What’s your contract? What’s your package limitation?

Poralu Marine Australia Pty Ltd v MV Dijksgracht – [2023] FCAFC 147 is a recent decision  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. The cargo of 23 pontoons and 11 pallets was carried from Ireland to Australia and it was alleged that three pontoons were discharged damaged having been loaded in sound condition. Poralu commenced two actions for damages arising from the alleged damage to three of the pontoons, 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.

There were various contenders for the contract of carriage by sea; the second recap email; the booking note; the sea waybill. At first instance, [2022] FCA 1038, Stewart J found that the contract was concluded in the booking note which applied the law of the Netherlands and stated specifically that liability was limited to £100 lawful money of the UK per package or unit. The Hague-Visby Rules did not apply to the contract of carriage and accordingly the package limitation was the very low figure of £100 in sterling. By virtue of the Himalaya clause in the bill of lading the shipowner was able to rely on the limitation figure in the contract of carriage.

On appeal the Federal Court of Australia has upheld the decision that the shipowner could rely on the Himalaya clause in the standard form of bill of lading which formed part of the contract of carriage. However, it overruled the decision as to what constituted the contract of carriage and what was the applicable limitation of liability thereunder.

The Federal Court found that the contract of carriage was contained in the second recap email, which preceded the booking note.  This specified English law and was subject to the terms of the contemplated bill of lading which contained clause 3(a) a clause paramount which reads:

“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.”

 The fact that the contract contemplated the issue of a bill of lading, even though a sea waybill was eventually issued, was enough potentially to engage the Hague-Visby Rules, as held by the English Court of Appeal in The Maersk Tangier [2018] EWCA Civ 778. As for the sea waybill, that was a mere receipt.  

The contract did not fall under Article 10(a) as Ireland, where the goods were loaded, was not a Contracting State, but did fall under Article 10(c) by virtue of paragraph 1 of the clause paramount in the contemplated bill of lading. Ireland had enacted the Hague-Visby Rules domestically and therefore, in line with the decision of the English Court of Appeal in The Superior Pescadores [2016] EWCA Civ 101, involving a similarly worded clause paramount, the reference to “the Hague Rules…as enacted in the country of shipment” referred to the “Hague-Visby Rules as amended by the 1979 Protocol”.  As a result, those Rules applied to the contract of carriage so that the relevant package limitation would be calculated in accordance with the operation of the SDR Protocol unless, at the trial, Art 4(5)(e) was found to apply (namely, because the damage to the pontoons resulted from an act or omission of the carrier done with intent to cause damage or recklessly and with knowledge that damage would probably result).