Section 16

Cargo liability

The liabilities and costs set out in paragraphs [A] to [D] below when and to the extent that they relate to cargo intended to be or being or having been carried in an entered ship:

A. Loss, shortage, damage or other responsibility

Liability for loss, shortage, damage or other responsibility arising out of any breach by the Member, or by any person for whose acts, neglect or default he may be legally liable, of his obligation properly to load, handle, stow, carry, keep, care for, discharge or deliver the cargo or out of  unseaworthiness or unfitness of the entered ship.

B. Disposing of damaged cargo

The additional costs  ( over  and  above  those  which  would  have been        incurred by him if the cargo had not been damaged) incurred by the Member in discharging or disposing of damaged or worthless cargo, but only if and to the extent that the Member has no recourse to recover those costs from any other party.

C. Failure of consignee to remove cargo

The liabilities and additional costs (over and above the costs which would have been incurred by him if the cargo had been collected or removed) incurred by a Member solely by reason of the total failure of a consignee to collect or remove cargo at the port of discharge or place of delivery, but only if and to the extent that such liabilities or costs exceed the proceeds of sale of the cargo and the Member has no recourse to recover those liabilities or costs from any other party.

D. Through or transhipment bills of lading

Liability for loss, shortage, damage or other responsibility in respect of cargo carried by a means of transport other than the entered ship, when the liability arises under a through or transhipment bill of lading, or other form of contract, approved by the Managers, providing for carriage party to be performed by the entered ship.

PROVIDED ALWAYS that

a. Maritime Code of the People’s Republic of China or other rules  relating to carriage of goods

Unless and to the extent that the Directors otherwise decide, or special cover has been agreed in writing by the Managers, there shall be no recovery from the Association in respect of liabilities which would not have been incurred or sums which would not have been payable by the Member if the cargo had been carried under a contract applying to the provisions of Maritime Code of the People’s Republic of China or under a contract incorporating terms no less favourable to the carrier than the Hague Rules or Hague Visby Rules.

b. Deviation

Unless and to the extent that the Directors in their discretion otherwise decide, or cover has been confirmed in writing by the Managers prior to the deviation, there shall be no recovery from the Association in respect of liabilities, costs and expenses which arise out of or which are incurred as a consequence of a deviation.

The deviation referred to in this proviso [b] means a departure from the contractually agreed voyage or adventure which deprives the Member of the right to rely on defences or rights of limitation which would otherwise have been available to him on the basis of the provisions of Maritime Code or the rules referred to in proviso [a] above to reduce or eliminate his liability.

c. Exclusions from cover

Unless and to the extent that the Directors in their discretion otherwise decide there shall be no recovery from the Association in respect of liabilities, costs or expenses arising out of:

i. Discharge of cargo at a port or place other than the port or place provided in the contract of carriage;

ii. Delivery of cargo carried under a non-negotiable bill of lading, waybill or similar document without production of such document by the person to whom delivery is made, where such production is required by the express terms of that document or the law to which that document, or the contract of carriage contained in or evidenced by it, is subject, except where the Member is required by any other law to which the carrier is subject to deliver, or relinquish custody or control of, the cargo, without production of  such document.

iii. Delivery of cargo carried under a negotiable bill of  lading or similar document of title without production of that bill of lading or document by the person to whom delivery is made, except where cargo has been carried on the entered ship under the terms of a non-negotiable bill of lading, waybill or other non-negotiable document, and has been properly delivered as required by that document, notwithstanding that  the Member of that entered ship may be liable under the terms of a negotiable bill of lading or other similar document of title issued by or on behalf of a party other than that Member providing for carriage partly by a means of transport other than the entered ship;

iv. The issue of an ante dated or post dated bill of lading, waybill or other document containing or evidencing the contract of carriage, that is to say a bill of lading, waybill or other document recording the loading or shipment or receipt for shipment on a date prior or subsequent to the date on which the cargo was in fact loaded, shipped or received as the case may be;

v. A bill of lading, waybill or other document containing or evidencing the  contract of carriage, issued with the knowledge of the Member or the Master of the entered ship with an incorrect description of the cargo or its quantity or its condition;

vi. Either the failure to arrive or late arrival of the entered ship at a port of loading, or the failure to load any particular cargo or cargoes in an entered ship other than liabilities, loss and expenses arising under a bill of lading already issued;

vii. Any deliberate breach of the contract of carriage on the part of the Member or his managers.

