This case concerned a consignment of Greenland shrimp which turned out to be frost-damaged on arrival in Japan. The issue was whether the damage must be considered to have occurred while the shrimp were in the carrier's custody, whether the carrier was responsible for the damage, and how the damage must be calculated.

Codan Forsikring A/S (Codan), which is the cargo insurer for the shipper, Royal Greenland A/S (RG), claimed DKK 752,524 with interest from the carrier, Kawasaki Kisen Kaisha Ltd (K Line). The shrimp were caught by the trawler Kiliutaq owned by RG from 29 September-28 October 2000. They were sorted and immediately frozen in a raw state. The prawns were packed into boxes in trays and placed in freezers equipped with eight temperature sensors. A printout of the temperature records from 26 September-29 October 2000 has been submitted. All measurements show temperatures below or just over -25 °. After the ship arrived in port, the shrimp were unloaded on 29 October 2000 and placed in a cold store. The goods were handled by Royal Arctic Line, who performed these tasks for RG. Royal Arctic Line and RG are companies owned by the Home Rule Government of Greenland. Royal Arctic Line stuffed the prawns into two freezer containers. The stuffing of the boxes into containers took place on 6 November 2000. K Line handled the transport from Nuuk to Tokyo. Royal Arctic Line was the carrier for the transport from Nuuk to Aalborg, as a sub-carrier for K Line, using the Naja belonging to Royal Arctic Line. Royal Arctic Line issued a bill of lading for the transport to Aalborg. The shipper was RG. The FCL (Full Container Load) field was indicated in the transport mode box.

The two containers were loaded on 11 November 2000 and unloaded in Aalborg on 19 November 2000. They were then transported by truck to Aarhus, and taken on board a container feeder to Bremerhaven on 27 November, arriving on 28 November. They were loaded on the Elbe Bridge on 1 December 2000. The Elbe Bridge arrived in Tokyo on 29 December 2000. A bill of lading was issued for the total transport from Nuuk to Tokyo. It described the goods as follows: 'Shipper´s load and count. Said to contain 2 container(s). Details as per attached sheet.' The supplementary description stated, among other things: 'Temp: -25 degr. celcius Shipper's load, stowage and count FCL / FCL ... Goods to be kept at a temperature of minus 25 degrees centigrade or colder.' The bill of lading was issued in Tokyo on 2 December 2000 by K Line 'AS CARRIER'. The bill of lading terms and conditions stated, among other things:

11. SHIPPER-PACKED CONTAINERS

If a Container has not been filled, packed, stuffed or loaded by the Carrier, the Carrier shall not be liable for loss of or damage to the contents and the Merchant shall indemnify the Carrier against any loss, damage, liability or expense incurred by the Carrier, if such loss, damage, liability or expense has been caused by:

the manner in which the Container has been filled, packed, stuffed or loaded; or …

the unsuitability or defective condition of the Container which would have been apparent upon reasonable inspection by the Merchant at or prior to the time when the Container was filled, packed, stuffed or loaded.

If a Container which has not been filled, packed, stuffed or loaded by the Carrier is delivered by the Carrier with seal intact, such delivery shall be deemed as full and complete performance of the Carrier's obligation hereunder and the Carrier shall not be liable for any loss of or damage to the contents of the Container.

On the interchange sheet issued in Tokyo on 9 January 2000, the temperatures were recorded as correct, but one container was noted as damaged: 'Sidepanel left Rivet Missing Name of brand 3 pieces. The container was delivered in the Yard on Jan 9. Cleaning by water was carried out and three rivets were driven on left side. There was no damage to the container.' On arrival in Tokyo, it was found that part of the consignment was temperature-damaged, which was shown by white spots on the shrimp. Royal Greenland Japan Ltd, the consignee of the goods, wrote on 11 January 2001 to K Line that damage had been found in the containers in the form of 'Ice Crystal ... Heavy White Spots'.

