This case concerned a container of shoes damaged by water while extinguishing a fire on the MSC London which emanated from two containers of coconut shell charcoal briquettes for shisha pipes. The issues were whether the Court had jurisdiction; whether XL Insurance Com SE, XL Catlin Northern Europe, and Axa XL, a Division of Axa (XL), the cargo insurers, were entitled to have the value of their claim covered as subrogees for the goods damaged by Damco Denmark A/S (Damco) and Dezzan Shipping Inc (Dezzan), amongst other things, with reference to the rules on general average; and whether the claim was obsolete as time-barred.

XL filed a claim, arguing that Damco and Dezzan were jointly and severally liable for EUR 54,015.17. Damco and Dezzan argued that XL's claim was inadmissable. Damco also filed a claim that Dezzan was obliged to indemnify Damco for any amount, including costs, which Damco might have to pay to XL.

XL was part of the AXA Group, an international insurance company headquartered in Paris, France. XL paid compensation to the cargo owner, Ecco Sko A/S (Ecco). Damco was part of the Damco Group, which was owned by AP Møller-Maersk. Damco was an international freight forwarding company headquartered in The Hague, the Netherlands. Damco Denmark had been Ecco's permanent freight forwarder since the 1990s. Dezzan was a shipping company headquartered in Geneva, Switzerland, and was the owner of the MSC London, on which the container of shoes was shipped from Tanjung Pelepas, Malaysia, to Hamburg, Germany, and on which the fire occurred.

On 12 October 2017, Damco signed and issued a non-negotiable waybill for the transport of the shoes 'as agent of the Carrier', Damco International BV. The reverse of the waybill, among other things, contained the following terms and conditions:

SUBCONTRACTING

The Carrier shall be entitled to sub-contract on any terms whatsoever the whole or any part of the Carriage.

The Merchant undertakes that no claim or allegation, whether arising in contract, bailment, tort or otherwise shall be made against any servant, agent, or Subcontractor of the Carrier, which imposes or attempts to impose upon any of them or any vessel owned or chartered by any of them any liability whatsoever in connection with the Goods or the Carriage of the Goods whether or not arising out of negligence on the part of such Person, and, if any such claim or allegation should nevertheless be made, to indemnify the Carrier against all consequences thereof. Without prejudice to the foregoing every such servant, agent, and Sub-contractor shall have the benefit of all Terms and Conditions of whatsoever nature herein contained or otherwise benefiting the Carrier including clause 26 hereof the law and jurisdiction clause. …

GENERAL AVERAGE

General average to be adjusted at any port or place at the Carrier's option, and to be settled according to the York-Antwerp Rules 1994, this covering all Goods carried on or under deck. General average on a vessel not operated by the Carrier shall be adjusted according to the requirements of the operator of that vessel.

Such security including a cash deposit as the Carrier may deem sufficient to cover the estimated contribution of the Goods and any salvage and special charges therein, shall if required be submitted to the Carrier prior to delivery of the Goods. The Carrier shall be under no obligation to exercise any lien for general average contribution due to the Merchant. …

26. LAW AND JURISDICTION

Whenever clause 6.2 (d) and/or whenever US COGSA applies, whether by virtue of Carriage of the Goods to or from the United States of America or otherwise, that stage of the Carriage is to be governed by United States law and the United States Federal Court of the Southern District of New York is to have exclusive jurisdiction to hear all disputes in respect thereof. In all other cases, this bill of lading shall be governed by and construed in accordance with English law and all disputes arising hereunder shall be determined by the English High Court of Justice in London to the exclusion of the jurisdiction of the courts of another country.

XL argued that the York-Antwerp Rules 1994 applied. As stated in the Rule Paramount and r A of the Rules, the main principle in common accidents is very old and well-known. If reasonable and proportionate steps are taken whereby property on a ship is intentionally sacrificed in order to save all the other property on the ship from a common danger, the party whose property has been sacrificed is entitled to contributions from all those whose property was saved. This is thus the ship itself, the cargo, and other property such as freight. The general average contribution must be calculated as the value of the victim's property, less what the sacrificial property should have paid to other sacrificial properties, if the sacrificed property itself had been saved. General average settlement is regulated almost universally by the Rules. It appears from s 461 of the Merchant Shipping Act that these Rules apply in Denmark. The Rules indicate a number of situations. According to r 3 of the Rules, destruction of goods with water used in connection with firefighting is such a classic situation.

