Think Recoveries - Fire Aboard

Marine cargo claims involving fire on board a vessel can often be complex from both a legal and technical viewpoint. In this update, we will provide a brief overview of some of the key considerations when dealing with cargo loss or damage caused by fire. One of the challenges in providing such an overview is the wide variety of scenarios that can arise, from the simplest engine room fire that is quickly extinguished to the most complex fire on a large containership that causes widespread damage and cargo loss. For the purposes of this overview, we will consider the legal and technical framework for a cargo loss due to fire in a containership with focus on issues relating to the Hague and Hague-Visby Rules, burden of proof and preservation of evidence.

The Hague and Hague-Visby Rules and the ‘fire defence’

The fire exception in Article IV, Rule 2(b) of the Hague Rules and Hague-Visby Rules provides as follows:

"Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from…

(b)        fire unless caused by the actual fault or privity of the carrier".

The "carrier" here means the directing mind and will of the company and so usually the top level of management.  As is apparent from the language, this exemption from liability for the carrier for loss caused by fire will often provide a very high degree of protection.

However, before looking at the fire defence in more detail, it is important to remember at the outset that the exceptions listed in Article IV, Rule 2 (including the fire defence) will not protect the carrier in circumstances where:

1. The loss was caused by unseaworthiness or another breach of Article III Rule 1; and
2. The carrier is unable to discharge the burden of proving the exercise of due diligence.

It follows that the starting point for pursuing any claim for loss and/or damage to a cargo during carriage remains the standard one of producing evidence to show that:

1. The cargo was loaded in good order and condition;
2. The cargo was discharged in a deteriorated and/or damage condition; and
3. The damage was caused by the unseaworthiness of the ship.

In the case of fires at sea, causative unseaworthiness might include the Owners failing to exercise due diligence insofar as the crew fighting the fire is concerned, a lack of adequate firefighting systems, a lack of training or a lack of procedural guidance from the Owners or carrier to the crew.

Recent developments affecting the ‘fire defence’

As we have seen, recovery prospects in the case of cargo loss or damage caused by fire on board a vessel are (in the absence of causative unseaworthiness)  problematic because of the wording of the fire exemption in the Hague and Hague-Visby Rules ("fire unless caused by the actual fault or privity of the carrier").  As such, it will usually be common ground that there was a fire, but who has a burden to prove whether the fire occurred with or without the actual fault or privity of the defendant carrier? 

In the "APOSTOLIS" [1996] 1 LLR 475, the English Court considered the burden to be on cargo interests to prove actual fault or privity.  This seems to have been accepted in the subsequent and leading fire case, the "EURASIAN DREAM" [2002] 1 LLR 719 in which it was held that inadequate training of the crew in the firefighting systems on board the vessel constitutes unseaworthiness.  However, the reasoning of the Court in the "APOSTOLIS" was based on the principle that where there is an exception to an exemption, the party alleging that the exception applies must prove it.  This reasoning appears to have come from a very old Court of Appeal decision in the "GLENDARROCH" [1894] P 226, a pre-Hague Rules case in which the Court held that a perils of the sea exclusion clause in a bill of lading would not apply where the loss was caused by the negligence of the crew, but that because "negligent navigation was an exception to an exception", the burden was on cargo interests to prove the negligent navigation.

However, the decision of the Supreme Court in the “VOLCAFE” [2018] UKSC 61 (where the successful cargo interests were represented by Clyde & Co) overturned the "GLENDARROCH".  The Court said:

"the basis on which it was decided is technically confusing and immaterial to the commercial purpose of the Hague Rules"

and went on to say

"As the source of any general rule governing the burden of proof it should no longer in my view be regarded as good law". 

The Court held that a carrier is liable for loss or damage during the voyage unless it proves that, on the balance of probabilities, the loss or damage was not caused by any breach by it of its duties under Article III Rule 2 or that one of the defences in Article IV Rule 2 applies.  The carrier must also prove that the loss or damage was not caused by its own negligence or breach of Article III Rule 2 to bring itself within one of the defences set out in Article IV Rule 2.  The result of this judgment is that the burden is on the carrier to disprove causative negligence.  The impact of the “VOLCAFE” decision in determining who carries the burden of proving whether the fire occurred with or without the actual fault or privity of the defendant carrier has yet to be confirmed, although the reasoning adopted is undoubtedly helpful for cargo interests.

Investigation and evidence

So much for the law, but what about practical matters?  We have already seen the vital part that evidential issues will play in determining liability for cargo damage caused by fire and at the earliest possible stage it is important to begin the process of gathering evidence both about the cause of the fire and the steps taken by those on board to fight the fire including their training/ability to do so properly.  It is also necessary to gather evidence about the physical condition of the vessel's firefighting equipment/systems.  This process will usually require the appointment of an experienced consultant fire expert to attend on board the vessel, usually as part of a joint investigation with the carrier's consultant fire expert.  Questions that will typically need to be considered include:

• Where was the origin of the fire?  Was it within a cargo (container) or elsewhere on board the ship (e.g. engine room)?
• Was the fire detected properly and promptly?  Did fire alarms on board the vessel operate properly?  Was the vessel's firefighting system physically adequate and was it operated correctly (discharge of carbon dioxide).  Did the reactions of the crew to the fire appear those of a competent and well-trained crew?
• According to English law, a vessel can be unseaworthy not only if it has physical defects (e.g. an inoperable firefighting system) but also if the vessel's crew are incompetent, including being inadequately trained or prepared to fight the fire as was the case in the "EURASIAN DREAM".  This is so called human unseaworthiness.
• Was there a suitable plan of action to fight fires on board the vessel?  Were the crew properly trained?  Did the crew put their training into practice?  Was any firefighting training the crew had undergone specific to the type of vessel involved in the fire?
• Was the vessel's firefighting equipment operable?  In a case in which carbon dioxide discharge is appropriate, was the equipment working properly?  Was it maintained and was it correctly labelled so that the carbon dioxide could be discharged in the correct place?

Given that almost all of the evidence relevant to answering these questions will be on board the vessel, it is vital for swift action to be taken to prevent crucial evidence from being lost and/or destroyed.  With this in mind, it may be necessary to make an application to Court in the jurisdiction where the vessel is located and/or in the jurisdiction agreed in the carriage contracts, for a Court Order that the carrier/Owners permits access to a fire expert nominated by cargo interests.

It may also be possible to obtain a Court Order forcing the carrier/Owners to disclose copies of documents on board the vessel relevant to the cause of the fire.  Again, early action is recommended because such documentary evidence may be lost or destroyed over time.

Finally, in addition to seeking recovery from the carrier, it should be remembered that in some jurisdictions it may be possible to pursue a recovery claim against the shipper or manufacturer of the cargo if the cargo in which the fire started was manufactured in an improper way so as to make it dangerous and/or that the shipper and/or the manufacturer did not provide sufficient information and/or warning to the carrier/those responsible for carrying the cargo so that they could do so safely and carefully.  This sort of claim can generally only be pursued on a tort basis if the law applicable in the relevant jurisdiction allows it.

Conclusion

Cases involving fire on board ships, and particularly container ships, have the potential to cause huge losses for cargo interests and can be complex and challenging.  However, as we have seen, there are significant potential routes of recovery against the carrier under the Hague and Hague-Visby rules.  There is often scope for making strong arguments relating to unseaworthiness.  As ever, the collection of evidence is vital in such cases and early action can often be essential to ensure that this is identified and preserved.  The key message is not to delay and to seek expert advice at the earliest possible stage.