The Hollandia (Haico Holwerde, Morviken)

On 21st March 1978, some nine months after the Carriage of Goods by Sea Act 1971 ("the 1971 Act") came into force, the respondents ("the shippers") shipped from the Port of Leith a large machine weighing 9906 kilograms upon a vessel, Haico Holwerda, belonging to the appellant, the Royal Netherlands Steamship Company ("the Carriers"), for carriage to Bonaire in the Netherlands Antilles. In respect of this carriage, the Carriers issued at the Port of Leith a Through Bill of Lading proving for trans-shipment at Amsterdam.

The shippers claim that the machine was damaged during the course of discharge from the carrying vessel at Bonaire as a result of the negligence of the servants of the carrying vessel which for the ocean leg of the voyage was in fact a ship under the Norwegian flag, the Morviken, of which the Carriers were charterers.

On 26th February, 1980, the Shippers commenced an action in rem in the High Court against the Hollandia, a sister ship of the Haico Holwerda, belonging to the Carriers. The Hollandia was within the jurisdiction of the Admiralty Court though she was not in fact arrested because, as so often happens, the Carriers' solicitors agreed to accept service of the writ without prejudice to their right to move the Admiralty Court for a stay of all further proceedings.

The only ground on which such stay was sought which it is necessary for your Lordships to consider, was based on the incorporation in the Bill of Lading of a printed clause included among some 16 other clauses appearing under the heading "Company's Standard Conditions". The clause relied upon was Condition 2 which was in the following terms:—

"Law of application and jurisdiction: The law of the Netherlands in which the Hague Rules, as adopted by the Brussels Convention of 25th August 1924 are incorporated—with the exception of article 9—shall apply to this contract. The maximum liability per package is D.fl. 1,250. For goods loaded or discharged at a Belgian port, the rules of article 91 of chapter 2 of the Belgian Commercial Code shall apply.

Whenever the Carrier is not the Owner or Demise Charterer of the Ocean vessel, the Owner or Demise Charterer of such vessel shall, nevertheless, be entitled to avail himself of every exemption, limitation, condition and liberty herein contained, and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Carrier or to which the Carrier is entitled hereunder as if this Bill of Lading had been issued by the said Owner or Demise Charterer in his own name and on his own behalf.

All actions under the present contract of carriage shall be brought before the Court of Amsterdam and no other Court shall have jurisdiction with regard to any such action unless the Carrier appeals to another jurisdiction or voluntarily submits himself thereto."

The last paragraph of this clause is unquestionably a choice of forum clause, weighted no doubt in favour of the Carriers, providing for the exclusive jurisdiction of the Court of Amsterdam unless the Carriers elect otherwise. It was submitted on behalf of the Carriers that, since they had not waived it, the High Court in England ought to give effect to the choice of forum clause by granting the stay. Although the Admiralty Court in England had undoubted jurisdiction to determine disputes between the parties in the exercise of its in rem jurisdiction over the Hollandia, it would, it was contended, be an unjudicial exercise of that discretion to allow the action to proceed in the High Court in England.

My Lords, as is apparent from the first paragraph of the clause, the Netherlands at the time of the issue of the Bill of Lading were parties to the Brussels Convention of 1924, commonly known as the Hague Rules, which were scheduled to the Carriage of Goods by Sea Act 1924 ("the 1924 Act"); but the Netherlands had not by then ratified the Brussels protocol amending the Hague Rules of 1968, commonly known as the Hague-Visby Rules, which are scheduled to the 1971 Act. The Hague-Visby Rules modify the Hague Rules in several relevant respects and in particular by the new Article IV (5) they provide a higher maximum monetary liability of a carrier to a shipper or consignee in damages for any negligence or breach of contract for which the carrier is not relieved from liability under Article IV. In the instant case, under the Hague Rules the maximum liability of the Carriers would be calculated on the package or unit basis, for which alone the Hague Rules provide, and would amount to about £250; whereas under the Hague-Visby Rules the shippers would be entitled to the higher maximum based on weight which would amount to some £11,000.

It is common ground between the parties that if the dispute were to be litigated before the Court of Amsterdam, that court would apply the lower maximum applicable under the Hague Rules. Since in English law it is a question of fact what a Netherlands Court would decide under Netherlands law, your Lordships must, I think, in determining this appeal accept as accurate the statement of the law that would be applied by the Court of Amsterdam upon which the parties are agreed.

The provisions of the 1971 Act that are most directly relevant to the instant appeal are subsections (1) to (3) of section 1 which reads as follows:—

"1. — (1) In this Act, 'the Rules' means the International Convention for the unification of certain rules of law relating to bills of lading signed at Brussels on 25th August 1924, as amended by the Protocol signed at Brussels on 23rd February 1968.

(2) The provisions of the Rules, as set out in the Schedule to this Act, shall have the force of law.

(3) Without prejudice to subsection (2) above, the said provisions shall have effect (and have the force of law) in relation to and in connection with the carriage of goods by sea in ships where the port of shipment is a port in the United Kingdom, whether or not the carriage is between ports in two different States within the meaning of Article X of the Rules."

The provisions of the Hague-Visby Rules set out in the Schedule to the Act, upon the meaning of which this appeal mainly turns, are rule 8 of Article III (read in conjunction with rules 1 and 2 of the same article and rule 5(a) of Article IV) and Article X.

For ease of reference I have set these rules out below.

"Article III

1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to—

• (a) Make the ship seaworthy.

• (b) Properly man, equip and supply the ship.

• (c) Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for reception, carriage and preservation.

2. Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. …

……

8. Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. A benefit of insurance in favour of the carrier or similar clause shall be deemed to be a clause relieving the carrier from liability.

Article IV

5. (a) Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding the equivalent of 10,000 francs per package or unit or 30 francs per kilo of gross weight of the goods lost or damaged, whichever is the higher.

Article X

The provisions of these Rules shall apply to every bill of lading relating to the carriage of goods between ports in two different States if:

(a) the bill of lading is issued in a contracting State, or

(b) the carriage is from a port in a contracting State, or

(c) the contract contained in or evidenced by the bill of lading provides that these Rules or legislation of any State giving effect to them are to govern the contract,

whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person."

My Lords, the provisions in section 1 of the Act that I have quoted appear to me to be free from any ambiguity perceptible to even the most ingenious of legal minds. The Hague-Visby Rules, or rather all those of them that are included in the Schedule, are to have the force of law in the United Kingdom: they are to be treated as if they were part of directly enacted statute law. But since they form part of an international convention which must come under the consideration of foreign as well as English courts, it is, as Lord Macmillan said of the Hague Rules themselves in Stag Line Ltd. v. Foscolo, Mango & Co. [1932] A.C. 328 at 350, "desirable in the interests of uniformity that their interpretation should not be rigidly controlled by domestic precedents of antecedent date, but rather that the language of the rules should be construed on broad principles of general acceptation." They should be given a purposive rather than a narrow literalistic construction, particularly wherever the adoption of a literalistic construction would enable the stated purpose of the international convention, viz. the unification of domestic laws of the contracting States relating to bills of lading, to be evaded by the use of...