SHIPMENT OF DANGEROUS CARGO BY SEA

Citation(2006) 18 SAcLJ 541
Date01 December 2006
Published date01 December 2006

This article examines the US law that governs the shipment of dangerous goods. The early cases imposed the risk of loss or damage caused by dangerous goods on the shipper, the underlying rationale being that a shipper is in the best position to know the characteristics of the cargo that it ships and should either warn the carrier of the nature of the goods or take steps to eliminate the danger. Some doubt was cast on this view when some courts seemed to adopt a fault-based liability approach. An overview of cases, nevertheless, shows that a majority impose strict liability. This view is supported by the US adoption of the Hague Rules in the Carriage of Goods by Sea Act. More recently the adoption of international standards such as in the International Maritime Dangerous Goods Code identifies dangerous goods and provides instructions that specify requirements for packaging, labelling, stowage, etc. This Code is supplemented by national legislation in some countries, such as the US. The article concludes with a discussion of the impact of the Code and national legislation on the allocation of risk between shipper and carrier.

I. Introduction

1 At first glance, the subject of liability for damage caused by dangerous goods shipped aboard vessels might appear to be rather straightforward. A review of relevant legislation, government regulations, judicial decisions and international safety standards reveals that the subject is not so simple.1 For example, consider the word “dangerous”. What does that word mean in the context of sea transport? If one

examines the word in a post-casualty context, then anything brought aboard a ship that results in physical damage or injury, in retrospect, has been demonstrated to have been “dangerous”. After all it caused damage or injury. Under this approach, even the most innocuous substance or thing such as paper may become dangerous if improper stowage places it next to an open flame that ignites the paper resulting not only in the destruction of the paper but also damage to other cargo, the vessel itself and, perhaps, injury to members of the crew.

2 Neither statutes nor US case law provides a comprehensive definition of the term “dangerous cargo”. It is submitted that the term cannot be defined in a vacuum, but rather it should be examined in the context of “risk”. Whether or not cargo is “dangerous” must be ascertainable before a risk of danger has had an opportunity to manifest itself because rights and duties, between shipper and carrier, come into play even before the goods are loaded on board a ship. For example, a shipper may have a statutory or “common law” duty to notify a carrier that its goods are “dangerous” and to take proper steps in preparing that cargo for transport so as to eliminate or reduce the risk of danger. The carrier in devising a proper stowage plan has to factor in the “dangerousness” of cargo it intends to carry.

3 It is submitted that dangerous goods are risk specific. For example, goods may be dangerous because they are toxic or subject to emit toxic fumes under certain circumstances, but they may not be flammable or explosive. Other goods may be flammable but not toxic. Still other goods may present multiple risks in that they are, for example, both explosive and flammable.

4 Also goods may present a risk to a particular interest. For example, goods may present a risk only to themselves (inherent vice) or they may present risks only to other cargo on board, or to the ship, or to seamen or longshoremen who handle the cargo. Goods, such as explosives, may present risks to all of the aforementioned.

5 Goods may present risks only if they are not properly labelled, packaged, handled or stowed. Thus, goods may present risks only if proper precautions are not taken. The failure to take proper precautions may be the result of negligence or simply scientific ignorance. The latter occurs when scientific knowledge has not identified a particular risk such as an inherent characteristic of certain goods to spontaneously explode or become inflamed. There are important cases, important in the sense of the enormity of loss, where science identified the risk of exposing certain goods to flame or spark or other heat source, but, at the time of the

incident, science had not identified the goods as being subject to spontaneous combustion.2 Such goods may cause damage even though precautions are taken against “known risks”.

6 Creation of risk alone does not automatically result in liability such as in situations where the risk does not cause damage. For example, a shipper’s improper stowage of tin ingots within a container did not render it liable to other cargo or the vessel, unless such negligence was the proximate cause of the collapse of the stowage of 50 containers on the container ship’s deck. In this case, the court concluded that the carrier’s failure to exercise due diligence in allowing an eight-year-old structurally damaged, unseaworthy container to be loaded on the ship was the cause of the collapse.3

7 Finally “risk” cannot be viewed in absolute terms. The degree of risk must be factored in. Risks can run the gamut from remote, to possible, to likely and to a virtual certainty.

