Count, stow and seal

C Chakradaran and N Asthana of Afridi & Angell look at the need for careful wordings on bills of lading under UAE law

THE UAE Commercial Maritime Code places virtual strict responsibility on a carrier to deliver cargo to a consignee in the same condition as described in the bill of lading. The code provides that the shipper is responsible to the carrier for any inaccuracy in the particulars appearing on the bill of lading, but that the carrier may not rely on any such inaccuracy as against a third party.

It further provides that the carrier may express reservations against the particulars provided by the shipper in connection with the marks on the goods, their number, quantity or weight, if the carrier has serious reason to doubt the accuracy thereof and if the ordinary means of verifying the same are not available. The reasons for such reservations must be stated on the bill of lading and reservations such as ‘said to contain’ or ‘shippers load, stow and count’ have not been recognised by the courts in the past.

The code also does not distinguish between containerised and non-containerised cargo. The duty to load and stow the cargo imposed on the carrier has been interpreted by the courts as a duty to load and stow the cargo inside the container. Accordingly, carriers have been held liable for the condition of the cargo within the container if upon delivery of the container to the consignee the cargo was not in accordance with its description on the bill of lading.

A carrier has been held liable where a clean bill of lading has been issued, even when shipper's fraud has been established and the container with seals intact has been delivered to the consignee. In order to avoid liability in such cases, the carrier would have to establish that the consignee and the shipper were related parties or that they both participated in the fraud. The carrier owes a duty to the consignee to ensure that the goods of the description set out in the bill of lading are loaded inside the container.

However, in a recent judgment of the Dubai Court of Cassation (the final Court of Appeal in Dubai), the court has given recognition to a general reservation which was made on the bill of lading in the words ‘shipper's count, stow and seal’ and has held in favour of the carrier. In the case in question, the cargo was bagged groundnuts carried in a container from India to Dubai. The judgment states that the reservation ‘shipper's count, stow and seal’ appeared on the bill of lading. The container was delivered to the consignee in apparent good condition with seals intact, but the cargo within it was found to be damaged. The survey report attributed the cause of damage to heavy condensation within the container. The saline test proved negative.

The Court of Appeal held that damage was caused due to condensation within the container caused by a variation in temperature during the voyage. The Cassation Court held that the Court of Appeal erred in finding that the damage was caused by a variation in the temperature as there was no evidence to support this finding. The Cassation Court went on to hold that the damage was caused by condensation within the container but that the carrier was not responsible for the condensation, which was attributable to the shipper who had stowed the cargo within the container in an inappropriate manner considering the nature of the cargo and the carrier's reservation on the bill of lading in the above-mentioned wording.

Although this judgment departs from the previous trend and may be regarded as encouraging to carriers, particularly in relation to the carriage of containerised cargo, it should be borne in mind that the UAE is a civil law jurisdiction and the doctrine of binding precedent is not applied as it is in common law jurisdictions. Although previous judgments are commonly cited and are regarded as being of persuasive value, each case is decided strictly on its own facts. In the case mentioned above, the Cassation Court held that the damage itself arose from the nature of the cargo inside the container and the shipper's failure to stow the cargo properly in the container.