A motor vessel, the Elin, owned by Elin Maritime Ltd (defendant), was carrying equipment for an offshore project from Thailand to Algeria pursuant to a non-negotiable bill of lading issued by Sealite Shipping Co Ltd (agent) on behalf of the defendant to the cargo interests (claimants). 

The Elin encountered heavy seas and some cargo carried purportedly on deck was lost and/or damaged. The bill of lading contained the following exclusion clause: ‘[t]he carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising ... in respect of deck cargo’.

The parties differed on whether the cargo was in fact loaded on deck. However, the parties agreed that neither the Hague Rules nor the Hague-Visby Rules applied to deck cargo, and only the bill of lading terms (including incorporated terms) and implied terms at common law (specifically, an absolute warranty of seaworthiness) applied.

The claimants claimed in contract, tort and bailment, alleging that the loss of and/or damage to the deck cargo was caused by defendant’s breach of duties under arts 3.1.a, 3.1.c and 3.2 of the Hague Rules or alternatively, Hague-Visby Rules and/or the contract contained in or evidenced by the bill of lading.

The defendants denied liability on the ground that it was expressly excluded by the bill of lading.

The claimants argued that since this exclusion clause was not clearly worded enough, it could not affect the overriding obligation of seaworthiness. They suggested alternative ways to interpret the exclusion clause, including the reduction of the absolute warranty of seaworthiness to the obligation to use due diligence to make the Elin seaworthy.

The defendant rejected the claims and denied liability on the basis that liability for the carriage of deck cargo was excluded by express terms in the bill of lading. The phrase ‘howsoever arising’ referred to all causes of loss or damage. There was no need to construe words of limitation or exclusion narrowly or artificially. The expressed intention of the parties was that deck cargo would be carried at the risk of claimants and the commercial understanding would have been that the cargo interests would arrange appropriate insurance.

Held: The judge held that that, on a true construction of the bill of lading, the defendant was not liable for any loss of or damage to any cargo carried on deck, including loss of or damage to any cargo carried on deck caused by the unseaworthiness of the Elin and/or the defendant’s negligence. The words used were effective to exclude liability for both negligence and unseaworthiness.

As a general rule, the deck of a ship is not a proper place for the stowage of cargo and thus a shipowner is not entitled to stow goods on deck. Deck cargo has always been treated as being in a category of its own, and this is also the case in relation to claims for general average. The carriage of goods on the deck of a ship is inherently risky because of the exposure of elements (sea, spray and wind) and the additional risk of being washed or falling overboard.

Deck cargo has to be both carried and stated to be so carried in the bill of lading to be disqualified within the meaning of ‘goods’ (s 7, Carriage of Goods by Sea Act 1971; art 1.c, Hague Rules; art 1.7, Hague-Visby Rules). The Hague Rules or Hague-Visby Rules could thus apply in the following situations: where the bill of lading states that the goods are carried on deck but, in fact, the goods are carried below deck; and where the bill of lading is silent as to the location of the goods but, in fact, the goods are carried on deck.