The claimants' 453,089 bags of rice were carried on the vessel Sea Miror from Karachi, Pakistan, to Abidjan, Ivory Coast, pursuant to two bills of lading. The first defendant was the carrier under the bills of lading. The bills of lading incorporated the Hague Rules and some of the terms of a booking note dated 15 March 2012 between the carrier and Louis Dreyfus Commodities Ltd, which in turn incorporated the terms of a voyage charterparty on the Synacomex 90 form for the vessel Mohave Maiden.

Cargo claims arose in respect of alleged moisture damage during the voyage and loss through: (i) bags allegedly becoming torn during loading and/or carriage and/or discharge; and (ii) alleged short delivery of the number of bags stated to have been shipped in the bills of lading. The principal issues concerned whether the loss and/or damage was caused by inadequate or improper loading and/or stowage and/or discharge of the cargo and, if so, whether the carrier was responsible for that loss and damage under the contracts of carriage or was entitled to rely upon one or more of the defences under art 4.2 of the Hague Rules.

Clause 5 of the charterparty incorporated in the contracts of carriage provided:

Cargo shall be loaded, trimmed and/or stowed at the expenses and risk of Shippers/Charterers at the average rate of 1,500 metric tons per weather working day … Cargo shall be discharged at the expenses and risk of Receivers/Charterers at the average rate of 1,500 metric tons per weather working day … Stowage shall be under Master's direction and responsibility … Charterers and Owners are allowed to work overtime, such expenses shall be for the account of the party ordering same. If ordered by Port Authorities, overtime shall be for Charterer's account. Overtime services rendered by ship's crew shall be in all cases for Owners' account.

Held: Judgment for the defendants. Construing the contracts of carriage as a whole, the effect of the first sentence of cl 5 of the charterparty incorporated in the bills of lading is to impose responsibility for bad loading and discharge of the cargo on the charterers/cargo interests. To the extent that it is established that damage to the bags of rice was caused by bad loading and/or discharge (as opposed to bad stowage) that damage is the responsibility of the cargo interests who cannot recover in respect of such damage from the carrier.

At common law, responsibility for loading, stowage and discharge is upon the carrier, but that responsibility can be transferred to the cargo interests (Jindal Iron and Steel Co Ltd v Islamic Shipping Co Jordan Inc (The Jordan II) [2004] UKHL 49 (CMI627). Both at common law and under art 3.2 of the Hague Rules it is possible for the carrier and the cargo interests to enter an express agreement that the carrier will not be responsible for loading, stowage or discharge operations (Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402 (CMI2100); Renton v Palmyra Trading Corp [1957] AC 149 (CMI2113)). However, for a term in a contract of carriage to have the effect of transferring responsibility for the functions of loading, stowage or discharge to the cargo interests it must be in clear terms (The Jordan II).

The words ‘at the expense and risk of’ in cl 5 are sufficiently clear to transfer responsibility for loading and discharge to the charterers and hence the cargo interests. The sentence ‘[s]towage shall be under Master’s direction and responsibility’ makes it clear that responsibility for stowage remains with the carrier. Absent that sentence, responsibility for stowage would have shifted to the cargo interests.