Carriage of Goods by Sea AY2018-2019 (5 credits)

(LL4008AV/LL5008AV/LC5204AV/LCD5204AV)(5 credits)

Take Home Examination: LLM, LLB, Exchange, GDMLA

1. The deadline for this Take Home Examination is 1500 on Friday, 23

November 2018. A soft copy of your answer must be deposited on IVLE,
in the folder marked “Take Home Examination Student Answer”. Please
ensure that you save your work in the following format: Matriculation
Number.Carriage Exam.
2. Please note that late submission of your work will be subject to a penalty
of 10% per day (weekends included).
3. Your answer must be typed, using 1.5 spacing and 12 point font (such as
Arial, Calibri, or Times New Roman) in Word format. Please justify your
paragraphs. Adobe Acrobat .pdf files are not acceptable.
4. The total length of your research paper must not exceed a maximum of
4,500 words. There is no minimum number of words.
5. You are NOT required to provide a bibliography but you MUST footnote
your sources if quoting directly from them.
6. Please provide a front page, separate from the text of your answer,
indicating: (i) the elective name and module code (as on this page); (ii) your
matriculation number, NOT your name; (iii) total number of words used.
7. Please write the NUMBER of the question being answered before writing
your answer to that question.
8. Please take note of the NUS Plagiarism Policy which applies to this paper:
http://law.nus.edu.sg/student_matters/plagiarism_policy.html.
9. You are advised that Turnitin has been enabled and that you should ensure
that you check your work prior to submission.

Answer ALL questions

Answer ALL parts of a question

Turn over
 2

Question 1

Compania Sud Africana SA (“Africana”) is an iron ore producer with a registered

office in Johannesburg, South Africa. It contracts to sell 2 million tonnes of iron ore
concentrate from its mine at Sishen to China Shipbuilding Holdings Ltd (“CSH”) and
its subsidiaries on c.i.f. terms.1

Africana makes arrangements to ship this iron ore concentrate, on COA terms,2 from
the port of Saldanha Bay (South Africa), on the west coast of South Africa. The COA
contract, with Beavan Shipping SA (“Beavan”), is for carriage in the company’s
“Cape”3 fleet of iron ore carriers.

The first shipment of ore takes place when 170,000 tonnes of iron ore concentrate
is loaded aboard the Cape Fynbos. The reverse of the “to order” B/Ls contains the
following clause:

“The Carrier shall not be responsible for loss or misdelivery or damage to or in connection
with the goods of any kind whatsoever (including deterioration, delay or loss of market)
however caused (whether by unseaworthiness or unfitness of the vessel or any other
vessel, tender, lighter or craft or any other mode of conveyance whatsoever or by faults,
errors or negligence, or otherwise howsoever).”

The B/Ls also include a clause which limits liability to “1.5 SDRs per kilogramme of
gross weight of the goods lost or damaged” and provides that:

“PARAMOUNT CLAUSE. This B/L shall be subject to the 1924 Hague Rules or, if
compulsorily applicable, subject to the 1968 Protocol (Hague-Visby) or any compulsory
legislation based on the Hague Rules and/or the said Protocols. Where the Hague-Visby or
similar legislation is compulsorily applicable, the 1979 SDR Protocol shall also apply,
whether or not mandatory.”

Turn over

1
“Cost, Insurance, Freight”. In a CIF sale the seller must pay the costs and freight necessary to bring
the goods to the named port of destination; the risk of loss of or damage to the goods, as well as
any additional costs due to events occurring after the time of delivery, are transferred from the seller
to the buyer. The seller also has to procure marine insurance against the buyer’s risk of loss of or
damage to the goods during the carriage.
2
“Contract of affreightment” (also sometimes known as a “volume contract”): see Girvin 2nd ed
(2011), para 1.49.
3
Each of the vessels is also “Capesize”, of 100,000 dwt and above.
 3

As required by SOLAS4 and under the IMSBC Code,5 Africana provides the master
with detailed information about the cargo, including a transportable moisture limit
(TML) certificate, indicating that the moisture content of the cargo is within normal
limits.6

The notify party is “Teck Management” (“Teck”), CSH’s agents in China. The
signature box of the B/L contains the printed words “Signed as agents for carrier pp
Compania Sud Africana SA as agents only”. Across these printed words there is an
indecipherable signature. The destination port has been left blank.

While the Cape Fynbos is en route to China, CSH sells 100,000 tonnes iron ore
concentrate to VOC Shipbuilding Pte Ltd (“VOC”), a local subsidiary. CSH indorses
one of the B/Ls to VOC, while the remaining two B/Ls are indorsed to China Export
Bank (“Export”) as part security for the mortgages of feeder vessels used to move
cargo around its construction facility.

