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Hague Rules time limit applies to misdelivery claims

News / 02-10-2018

Deep Sea Maritime Ltd v Monjasa A/S (The Alhani) [2018] EWHC 1495 (Comm) 

The Court has held that a ship-owner, who had delivered the shipper’s cargo to a third party without production of the relevant bill of lading, could nonetheless rely on the one-year time limit in Article III Rule 6 of the Hague Rules to defeat the shipper’s claim for misdelivery.

The background facts

The dispute arose in relation to a shipment of bunker fuel oil on board the Owners’ oil product tanker from Lome, Togo and destined for Cotonou, Benin. The bill of lading incorporated an exclusive English law and jurisdiction clause from the relevant charterparty, as well as the Hague Rules, which took effect as a matter of contract.

In the event, the cargo was discharged via ship-to-ship transfer off-shore Lome. The cargo was delivered, but without production of the bill of lading, to the buyer under the sale contract. The seller/shipper subsequently contended that it had not received payment for the bunker fuel and that it remained the owner of the cargo. It sought to claim against the Owners for non-delivery of the cargo.

The shipper commenced a number of proceedings in different jurisdictions, including arresting the vessel in Tunisia and subsequently commencing substantive proceedings there in order to determine the merits of the claims. Those proceedings were later dismissed, but remained subject to appeal. The Tunisian proceedings were commenced within 12 months of the misdelivery.

The Owners commenced English proceedings, seeking summary judgment and/or a declaration of non-liability in respect of the shipper’s claims on the ground that these were time-barred pursuant to Article III Rule 6 of the Hague Rules. This provides that:

“In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.”

The Commercial Court decision

The Court found in favour of the Owners. It considered that the words used in Article III Rule 6 (“in any event” and “all liability”) were wide enough to encompass any breach of a ship-owner’s obligations under the bill of lading, including liability for delivering the goods to someone not entitled to take delivery of them. The object of finality (allowing a ship-owner to close its books) that the time bar was intended to achieve would be undermined if it did not apply to misdelivery claims. 

The Court’s view was that the time bar was not limited to breaches of the Hague Rules, but would apply to any breach of the contract of carriage, including misdelivery, where that breach occurred during the Hague Rules period of responsibility and where it had a sufficient connection with the cargo that was carried or to be carried. The Court added that the misdelivery claim could in any event have been pleaded as a breach of the Hague Rules because it amounted to a failure to properly and carefully load, stow, carry, keep, care for and discharge the cargo under Article III Rule 2. The Court also rejected the argument that there was any settled understanding that the time bar did not apply to misdelivery claims.        

The Court then considered whether the Tunisian proceedings were effective to interrupt time running for the purposes of the one-year time bar. It decided that they did not. In circumstances where the Tunisian proceedings were brought in breach of the parties’ contractual agreement to bring their claims in the English courts, the Tunisian proceedings did not constitute proceedings before a competent court that satisfied the requirements of Article III Rule 6. It would require exceptional circumstances, which were not present here, for foreign proceedings brought in breach of an exclusive English jurisdiction clause to constitute the bringing of suit for the purposes of Article III Rule 6. Among other considerations highlighted by the Court, the shipper was aware that there was a charterparty to which the Owners were party, and the bill of lading referred to it. Therefore, had the shipper asked for a copy of the Charterparty, it would have known about the exclusive jurisdiction clause. It could not, therefore, rely on any argument that it was unaware of that clause.

In conclusion, therefore, the shipper’s claim for misdelivery was time-barred.

Comment

This decision provides important and welcome clarification on the application of the Hague Rules time limit to misdelivery claims. Further, given that the wording of the time bar under the Hague-Visby Rules is even wider in ambit (“all liability whatsoever…”), it is to be expected that the position would be the same under those Rules.

The shipper is appealing this decision.

Fionna Gavin

Fionna Gavin Joint Head of Insurance, Partner

Eleanor Dickens

Eleanor Dickens Associate

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