Pursuant to a contract made in 1988 and governed by French law, a company from the Netherlands Antilles (Claimant) undertook to sell a chemical product to a French company (Respondent) CIF FO Nantes or La Rochelle. The cargo was damaged on arrival. The seller initiated arbitration proceedings claiming payment of part of the purchase price covered by a guarantee. Respondent alleged that the damage was caused by the unsuitability of the ship on which it was transported and faulty stowage and attributed responsibility for this to Claimant.

'4. The contract included the Incoterms for CIF sales. Under these the seller must, inter alia, contract on usual terms and at his expense for the carriage of the goods to their destination by a vessel of the type normally used for the transport of goods of the contract description. Consequently, in order to consider the validity of [Respondent]'s complaint about the characteristics of the ship, it is necessary to see whether she was of the type normally used for the transport of goods such as those involved here.

5. The evidence on this point was to be found in the report of the Court Expert . . . (a report which was, I should note, "contradictoire") upon which [Respondent] in particular relied, and in a report obtained by [Claimant]'s lawyers from English experts who did not see the ship or the cargo and who therefore based their views on the other documentation. The points which the Court Expert made against the ship were firstly that there were areas of understow which were "inaccessible to cranes, so that horizontal handling is required"; secondly that the fold-down covers and the casings of the hydraulic equipment used to operate them projected beyond the edge of the hatch covers sufficiently to tear bags; thirdly that the pontoons stored in the bottom of hold 2 would not have been present on a single-deck ship and that these also had parts which were likely to tear the bags; and fourthly that across the centre of each hatch was a substantial carling on which bags were torn and which impeded the crane operators during discharging.

6. The experts engaged on behalf of [Claimant] dealt with these points as follows. Firstly, as to the understow, whilst accepting that this was not as easy as a direct-drop stow, they contended that it would be neither difficult not unusual, and that it would have been a simple job to swing slings in under the deck in most areas of the ship. Secondly, as to the covers, casings and pontoons, [Claimant]'s experts expressed the view that these should not cause any problem provided they were correctly positioned and the cargo was protected from them by dunnage and separation sheets. So far as the carlings were concerned, their view was that these should not impede the crane operators, that they should be easy to avoid, and that the cargo could be protected from them by polythene wrappings. [Claimant]'s experts accepted that the ship was not ideally suitable for the cargo. But their view was that she was typical of the type of ship used for a cargo such as this.

7. [Claimant] submitted evidence, in the form of three earlier charters (or extracts of charters) for ships used to carry similar cargoes sold by [Claimant] to [Respondent]. The descriptions of the ships found in those charters suggested to me, in the absence of any further details (e.g. plans or photographs) that they had holds which, when their tweendecks were folded, were in fact far more box-shaped than those of [the ship in question] and which provided fewer obstructions likely to cause damage to cargo. Rather than supporting the case for which [Claimant] provided this evidence, namely that [the ship in question] was a usual type of ship for this kind of cargo, it seems to me that the evidence in question goes some way to suggesting the opposite conclusion.

8. Neither side presented any expert evidence directed precisely at the question what type of ship is normally used for the carriage of this kind of cargo. But taking the indications which are to be found in the experts' reports, and some inference that is to be drawn from the previous fixtures for the carriage of similar cargoes, I have on balance come to the conclusion that [Claimant] did not charter a ship that can properly be described as being of the type normally employed for the carriage of such cargo, that consequently they were in breach of the sale contract, and that they must be liable for any part of the proved damages suffered by [Respondent] that resulted from this breach.

9. What part, if any, of the cargo damage flowed from the nature of the ship? To my mind, there is no doubt that given proper stowage and protection of cargo, most of the damage suffered here could have been avoided. But, doing the best I can on the limited information made available, I have come to the conclusion that some 15% of the damage to this cargo was attributable to the nature of the ship. In reaching that figure, I have tried to assess how much of the damage suffered here would have been suffered if the cargo in question had been stowed in a ship which did not present the difficulties offered by [the ship in question], but with the same stowage and lack of protection; and on the other hand I have formed a view as to how much damage I think would have been suffered in this case if the cargo had been properly stowed and protected. These two approaches have led to my assessment of 15% of the damage being attributable to the characteristics of [the ship in question].

10. In these circumstances, I have next to decide whether or not [Claimant] were in breach of their contractual obligations as regards the stowage and lack of protection of the cargo which were responsible for the remaining 85% of the damage.

11. The stowage and protection of the cargo

I deal with these two matters together because for the purposes of this case they are part and parcel of the same operation. The complaints made about the "protection" of the cargo were not that the packaging was in any way defective, but rather that in the course of loading the cargo into the ship greater use should have been made of kraft paper, plastic sheeting or tarpaulins to keep the cargo from contacting the ship and her structures.

12. So far as stowage is concerned, there were clearly considerable inadequacies, as the master pointed out in letters which he addressed to the shippers at the loading port. In particular, he complained of broken stowage in the sense that spaces were left between the cargo and the ship's sides. The Court Expert concluded that the master's complaints were justified since during the course of heavy weather on the voyage (but no more heavy than might be reasonably anticipated on a voyage of this kind at the time of year in question) cargo shifted and fell over into the empty spaces, and thus became damaged.