The Cape Fynbos arrives at Dalian. As CSH has defaulted on its mortgage
repayments to Export, Export presents an original B/L to the master of the Cape
Fynbos, only to discover that delivery of the iron ore concentrate has already been
made pursuant to ship’s delivery orders presented by Teck.

The remaining 70,000 tonnes on board the Cape Fynbos are sold by CSH to Ta Tung
Ltd (“TT”). The B/Ls provide that the cargo has been “shipped in apparent good
order and condition” and are posted to TT. As the originals have not arrived, TT
presents a copy of the B/L to the master, together with a letter of indemnity
countersigned by Orient Bank Sdn Bhd (“Orient”). On the instructions of Africana,
the master gives orders for discharge of the cargo for delivery to TT. When the holds
are opened, however, the iron ore concentrate has developed a putty-like surface,
signs of liquefaction, which also explains the increasingly pronounced port list of the
Cape Fynbos. Arrangements are made to remove the iron ore concentrate safely,
but the liquefaction process has caused damage to two of the holds.

After effecting repairs to her holds, the Cape Fynbos leaves Dalian and proceeds in
ballast to Dampier (Western Australia). Although not reduced to writing, an email
trail indicates that the Cape Fynbos is now on a voyage charter to Stemkor A/Asia
Pte Ltd (“Stemkor”).
Turn over

4
International Convention for the Safety of Life at Sea.
5
The International Maritime Solid Bulk Cargoes Code.
6
This is required because such cargoes may liquefy on ocean voyages if they contain an excessive
amount of water; liquefaction occurs due to energy being applied to the cargo as a result of vibration
from the ship’s engine or due to motion in heavy seas.
 4

The Cape Fynbos loads a full and complete cargo of iron ore concentrate, this time
for delivery at the port of Owase (Japan). The reverse of the B/Ls, when issued,
contains the following clauses:

“1. All terms, and conditions, liberties and exceptions of the charterparty, dated as overleaf,
including the law and arbitration clause are herewith incorporated.
2. The International Convention for the Unification of Certain Rules of Law relating to Bills
of Lading signed at Brussels on 25 August 1924 (“The Hague Rules”) as amended by the
Protocol signed at Brussels on 23 February 1968 (“The Hague-Visby Rules”) shall apply to
this Contract.
3. This B/L shall be construed and interpreted in accordance with, and governed by, the
laws of England.
4. Any dispute of whatsoever nature arising under this B/L shall be determined by the English
Courts and the parties hereby expressly submit to the exclusive jurisdiction of the English
Courts.”

A few days out from Dampier, a fire breaks out in the engine room of the Cape
Fynbos and spreads rapidly to the crew quarters. The master of the Cape Fynbos
triggers the vessel’s fire-fighting systems, but the fire is not contained and spreads
to the vessel’s cargo holds. The vessel is later declared a constructive total loss.7 An
investigation later establishes that the fire-fighting systems were defective. Some
months before the fire, the Cape Fynbos underwent a classification inspection by
Beavan’s classification society, which included an examination of her fire-fighting
systems, and had on board out-of-date ISM8 certification.

Discuss the legal issues arising out of the above facts.

AND

Turn over

7
A “constructive total loss” is defined in the Marine Insurance Act 1906 (s 60(1)), as one “where the
subject-matter insured is reasonably abandoned on account of its actual total loss appearing to be
unavoidable, or because it could not be preserved from actual total loss without an expenditure which
would exceed its value when the expenditure had been incurred”.
8
i.e. relating to the ISM Code, which is mandatory under SOLAS.
 5

Question 2

Gander & Sons Ltd (“Gander”), a renowned manufacturer of pipe organs,9 is based
in London (UK) and exports its organs to churches and concert halls worldwide. It is
currently manufacturing a large new organ for export to Melbourne (Australia). Most
of the organ will be built at the firm’s premises in London but some materials,
including some pipework, has to be imported.

Some pipework is bought in already manufactured from a Danish supplier, Nimbus

A/S (“Nimbus”), based in Haderslev (Denmark). Pipe supplies for the organ are
manufactured by Nimbus and shipped to London. Nimbus negotiates for the
transport of the materials with Skandi Containers Ltd (“Skandi”), a Danish freight
forwarder. Skandi delivers the container to Nimbus’s premises and stuffing of the
container is completed by Nimbus’s staff before Skandi picks up the container and
takes it by road to the port of Aarhus.

The container is shipped on the Jade, a general cargo vessel with container capacity,
and the container is lifted aboard the vessel and stowed below deck. As the parties
deal with each other regularly, Skandi issues a consignment note for carriage. The
terms on the reverse provide that:

“1. The terms exceptions and immunities contained in the Brussels International Convention
of 25 August 1924 and any subsequent amendments thereto, shall apply to this contract.
2. The sea-carriers’ liability is limited to €500 per package or unit whether or not any value
in excess of these sums be stated in the document or otherwise declared to the sea-carrier.
3. Disputes arising out of or in connection with this Consignment Note shall be exclusively
determined by the courts and law of the place where the Carrier conducts its business.”

