Poralu Marine Australia Pty Ltd v MV Dijksgracht –  FCA 1038 is an interesting case from the Federal Court of Australia on identifying what constitutes the contract of carriage of goods by sea,and what terms are applicable to that contract. It will not necessarily be the transport document that is issued on loading, in this case a sea waybill.
Between 6 and 11 December 2019, 23 pontoons and 11 pallets were loaded on board the motor vessel Dijksgracht at the port of Cork, Ireland, as breakbulk cargo. The cargo of 23 pontoons and 11 pallets was loaded at Cork on The Dijksgracht and was consigned to Poralu Marine Australia Pty Ltd, for installation at the Royal Geelong Yacht Club. The cargo was discharged on or about 13 February 2020 at Geelong and it was alleged that three pontoons were discharged damaged having been loaded in sound condition. Poralu brought actions in bailment and negligence against the shipowner, RT, in rem and against ST as carrier, in personam
The carriage agreement began with a series of emails between Poralu and ST, between 7 and 9 November 2019, culminating in an unsigned booking note issued by ST which Poralu accepted on 20 November 2019. The booking note, which provided that it was to “prevail over any previous arrangements”, was accepted by Poralu on 20 November 2019. After loading ST issued a sea waybill was issued acknowledging receipt of the cargo in good order and condition. The sea waybill contained a “Himalaya Clause” under which RD as owner was entitled to the benefit of:
Poralu alleged that the cargo was loaded on board the vessel in sound condition and that three pontoons were found to have been damaged when the cargo was discharged. Poralu commenced two actions for damages arising from the alleged damage to the cargo, both in bailment and the tort of negligence. The first action was in rem against the vessel and its owner, said to be Dijksgracht CV (DCV), a Netherlands company. The second was an action in personam against Spliethoff Transport (ST) as carrier and Rederij Dijksgracht (RD), said to be the shipowner.
An issue arose as to the applicable limitation figure in respect of the three damaged pontoons. Poralu asserted that the contract of carriage was concluded in the recap in the emails, so that there was a binding arrangement in advance of the acceptance of the booking note. On that basis the contract was subject to and incorporated the Australian Hague Rules and that it was a term of the contract of carriage that a bill of lading would be issued to Poralu in respect of the cargo either immediately or on request. Under the Australian Hague Rules the limitation figure would be that in the 1979 SDR Protocol to the Hague-Visby Rules.
The two defendants denied negligence and claimed that the contract of carriage was subject to the terms and conditions of ST’s booking note which applied the law of the Netherlands and incorporated the terms of Articles I-VIII of the Hague Rules 1924 and therefore excluded the operation of the Australian Hague Rules under the Carriage of Goods by Sea Amendment Act 1997 (Cth) and the Carriage of Goods by Sea Regulations 1998 (Cth). The booking note stated specifically that liability was limited to £100 lawful money of the UK per package or unit. ST and RD argued that the Hague Rules had been incorporated and that such incorporation excluded the application of the Australian Hague Rules.
Stewart J held that the liability of ST was limited to £100 UK money per package, and that applied to the claims in bailment and negligence. The court’s starting point was that the Australian conflict of laws rule for determining the question whether a contract was concluded is the law of the forum (in contrast to the English conflict rule which applies the law of the putative contract). A binding contract had not been concluded at the end of the initial email exchanges but came into being with the acceptance of ST’s booking note which contained all of the terms previously agreed in the recap and filled in the gaps, so that it constituted an offer capable of acceptance, and it was immaterial that it was unsigned. The booking note anticipated the issue of a bill of lading or a sea waybill, and provided that the booking note would prevail over the terms of such a document. The sea waybill that was issued made no change in the contractual relationship. The sea waybill was not a contractual document at all but a receipt only, as was the case with the bill of lading received by the fob charterer in The Dunelmia. The overriding clause in the booking note meant that the terms of the booking note prevailed over the sea waybill. Further, the booking note, which had been found by the court to be a contractual document, preceded the shipment of the cargo, whereas the sea waybill was only agreed and issued long after the cargo had been shipped
Applying Dutch law, to which the booking note was subject, the Hague-Visby Rules were not applicable. The Dutch law experts disagreed regarding the application of the Hague-Visby Rules where the carrier and the shipowner did not agree, when concluding the contract, whether or not a bill of lading or sea waybill will eventually be issued. They disagreed about whether the mere existence of the unexercised right of the shipper to demand a bill of lading (pursuant to Art 3(3) of the Rules or Art 8:399 of the DCC) was sufficient for the material application of the Rules or whether the shipper had actually to exercise its right to demand a bill of lading. The experts agreed that that question was undecided by the Dutch courts. However, assuming that the shipper’s right to demand a bill triggered the issue of the Hague-Visby Rules, the Hague-Visby Rules could not operate on the facts of this case. Ireland was not a contracting state so such a possible bill of lading would not have been issued in a contracting state nor would there be carriage was from a contracting state. As regards Article X(c) whereby the Rules apply to a bill of lading relating to the carriage of goods between ports in two different states if “the contract contained in or evidenced by the bill of lading provides that the rules of this Convention or legislation of any State giving effect to them are to govern the contract” Poralu relied on the standard bill of lading terms that ST would have used had a bill of lading been issued. That would have contained the following clause paramount:
1 Except in case of US Trade, the Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels, 25th August 1924, as enacted in the country of shipment, shall apply to this Bill of Lading.
2 If no such enactment is in force in the country of shipment, the articles I-VIII inclusive of the said Convention shall apply.
3 In trades where the International Brussels Convention 1924 as amended by the Protocols signed at Brussels on 23 February 1968 and 21 December 1979 (the Hague-Visby Rules) apply compulsorily, the provisions of the Hague-Visby Rules shall be considered incorporated in this Bill of Lading.
5 If the Hague Rules are applicable otherwise than by national law, in determining the liability of the Carrier, the liability shall in no event exceed £100 (GBP) sterling lawful money of the United Kingdom per package or unit.
Since the Hague Rules were not enacted in Ireland, the first sentence of the paramount clause had no application, and the second sentence applied. Since the paramount clause in the present case here referred separately and deliberately to the Hague Rules and the Hague-Visby Rules, the conclusion in The Superior Pescadores was inapplicable
Neither did the Hague-Visby Rules apply by virtue of the Australian legislation under which the booking note would be regarded as a charterparty (in this case a “space” or “slot” charter) over which the Rules would apply only where a sea carriage document was issued for the carriage. The booking note here was a charterparty, but the sea waybill was not a sea carriage document in that it was a mere receipt and was not negotiable. Accordingly the parties’ agreement on limitation remained applicable. Stewart J rejected Poralu’s argument that as they had a contractual right to demand a bill of lading then the contract of carriage was a contract covered by, relevantly, “a sea carriage document”. It was doubtful whether a contract of carriage is “covered by” a sea carriage document when the document in question, whether actually issued or merely the subject of a right of demand to be issued, did not or would not contain or evidence the contract.
Finally, RD were entitled to rely on the £100 package limitation in the booking note by virtue of its Himalaya clause. The clause satisfied all four of Lord Reid’s conditions set out in Midland Silicones v Scruttons and Stewart J rejected Poralu’s argument that the clause did not satisfy the third element, in that the carrier had not had authority from the third party to contract as agent. The evidence showed that RD and ST were parties to a pooling agreement under which ST had to use all reasonable endeavours to protect and promote the interests of pool members. The pooling agreement conferred the necessary authority.