Volcafe v CSADV

The proceedings in Volcafe Ltd v Compania Sud Americana De Vapores SA 1 were recently brought to a conclusion by a unanimous decision of the UK Supreme Court. This note focuses on the meaning and scope of exceptions for losses arising from “inherent vice”.2 Lord Sumption delivered the sole judgment, from which a number of insights can be drawn. Inherent vice exceptions are not “true” exceptions; they differ in scope depending on the contractual context in which they occur; but, generally, the scope of an exception for inherent vice is defined by “the nature of the service contracted for”.3

The relevant facts can be summarised shortly. The claimants held bills of lading for consignments of bagged green coffee for carriage from Colombia to Bremen. The bills of lading were subject to English law and incorporated the Hague Rules: it was common ground that the defendant-carriers were responsible under the bill of lading contracts for preparing the containers for carriage and stowing the cargo therein. The cargo was shipped in unventilated containers, a common practice at the time. Coffee has a natural tendency to absorb, store and emit moisture: when carried in unventilated containers from a warm to a cooler climate, the beans “inevitably” emit moisture which may condense on the inside of the containers.4 Accordingly, the defendant-carriers had lined the containers with Kraft paper. Despite this precaution, upon arrival at Bremen many bags of coffee had suffered water damage from condensation.