If a general average settlement is to take place, it is the responsibility of the shipowner/operator under s 465(2) of the Merchant Shipping Act to collect security from the rescued cargo interests on board so that they can be forced to pay their general average contribution. This is because cargo owners are liable for their general average contribution up to the value of the cargo, but not personally: see s 465(1) of the Merchant Shipping Act. As soon as the cargo has been handed over, there is - at least in the case of a container ship with several thousand cargo owners - no real possibility for a person entitled to obtain its general average contribution to recover it. As a natural consequence of the shipowner's duty to collect security, the shipowner therefore also becomes liable if it neglects to obtain collateral when this has been promised: see the comments on the Merchant Shipping Act, s 465(2).

The York-Antwerp Rules 1994 apply, according to the Merchant Shipping Act, s 461, without further ado. A right to a general average contribution exists, regardless of whether XL declared general average. Pursuant to r 3 of the Rules, XL is entitled to a general average contribution. According to the defendants, the damage was caused intentionally, and it must be considered sensible and proportionate to use water to extinguish a fire, even if it causes water damage. The fire caused danger to the ship, cargo and other property involved. It is assumed in the theory of general average that fire is one of the greatest dangers of all for a ship, which makes sense, as a ship is often (and also here) far from any help, access conditions can be difficult, firefighting tools and emergency preparedness are not optimal, and fires which have occurred on container ships in numerous cases have been shown to develop unpredictably and rapidly. All the conditions in r A for XL to be entitled to a general accident contribution have been met.

Dezzan must pay a general average contribution to XL with an amount calculated on the basis of its own property, ie the value of the ship. Dezzan is personally liable for this: see s 465 of the Merchant Shipping Act. In relation to the contribution of the cargo interests, Dezzan must pay the share of the cargo interests, because Dezzan as the shipowner chose to ignore the rules on common casualties. Rather than: 1) declaring general average; 2) collecting collateral from the salvaged cargo to ensure that these can be made to pay (see s 465(2) of the Merchant Shipping Act); or 3) simply informing the cargo interests that a common accident had occurred, so that they could at least decide for themselves whether they wanted to make a general average contribution and look after their interests, Dezzan pretended that nothing had happened and handed over the cargo. It is disputed that a shipowner is free to declare general average. The shipowner - and only the shipowner - has information that there has been a common incident, and only the shipowner is in possession of the cargo, which is necessary to collect security from the cargo interests. A shipowner is also not free to decide whether it will ensure the safety of other properties for general average contributions: see s 465(1) of the Merchant Shipping Act. A shipowner must be liable for refraining from notifying a person entitled that it is, or may be, entitled to a general average contribution, so that the beneficiary can safeguard its interests. Dezzan has neglected this duty and, as a result, is liable to XL.

In the alternative, Dezzan was responsible for loss and damage to the goods while in Dezzan's custody as a performing carrier: see s 286 of the Merchant Shipping Act. Dezzan cannot invoke the fire exemption in the Merchant Shipping Act, s 276(1), which corresponds to art 4.2.b of the Hague-Visby Rules, as the MSC London must be considered to have been initially unseaworthy at its departure from the last port before the fire. The fire originated in two containers loaded with charcoal for use in hookah pipes. This category of goods is a well-known source of self-heating, especially if it is exposed to moisture. Nevertheless, it was stowed at the front of the ship's bow and at the bottom of the deck, where it may have been exposed to foam spray in connection with the ship's sailing.

XL further argued that Damco was liable for its subcontractor, Dezzan; that the English jurisdiction clause in the waybill was inapplicable; and that its claim was not time-barred.

Damco argued that the water damage to Ecco's cargo occurred in connection with firefighting measures, which are covered by the fire exemption in s 276(1) of the Merchant Shipping Act, which entails a discharge of liability for the carrier. The fire was not caused by fault or negligence on the part of Damco and/or Dezzan. XL argued that Damco cannot invoke the fire exemption, as the ship was unseaworthy: see the Merchant Shipping Act, s 276(2), but has not provided evidence of incompetence. It is disputed that the containers containing charcoal were improperly loaded and stowed, including in a way that would render the MSC London unseaworthy. The English law and jurisdiction clause in cl 26 of the waybill must be upheld. Any dispute between XL and Dezzan which arises on the basis of, or in connection with, the transport covered by the waybill must be settled in accordance with English law before the High Court of Justice in London. This Court does not have jurisdiction to hear the claim against Dezzan, and the Court must therefore dismiss the case.

