On the application of the plaintiff, and with the consent of the defendants, the following point of law raised by the latter in their defence is to be heard and disposed of as preliminary to the hearing of the action: whether the present action is time-barred under the terms of the bill of lading in question and in particular under cl 20 thereof and/or under the US Carriage of Goods by Sea Act 1936 (COGSA), the provisions of which are incorporated in the bill of lading and became an express term of the contract; and in particular under s 3(6) of COGSA.

The defendants submitted that, since no action was brought against the carrier within one year of their alleged breach but about three years after the one-year bar had expired, the action is time-barred and the carriers should be discharged from any liability. In support of this proposition I was referred to Ship 'Ntama' v Th D Georghiades SA (1980) 1 CLR 386 (CMI296), where it was held that such a claim is time-barred and extinguished. In that case, however, it was considered that the deciding factor in determining whether an action is time-barred under a statute of limitation, is the date on which the suit was filed before the Court and not whether other proceedings had been instituted within the period of limitation which could not prevent an action from being time-barred.

The defendants further referred to the Limitation of Actions (Suspension) Act 1964 (Law No 57 of 1964), which they argued has no application in the present instance as it does not apply to cases of limitation of time imposed by agreement between the parties but applies exclusively to limitation periods imposed by 'provisions of a legislative nature' and, in this case, the main reason for the imposition of the one-year limitation period was cl 20 of the bill of lading, which they argued should be given its full effect. COGSA, they went on to say, is applicable not as the proper law of the contract but only because of the specific agreement of the parties that its terms were to be incorporated in their contract ie the bill of lading. Consequently, they say, Law No 57 of 1964 is not applicable.

The plaintiff for its part has argued that the provisions of COGSA have precedence over the terms of the bill of lading, because the parties have, by their own choice, adopted COGSA, s 3(8) of which provides: 'Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this Act, shall be null and void and of no effect. A benefit of insurance in favour of the carrier or similar clause, shall be deemed to be a clause relieving the carrier from liability.'

Therefore, according to the plaintiff, irrespective of what cl 20 of the bill of lading provides, it would be irrelevant and of no effect if it were contrary to the provisions of COGSA and in particular s 3(8).

Held: Application dismissed.

I would agree with the plaintiff on this point, that the provisions of COGSA as such have precedence over the terms of the bill of lading. This is borne out by what was said in The Morviken [1982] 1 Lloyd's Rep 325, 328 by Lord Denning: 'In every case properly brought before the Courts of the United Kingdom, the rules are to be given supremacy over every other provision of the bill of lading. If there is anything elsewhere in the bill of lading which is inconsistent with the rules or which derogates from the effect of them, it is to be rejected. There is to be no contracting-out of the rules. Notwithstanding any clause in the bill of lading to the contrary, the provisions of the rules are to be paramount.' This is in effect what s 3(8) of COGSA also provides.

The plaintiff has further argued in support of its case that under the principles of private international law, the governing law in this instance is COGSA, since this is the law adopted by the parties and this is their expressed intention in the agreement, ie the bill of lading. In considering this case, I should say at the outset that this bill of lading which refers to carriage from Cuba to Japan, ie from one foreign port to another, is not subject to the Cyprus Carriage of Goods by Sea Act, Cap 263, since this Act applies only to outward journeys from Cyprus. It may also be added here that in the USA the incorporation of the Hague Rules is only compulsory in the case of outward journeys. Where, however, the Hague Rules do not normally apply, they can become applicable by express agreement between the parties. COGSA has been expressly incorporated in the bill of lading by a clause paramount, and its provisions have to be construed as part of the agreement made between the parties, as being a contractual stipulation. Since however, it is to be treated as a contractual stipulation, its validity and effect must be tested against Cypriot law.

Section 28(1) of our Contract Act, Cap 149 provides: 'Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the Courts, or which limits the time within which he may thus enforce his rights, is void to that extent'. This provision has been judicially considered in Domestica Ltd v Adriatica Societa Per Azioni Di Navigazione (1981) 1 CLR 85. Pollock and Mulla, Indian Contract and Specific Relief Act (9th ed) 295, on the interpretation of s 28 of the Indian Contract Act which is the same as our s 28(1) of Cap 149, states:

Under the provisions of this section, an agreement which provides that a suit should be brought for the breach of any terms of the agreements within a time shorter than the period of limitation prescribed by law is void to that extent. The effect of such an agreement is absolutely to restrict the parties from enforcing their rights after the expiration of the stipulated period, though it may be within the period of limitation. Agreements of this kind must distinguished from those which do not limit the time within which a party may enforce his rights, but which provide for a release or forfeiture of rights if no suit is brought within the period stipulated in the agreement. The latter class of agreements is outside the scope of the present section, and they are binding between the parties.

So in. effect, these are two types of limitation clauses which must be distinguished from each other.

In Domestica, carriage was agreed under a bill of lading from Venice to Limassol - ie an inward journey to which Cap 263 did not apply - which therefore had to be seen in the light of the principles of the Cypriot contract law. A provision that 'the suit must be brought ... on penalty of prescription, within six months' was interpreted as taking away only the remedies by action - it did not provide for a forfeiture of rights - as such it was within the scope of s 28(1) of Cap 149 and therefore void.

In The Ntama, a voyage was agreed under a bill of lading from the UK to Greece (ie to/from a foreign port). The Hague Rules did not apply by operation of law but because they had been expressly incorporated by a clause paramount; they thus had contractual force. A provision that 'the ship shall be discharged ... unless suit is brought within one year' was considered to extinguish the right altogether and was thus valid.

In the present instance, as said above, COGSA is to be treated as a contractual stipulation. And the wording of the limitation clause is clear. It extinguishes the claim which ceases to exist and consequently the provision is outside the scope of s 28 of Cap 149 and not subject to it.

The next point for consideration is whether the Limitation of Actions (Suspension) Act 1964 (Law No 57 of 1964) applies. The answer in the present case is in the negative. The first reason is that the Act applies to 'provisions of a legislative nature' and not to contractual stipulations. The second reason is, that though the question of limitation is a matter of procedure and therefore governed by the lex fori, yet a distinction has to be drawn between statutes of limitation which remove the remedy and those which extinguish the right. In the former case obviously they are rules of procedure, whereas in the latter they are rules of substantive law. In this case, as the provisions of COGSA as to the time limit were found to extinguish the right, they are substantive provisions. Once I have concluded that the right has not merely become unenforceable, but has simply ceased to exist, I fail to see how such a claim can be introduced for any purpose into legal proceedings. For all the above reasons this action cannot stand as the plaintiff's right has been extinguished once no proceedings were instituted within the period envisaged by the bill of lading, and this is irrespective of whether COGSA applies by contract or by its adoption as foreign law.