Jurisprudence on interpretation of Hague-Visby Rules: Limitation of Liability
- Date: 30/09/2010
- Source: CMI
El Greco (Australia) Pty Ltd. v. Mediterranean Shipping Company S.A., Federal Court of Australia, Queensland District Registry, 10 August 2004 (2004 AMC 2886)
(The summary of facts may be found in the section "General principles - Rules of interpretation")
Held, by the Federal Court, that:
 For the purpose of Article 4 rule 5(c) of the Hague-Visby Rules the enumeration of the number of packages or units in the bill of lading needs not to be contractually binding and cannot be adversely affected by any contrary statement of the carrier.
 The reference in Article 4 rule 5(c) to the number of packages or units enumerated in the bill of lading "as packed" in the container indicated that the bill of lading must use words which make clear the number of packages or units separately packed for transportation and, therefore, an enumeration of a number of pieces of cargo that could be packed in a variety of ways is not an enumeration called for by Article 4 rule 5(c).
Serena Navigation Ltd. v. Dera Commercial Establishment – The “Limnos”, Queen’s Bench Division (Commercial Court) 28-29 April; 15 May 2008,  2 Lloyd’s Rep, 166.
A shipment of US corn was carried from Louisiana to Aqaba on the vessel Limnos owned by Serena Navigation Ltd. arrival at Aqaba, after a passage through very heavy weather, a small amount of wetting damage was discovered in the holds, primarily holds 2 and 3, but also, it is alleged by the Cargo Owners, to a limited extent, holds 5 and 8, apparently caused by leakages through the vessel’s hatch covers. The quantity of wet damaged cargo was segregated and disposed of, though the owners alleged that some wet damaged kernels were not segregated, and were discharged along with the apparently sound cargo and that up to 250 tons of cargo in holds 2 and 3 had to be discharged by bulldozers, and, as a result, suffered an increased number of broken kernels.
As a condition of allowing any discharge of the cargo from holds 2 and 3 it was required that the whole of that cargo be fumigated and treated with chemicals and transferred to pre-fumigated and disinfected silos.
In order to carry out the required fumigation and treatment, the cargo had to be moved within the silos, and, as a result, the number of broken kernels within the cargo increased, resulting in a depreciation in value of the cargo amounting to US $362,142.
The whole of the cargo as a result acquired a reputation in the market as a distressed cargo, and its sound arrived market price was depressed as a result by US $13 per ton: thus the total cargo of 43,998.66 tons (less the 12 tons damaged) was reduced in value by US $13 per ton, namely a loss of US$ 571,842.26.
A range of other expenses and liabilities were incurred by the Cargo Owner in relation to the fumigation, segregation and silo storage of the cargo.
In proceedings brought by the shipowners against the Cargo Owners, Dera Commercial Establishment, counterclaimed, in addition to the market value of the cargo which was not delivered, for the total amount of US$ 1,742.40, all losses and expenses referred to in paragraphs (i)-(ii). The preliminary issue that had to be decided was how the limitation of liability had to be calculated.
The Carrier’s case was that the limit of liability under Article IV.5(a) of the Hague-Visby Rules, where, as in that case, gross weight is the applicable test, and loss of the goods is not in issue, is by reference to the gross weight of the goods physically damaged. The Cargo Owner asserted instead that the limit was applicable by reference to the whole cargo of 43,999.86 tons.
Held, by the Commercial Court, that:
 Under article 4, paragraph 5 (a) of the Hague Visby Rules the limit of liability applies only to the goods that are physically lost or damaged and therefore cannot apply to goods in respect of which only an economic loss has occurred
The MV "New York Express", Oberlandesgericht Hamburg (Court of Appeal) 2 November 2000, Transportrecht 2001, p. 87 *
Two containers with machinery were carried from Bremerhaven to Newark/New Jersey on the MV New York Express. The carrier issued an express cargo bill. The express cargo bill provided for the application of German law. It further contained a Paramount Clause in favour of the US COGSA extending the application of the US COGSA also to losses and damages occurring prior to the loading and after the discharging of the cargo. After discharging had been completed at Newark and in the course of the handling of the cargo on the terminal, the terminal operator being the carrier's subcontractor, part of the cargo was damaged. The consignee claimed damages from the carrier under the contract of carriage. The issue to be decided by the Court was whether the limitation of liability was effective.
