Balancing Responsibility Under The Bill Of Lading: Evergreen Marine (UK) Ltd v. Noel Cefai Et

Introduction

On 2 February 2026, the Maltese Court of Appeal delivered its judgment in Evergreen Marine (UK) Ltd v. Noel Cefai, acting on behalf of Green Care Trading. The judgment addressed several important issues in maritime law, particularly the scope of a shipper’s liability under a bill of lading, the interpretation of the term “Merchant” in standard shipping contracts, and the extent to which a carrier is required to mitigate its losses before seeking recovery from a shipper.

Facts of the Case

On 15 January 2013, Noel Cefai engaged the services of MBL Shipping Agency Limited, Evergreen’s local agent in Malta, to transport two containers of plastic scrap from Malta to the port of Xingang, China. The containers were shipped under a bill of lading and arrived in Xingang on 28 March 2013. However, the consignee, a Chinese entity, failed to collect the cargo. The consignee subsequently denied any knowledge of, or commercial relationship with, Green Care Trading.

As the containers remained uncollected at the port, Evergreen began incurring substantial demurrage and detention charges. The cargo was eventually destroyed in January 2017, approximately four years after its arrival in China. By 17 December 2014, Evergreen claimed to have incurred €101,006 in costs relating to demurrage, detention, and destruction expenses. Consequently, in May 2015, Evergreen instituted proceedings against Noel Cefai before the First Hall of the Civil Court in his capacity as shipper.

The Decision of the First Hall, Civil Court

1. The Definition of ‘Merchant’

   The First Court’s analysis centred on the interpretation of the term “Merchant” as defined in the bill of lading. Clause 1(9) broadly defined “Merchant” to include:

   “includes the shipper, Holder, consignee, the receiver of the Goods, any person owning or entitled to possession of the Goods or this Bill and anyone acting on behalf of any such persons.”

   Evergreen argued that Cefai, as the shipper, clearly fell within this definition and was therefore jointly and severally liable for all costs claimed. While the Court accepted that Cefai could, in principle, qualify as a “Merchant”, it drew an important distinction in relation to Clause 25 of the bill of lading, which regulated delivery, storage, and disposal obligations.

   The Court reasoned that, within the context of Clause 25, the term “Merchant” could only logically refer to the consignee, namely the party entitled and obliged to take delivery of the cargo. Since Cefai had arranged a telex release and no longer retained the ability to collect the cargo in China, the Court concluded that he could not be held liable for costs arising from the consignee’s failure to take delivery.

2. Telex Release

   The Court further observed that Cefai had arranged a telex release, which meant that once the cargo was shipped, he surrendered authority and title over the goods. From that point on, Cefai had no legal right to give instructions about or take decisions regarding the containers.

3. Evergreen’s failure to mitigate

More decisively, the First Court found that Evergreen had failed to mitigate its losses. Despite holding a maritime lien under Clause 15 and having the right to sell or destroy the cargo under Clause 25(3) of the bill of lading, Evergreen allowed charges to accumulate from March 2013 until the cargo’s destruction in January 2017. The Court found no satisfactory explanation for this prolonged delay and held that a carrier cannot permit damages to increase indefinitely before seeking to shift the entire burden onto the shipper.

Accordingly, the First Court dismissed Evergreen’s claims in their entirety and ordered costs against the plaintiff, holding that although there may have been a contractual basis to pursue Cefai, Evergreen’s failure to mitigate its losses proved fatal to its claim.

The Decision of the Court of Appeal

A. Grounds of Appeal

Evergreen raised three grounds of appeal, namely that:

1. Cefai fell within the definition of “Merchant” under the Bill of Lading;
2. as “Merchant”, Cefai was contractually liable for all the costs claimed; and
3. the First Court was wrong to dismiss the claims on the basis that Evergreen had failed to mitigate its losses

B. The Binding Force of the Bill of Lading

The Court of Appeal reaffirmed that a bill of lading, like any other commercial contract, is governed by the principle of pacta sunt servanda. Referring to Article 325 of the Commercial Code and established jurisprudence, the Court held that the terms of a bill of lading constitute strong, albeit rebuttable, evidence between parties interested in the cargo.

C. Definition of ‘Merchant’

The Court of Appeal disagreed with the First Court’s narrow reading of the term ‘Merchant’.

