News / 06-10-2022 / London

FIMBank p.l.c. v. KCH Shipping Co. Ltd (Giant Ace) [2022] EWHC 2400 (Comm)

Article III r.6 of the Hague-Visby Rules (the “Rules”) provides that claims against the carrier are time-barred unless suit is brought within 12 months of the date of delivery or the date when the goods should have been delivered. However, does this apply to claims for misdelivery occurring after discharge? This is an important question formerly left unanswered the English Courts which has divided opinions. In an important judgment, the Court has now decided that it does.

The background facts

As a result of a misunderstanding as to who was the carrier, arbitration proceedings were started against the proper party (KCH) more than 12 months after the goods should have been delivered. We have previously reported on the confusion and the Court’s 2020 decision not to grant an extension of time here: https://www.incegd.com/en/news-insights/maritime-dangers-overlooking-bareboat of which provided-charter-charterparty-chain.

The claim arose under a Congenbill bill of lading, clause 2(c) of which provided ““The Carrier shall in no case be responsible for loss and damage to the cargo, howsoever arising prior to loading into and after discharge from the Vessel …”

The claimant (“FIMBank”) contended that the claim was not time-barred because

1. The Article III r.6 time bar does not apply to claims arising after discharge; and
2. Even if the time bar did apply after discharge under the Rules, clause 2(c) of the bill of lading dis-applied the Rules to losses after the discharge of the goods

In arbitration proceedings, the tribunal disagreed and held that the time bar contained in the Rules applied. It found that: (a) the time bar applied to claims relating to misdelivery after discharge; (b) clause 2(c) did not operate to disapply the Rules in respect of claims for misdelivery after discharge; and (c) a term should in any event be implied into the contract that the Rules were to apply after discharge until delivery.

FIMBank appealed.

The Commercial Court decision

(a) The First Issue

FIMBank argued that the wording of Article III r.6 gave no immunities to carriers post-discharge. None of the provisions of the Rules contain or regulate an obligation to deliver. Therefore, they said, the carrier’s “period of responsibility” in relation to the goods under the Rules and the immunities provided to them ended when the goods were discharged from the vessel. After this, it was still open to the parties to contract into the Rules. As no such terms were contained in the current contract, FIMBank argued that the Rules did not apply and the one year time bar was therefore inapplicable.

The Court rejected this argument and upheld the decision of the tribunal. Article III r.6 was designed to allow carriers to close their books after a year. The time bar contained in the Rules has consistently been given a broad construction to achieve finality and there was “no sound objective reason” for applying fine distinctions on discharge and delivery.

The Court went on to emphasise the tribunal’s consideration that it was “not commercially sensible or even reasonable” for the carrier’s period of responsibility to end immediately

post-discharge. Certainly, in the current case, FIMBank did not immediately present the bill of lading to the carrier when the goods were discharged. For the carrier to lose the protections provided by the Rules in circumstances where they had to hold the goods post- discharge for an undefined period would not make commercial sense.

(b) The Second Issue

The Court held that clause 2(c) did not operate to disapply the Rules after the discharge of goods.

FIMBank sought to rely on The MSC Amsterdam, a 2007 case in which the Court of Appeal held that the bill of lading did indeed dis-apply the Rules.

In this instance, the Court held that the terms of the current bill of lading had “materially different terms” to those considered in The MSC Amsterdam and the terms in question in that case did not consider Article III r.6. A similar decision to The MSC Amsterdam was not, therefore, warranted.

Comment

The decision is important for parties involved in the carriage of goods by sea. It has confirmed that the immunities conferred by the Rules apply during the period between discharge and delivery. This is obviously good news for carriers and their insurers.

It is, however, important to note that the case involved the particular contract in issue. Whilst a precedent has been set that the Rules in principle apply in the period after discharge until delivery, whether the parties have contracted out of the Rules will depend on the particular wording of the contract. The MSC Amsterdam shows that language that is substantially different to clause 2(c) of the Congenbill could result in a different conclusion.

FIMBank have been granted leave to appeal.

This article was written with the assistance of Katie O’Farrell.