Correct packaging of cargo plays a crucial role in the logistics chain – and when determining whether cargo is insufficiently packed, each case must be decided on its merits. “The degree of packing that can reasonably be expected from the shipper must be balanced against the degree of care that can reasonably be required from the carrier,” says Julia Blain, senior account executive at JLT Marine. She points out that inadequate packaging, packing or storage into containers are the most frequent causes of loss or damage to cargo. “Insurers are well aware of this and will normally rely on Exclusion 4.3 of the Institute Cargo Clauses incorporated into insurance policies to narrow down the risks covered.” In simple language, this clause excludes loss or damage caused by insufficient or unsuitable packing of the cargo, where such packing or preparation is carried out by the assured or their employees. A recent decision of the Court of Appeal of Barcelona offers helpful guidance to insurers and assureds on the issue of insufficiency of packing in cargo claims. The facts of the case involve an insurer who rejected a claim brought by an assured for damage to cargo. The cargo was packed by an independent contractor and then loaded into a container and stored at the shipper's warehouse prior to shipment. The cargo was found to be damaged upon arrival at final destination and a claim was lodged with insurers who rejected it on the grounds of insufficient packing. The claim then went to court, where it was ruled that under the 2009 clauses, independent contractors could not be considered “employees” of the assured and the exclusion of cover could not extend to damage caused by inadequate packing performed by independent contractors. In fact, the purpose of the updated clause was to clarify that the term “employees” did not include independent contractors. Because the palletising of the cargo had been carried out by a third party after the transit had commenced, it meant that the exclusion could not be invoked under 2009 Institute Cargo Clauses and the claim was deemed to be recoverable in terms of the policy.