13. So far as protection went, the Court Expert underlined the fact that on [the ship in question] there was no protection of the kind mentioned above to keep the cargo away from the ship and her fittings.

14. [Claimant]'s experts agreed that the stowage and protection of the cargo was defective: indeed, their opinion was that the principal cause of the damage was the failure to use proper separations, and that apart from that the stowage was to blame.

15. The question that then arises as a matter of law is whether, under the sale contract, these are matters for which [Claimant] are wholly or partly responsible. Under the Incoterms, a seller must conclude a contract of carriage on usual terms and must load the cargo on board the ship at his expense. It is to be noted in particular that under Articles A.6 and B.3, the risk in the goods is transferred to the buyer at the moment that the goods pass the ship's rail at the loading port.

16. [Respondent] relied upon a decision of the Court of Appeal of Aix of 29th April, 1976, concerning the ship "Baska" in which it was held that there had been gross negligence (faute grossière) in the stowage of a ship and that the CIF sellers were responsible for that. On the other hand, in his article on "Obligations du vendeur quant à l'embarquement et au transport" under the title "VENTES MARITIMES Vente C.A.F.", Monsieur Y. Tassel explained this decision on the basis that the particular circumstances of that case went against the ordinary rules in that the charterparty in that case was on a "free in and out and trimmed" basis and that consequently the ship was not responsible for the stowage. Absent such a consideration, Monsieur Tassel's view was clearly that buyers have to bear the risks of bad stowage.

17. The charter in this case appears, in clause 5(b), to impose a regime similar to that which applied in the case of the Baska. Nonetheless I am not persuaded that the decision in that case reflects the law. I think it has to be borne in mind that all relevant parties, including the shipowners, were before the Court in that case, whereas here (as is so often the situation) I am concerned with a contract between sellers and buyers alone; there are separate court proceedings between the buyers and the shipowners, and separate London arbitration proceedings between the shipowners and the sellers/charterers. Further, a careful reading of the Baska decision suggests to me that what the court concluded was a breach of the sale contract was the acceptance by the sellers in the charter of draconian provisions relating to the discharging, and not the acceptance of the "free in and out trimmed" clause. The court's reliance upon the faulty stowage as being somehow a fault on the part of the sellers under the sale contract was secondary and strictly non-essential.

18. Under the Incoterms, a seller has to conclude a contract of carriage on "usual terms". The question is what are usual terms? There was no evidence before me as to this, but I do not think evidence was necessary or, indeed, that it would have led to any limited conclusion. The fact is that many contractual regimes are common, and thus "usual" for voyages such as this one and for the carriage of cargo such as this. Much depends on the situation in the market, the parties' relative bargaining powers, possible previous business relationships, and so on. It cannot, I am satisfied, be said that a charterparty such as that concluded in this case was not "usual" for the purposes of the sale contract. It is true that, in other circumstances, [Claimant] might have been able to conclude a charter under which the shipowners had full responsibility for stowage. Or they might conceivably have been able to ship the cargo under a bill of lading on a liner basis where the regime as to stowage would again have been similar. It is even possible that either of those forms of contractual engagement could be said to be not unusual, but that does not stop the charter which was entered into here from being usual, as I find it was.

19. As between CIF sellers and buyers, as the court observed in its judgment in the Baska case, ". . . a fault consisting of defective stowage of goods by the seller or his delegate does not normally come within the scope of the sale contract but concerns either the contract of carriage itself or the loading contract related to the contract of carriage. . .". That must be the position in all cases save where sellers are in breach by entering into a contract of carriage which is not "usual" within the Incoterms, or where there is some other relevant breach of the sale contract.

20. My conclusion on the arguments addressed to me in this respect is therefore that [Claimant] were not in breach of the sale contract as regards the terms of the charter entered into and cannot therefore be held responsible for the 85% of the cargo damage attributable to the stowage and lack of protection.

21. But I think there is another-and overriding-reason why this must be so. I refer to it last only because it was not expressly argued before me. It arises in this way. If one asks why the Incoterms impose an obligation on a CIF seller to contract for the carriage of the cargo on usual terms, the answer is (a) because the sellers' liability ceases at the ship's rail, (b) the buyers' remedy for damage thereafter is going to lie under the contract of carriage and (c) it is therefore only reasonable that such contract should be on terms that are no more onerous than is usual. And the underlying conceit is that the buyer will acquire rights under the contract of carriage. Absent a novation, a buyer will never acquire rights under a charter entered into by sellers. But he does acquire rights under a bill of lading that is negotiated-to him, as always happens in the case of a CIF sale. So the bill of lading must be the contract of carriage that paragraph A2 of the Incoterms refers to: provided that is on usual terms, and thus gives the buyer the usual rights, he can have no cause for complaint. The provisions of any charterparty, and liabilities thereunder, are res inter alios acta so far as the buyer is concerned. Here, the bill of lading form, and the liability position under it, were beyond question "usual", so there was clearly no breach by [Claimant].'