The Onus of Proof in A Cargo Claim

The onus of proof in A cargo claim arts iii & iv of the
hague-visby rules and the uncitral draft convention
The Hon Justice Steven Rares

Federal Court of Australia
Presented at the MIG/MLAANZ
Lecture Series, 23 July 2008
Overview
The Hague and Hague-Visby Rules history
Onus of proof in cargo claims - Arts III and IV of the
Hague-Visby Rules
UNCITRAL Working Group III (Transport

Law)
Draft Convention on Contracts for the
International Carriage of Goods Wholly or

Partly by Sea
Aspects of the possible operation of the draft

convention
Hague-visby rules: history

International Convention for the Unification of Certain
Rules of Law Relating to Bills of Lading, 1924 (the Hague
Rules)
Protocol to Amend the International Convention for the
Unification of Certain Rules of Law Relating to Bills of

Lading, 1968 (the Hague-Visby Rules)
Carriage of Goods by Sea Act 1991 (Cth)
Harter Act 1893 (US)
Demand for international uniformity in shipowners
liability
Draft Convention on Contracts for the International

Carriage of Goods Wholly or Partly by Sea
July 2008 - 41st session of UNCITRAL approves final text

of Draft Convention on Contracts for the International
Carriage of Goods Wholly or Partly by Sea (the
Rotterdam Rules)
Draft convention approved earlier this month

To replace the various rules Hague Rules, Hague-Visby Rules,
Hamburg Rules and the Multimodal Convention
Sufficient safeguards or danger of a return to a pre-Hague
Rules free-for-all?
Onus of proof
arts III & iv
Distinction in Australia between onus of proof and order
of proof in cargo claims

Made clear in unanimous HC decision in Gamlen
Chemical (1980) 147 CLR 142
Doubt cast by Gaudron, Gummow and Hayne JJ in Great
China (The Bunga Seroja) (1998) 196 CLR 161
Ankergracht (2007) 160 FCR 342 approach in order for
a carrier to rely on the exceptions in Art IV r 2 it must
not be negligent or at fault, ie not in breach of Art III
rules 1 or 2
Allsop Js observation in Hilditch [2007] FCA 752
difficulties for plaintiffs in knowing what to plead
Issues raised by arts III & IV

Art III r 1 obligation on carrier to exercise due
diligence before and at beginning of voyage

Derogates from common laws requirement of absolute
obligation on shipowner to make vessel seaworthy
before voyage
Art III r 2 obligations before and during voyage on
carrier subject to exceptions from liability provided in Art
IV
Art IV r 1 excludes carriers liability for
unseaworthiness unless carrier failed to exercise due
diligence at or before commencement of voyage
burden of proof is on the carrier or other person claiming
exemption
Art IV r 2 list of exceptions to carriers liability
The ankergracht case

(2007) 160 FCR 342
Factual background:
Steel coils rust on Korea-Australia voyage in
northern winter moisture in holds
Should carrier have fitted dehumidifiers to
make vessel cargoworthy?
Did carriers properly care for steel on voyage?
Findings of trial judge carriers had filed

to make vessels seaworthy at time of
loading lack of due diligence
The ankergracht case

(2007) 160 FCR 342
Appeal to Full Court unanimous finding upholding trial
judges ruling that carriers had failed to take care
majority overturned trial judges decision on lack of due
diligence
Ryan & Dowsett JJ
Insufficient evidence to justify finding of unseaworthiness no
evidence of practice of fitting dehumidifiers; question of due

diligence did not arise
Failure to remove moisture was a want of care, not want of due
diligence
Rares J
The court should determine whether the practice was sufficient to
determine question of seaworthiness and due diligence

The question of whether a practice is adequate is a question of law
to be determined by the courts: Rogers v Whitaker (1992) 175 CLR
479
SHIFTING ONUSES
Lloyd J in Hellenic Dolphin [1978] 2
Lloyds Rep 336
Cargo owner raises prima facie case by

showing that cargo was damaged on arrival
Ship owner meets prima facie case by relying
on exception in Art IV r 2
Cargo owner seeks to displace exception by
proving:
a. vessel unseaworthy at start of voyage
b. unseaworthiness caused of loss
SHIFTING ONUSES
Hague-Visby rules do not explicitly identify who has onus
of proving unseaworthiness
At common law, it falls on those who allege it: Lindsay v
Klein (The Tatjana) [1911] AC 194
The standard of seaworthiness or fitness: Great China
(1998) 196 CLR 161
Auld LJ in The Kapitan Sakharov [2000] 2 Lloyds Rep
225 reasonably fit to encounter ordinary incidents of
the voyage objective test
Art III r 1 also imposes obligation on carriers to make
ship cargoworthy
Onus of proof and

care of cargo
Art III r 2: Subject to the provisions of
Article IV, the carrier shall properly and

carefully load, handle, stow, carry, keep,
care for and discharge the goods carried.
Properly means:
in accordance with a sound system and that

may mean more than carrying the goods
carefully: Albacora SRL v Westcott &
Laurance Line Ltd [1966] 2 Lloyds Rep 53 per
Lord Reid
Depends on the conditions which it is
anticipated the vessel will meet: Great China
(1998) 196 CLR 161
Onus of proof and

care of cargo
If goods are shipped in apparent good condition and lost or damaged
when discharged prima facie breach of Art III r 2
Carrier bears onus of proving defence under Art IV r 1

