Owners of Cargo on Board The Merak v The Merak(Owners); The Merak

JurisdictionEngland & Wales
CourtCourt of Appeal
Judgment Date02 Dec 1964
Judgment citation (vLex)[1964] EWCA Civ J1202-1

[1964] EWCA Civ J1202-1

In The Supreme Court of Judicature

Court of Appeal


Lord Justice Sellers

Lord Justice Davies and

Lord Justice Russell

The Owners of Cargo Lately Laden on Board the Ship or Vessel "Merak"
- and -
The Owners of the Ship or Vessel "Merak" "The Merak"

Mr. J. FRAHKLIK WILLMER (instructed by Messrs. Clyde & Co.) appeared on behalf of the Appellants (Plaintiffs).

Mr. BASIL S. ECKERSLEY (instructed by Messrs. Sinclair, Roche & Temporally) appeared on behalf of the Respondents (Defendants).


The writ in this action was issued on the 15th November, 1962, claiming £406. 4s. 6d. damages for alleged breach of contract by the defendants, Dutch owners of the motor vessel "Merak", in respect of timber shipped on board that vessel for carriage to Newport, Monmouth shire. The writ included other claims and relief which are not here relevant. On the 28th July, 1964, Mr. Justice Scarman stayed further proceedings on the claim for damages on the ground that the parties had agreed to refer such a dispute to arbitration.


Unfortunately for the plaintiffs, if Mr. Justice Scarman's decision is upheld it would seem that they cannot successfully pursue their claim at all, for arbitration has long since been out of time. The damages are said to have accrued when the goods in question were delivered at Newport not later than the 21st November, 1961, when the whole cargo was finally discharged and the period of limitation of twelve months under the Hague Rules had nearly expired when the writ was issued. The period in which arbitration proceedings were to be taken was likewise twelve months and it is no longer submitted that there is any ground for extension of time.


The appellants had purchased timber from Walkom, Finland, and on the 21st April, 1961, they entered into a charter party with William Dickinson & Co. Ltd. for the carriage of a full and complete cargo of timber, as specified, in "First Class tonnage to be nominated". Clause 10 of that charter party stipulates that "the bills of lading shall be prepared in the form endorsed upon this charter and shall be signed by the master, quality, condition and measure unknown, freight and all terms, conditions, clauses (including clause 32) and exceptions as per this charter". Clause 32 provides that "Any dispute arising out of this charter or any bill of lading issued hereunder shall be referred to arbitration…."


The clause further stipulates: "All claims must be made in writing and the Claimant's Arbitrator must be appointed withintwelve months of the date of final discharge otherwise the claim shall be deemed waived and absolutely barred".


William Dickinson & Co. Ltd. performed their charter party with the plaintiffs by chartering the motor vessel "Merak" under a charter party dated the 15th September, 1961, which was on the same terms and conditions as the original charter party (including clauses 10 and 32) except as to freight and a new clause No. 33 which provided: "Bills of lading for this cargo to be signed with reference TO charter party dated 21st April 1961 which is guaranteed to be the same as this charter party except as regards rate of freight, sub-charterers undertaking to pay freight in accordance with clause 1 of this charter".


In this way the owners of the "Merak" were called upon to perform William Dickinson & Co. Ltd.'s duty under the charter party of the 21st April, 1961.


Bills of lading were duly issued. The plaintiffs claim as indorsees of 13 bills dated in Walkom, Finland, the 24th October, 1961, signed by the Master of the "Merak".


Each bill of lading states that the voyage is "as per charter dated the 21st April 1961" and provides that "All the terms, conditions, clauses and exceptions including clause 30 contained in the said charter party apply to this bill of lading and are deemed to be incorporated therein".


Clause 30 was clearly an error as that clause gives liberty to the ship-owners to substitute a vessel, if one were named, on due notice to the charterers and it would have no bearing once the ship had commenced loading.


Learned counsel for the appellants in a sustained and clear submission argued that the reference to clause 30 (which he conceded clearly was an error) left the whole clause in which it appeared inadequate to incorporate the arbitration clause (that is clause 32) into the bill of lading.


In my opinion if "including clause 30" is struck out the remaining clause is quite adequate and effective to make clause 32, the arbitration clause, in the charter party "deemed to beincorporated" into the bill of lading. Amongst the various clauses in the charter party which can be regarded as relevant to the bill of lading is clause 32, which in terms stipulates for arbitration "Any dispute arising out of this charter party or any bill of lading issued thereunder…."


