On July 1, 2023, the International Longshore and Warehouse Union Canada, representing more than 7,000 of British Columbia’s port workers went on strike. These longshoremen are integral to the proper functioning of the ports and supply chains. Negotiations to end the strike are ongoing, but the economic toll is significant, will only grow the longer the strike continues, and could be continent-wide.
With this latest disruption to trade, cargo interests, carriers, and other industry stakeholders will need to consider the delays to the regular movement of cargo, and the consequences which arise. In British Columbia, as in all of Canada, the Hague-Visby Rules apply to the relationship between carriers and shippers. Amongst other things, Article 4 of the Rules provide that carriers will not be held liable for damages caused by “strikes or lock-outs or stoppage or restraint of labour from whatever cause, whether partial or general”. Article 4 rule 4 also sets out that any reasonable deviation “shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom.”
However, the carriers have the burden of proof to show that this exception applies to exculpate their liability. The factual circumstances are important to the raising of a successful defense on these grounds, and the question of whether the vessels should have deviated from their planned routes, or the reasonableness of the deviation, upon learning of the strike can be a central issue between shippers and carriers. Other efforts to mitigate potential damage to the cargo may also be scrutinized by cargo interests. Ultimately, decisions may need to be made in respect of all the cargo and not merely any one shipment.
Although strikes are, in many instances, held to be a reasonable cause of deviation, the reasonableness is a question of fact. Both shippers and carriers will probably want to be aware of any clauses dealing with deviation in the contract of carriage, and any other pertinent details such as the customary routes taken by the line in the past, notices and publicity about the strike, and the availability of alternate ports. It should be borne in mind that an unreasonable deviation places the carrier at risk of being deprived of the rights and defenses found in the Rules, including the time bar.
Cargo interests should also be alive to the choice of affirming or terminating the contract after learning about an unreasonable deviation, as the decision may be consequential on the ability of the carrier to rely on the rights and defenses. Finally, shippers and cargo insurers may consider whether the cargo insurance policy excludes coverage in the circumstances of delays or strikes.
If you have any questions about navigating the port strikes, please contact David Fung or Kim Wigmore of Whitelaw Twining’s Transportation Group.