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The Maersk Klaipeda

The Maersk Klaipeda – when Shippers commit fraud and copper isn’t copper but concrete – is there a claim against the vessel owner?

In Stournaras Stylianos Monoprosopi EPE v Maersk the Commercial Court recently ruled on whether a Claimant (cargo interests) could claim against a carrier where there was a substantial discrepancy between the shipper declared weight and the verified gross mass (VGM). VGM is the total weight of the cargo, its packaging and the container and is required for safe stowage reasons.

The Claimant purchased three consignments of copper from shippers in Dubai in 2019. These turned out to contain not copper but concrete blocks. The Shippers disappeared and the Claimant tried to claim against Maersk for issuing clean bills of lading because Maersk knew or should have known that the containers contained much less than the declared weight. The Claimant contended that this pointed to fraud. The Claimant argued that by failing to clause the Bills or otherwise alert the Claimant to the VGM weights, the Claimant became the victim of the Shippers’ fraud. 

At the time Maersk did not have a system to cross-check the VGM weights with the Shippers’ declared weights whereas now they perform a manual check of VGM weights and declared weights with a policy of fining those shippers where the discrepancy is 5000kg or more. The change came about due to a container stack collapse when it was realised that the weights did not always correspond and since implementing the new system Maersk have discovered several instances of attempted fraud.  

The Court found there was no evidence to suggest that Maersk should have been aware that fraudulent data would be supplied such that they should have cross-referenced the weights.

In the 3 ways the Claimant presented its case, it asserted that Maersk knew or should have known that there was a major difference between the stated and the actual weight of the cargo.

  1. The Claimant tried to argue there was a breach of Article III rule 3(c) of the Hague/Hague-Visby Rules in that Maersk should not have issued clean bills when they knew or ought to have known that the cargo was not in good order and condition. The Court held that the carrier was not entitled to ignore clear evidence that goods inside a container are not in good condition. However, with a container, looking at the shell of the container in most cases is a reasonable inspection. The Claimant contended that the weight discrepancy meant that it could not be said that the cargo was in “good order and condition”. The Court agreed that if the carrier was aware of such a discrepancy, then it should draw attention to this when it issues the bills. The Court rejected the Claimant’s assumption that any reasonable carrier of containers in 2019 would have cross-checked the weights. There was no breach of Article III Rule 3(c).

  2. The Claimant further argued that there was a negligent misstatement. The Court had little sympathy with this and found that there were no negligent misstatements in the bills. The Court agreed with Maersk that there is no room for the implication of any representation by the carrier as to the details of the cargo under Art III rule 3.

  3. The Claimant argued that the Carrier was under a duty not to issue a clean bill without qualification where the shipper’s particulars were such that a reasonably competent carrier would know or reasonably suspect they were fraudulent. The Court held that “where a consignee under a straight bill of lading can establish that the carrier knew or ought to have known when issuing the bill that there was a substantial discrepancy between the shipper declared weights and the actual verified weights it has a strong case that the carrier ought not to issue an unclaused bill or ought not to have issued a bill at all.” This failed on the facts as found by the Court.

Therefore, the Claimant failed in all its arguments. However, the final point is interesting in that the Court considered if it can be established that a carrier knows or ought to know that there is a significant discrepancy between the declared and VGM weights of containerised cargo, then the consignee has a strong case that an unclaused bill should not be issued or even that a bill should not be issued at all. This is because the Judge considered such circumstances would cause the carrier to assume that the proposed bill was being used as an instrument of fraud. In these circumstances, the Judge found that it would be fair and reasonable to impose on the carrier a duty of care owed to the named consignee to ensure that its bills are not used as instruments of fraud.

Considering the above, we recommend our charterer Assureds who are carriers or cargo interests be vigilant as to significant discrepancies between declared and VGM weights so as not to inadvertently allow their bills to be used for fraudulent purposes.

The MECO Group
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