On 18 November 2011, the owners of the Alhani, Deep Sea Maritime Ltd (Deep Sea), discharged a cargo of bunker fuel (the cargo) through a ship-to-ship transfer to the Marida Marguerite, purportedly under instructions given pursuant to a time charterparty between Deep Sea and Unitaes Energy Sources Company Limited (Unitaes) dated 7 July 2011, without production of the bill of lading. Pursuant to an addendum to the time charterparty, Babecca Business Links Limited (Babecca) agreed to perform the obligations of Unitaes under the time charterparty. Notwithstanding an absence of express identification, the bill of lading referred to the time charterparty. The bill of lading incorporated the time charterparty exclusive jurisdiction clause. The discharge of the cargo occurred off-shore Lomé even though the bill stated that the carriage was from Lomé, Togo to Cotonou, Benin.

The shipper of the cargo (Monjasa) brought proceedings in relation to the alleged non-delivery of the cargo in Tunisia, China, France and England respectively. The Tunisian proceedings were brought by Monjasa to arrest the Alhani, and to claim against Deep Sea and the master of the Alhani. The Alhani was subsequently released against a bank guarantee. The substantive proceedings were dismissed by the Tunisian Court for want of jurisdiction under the Tunisian Maritime Commercial Code or the Code of Private International Law, though this decision was subject to appeal. The Chinese proceedings involved Monjasa’s claim against Deep Sea, but a settlement was reached leading to the withdrawal of the claim. Subsequently, Unitaes and Huaming fell short of the bargain on the settlement, resulting in Monjasa obtaining a judgment against them. This was still undergoing appeal. The French proceedings involved the arrest of the vessel at Le Havre, with the French court ordering Monjasa to provide security to procure the release of the Alhani from arrest, and to commence proceedings before a competent court for substantive relief (see Cour d'appel de Rouen, 17 février 2017, N° de RG: 17/00576 (CMI1231)). This resulted in the present proceedings in England.

Deep Sea (the claimant) applied, in the present proceedings, for a declaration of non-liability to Monjasa (the defendant) for claims in relation to the bill of lading. Shortly afterwards, the defendant commenced proceedings in the English High Court, claiming damages in contract, bailment and conversion against the claimant and seeking relief against Unitaes and Babecca.

Article 3.6 of the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (the Hague Rules) provided for a one-year time bar for claims. The claimant claimed that the suit was not brought within the one-year period provided for in art 3.6 of the Hague Rules. Neither Benin nor Togo were parties to the Hague or Hague-Visby Conventions. Thus, in the absence of enactments that were compulsorily applicable, the general paramount clause of the bill gave contractual effect to the Hague Rules.

There were two key issues in this summary judgment application. First, whether the time bar created by art 3.6 of the Hague Rules applied to claims for wrongful misdelivery, where the shipowner had delivered the cargo to a third party without production of the bill of lading. Second, whether the commencement of proceedings in the courts of a different country from that identified by the exclusive jurisdiction clause could satisfy the time bar requirement in art 3.6.

Held: All of the defendant’s claims were subject to art 3.6 and were extinguished by the operation of art 3.6, save for any claim still being pursued in the Tunisian proceedings.

The Judge discussed the development and nature of the Hague Rules at length. It was the appearance of the one-sided nature of contractual terms on which cargo was carried by sea and the desire to produce a ‘package’ of terms which would be compulsorily applicable in their sphere of operation that resulted in the Hague Rules.

The Judge identified three replacements made by the Hague Rules.

1. The Hague Rules replaced the absolute obligation of seaworthiness which arose at common law with one of due diligence, benefiting shipowners. Article 4.2 sets out standardised exceptions which replaced the wide variety of exceptions contained in contemporary bills of lading. However, these standardised exceptions did not operate when the loss was caused by unseaworthiness resulting from the shipowner’s lack of due diligence.

2. Article 4.5 provided a standardised regime which replaced the widely varying package limitation regimes.

3. Article 3.6 replaced the widely differing contractual time bars which featured in bills of lading. It was not open to the shipowner to contract for lesser liability (art 3.8).

The Judge described four features, or possible features, of the Hague Rules.

1. The responsibility of the shipowner to load or discharge goods was a question of contract and not the Hague Rules. However, if the shipowner was contractually responsible for loading and discharging, the Hague Rules determined the content of the shipowner’s contractual obligation. This might embrace activities which take place sometime before or after the goods had crossed the ship’s rail on loading and discharge respectively.

2. There was a temporal sphere of operation to the Hague Rules. This was usually referred to as the ‘period of responsibility’, which did not on their own terms apply to activities occurring outside that period of responsibility. For example, the responsibility of the shipowner under the Hague Rules ended when the carried goods were discharged from the ship (art 3.2). Thereafter, contractual rules apply.

3. The Hague Rules obligations were not exhaustive of every obligation which might be owed by a shipowner under a bill of lading contract. The obligations under Hague Rules and common law might not be mutually exclusive. For example, the duty of the shipowner not to deviate might not be absent in the Hague Rules, but nuanced. The words ‘and the carrier shall not be liable for loss or damage resulting therefrom’ in art 4.4 assumed that the duty not to deviate could constitute a breach of the Hague Rules obligation. Therefore, art 4.4 impacted on this duty to some extent.

4. It became common practice to incorporate the terms of the Hague Rules into charterparties. This generated issues of interpretation of the Hague Rules in the charterparty context such as the interpretation of the expression ‘loss and damage’ in the Hague Rules to encompass purely economic loss without any physical loss or damage.

