The Hague Rules fire exception and barratry.

In Glencore Energy UK Ltd v Freeport Holdings Ltd, “The Lady M”,  [2019] EWCA Civ 388, the Court of Appeal has today upheld Popplewell J’s decision https://iistl.blog/2017/12/30/barratry-and-the-hague-visby-rules/   that article IV rule 2(b) of the Hague-Visby Rules is capable of exempting the carrier from liability to the cargo owner for damage caused by fire if that fire were caused deliberately or barratrously. Cargo owners argued that at common law a term which excluded liability for ‘fire’ would not have provided a defence if it were caused by the negligence or barratry of the crew; and consequently the exception in article IV.2(b) did not have the effect of excluding liability for fires which were caused either negligently or deliberately. The owners argued that the Judge’s interpretation of article IV.2(b) was correct. The words are clear and emphatic, and set out an exception for all loss or damage arising or resulting from fire, subject to the proviso: where the fire is caused with the actual fault or privity of the carrier. There is no proper basis for implying  a further proviso by adding the words ‘or the barratry of master or crew’, not least because ‘barratry’ is not a relevant concept in the Hague Rules.

The Court of Appeal agreed with owners’ contention. There was no sound policy reason for reading the word ‘fire’, both in isolation and in context, in a way that excludes fire where deliberately caused by the crew, from the carrier’s defence under Article IV.2(b). In cases of barratry the carrier’s agents are acting contrary to the carrier’s interests and in breach of the trust reposed in them. The construction of the fire exception was not affected by the Supreme Court’s decision in Volcafe in relation to the construction of the inherent vice exception. It was important not to lose sight of Lord Sumption’s observation that there is ‘no unifying legal principle’ behind the list of exceptions in article IV.2. The correct approach was to construe the exceptions in their own terms, while bearing in mind that they fall under a general heading and have to be construed as part of the overall scheme of obligations, liabilities and exceptions set out in articles III and IV. 66.    Lord Sumption’s observations that the carriers bore the legal burden of disproving negligence for the purposes of invoking an exception under article IV.2 did not address any argument in relation to article IV.2(b), and did not  assist on the assumed facts where there has been a deliberate act by a crew member to the prejudice of the carrier and without the carrier’s actual fault or privity.

None of the common law cases on construction of exceptions clauses assisted. There was no pre-Hague Rules judicial interpretation of ‘fire’ as a term which had a clearly assigned meaning that excluded fire caused by the crew, so that it must be presumed that it was used in article IV.2(b) in the same way. Nor did the travaux preparatoires to the Hague Rules support such a construction. Simon LJ was very doubtful as to whether the threshold for consideration of the travaux préparatoires came close to being met. This was not a provision in respect of which there were ‘truly feasible alternative interpretations’ of the words, nor was it one of those ‘rare’ cases where the travaux ‘clearly and indisputably’ pointed to a definite legal intention.

Simon LJ added: “To adopt Lord Steyn’s analogy, Glencore’s argument not only failed to hit the bullseye, it should not have been aimed at the target.”

 

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Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to seven editions (soon to be eight) and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

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