The Mahkutai
| Jurisdiction | UK Non-devolved |
| Judge | Lord Goff of Chieveley,Lord Jauncey of Tullichettle,Lord Nicholls of Birkenhead,Lord Hoffmann,Sir Michael Hardie Boys |
| Judgment Date | 22 April 1996 |
| Court | Privy Council |
| Date | 22 April 1996 |
Bailment - Carriage by sea - Terms - Bailment of goods by shippers to shipowners for carriage - Bill of lading issued by carrier to shippers containing Himalaya clause and providing for determination of disputes in Indonesia - No contractual relationship between shipowners and cargo owners - Cargo damaged during voyage - Cargo owners bringing action in Hong Kong against shipowners - Whether exclusive jurisdiction clause term of bailment - Whether shipowners entitled to rely on exclusive jurisdiction clause - Shipping - Bill of lading - Himalaya clause - Carrier issuing bill of lading containing Himalaya clause - Exclusive jurisdiction clause - Carrier directing shipowners to carry cargo - Shipowners not parties to bill of lading contract - Cargo damaged during voyage - Cargo owners instituting proceedings in Hong Kong against shipowners - Whether Himalaya clause entitling shipowners to benefit of exclusive jurisdiction clause - Ships' Names - Mahkutai
Indonesian shipowners chartered their vessel to the carrier, an Indonesian corporation, which sub-chartererd it to the shippers for the carriage of a cargo from Jakarta, Indonesia, to Shantou in the People's Republic of China. The carrier's agents issued a shipping order directing the vessel to receive the cargo for carriage to Shantou subject to the provisions of the carrier's bill of lading. The master signed the shipping order, which constituted a mate's receipt, and he authorised the carrier's agents to sign the bill of lading. They issued a bill of lading to the shippers containing a Himalaya clause which provided, inter alia, that every servant, agent or subcontractor of the carrier was to have the benefit of all “exemptions, limitations, provision, conditions and liberties” therein benefiting the carrier as if such provisions had been expressly made for their benefit. The bill of lading also provided that any dispute should be determined exclusively by the Indonesian courts. On arrival at Shantou some of the cargo was found to have been damaged by sea water. The vessel proceeded to Hong Kong, and the cargo owners instituted proceedings in the High Court of Hong Kong against the shipowners claiming damages for breach of contract, breach of duty or negligence. On application by the shipowners the judge ordered those proceedings to be stayed holding that the shipowners, although not parties to the bill of lading, were entitled to invoke the exclusive jurisdiction clause in it either as a contractual term or as one of the terms on which the goods had been bailed to them. The Court of Appeal of Hong Kong by a majority reversed that decision.
On the shipowners' appeal to the Judicial Committee: —
Held, dismissing the appeal, (1) that the exclusive jurisdiction clause created mutual rights and obligations with regard to the relevant jurisdiction for the determination of disputes and therefore was not an exception, limitation, condition or liberty benefiting the carrier within the Himalaya clause because no obligations were imposed on the shippers by such terms; that, furthermore, having regard to its context the word “provision” in the Himalaya clause related to provisions in the bill of lading which were not exceptions, limitations, conditions or liberties but were nevertheless for the carrier's benefit and protection, and not to a mutual agreement such as an exclusive jurisdiction clause; and that, accordingly, the exclusive jurisdiction clause was not within the Himalaya clause, and even if they were “subcontractors” of the carrier the shipowners, not being parties to the bill of lading contract, were not entitled to invoke the exclusive jurisdiction clause as against the cargo owners (post, pp. 12H, 13E–H, 14G, 15C).
(2) That, since the goods had been shipped on board the shipowners' vessel pursuant to a bill of lading containing a Himalaya clause whereby the shipowners, if subcontractors, were expressly to be entitled to the benefit of some of the terms in the bill of lading but not of the exclusive jurisdiction clause, that clause was not an implied term on which they had taken the goods into their custody because a bailment on terms which included it would be contrary to the express provisions of the bill of lading; and that, accordingly, the cargo owners were entitled to bring the action in Hong Kong against the shipowners and the stay had properly been set aside (post, p. 15F–H).
Quaere. Whether the shipowners are “subcontractors” within the meaning of the Himalaya clause (post, p. 12G).
The following cases are referred to in the judgment of their Lordships:
Adler v. Dickson[
Brandt v. Liverpool, Brazil and River Plate Steam Navigation Co. Ltd.[
Dresser U.K. Ltd. v. Falcongate Freight Management Ltd.[
Elder, Dempster & Co. Ltd. v. Paterson, Zochonis & Co. Ltd.[
Forum Craftsman, The[
Johnson Matthey & Co. Ltd. v. Constantine Terminals Ltd.[
London Drugs Ltd. v. Kuehne & Nagel International Ltd.(
Midland Silicones Ltd. v. Scruttons Ltd.[
New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd. (The Eurymedon)[
Pioneer Container, The[
Port Jackson Stevedoring Pty. Ltd. v. Salmond and Spraggon (Australia) Pty. Ltd. (The New York Star)[
Thomas (T.W.) & Co. Ltd. v. Portsea Steamship Co. Ltd.[
Trident General Insurance Co. Ltd. v. McNiece Bros. Pty. Ltd.(
Wilson v. Darling Island Stevedoring and Lighterage Co. Ltd.(
The following additional cases were cited in argument:
Aratra Potato Co. Ltd. v. Egyptian Navigation Co.[
Sea & Land Securities Ltd. v. William Dickinson & Co. Ltd.(
Singer Co. (U.K.) Ltd. v. Tees and Hartlepool Port Authority[
Vita Food Products Inc. v. Unus Shipping Co. Ltd.[
APPEAL (No. 39 of 1994) with leave of the Court of Appeal of Hong Kong by the owners and/or demise charterers of the Mahkutai (“the shipowners”) from that part of the judgment and order of the Court of Appeal of Hong Kong (Litton J.A. and Mayo J., Bokhary J.A. dissenting) given on 2 July 1993 which had allowed an appeal by the owners of the cargo lately on board the Mahkutai, (“the cargo owners”) and set aside the order of Sears J. made on 5 February 1993 in the High Court of Hong Kong (Admiralty Jurisdiction) that the proceedings by the cargo owners against the shipowners in Hong Kong be permanently stayed. In view of the dismissal by the Judicial Committee of the shipowners' appeal it was unnecessary for the cross-appeal by the cargo owners relating to the security provided by the shipowners to be determined.
The facts are stated in the judgment of their Lordships.
Peter Gross Q.C. and Duncan Matthews for the shipowners.
Richard Aikens Q.C. and Alan Roxburgh for the cargo owners.
22 April. The judgment of their Lordships was delivered by LORD GOFF OF CHIEVELEY.
There is before their Lordships an appeal by the appellants, the owners of the Indonesian vessel Mahkutai (“the shipowners”), from a decision dated 2 July 1993 of the Court of Appeal of Hong Kong [
The main issues arise on the appeal, and are concerned with the question whether the shipowners, who were not parties to the bill of lading contract, can invoke as against the cargo owners the exclusive jurisdiction clause contained in that contract, the bill of lading being a charterers' bill issued by their agents to the shippers. The shipowners claim to be able to do so, either under a Himalaya clause incorporated into the bill, on the principles established by the Privy Council in New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd. (The Eurymedon)[
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