P&I (CLASS 3) / PART III / RULE 19 RISKS COVERED / 19.17 Cargo

Liabilities which a Member may incur, or expenditure which the Member may be unable to recover, together with costs and expenses incidental thereto, in respect of cargo intended to be, or being, or having been carried in an Entered Ship, which arises out of a breach by the Member or by persons for whose acts, neglect or default the Member is liable, of the Member’s obligations or duties as a carrier properly and carefully to load, handle, stow, carry, keep, care for, discharge or deliver the cargo or out of unseaworthiness or unfitness of the Entered Ship.

The following shall be recoverable:

19.17.1 Loss, shortage and damage

Liability for loss or shortage of, or damage to, or other responsibility for, cargo (other than cargo carried under a contract of through carriage).

19.17.2 Damaged cargo

The additional costs of discharging, disposing of, or restowing, damaged cargo insofar as these costs cannot be recovered from any other party.

19.17.3 Unrecoverable expenditure

The additional costs of discharging and disposing of, or of restowing, cargo which are necessarily incurred in order to continue the safe prosecution of the voyage following a casualty, insofar as these costs cannot be recovered from any other party and could not form part of general average expenditure.

19.17.4 Through transit

Liability for loss or shortage of, or damage to, or other responsibility for cargo carried under a contract of through carriage, including transit by land, water or air to or from the Entered Ship.

Provided always that:

19.17.4.1 such contract has been approved by the Managers and the Member has paid, or agreed to pay, such additional Call or premium as may be required by the Association.

19.17.5 Contracts of indemnity

Liabilities arising under the terms of a contract of indemnity which relates to the handling or custody of cargo insofar as such liability may be covered under Rule 19.15 Contracts of Indemnity or Guarantee subject always to Rule 20.1.4 Cargo and freight.

19.17.6 Collision liability to cargo

Liability for loss of or damage to cargo carried in an Entered Ship under Rule 19.9.3 Collision liability to cargo.

19.17.7 Disposing of cargo

The additional costs of storing and disposing of cargo rejected or not collected by receivers insofar as these costs cannot be met out of the salved value of such cargo or recovered from any other party, even where such rejection or failure to collect does not arise out of a breach by the Member or any other person of their obligations or duties as a carrier.

Provided always that:

19.17.7.1 there shall be no recovery in respect of storage costs for the first 30 days following discharge.

19.17.8 PROVIDED ALWAYS THAT:

19.17.8.1 Hague Visby Rules

unless Special Cover has been agreed in writing by the Managers, if a Member enters into a contract of carriage by sea which is on terms less favourable to the carrier than those contained in the Hague or Hague Visby Rules, the Board (or, in the case of claims not exceeding USD2,000,000, the Committee) may in its discretion reject any claim or reduce it to the extent by which the Board (or, in the case of claims not exceeding USD2,000,000, the Committee) considers such claim would have been reduced had the contract of carriage been on terms as favourable to the carrier as those contained in the Hague or Hague Visby Rules;

19.17.8.2 Deviation

there shall be no recovery where the Member has become liable in consequence of a deviation from the contractually agreed voyage unless in the case of a deviation authorised by the Member, prior notice of the intended deviation has been given to the Managers or, in the case of a deviation without the Member’s authority, the earliest possible notice has been given to the Managers after the Member has received information thereof and, in either case, the Managers have confirmed to the Member that cover under this Rule continues unprejudiced. Nevertheless, the Board (or, in the case of claims not exceeding USD2,000,000, the Committee) may allow such a claim either in part or in whole if, in its discretion, it considers that the Member had reasonable grounds for believing that no deviation was to be or had been made. If, upon receiving information of the deviation, the Managers advise the Member that cover under this Rule is prejudiced and the Member then requests the Managers to arrange Special Cover to cover the Member’s liabilities under this Rule, the cost of such insurance shall be borne by the Member;

19.17.8.3 Loading and discharge

unless the Board (or, in the case of claims not exceeding USD2,000,000, the Committee) shall, in its discretion, otherwise determine there shall be no recovery in respect of a Member’s liability:

19.17.8.3.1 for the cost of carrying cargo to the port of destination stipulated in the contract of carriage from another port at which the cargo was discharged from an Entered Ship, or for storage or other charges; or

19.17.8.3.2 arising, otherwise than under a bill of lading already issued, out of the failure to arrive or late arrival of an Entered Ship at a port of loading, or out of failure to load, or late loading of, any particular cargo or cargoes in an Entered Ship; or

19.17.8.3.3 arising out of the delivery of cargo carried under a negotiable bill of lading or similar document of title (including an electronic bill of lading) without production (or the equivalent thereof in the case of an electronic bill of lading) by the person to whom delivery is made of the relevant bill of lading or document of title, except where cargo has been carried in the Entered Ship either

19.17.8.3.3.1 under the terms of a non-negotiable bill of lading, waybill or other non-negotiable document (and has been properly delivered as required by that document) and liability arises under the terms of a negotiable bill of lading or other similar document of title issued on behalf of a party other than the Member providing for carriage partly by a means of transport other than the Entered Ship or

