Judgment of the Central Intellectual Property and International Trade Court

Bill of lading states “weight, measure, quality, condition and value unknown” and “said to be, said to weigh” in describing the nature of the goods in question. However, it also states “shipped at the port of loading in apparent good order and condition”. When terms are in conflict, and no further evidence is submitted, since terms in the bill of lading are contained in the standard form put into effect by the carrier, the terms not favourable to the carrier shall have more weight than the terms which are neutral or more favourable to the carrier. The contra proferentem rule applies.

In normal circumstances, the duty to pay demurrage is vested in the charterer. However, if the parties in the bill of lading would like the consignee who is not privy to the charter-party to bear the demurrage, it must be clearly stated in the bill of lading to that effect. In an English case of Porteus V. Watney (1878), 3 Q.B.D 534, it was held that the term “freight and all other conditions per charter” was sufficient to make the consignee liable for demurrage. In the case under consideration, the stipulation “Bill of Lading to be used with charter-parties” is in fact an amendment to the terms of the bill of lading by incorporating the terms of the charter-party to the bill of lading. Incorporation by reference as it were. The parties concerned are business people in international commerce and maritime carriage and as such are presumed to know the implication of such incorporation.

Carrier is to provide sea and cargo worthy vessel. It is his duty to inspect the vessel, its equipment and storage facilities for the cargo. The defect to the refrigeration units of the storage in question is a defect so apparent that a reasonable carrier must comprehend. It is not a latent defect beyond the comprehension of a reasonable carrier with due diligence and competence.

The plaintiffs are justified in the delay of taking delivery of the goods in question. Being material of food for human consumption, the plaintiffs had reasonable grounds to be cautious in the examination of the temperature and histamine in the frozen tuna. The delay was caused mainly by the deteriorating stage of the goods, which in turn had been caused by the default in refrigeration units of the ship. However, both the plaintiffs as the consignees and the defendant as carrier were both to blame on the prolonged and failed negotiation leading to aggravated damage to the goods.

The plaintiffs, in the capacity of consignees, claim damages for the consignment of frozen tuna in the amount of US $ 1,941,500. The defendant was the carrier of the tuna from Truk in Micronesia to the port of discharge in Bangkok. The condition of the carriage was that the carrier must maintain the temperature at –18 degree Celsius. The refrigeration units of the vessel, the Bright Ocean, broke down and caused damage to the tuna. The tuna was then unfit for human consumption and had to be sold as animal feed.

The defendant contended that under the term of the bill of lading, which is FOIST (free in and out, stowed, trim), the shipper has the duty to provide stevedores for the loading of the goods at the port of loading and the consignee has the burden to discharge the goods at the port of destination. The bill of lading clearly stated “weight,

measure, quality, quantity, condition, contents and value unknown” and the terms “said to be and said to weigh” were used in relation to the nature of the goods. The goods were not maintained at –18 degree Celsius at the time of the loading. The damage was caused by the delay on the plaintiff’s part in the unloading of the goods. The defendant thus counter-claims demurrage in the amount of US $ 6,000 per day, totaling US $ 677,000.

It was held that the bill of lading states “weight, measure, quality, condition and value unknown” and “said to be, said to weigh” in describing the nature of the goods in question. However, it also states “shipped at the port of loading in apparent good order and condition”. When terms are in conflict, and no further evidence is submitted, since terms in the bill of lading are contained in the standard form put into effect by the carrier, the terms not favourable to the carrier shall have more weight than the terms which are neutral or more favourable to the carrier. The contra proferentem rule applies.

Carrier is to provide sea and cargo worthy vessel. It is his duty to inspect the vessel, its equipment and storage facilities for the cargo. The defect to the refrigeration units of the storage in question is a defect so apparent that a reasonable carrier must comprehend. It is not a latent defect beyond the comprehension of a reasonable carrier with due diligence and competence.

The plaintiffs are justified in the delay of taking delivery of the goods in question. Being material of food for human consumption, the plaintiffs had reasonable grounds to be cautious in the examination of the temperature and histamine in the frozen tuna. The delay was caused mainly by the deteriorating stage of the goods, which in turn had been caused by the default in refrigeration units of the ship. However, both the plaintiffs as the consignees and the defendant as carrier were both

to blame on the prolonged and failed negotiation leading to aggravated damage to the goods. The damages recovered by the plaintiffs shall be subject to the limitation set forth in section 58 of the Carriage of Goods by Sea Act B.E. 2534 (1991) i.e. ฿ 30 per kilo. The damages shall be further reduced by the deduction of proceeds from sale of the goods as animal feeds plus a portion of blame on the part of the plaintiffs for the prolonged and failed negotiation.

In normal circumstances, the duty to pay demurrage is vested in the charterer. However, if the parties in the bill of lading would like the consignee who is not privy to the charter-party to bear the demurrage, it must be clearly stated in the bill of lading to that effect. In an English case of Porteus V. Watney (1878), 3 Q.B.D 534, it was held that the term “freight and all other conditions per charter” was sufficient to make the consignee liable for demurrage. In the case under consideration, the stipulation “Bill of Lading to be used with charter-parties” is in fact an amendment to the terms of the bill of lading by incorporating the terms of the charter-party to the bill of lading. Incorporation by reference as it were. The parties concerned are business people in international commerce and maritime carriage and as such are presumed to know the implication of such incorporation. However, the delay is mainly caused by the fault on the part of the carrier and as a result demurrage is denied.

The defendant is to pay ฿ 58,080,000 to the plaintiffs plus 7.5 % interest of the said sum from the day following the pronouncement of this judgment to the day the judgment debt is paid. The defendant shall reimburse the plaintiffs’ court fees. Attorney’s fee is set at ฿ 100,000. The defendant’s counter-claim is hereby dismissed.

N.B. The case was filed on the 16^th June 1998, the judgment of the Central IP&IT Court was delivered on the 9^th April 1999. Since no appeals of the decision were lodged, the decision is final and conclusive.

Summarized by Damrongrit Pankaew