What is a unit?

Date: 11/04/2017
Author: Amanda Hastings

The views and opinions expressed here are solely those of the original author or contributor. These views and opinions do not necessarily represent those of the UK P&I Club.

What’s in a unit? A measurement by any other name…will probably still result in higher limits…

It’s been at least 6 months since the English courts considered limitation under the Hague/Hague-Visby (“HR”/”HVR”) rules, but fear not,  Mr Justice Baker’s decision in the Maersk Tangier is sure to give you that much needed fix!

The Aqasia focused on package limitation in bulk cargos, while the Maersk Tangier considered package limitation for containerised cargo. So what is the difference between a unit and a package, why should we care and what impact will it have?  

The Maersk Tangier

The shipper contracted with Maersk to ship 12 containers of frozen tuna loin. On route, three of these containers allegedly suffered damage and the cargo owner sued.   Liability was put on hold, the issue here is package limitation.  So we need to rewind back to the initial booking and the subsequent sea waybills that were issued.

During booking Maersk drew up and provided the claimant with a draft, straight consigned bills of lading referring to a specific number of “FROZEN BLUEFIN TUNA LOINS” which was reflected in the waybills that were subsequently issued.

Those eagle-eyed will have spotted that I said sea waybills, not bills of lading. As the HVR do not automatically apply to waybills, Maersk said the Article IV 5 limits don’t apply and wanted to rely on the contractual limit set out in its T&C’s, which happened to be in line with the Hague Rules, so £100 per package. The judge said no, and said the parties need merely contemplate the issuance of a bill of lading for the HVR to apply.

The next and (literally) million dollar question was - what is a unit?  Maersk said you can’t ship tuna loins individually,  they can’t be a “unit” and the only thing that they can be is the container. That would limit the claimant’s damages to about £2,000 – but they were claiming about £890,000 Again the judge said no,  there was nothing in the HVR from allowing a separate limit for each package or unit within a container e.g. the frozen tuna loins could be calculated at the package limit. 

And the lesson is? Well, this isn’t exactly welcome news to carriers but this and the Aqasia case suggests that given two plausible alternatives on limits of liability, the English courts are going to lean towards the one that favours the claimant.  It’s worth bearing this in mind when describing goods on the Bill of lading.  If you’re carrying lots of little items, think about describing them by weight, rather than unit.  

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About the Author:

What is a unit?

Claims Executive

Amanda joined Thomas Miller as a claims handler in January 2015 from HFW, where she worked in shipping litigation. Prior to this she worked in supply chain management for an international retailer. Amanda has recently joined LS2 from the Club’s People Claims Syndicate and now deals primarily with the German membership.  A  fluent German speaker, Amanda read Law at Sheffield University and Trier University. She is currently studying for the postgraduate diploma in Legal Practice (LPC) and is about to complete the International Group’s P&I Qualification. Amanda is actively involved with the London Shipping community and sits on the Young Maritime Professionals Committee for the London Shipping Law Centre.

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