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Coffee company Volcafe has won a long-running legal case against a shipping company that will have important implications for the industry

A lengthy and extremely complex legal case involving moisture damage to coffee shipped in containers, and the application of English law to determine who was at fault for that damage, reached a conclusion early in December 2018, when the Supreme Court – the final court of appeal in the UK for civil cases – issued a ruling in favour of an appeal by owner of the coffee, which was shipped from Colombia to Germany.

The Supreme Court’s judgment in Volcafe v CSAV will be essential reading for all involved in the carriage of goods by sea, whether lawyer, insurer, cargo owner or carrier.

Argued as test case on The Hague Rules, Volcafe provided the first authoritative analysis of the burden of proof under the Hague and Hague-Visby Rules, the continuing relevance of the English common law of ‘bailment’ where the rules apply, and the interaction between the carrier’s duty to care for cargo.

Upholding the cargo claimants’ appeal, the Supreme Court held that, as a bailee (a person or party to whom goods are delivered for a purpose, such as custody or repair, without transfer of ownership), a carrier is liable for loss or damage during the voyage.

The case brought before The Supreme Court took the form of an appeal against a Court of Appeal ruling in 2017 that overturned a decision by the High Court in 2015.


2017 decision was a controversial one

The 2017 decision was said to have “restored the balance between the competing interests of shipowners and cargo interests in disputes over cargo damage.” At that time, it was said that the first instance judgement handed down on 5 March 2015 “overturned around 100 years of legal precedent, effectively penalised shipowners for following shipper’s instructions and discarded well-established industry practise regarding the carriage of coffee in containers.”

It was claimed in 2017, when the first instance ruling was overturned that, “had the High Court decision been allowed to stand, shipowners would have faced a significant increase in claims relating to hygroscopic cargos, including rice, coffee and other grains” and that “shipowners’ liability would have increased to the level approaching that of a cargo insurer.”

The appeal brought before the Supreme Court challenged the 2017 decision and revolved around the burden of proof in actions against a shipowner for loss of or damage to cargo.■ C&CI

This extract is from an article that first appeared in the January’19 issue of C&CI, click on subscribe now if you wish to read the article in full and other informative articles in the January and future issues of C&CI.

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