Loss of cargo – a case study based on a real life question from Sudan

Recently, a question regarding shipping and handling resources was raised by an NVOCC representative in Port Sudan:

“We have a very sensitive case in Port Sudan. The consignee has presented us with the original bill of lading, but his container ship sank in the Indian Ocean due to bad weather and did not arrive.

What advice could be useful to the owner of the goods, what action can he take and what are our duties as NVOCC representatives?

This is a sad and complex situation, but one that reflects the nature of maritime risk management.

This raises important questions about liability, seaworthiness, insurance, and due diligence, all of which come into play when cargo is lost at sea.

Determination of seaworthiness and cause of casualties

The first thing to consider is how severe the weather has been and whether the vessel is seaworthy when it departs from its last port of loading.

According to international maritime conventions, the carrier is obliged to take due care to seaman the ship before and at the start of the voyage.

This includes ensuring that the ship is properly manned, equipped, maintained and supplied.

If the vessel was unseaworthy and the carrier (or charterer) failed to fulfill this obligation, there may be liability for loss of cargo.

However, if the damage is caused solely by perils of the sea, such as extraordinary and unforeseeable weather conditions, the carrier may be exempt from liability under the Hague or Hague-Visby laws.

The first action of the cargo owner – immediately contact the insurer

The owner of the cargo (or the insured) must immediately notify his cargo insurance of the incident.

If the goods are insured under one of the Lloyds Cargo Clauses (ICC A, B or C), a claim may be recoverable, provided the owner of the cargo was not aware of the ship’s unshipment at the time of shipment.

• ICC(A) provides “all risks” coverage, excluding general exceptions such as delay or inherent defect.
• ICC (B) covers named perils such as heavy weather, collision or drowning.
• ICC (C) provides the narrowest coverage, typically limited to total loss scenarios.

The insurance claim must be submitted by:

• original bill of lading
• Commercial invoice and packing list
• Insurance certificate
• Proof of loss (such as statements by the carrier or mariner confirming the sinking)

If properly insured, the cargo owner will normally receive compensation based on the insured or CIF value of the goods under the terms of the policy.

If the cargo was not insured

If the cargo owner does not have marine insurance, their recourse will be more limited. In such cases, the cargo owner may request recovery directly from the NVOCC or ocean carrier.

However, the burden of proof is much higher. Under the Hague, Hague-Visby and Hamburg laws, carriers are not liable for damages caused by “perils of the sea” unless it is proven that they did not exercise due care to navigate the ship or take proper care of the cargo.

The NVOCC’s liability, if any, depends on the terms printed on the bill of lading, applicable law and applicable international conventions.

Legal framework – applicable conventions and limitations of liability

Depending on the issued bill of lading, the shipment of goods will be subject to one of the following contracts:

(SDR – Special Drawing Right. Current exchange rates are available at www.imf.org. The latest rate applies, not the rate at the time of the loss.)

In the case of Sudan, maritime matters are governed by several separate laws rather than one comprehensive law, including the Sudanese Maritime Law of 1961, the Maritime Law No. 27 of 1992, and the Sudanese Maritime Flags Law of 1994, which together regulate areas such as ship registration, merchant shipping, commercial shipping.

For the carriage of goods by sea, the Sudanese framework generally conforms to the Hague or Hague-Visby rules through domestic provisions similar to the Carriage of Goods by Sea Act (COGSA).

However, as there is no definitive public record of full incorporation, it is recommended that you verify the applicable law clause of the bill of lading and, if necessary, consult local legal counsel to confirm which Convention applies to any shipment to or from Sudan.

Role and responsibilities of NVOCC and its agent

An NVOCC (Non-Vessel Common Carrier) acts as a contract carrier for the shipper while contracting with the actual vessel operator.

When such a loss occurs, the local NVOCC agent plays an important role in coordinating communications and documentation, even though they are not directly responsible for the loss.

Their key responsibilities are:

1. Official Notification – Notify the shipper, consignee, insurer and principal of the incident.
2. Document Support – Provide NVOCC bill of lading, manifest and cargo details for claim processing.
3. Communication with Ocean Carrier – Receive and share an official loss confirmation report or statement.
4. Regulatory Compliance – Notify port and maritime authorities as required by local law.
5. Helping Claimants – Facilitating the flow of documents between the cargo owner, the insurer and the original NVOCC.

The role of the representative is representative and administrative, not operational. Unless negligence or misrepresentation is proven, the agent is not personally liable for damages.

Claims handling process and limitation period

Cargo claims are usually calculated based on the CIF value of the goods, although some bills of lading specify the market value at destination.

Claims are excluded after one year from the date of delivery or the date when the goods should have been delivered.

If the prescription date is approaching, the petitioner must request an extension in writing and, if refused, file a subpoena to preserve the lawsuit.

It is always the claimant’s burden to prove damage and the carrier or insurer to prove any exclusions under the applicable convention.

Lessons for Shipping, Shipping, and NVOCC

1. Always adequately insure cargo.. Even the most reputable shipping companies and ships at sea face unpredictable risks.
2. Get to know the exact letters. Know which legal regime governs your bill of lading and what restrictions apply.
3. Act quickly after an incident. Notify the insurers, request official approval from the shipping company and collect the documents immediately.
4. Maintain clear communication. Coordination between the NVOCC, its agent, shipper and insurer is essential to resolve outstanding claims.
5. Keep track of claim timelines.. Missing a one-year prescription period can shut down a valid claim forever.

While the sea always has an element of unpredictability, legal preparedness and operational vigilance ensure that when disaster strikes, the path from loss to recovery is as smooth and swift as possible.

With the participation of Alexander Robertson of Robertson Freight Consultants.

related