12-34-56-78 Chekhov v. State of Israel, P.D. 51 (2)9. The samples taken by the plaintiff's appraiser were sent for laboratory testing at the Israel Institute of Energy and the Environment - The chemical laboratory (Appendix 6 to the plaintiff's affidavit). The results of the test show that the oil was clear but contained particles. There is no determination regarding the identification of the particles.
The Proceedings
- On June 7, 2021, the plaintiff filed the original claim addendum in the case, along with a request to arrest the ship. In the addendum to the claim, the plaintiff petitioned to oblige the ship to compensate it in the full value of the cargo, in the sum of $4,899,261 (paragraph 6.2 of the original statement of claim). The statement of claim claims that the entire cargo of oil is contaminated and unfit for use.
- On the same day, a warrant was issued for the ship's arrest. Since the ship and its owners claimed that the plaintiff was not unloading the cargo and causing the delay of the voyage and losses, a hearing was scheduled before the Honorable Judge Y. Cohen.
- In order to promote the unloading of cargo, the shipowner has available a filtration system from the Netherlands, in order to allow the separation of particles from the oil. In light of this and in order to enable the discharge, the court ordered that the detention order be left in place and an additional hearing was scheduled (decision of June 15, 2021).
- On July 15, 2021, the unloading of the cargo began using the filtration system, and on July 25, 2021, the unloading was completed (see the Seidenberg Report, paragraphs 13, 16-18, and the Appraiser's Tal Report, paragraphs 9-12). The appraisers on behalf of the parties were present when the cargo was unloaded through the filtration system and confirmed that the unloaded cargo remained clear (ibid.).
Following the unloading of the cargo, the parties reached an agreement on the release of the ship from its detention, and on the deposit of a reporter Commitment (LOU) of the Indemnity Club (the Club).
- It was also reported that upon completion of the unloading, the filters (52 units) were divided into 4 packages, each of which 13 Filters. One package was left on the ship, a second was delivered to the ship's insurers, a third was given to appraisers on behalf of the ship's insurer, and the last was delivered to the plaintiff. 7 filters sent with consent to the laboratory Dixie services laboratory from Houston, United States (hereinafter: Dixie Lab). The material found in the filters was examined and on September 10, 2021, the laboratory report was written (Appendix 1.9 to the plaintiff's affidavit). According to the plaintiff, the examination revealed that the contaminating particles included an orange/red substance, which corresponds to a mixture of salt (sodium chloride) and rust (paragraph 17.3 of M. Tal's opinion, Appendix 2 to the plaintiff's exhibits) as well as wax particles (see also an email message dated September 2, 2021 sent by the appraiser Max Grossey, p. 84 of the appendices to the affidavit of K. Zatlawi).
Copied from Nevo15. It was also reported that on June 24, 2021, i.e., before the unloading of the cargo was completed, the ship's owner submitted a request for the establishment of a "limitation fund". The application was based on a provision Article 13 to the Shipping Law (Limitation of Liability of Vessel Owners), 5725 - 1965. In accordance with the 1957 Brussels Act and Convention, adopted therein, the shipowner sought to limit its liability to $552,691 (Article 10(f) of Application No. 4).
- Before the request for the establishment of a limitation fund was discussed, and after the unloading of the cargo was completed, the plaintiff filed a motion to amend the claim addendum (Request No. 13 of September 29, 2021). The motion argues that in light of the findings of the laboratory report and the unloading of the cargo, there is a need to amend and adapt the claim to the new situation. After several extensions, on January 17, 2022, the amended claim addendum was filed, which is the claim addendum that is now being decided.
- In the addition of the amended claim, it was claimed that the contamination of the oils was caused after loading and as a result of the liability of the ship and its owners. It was further claimed that as a result of the contamination of the oils, the plaintiff was forced to sell them at a lower price.
- The plaintiff based her claim on the opinion of the appraiser M. Tal. According to the plaintiff, she was forced to sell the contaminated oil cargo, which was unloaded on June 2, 2021, before the particles were discovered, for a total of ILS 0.085 per liter. Since 120,000 liters were discharged in this initial discharge, the consideration was only ILS 10,200. The remaining oils that were discharged after filtration (hereinafter referred to: The Filtered Oil Cargo), sold for a total of ILS 2,435 per liter, and in total sold the oils for a total of ILS 14,882,607. The plaintiff claimed that she purchased the oils for the sum of ILS 16,164,625, and bore expenses in the sum of ILS 909,540, and in total paid for the oils the sum of ILS 17,074,165. As a result, it suffered a loss of ILS 2,191,558. In light of all the above, the statement of claim was amended and the amount of the loss was set only.
