Hague–Visby Rules – specimen BOL incorporated into contract carriage but not issued – contract of carriage nevertheless “covered” for the purposes of Article 1(b)
A contract of carriage provided for the transport of 3 reactors from Porto Marghera, Italy to Jubail in Saudi Arabia
The contract consisted of 3 parts: a signed front page, 18 clauses in a separate rider and a specimen BOL. Relevant clauses were:
“ 5. The Carrier’s regular form of Bill of Lading as per specimen attached, is applicable and shall form part of this Contract. In the event of a conflict between the Bill of Lading and this Contract, the terms, conditions and exceptions of this Contract shall prevail to the extent of such conflict.”
“15. Any dispute arising under this Contract of Carriage and Bill of Lading is to be decided in London and English law shall apply”.
Clause 3 of the specimen BOL read:
“3. GENERAL PARAMOUNT CLAUSE
The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels 25 August 1924, as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, Articles I to VIII of the Hague Rules shall apply. In such case the liability of the Carrier shall be limited to £100.-sterling per package.
Trades where Hague-Visby Rules apply
In trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on 23 February 1968 – the Hague-Visby Rules – apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Lading. The Carrier takes all reservations possible under such applicable legislation, relating to the period before loading and after discharging and while the goods are in the charge of another Carrier, and to deck cargo and live animals…”
As the first of the three reactors was being loaded, a hook on one of the vessel’s cranes broke causing the reactor to fall to the ground with predictable consequences. The main issue was whether articles 1 – VIII of the Hague Rules as per the second sentence of the paramount clause, or the Hague Visby Rules applied, the latter set of rules yielding a higher limitation value.
Tomlinson J found the mere fact that the parties had chosen English Law did not mean that the Hague Visby Rules which had been enacted in England in the Carriage of Goods by Sea Act, 1971, applied. Claimants still had to prove the requirements of Article 1(b) were satisfied and that the contract of carriage was covered by a BOL or similar document of title.
Because (a) a BOL was never issued; and (b) the contract of carriage was already formulated, so that the BOL would only function as a receipt and not a contract on its own terms; and (c) the BOL was not made to order and was therefore a straight BOL, the contract of carriage was not covered by a BOL or similar document of title as required by Article 1(b).
Tomlinson J held further that the first sentence of the paramount clause could not be interpreted to morph the Hague Rules into the Hague Visby Rules (the Hague Visby Rules had been enacted in Italy, the country of shipment).
The result was that Articles 1 – VIII of the Hague Rules applied by virtue of second sentence of the paramount clause – and so also the £100 sterling package limitation.
Tuckey (Aldous and Rix LJJ concurring) held that Tomlinson J was wrong on the first point. All that Article 1(b) required was that the contract of carriage should provide for the issue of a BOL. That the BOL would contain no new term was irrelevant.
Tuckey LJ held further that the form of the intended BOL was not a straight BOL.
Tuckey LJ (Aldous LJ concurring) held that despite the incorporation of the paramount clause indicating the application of the Hague Visby Rules (because Italy, the country of shipment, was a contracting state for the purposes of article X), it remained necessary to cross the Article 1 (b) hurdle i.e. the contract of carriage had to be covered by a BOL or similar document of title.
Rix LJ, on the other hand, was of the view that by reading in the wording of the BOL and then manipulating the language as per Adamastos Shipping, the Hague Visby Rules would apply without the need to satisfy Article 1(b). In effect, Rix LJ held that “applied compulsorily” in the paramount clause meant “enacted” or given the force of law – there was no further need to satisfy the internal requirements of the Rules e.g. Article 1(b).
Tomlinson J’s judgment is not impressive.
The majority view is consistent with the Hollandia and seems right.
Tuckey LJ also decided that the broad language of the package limitation meant that it would override the seaworthiness obligation i.e. he rejected a fundamental breach type argument.
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