The English High Court has just given people handling inherent vice cargo damage claims needed clarity in The Grand Amanda.

A soyabean cargo was discharged with self-heating damage in China. The owners defended the cargo claim brought in the Chinese court. They said the damage was due to the cargo’s pre-shipment self-heating nature, an inherent vice for which they were exempted under Article IV rule 2(m) of the bill of lading-applied Hague/Hague-Visby Rules). The Chinese court disagreed and held them liable for the cargo damage.

The owners claimed in London arbitration a 100% indemnity from the time charterers under (i) the charterparty-applied Inter-Club Agreement (the “ICA”); or (ii) the charterparty’s clause 8 implied indemnity. The tribunal comprising two well-known KCs and a senior LMAA Full Member upheld their claim, as did the High Court on appeal.

They decided this:

1. Tribunal: the cargo was damaged by the inherent vice. (The tribunal was not bound by the Chinese court’s ruling and was entitled to consider the evidence afresh. See e.g. The Labrador.)
2. Tribunal: the owners were not required to (i) obtain against the cargo interests a declaration of no liability from a London tribunal or an anti-suit injunction from the English High Court (for bringing the cargo claim in China in breach of the bill of lading’s English law/London arbitration provision); or (ii) contest the Chinese court’s jurisdiction. That would have achieved nothing.
3. Tribunal: the ICA did not apply – it only applies per its clause 4(c) where the cargo claim is “properly settled or compromised” under a consensual settlement rather than by an award/court judgment. (This part of the decision seems debatable since “settle” can also mean ‘decide’ or ‘resolve’ and would be duplicative if limited to a consensual settlement that is covered by “compromised”. See e.g. London Arbitration 30/16. At any rate, this decision has resulted in the ICA now being amended to expressly apply to cargo claim awards/judgments.)
4. Tribunal: if the ICA had applied, shipment of this unstable cargo would have been an “act” for which the charterers would have been 100% liable under ICA clause 8(d). (This non-binding decision is in line with London Arbitration 30/16 and takes the High Court decision in The Yangtze Xing Hua a slight step further, compared with the contrary decision on particular facts in London Arbitration 10/22.)
5. High Court & Tribunal: the owners were entitled to recover all their cargo claim loss (including their legal expense in China) under the clause 8 implied indemnity. The loss to the owners arose from loading this cargo as per the charterers’ instructions without the vessel’s fault. It was not an ordinary physical or commercial risk incidental to the charter service or one which the owners had borne under the charterparty in return for payment of hire. An indemnity can also be implied for a lawful cargo under the charterparty and it requires no change of or unusual circumstances to apply. Finally, the ICA is not an ‘all or nothing’ exclusive code: where it does not apply then an alternative charterparty claim may be possible.

The decision is a sensible one and provides needed clarity to people handling inherent vice cargo damage claims.

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BIMCO has just issued a time charterparty clause concerning the U.S. port fees (U.S. Services Fees) planned since 23 April 2025 for China-linked ships calling at U.S. ports.

The core parts of the clause are as follows:

When agreeing the charterparty, if requested by the charterer, the owner must declare to it whether the vessel, the owner, the bareboat charterer/disponent owner, the manager, or the operator are linked to China. And during the charterparty, the owner must declare to the charterer as soon as reasonably possible if that position has changed.

If the charterer subsequently orders the vessel to a U.S. port, and a U.S. Service Fee is imposed:

1. The charterer must pay it if the declarations have properly been made by the owner.
2. But the owner pays it or any increased portion of it if that results from (i) the owner not having properly made its declaration(s); or (ii) the owner’s charterparty breach or an off-hire event or the owner using the vessel outside of the charterer’s instructions.

If either party does not pay under the clause, all consequences, fines, expenses, losses, and time are for its account. And for the charterer’s failure to pay, the owner can additionally suspend performance of the charter.

In our view, the clause strikes a fair balance between an owner’s and time charterer’s competing commercial interests, and parties are best advised to address this scenario and consider the inclusion of the clause in their charterparties rather than leave things to chance.

The full text of the clause and its explanatory note can be found here.

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The English High Court decision in The Maersk Klaipeda sets out important limits to a carrier’s duties when describing containerised cargo in a bill of lading.

In 2019 a cargo receiver bought copper wire scrap from a Dubai-based shipper.  The shipper contracted with Maersk (as carrier) to ship it in sealed containers on the containerships Maersk Klaipeda and MSC Hamburg from Jebel Ali to Piraeus.

The shipper gave Maersk its shipping instructions containing its declared gross cargo weight (GCW), empty container tare weight (TW), and copper wire scrap description of the goods.  This looked in order.