- It is already worth mentioning here that after the submission of the supplement claim, the plaintiff received from the cargo insurer the sum of $115,000 (notice dated September 2, 2024), and according to the dollar exchange rate at the time of the notice, the remaining claim amount is ILS 1,771,838.
- Taking into account the amendment of the claim addendum and placing the claim on the amount of the alleged loss only, the parties agreed to delete the application for the establishment of a limitation fund. The Indemnity Club's Letter of Commitment (LOU) has been reduced and placed on the amended claim amount plus expenses, if they are awarded.
It was also reported that attempts to reach an understanding, including by way of mediation or consolidation of the claim with the claim filed against the cargo insurer in the Magistrate's Court, were unsuccessful.
- In the absence of agreements, the parties were given the opportunity to submit affidavits of the main witness, including an opinion. After submitting the affidavits and opinions, the parties reached an agreement that the disputes would be resolved without the need to cross-examine the witnesses. Accordingly, the parties submitted summaries of the arguments and now the time has come for a decision.
The Questions in Dispute
- Since we are dealing with a Hefetza lawsuit in the Maritime Court, the defendants were not obligated to file a statement of defense and they were satisfied with submitting a reminder to register a performance. Therefore, the agreed facts and disputes can be learned from the affidavits of the witnesses and the summaries of the claiMs.
- From the arguments of the parties, it can be concluded that there is no dispute that when the cargo of oils arrived at the port of Ashdod and at the beginning of unloading, unidentified particles were found in the oils. There is also no dispute that at the end of the unloading of the oils through the filtration system, particles were found that were sent for laboratory testing in the United States, and that these particles included a mixture of salt, rust and other substances whose identity is not agreed.
- The parties disagree as to the source of the particles found in the cargo. According to the plaintiff, the oils were loaded on the ship clean and clear, and therefore the conclusion is necessary that the source of the contaminated particles is on the ship. The plaintiff is of the opinion, according to the opinions submitted, that the source of the particles is in a previous cargo that was transported on the ship, or in the ship's warehouses themselves. On the other hand, the defendants are of the opinion that the source of the particles found is in storage on the beach prior to loading or in the pipes for loading the cargo.
- The parties also disagree on the question of the burden of proof. While the plaintiff is of the opinion that since particles were found in the cargo at the time of unloading, and taking into account that no reservations were recorded in the bills of lading, the defendants have the burden of proving the source of the particles, and since this burden has not been lifted, they are responsible for compensating it. The defendants, on the other hand, claim that the burden of proving that the source of the particles is on the ship and the handling of the cargo during the voyage rests on the plaintiff's shoulders. The defendants claim that according to law and law, the plaintiff must prove that the cargo was delivered to the ship in good condition and without any damage. According to them, the plaintiff failed to do so, and therefore her claim should be dismissed.
- The defendants also claim that even if it is determined that the source of the particles is in the ship's warehouses, they are legally exempt from compensating the plaintiff. It was argued that according to the Hague Rules (the International Convention on the Unification of certain regulations regarding bills of lading made in Brussels on 25 August 1924), and the Hague-Visby Rules (the Protocol made in Brussels on 23 February 1968 to amend the 1924 Convention) adopted inTransportation of Goods by Sea Ordinance, the sea carrier is exempt from its liability for damage to the cargo, if it has done everything necessary to adapt the vessel to travel and transport the cargo. The defendants claim that the conditions for exemption from liability were met, since they acted as required to adapt the ship and prepare the warehouses for transporting the cargo of oils.
- The parties also disagree on the question of whether the plaintiff suffered claimable damage. While the plaintiff claims that she was forced to sell the oils at a reduced price, the defendants claim that it has not been proven that the price of the oil sold was affected by the claims regarding the contamination. The defendants emphasize that after the filtration, the oils were normal and clear, and therefore there is no connection between the particles found in the discharge and the consideration that the plaintiff received from the sale of the oils. The parties also disagree on additional sub-issues that I will address in the framework of the decision.
Discussion and Decision
- As will be detailed below, I have come to the conclusion that The claim must be accepted only partiallyand to obligate the defendants to compensate the plaintiff in the sum of ILS 315,000 only.
I was persuaded that the source of the particles found in the cargo was on the ship, and I found that the defendants were not exempt from liability for the damage caused. However not I am persuaded that the consideration paid to the plaintiff for the filtered oil cargo was affected by the fact that particles were found in the oil prior to unloading. However, I was convinced that the value for The contaminated oil load that was unloaded before filtration was affected by the contaminationand therefore the plaintiff is entitled to compensation for the loss caused to her for this cargo.
- The plaintiff filed a "Hefza" claim against the ship for compensation for damage caused to the cargo. The claim was filed in accordance with the jurisdiction vested in the Maritime Court under section 6 of the Admiralty Act of 1861, and in accordance with the Section 41(7) of the Shipping (Vessels) Law, 5720 - 1960, which recognizes a maritime lien for damage caused to cargo transported on a ship.
