The plaintiff claims CYP 503,926 for non-delivery of one container of goods. The first defendant, a company of the USSR, is the shipowner. The third defendant is the ship under the flag of the USSR owned by the first defendant.

The first defendant submits that under cl 13 of the bill of lading its liability, if any, is limited to RUB 250 or the CYP equivalent.

It is common ground that the plaintiff is the consignee of the relevant bill of lading dated 13 May 1982. Counsel for the first defendant contended that the bill of lading is governed by Russian law, and that art 155 of the Merchant Marine Code of the USSR provides: 'For sea carriage the Carrier shall in no case be liable in an amount exceeding Rbls 250 per package or unit or the equivalent of that sum in other currency, unless value declared on Bill of Lading' and that cl 13 of the bill of lading limits liability to RUB 250, and that the Hague Rules are not applicable.

Counsel for the plaintiff contended that the bill of lading does not contain the contract between the parties in the litigation. Clause 13 is invalid as it is contrary to cl 4, the paramount clause. The Hague Rules are incorporated into the Schedule to the Cyprus Carriage of Goods Act, Cap 263. Article 4.5 limits liability at one hundred pounds per package or unit, or the equivalent of that sum in other currency; under art 9 the monetary units are to be taken to be gold value. Furthermore, cl 13 of the bill of lading is illegal, being contrary to s 28 of the Contract Law, Cap 149, as it limits liability and does not allow this Court the freedom for ascertainment and assessment of the damages. And finally it is illegal, because the Russian rouble is not freely convertible.

Counsel for the defendant argues that the value of the rouble is ascertainable and it is not permissible to declare that Russians cannot contract in their currency or stipulate the measure of their own liability in their own currency.

Held: Judgment for the defendants.

I must say from the outset that s 28 of the Contract Law, Cap 149, has no bearing in this case and the contention of counsel for the plaintiff is ill-conceived and unfounded.

The material part of cl 13 of the bill of lading reads: 'Limitation of Responsibility. For the sea carnage the Carrier shall in no case be liable in an amount exceeding Rbls 250 per package or unit or the equivalent of that sum in other currency, unless value declared on the Bill of Lading.' It was contended that this stipulation in the bill of lading is invalid, as the rouble is not freely convertible currency. The value of the rouble is, on the uncontested evidence, ascertainable at any time.

It is impermissible for this Court to declare that the currency of one of the major countries of the world cannot be used by the citizens of that country in their contracts with people outside the USSR, in an era like the present one, where international trade is expanding and moving so rapidly. Certainly this does not offend public policy in this country and it is not prohibited by any law.

At a meeting of the International Law Association at the Hague on 3 September 1921, the Hague Rules were originally adopted. They were adopted at an international conference on maritime law held at Brussels in October 1922 and after their amendment at a further conference in Brussels in October 1923, received the form of an international Convention and were intended for adoption by municipal legislation. Indeed arts 9-11 contain provisions regarding the adoption of those rules by municipal legislation and regarding accession to, and ratification, denunciation and amendment of the proposed Convention.

By the Carriage of Goods by Sea Law enacted on 4 February 1927, it was provided that the Rules which were set out in the Schedule (arts 1-9 of the Hague Rules) shall have effect in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in Cyprus to any other port in or outside Cyprus. As the carriage and voyage in the present case do not come within the ambit of s 2 of Cap 263, this Law is inapplicable.

It is clear that the Hague Rules are not applicable if the proper law of the contract is Russian law. They are only applicable if the national law of another country is the proper law of the contract, where the matter is determined by the Court in another country, and their application in that other country is obligatory to be incorporated in the bill of lading. The proper law of a contract is the law which the parties intended to apply. That intention is objectively ascertained, and, if it is not expressed, it will be presumed from the terms of the contract and the relevant surrounding circumstances. The intention of the parties will be ascertained by the intention expressed in the contract, which will be conclusive.

We have to look at the contract and the bill of lading. The contract must be read as a whole. Clauses 4, 5, and 13 read together and, subject to public policy in this country, leave no doubt that the parties intended that the Merchant Shipping Code of the USSR 1968 would be the law applicable for the carriage under this bill of lading.

Public policy should be understood in a wide sense. If the contract is forbidden by a local statute, or is declared to be void, or nullified for disobedience to a statutory provision, then foreign law is excluded and stipulations in the contract for the foreign law are nullified. Public policy, however, as was said by Lord Wright, is better served by refusing to nullify a bargain, save on serious and sufficient grounds. No statute of this country forbids the application of the provisions of the USSR Merchant Shipping Code 1968. The objection on grounds of public policy fails.

The liability of the defendant shipowner under the bill of lading therefore does not exceed RUB 250, which on the relevant date was equivalent to CYP 145,805.