But the loadport terminal separately gave Maersk each container’s actual verified gross mass weight (VGM).  Under SOLAS, the shipper must give this so the carrier can prepare the stowage plan.  The actual VGM total weight figure was less than 40% of the declared weight figure, a big difference.

Maersk’s customer services department received the shipping instructions and issued bills of lading (“bills”); and a different department received the VGM figures and prepared stowage plans.  The two sets of figures were not cross-checked by those two departments, so clean bills were issued referring to the incorrect declared weights.  On delivery, the containers were also found to contain different cargo – concrete blocks. 

The overpaid shipper vanished before the cargo receiver could enforce a Dubai judgment against it for its apparent fraud, so the cargo receiver claimed its losses from Maersk on the basis that:

1. Article III rule 3(c) of the Hague Rules (incorporated into the bills) gives a shipper the right after loading to require the carrier to issue bills showing the cargo’s (i) “weight” except where the carrier has “reasonable grounds for suspecting [the figures does] not accurately…represent the goods actually received, or which [it] has no reasonable means of checking” and (ii) “apparent order and condition”.
2. Maersk should have known the shipper’s declared weights were wrong because of the actual VGM figures it had received.  This should also have told Maersk the goods were not in apparent good order and condition.
3. So (receiver’s contractual claim under the bills) under Article III rule 3(c) Maersk should have claused the bills regarding the apparent order and condition of the cargo instead of issuing clean ones.
4. And (alternative claim in tort) Maersk were in breach of a duty of care towards the receiver to take reasonable steps not to issue bills that a reasonably competent carrier would know or suspect to be fraudulent.

However, the High Court judge ruled in favour of Maersk:

1. Weight.  If Maersk had in fact spotted the weight discrepancy, it would have had to mention this in the bills despite a ‘weight unknown’ clause in the bills (which Maersk said also absolved them of liability but which the judge rejected).  But Maersk did not spot it, so the question was whether it should have done so.  And whilst Maersk could have cross-checked the declared weights with the actual ones (and from 2020 it started doing that) the judge was not shown that it should have done so in 2019.  It was for the receiver to prove that in 2019 carriers appreciated there could be discrepancies or that consignees might become victims of shipper’s fraud, which the receiver had not done.  The VGM was introduced by SOLAS for technical safety purposes, for the stowage plan, not for cross-checking before issuing bills.
2. Apparent order and condition.  The receiver’s case was not just about a lesser cargo weight – it was about a wrong cargo too.  It said the significant weight discrepancy indicated something seriously wrong with the container contents, requiring Maersk to qualify the cargo’s likely order and condition in the bills.  The judge held that ‘order and condition’ refers to the external condition, not the cargo weight.  If e.g. the crew had seen a container drop from a height or heard glass shattering in it or noted a bad smell from a container supposedly containing fresh fish, the carrier could not ignore such plain evidence and issue clean bills regarding the cargo’s apparent order and condition.  But this was different.
3. That answered the receiver’s contractual and tort claims.

But Carriers Beware!

Despite this carrier’s victory, the result could be different on other facts.

First, whilst Article III rule 3 just gives a carrier the right (not obligation) to refuse to insert the shipper’s declared weight in a bill where it hasreasonable grounds for suspecting the figure is incorrect or it has no reasonable means of checking it, if it in fact spots a significant discrepancy then it must say so in the bill or not issue a bill at all.

Secondly, the judge accepted (at least for the alternative tort claim) that where a carrier should have known there was a substantial discrepancy between declared and actual weights, the bill should be claused or not issued at all.  But when should the carrier know?  In 2019 the judge said there was no reason for Maersk to suspect the shipper would provide fraudulent data to require cross-checking – suggesting that in 2019 a carrier would need a specific reason to be suspicious before being required to cross-check the figures.  But it seems possible that today, after 4 years of Maersk cross-checking figures and discovering several cases of fraud in doing so, the decision might be different.

So, carriers must take care despite this victory!

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Commercial and shipping law firm LCI Law has successfully represented a client in a case that went to the Greek Supreme Court (Areios Pagos) and has just resulted in a landmark decision in favour of the client.  

What the Supreme Court has ruled is that Greek-based branches of EU-based insurance companies established in Greece pursuant to EU Directive 2009/138/EC (Solvency II) are not liable for the EU-based insurers’ obligations, and that the establishment of such Greek-based branches does not alter the EU-based insurers’ status as foreign residents in the eyes of the Greek Courts.

This decision sets a crucial legal precedent in Greece, overturning previous judgments of the Greek Courts of Appeal. 

The successful clients were represented by LCI Law’s Greek litigation team at its Athens office, led by George Iatridis and George Pezodromos, insurance and reinsurance being core elements of LCI Law’s litigation practice.

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