Commercial Law

International Harvester Company in Russia vs Hamburg-American Line

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G.R. No. L-11515 – 42 Phil. 845 – Mercantile Law – Law on Transportation – General Averages – Stranding by Reason of War

The International Harvester Company in Russia (IHCR), an American Company, contracted the Hamburg-American Line (HAL) to transport 852 crates of agricultural machinery from Baltimore, Maryland (USA) to Hamburg, Germany, and that after it reached Hamburg, the crates were to be delivered, at the order of the consignor, to Vladivostok, Russia. The crates were delivered via the vessel Bulgaria to Hamburg, at the expense of HAL. It was transferred to the German ship Suevia to resume journey from Hamburg to Russia. During Suevia’s journey, war broke out between Russia and Germany. Suevia’s captain ordered the ship to be placed on neutral ground, which happened to be the nearest port of Manila. IHCR demanded HAL to continue the journey by transferring the cargoes to a non-German ship (as agreed upon in the Bill of Lading in case of war). HAL declined. IHCR sued HAL in Manila. RTC Manila issued a writ of replevin hence IHCR recovered its cargoes, it then contracted a separate ship to continue the transport. HAL claimed that IHCR is liable for general averages for the expenses of the Suevia while at the port of Manila. IHCR claimed that HAL is liable for the expenses incurred by IHCR in contracting a different shipping line.

ISSUE: Whether or not IHCR is liable for general averages.

HELD: No. The cargoes were not contraband and are not in danger at war. Suevia’s captain merely thought about the safety of the ship, not of the cargos hence there is no common benefit here between the ship and the cargo; therefore, general averages does not exist. HAL is liable for the expenses incurred by IHCR in contracting a different shipper. By the terms of the contract of affreightment HAL was bound to forward the cargo to Vladivostok at the steamer’s expense, not necessarily by a steamer belonging to HAL; and it does not by any means follow that it is not liable for the expense incurred by IHCR in completing the unfinished portion of the voyage in another ship.

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