On Wednesday in The Aqasia [2018] EWCA Civ 276 the Court of Appeal upheld the decision of Sir Jeremy Cooke [2016] EWHC 2514 (Comm) that “unit” in Article IV rule 5 of the Hague Rules means a physical item of cargo and not a unit of measurement. The case involved a cargo claim against owners under a voyage charter for the carriage of bulk fishoil, which provided that “The Owners in all matters arising under this Contract shall also be entitled to the like privileges and rights and immunities as are contained in Sections 2 and 5 of the Carriage of Goods by Sea Act 1924 and in Article IV of the Schedule thereto …”
Flaux LJ reasoned that the word “package” clearly referred to a physical item and the use of the words “package” and “unit” together and in the same context pointed strongly to both words being concerned with physical items rather than units of measurement. “Unit” refers to a physical item which is not a “package”, because, for example, it is incapable of being packaged or is not in fact packaged. This was the construction accepted by courts in other common law jurisdictions and favoured by the majority of academic commentators and textbooks.
It was also clearly confirmed by the travaux préparatoires for the Hague Rules. There was no suggestion in the travaux préparatoires that “unit” had been introduced to cater for bulk cargoes. Any limitation by reference to weight or volume was abandoned by the end of the session on 31 August 1921, as was any limitation by reference to a multiplier of freight by the end of the session on 1 September 1921. The word “unit” had been introduced to cater for items of cargo which are carried without packaging, such as cars or boilers.
Accordingly, there is no limitation available under the Hague Rules in respect of loss or damage to bulk or liquid cargo. The Court of Appeal also rejected owners’ argument that the words of Article IV were written into the charterparty so that every provision in the Article must be given meaning and effect in the context of the carriage of the bulk cargo contemplated by the charterparty. On the correct construction of the charterparty, owners were entitled to rely upon no more than what Article IV provides.
