not deal with the mode of proving a breach and questions of evidence, these will be governed under the law of evidence and the rules of procedure in the appropriate forum. If the English Court is the appropriate forum, then the English rules of evidence and procedure will apply. Further, some researches show that many countries, such as Belgium, the Netherlands, Italy, Germany, Norway and Spain, also apply principles that the fact that a damage has been sustained during carriage will cast the burden of proving the absence of fault on the carrier and there shall be a conclusive breach of Article III Rule 2 of the Hague Rules unless the carrier can prove that the exception under Article IV Rule 2 of the Hague Rules applies.
Article IV Rule 2 of the Hague Rules
The Defendant relied on The ‘Glendarroch’  to argue that if it has successfully proved that the cargo suffered from inherent vice, the burden of proof will be shifted to the Claimants to prove that those inherent vice of the cargo resulted in damage because of the Defendant’s negligence.
The Supreme Court disagreed with the Defendant and overturned The Glendarrochsince it was technical, confusing, immaterial to the commercial purpose of the exception and out of place in the context of the Hague Rules, which was made effective on 1968. Also, The Glendarroch case is concerned about the perils of the sea defence and thus not applicable to the exception for inherent vice in the present case. The Supreme Court held that there is not a general principle that a cargo owner shall bear the burden of proving negligence. It is the carrier who bears the legal burden to prove that the exception under Article IV of the Hague Rules applies. For a carrier to rely on the inherent vice exception, he shall prove that the cargo will be damaged anyways no matter what reasonable steps he has taken to prevent such damage, or that he has actually taken reasonable care of the cargo but the damage was still sustained nevertheless. This is because, if the carrier could take steps to prevent inherent characteristics of the cargo from resulting in damage, this characterises is not inherent vice.
Over four centuries, the Supreme Court has not provided a definite answer to the question of the burden of proof in cargo damage claims since there were usually some persuasive evidence in the prior cases. This landmark case has clarified this question and held that the carrier shall bear the legal burden to disprove that the loss or damage sustained was caused by its breach of Article III Rule 2 of the Hague Rules or to prove that the defence under Article IV Rule 2 of the Hague Rules applies.
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