GORRISSEN FEDERSPIEL KIERKEGAARD
465737-3 NJF 21.11.2006
The Squeaky

 Home Assignment 1
In late April 2005 Mr Unlucky shipped a cargo of 200 sugar bags on board the
Squeaky from Rouen in France to Hodeidah in Yemen. The shipowner, Prudence
Ltd, issued a shipped bill of lading, which was governed by English law.
On leaving Rouen the Squeaky experienced good weather and light seas, however,
for a few days on entering the Bay of Biscay, she encountered northnorth-
westerly winds up to force 7, with correspondingly high seas. After rounding
Cape Finisterre, she again navigated continuously in light winds and calm
seas.
On May 5 2005 the Squeaky was sailing through the Mediterranean. The seas
were calm and the weather fair. The Squeaky sailed at her full speed of about
11-12 knots. Suddenly, there was a large entry of water into the engine room
through a large hole in the ship’s shell plating on the port side.
Upon the entry of water, the crew placed the pumps on to the engine room
bilges, but the pumps could not cope with the inflow. The third engineer, who
was in the engine room at that time, was ordered to close the watertight door
between the engine room and the shaft tunnel. The entry of water was not, in
the event, confined to the engine room, but extended also to the two after
holds.
Later, a surveyor found that there were two reasons for this: The first reason
was that the third engineer did not succeed in closing completely the watertight
door between the engine room and the shaft tunnel. The second reason was that
the non-return valves in the bilge lines serving the two after holds had earlier
been removed for maintenance in mid April 2005, and, because of interruption
by the more urgent work, had not as yet been replaced.
The engine room quickly filled with water and the vessel’s crew had to abandon
her. Water continued to fill the aftermost compartments of the vessel and soon
her bow reared in the sea and she sank stern first in deep water a few miles off
the coast of Algeria. All her cargo was lost, including Mr Unlucky’s sugar bags.
GORRISSEN FEDERSPIEL KIERKEGAARD
- 2 -
465737-3 NJF 21.11.2006
Afterwards, divers went down to examine the nature of the hole, however, they
had to give up, as the water at the place of sinking was too deep. Prudence Ltd.
submitted that the Squeaky had collided with a submerged rock, a floating object
or a submarine.
Mr Unlucky brought a claim of SDR 100,000 against Prudence Ltd. for the loss of
the sugar bags.
During trial, Mrs Jones, the managing director of the reputable shipyard that had
build the Squeaky, gave evidence as regard the construction and the service history
of the vessel as follows:
“The Squeaky was build in 1972, however as it appear from the service
manual, since 2004 she had been repaired in an unmethodical way. As a
whole, and her shell plating in particular, she was still in a generally wasted
condition.”
Mrs Jones continued:
“She was constructed with the bridge amidships, three holds (nos. 1, 2 and
3) forward of the bridge and two further holds (nos. 4 and 5) abaft the
bridge. The engine room occupied the space between the three forward and
the two after holds. A shaft tunnel ran after from the engine room, in which
there were contained not only the propeller shaft but also the bilge lines
serving the two after holds. There was a watertight door between the engine
room and the shaft tunnel, which was normally to be left open, but which, if
securely closed, would prevent water running from the engine room into the
shaft tunnel or vice versa. The bilge lines serving the two after holds were
fitted with non-return valves which, when in position, allowed pumps to
draw water from the bilges of those two holds, but prevented water from
running the other way into them.
The buoyancy (the ability to stay afloat) of the Squeaky’s various compartments
was such that, if the engine room spaces alone became flooded, the
Squeaky would remain afloat. But, if the after holds became flooded as well,
the Squeaky would – as seen - sink.”
Please decide the matter between Mr Unlucky and Prudence Ltd.
The squeaky
 
Solution:
 
