Landmark Supreme Court decision on burden of proof under the Hague Rules

By Andrew Nicholas, Partner at Clyde & Co, IUMI Professional Partner,

A recent Supreme Court decision has provided important clarification of a key issue for parties involved in cargo disputes under the Hague Rules. In Volcafe Ltd and others v Compania Sud Americana de Vapores SA [2018] UKSC 61 it was held that the carrier has the legal burden of proving that they took due care to protect the goods from damage, including due care to protect the cargo from damage arising from its inherent characteristics.

In the context of a claim involving the carriage of bagged coffee beans that had been packed into containers by the carrier, the Supreme Court unanimously ruled that the carrier bore the burden of disproving negligence under both Article III.2 and Article IV.2 of the Hague Rules. Having failed to discharge this burden of proving the exercise of reasonable care for the cargo in respect of the preparation of the containers to prevent condensation damage, the carrier was held liable to the cargo claimants.

In its decision the Supreme Court emphasised that the common law of bailment was a vital feature of the background against which the Hague Rules were drafted and that in circumstances where goods are redelivered in damaged condition, the onus is on the bailee to show that the damage was not due to the absence of reasonable care on its part. 

The clarification found in this important ruling should be a welcome development for cargo insurers and P&I Clubs alike given the increased certainty it provides for future Hague Rules cases, with cargo interests likely to be placed in the more advantageous position going forward. It also reflects both common sense and the commercial realities of the carriage of goods by sea that the legal burden of proof should be placed on carriers to have to account for the circumstances of cargo damage when they are the best-placed and often only party in a position to account for - and prevent - what happens during the carriage.

Andrew Nicholas of Clyde & Co acted for the successful claimants.