Limitation for bulk cargoes: where are we now?

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The Court of Appeal has handed down its judgement in the Aqasia, upholding the decision at first instance - to the collective groan of bulker and tanker owners everywhere. The full judgement can be found

In a nutshell, the Aqasia concerned the carriage of fishoil in bulk from Iceland to Norway which suffered contamination on route. The owners had sought to limit their liability to under the Hague Rules to £100 per metric ton. This was contested by the claimant. It was agreed between the parties at arbitration that this preliminary point should be addressed by the court. At first instance, Mr Justice Cooke found the Hague Rules not to apply.

On appeal, their Lordships, contrary to the commercial opinion of many, held that a "unit" does not in fact refer to a unit of measurement, i.e. a metric ton, but instead refers to a physical item and therefore does not apply to bulk cargo.

In dismissing the Owners appeal, Flaux LJ giving the lead judgement stated:

"My conclusion that the clear meaning of "unit" is a physical item of cargo or shipping unit and not a unit of measurement or a freight unit and, hence, Article IV rule 5 does not apply to bulk cargo, is confirmed by the travaux préparatoires, by the preponderance of the authorities and textbook and academic commentaries. Like the judge I have no hesitation in rejecting the appellant's construction of Article IV rule 5." (para 92)

So where does this leave us now?

The Court's decision again highlights an apparent trend towards higher limits in favour of claimants in the English courts. However, it may not all be doom and gloom for Owners. The decision in the Aqasia is limited the Hague Rules, with the Visby amendment and their clearer SDR/kg limits remaining intact.

Further, Flaux LJ did give owners an out. Referencing Lord Bingham in the Tasman Discoverer [2004] UKPC 22 and Temperley and Vaughan, he advised there was nothing stopping parties incorporating a deeming provision into the body of a charter to give ".Article IV rule 5 and "unit" a different meaning from that they would have had in the absence of the deeming provision."