544. Kyokuyo Ltd v AP Møller – Maersk A/S t/a “Maersk Line” [2017] EWHC 654 (Comm)

Hague/Hague Visby Rules – limitation as applied to containerized frozen fish.

The Facts

Twelve containers of frozen tuna were shipped on Maersk Tangier on 24 November 2012.

The vessel sailed from Cartagena, Spain to Yokohama. En route, at Valencia, nine of the twelve containers were transshipped onto Maersk Emden.

The three remaining containers A, B and C were transshipped onto Maersk Eindhoven which left Valencia only a month later.

At Barcelona, container C was de-stuffed, its contents re-stuffed into a Replacement Container and shipped on Maersk Tangier.

Container B and the Replacement Container were carried by road from Yokohama to Shimizu.

All twelve containers were shipped pursuant to the Maersk terms containing an implied term entitling shippers to demand that Bills of Lading be issued by Maersk Line.

Maersk Line issued a draft Bill of Lading to the Claimant who was named in the draft bill as the consignee.

No Bills of Lading were issued for the three containers in question.

To avoid delay, Maersk Line agreed to issue three sea waybills, one for each of the containers, A, B and Replacement Container, to the Claimant.

Container A contained 206 frozen tuna loins and 460 bags of tuna parts. The frozen loins were enumerated on the sea waybill but the bags were not.

Container B and the Replacement Container contained 520 and 500 frozen loins respectively, both quantities enumerated on the relevant sea waybills.

On arrival in Japan, the tuna in all three containers was found to be damaged.

Findings

The matter was decided on documents.

It was unclear who the parties to the underlying contract were. In any event, by virtue of section 2(1)(b) of COGSA, 1992, Claimant, as the recipient of the waybills, became a party to the contract.

Preliminary issues were ordered to be tried:

First issue: which a set of rules applied, Hague or Hague Visby;

Second Issue: was limitation to be applied to all three containers collectively or to each container individually;

Third issue: if Hague Rules applied, were the containers to be regarded as the package/unit or the individual pieces of tuna stuffed inside them.

Although not explicitly stated in the judgment, it appeared to be common cause that English Law applied.

On the first issue, Andrew Baker J held that section 1(2) of COGSA 1971 read with the Hague Visby Rules themselves, Art.I(b), 1(e), Art. II and Art.X(b), the Hague Visby Rules applied.

To decide whether the contract was “covered by a Bill of Lading” for the purposes of the definition of a contract of carriage in Art.1(b), Baker J referred to a number of authorities, most importantly, Pyrene v Scindia, where Devlin J said as follows:

Wherever a contract of carriage is concluded, and it is contemplated that a Bill of Lading, in due course, be issued in respect of it, that contract is from its creation “covered” by a Bill of Lading, and is therefore from its inception a contract of carriage within the meaning of the rules and to which the rules apply.”

The fact that, in this case, sea waybills were issued, did not affect matters because the sea waybills were not variations of the original contract/s of carriage: the original contract was still “covered” by Bills of Lading.

The third issue, whether the individual pieces of tuna were packages or units or whether the containers were, vis à vis the Hague Rules, was considered before the second issue.

Baker J referred to the River Gurara as authority for the proposition that when the shipper has described individual packages or units within a container, it is not permissible for the shipowner to stipulate that the container itself will be the package or unit as this would offend Art. III rule 8 even though the carrier was unable to verify the contents of the container.

That the River Gurara was decided under the Hague Rules was immaterial because the packages and units for both sets of rules are the same.

Although the frozen tuna loins, stuffed into the containers, as is, could not be called “packages” they were “units” in terms of both the Hague and the Hague Visby Rules.

As the tuna loins were enumerated on the sea waybills, the package limitation applied to each loin as a unit.

Because of the bags of tuna parts were not enumerated, damage to them was limited by reference to the container as the package.

With regard to the second issue, Baker J held that the inquiry was misconceived, the package limitation applied directly to each unit, and damage to each unit had to be considered individually. It was not permissible to aggregate the potential limitation per container, or containers, by multiplying the number of units and to extract a value for the damage as a percentage value of the contents of the container or containers.

Commentary

Even though cargo owners did not take the point, it is arguable that the issuing of the sea waybills did constitute a variation of the original contract, so eliminating the application of the Hague and /or the Hague Visby Rules – despite Art III rule 8.

The judgment is in line with the trend of protecting cargo interests, which was one of the objectives of the Convention which gave rise to the Hague Rules.

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