Carrier bears onus of bringing cause of damage within an exception in
Art IV r 2
The question of concurrent causes: Gamlen Chemical (1980) 147 CLR

142 treat the two concurrent causes as inseparable, and therefore
joint
The carrier will only escape liability if it can prove that the loss or
damage was caused by an excepted peril alone: see e.g. Hilditch (No 2)
(2007) 245 ALR 125
If unseaworthiness is the cause of the loss, and the carrier is in breach
of its obligation to exercise due diligence to make the ship seaworthy as

required by Art III r 1, it cannot rely on an exception under Art IV
Principles of proof
Professor William Tetleys four general principles of
proof (Marine Cargo Claims (4th ed)):
1. The carrier is prima facie liable for loss/damage to

2.
3.
4.
cargo received in good order and out-turned in bad

order
The parties are required to make proof of whatever
facts are available
Onus of proof does not mean proving all circumstances
to point of absurdity, but means making proof to a
reasonable degree
Once a party conceals, modifies or destroys evidence,
other evidence of that party is suspect
Order of proof
Order of proof = sequence in which facts/allegations are

proved by one party or the other during trial
The traditional order of proof:
1.
Onus on SHIPPER to prove:
2.
3.
Contract of carriage
Goods shipped in apparent good order & condition
Goods missing or delivered damaged on arrival
Prima facie case of carriers breach of Art III r 2
Onus shifts to CARRIER to rebut shippers prima facie case by

establishing that damage/loss caused by Art IV r 2 exception
If an exception established, onus shifts to SHIPPER who may
displace carriers defence by:
Proving carrier failed to satisfy requirements of Art III r 2

Proving ship was unseaworthy at start of voyage, and that caused the
damage/loss: Arts III r 1 & IV r 1
The Great china case

(1998) 196 CLR 161
Obiter comments by Gaudron, Gummow and Hayne JJ
suggest a different Australian position

Trial judge and NSW Court of Appeal held that damages
resulted from perils of the sea
McHugh J said that defence of perils of the sea did not
apply because the cargo owners failed to prove breach
of Art III r 2
Kirby and Callinan JJ suggested that the traditional onus
of proof would apply
Gaudron, Gummow and Hayne JJ said that nothing
turned on the allocation of the burden of proof

Obiter remarks of Gaudron, Gummow and Hayne JJ:
Davies & Dickey (Shipping Law) have described their
Honours views as radical so far as they depart from

the onus and order identified in Gamlen Chemical
Their views are inconsistent with the travaux
prparatories for the Hague Rules which suggest that
the carrier should prove which specific exception in Art
IV caused the loss/damage
The practical effect of their Honours approach may be
that, in circumstances where the cause of loss/damage
is uncertain, the carrier may escape liability simply by
demonstrating that due diligence & care were exercised,
without having to prove how the cargo became
lost/damaged.
draft convention
Recent developments: the draft

convention
Draft Arts 14-19 significantly alter the
regime in Arts III & IV of the Hague-Visby

Rules
Draft Art 18 deals with carriers liability

& which party bears the onus of proof
Recent developments: the draft

convention
Australian Governments observation:
Australia is of the opinion that the current
text is so different from current international
law and so complicated that the potential for
lengthy and costly litigation is high. As this
litigation will be domestic, there remains the
potential for the uniformity of the
international law to be undermined by having
provisions interpreted differently in different
countries.
the draft convention

Draft Art 18
1. Claimant must prove that loss etc (or event/circumstance
that caused/contributed to the loss etc) took place during

period of carriers responsibility: draft Art 18 r 1
2. Carrier relieved of responsibility if it proves that the (or a)
cause of the loss etc was not its fault or that of any
servant or agent, including master, crew or any
performing party: draft Art 18 r 2
3. Carrier can also prove exemption: draft Art 18 r 3
list of exemptions similar to those in Art IV r 2 of Hague-Visby

Rules
but draft Art 18 r 3 expressly provides that the carrier bears the
onus of proving that one of the circumstances caused/contributed
to loss etc
draft 18 r 3 omits the nautical fault exception now the carrier
is to be liable for the acts/omissions of the master, crew or any
performing party

4. Despite carrier establishing exemption under r 3,
carrier will still be liable if claimant proves that carrier

(or person for whom it is responsible)
caused/contributed to event/circumstance on which
carrier relies: draft Art 18 r 4
Although carrier has proved it is not at fault (r 3),
claimant can prove that carrier is at fault (r 4)!
5. If carrier succeeds in establishing exception (r 3), onus

