79603 International Business Transactions and the Law

Issue

The main issue concerning the forwarded occurrence is whether claims can be made by Purple Construction Management Ltd against XYZ Business Printers Pty Ltd, Eastern Insurance Ltd, Harris Freight Forwarders Pty Ltd, Green Shipping Services Ltd and “Southern Ocean Express”.

Rule

As per the Carriage Paid To (also known as CPT) of 2020 Incoterms, the particular purchaser shall be considered to be responsible in relation to the insurance starting from the specific point of the delivery. The particular purchaser shall also be responsible in relation to the import clearances. As per CPT, the seller makes payment in relation to the carriage as well as organizes or arranges the carriage in respect of the decided and settled destination. The seller acquires the export clearances. The risk shifts from the seller to the purchaser as soon as the delivery of the specific goods is made in respect of the carrier at the decided or settled location.

According to clause 1 of Institute Cargo Clauses (A), the insurance shall cover every risk relating to damage to or loss of the subject-matter that has been insured except the ones that are excluded by certain provisions of ICC (A).

As per clause 4 of Institute Cargo Clauses (A), the insurance shall not cover the following losses: -

• The expense and loss of damage that is attributable to deliberate misconduct of assured
• Ordinary loss in volume or weight, ordinary leakage, or ordinary ‘wear and tear’ of the specific subject-matter that is insured
• The expense or loss of damage caused by unsuitability or insufficiency of preparation or packing in connection to the subject matter that is insured in order to endure and survive the ordinary events of the specific insured transportation where the preparation or packing is done by the Assured.
• The expense or loss of damage caused by the intrinsic nature or vice of the specific subject-matter that has been insured.
• The expense or loss of damage caused by postponement or delay.
  
  

In connection to the given occurrence, the case quoted to be Gibbs v Mercantile Mutual Insurance (Australia) Ltd [2003] HCA 39 should be regarded due to the pertinence of the case. In the above stated pertinent case, it had been mentioned that a specific marine insurance contract covers against the incidents or the losses of any particular marine adventure. It was further specified that a ‘marine adventure’ includes the exposure of any ship, movables or goods or earnings to the ‘marine perils’, which are incidental and consequent to navigation of sea.  The coverage may be extended to losses on inland waters or land risks.

The case known as Mount Isa Mines Ltd v The Ship “Thor Commander” [2018] FCA 1326 would be a relatable case concerning the forwarded scenario. In this specific well-known case, it had been stated that the shipowner shall be obligated to perform due diligence prior to the voyage in order to ensure the seaworthiness of the vessel. It should be ensured that the ship must be fit to carry the cargo in the course of the voyage and that the ship is properly manned.

The case cited as Siemens Ltd v Shenker International Australia Pty Ltd [2004] HCA 11 should be deliberated in this regard as it is a vital case concerning the provided instance. In the above said vital case, it was said that a carrier shall be considered to be liable or accountable in connection to any delay or damage if the incident that resulted in the damage occurred during the transportation. 

Application

In the forwarded scenario, when Southern Cross Express unloaded the cargo after arriving at Christchurch, subsequent to unpacking of the containers, it was discovered that several multifunction devices were in a smashed and broken condition. Not a single multifunction device could be utilized by Purple.

Making application of the Carriage Paid To (also known as CPT) of 2020 Incoterms, it should be declared that the Purple Construction Management Ltd shall be considered to be responsible in relation to the insurance starting from the specific point of the delivery, which is Perth. Purple Construction Management Ltd shall also considered to be responsible in relation to the import clearances. Applying CPT, it can be stated that XYZ Business Printers Pty Ltd shall make payment in relation to the carriage as well as organize or arrange the carriage in respect of the decided and settled destination, which is Christchurch. XYZ shall acquire the export clearances. The risk shall shift from XYZ Business Printers Pty Ltd to Purple Construction Management Ltd as soon as the delivery of the multifunction machines is made in respect of Southern Ocean Express (the owner of which is Green Shipping Services Ltd) at Perth.

Making application of clause 1 of Institute Cargo Clauses (A), it can be stated that the insurance for the multifunction machines (insured by Eastern Insurance Ltd) shall cover every risk relating to damage to or loss of the multifunction machines except the loss that are excluded by certain provisions of ICC (A).

Making application of clause 4 of Institute Cargo Clauses (A), it can be said that the insurance by Eastern Insurance Ltd shall not cover the following losses relating to the multifunction machines: -

• The expense or loss of damage that has been caused to the multifunction machines by unsuitability or insufficiency of preparation or packing (by Bob and Bill ofHarris Freight Forwarders Pty Ltd) in connection to such multifunction machines. Harris failed to properly prepare and pack the machines so that the machines could have endured and survived the ordinary events of the particular insured transportation.
• The expense or loss of damage of the multifunction machines when caused by the intrinsic nature or vice of such machines.
• The expense or loss of damage of the machines caused by postponement or delay.
  
  

In connection to the given occurrence, the case quoted to be Gibbs v Mercantile Mutual Insurance (Australia) Ltd [2003] HCA 39 should be applied due to the pertinence of the case. Making application of the above stated pertinent case, it can be mentioned that a specific marine insurance contract amid the Purple and the Eastern Insurance shall cover against the incidents or the losses of the particular marine adventure of Southern Ocean Express. It can be further specified that a ‘marine adventure’ shall include the exposure of Southern Ocean Express and the multifunction machines to the ‘marine perils’, which would be incidental and consequent to navigation of sea.  

Applying Mount Isa Mines Ltd v The Ship “Thor Commander” [2018] FCA 1326, it must be stated that Green Shipping Services Ltd shall be obligated to perform due diligence prior to the voyage in order to ensure the seaworthiness of Southern Ocean Express. It should have been ensured by Green Shipping that Southern Ocean Express must have been fit to carry the multifunction machines in the course of the voyage and that Southern Ocean Express had been properly manned.

The case cited as Siemens Ltd v Shenker International Australia Pty Ltd [2004] HCA 11 should be applied in this regard as it is a vital case concerning the provided instance. Applying the above said vital case, it must be said that Southern Ocean Express shall be considered to be liable or accountable in connection to the damage of the multifunction machines because the incident that resulted in the damage of the multifunction machines occurred during the transportation.

Conclusion

In the conclusion, claims can be made by Purple Construction Management Ltd against Harris Freight Forwarders Pty Ltd and Green Shipping Services Ltd, however, no claims can be made against Eastern Insurance as Harris failed to prepare and pack the machines in a proper manner.

References  

Carriage Paid To (CPT) 2020 Incoterms.

Gibbs v Mercantile Mutual Insurance (Australia) Ltd [2003] HCA 39.

Institute Cargo Clauses (A).

Mount Isa Mines Ltd v The Ship “Thor Commander” [2018] FCA 1326.

Siemens Ltd v Shenker International Australia Pty Ltd [2004] HCA 11.

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