The Judge decided the first issue by determining three sub-issues.

1. Article 3.6 was capable of applying to misdelivery claims in the charterparty context. The wording ‘in any event’ and ‘all liability’ in art 3.6 were both wide enough to apply to misdelivery claims. Moreover, a claim for misdelivery was subject to art 4.5. Furthermore, art 3.6 was intended to achieve finality and this would be seriously undermined if art 3.6 did not apply to misdelivery claims. The clarity of the position that the one year time bar under the Hague (and Hague-Visby) Rules as an internationally accepted and universally understood condition of claims against carriers for damage to goods during sea transit would be substantially undermined if its application turned on such fine distinctions.

2. Article 3.6 was not limited in its application to claims capable of being pleaded as breaches of the Hague Rules obligations, such as misdelivery that occurred during the Hague Rules period of responsibility. The discharge of goods, not into the hands of the cargo owner, but into the hands of someone with no entitlement to the goods resulted in a breach of the obligation to properly and carefully keep, care for and discharge the goods (art 3.2). However, this duty was not a strict one.  In the vast majority of cases, misdelivery would involve an element of fault on the shipowner’s part, in consciously delivering without production of a bill of lading. However, in rare cases, the shipowner could be liable despite having taken reasonable care and skill notwithstanding the breach could have been avoided by reasonable diligence, but the claim would not be capable of being pleaded as a breach of the art 3.2 obligation. The full ‘Hague Rules package’ gave the cargo claimant the benefit of the irreducible obligations and liabilities inherent in the Hague Rules regime. However, as part of that same package, the shipowner obtained the benefit of the one year time bar. It was also well-established that a cargo claimant cannot circumvent the limitations and exclusions in the Hague Rules by suing the shipowner for the torts of negligence or conversion, or indeed for breach of bailment. In view of this, the Judge interpreted the phrase ‘provided in this Article’ in art 3.8 as ‘as provided for’. The answer to whether art 3.6 applied to misdelivery claims was not to be found in art 3.8. The travaux préparatoires showed that one of the purposes of the Visby amendment to art 3.6 was to ensure that the one year time bar applied to cases of misdelivery. However, the relevant terms of art 3.8 were left unamended by the Visby Protocol.

3. It did not appear that there was a settled understanding that art 3.6 of the Hague Rules did not apply to misdelivery claims. Notwithstanding whether the travaux préparatoires of an amending convention was an admissible aid to the construction of the original convention, the travaux préparatoires to the Visby amendments to the Hague Rules did not reveal a settled consensus that art 3.6 was so limited during the Hague Rules period of responsibility.

For the second issue, the Judge held that the suit was brought within the one-year period for the purposes of art 3.6. The distinction between the first and second issue reflected a pragmatic compromise between the strong policy of the English court of giving effect to forum selection agreements, and considerations of judicial comity. Additionally, there was enforced substitution of the proceedings brought in time by proceedings in another forum. The Judge also set out a four stage test.

First, where the claimant commenced proceedings before a court of competent jurisdiction, but was then required to proceed in an alternative forum for reasons which were not the claimant’s responsibility, the first action would constitute the bringing of a suit for the purposes of art 3.6. This included the following two cases.

1. The first action ended because of an election made by the defendant to require proceedings to be pursued in another forum, which election was made at a time when it was no longer practicable for the claimant to commence proceedings in that forum within the art 3.6 period.

2.  An exclusive jurisdiction clause that required proceedings to be brought in another court only became enforceable because of an undertaking offered by the defendant when it was no longer practicable for the claimant to commence proceedings in the contractual forum within the art 3.6 period.

Second, if the first proceedings were brought in a particular court in breach of an agreement to bring claims in another forum, then, save perhaps in exceptional circumstances, they would not constitute proceedings before a competent court.

Third, when the claimant commenced proceedings before a court of competent jurisdiction, those proceedings would be capable of defeating an art 3.6 time bar in another set of proceedings provided at least at the time when the time bar defence was determined in the second proceedings:

1. The first set of proceedings remained effective; and

2. The shipowner was unable to prove on the balance of probabilities that the first set of proceedings would be found to be ineffective proceedings in the forum in which they were brought.

Fourth, the first set of proceedings would remain effective proceedings if they had culminated in a judgment in the claimant’s favour on the merits.

The Tunisian proceedings could not be relied upon by Monjasa as the bringing of a suit for the purposes of art 3.6 in other proceedings commenced outside the one year period (including the English proceedings), because the Tunisian proceedings were brought in breach of the exclusive jurisdiction clause. Moreover, there were no exceptional circumstances here. The bill of lading expressly incorporated the charterparty ‘Law and Arbitration Clause’ and hence met the heightened standard which English law required for the incorporation of arbitration and jurisdiction clauses into bills of lading.

However, the Tunisian proceedings were brought within time for the purposes of art 3.6. The time limit within which claims must be made and the creation of exclusive jurisdiction in the courts of a particular country were separate and distinct subject-matters. Moreover, there were issues of comity and an issue of principle as to whether the commencement of proceedings in breach of an exclusive forum clause should have the same effect for the purposes of art 3.6 of the Hague Rules, regardless of whether the question arises in the proceedings thus commenced, or in later proceedings. Furthermore, an action brought in breach of an exclusive jurisdiction or arbitration clause, was not, at any rate under English law, a nullity.