Further, Damco argued that the danger did not constitute the necessary common danger to ship and cargo (York-Antwerp Rules 1994, r A), as the fire only covered and caused damage on some containers with goods. No general average was declared, nor was an application for an average calculation was made immediately after the end of the trip, and the claim has therefore fallen away.

Held: Judgment for XL in the amount of EUR 54,009.15. Dezzan shall indemnify Damco for all amounts payable, including costs.

Damco did not object to the competence of this Court in its statement of defence, but only in the final pleading of 20 April 2020. As a result, this Court must be considered the proper venue in relation to Damco, and Damco's claim for inadmissibility is rejected. Whether this Court has jurisdiction in relation to Dezzan depends on whether the waybill dated 12 October 2017 and the conditions stated on the back of it, including the English jurisdiction clause, must be considered part of the transport agreement entered into between Ecco and Damco. Ecco and Damco reportedly had a long-term collaboration on the execution of transport tasks. However, no information was provided on how individual agreements were entered into, and whether certain documents were routinely exchanged. Regarding the specific transport, it appears from Damco's invoice to Ecco that 'All Services rendered are subject to the General Conditions of the Nordic Association of Freight Forwarders (NSAB 2015)'. It must therefore be assumed that NSAB 2015 regulates the relationship between Ecco and Damco in connection with this transport. The waybill and the terms therein cannot be considered part of the parties' agreement. The waybill was not issued by Damco, but by Damco International BV, to which Damco had contracted the transport task. There was no indication from Damco that the terms of the waybill would apply to the transport. As a result, Dezzan cannot rely on the jurisdiction clause in the waybill. Since this Court has jurisdiction pursuant to art 6.1 of the Lugano Convention, Dezzan's objection to jurisdiction is rejected.

It is common ground that the cargo was damaged by water in connection with the extinguishing of a fire in two containers on Dezzan's ship, the MSC London. A fire on a container ship can quickly develop to endanger the ship and its cargo. Regardless of the fact that the fire in the specific situation was limited to two containers, there was thus a case of a common incident (York-Antwerp Rules, r A) where the cargo was sacrificed for the common salvation of property that was exposed to danger. It also follows from r 3 of the Rules that damage to cargo in connection with extinguishing a fire on board with water is compensated as general average.

Dezzan must have been aware of the fire on the ship, and the possible damage to part of the ship's cargo as a result of the fire extinguishing, by 7 October 2017. Although Dezzan was not obliged to declare general average, it should have informed the affected cargo owners what had happened, so that they themselves had the opportunity to pursue their interests. By failing to inform Ecco, Dezzan neglected its duty to look after the interests of the cargo owners and thus acted irresponsibly in relation to Ecco, who was deprived of a real opportunity to have the damage to its cargo covered through general average contributions. Ecco first became aware that the water damage to its cargo was due to firefighting on the MSC London after the goods on board had been handed over to the cargo owners. As the cargo owners are only liable for average contributions up to the value of the goods and not personally (see s 465(1) of the Merchant Shipping Act) it was therefore virtually impossible for Ecco to receive a general average contribution from them. As a result, Dezzan must cover the loss suffered, unless the claim is obsolete as time-barred. As a freight forwarder, Damco is responsible for co-contractors that the freight forwarder has assumed to carry out the task, and is therefore jointly and severally liable with Dezzan.

This claim is not a claim for compensation for loss or damage to goods pursuant to s 275 of the Merchant Shipping Act, but rather a claim for a general average contribution pursuant to Ch 17 of the Merchant Shipping Act, and therefore the one-year limitation period pursuant to s 501(1)(vi) of the Merchant Shipping Act, which corresponds to art 3.6 of the Hague-Visby Rules, does not apply. As the claim is not covered by the special limitation provisions in s 501 of the Merchant Shipping Act, the claim becomes time-barred in accordance with the general rules on limitation, in terms of which the limitation period is three years. XL's claims are thus not obsolete in relation to either Damco or Dezzan.