Fire exemption for ocean carriers in the international logistics industry

One of the important circumstances under which ocean carriers are exempt from liability for cargo loss or damage is fire exemption. It means that the carrier is not liable for the loss or damage of goods caused by a fire during the period of responsibility, except for those caused by the carrier's own fault. 

The scope of fire exemption is broad, and it includes cargo damage related to fire in terms of burning, firefighting, and cleaning processes. Examples include loss due to the immersion of goods caused by firefighting liquid and damage caused by smoke. These losses are exempted when they are caused by a fire. The fire exemption provision for ocean carriers is stated in Article 51, Paragraph 2 of the Maritime Law. To analyze the issue of fire exemption for ocean carriers, it can be approached from the following two aspects:

1.Exceptions to fire exemption

Article 51 of China's Maritime Law clearly defines the exceptions to fire exemption for ocean carriers as "those caused by the carrier's own fault." "Carrier's own fault" has a distinct difference from the fault mentioned in the preceding paragraph, which refers to the faults committed by the captain, crew, pilot, and the carrier's agents.

The former can be understood as the carrier's own fault or misconduct, including intentionally or negligently causing a ship fire. This includes situations where the carrier fails to ensure the seaworthiness of the vessel before or at the time of departure, fails to fulfill its obligation to properly handle the cargo, or even deliberately instructs and manipulates the captain, crew, pilot, and the carrier's agents to damage or set fire to the vessel for personal gain, resulting in a ship fire and loss of goods. In such cases, the carrier cannot invoke Article 51, Paragraph 2 of the Maritime Law for exemption. 

As for the faults committed by the captain, crew, pilot, and the carrier's agents, they are limited to the negligence in operating and managing the vessel, which are different entities from the carrier itself (employer) and should be treated separately.

2.Burden of proof for fire exemption

According to Article 51 of the Maritime Law, the carrier's claim for fire exemption is direct, and if the cargo owner wants to invoke the exceptions to fire exemption for ocean carriers, they need to bear the burden of proof, which is particularly heavy for the freight forwarder who acts as the shipper compared to the actual carrier.

n the case of China People's Insurance Company Shanghai Branch v. COSCO Shipping Co., Ltd., the vessel "Hanjin Pennsylvania" operated by COSCO Shipping caught fire in the waters of Sri Lanka. COSCO Shipping invoked Article 51, Paragraph 2 of the Maritime Law (fire) to claim exemption from liability. 

The court held that the cargo damage in this case was caused by the sudden explosion and fire on the vessel, and the carrier enjoyed the right of exemption. The plaintiff failed to provide evidence proving that the explosion and fire on the vessel were caused by COSCO Shipping's fault. Therefore, COSCO Shipping was not liable for compensation in this case. Based on this, if the cargo owner wants the carrier to bear the compensation for cargo damage caused by a fire, they need to actively collect and grasp key evidence.

In practice, lawyers often take a different approach in defending against fire exemption claims. In addition to focusing on the cause of the fire, they also pay attention to whether the carrier can be proven to have fault. If the cargo owner can provide evidence of the carrier's fault, even if the ship fire was caused by an accident or force majeure, there is still a probability of winning the case. 

For example, in the case of "the Eurasian Dream," the court stated that, "Although the ship caught fire due to an accident, the crew did not possess the necessary qualifications and training, and failed to take effective measures to prevent the escalation of damage when in distress. In this case, the carrier still had fault and cannot claim fire exemption."