There was a fire on board the Lady M, owned by Freeport (respondent), salvage operations were engaged and general average was declared. Glencore (appellant) brought proceedings with the claim founded on alleged breaches of contracts of carriage contained in or evidenced by four bills of lading or alternatively in bailment.

The fire was started by a member of the crew deliberately with intent to cause damage. The perpetrator was the chief engineer, who acted alone. At the time of starting the fire deliberately and with intent to cause damage, he was under extreme emotional stress and/or anxiety due to the illness of his mother; or suffering from an unknown and undiagnosed personality disorder and/or mental illness; or neither of the above.

Based on the above agreed and assumed facts, Popplewell J in the High Court (CMI115) held that it was inconclusive whether the conduct of the chief engineer constituted barratry. The judge required further facts concerning his state of mind. This issue, however, was not determinative of whether the respondent was exempt from liability for the fire under art 4.2.b or 4.2.q of the Hague-Visby Rules. If the fire were caused deliberately or barratrously, art 4.2.b of the Hague-Visby Rules was capable of exempting the respondent from liability. However, the respondent was not exempt from liability for the fire under art 4.2.q of the Hague-Visby Rules.

Two issues formed the subject of the appeal application. First, whether the conduct of the chief engineer necessarily constituted barratry on the assumed facts and whether an act of barratry depended on a mental element. Second, whether art 4.2.b of the Hague-Visby Rules, which reads ‘Fire, unless caused by the actual fault or privity of the carrier’, was capable of exempting the carrier from liability to the cargo owner for damage caused by fire if that fire were caused deliberately or barratrously.

The appellant argued that the defences in art 4.2 were based on standard forms of exclusion clauses which had been used in contracts of carriage prior to the establishment of the Hague Rules; and it followed that as a matter of English law the meaning and effect of words used in such standard clauses should inform the operation and effect of the art 4.2 defences. At common law a term which excluded liability for 'fire' would not have provided a defence if it were caused by the negligence or barratry of the crew; and consequently the exception in art 4.2.b did not have the effect of excluding liability for fires which were caused either negligently or deliberately.

The respondent contended that the High Court Judge was correct in his interpretation of art 4.2.b. The words are clear and emphatic, and set out an exception for all loss or damage arising or resulting from fire, subject only to the proviso 'where the fire is caused with the actual fault or privity of the carrier'. The appellant's interpretation would require a further implied proviso to be added, 'or the barratry of master or crew'. There is no proper basis for implying such words, not least because 'barratry' is not a relevant concept in the Hague Rules. The relevant interpretative rules require that it is only if the words of the Hague Rules are unclear, that it is permissible to look at their background; and the appellant's wide-ranging search for a prior meaning of words which are clear was plainly impermissible.

Held: Whether the conduct of the chief engineer in starting the fire constituted barratry was not determinative of whether the respondent was exempt from liability for the fire under art 4.2.b, because the fire was caused deliberately by the chief engineer with intent to cause damage, and art 4.2.b exempted the respondent from liability if the fire were caused deliberately or barratrously, subject only to a causative breach of art 3.1 of the Hague-Visby Rules or the actual fault or privity of the respondent. The court allowed the appellant’s appeal in part: it was successful on the first issue, but unsuccessful on the second issue.

For the first issue, there was no need to decide whether the chief engineer’s assumed conduct would properly fall within the definition of barratry - the High Court judge had already decided the second issue correctly. Additionally, the Court of Appeal disagreed with the approach taken by the High Court judge to allow the respondent to raise the issue of insanity. According to Sir Geoffrey Vos, it was undesirable and a waste of resources to allow a departure from assumed facts that introduced an issue that was not, and could not be, pleaded.

For the second issue, the appellant’s argument, according to Simon LJ, necessarily implies an additional qualification ‘or the fault or neglect of the crew’ to the words ‘Fire, unless caused by the actual fault or privity of the carrier’. Since an act of barratry occurs without the actual fault or privity of the carrier, there was no proper basis for implying such words as a matter of ordinary meaning or on any of the appellant’s supplementary arguments advanced by the appellant, and there were principled reasons for not doing so. Coulson LJ similarly held that such unabashed rewriting of the Hague Rules had no basis in law.

Simon LJ further rejected the appellant's arguments based on the Volcafe case (CMI221)​. In his view, this decision did not change the well-established approach to construction of the Hague Rules, or amount to encouragement to embark on a wide-ranging examination of the common law position other than where it is necessary and likely to throw light on the particular point in issue. In Volcafe it was necessary to do so on the issue of burden of proof which was not a matter dealt with in the Hague Rules at all. Lord Sumption's observations in Volcafe that the carriers have the legal burden of disproving negligence for the purposes of invoking an exception under art 4.2 did not address any argument in relation to art 4.2.b and does not greatly assist where there has been a deliberate act by a crew member to the prejudice of the carrier and without the carrier's actual fault or privity.

There was also some discussion by Simon LJ of the Hague Rules and its history, travaux préparatoires, context, object and purpose for the relevance in examining the meaning of the words ‘fire, unless caused by the actual fault or privity of the carrier’, which clearly exclude the carrier from liability for fire however caused, provided it was not caused with the actual fault or privity of the carrier or in breach of its obligations set out in art 3.1. There was also no sound policy reason for reading the word ‘fire’, both in isolation and in context, in a way that excludes fire where deliberately caused by the crew from the carrier’s defence under art 4.2.b; in cases of barratry, the carrier’s agents were acting contrary to the carrier’s interests and in breach of the trust reposed in them.