Time Bars under the Hague-Visby Rules and misdelivery by a carrier after discharge

The Commercial Court considered an arbitration tribunal decision that found that the time bar in Article III rule (6) of the Hague Visby Rules (HVR) does apply to misdelivery claims after the discharge of cargo.

Background

Bills of lading held by FIM Bank plc, were issued on the CONGENBILL form "to order" on behalf of the vessel, which was bareboat chartered by KCH. The bills of lading were subject to the HVR and included Article III rule (6) which provides:

"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".

Cargo had been discharged from the vessel against Letters of Indemnity without production of the original bills of lading but was misdelivered to the wrong party.

FIMBank commenced a claim against KCH-the contractual carrier but the arbitration was started after the one-year time bar in Article III rule (6) had lapsed.

FIMBank argued the claim was not subject to the time bar under Article III rule (6) of the HVR on the basis that:

1. Delivery took place after the discharge of cargo and therefore the time bar was not relevant as a matter of fact.
2. The time bar did not apply to claims for misdelivery occurring after discharge, because they only governed the carrier’s obligation in the carriage of goods by sea, and therefore did not apply once the cargo had been discharged as a matter of law.
3. Relying on the judgment in the MSC Amsterdam, clause 2(c) of the CONGENBILL disapplied the HVR, by stating that “the Carrier shall in no case be responsible for loss and damage to the cargo[…] prior to loading into and after discharging from the Vessel”.

The Tribunal decision

The Tribunal had found that:

1. The time bar in Article III rule (6) of the HVR did apply to claims relating to the misdelivery of cargo occurring after discharge and the CONGENBILL form did not dis-apply the HVR for the period following discharge.
2. Clause 2(c) of the CONGENBILL form does not disapply the HVR in respect of the period after discharge because the facts and the clauses considered in the MSC Amsterdam decision [2007] where a contrasting conclusion was reached, had distinguishable terms in the Bills of Lading.

FIMbank appealed under section 69 of the Arbitration Act 1996.

The Commercial Court judgment

The Commercial Court upheld the tribunal’s decision, and dismissed the appeal in its entirety.

Comment

In this key decision, the Commercial Court clarifies an important question which had not previously been decided by the English courts, namely whether the time bar in Article III rule 6 HVR, applies to claims for misdelivery of cargo after discharge from the vessel.

Parties should be extremely careful in determining chains of ownership in charter parties. Further, parties wishing to exclude the effect of the time bar under Article III rule 6 of the HVR after discharge, need to expressly exclude it when contracting.