Held, by Oberlandesgericht Hamburg (Court of Appeal), that:
 The Carrier can limit its liability to US$ 500.00 per package pursuant to US COGSA para. 1304 (5) (cfr. Art. 4 para. 5 Hague-Visby Rules).
* By the courtesy of Dr. Cristoph Horbach, Lebuhn & Puchta Rechtsanwälte,
Vorsetzen 35, D-20459 Hamburg - email@example.com
Tribunal of Naples 27 February 2004, Fertilizers and Chemicals Ltd. v. Grimaldi Compagnia di Navigazione S.p.A.  Dir.Mar. 451
A truck loaded at Rotterdam on the m/v Grande Africa, of Italian flag, with destination Lagos, was not delivered at destination. Fertilizers and Chemicals Ltd., holder of the bill of lading issued by the carrier, Grimaldi Compagnia di Navigazione S.p.A., commenced proceedings against Grimaldi in the Tribunal of Naples, claiming as damages the value of the truck, in the amount of US$ 24,727. The carrier invoked the application of the limit of liability of the Hague-Visby Rules.
Held, by the Tribunal of Naples, that:
 If the carrier fails to deliver at destination the goods and is incapable to provide any explanation on the cause of the loss, such loss must be deemed to have been caused by his gross negligence.
 When the loss of the goods is due to the gross negligence of the carrier the limit of liability provided by the Hague-Visby Rules is null and void, since it is contrary to ordre public.
Tribunale of Naples 7 October 2003, Embroidered Centre S.a.s. v. Air Seatransport Inc. and Coscos S.r.l. - The "Hua Li He"  Dir.Mar. 451
A consignment of textiles, stowed in a container carried from Quingdao to Naples on the m/v Hua Li He, arrived in damaged conditions and the consignee, Embroidered Centre S.r.l., brought proceedings against the agents in Naples of the carrier, Cosco S.r.l. and the logistic provider, Air Seatransport Inc., in the Tribunale of Naples.
A dispute arose between the parties on the conversion of the 100 gold pounds limit of the Hague Rules, applicable to the contract of carriage.
Held, by the Tribunale of Naples, that:
 The limit of liability of the carrier under article 4(5) of the Hague Rules must be converted into Italian currency on the basis of the market value at the time of the occurrence of the gold content of the gold pound in 1924.
The Buen Viento, Chiho Saibansho (District Court) of Tokyo, 16 October 2003, Kaijihou Kenkyûkaishi no.178, p.66.*
The owners of the Buen Viento, that has sunken during a voyage from Japan to the United States, commenced limitation proceedings under the Japanese law that implemented the LLMC Convention (Act on Limitation of Liability of Shipowners) in the District Court (Chiho Saibansho) of Tokyo. The owners of some valuable cargo claimed the full value of the cargo but other claimants objected that the amount of the claim should be calculated on the basis of the per kilo limitation set out by the Japanese law that implemented the Hague-Visby Rules (International Carriage of Goods Act).
Held, by the Tokyo District Court (Chino Saibansho) that:
 The per kilo limitation set out by the International Carriage of Goods Act applies automatically to any claim against the carrier, irrespective of the carrier invoking its application or not.
 The amount of the claim in respect of loss of or damage to cargo that may be filed in limitation proceedings is not based on the value of the goods lost or damaged, but on the amount that may be claimed on the basis of the per kilo limitation of the International Carriage of Goods Act.
