Supreme Court finds damages claim for misdelivered sea freight time-barred by international carriage law

About this case:

• Citation:
  [2024] UKSC 38
• Judgment:
  External link
• Court:
  UK Supreme Court
• Judge:
  Lord Hamblen

Fimbank Plc, the holders of the Bills of Lading under which respondent KCH Shipping Co Ltd transported the cargo in 2018, raised a claim in 2020 seeking damages for the misdeliveries. KCH argued the one-year time bar under article III rule 6 of the Hague Visby Rules governing transport of goods by sea applied to the claim, and thus any claim had expired.

The appeal was heard by Lord Hodge, Lord Sales, Lord Hamblen, Lord Leggatt, and Lord Richards, with Lord Hamblen delivering an opinion with which the other judges agreed. Christopher Smith KC and Helen Morton appeared for the appellant and Simon Rainey KC and Matthew Chan for the respondent.

Extended application

In 2018, a customer of the appellant arranged for a cargo of approximately 85,510 metric tonnes of steam coal to be shipped aboard a vessel at East Kalimantan, Indonesia, and discharged and delivered at Indian ports under 13 bills of lading. The bills were on the 1994 Congenbill form and incorporated the terms of a voyage charterparty to have effect subject to the Hague Visby Rules, the amended version of the 1924 Hague Rules for Bills of Lading. Fimbank became the holder of the bills after taking security on them by means of pledge.

Under clause 2(c) of the bills of lading, the carrier would not be responsible for loss or damage to the cargo prior to loading and after discharge from the vessel. The cargo was discharged by the vessel at two Indian ports against a letter of indemnity and without production of the bills of lading. As a result of the misdelivery, the appellant alleged it was unable to collect payment for the cargo and sought damages from the respondent. KCH sought dismissal on the ground of the one-year time bar per the Hague Visby Rules.

It was the claimant’s case that the Hague Visby Rules could not be applied to claims arising after discharge of the goods from the vessel and therefore there was no issue of time bar. After an arbitral tribunal ruled in favour of KCH, appeals were made unsuccessfully to the High Court and the Court of Appeal, which took the view that article III rule 6 did apply to misdelivery after discharge.

On appeal to the Supreme Court, it was submitted for the appellant that nothing in the wording of the rules extended their application beyond the point of discharge. The intention of those involved in drafting the Hague Rules was that the carrier should be subject to the responsibilities, liabilities, rights and immunities of the rules when carrying goods by sea and not when they were, for instance, a bailee of cargo stored ashore after discharge.

Still wider wording

In his opinion, Lord Hamblen said of the scope of the Hague Rules: “As a matter of language, there are a number of indicators that this provision is intended to be of wide application. First, it is introduced by the phrase ‘In any event’. This indicates that the time bar is to apply in any and every case. This is supported by the French text: ‘en tout cas’.”

He continued: “This object and purpose is best met if all related claims are covered by the time bar. It makes little sense, for example, to have a time bar for claims for breach of the Rules, but not for contractual or tortious claims based on the same or substantially the same facts. It also makes little sense to have a time bar which applies to some claims arising out of the carrier’s care and custody of the goods, but not to other such claims, particularly where the dividing line will turn on factual niceties such as precisely how or when discharge has been completed.”

Noting that the same points applied to the Hague Visby Rules, Lord Hamblen said: “If the Hague Rules time bar applies to misdelivery occurring after discharge then the Hague Visby Rules time bar necessarily does so, given its still wider wording. That the Hague Visby time bar was meant to apply to such misdelivery is borne out [by] the wider wording in which it is expressed covering all liability ‘whatsoever’ and ‘in respect of goods’ rather than ‘in respect of loss or damage’.”

He concluded: “I therefore agree with the Court of Appeal’s decision that the Hague Visby Rules time bar does apply to misdelivery which occurs after discharge. It does so notwithstanding that the period of responsibility under the Hague Visby Rules is defined in the same terms as under the Hague Rules. This supports the conclusion reached in relation to the Hague Rules that the period of responsibility under the Rules does not preclude the time bar from operating outside that period.”

The appeal was therefore dismissed.