The applicant applied to set aside an arbitral award issued in the respondent’s favour for damages arising out of contaminated lube oil cargo carried on the applicant’s vessel, the MT Seven Islands, chartered to the respondent.

One of the grounds the applicant relied upon was the respondent’s failure to prove cargo contamination. It submitted that the tribunal’s finding on contamination was contrary to the test report and evidence. The tribunal had erroneously placed the burden of proof on the applicant to establish the true cause of contamination when it should be on the respondent.

The respondent submitted that the court could not interfere with the tribunal’s finding of fact and interpretation of the contract. The respondent’s burden was limited to proving that it had tendered goods in good condition and received them damaged. In the circumstances, the respondent had discharged the burden before the tribunal who rendered a finding of fact accordingly. The tribunal held that, once the respondent discharged its burden of proof, the burden shifted to the applicant, whose custody the goods were in, and had to thereafter prove the cause of loss. To this end, the applicant had to prove that it exercised due diligence to make the vessel seaworthy at the beginning of the voyage and that it had carefully loaded, handled, stowed, carried, kept, cared for, and discharged the goods (see art 3.1 of the Hague Rules) and that the damage was caused by the exculpatory causes in art 4.2. It submitted that the applicant did not lead any such evidence.

Held: Application to set aside the award dismissed.

The tribunal’s findings were rendered after appreciating evidence led by both parties and, the same not being perverse, no interference with such findings of fact is permissible.

The tribunal had concluded that the respondent had proved that the cargo was shipped in good condition as claimed and that it received the cargo in a contaminated state. The tribunal also rendered a finding of fact that since the cargo was in the applicant’s custody, it ought to have presented all facts and evidence (including producing the crew) and proved the cause of contamination. The applicant also did not plead perils of the sea before the tribunal.

The tribunal also found that although the Hague Rules were designed to only apply to bills of lading, it became the practice to incorporate them into charterparties and it was often desirable to do so commercially. The tribunal further found that the applicant had not led any evidence to prove the burden cast on it under those rules had been discharged.