Singapore – Blowing Away Unfounded Defences – Cargo Recovery Following Adverse Weather Incidents.

28 January 2021

 

As Professor John Miksic recounted in his erudite maritime history book Singapore & the Silk Road of the Sea, when seafaring vessels relied on wind power, Singapore's status as a convenient stopping point in between the monsoon seasons supported its growth as a trading hub. Vessels would sail from China to Southeast Asia during the Northeast Monsoon, and back again during the Southwest Monsoon.  
 

Although technological advances have reduced the reliance on wind power, vessels remain subject to weather conditions, and when adverse weather conditions occur – as so often happens during the monsoon season – the perennial question of who bears the cargo losses that may result, arises.
 

Three main legal principles are often raised in response to cargo claims stemming from adverse weather conditions:
 

• Act of God – an Act of God defence solely arises out of natural causes such as storms or typhoons. Incidents such as wars (caused by humans) are not considered an Act of God. While an Act of God is a recognised defence under the Hague-Visby Rules, it can also be raised in relation to non-seafaring cargo claims, such as a situation where cargo stored in a warehouse is damaged due to fire caused by a lightning strike during a storm.
   

• Force Majeure – Force majeure is a legal doctrine dealing with contracting parties' respective liabilities and/or obligations when an unexpected situation, beyond the control of both parties, takes place. Unlike the Act of God Defence, the doctrine of force majeure must stem from a contract between parties. Common examples of situations that are considered "unexpected" include flooding, an act of war, or terrorism.
   

• Perils of the Sea – this is a defence under the Hague-Visby Rules. This is both a broader and narrower defence than an Act of God defence, narrower as it encompasses only perils that could be faced at sea, and broader as the defence can include loss that was foreseeable but unavoidable despite the exercise of reasonable care. As such, a vessel being pushed by the sea to ground on a sandbar would be considered a peril of the sea, but not an Act of God[1].
   

If the adverse weather conditions result in cargo damage, the cargo owners frequently look for cargo recovery from the bailees of the cargo (most often the cargo carriers). The bailees may then seek to invoke the doctrines above to try and avoid liability for the claim.
 

However, the burden of proving that the bailee can rely on the defences outlined, above, generally falls on the bailees, and care must be taken to review the evidence offered. The following points are instructive:-
 

• While a bailee can claim that the cargo was lost or damaged due to a storm and seek to rely on an Act of God, proof should be adduced to show:
   

  • whether the storm was sufficiently violent to qualify as an Act of God, especially in sea carriages. This generally requires a review of the ship's logs on the weather faced by the vessel, as well as any other meteorological data.
     

  • Whether the storm was avoidable in a sea carriage – for example, could the vessel have made for a safe harbour to minimise the damage to the cargo or taken another route? A review of the passage plan or weather forecasts would prove critical.
     

  • Whether the damage to the cargo was avoidable – for example, if there was unexpected rain but the bailee nevertheless failed to cover the cargo, the bailee would be unable to rely on the Act of God defence[2].
     

• While a bailee may seek to rely on perils of the sea, a key question that is sometimes overlooked is whether the peril is fortuitous. As the Singapore Court of Appeal held in The "Benoi VI"[3]: "In general, the term “perils of the sea” refers only to fortuitous accidents or casualties of the seas and does not include the ordinary action of the winds and waves. Whether in any particular case there is a peril or not is a question of fact."
   

  • This is something that must be proven by the bailee (in almost all cases, the sea carrier). As such, if the vessel sinks during the voyage but no evidence is provided regarding the cause of loss, the bailee would not be entitled to rely on the defence of perils of the sea[4].
     

• Where a bailee seeks to rely on force majeure, the contractual clause must be reviewed with care as parties can – and often do – address the criteria for establishing force majeure. For example, certain clauses may require a certificate of force majeure from a country's government before force majeure can be relied on. Another example, if cargo is stored in an area which often suffers floods, the contract should be reviewed to determine whether flooding was included or excluded as a basis for declaring force majeure.
   

In general, cargo owners should not write off recovery simply on the basis that a bailee has presented a defence to a claim – ultimately, the question of whether the bailee is able to rely on such defence needs to be examined closely, and bailees should be made to prove the facts they seek to rely on.
 

If you require clarification or assistance on any of the points discussed in this article, we have extensive experience in cargo recoveries at Clyde & Co, and will be happy to assist you.
 

 

For further information, please contact:
 

Jannelle Lau, Claims Associate, Clyde & Co

Jannelle.lau@clasisllc.com