Cargo claims: How much evidence is needed?

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Supreme Court ruling on burden of proof for cargo claims.

Cargo insurers, P&I Clubs and all those who deal with claims under English law for cargo loss or damage will need to be aware of the UK Supreme Court’s decision in the case of Volcafe v CSAV, which will have an important effect on the evidence which needs to be provided by claimants and carriers respectively. The case began life as a routine cargo claim for moisture damage to a cargo of bagged coffee beans shipped in containers from Colombia to Germany in 2012. The value of the claim was relatively modest, but the matter was pursued through the courts in order to resolve the issues of principle which arise regularly in such cases.

The cargo was shipped on LCL/FCL terms, meaning that the carrier (C) was contractually responsible for preparing the containers for carriage and stuffing the bags of coffee into them. The shippers specified that unventilated containers could be used, and this made it necessary for the containers to be lined with kraft paper or similar material to protect the coffee from being damaged by condensation. The dispute focused on whether C had been negligent by failing to use adequate or sufficient kraft paper, or whether the damage had occurred due to inherent vice despite all reasonable care being taken by C.

The cargo owners (V) succeeded at first instance, but C successfully appealed to the Court of Appeal, which held that V had failed to discharge the burden of proof that C’s negligence had caused the inherent vice exception to operate. This in turn has now been reversed by the Supreme Court, based on application of the established principles of bailment. According to the Supreme Court, once a cargo owner has proved that the cargo was shipped in apparent good order and condition but discharged in damaged condition, the carrier has the burden of proving that this was not due to its breach of the obligation to take reasonable care (either at common law or under Article III rule 2 of the Hague Rules).

In order to be able to rely on the exception of inherent vice under Article IV rule 2(m) the carrier must show either that he took reasonable care of the cargo but damage occurred nonetheless, or that whatever steps might have been taken to protect the cargo would in any event have failed due to its inherent propensities. In the present case the trial judge had found that there was no generally accepted industry practice at the relevant time with regard to the lining of containers, and also that the evidence did not clearly show what thickness of paper was used or how many layers there were. The Court of Appeal had reviewed the evidence and come to different conclusions, but in the Supreme Court’s view there were no proper grounds to overturn the judge's findings of fact. On those facts, C had failed to discharge the burden of proof and V’s claim should succeed.

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