Web Alert: Hazards associated with the transport of lithium-ion batteries

Lithium-ion batteries and fires

Following recent media attention surrounding the incidents of self–ignition of lithium-ion batteries used in the Samsung Galaxy Note 7 and the product recall, the club has received a number of queries in respect of best practices concerning the safe carriage of such batteries as well as issues of club cover arising from carriage of the batteries as cargo onboard members’ vessels.

A possible cause for the self-ignition of the batteries may be the defective and/or damaged circuitry within the batteries which could cause them to discharge rapidly, to overheat, ignite and ultimately to explode.

The exposure to members arising from carriage of these batteries is potentially wide and includes claims in respect of damage to cargo and hull by fire, personal injury, deviation, storage and disposal costs, pollution, salvage or even wreck removal. A web-alert is therefore timely to address some of the issues.

IMDG Code

Lithium-Ion batteries are classified as Class 9 goods (under UN numbers 3480 and 3481) in the International Maritime Dangerous Goods (IMDG) Code due to the dual hazard properties associated with their chemical and electrical content:

• UN 3480: Lithium-Ion Batteries
• UN 3481: Lithium-Ion Batteries contained in equipment or packed with equipment

The IMDG Code expressly cautions that ‘electrical lithium batteries may cause fire due to an explosive rupture of the body caused by improper construction or reaction with contaminants’.

Pursuant to the IMDG Code, the shipper is obliged to furnish the vessel with a completed Dangerous Good (DG) cargo declaration.

Additionally, each vessel has a Document of Compliance (DOC) for dangerous cargo which indicates where the batteries can be safely stowed on board. To ensure full compliance during a particular voyage, the classification, packaging and stowage of dangerous goods is governed by laws of the flag state, the countries of the load and discharge ports as well as the laws of any country which the vessel enters while in transit.

Members agreeing to carry this cargo are recommended to comply with the following additional precautions:

• Container inspection (for sealed and unsealed packages) be carried out to ensure conformance with the instructions (P903, P908, P909, LP903 and LP904) of the IMDG Code; and
• In the case of used and recalled batteries being shipped, to obtain confirmation in writing from the shippers that the batteries have been discharged to 0% before shipment.

Basel Convention on the Control of Trans-boundary Movements of Hazardous Wastes and their Disposal (Basel Convention)

Used batteries may also be considered as hazardous waste. The shipper is obliged to provide a written declaration to the carrier if in fact the batteries are not considered waste, failing which the carrier runs the risk of the batteries being treated as ‘waste cargo’ pursuant to the guidelines set out in the Basel Convention. The consequence of this may include the batteries being rejected at the discharge port because the cargo was mis-declared. 

In such cases, it is not unusual to hear of the shipper/consignee abandoning the cargo and leaving the carrier to bear the storage and disposal costs. Usually, returning the cargo to the load port is not a practical or commercially viable option for the carrier.

We therefore recommend that the members insist that the shipper provides evidence of written consent from the authorities in the place of export, import and transit in accordance with the provisions of the Basel Convention before agreeing to carry the batteries.

Indemnity

Most contracts of carriage evidenced by the bills of lading provide for some form of indemnity in favour of the carrier in respect of the carriage of dangerous cargo. The member should review and ensure strict compliance with the provisions of the indemnity clause when agreeing to carry the batteries in order not to waive or compromise its rights of recourse against the cargo interests by way of the indemnity. Alternatively, if the member has sufficient commercial bargaining power, it may insist on provision of security by way of a bank guarantee or letter of indemnity from a creditworthy charterer/ shipper or consignee.

Club cover

Provided that carriage of the batteries complies with all of the above mentioned requirements imposed by the applicable law(s) and international conventions, club cover remains in place. Conversely, the member’s failure to comply with the provisions of the applicable regimes and the guidelines may compromise member’s cover pursuant to Rule 4.8 of the Club Rules:

‘…No claim is recoverable… if the board determines that the carriage, trade, voyage or operation was imprudent, unsafe, unduly hazardous or improper…’.

Additionally, a carrier’s failure to adhere to the requirements of the applicable regimes may be regarded as ‘actual fault and privity’ on the part of the carrier or ‘fault or negligence by its agents or servants’ with the consequence that the member may be disentitled from relying upon its defences at law against a claim by cargo interests: see for example Hague and Hague-Visby Rules at Articles IV, rule 2 (b) and (q).

Category: Cargo