46. Pyrene Company Ltd v Scindia Steam Navigation Company, Ltd [1954] 1 Lloyd’s Rep 321

Hague Rules – FOB seller held to be a party to the contract of carriage between shipper and owners

The facts

Six fire tenders were sold FOB London to purchasers in India. The purchaser’s agents engaged ship-owners to carry the goods from London to India.

While lifting one of the fire tenders from the quayside on to the vessel, owners negligently dropped the machine causing damage.

A bill of lading was issued to the purchaser’s agents by owners in due course with the damaged fire tender deleted from the list of goods shipped.

The FOB seller sued owners in tort as risk in the machine had not passed at the time of the accident.

Owners contended that they were protected by the package limitation in the Hague Rules.

Findings

Devlin J upheld owner’s contention.

The court held that the sellers were party to the contract of carriage between the purchasers and owners.

An alternative justification put forward by the court was that on an analogy with Elder v Dempster, owners were acting as the purchaser’s agents and that they were entitled to the same immunities as the purchaser would obtain from the bill of lading incorporating the Hague Rules.

The court rejected an argument that the Hague Rules applied only from the time when the goods were loaded on to the vessel.

Article I (e) defines the carriage of goods as covering the period from the time when the goods are loaded on to the time when they are discharged from the ship.

Reading the rules as a whole and in context, Devlin J preferred to concentrate on Article II in determining the application of the Hague Rules. He thought it was artificial to distinguish between the act of loading prior to the goods’ passing the ship’s rail and loading subsequent.

Although the duty of loading was imposed on owners by Article II, this did not preclude owners from employing a third party to carry out this function.

Commentary

The finding of a contract between the FOB seller and owners is debatable.

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