Yesterday in The “GIANT ACE”, FIMBank PLC v KCH Shipping Co Ltd, [2023] EWCA Civ 569 (24 May 2023), the Court of Appeal upheld the judgment of Sir William Blair J last autumn that the one year time limit under the Hague-Visby Rules applies to claims for misdelivery where the cargo is delivered outside the tackle to tackle ambit of the Hague Visby Rules, after discharge has been completed.
Three issues arose for decision, with Males LJ giving the principal judgment of the Court of Appeal, with whom Popplewell LJ and Nugee LJ agreed.
(1) Does Article III, rule 6 of the Hague Visby Rules apply to a claim for misdelivery occurring after discharge of the cargo has been completed?
The Court of Appeal considered that the Rules do not apply to misdelivery of cargo stored on land after discharge, whether or not such misdelivery is a breach of the contract evidenced by the bill of lading, at least where the misdelivery is not related to the discharge operation. However, the natural meaning of Article III, rule 6 of the Hague Rules is that if suit is not brought in time, the carrier will be discharged from all liability of any kind arising during the Hague Rules period of responsibility.
Article III (6) of the Hague-Visby Rules in paragraph 3 provides “Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods unless suit is brought within one year of their delivery or of the date when they should have been delivered. (emphasis added).” This contains a change from the phrase in the Hague Rules “all liability in respect of loss or damage” to “all liability whatsoever in respect of the goods” which weakened or even removed the nexus with loss or damage to the cargo which was previously required. If, the natural meaning of Article III, rule 6 of the Hague Rules was that the carrier will be discharged from all liability of any kind arising during the Hague Rules period of responsibility, it was a reasonable inference that the new rule was intended to apply even in cases outside the sphere of application of the Rules.
Reference to the travaux préparatoires in accordance with Article 32 of the Vienna Convention confirmed that Article III, rule 6 of the Hague Visby Rules was intended to apply to misdelivery claims. It was put before a plenary session of the CMI on June 14, 1963, with the explanation (p. 500) that: ‘The object of the aforesaid amendment is to give the text a bearing as wide as possible, so as to embody within the scope of application of the one year period, even the claims grounded on the delivery of the goods to a person not entitled to them, i.e. even in the case of what we call a wrong delivery.’ This constituted an interpretative ‘bulls-eye’. Although misdelivery can occur during the voyage or simultaneously with discharge, misdelivery after discharge is the paradigm case which would have been understood by the drafters of the Visby amendments to the Hague Rules. Had they intended to limit the new Article III, rule 6 to cases of misdelivery occurring during the carriage by sea (including the discharge operation itself), they could have been expected to say so. However, there was no indication in the travaux that they intended to limit the new rule in this way. Although two decisions from Hong Kong (Cheong Yuk Fai v China International Freight Forwarders (H.K.) Co Ltd [2005] 4 HKLRD 749 and Perfect Best Asset Management Inc v ASL Express Ltd [2021] HKCFI 2310) have held that Article III, rule 6 of the Hague Visby Rules does not apply to a claim for misdelivery occurring after discharge, two cases from one jurisdiction were not capable of amounting to an international consensus on the interpretation of the provision. Further, the two judgments in those cases did not consider either the significance of the language used in the Visby amendment to Article III, rule 6 or the impact of the Visby travaux préparatoires.
(2) If not, was there an implied term in the bills of lading to the effect that the Hague Visby Rules including Article III, rule 6 would apply to govern the parties’ relationship after discharge of the cargo (referred to in argument as “the Carver implied term”)? This derives from the following passage in the fifth edition of Carver on bills of lading at para 9-135 -“It is submitted therefore that as a matter of the English law of contract it may well be appropriate to state the position as being that the Rules may apply as implied terms after receipt of the goods but before loading, and after discharge but during the period before delivery or up to the time of the operation of any separate warehousing arrangements, except insofar as this result has been excluded or modified by the parties.”
Given the decision on the first issue, it was not necessary to reach a final conclusion on this issue. Males LJ had considerable doubt whether a term to the effect suggested could be implied. If such a term rested on an implication in fact, there were no factual findings in the award on which such an implication could be founded. To the extent that it was an implication in law, it seemed difficult to imply a term that the Rules should apply if, on their own terms, they do not.
(3) If the answer to either of these questions is “yes”, does clause 2(c) of the Congenbill form have the effect of disapplying the time bar in Article III, rule 6?
Clause 2 (c) provides:
“The Carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising prior to loading into and after discharge from the Vessel of [sc. or] while the cargo is in the charge of another Carrier, nor in respect of deck cargo or live animals.”
The issue was rather artificial as if the clause did exclude liability, something which was not in issue, the issue of time bar would not arise. cl.2 On the other hand, if the carrier remains liable for misdelivery after discharge despite clause 2(c), there was no reason why the one-year time limit for such a claim should not apply.
The Appeal was therefore dismissed.
