Nea Agrex SA v Baltic Shipping Company Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,Lord Justice Goff,Lord Justice Shaw |
| Judgment Date | 01 April 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J0401-3 |
| Date | 01 April 1976 |
| Court | Court of Appeal (Civil Division) |
In the Matter of The Supreme Court of Judicature
(Consolidation) Act, 1925
and
In the Matter of the Arbitration Act, 1950
and
In the Matter of an Arbitration or intended Arbitration
[1976] EWCA Civ J0401-3
The Master of the Rolls (Lord Denning)
Lord Justice Goff
and
Lord Justice Shaw
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Judgment of Donaldson, J.
Mr. KENNETH ROKISON (instructed by Messrs William A. Crump & Son) appeared on behalf of the Appellants (Defendants).
Mr. ANTHONY HALLGARTEN (instructed by Messrs Ingledew, Brown, Bennison & Garrett) appeared on behalf of the Respondents (Plaintiffs).
The "Aghios Lazaros" is a small vessel carrying about 1350 tons of cargo. In January 1972 a Greek company chartered her for a voyage. She was to load a cargo of oranges in Greece and carry them to Rotterdam and Hamburg. She loaded them and left Preveza in Greece on 22nd January, 1972, but on her way out of the harbour she collided with another vessel and then grounded. She got clear with the help of a tug and proceeded with the voyage. She reached Rotterdam on 1st February, 1972 and unloaded part of her cargo there. Then to Hamburg on 3rd February, 1972 and unloaded the rest. Many of the oranges were found to be warm, wet and blackish. The charterers say that it was the fault of the shipowners: because the collision caused the ventilation channels to be blocked. The charterers gave notice of the damage to the shipowners' agents: and on 28th February, 1972 the charterers made, a claim against the shipowners for the loss. They said: "Charterers holding you fully responsible for all losses involved". On 28th April, 1972, the charterers quantified the claim, which, converted into sterling, came to £11,520 for the Hamburg consignment, and £17,641 for the Rotterdam consignment. The charterers instructed their Greek agents in Piraeus to put in a claim for payment from the owners and said: "otherwise we will take legal steps against them". The Greek agent passed this on to the agents for the shipowners in a letter dated 31st May, 1972, which is of much importance. It said simply:-
"…… Please advise your proposals in order to settle this matter, or came your arbitrators. Expecting your reply…"
The shipowners, however, did not reply. Nor did their agents. So the charterers' agents' on 16th June, 1972, sent a telex in these terms:-
"…… We have not received any reply to our letters. Please reply as charterers pressing and they are ready to take steps unless your reply will reach us till 24th June".
Still the shipowners did not reply. So on 8th December, 1972, the charterers' agents saw Mr. Clifford Clark and appointed him as their arbitrator. He accepted the appointment and they handed him the documents relating to the claim. Mr. Clifford Clark wrote to the charterers' agents, saying:-
"…… I look forward to hearing further from you in due course, especially as to whether or not agreement can be reached between the parties appointing me as the Sole Arbitrator, or, failing this, the name of the Arbitrator nominated by the Respondents".
Unfortunately, the charterers' agents did not follow this up. They went to sleep until 19th November, 1973, when they wrote giving notice of arbitration, nominating Mr. Clifford Clark as Charterers' Arbitrator. Still the owners' agents did not reply. So on 14th February, 1974 the charterers' agents gave to the owners fourteen days' notice to name their Arbitrator, thereupon, the shipowners' solicitors wrote and said that the claim was barred by time. They said that time expired one year after the cargo was delivered in February 1972. So the claim became time-barred in February 1973.
THE RELEVANT PROVISIONS
There is nothing in the charterparty itself about a time bar. It was a simple voyage charter made at Piraeus on 5th January, 1972 between Danish managing agents for the disponent owners and Greek agents for Greek charterers. It was on the Gencon form, but with these added clauses in typewriting: -"23. If any dispute arises during the performance of this charterperty and cannot be solved amicably, shall be referred to Arbitration in London.
31. New Jason clause, both to blame collision clause, P and I bunkering clause and Chamber of Shipping War Risks clauses Nos. 1 and 2 and also Paramount clause are deemed to be incorporated in this Charter Party".
