TSA INDUSTRIES SDN BHD v PEMUNYA DAN ATAU ORANG LAIN YANG BERKEPENTINGAN DALAM KAPAL MSR NO 1 (IMO 9141742) DARI PELABUHAN PANAMA

Case Significance

Illustrates the operation of deck-cargo exclusion clauses in a Bill of Lading — a consignee agreeing to deck carriage on excluding terms bears the risk of weather-related loss — and the high threshold for wrongful arrest of a vessel under The Evangelismos; both claim and counterclaim were dismissed.

This High Court decision is an admiralty in rem action brought by TSA Industries Sdn Bhd, the consignee of an annealing furnace, against the owners of and others interested in the vessel MSR No 1, following damage to the cargo during a voyage from Shanghai to Port Klang. While the vessel encountered typhoon Muifa, eight packages of the cargo fell overboard and fifteen packages remaining on board were damaged. The consignee sued in contract of carriage and bailment, for breach of the duty of good seamanship, and in negligence; the shipowner counterclaimed for wrongful arrest of the vessel. After a full trial the court dismissed both the claim and the counterclaim.

The decisive features of the case were the terms of the Bill of Lading and the nature of the cargo. The court found that the annealing furnace was carried as deck cargo — the charterparty fixture note having agreed that it "could be carried on deck" — and that the Bill of Lading expressly addressed such cargo. Clause 15 on the reverse of the Bill provided that "the Carrier shall not be liable for loss thereof or damage thereto" in respect of deck cargo, and the front of the Bill likewise recorded that deck cargo was carried without the carrier being responsible for loss or damage howsoever arising. The court also considered whether the loss fell within "a peril of the sea", the master's duty of good seamanship in securing the cargo and in navigating in the face of the forecast weather, and whether the deck cargo was carried "at the sole risk of the plaintiff".

Having weighed these matters, the court dismissed the consignee's claim, giving effect to the exclusion of liability for deck cargo. It equally dismissed the shipowner's counterclaim for wrongful arrest, applying the test drawn from The Evangelismos, and awarded costs of RM60,000 to the defendant.

The judgment is a useful illustration of the operation of deck-cargo exclusion clauses in a Bill of Lading and of the high threshold for wrongful arrest of a vessel: a consignee who agrees to deck carriage on excluding terms bears the risk of weather-related loss, while a claimant who arrests a vessel is not liable for wrongful arrest absent mala fides or crassa negligentia.