At the Port of Tilbury (UK), the container is picked up by the shore-based container
handling gantry crane. As the container crosses the Jade’s rail, two of the container
twistlocks give way and the container falls onto the dockside. A survey report
indicates that the contents have been badly damaged.

Notwithstanding the delay occasioned by the damaged components, Gander is able

to complete manufacture of the new pipe organ on schedule and the organ is set
up and tested in its workshop before being dismantled ready for shipment to
Melbourne. Four large 40-foot containers are stuffed at Gander’s factory for
shipment to Melbourne with Oceania Shipping Co (“OSC”).
Turn over

9
Appendix A contains two photographs of such organs: the first, a particularly famous example in
the Grote Sint-Bavokerk in Haarlem (Netherlands). The second is the organ in Melbourne Town Hall
(Australia).
 6

OSC’s booking agents, Grindle & Co (“Grindle”), issue a liner booking note to
Gander on the terms of the Conlinebooking 2016 form, with an added rider that the
shipment is FCL/FCL.10 Gander is named as shipper and the cargo description box
for each container states the container number and seal number, the number of
packages as “1” and, in the description box, provides “1 x 40 foot container said to
contain” the number of items, several thousand organ pipes. The booking is for
carriage on the Oceania Star, a container vessel of 12,500 TEU.

The Oceania Star leaves Tilbury, bound for Singapore, and with planned bunkering
and provisioning stops at Marseille (France) and Colombo (Sri Lanka). Order bills of
lading on the Conlinebill 2016 form are signed by Grindle on behalf of the master
and released to Gander.

The Oceania Star is not fully laden and OSC orders her master to call at the Sardinian
port, Cagliari (Italy), to load further containers. On arrival at Cagliari, it is discovered
that several containers have shifted during the voyage. Further investigation shows,
however, that the problem was caused because some of the container stacks have
rusted so that the containers loaded in these stacks can no longer lock into place.
The master orders the re-stowing of some of the containers, in an attempt to avoid
the problem stacks, and notifies his fleet manager.

The Oceania Star encounters heavy weather during the next stage of the voyage
through the Arabian Sea. As the Oceania Star pitches and rolls more than usual, the
master orders a reduction in speed, but several containers are lost overboard. When
the Oceania Star calls at Colombo, the master orders a fuller investigation and
restowing of some of the containers. After some damaged containers are removed
from the vessel, the Oceania Star leaves Colombo for Singapore.

At Singapore, the containers are off-loaded and those bound for Melbourne
transhipped on the feeder vessel, Oceania Sky.

When the Oceania Sky arrives in Melbourne, it is discovered that two of the
containers lost overboard from the Oceania Star contained part of the organ shipped
by Gander, including some of the largest (and most expensive) 32’ bass pedal pipes.

Turn over

10
i.e. “full container load”.
 7

It is also discovered that the wooden trunking for the organ shipped in the third
container has been damaged by fresh water and that pipework in the fourth
container has suffered compression damage because, unlike the other containers,
the pipes were not individually wrapped in bubble wrap or the container lined, as it
usually would be, with Kraft paper.

The following actions are commenced in the light of these facts:

(a) Gander issues a claim form in the Admiralty and Commercial Court in London
for the arrest in rem of the Jade. The particulars of claim are for breach of the
contract of carriage or, alternatively, a claim framed in tort. Skandi’s P & I Club
puts up security for the claim, and when the case goes for trial, Gander
disputes Overseas’ reliance on the limitation clause, cl 2, which it argues is
void under Art III, r 8 of the Hague (and Hague-Visby) Rules. Skandi disputes
Gander’s right to claim in contract which, it says, should have been litigated
in Denmark and therefore also falls outside the period of carriage. Skandi also
denies Gander’s alternative claim in tort, which it says falls outside the scheme
of the Hague (and Hague-Visby) Rules.

(b) Gander commences proceedings in the Admiralty and Commercial Court in

relation to the pipework lost and damaged during the voyages of the Oceania
Star to Singapore and the Oceania Sky to Melbourne. Gander’s claim form
alleges a breach of OSC’s obligation to exercise due diligence or,
alternatively, a breach of its obligation to take proper care of the cargo.

(c) OSC files a limitation claim in which it argues that the extent of its liability, if
any, for Gander’s claim is for four containers. Gander counterclaims that the
loss is the number of items “enumerated” in the B/Ls. Gander also disputes
OSC’s reliance on the limitation amounts of the Hague-Visby Rules because
it argues that the losses would not have occurred but for OSC’s actual fault
or privity.

Discuss.

END OF PAPER
 8

Appendix A