There were also a few words in type added to clause 2 about the responsibility for ventilation.
The shipowners rely on the incorporation of the Paramount clause. They say that it incorporates all the Hague Rules and in particular Article III 6, which says (inter alia):-
"In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered".
Seeing that the charterparty provided for arbitration in London, it is presumably to be governed by English law. But it is not subject to the Carriage of Goods by Sea Act, 1924, because the voyage here had nothing to do with England. Nor is it subject to any Greek legislation: because Greece has no legislation making the Hague Rules compulsory. So, if the Hague Rules do apply, it is only by virtue of the contract.
UNCERTAINTY
The Judge held that in Clause 31 the phrase "and also Paramount clause" was ineffective, because he could not say what clause was to be incorporated. So none of the Hague Rules applied. Nor did the time bar in them. The contract was good but the words "and also Paramount clause" must, he held, be struck out as meaningless, as in Nicolene v. Simmonds (1953) 1 Q. B. 543.
I regard that argument as a counsel of despair, The parties have expressly stated that "Paramount Clause" is deemed to be incorporated into this charterparty. We should strive to give effect to this incorporation, rather than render it meaningless. We should make all reasonable implications to this end, just as the House of Lords did in Hillas v. Arcos (1932) 38 Com. Cas. at pages 37 and 38.
What does "Paramount Clause" or "Clause Paramount" mean to shipping men? Primarily it applies to bills of lading. In that context its meaning is, I think, clear beyond question. It means a clause by which the Hague Rules are incorporated into the contract evidenced by the bill of lading and which overrides any express exemption or condition that is inconsistent with it. As I said in Adamastos Shipping Co. v. Anglo-Saxon Petroleum Co. (1957) 2 Q. B. at page 266: "When a paramount clause is incorporated into a contract, the purpose is to give the Hague Rules contractual force: so that, although the bill of lading may contain very wide exceptions, the rules are paramount and make the shipowners liable for want of due diligence to make the ship seaworthy, and so forth".
Such being the clear meaning of "clause paramount" in a bill of lading, we have to see what is its meaning is in this charterparty. The answer is given by the decision of the House of Lords in The Adamastos (1959) A. C. 133. It brings the Hague Rules into the charterparty so as to render the voyage, or voyages, subject to the Hague Rules, so far as applicable thereto; and it makes those rules prevail over any of the exceptions in the charterparty. The Judge, however, took a different view. He said that there are many different paramount clauses and he could not say which of them was applicable. So none of them was. Hesaid of paramount clauses: "Sometimes only Article 4 exceptions are incorporated, and sometimes the incorporation of the whole of the Hague Rules is subject to a limitation that they are only to be effective if compulsorily applicable by the law of the place of shipment". I do not share the Judge's view. It seems to me that when the "Paramount Clause" is incorporated, without any words of qualification, it means that all the Hague Rules are incorporated. If the parties intend only to incorporate part of the Rules (for example Article IV), or only so far as compulsorily applicable, they say so. In the absence of any such qualification, it seems to me that a "Clause Paramount" is a clause which incorporates all the Hague Rules. I mean, of course, the accepted Hague Rules, not the Hague-Visby Rules, which are of later date.
Mr Hallgarten acknowledged that it was a case of "all or nothing". Either all the Hague Rules were incorporated, or none of them was. My answer is that, by the simple incorporation of the "Paramount Clause", all were incorporated.
ARTICLE III (6)
It follows, therefore, that there is incorporated into this charterparty the time bar clause under which the shipowners are discharged from all liability "unless suit is brought within one year after delivery of the goods".
It has been held in this Court that the clause applies to an arbitration as well as to a suit in a Court of Law, see The Merck (1965) p. 223: and I am not disposed to question this. But that case leaves open the question: At what time is a suit brought? So far as the Courts of Law are concerned, there is no difficulty. The suit is "brought" at the time when the writ is issued, even though it is not served on the defendant until some time later. But, so far as arbitrations are concerned, there ismore difficulty. I do not know of any authority which tells us when an arbitration is commenced: nor of any statute save the Limitation Act, 1939, Section 27(2). Both parties agreed before us that that section should be applied by analogy in applying Article III Rule 6. It says (so far as material) that: "…an arbitration shall be deemed to have commenced when one party to...
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