6.
shifts back to cargo claimant to prove that loss etc was

(or was probably) caused by unseaworthiness etc:
draft Art 18 r 5(a)
If unseaworthiness etc proved, draft Art 18 r 5(b)
shifts onus back onto carrier who is liable unless it
proves:
i.
ii.
unseaworthiness etc did not cause loss etc

it complied with its obligation to exercise due diligence this
extends to an obligation to keep the ship seaworthy etc during
voyage: draft Art 15

Draft Art 18 r 5 compared with Art IV r 1
Similarities:
Both deal with liability of carrier where
damage arises or results from
unseaworthiness of vessel
Both require carrier to prove that it
exercised due diligence or that damage
was not caused by unseaworthiness etc

Differences:
Art IV r 1 is framed as a negative proposition carrier is not
liable except in circumstances specified:
Neither the carrier nor the ship shall be liable for the loss or
damage arising or resulting from unseaworthiness unless
caused by want of due diligence on the carrier to make the
ship seaworthy
Draft Art 18 r 5 is framed as a positive proposition claimant

must prove carrier is liable:
The carrier is also liable for all or part of the loss,

damage, or delay if: (a) The claimant proves that the loss,
damage, or delay was or was probably caused by or
contributed to by (i) the unseaworthiness of the ship

Australian Government expressed
concerns regarding the alteration of the

burden of proof. Australia argued that:
- the carrier is in a better position than the
shipper to know what happened while the
goods were in the carriers custody
- the shipper would have difficulty proving
unseaworthiness etc

Other Draft Articles
Draft Art 14 r 1 restates carriers
obligations in Art III r 2 in familiar terms

Draft Art 15 broadens significantly Art III r
1 expansion of obligation of due
diligence must keep ship seaworthy etc
during voyage
Draft Art 19 introduces liability of carrier

for other persons

Other Draft Articles
The exception in Art IV r 2(q) (damage arising without fault, or
privity of carrier) has been made a distinct exception under draft Art
18 r 2
Draft Art 18 rr 2, 3, 6 affect position under amended Hague Rules
relating to carriers liability where there are concurrent causes
Rules 2 & 3 relieve carrier of all/part liability if it proves cause of
loss not its fault, or stipulated event/circumstance
caused/contributed to loss etc
rr 2 & 3 reverse the interpretation in Gamlen Chemical and
Hilditch where carrier was liable if there were concurrent causes but
it only established one exception
r 3 reverses the position stated by Staughton LJ in The Antigoni
[1991] 1 Lloyds Rep 209 that a shipowner who seeks to rely on Art
IV r 1 need not establish an exception under Art IV r 2
The end

The Onus of Proof in A Cargo Claim

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The onus of proof in A cargo claim arts iii & iv of the

hague-visby rules and the uncitral draft convention

The Hon Justice Steven Rares

UNCITRAL Working Group III (Transport

Draft Convention on Contracts for the

International Carriage of Goods Wholly or

Aspects of the possible operation of the draft

Hague-visby rules: history

Rules of Law Relating to Bills of Lading, 1924 (the Hague

Unification of Certain Rules of Law Relating to Bills of

Draft Convention on Contracts for the International

July 2008 - 41st session of UNCITRAL approves final text

Draft convention approved earlier this month

of proof in cargo claims

Issues raised by arts III & IV

diligence before and at beginning of voyage

The ankergracht case

Findings of trial judge carriers had filed

The ankergracht case

Insufficient evidence to justify finding of unseaworthiness no

evidence of practice of fitting dehumidifiers; question of due

The court should determine whether the practice was sufficient to

determine question of seaworthiness and due diligence

Cargo owner raises prima facie case by

Onus of proof and

Article IV, the carrier shall properly and

in accordance with a sound system and that

Onus of proof and

Carrier bears onus of proving defence under Art IV r 1

The question of concurrent causes: Gamlen Chemical (1980) 147 CLR

If unseaworthiness is the cause of the loss, and the carrier is in breach

of its obligation to exercise due diligence to make the ship seaworthy as

1. The carrier is prima facie liable for loss/damage to

cargo received in good order and out-turned in bad

Order of proof = sequence in which facts/allegations are

Onus on SHIPPER to prove:

Onus shifts to CARRIER to rebut shippers prima facie case by

Proving carrier failed to satisfy requirements of Art III r 2

The Great china case

The Great china case

suggest a different Australian position

The Great china case

Davies & Dickey (Shipping Law) have described their

Honours views as radical so far as they depart from

Recent developments: the draft

regime in Arts III & IV of the Hague-Visby

Draft Art 18 deals with carriers liability

Recent developments: the draft

the draft convention

1. Claimant must prove that loss etc (or event/circumstance

that caused/contributed to the loss etc) took place during

list of exemptions similar to those in Art IV r 2 of Hague-Visby

the draft convention

carrier will still be liable if claimant proves that carrier

claimant can prove that carrier is at fault (r 4)!

5. If carrier succeeds in establishing exception (r 3), onus

shifts back to cargo claimant to prove that loss etc was

unseaworthiness etc did not cause loss etc