Manufacturer-shipper Liable for Containership Loss

Monday, October 24, 2005
In a high visibility (but not precedent setting) case, a company that both manufactured a chemical product and was the shipper of the product was held liable for loss of the container ship and the other cargo that the ship carried. The court found that the containership caught fire and became a constructive total loss after a container holding 120 drums (300 pounds each) of calcium hypochlorite spontaneously ignited. The ship owner and operator and numerous cargo interests sued the manufacturer-shipper, alleging strict product liability, failure to warn, and negligence. Regarding product liability, the court held that, while the manufacturer did not have actual knowledge of the full extent of the danger presented by shipping this particular cargo in this particular manner, it was in a better position than the carrier to ascertain ahead of time the true nature of the shipped goods. The court found that manufacturers have a duty to warn of dangers that are known or should be known through the exercise of reasonable diligence. The court also found that previous incidents involving shipment of this product and published reports should have caused the manufacturer to further investigate the risks of transporting the product in this particular manner, although the shipment was in accord with the basic requirements of the IMDG Code as of the time of the shipment. Note: the IMDG Code has been amended since this incident. In re M/V DG HARMONY, No. 98-Civ-8394 (S.D.N.Y., October 18, 2005).
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