How We Negotiated Settlement of Difficult Marine Cargo Claim

The phone rang. “Hello, this is John. Our 20’ FCL reefer container of Assorted Milk Products arrived yesterday from Durban. The contents are badly damaged. Please send Surveyor to inspect damage at our haulier’s warehouse. This is URGENT “. That anxious call came three years ago from our wholesaler client. They were expecting the shipment to meet their retailers’ Lunar New Year orders. We immediately arranged with Insurers to survey the damage in preparation for the impending marine cargo claim.

Marine Cargo Claim

Surveyor noted that the external condition of the container was apparently in good condition during the inspection. However, he found a substantial number of trays, cases, cartons and boxes of Assorted Milk Products dented and deformed in varying degrees, with leakage in some of them. They had toppled from within the reefer container.

The Surveyor studied the stowage of the Assorted Milk Products and nature of damage. He concluded that it was inadequate to prevent the stowage from collapse and reported his findings accordingly to Insurers. Based on the findings, Insurers refused to accept liability of our client’s marine cargo claim for the damaged Assorted Milk Products.

We informed John of the Insurer’s decision. Understandably, John was disappointed. However, we told him we intended to challenge the decision.

Consultation on How to Build the Case for the Marine Cargo Claim

But, first, we advised John to serve notice of claim against the Seller for the damaged Assorted Milk Products using the Surveyor’s report as evidence of damage to preserve their legal rights of recovery. John did so.

On our advice, John gathered evidence that the Assorted Milk Products were properly stowed according to customary trade standards and practice. This is important to rebut the Surveyor’s opinion that stowage was inadequate. As it turned out, the Seller did issue an Export Certificate cum Packing/Stowage List together with other negotiable documents. John forwarded us a copy.

Meeting the Insurer to Discuss the Claim

We then met up with Insurer to discuss our client’s marine cargo claim. Initially, the Insurer reiterated emphatically that the marine cargo claim was inadmissible as “inadequate stowage” was a policy exclusion. We disagreed and submitted the Seller’s Export Certificate. This certified that the Assorted Milk Products were properly packed and stowed in conformity with standard stowage specifications and robustness. On the basis of this certification, we argued it was conceivable and indeed reasonable to assume that damage most likely occurred during loading or unloading. It could also have occurred during land transit due to rough handling and transit risks. The vessel might have encountered rough seas at some stage of ocean transit, resulting in the damage. In other words, the damage resulted from a fortuitous event which was covered under the policy.

To back up our contention, we pointed out that in all their past shipments of similar packing and stowage, our client did not suffer damage. It was therefore unsafe for the Surveyor to conclude that stowage was inadequate. There was simply no precedent.

We further told Insurers the Seller is an established and reputable company. They have been in the dairy products business for many years and have a reputation of ensuring that its products are properly packed and stowed to arrive at destination in sound condition barring any fortuitous loss event.

Under the circumstances, we requested Insurers to reconsider their position and settle our client’s claim. Insurers listened attentively to our arguments and, in the end, told us they would review our case with their Surveyor.

The Successful Settlement of the Marine Cargo Claim

The next day, Insurers called. Good news! After careful consideration, they were prepared to settle the claim but without prejudice on an ex-gratia basis. We broke the good news to John. He was delighted with the outcome!

A few days later, we collected a cheque in excess of $20,000 from Insurers. We called John to inform him that we were on the way to hand it to him. On arrival, John greeted us with a big smile and warm handshake. “Well done. Thank you very much” he said happily.

Those sweet words of appreciation touched us considerably and brought us immense satisfaction at the thought that we succeeded in negotiating full settlement for John despite the odds.

Our persistent efforts and determination paid off and these characteristics will continue to define the high standards that we place on client servicing. That is our commitment to our clients.

If you have a marine cargo claim or insurance requirement or would like to know more about the subject, call Edmund (Tel 6797 9249) or email us at