* By the courtesy of Prof. Souichirou Kozuka of the Sophia University, Tokio - firstname.lastname@example.org
Tokyo Chiho Saibansho (Tokyo District Court) 13 May 1998, Nicholas D. Carner v. Global Silver Hawk, Inc. et al. (Hanrei Jihô no. 1676, p. 129) *
Nicholas D. Carner shipped on board the “Silver Hawk” owned by Global Silver Hawk Inc. unspecified goods and, at the time he entered into the contract of carriage, declared to the carrier the value of the goods that had been delivered to it. However the declaration of the value was not inserted in the bill of lading. Upon arrival at destination in Japan, loss and damage was found in the consignment and the shipper sued the carrier before the Tokyo District Court claiming payment of the damages on the basis of the value declared to the carrier. The carrier denied the validity of the declaration of value on the ground that it had not been inserted in the bill of lading.
Held, by the Tokyo District Court, that:
(1) The declaration of the nature and value of the goods does not need to be endorsed on the bill of lading when it is made to the performing carrier.
* Summary prepared by by Prof. Souichirou Kozuka, Sophia University, Tokyo.
Dairy Containers Ltd., Moriah Co. Ltd. and Posteel v. The Ship “Tasman Discoverer” and Tasman Orient Line CV (High Court of New Zealand-Auckland Registry 27 July 2001,  1 NZLR 265;  2 Lloyd's Rep. 528 *
During the voyage from Busan (Korea) to Tauranga (New Zealand) 55 coils of electrolytic tin plates part of a consignment of 70 coils loaded on board the m.v. Tasman Discoverer were damaged as a result of sea water ingress, and were sold as scrap. After salvage recovery, the agreed net claim of the receiver, Dairy Containers Ltd. was US$ 613,667.25. The carrier, Tasman Orient Line CV, accepted liability but stated that the package limit of £ 100 applied. Dairy Containers instead stated that the applicable limit was per each package the present value in gold of £ 100 in 1924. Clause 6(B)(b)(i) of the bill of lading provided that where no international convention or national law was applicable the liability of the carrier would be determined by the Hague Rules contained in the 1924 Convention on Bills of Lading and for the purpose of that provision the limitation of liability was deemed to be £ 100 sterling lawful money of the United Kingdom per package or unit. Clause 8.2 provided that any provision in conflict with the applicable international convention or national law shall be null and void. Dairy Containers commenced proceedings in rem against the m.v. Tasman Discoverer and in personam against Tasman Orient Line before the High Court of New Zealand-Auckland Registry.
Held, by the New Zealand High Court, that:
(1) The Hague Rules being incorporated in the bill of lading the effect of clause 8.2 is to nullify the package limitation in clause 6(B)(b)(i) to the extent that it may be in conflict with or repugnant to the Hague Rules.
(2) The first paragraph of article 9 of the Hague Rules is intended to qualify the reference in article 4(5) to £ 100, so that the figure in sterling must be taken to be a gold value figure, viz. the gold value of $ 100 sterling in 1924.
* A copy of this judgment has been kindly provided by Dr. Paul Myburgh, University of Auckland.
On appeal by Tasman Orient Line CV the New Zealand Court of Appeal reversed the decision and held that the limitation of liability under the Hague Rules was determined by both articles 4(5) and 9 and the effect of clause 6(B)(b)(i) was to replace the limit set out by the provisions of the Rules by the £100 sterling limit nor was the application of that limit prevented by article 3(8) of the Rules since the intention of the parties had been to incorporate the Rules subject to the change of the limit of liability.
Dairy Containers Limited appealed from the decision of the Court of Appeal of New Zealand to the Privy Council. The decision of the Court of Appeal was affirmed by the Privy Council (Judicial Committee) with judgment dated 20 May 2004  2 Lloyd's Rep. 647.
Held, by the Privy Council, that:
 The opening words of cl. 6(B)(b)(i) serve to incorporate the Hague Rules if no international convention or national law governs and the loss or damage is proved to have occurred at sea or on inland waterways. One of the subsequent deeming provisions, expressed to take effect "for the purposes of this sub-paragraph", is to the effect that the deeming provision gives effect to art. IV, r. 5 as it if were unqualified by art. IX.