Codan argued that there was no information to indicate that the temperature damage occurred before the shrimp were transferred to the custody of K Line. K Line took over the goods in Nuuk via Royal Arctic Line. The bill of lading, which applied to the entire transport, does not contain any reservations of any kind: see s 299 of the Merchant Shipping Act, which broadly corresponds to arts 3.3 and 3.4 of the Hague-Visby Rules. The stuffing list also did not contain remarks of significance to the case. Container reservations cannot be enforced, and cl 11 of the bill of lading does not apply, because the person who took over the containers is identical to the person who stuffed them. There was also nothing to indicate that the damage could have occurred after the cargo was removed from K Line's control. K Line had not proved that the damage did not occur during this period and must therefore bear responsibility for it. There were further specific circumstances that pointed to the damage occurring during K Line's custody: ice was found at the door, and the damage percentages were different with increasing damage to the top of the containers. The latter conditions did not indicate that the damage occurred before the stowage, because then the damage would have been more evenly distributed. In two of the survey reports, it was assumed that the damage occurred while the shrimp were in the containers. Compensation for the losses must, according to s 279 of the Merchant Shipping Act (based on art 4.5.b of the Hague-Visby Rules), be calculated on the basis of the value of goods of the same kind in Japan at the time of arrival. The claim statement was based on prices of comparable shrimp sold in the same period and from this the actual prices obtained have been deducted.

K Line argued that Codan must prove that the damage occurred during the period the goods were in its custody. Such evidence had not been adduced. The temperature measurements did not indicate anything amiss. The damage might have occurred while handling the shrimp on the trawler, on the way from the trawler to the cold store, or on the way from the cold store to the container. There was also a possibility that the injury might have occurred during the stay in Japan. Surveys were made several days after arrival. Royal Arctic Line acted on behalf of RG and had the exclusive right to handle and operate stevedores and to transport from Nuuk to Aalborg. Section 274(3)(iii) of the Merchant Shipping Act, which is modelled on art 4.2 of the Hamburg Rules, provides that the 'carrier shall be deemed to no longer have the goods in his charge ... when the carrier has handed over the goods to an authority or other third party to whom, pursuant to law or regulations applicable at the port of discharge, the goods must be handed'. This meant that K Line was not responsible for the leg of the transport handled by Royal Arctic Line. Royal Arctic Line acted on behalf of the shipper and stuffed the containers as well as transporting them to Aalborg in accordance with the consignment note, which also showed that RG paid separately for this transport. K Line transported a full container stowed by the shipper - see cl 11 of the bill of lading - and was therefore not able to check the condition of the goods upon receipt. Thus, there was no evidence that the goods did not have defects when they came into K Line's custody.

Held: Judgment for Codan for DKK 752,524 with interest.

There is no information to suggest that the damage occurred before Royal Arctic Line stuffed the goods into the containers and then took them over on behalf of K Line. Royal Arctic Line did not comment on damage on receipt of the goods. The stuffing list must be taken as proof that the goods were undamaged during stowage, unless otherwise proven, and this is not the case. K Line chose to let the transport to Aalborg be handled by Royal Arctic Line. K Line must therefore also take responsibility for Royal Arctic Line's treatment of the goods in so far as the latter acted on K Line's behalf. There are also no circumstances that show that the damage may have occurred after the goods were removed from K Line's custody.

The damage must be assumed to have occurred during the transport from Nuuk to Tokyo. K Line is therefore liable for this damage, unless the company proves that the damage was not caused by the company. K Line has not proved this. K Line has not presented original temperature print outs. The objective findings on the damage picture positively point to the damage occurring while the goods were in K Line's custody.

There is no basis for disputing the information on the prices obtained for the damaged goods. The survey costs calculated by Codan should be reimbursed as claimed as necessary to determine what is damaged and what is not damaged, and to determine how to dispose of the goods in order to limit the loss. Storage in a cold store for a certain period of time must be considered necessary to ensure that the goods were disposed of in the best possible way, and is thus part of the loss limitation. There is no basis for establishing that the sale could have taken place at an earlier stage.