d. Deck cargo

There shall be no recovery from the Association in respect of any loss, damage or other responsibilities arising out of the carriage of cargo on deck unless the cargo and the entered ship are, in the opinion of the Managers, suitable for carriage on deck and the bill of lading or other contract of carriage:

i. states that the cargo is carried on deck and either provides that the carrier is free from all liability for loss of or damage to cargo,or provides that the carrier has the rights, immunities and limitations no less favourable than those contained in the Hague Rules or the Hague Visby Rules; or

ii. states that the cargo is carried on deck and provides that the provisions of Maritime Code of the People’s Republic of China apply to such carriage ;or

iii. appropriately provides that the carrier has the liberty to carry cargo on deck and either provides that the provisions of Maritime Code of the People’s Republic of China or the terms , in respect of the rights, immunities and limitations of the carrier, no less favourable then those contained in the Hague Rules or the Hague Visby Rules shall apply to such cargo.

e. Value declared on bill of lading

Where the value of any cargo is declared upon the bill of lading, waybill or other document containing or evidencing the contract of carriage at a figure in  excess of US$2,500  ( or  the equivalent in  the currency in which the declared value is expressed) per unit, piece or package, the liability of the Association under this Section shall not exceed US$2,500 per unit, piece or package unless the Managers have agreed in writing on such terms as they think fit, to the Association providing special cover up to that higher declared value.

f. Rare and valuable cargo

Unless and to the extent that special cover has been agreed in writing by the Managers, there shall be no recovery from the Association in respect of claims relating to the carriage of specie, bullion, precious or rare metals or stone, plate or other objects of a rare or precious nature, bank notes or other forms of currency, bonds or other negotiable instruments.

g. Property of the Member

In the event that any cargo lost or damaged on board the entered ship shall be the property of the Member, such Member shall be entitled to recover from the Association the same amount as would have been recoverable form him if the cargo had belonged to a third party and that third party had concluded a contract of carriage of the cargo with the Member on the terms of Maritime Code or the rules referred to in proviso [a] of this Section above.

h. Regulations as to methods of carriage

The Directors shall have power from time to time to make regulations prescribing the conditions or method of carriage, storage, transport, custody and handling of cargo intended to be, being or having been carried in the entered ships.

Upon the passing of any such regulation it shall be deemed to be incorporated in these Rules so as to take effect as from the beginning of the policy year next following the time and date of the making of such regulation or as from the time and date as the Directors decide, and as from such taking effect every Member shall conform thereto in so far as the same may apply to the ships entered by him or on his behalf in the Association or to the trades in which they may be engaged.

If any Member shall commit a breach of any regulation, the Managers may reject or reduce any claim made by the Member to the extent to which it would not have arisen if he had complied with the regulation and may further impose such terms upon him as they may think fit as a condition of the continuance of the entry of the Member’s ship or ships in the Association. 

i. Events on land

There is no cover under paragraphs [A], [B] and [C] of this Section in respect of liabilities, costs and expenses arising out of events occurring before the cargo has been received for shipment, after it has been delivered at the port of discharge, or at any time when it is neither aboard the entered ship nor in the dock area of the port of loading or the port of discharge. This proviso shall not prevent recovery from the Association under paragraph [D] of this Section.

j. Pre-loading Survey

A Member shall arrange for a survey as to the condition of any cargo carried or intended to be carried on an entered vessel as may at any time be required in any Circulars to Members by the Association or otherwise in writing by the Managers. Such survey shall be carried out by a surveyor approved in writing by the Association. Without prejudice to provisos c.v. of this Section 16 of Rule 3, where such a survey is carried out before a Bill of Lading, Waybill or other document is issued in respect of such cargo by or on behalf of the Member, the Member shall, unless the Managers otherwise agree in writing, clause such Bill of Lading, Waybill or other document containing or evidencing the contract of carriage to describe the cargo or its condition in accordance with the findings of the survey.