Package limitation under Hague Visby Rules confirmed

Kyokuyo Co Ltd v A.P. Møller-Maersk A/S (The Maersk Tangier) [17.04.18]

Date published

22/06/2018

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Court of Appeal confirms that a unit for the purpose of the Hague-Visby Rules (H/V Rules) package limits is any unpackaged item of cargo, and that the H/V Rules can apply compulsorily even where a waybill is issued.

Background

Cargo interests claimed for damage to a cargo of unpackaged pieces of frozen tuna stuffed in three refrigerated containers. The carriage arrangements contemplated the issue of bills of lading but to avoid delays in delivery waybills were issued describing the contents of the containers as (in the case of one waybill) “said to contain 206 pcs frozen bluefin tuna loins”.

Preliminary issues relating to the applicability of the H/V Rules to the contracts of carriage and package limitation in light of the description of the contents of the containers were determined by the Commercial Court (Baker J).

The Court of Appeal dismissed the carrier’s appeal against the judgment of Baker J, holding that:

  1. A ‘unit’ is to be interpreted simply as any physical item of cargo which is not packaged. There was no additional requirement that the item must have been capable of breakbulk shipment.
  2. A description of the cargo which accurately states the number of items which are in fact ‘units’ or ‘packages’ inside the container will be sufficient enumeration to comply with Article IV.5(c) H/V Rules. It was not necessary, as held by the Federal Court of Australia in El Greco v Mediterranean Shipping [2004], that the manner of packing also be described.
  3. In principle, the H/V Rules apply compulsorily to any contract of carriage which expressly or by implication gives the shipper a right to demand the issue of a bill of lading. It is not necessary for that right to be exercised and the H/V Rules apply whatever carriage document (if any) is actually issued.

Comment

Baker J’s decision was something of a tour de force and it is pleasing to see that the Court of Appeal has upheld the pragmatic approach to the potentially difficult question as to what is meant by a unit, consistent with its decision in The Aqasia [2016], without requiring the additional level of detail suggested in the El Greco case. It now seems to follow that where items of cargo have been packaged together the items are not units but part of a single package, otherwise each item is a ‘unit’.

The more difficult issue is whether the H/V Rules should have any compulsory application where a waybill is actually issued. The H/V Rules only apply to contracts of carriage which are ‘covered by a bill of lading’ and a waybill is not a bill of lading for these purposes (the Rafaela S [2005]). Cases such as Pyrene v Scindia [1954] have (correctly) held the H/V Rules to have been applicable where bills of lading were contemplated but never issued, where cargo is damaged during loading and never shipped. In those cases it was clearly the parties’ intention that the H/V Rules should apply.

There seems to be less justification for extending that principle to situations where the relevant terms of the contract (usually in a charterparty or booking note) provide for the potential issue of a bill of lading but a waybill is issued instead. The situation in the Maersk Tangier was somewhat unusual, and the conclusion may be justified on the specific facts, or where the carrier issues a waybill contrary to the shipper’s intention, or by mistake.

In future cases we can expect to see waiver and estoppel arguments being deployed: it seems unlikely that courts or tribunals would reach a similar conclusion where, for example, cargo interests have by the terms of a booking note or charterparty a choice between being given a bill of lading and a sea waybill and elect for the latter.