High Court Rules on Cargo Damage Claims in Maritime Transport Case: Key Legal Issues and Findings

Citation: [2023] EWHC 3264 (Comm)
Judgment on

Introduction

In the case of AMS Ameropa Marketing Sales AG & Anor v Ocean Unity Navigation Inc [2023] EWHC 3264 (Comm), the High Court of Justice dealt with claims relating to cargo damage during maritime transport. This article analyses the key legal issues, principles applied, and the court’s findings. The focus is on title to sue, causation, quantum of damages, mitigation, and proof of loss in a commercial shipping context, guided by the Hague-Visby Rules.

Key Facts

The dispute involved a cargo of soybeans shipped from Louisiana to Egypt. The defendant, registered owner of the vessel, admitted to breach of contract for heating fuel oil excessively near the cargo, leading to damage. The claimants, the consignee’s assignee and cargo insurer, sought damages for the loss of value and ancillary costs. The owners contested the claimants’ title to sue, the causation, and the amount of recoverable losses, countering with arguments of failed mitigation efforts by the claimants.

Title to Sue

The court evaluated whether the assignee, AMS Ameropa Marketing Sales AG, had a legitimate title to sue. This relied on whether a beneficial claim against the carriers subsisted at the time of assignment from Oilex, the bill of lading holder, in accordance with The Baltic Strait.

Causation

The claimants were obliged to show that the losses incurred were due to the owners’ breach. The legal thresholds for breaking the causation chain, based on Borealis v Geogas Trading, necessitated proof that subsequent events (post-breach actions) did not obliterate the breach’s effects.

Mitigation

The owners alleged the claimants failed to mitigate damages adequately, referring to the principles outlined by Chitty on Contracts. The claimants defended their mitigation strategy, positing that their decision to conduct a salvage sale was a direct and reasonable consequence of the breach.

Quantum of Damages

The court examined the extent of recoverable losses. The sound CIF value of the cargo versus its salvage sale price was scrutinized to determine the loss’s quantum. Ancillary costs were contested, with the claimants needing to show that such expenses were indeed incurred by Oilex as a direct result of the breach.

Outcomes

  1. Title to Sue: The First Claimant had title to sue as Oilex’s assignee. Settlements reached under existing contractual arrangements were not considered a credit to the Owners.

  2. Causation: Losses from the Salvage Sale were a direct consequence of the Owners’ breach, and the chain of causation was not broken by the mitigation strategy adopted by Oilex or the First Claimant.

  3. Extent of Damage: The court found a middle ground on the extent of damage, asserting that the damages were significantly less than claimed. It relied on expert testimony to determine the extent and nature of the damage.

  4. Mitigation: The claimants’ mitigation actions in concluding a Salvage Sale were found reasonable, as they sought to minimize the risk of further deterioration.

  5. Quantum of Damages: The claimants successfully proved the difference in value based on the CIF sale price and the salvage sale price, but failed to prove the ancillary losses.

Conclusion

The High Court applied established legal principles relevant to maritime cargo damage cases. It upheld the claimant’s right to damages based on the invoice’s sound CIF value less the salvage price. However, it dismissed the claim for ancillary costs due to insufficient proof that they were incurred by Oilex. This case reinforces the need for claimants to provide concrete evidence for mitigation-related expenses and highlights the court’s role in balancing contractual obligations against practical commercial considerations.