In this analysis below it will be decided the matter between Mr Unlucky and Prudence Ltd considering which system of law must be applied, if the claimant has title to sue the defendant and if he has suffered an economic loss. Besides it will be weighed up if the defendant could rely on any exception and if the claimer could prove that those exceptions were barred. In the end it will be established how is liable the defendant for this matter.
 First of all it must be determined which rules apply to the case. The bill of lading is governed by English Law, as mentioned in the case. The Hague Visby Rules (HVR) shall apply if some characteristics related to the type of contract, to the location of facts and to the type of goods.
The HVR apply only to contracts of carriage covered by a bill of lading or any similar document of title. In our case the contract is covered by a bill of lading.
The HVR apply to every bill of lading relating to the carriage of goods between ports in two different States if the carriage is from a port in a contracting and applying state or if the bill of lading is governed by any legislation giving effect and applying them, cf HVR art X (b) - (c). In this case the carriage is from Rouen in France, a contracting and applying state of HVR, to Hodeidah, in Yemen, and the bill of lading is governed by English Law.
The HVR apply to every bill of lading relating to the carriage of any kind of goods except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried. In our case the cargo is sugar and it is carried under deck. Therefore in this case are applied the English Law and the HVR.
 Secondly it must be established if the claimant has title to sue. The Carriage of Goods by Sea Act 1992 (CGSA) state that has title to issue the lawful holder of a bill of lading, cf CGSA s 2(1). In this matter Mr Unlucky is the lawful holder of the bill of lading, so he has title to sue Prudence Ltd.
 Thirdly it must be proved by who sued that it has suffered a loss and that the damage occurred from the time when the goods are loaded on to the time they are discharged as the HVR cover only this period of the carriage of cargo. The claimant can prove it by representation in the bill of lading, that is a prima facie evidence, unless the defendant could rebut the information in the bill of lading, cf HVR art III r 4, or a valid clause in the contract relieving the defendant from liability, cf HVR art III r 8. In this case Mr Unlucky can prove a loss of 200 bags of sugar during the navigation, as mentioned in the case, by representation of bill of lading; moreover Prudence Ltd didn’t rebut and no clauses are mentioned in the case.
 Fourthly it must establish if the defendant could prove that is able to rely on any exception in the HVR art IV r 2. The defendant is not responsible for a loss that, he can prove, arose from perils or dangers of the sea which cannot be avoided by the exercise of reasonable care, cf HVR art IV r 2 (c). In our case the hole in the ship’s shell plating through which water entered was created by a collision with a submerged rock, a floating object or a submarine, as stated by the surveyor, that Prudence Ltd couldn’t avoid with reasonable care. Besides the defendant is not responsible for a loss that, he can prove, arose from default of one of his servant, cf HVR art IV r 2 (a). In our case the third engineer did not succeed in closing completely the watertight door between the engine room and the shaft tunnel and so water entered it and but also the after holds; for this reason the vessel sank, as stated by the director of the shipyard Mrs Jones.
 Fifthly it must be decided if who sued could prove that the exceptions are barred by unseaworthiness, before and at the beginning of the voyage, cf HVR art III r 1, or by unjustified deviation, cf HVR art IV r 4, or by carriage of cargo on deck without the consent of the shipper, cf ………… In circumstance of proved unseaworthiness by the claimant, the defendant should prove only that it exercised due diligence to provide a seaworthy ship before and at the beginning of the voyage, cf HVR art III r 1. In our case Mr Unlucky could prove that the vessel was unseaworthy as the non-return valves in the bilge line serving the two after holds had not yet been replaced and so they could not prevent water from running in to the holds, as stated by the director of the shipyard Mrs Jones, and the vessel from sinking. Prudence Ltd could not prove that he exercised due diligence in provide a seaworthy ship as the valves were not repaid to carry out the more urgent work that was that voyage.
 Sixth it must be determined if the defendant, that could not rely on exceptions, is entitled to limit its liability. The limitation of liability can regard the time limit within actions should be brought, cf HVR art III r 6, and/or the value, cf HVR art IV r 5.
If the suit is not brought within one year from the date of delivery or when they should have been delivered, the defendant is discharged from all liability; if it is the defendant is completely liable. However even after one year an action of indemnity can be brought against a third person within the time allowed by the law of the court seized of the case. In our case it is not mentioned the date in which the suit is brought. If the suit were brought within the date in which the bags of sugar should have been delivered Prudence Ltd would not have discharged of any liability; otherwise it would have discharged of all liability.
If the nature and the value of the goods lost or damaged have been declared by the shipper before shipment and inserted in the bill of lading, the total amount for which the defendant is liable is the value of such goods at the place and the time at which the goods are or should have discharged, cf HVR art IV r 5 (b). If not, the total amount for which the defendant is liable is the higher between 666.67 SDR per package or unit or 2 SDR per kilogram weight of the goods lost or damaged, cf HVR art IV r 5 (a) and (d). In this case the value of the bags of sugar was not declared and inserted in the bill of lading; besides only the number of packages is mentioned and therefore the amount for which Prudence Ltd is liable is 133,334 SDR. If the weight were known the amount for which Prudence Ltd is liable could only be bigger and as Mr Unlucky claimed 100,000 SDR is not necessarily to know the weight.
 In conclusion considering which system of law must be applied , the exceptions on which the defendant could rely, the barriers to those exception and the limitation of liability on which the defendant can count on, Prudence Ltd is liable for the whole claim of 100,000 SDR of Mr Unlucky.