The Cherry Express

1. The Cherry Express was in the news in the early party of this year (2025). This loss is related to damage to cargoes of Chilean Fruit (perishable cargo in reefers) loaded in Maersk Saltoroⁱ and which became adrift for 23 days due to a breakdown of her main engine enroute to her next port of call at China. Because of the delay, the Cherries became spoilt and were rejected and destroyedⁱⁱ. This service is known as The Cherry Express is due to the quick carriage of Cherries and other fresh produce during the season in refrigerated containers (which usually take 20 to 25 days from Chile to China).
2. We understand that Owners have established a shipowners limitation fund in Chile and which is for a sum of USD 16.4 Million. Given that the cargo losses are estimated to exceed USD 150 million, cargo interests have decided to deny the Owners entitlement to limit liability by initiating an action in the Chilean Court at Valapariso. Having seen a spate of Limitation challengesⁱⁱⁱ in the recent past, this action caught our eye given that the other actions for denying limitation were generally for other claims and not specifically for cargo.
3. Chile is a civil law country and with its legal literature in Spanish. Given that we are limited in our language skills, particularly with respect to Spanish, we reached out to Carmen Quevedo, a practicing Peruvian Lawyer^iv to assist us in our research. Incidentally, Carmen is also an alumnus of International Maritime Transport Academy^v, The Netherlands.
4. Chile is a Hamburg Convention signatory and has implemented it in their domestic laws with certain changes^vi. The Hamburg Rules do not have a litany of exceptions and instead provide for the Carrier to be liable for the loss or damage to the goods (including delay) if the occurrence that caused the loss occurred whilst the goods were in their charge unless they (Carrier) could prove that they (including their servants and agents) took all measures to avoid the consequences of the loss. Article 25 of the Hamburg Rules also preserves the right of Carriers to the defenses available under other conventions, such as the Shipowners Limitation Convention^vii.
5. While Chile has neither ratified nor acceded to the 1976 Limitation Convention, Chilean domestic law has incorporated provisions of this (1976) convention such that Carriers are entitled to limit liability. Cargo interests are obviously not happy given that the recovery against the limitation fund would be less than a tenth of their actual loss suffered and have challenged Owner’s entitlement to limit liability as provided in Art 1222 of the Commercial Code i.e. the legal requirements for exercising this benefit (limitation of liability) is not met.
6. Carmen comments that
   1. The case is before the Chilean Constitutional Court, pursuant to Art 20 of the Chilean Constitution to prevent the application of four article being the liability limits, benefits for shipowners and insurers, employee and the restriction of claims to the limitation fund. The argument made is that the limitation of liability infringes the property rights given that it is disproportionate.
   2. This is even though Art 1222 of the Chilean Commercial Code allows for a party to challenge Owner entitlement to create a fund to deal with their liabilities.
7. While it is understandable that the cargo interests would wish to recover their losses, the question would be whether such losses were ever contemplated by the Carriers and the effect should they be held liable. We take each of this in turn.
   1. Maersk Saltoro appears to be entered with Britannia Steamship Insurance Association Ltd, one of the 12 P&I Mutuals insuring the liability risks of Owners including cargo liability. Clause 46.1 of the Britannia P&I Rules provide for the application of English Law, and which would result in the application of the English Marine Insurance Act 1906 (“MIA 1906”). S 55(2)(b) of the MIA 1906 states that unless the policy provides otherwise, insurers are not liable for any loss caused by delay. This being the case, if the cargo was insured under English policies, unless the policy expressly provides cover, there would be no cover available to deal with the loss as arguably this would be a delay claim. However, the cover provided by P&I Insurers is for cargo liability (amongst others), and which is a derived liability and not due to the “delay”. Accordingly, it is our understanding that the P&I policy will respond to this claim.
   2. Given that such losses are far and few and under normal circumstances, the contract of carriage would have provided for the application of the Hague/ Hague Visby Rules (“HV”), we submit that
      1. Maersk would be entitled to exclude liability subject to satisfying Art III R1(exercise due diligence) and R2 (continuous care of cargo). The provision in the Hamburg Rules provide for a different test and which is higher than that in the HV Rules i.e. on the basis of presumption of fault^viii unless the Carrier can prove that he took all reasonable measures to avoid the incident and its consequences. While there is a provision for limiting liability, given the increased amounts, this appears to be not of assistance in this incident^ix.
      2. The HV Rules do not have any provision for delay such that a Carrier is entitled to make specific provisions for claims arising out of delay. In this case, Clause 8.1 of the Maersk Bill of Lading terms entitles them to capp their exposure to the value of freight involved in the carriage of goods. Arguably, this Capp should be only for the delay and not the damage to the cargo per se.
8. The Shipowner’s limitation of liability conventions is meant to Capp the maximum exposures to Owners and thus allow them to purchase appropriate insurance cover. The 1976 Convention has provided for increased limits vis-à-vis the 1957 convention and is designed to be only breakable if it is proven that the loss arose from the personal act or omission, committed with intent to cause such a loss, or recklessly …On the other hand, if breaking limitation becomes common, the costs of insuring for Owners liability will increase such that this will in turn escalate the freights offered to the cargo interests.
9. The Chilean Constitutional Court’s Verdict when given, would indeed provide clarity on whether
   1. the Shipowners Liability provisions could be broken as argued by the cargo interests
   2. the prevailing cover together with the premium/calls charged by the liability insurers are sufficient to deal with the exposures.

^i. Both Maersk Saltoro and MV Dali are sister ships in that they have similar designs. MV Dali was in the news in March 2024 given that it had collided with and caused the collapse of Francis Scott Key Bridge in Baltimore.
^ii.See article on The Maersk Saltoro Incident and its impact on Marine Insurance by Alexander Eslava Sarmiento
^iii.See The Xpress Pearl and which is being litigated both at the UK and Sri Lanka and the MV Dali at USA.
^iv. She studied at the Catholic University and taught Maritime and Aeronautical Law at various universities and institutes in Peru. She was formerly the President at Foreign Trade and Transport Commissions of the Bar Association of Law and practices as a litigation attorney including assisting various P&I Insurers.
^v. We understand that IMTA/STC is now a part of STC Group. Ms Carmen and I studied together in 1998 and 1999. Fellow students were from various countries including South and Central America, Africa, Europe and Asia.
^vi. See Shipping Laws and Regulations Chile 2025 contributed by Leslie Tomasello Weitz
^vii. There are mainly two conventions namely the International Convention relating to the Limitation of Liability of Owners of Sea-Going Ships 1957 and Convention on Limitation of Liability for Maritime Claims 1976 (and its subsequent protocols). Also see an article on Limitation of Shipowners’ Liabilities – 1957 or 1976 Convention?
^viii. See Article 5 (1) of the Hamburg Rules
^ix. See Article 6(1) a and b of the Hamburg Rules.