Cargo: when is a 'clean bill' not clean?

Cargo interests brought a claim under the bills of lading in relation to a heavily rusted cargo of steel pipes. The pipes were in fact rusty on shipment, but the bills of lading contained a standard form RETLA clause (named after the US case, Tokio Marine & Fire Insurance v. Retla Shipping), on which the owners sought to rely in order to defeat the claim. The RETLA clause sometimes appears on the face of a bill of lading where the carriage involves iron, steel, metal products or timber. The aim of the clause is to qualify the term “apparent good order and condition” by clarifying that, when the cargo was received for shipment, it was not necessarily free of visible rust or moisture, staining, chaffing etc. This means the carrier can issue clean bills of lading, even though the mate’s receipts have been claused. The decision of Mr Justice Simon in this case is the first time that the English courts have considered this clause. He disagreed with the reasoning behind the decision in Tokio Marine and held that the representation made in the bills as to the cargo’s apparent condition was false.

The vessel loaded a cargo of steel pipes at Ulsan, for carriage to Los Angeles, San Francisco and Vancouver. The bills of lading contained a US General Paramount Clause incorporating US COGSA. They also contained the usual statement that the goods were shipped “in apparent good order and condition”. In addition, however, the bills included a RETLA clause…

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