 A term in the bill cannot be repugnant to any provision of the Hague Rules if the term in question represents a modification of the Hague Rules provision agreed by the parties in exercise of their freedom to agree what they will. It would similarly be absurd to hold that a clear contractual limitation agreed by the parties is invalidated by art. III, r. 8 of the Hague Rules.
Ferrostaal, Inc. v. m/v Sea Phoenix, Delaro Shipping Co. Ltd., Interway Shipping Co. Ltd. and Others, United States Court of Appeals for the Third Circuit, 3 May 2006 (http://www.ca3.uscourts.gov/opinarch/051837p.pdf)
Ferrostaal, Inc., the consignees of a shipment of 402 coils, carried from Tunisia to Gloucester City, New Jersey, sued the Sea Phoenix and its owners, Delaro Shipping Company, in the U.S. District Court for the District of New Jersey claiming that 280 coils had been exposed to sea water for a total damage of $ 507,892. Delaro moved for partial summary judgment claiming that COGSA paragraph 4(5) limited their liability to $ 500 per package. The District Court granted the motion for partial summary judgment. It found that COGSA applied and then applied the fair opportunity doctrine and concluded that the bills of lading provided Ferrostaal with the necessary opportunity. At Ferrostaal's request, the District Court certified for immediate appeal the issue whether an ocean carrier is entitled to invoke COGSA in order to limit recovery of damages without having incorporated a reference to COGSA or COGSA's $ 500 per package limitation in the bill of lading.
Held, by the United States Court of Appeals for the Third Circuit, that:
 The fair opportunity doctrine is not consistent with the text and the policies of COGSA paragraph 4(5).
United States of America v. Ocean Bulk Ships, Inc., m/v “Overseas Harriette” and m/v “Overseas Marilyn” (United States Court of Appeals-5th Circuit 10 April 2001, 2001 AMC 1487)
Between 1994 and 1996, the United States, through its Commodity Credit Corporation (CCC), and with the assistance of several private relief organizations, shipped cargoes to famine-stricken areas of Africa on behalf of the Agency for International Development (AID). The cargoes were shipped under various charter parties made expressly subject to COGSA on the m/v Overseas Harriette and the m/v Overseas Marilyn, vessels owned by the defendants, Ocean Bulk Ships, Inc., and Transbulk Carriers, Inc. The shipments included a variety of foodstuffs such as vegetable oil, corn, and bulgur wheat, which were shipped to the African ports of Mombasa, Kenya; Beira and Maputo, Mozambique; Freetown, Sierra Leone; and Tema, Ghana. Clean bills of lading were issued for each shipment after the cargo was stowed, indicating that the cargo was received by the carrier in good condition. Unfortunately, the goods were not received in the same quantity or quality when discharged in Africa. Survey reports documenting the loss and damage indicated several problems. Some parts of the cargo were simply not received at all. Some parts of the cargo were received in a damaged and unusable condition. The total amount of documented loss and damage to the cargo was $203,319.87.
In December 1998, the United States filed the first of five lawsuits, seeking damages for the lost and damaged cargo under COGSA. In February 1999, these suits were consolidated. In September 1999, the matter was tried to the bench. In December 1999, the district court entered judgment in favor of the United States for the limited sum of $7,300.08, the amount of damage that the defendants admit occurred prior to discharge. The judgment was appealed.
Held, by the U.S. Court of Appeals for the 5th Circuit, that:
(1) Cogsa allows the shipper to declare the cargo’s value, and inclusion of this value on the bill of lading evidences the carrier’s acquiescence to this declaration. The declared value is therefore prima facie evidence of the cargo’s value and, absent any rebuttal evidence from the carrier, is adequate to set the value of the cargo for damage calculation purposes.
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