Time bar for misdelivery claims under the Hague Rules

Deep Sea Maritime Ltd v Monjasa A/S (The Alhani) [15.06.18]

Date published

22/06/2018

Services

Sectors

Locations

English High Court holds that the 12 month time limit in Article III Rule 6 of the Hague Rules applies to misdelivery claims where the carrier delivers the cargo to a third party without production of the bill of lading (at least where delivery takes place during the stages of carriage agreed to be covered by the Rules).

Background

The shipowners (Owners) agreed to carry a cargo of bunker fuel from Lome to Cotonou. The bill of lading as issued included a paramount clause which contractually applied the Hague Rules to the carriage. It also incorporated the terms of a voyage charterparty including an English High Court exclusive jurisdiction clause. Owners discharged the cargo by ship-to-ship (STS) transfer without production of the bill of lading. Cargo interests (Monjasa) arrested the vessel in Tunisia within 12 months of the misdelivery. Proceedings in Tunisia to determine the merits of the claims were later dismissed but were under appeal. Monjasa also brought proceedings in China, France and before the English High Court outside the 12 month period.

Owners sought summary judgment that they were not liable to Monjasa on the basis that Monjasa’s claims were time barred, in accordance with Article III Rule 6 of the Hague Rules, which states “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.”

The decision

The judge (David Foxton QC) granted summary judgment. He considered that there was no settled understanding that Article III Rule 6 did not apply to misdelivery claims; the wording of the Rule with its references to “in any event” and “all liability” was wide enough to do so; and the object of finality behind the time bar would be seriously undermined if Article III Rule 6 did not apply to misdelivery claims. The time limit applied to breaches of the carrier’s obligations connected with the goods which occur during the Hague Rules period of responsibility.

Where proceedings are brought in a particular court in breach of an agreement to bring claims in another forum they will not - other than in exceptional circumstances - constitute proceedings before a competent court for the purpose of satisfying the requirements of Article III Rule 6. On the facts of the present case, Monjasa could not rely on the Tunisian merits proceedings because they had been brought in breach of the exclusive jurisdiction clause in favour of the English courts.

Implications

There has long been academic debate as to whether claims against a carrier for misdelivery are subject to the one year time bar in the Hague Rules (and the Hague-Visby Rules) which runs from the date of delivery or the date on which the goods should have been delivered.

The weight of such judicial authority as exists (such as the decision of the Privy Council in The New York Star [1981]) supported that conclusion but some textbook authors have suggested the contrary. This decision now provides welcome clarity on this issue. Cargo interests claiming to be the victims of misdelivery should treat the date on which the goods were allegedly misdelivered as the date from which time runs, even if they were not aware of the misdelivery until a later date. The position is likely to be the same if the Hague-Visby Rules apply.

In this case, delivery took place by way of STS transfer and at the same time as discharge. Consequently, there may still be scope for argument in other cases (especially those involving dry cargo and containerised goods) that on the facts the misdelivery does not amount to delivery within the period of carriage covered by the Rules.