By a contract of 28 July 1999, SHB France (“the Seller”) sold to Charaf Corp (“the Cargo Owner”) a cargo of fertiliser (“the Cargo”), which was insured with Axa assurances Maroc (“the Insurer”).

By a charterparty of 19 August 1999, the Seller chartered the Vessel Junior M (“the Vessel”) owned by Mahoney Shipping (“the Shipowner”) and classified by the Lloyd’s Register of Shipping (“the Classification Society”) to transport the Cargo from St Petersburg in Russia to Jorf Lasfar in Morocco.

On 20 September 1999, the Shipowner issued the bill of lading and the Vessel left St Petersburg with an overload and a freeboard exceedance.

During the voyage, the Vessel encountered adverse sailing conditions and had to take refuge, first in Saint-Malo, then in Brest following the flooding of its hold. The Vessel was then detained by the French Administration due to serious structural deficiencies.

On 27 November 1999, the Vessel was declared abandoned by the Shipowner and part of the Cargo was assigned within the framework of a salvage sale.

The Cargo Owner and the Insurer initiated proceedings against both the Shipowner and the Classification Society for an expert determination as to relevant events and compensation for the loss of the Cargo.

The expert appointed by the court found that the damage to the Cargo resulted from structural deficiencies affecting the ballast and the bottom shell of the Vessel leading to the flooding of its hold. The expert concluded that the Shipowner knew that the Vessel was not in condition to transport the Cargo. The expert added that the Classification Society conducted surveys of the Vessel in 1998 and 1999, during which the planking and the ballasts were inspected.

The Shipowner invoked an excepted cause from its strict liability under the Hague Rules, Arts III and IV. The Shipowner argued that due diligence had been performed to make the ship seaworthy before the voyage and that the damage arose from the difficult