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MARITIME LAW – SOYBEANS, SALVAGE SALES AND SUIT RIGHTS: COURT CLARIFIES CARGO DAMAGE RECOVERY

1. Summary and Facts

AMS Ameropa Marketing and Sales AG and Another v Ocean Unity Navigation Inc (The “Doric Valour”) 1 Lloyd’s Rep 389 concerns a dispute over an alleged breach of duty between Ocean Unity Navigation, the owner of the vessel (Defendant), and Ameropa, the first claimant. Ameropa was the assignee of Oil Multiseed Extraction Co. (Oilex), the lawful holder of the bill of lading. The second claimant was the insurance company for the cargo. The vessel transported a cargo of 50,000 metric tons of yellow soybeans from Louisiana to Egypt. However, upon delivery, some of the soybeans were found to be damaged. The first claimant, as assignee, and the second claimant, as insurer, brought claims against Ocean Unity Navigation seeking to recover damages. They alleged that the damage was caused by the defendant’s breach of duty as the vessel’s owner. The owner disputed the claimants’ right to sue and argued that the amount claimed was inadequately proven.

2. Legal Issues

• Whether the claimants had the right to sue the defendant.
• Whether the 1st claimant as the assignee was entitled to recover the damages.
• Whether the salvage sale of the rejected cargo was solely because of the defendant’s breach.
• Whether the damages claimed by the claimant was adequately proven.

3. Court’s Findings

• The UK Commercial Court held that the insurer had no right of suit, but AMS Ameropa, as Oilex’s assignee, had title to sue.
• The 1st claimant was entitled to recover the loss as the assignee as the claim for breach by carrier was provided under the contract of carriage.
• The cargo interests acted reasonably in concluding the salvage sale of the rejected cargo, as this step was taken in response to the defendant’s breach. The rejected cargo included beans that had been heat-damaged as a result of the vessel’s condition.
• Damages were measured by the difference between the sound CIF invoice value and the salvage value achieved. The court awarded US$293,755.10.
• Ancillary costs (survey, warehousing, trucking) were rejected for lack of proof that Oilex incurred them.

4. Practical Implications

• Bill of lading holders or assignees may recover full damages, even where recovery has been made under the sale contract.
• Reasonable commercial salvage sales will be upheld as mitigation, provided they are a pragmatic response to cargo damage.
• Carriers face a high burden in alleging failure to mitigate, as courts adopt a practical and realistic approach.
• Damages focus on value differential between sound and actual cargo; ancillary costs must be proven as incurred by the cargo owner.

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