Cefai himself had repeatedly and unequivocally admitted in his own pleadings and in his sworn affidavit that he was the true shipper of the containers. He acknowledged that he personally arranged and paid for the shipment, contacted shipping lines for quotes, confirmed the order, and even had his conduct checked as an exporter before the containers were released to him.

Although Cefai’s name did not appear on the face of the Bill of Lading, where “FMS Seaways AG C/O Canusa Hershman Recycling Company” were listed as shipper/exporter, the Court stated that based on Cefai’s statements, such companies had nothing to do with the cargo and it was Cefai who was the actual shipper. Furthermore, both FMS Seaways AG and Canusa Hershman Recycling Company formally denied any involvement in the shipment.

Invoking Article 693 of the Code of Organisation and Civil Procedure, which provides that admissions of fact may be used as evidence against the party making them, the Court treated Cefai as the true shipper for all purposes of the bill of lading. On the basis of the broad definition in Clause 1(9) and the joint and several liability imposed by Clause 14(4), the Court concluded that Cefai qualified as a “Merchant” and was therefore contractually liable for the charges claimed.

D. Telex Release

The Court also dismissed the telex release argument as irrelevant. Cefai’s liability did not arise from any subsequent act or omission on his part, but rather from the contractual obligations he voluntarily assumed under Clause 14(4) upon accepting the terms of the bill of lading. The Court further noted that Cefai had personally approved the final version of the bill of lading and, as an experienced international scrap exporter since 2009, could not plausibly claim ignorance of its implications.

E. Evergreen’s duty to mitigate

The Court of Appeal adopted a more nuanced approach with respect to mitigation, partially agreeing with the reasoning of the First Court.

It confirmed that the duty to mitigate damages is a well-established principle in Maltese law, applicable to both contractual and delictual claims, and that courts may apply the principle ex officio, even in the absence of a specific plea by the defendant. Nevertheless, the Court disagreed that Evergreen’s conduct amounted to a failure to mitigate from the outset. It observed that Evergreen could not reasonably have been expected to immediately destroy or dispose of the cargo as soon as it remained uncollected, particularly while discussions were ongoing regarding the possibility of redirecting the containers to alternative ports outside China.

The Court identified 23 October 2013 as the critical turning point. On such date, Evergreen’s agent informed Cefai that the cargo was likely to be destroyed due to the consignee’s failure to collect it. At such stage, it was evident that the cargo had effectively been abandoned. From that point onward, the Court held that it was no longer reasonable for Evergreen to continue accumulating demurrage and detention charges without taking active steps to resolve the situation. The cargo was ultimately only destroyed, more than three years later, and Evergreen failed to produce concrete evidence explaining the delay or demonstrating that it had taken all possible measures to expedite the destruction process.

In particular, Evergreen failed to establish when it had applied for the necessary authorisations from the Chinese customs authorities and the Ministry of Ecology and Environment. The earliest documentary evidence produced dated no earlier than 13 April 2015. The Court also rejected Evergreen’s argument that judicial authorisation was required before the destruction of the cargo could proceed, noting that the cargo had ultimately been destroyed without any such court order.

The Final Decision

The Court of Appeal upheld the appeal in part and amended the First Court’s judgement. It set aside the First Court’s judgment insofar as it had accepted Cefai’s third and fourth pleas and dismissed Evergreen’s claims. In their place it: (i) declared Noel Cefai liable for the damages claimed by Evergreen; (ii) excluded from that liability any demurrage and detention charges attributable to the period after the end of October 2013; (iii) confirmed Cefai’s full liability for cargo destruction costs under Clause 25(3); (iv) remitted the question of quantum to the First Hall, Civil Court; and (v) ordered Cefai to pay the costs of the appeal, reserving first-instance costs to the final judgment.

Conclusion

The Court of Appeal ultimately sought to strike a balance between enforcing the contractual obligations assumed under the bill of lading and recognising the carrier’s duty to mitigate its losses. While Cefai was held contractually liable as “Merchant” under the terms of the bill of lading, Evergreen was also found responsible for the additional costs that accrued as a result of its own unreasonable delay in taking steps to mitigate further losses.

The judgment is likely to serve as an important reference point in future disputes concerning the recovery of port-related charges under bills of lading and highlights the importance for both carriers and shippers of fully understanding the contractual obligations they assume in contracts of carriage.

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