Case Study: Liability and Bills of Lading in Maritime Law

This case study involves a shipment of 20,000 tons of bituminous coal from Swansea to Cape Town. Wallabies Ltd, a Welsh company, purchased the coal from Travetta Ltd on 'CIF Cape Town' terms. Wallabies Ltd chartered the vessel 'Good Fellows' from Gregos Ltd for the voyage. The charter party included a clause stating that 'General Clause Paramount shall apply to this contract of carriage.'

On March 1st, the cargo was loaded onto the 'Good Fellows'. A clean bill of lading was signed in three original copies by the charterers' local agents 'for and on behalf of the master' of the 'Good Fellows'. The bills were consigned 'to the order of Wallabies Ltd' and described the cargo as 'coal'. The bills were subject to English law and jurisdiction.

Wallabies Ltd sent the bills of lading and relevant documents to the confirming bank on March 4th and demanded payment under the letter of credit. The bank inspected the documents and made payment to Wallabies on March 7th.

On March 9th, at their buyer's request, Wallabies Ltd approached Gregos Ltd to request a new set of bills of lading identifying the cargo as 'steam coal'. This would have benefited from a lower import tax rate in South Africa. Gregos Ltd, initially hesitant, agreed to the change on the assurance that the cargo wouldn't be sold to any third party. Travetta Ltd also provided Gregos Ltd with a letter of indemnity containing a clause stating:

'The above cargo was shipped on the above ship by Wallabies Ltd and consigned to Travetta Ltd for delivery at the port of Cape Town. We, Travetta Ltd, as the holders of the bill of lading issued, request you to switch the bill of lading as requested by us. In consideration of your complying with our above request, we hereby agree to indemnify you for any liability expense or fine you might incur.'

While approaching Cape Town on March 17th, a fire broke out in one of the holds and spread to other parts of the ship. It was later discovered that the fire originated due to the cargo's methane emission exceeding that of normal coal cargo. Regular inspections by the crew to measure the methane level in the holds could have detected this, but they assumed the cargo was ordinary coal and deemed daily inspections sufficient.

The fire was extinguished with the aid of salvors, and the 'Good Fellows' received temporary repairs at a port of refuge. The vessel eventually arrived in Cape Town on March 27th.

Upon discharge and delivery of the cargo to Travetta, it was discovered that 10,000 tons of the cargo had been destroyed by the fire, and the value of the remaining cargo was significantly reduced. Additionally, upon discovery of a discrepancy between the nature of cargo discharged and the description in the new bills of lading, Gregos Ltd was fined $500,000 by authorities.

Questions:

1. Who is the carrier under the bills of lading?

Answer: The carrier under the bills of lading is the owner of the vessel 'Good Fellows', Gregos Ltd, as they were the ones who entered into the voyage charter party agreement with Wallabies Ltd.