8 Today, in contrast with early US cases, statutes and international conventions play a major role in regulating the carriage of dangerous goods by sea. Although these regulations were promulgated as safety measures, their existence has ramifications on the imposition of liability where dangerous goods cause damage or injury. As will be seen later in this paper, the regulations are not mere platitudes to “be careful”. They designate thousands of products as dangerous, categorise the danger and provide highly detailed instructions on how specific goods should be packaged, labelled, placarded, stowed, etc. In most cases, courts no longer have to struggle with determining whether or not goods are dangerous. If they are on the list, they are. Likewise, in most instances, courts no longer have to determine what constitutes proper notice, packaging, labelling and stowage. If a shipper or carrier disregards a duty imposed under a national or international regime and the breach of that duty proximately causes damage, the party in breach inevitably will be held liable. Although ultimately liability will be imposed pursuant to the rules applicable to carriage of dangerous goods, the regulations make it easier to sort out whether or not the loss was caused by the failure of a party to carry out a duty imposed by law. Today shippers and carriers are legally obligated to be familiar with the regulations, and this requirement, to some extent,

equalises the knowledge of all parties involved in the transportation of dangerous cargo.

9 Yet, just as under the common law, a question remains as to which party bears the loss for an unknown risk. In fact, the regulations may complicate matters because parties tend to rely on them. Should a party be faulted for following the regulations? Should a party be exonerated for doing precisely what the regulations demand under circumstances where a regulation is based on imperfect information? This problem can occur where no one knows that goods are dangerous. The problem can also occur when it is known that a product poses a risk of a particular danger but, unknown to the world, it poses a risk of another danger as well. These and other issues will be discussed in this paper.

II. Dangerousness4

10 In one sense, all goods shipped by sea should be safe, that is, not present a risk of damage to themselves, other cargo, the ship or cause injury to persons aboard. Thus, if all of the risks associated with particular goods are known, and armed with that knowledge the goods are properly labelled so that all who come in contact with them know what precautions to take, and further if the goods are properly prepared for shipment and properly stowed, the risks presented by the cargo will have been effectively eliminated. In that sense, those goods are not “dangerous”. Reality proves otherwise. With respect to some goods, it is not possible, at the time they are shipped, to know of all the risks presented. Science simply has not identified all risks for all goods that are shipped by sea. But even where risks are known, some goods are so inherently risky that while it is possible to guard against them, it may not be possible to completely eliminate them. Likewise when goods have been properly prepared and stowed, an intervention of some outside force may compromise the precautions that had been taken, such as where a collision occurs not due to the fault of the carrying vessel. More importantly, there is the human element. Goods are not always properly prepared for shipment or properly stowed. In such cases, the dangerousness of the goods — whether inherent or arising under the circumstances of their carriage — results from the negligence of the shipper, carrier or some other person.

11 Determining whether cargo is dangerous sometimes must be made by the master of a vessel in deciding whether to load cargo or whether to load all of the cargo proffered. For example, in A & D Properties, Inc v M/V Volta River,5 the court upheld the decision of the master of a vessel who refused to load part of a shipment of coal. The court found that the coal in several barges from which it was to be loaded on the vessel had become wet from rainfall and presented risks of explosion and fire through spontaneous combustion thereby endangering the vessel, her crew and other cargo and also of producing an acid that could damage the vessel’s hull plates. The court acknowledged that a carrier is obligated to carry cargo that it has agreed to carry pursuant to its contract of carriage but relied on an exception to the rule recognised by the Supreme Court6 where cargo:7

… through no fault of the carrier [or the master], cannot be carried without danger to the...

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