Owners of cargo lately laden aboard the River Gurara v Nigerian National Shipping Line Ltd
| Jurisdiction | England & Wales |
| Judge | Colman J. |
| Judgment Date | 29 January 1996 |
| Court | Queen's Bench Division (Admiralty) |
| Date | 29 January 1996 |
Queen's Bench Division ((Admiralty Court)
Colman J.
Jeremy Russell QC and Robert Thomas (instructed by Waltons & Morse) for the plaintiff cargo owner.
Jervis Kay and Christopher Smith (instructed by Hill Dickinson Davis Campbell) for the defendant carrier.
The following cases were referred to in the judgment:
Aegis Spirit, TheUNK [1977] 1 Ll Rep 93.
Bank of England v Vagliano BrosELR [1891] AC 107.
Bekol BV v Terracina Shipping Corp (unreported, 13 July 1988, Leggatt J).
Binladen BSB Landscaping v MV “Nedllboyn RotterdamECAS (1985) 759 F 2d 1006.
Boknis, The (1985) 86 S & S No.49.
Cameco Inc v SS American LegionUNK [1975] 1 Ll Rep 295.
Cariba Express, The (1980) 80 S & S No. 122
Chelleram (P S) & Co Ltd v China Ocean Shipping CoUNK [1989] 1 Ll Rep 413.
Consumers Distributing Co Ltd v Dart Container Line Co Ltd (1979) 31 NR 181.
Haverkate v Toronto Harbour Commrs (1986) 30 DLR (4th) 125.
Hollandia, TheELR [1983] 1 AC 565.
Jessel v BathELR (1867) LR 2 Ex 267.
Johnston (J A) Co Ltd v “The TindefjellUNK [1973] 2 Ll Rep 253.
Leather's Best Inc v “The Mormaclynx”UNK [1970] 1 Ll Rep 527.
Lebeau v General Steam Navigation CoELR (1872) LR 8 CP 88.
Mitsui & Co Ltd v American Export Lines Inc (1981) 636 F 2d 807.
New Chinese Antimony Co Ltd v Ocean Steamship Co LtdELR [1917] 2 KB 664.
Royal Typewriter Co v MV KulmerlandUNK [1973] 2 Ll Rep 423.
St Paul Fire & Marine Insurance Co v Sea-Land Services Inc (1990) 735 Fed Supp 129.
Société Navale Caennaise v Gastin [1965] DMF 18.
Stag Line Ltd v Foscolo, Mango & Co LtdELR [1932] AC 328.
Studebaker Distributors Ltd v Charlton Steam Shipping Co LtdELR [1938] 1 KB 459.
Whaite v Lancashire & Yorkshire Railway CoELR (1874) LR 9 Ex 67.
Bill of lading — Limitation of liability — Carriage by sea — Cargo packed in containers — Bills of lading treated containers not filled by carrier as single “package or unit”— Loss of cargo — Whether carrier, could limit liability to £100 per container — Whether each container amounted to a “package or unit” or whether separately packed goods in each container amounted to “package or unit”— Hague Rules, art. III, r. 8, art. IV, r. 5.
This was the hearing of preliminary issues relating to whether, under a bill of lading which incorporated the Hague Rules, the defendant carrier was entitled to limit its liability to the plaintiff cargo owners for lost cargo to £100 per container under art. IV, r. 5 of the Hague Rules.
The defendant carrier was the owner of a vessel with the plaintiffs” cargo on board. The vessel sank with a total loss of cargo. The cargo mainly consisted of containers many of which had been packed by the shippers. The goods were mostly shipped under bills of lading in the form of the UK West Africa Line. Under that form the carriage of goods was subject to legislation at the ports of shipment incorporating the Hague Rules.
The cargo owners brought proceedings for the loss of the cargo. The carrier claimed it was entitled to limit its liability under art. IV, r. 5 of the Hague Rules to £100 per “package or unit”. A dispute arose as to whether each of the containers packed with goods amounted to a “package or unit” or whether the goods in the containers individually amounted to a “package or unit”.
Clarke J ordered the trial of the preliminary issues of whether the carrier was entitled to rely on art. IV, r. 5 of the Rules and on cl. 9 of the bills of lading which provided that a container not filled by the carrier was to be considered as one “package or unit”, or whether that clause was contrary to art. III, r. 8 of the Rules and therefore void.