In this respect it is in contrast to the case of Thomas v. Portsea S. S. Co. Ltd. (1912 Appeal Cases page 1), on which so much reliance was placed by the appellants. In that case no mention was made of the bills of lading issued under the charter party and the inclusion of the arbitration clause in them would have been by implication. No such argument can arise here and I do not think that Thomas v. Portsea can be regarded as an authority that a clause to be incorporated must relate to shipment, carriage and delivery and cannot be extended further and cannot provide for arbitration.


It was scarcely argued that if the incorporating clause had read "including clause 32" the arbitration clause would not then have been incorporated, subject to a further argument on repugnancy.


Although in this contract it was unnecessary specially to mention the arbitration clause in order that it should be clearly incorporated, it seems to me that the bill of lading clause can properly be read by substituting "32" for "30" and on two grounds. Anyone reading the charter party, as the bill of lading holder would have to do, would know that the arbitration clause was intended, and I cannot see why the Court should shut its eyes to the obvious on some technical ground of construction. A practical not an abstract construction is called for.


The bill of lading is a coinnercial document to be used by commercial people. It is a negotiable instrument which may be acquired by a party who has no knowledge of the charter party to which it refers and the Court should be mindful of this circumstance. But the incorporating clause is clear and wide and to be understood requires reference to the charter party. In order to discover what the terms of a bill of lading are, that is toconstrue or interpret it. the holder has to refer to the charter party and select therefrom the clauses which apply. He cannot do this without reading them. Lord Esher's observations in Hamilton v. Mackie (1889) 5 Times Law Reports, page 677, are apt. "Conditions of the charter party must be read verbatim into the bill of lading as though they were there printed in extenso. Then if it was found that any of the conditions of the charter party on being so read were inconsistent with the bill of lading they were insensible and must be disregarded". But even if a narrower view is taken and only the relevant clauses enter the bill of lading the others have to be read before they can be rejected and I do not see how clause 10 can fail to convey to any holder of the bill of lading with a copy of the charter party, which it is necessary for him to peruse, that clause 32 was intended where clause 30 was inserted. To me it does not seem to leave room for doubt and it is the way any ordinary business man would read the clause in the light of the two documents.


Further, in the present case, clause 10 was in the charter party of the 21st April, 1961, and consequently the form of the bill of lading was a requirement imposed by the appellants themselves as charterers and parties to the contract as much as by the shipowners. Bills of lading issued not in accordance with clause 10 (including clause 32) would put the shipowners in a default of which the appellants could have complained, saying for instance that clause 32 ought to have been inserted. In my view it is oddly inconsistent that the appellants complain that the shipowners now allege that the bill of lading properly construed means precisely what the appellants required it to mean.


The point is of little greater substance than a further point taken that the dispute does not arise out of any bill of lading "issued hereunder", that is under the charter party of the 21st April, 1961. The goods were carried in the "Merak" and her master issued the bills but he did so in fulfilment of the appellants' charter of the 21st April, 1961. It may bethat the bills were issued under the second charter as well but the claim arose in the course of the one voyage made on identical terms of carriage. Like the judge I see nothing in the point.


The appellants' further contention was that the arbitration clause must in any event be rejected because it would be contrary to the General Paramount Clause set out in the bill of lading.


By this clause (as it was conceded) the Hague Rules are incorporated and the Paramount Clause expressly stipulates that any term of the bill of lading repugnant to any extent to any legislation incorporated by the clause shall be void to that furtther.


Article III Rule 6 of the Hague Rules provides that "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 the delivery of the goods or the date when the goods should have been delivered".


It was argued that "suit" in the English version of the Hague Rules meant an action in the Courts and was distinct from an arbitration and that, if a...

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1 books & journal articles
  • Anti‐suit Injunctions and the Doctrine of Comity
    • United Kingdom
    • The Modern Law Review Nbr. 79-2, March 2016
    • 1 March 2016
    ...contained in the charterparty, even though arbitration and court litigationwere completely different modes of dispute resolution.)56 [1965] 1 All ER 230 (CA), 233 at [165] per Davies LJ and Russell LJ.57 See notes 10 to 14 above regarding the nature of the bills of lading in the present dis......

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