19.17.8.3.3.2 under the terms of an approved electronic trading system and has been properly delivered to the person so entitled in accordance therewith; or

19.17.8.3.4 arising out of the delivery of cargo carried under a non-negotiable bill of lading, waybill or similar document without production of such document by the person to whom delivery is made, where such production is required by the express terms of that document or the law to which that document, or the contract of carriage contained in or evidenced by it, is subject, except where the Member is required by any other law to deliver, or relinquish custody or control of the cargo, without production of such document; or

19.17.8.3.5 arising out of the discharge of cargo at a port or place other than the port or place provided in the contract of carriage; or

19.17.8.3.6 arising from the mistaken, imprudent or illegal exercise of a lien over cargo; or

19.17.8.3.7 in respect of the issue of an ante-dated or post-dated bill of lading, waybill or other document containing or evidencing the contract of carriage; or

19.17.8.3.8 in respect of a bill of lading, waybill or other document containing or evidencing the contract of carriage issued with an incorrect description of the cargo, its quantity or condition, or of its port of loading or discharge with the knowledge either of the Member (or of any agent appointed by the Member in which the Member has a substantial interest) or of the Master of the Entered Ship.

19.17.8.4 ad valorem bills of lading
where cargo or other property is carried under an ad valorem bill of lading or other document of title, contract of carriage or waybill in which a value of more than two thousand five hundred Dollars (USD2,500) (or the equivalent in any other currency) is declared and/or inserted by reference to a unit, piece, package or otherwise, where the effect of such a declaration / insertion is to deprive the Member of any right or rights of limitation to which the Member would otherwise have been entitled and cause the Member to incur a greater liability than the Member would have done but for such declaration / insertion, to the extent that such liability thereby exceeds two thousand five hundred Dollars (USD2,500) (or the equivalent in any other currency) in respect of any such unit, piece or package there shall be no recovery, unless

19.17.8.4.1 Special Cover has been agreed by the Managers in writing after receiving prior notice from the Member or the earliest possible notice after the Member has received notice of the said carriage;

19.17.8.5 Rare and valuable cargo
there shall be no recovery in respect of loss of or damage to specie, bullion, precious or rare metals or stones, plate, jewellery or other objects of a rare or precious nature, bank notes or other forms of currency, bonds or other negotiable instruments, unless the contract of carriage and the spaces, apparatus and means used for the carriage and the instructions given for the safe custody thereof, have been approved by the Managers prior to any such carriage and any directions made by the Managers have been complied with;

19.17.8.6 Member’s own cargo
where the cargo in respect of which a claim arises belongs to a Member, such Member shall be entitled to recover from the Association, and the Association shall have the same rights, as if such cargo belonged to a third party and that third party had entered into a contract of carriage with the Member.

19.17.8.7 Paperless trading
there shall be no recovery from the Association for any liability, cost or expense arising from the use of any electronic trading system, other than an electronic system approved in writing by the Managers, to the extent that such liability, cost or expense would (save insofar as the Board (or, in the case of claims not exceeding USD2,000,000, the Committee) in its discretion otherwise determines) not have arisen under a paper trading system.

For the purposes of this proviso:

19.17.8.7.1 an electronic trading system is any system which replaces or is intended to replace paper documents used for the sale of goods and/or their carriage by sea or partly by sea and other means of transport which

19.17.8.7.1.1 are documents of title, or

19.17.8.7.1.2 entitle the holder to delivery or possession of the goods referred to in such documents, or

19.17.8.7.1.3 evidence a contract of carriage under which the rights and obligations of either of the contracting parties may be transferred to a third party.

19.17.8.7.2 a ‘document’ shall mean anything in which information of any description is recorded including, but not limited to, computer or other electronically generated information.

19.17.8.8 Slot charters
a Member who is a slot or space charterer of an Entered Ship may recover under this Rule for the Member’s liabilities, together with costs and expenses incidental thereto, to persons interested in other cargoes carried in the Entered Ship, whether or not the Member is a carrier;

19.17.8.9 Deck cargo
there shall be no recovery where the Member has become liable in consequence of the carriage of cargo on deck unless the cargo is suitable for carriage as loaded on the deck of the Entered Ship and either:

19.17.8.9.1 Special Cover has been agreed by the Managers in writing after receiving prior notice from the Member or the earliest possible notice after the Member has received notice of the said carriage; or

19.17.8.9.2 the contract of carriage is specially claused to the effect that the cargo is carried on deck and either provides that the carrier is free from all liability for loss or damage to such cargo or provides the carrier with rights, immunities and limitations no less favourable than those contained in the Hague Rules or Hague Visby Rules; or

19.17.8.9.3 the contract of carriage contains an appropriate liberty to carry cargo on deck and provides for the Hague Rules or Hague Visby Rules to apply to such cargo; or

19.17.8.9.4 where the contract of carriage is compulsorily subject to the Hamburg Rules by operation of law, the Member has complied with the provisions of paragraphs 1 and 2 of Article 9 thereof.

Nevertheless, the Board (or, in the case of claims not exceeding USD2,000,000, the Committee) may allow such a recovery in whole or in part if, in its discretion, it considers that the Member had reasonable grounds for believing that the conditions of this proviso had been complied with.