Held, giving judgment for the cargo owner:
1. Although under art. III of the Hague Rules the carrier was entitled not to list in the bill of lading information in respect of goods, such as those packed in containers, which it had no reasonable means of checking, there was nothing in the Rules which expressly or by implication limited the application of art. IV, r. 6 to packages which the carrier had a reasonable means of identifying. Therefore for the purposes of art. IV, r. 5, the number of packages was not limited to the number of containers but was the smallest category of separately packed items which had been described in one of the bills of lading.
2. That construction of the scope of the rule accorded with decisions in other jurisdictions and was consistent not only with the language but also the policy of the Hague Rules.
3. The only purpose of cl. 9(B) was to achieve the very result which art. III, r. 8 was designed to prevent, that was to lessen the liability of the carrier for loss or damage in connection with goods arising from negligence or fault or failure in relation to art. III duties and obligations. The fact that such reduction in liability was achieved indirectly by a re-definition of “package” was of no consequence. Accordingly cl. 9(B) was rendered null and void by art. III, r. 8.
Colman J: This case raises an issue of far-reaching importance on the proper construction of the Hague Rules which has never previously been determined by the English courts.
On 26 February 1989 the defendants” vessel “River Gurara”, having suffered an engine breakdown while in the course of a laden voyage from West Africa to Europe, was stranded on the Portuguese coast. Subsequently, she broke up and sank with loss of life and a total loss of cargo. Much of that cargo was containerised. As is usual in modern maritime transportation, many of the containers had been stowed with their contents by the shippers before they were delivered to the defendants or their agents. These goods were mostly shipped under bills of lading in the same form, that of the UK West Africa Line. Under that form the carriage of goods was subject to legislation at the ports of shipment incorporating the Hague Rules.
The plaintiffs, who claim to be entitled to sue for loss of the cargo, commenced proceedings in the Admiralty Court and the defendants raised as part of their defence their entitlement to limit their liability to “£100 per package or unit” under art. IV, r. 5 of the Hague Rules. In so doing they asserted that, although many of the bills of lading stated that a container was “said to contain” a given number of separate items, such as pallets, crates, cases, cartons, bales and bags, the container itself should be treated as the sole package for the purposes of art. IV, r. 5. As can be appreciated the effect on the maximum recoverable amount is in many cases dramatic. Thus, for example, one bill of lading-evidencing shipment of a container from Tema stated that it was said to contain eight pallets said to contain 1,855 bundles of veneer. The defendants say that the container is the only “package”, whereas the plaintiffs say that there are 1,855 packages.
This issue has been the subject of dispute between cargo underwriters and P &I clubs ever since containers were first introduced as a regular means of international maritime transport over 30 years ago. Innumerable opinions must have been written on the subject over the years by counsel at the Commercial Bar. The problem was recognised by those who framed the protocol known as the Hague-Visby Rules at Brussels in 1968 which was incorporated into English Law by the Carriage of Goods by Sea Act 1971. Article IV, r. 5(c) provided:
“(c) Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned.”
However, there are still many states which have not incorporated the Hague-Visby Rules into their domestic legislation and there are consequently many movements of cargo which even today are still governed by the Hague Rules in their original form.
It is in these circumstances quite remarkable that up till now there has been no judgment of the English courts which has resolved the disputed applicability of art. IV, r. 5 to the contents of containers.
The point now comes before me as part of a number of issues ordered by Clarke J on 8 February 1995 to be tried as preliminary issues. They are as follows:
“(a) Whether cl. 9 of the UKWAL form of the bill of lading is contrary to art. III, r. 8 of the Hague Rules and hence void;
(b) If the answer to (a) is no whether the burden of proving that any particular container is ‘shipper packed’ rests upon the plaintiffs or the defendants;
(c) In circumstances where a container or pallet has been used to consolidate goods and the bill of lading states not only the number of containers and/or pallets, but also quantifies the number of goods loaded therein or thereon, whether the defendants are entitled to limit their liability pursuant to art. IV, r. 5 of the Hague Rules by reference to (a) the number of containers or (b) the number of pallets or (c) the number of goods described by the bill of lading as having, been loaded therein or thereon.
(d) In the circumstances where wood has been bundled and the bill of lading states not only the number of bundles but also the number of individual pieces of wood, whether the defendants are entitled to limit their liability pursuant to art. IV, r. 5 of the Hague Rules by reference to the number of bundles or whether they may only limit their liability by reference to the number of pieces of wood described by the bill of lading as having been loaded.”
In considering whether cl. 9B of the bills of lading is avoided by art. III, r. 8, it is necessary to determine, whether that clause is one which relieves the carrier or the ship from liability for loss or damage to or in connection with goods or lessens such liability as is provided in the Hague Rules. For this purpose, one must...
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