It should be noted that according to Halacha, "damage to cargo" also includes indirect damages, including losses due to delay, costs of replacement cargo, decrease in price, etc. (see Civil Appeal 296/71 The ship "Mitra Asimina" and its owner vs. "Halfour" Ltd., IsrSC 25(2) 632 (1971)).
- The first question that must be decided is whether the "damage to the cargo", i.e., the presence of polluting particles in the oils, occurred during sea transportation, and was the responsibility of the sea carrier.
- Conditional Sea transport, including the division of responsibility for cargo between the various parties involved in its carriage, the provisions of the agreements between the parties, including the provisions in the bills of lading, as well as the provisions of the law, led by the Hague and Visby Rules adopted into Israeli law in theTransportation of Goods by Sea Ordinance.
- It should be clarified that in 1924, the International Convention for the Unification of Regulations Relating to Bills of Lading was signed in Brussels, which was intended to bring about the unification of the law with regard to the legal relations between maritime carriers and those in need of their services. This treaty is recognized as the "Hague Tool". In 1968, a protocol to amend the treaty (the Visby Protocol) was drafted in Brussels, following which the rules known as the Hague-Visby Rules were anchored (see Civil Appeal 8205/16 Contrastock OY v. The Ship Thor Horizon, paragraph 8 (25/1/2018); Civil Appeal Authority 7195/18 Feyha Maritime Ltd N. Milobar Central Institute of Blends Ltd., paragraph 7 (12/5/2019)). The original convention was adopted in the Carriage of Goods by Sea Ordinance of 1926. In 1992, the Hague-Visby Rules were adopted in the Ordinance (Addendum) and the name was changed toTransportation of Goods by Sea Ordinance.
- As you can see from the instructions Transportation of Goods by Sea Ordinance, their purpose is to apply to the transportation of goods according to bills of lading. Thus In section 2 The Ordinance states that "Subject to other provisions in the Ordinance, the Regulations shall apply to any bill of lading regarding the carriage of goods by sea on any vessel [...]". The regulations (The Hague-Visby Rules) deal mainly with the relationship between the sea carrier and the parties to the bill of lading. The term "contract of carriage" is defined in the rules and states that "[...] applies only to contracts of carriage that are discussed in a bill of lading or any similar certificate of ownership to the extent that such a certificate relates to the carriage of goods by sea, including a bill of lading or any similar certificate [...]".
(See also Civil Appeal Authority 55481-09-24 maerks N' Gold Bond Group in Tax Appeal (5/5/2025); Civil Appeal Authority 7195/18 The above; Civil Appeal 6260/97 Polska Zegluga Morska N. Banque Nationale de Paris, New york, IsrSC 57(5) 193 (2003)).
- The Hague-Visby Rules define the duties of the sea carrier in transporting cargo and adapting the vessel To the Journey (Section VI detailed in the Addendum to the Goods Transport Ordinance). The rules also determine the scope of liability and the limits of liability and define the situations in which the sea carrier will be exempt from liability for the damage caused to the luggage. Section IV(1) The Rules deal with the liability of the carrier for damage caused as a result of the vessel being unfit to transport the cargo by sea, and instruct that the carrier shall be exempt from liability, If he acted as required to install the vessel and adapt it to transport the cargo. Section IV(2) The rules include a list of risks that will occur and cause damage For cargo, the sea carrier will be exempt from liability towards the cargo owner.
- According to the plaintiff, the cargo of oils was loaded onto the ship clean and without the polluting particles that were found on it at the time of unloading. The plaintiff relies on the laboratory tests carried out by Caleb Brett prior to shipment, and on the fact that the bills of lading delivered to the supplier did not contain any reservations of the ship. The plaintiff is of the opinion that the delivery of a "clean bill of lading", i.e., without reservation by the maritime carrier regarding the condition of the cargo, blocks the defendants' way from denying that the cargo was in good condition at the time of loading. The defendants also refer to the inscription on the bills of lading themselves where it is written that the cargo was delivered in good and proper condition "in apparent good order and condition".
- The defendants, on the other hand, claim that the plaintiff has the burden of proving that the cargo was not damaged before it was claimed. The defendants claim that the bill of lading stated that Ostensibly The cargo is in good condition according to its appearance, and the bill of lading clarifies that the quality and condition of the cargo are unknown. The defendants also refer to the captain's letter dated April 24, 2021, which includes a reservation about liability, since at that time quality certificates had not yet been received. The document addressed to Caleb Barrett's lab reads as follows:
I hold you responsible for any consequences arising from the events describe below […]