QCR Autumn 2018: Time bar under Article III rule 6 of the Hague Rules applies to claims for wrongful delivery - Arresting the vessel in a foreign jurisdiction will not stop time running

QCR Autumn 2018: Time bar under Article III rule 6 of the Hague Rules applies to claims for wrongful delivery - Arresting the vessel in a foreign jurisdiction will not stop time running

DEEP SEA MARITIME LTD V MONJASA A/S (THE “ALHANI”) [2018] EWHC 1495 (Comm)

Facts

The defendant, Monjasa, was the shipper of a cargo of bunker fuel carried onboard the Claimant’s vessel ALHANI. The bill of lading stated that the carriage was to be from Lome, Togo to Cotonou, Benin. The bill of lading expressly incorporated the 1924 Hague Rules as a matter of contract and also incorporated the exclusive English jurisdiction clause of a charterparty between the shipowners and Monjasa’s buyer.
Monjasa sold the cargo to Unitaes under a contract of sale which contained a retention of title clause. A letter of credit was issued in favour of Monjasa but payment under the letter of credit was declined due to alleged documentary discrepancies.

On 18 November 2011 the shipowners discharged the cargo onto another vessel by ship-to-ship transfer without production of the bill. The discharge and delivery of the cargo occurred simultaneously.

Monjasa commenced four sets of proceedings in relation to the alleged non-delivery of cargo. In Tunisia, Monjasa arrested the vessel in April 2012 and advanced a claim on the merits. Those proceedings had been dismissed for want of jurisdiction in July 2015 but remained the subject of an outstanding appeal. Monjasa also commenced proceedings against the shipowners before the Wuhan Maritime Court in the People’s Republic of China. The evidence suggested that Monjasa withdrew its claims against the shipowners in those proceedings on 18 October 2012. Monjasa commenced a third set of proceedings by arresting the vessel at Le Havre in January 2017. The French Court ordered Monjasa to commence proceedings before a competent court for substantive relief. Monjasa sought to commence an arbitration against the shipowners on 17 February 2017 but had since conceded that there is no arbitration clause in the bill of lading. 

The claimant, shipowners, sought a declaration that they were not liable to the defendant, Monjasa, as regards Monjasa’s claims under, or in relation to, a bill of lading under which the cargo in question was carried. The shipowners applied for summary judgement on their claim for a negative declaration on the ground that Monjasa’s claims had been extinguished pursuant to Article III Rule 6 of the Hague Rules, 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.”

This case raised two important issues in relation to the law of carriage of goods by sea;

  1. whether the time bar created by Article III Rule 6 of the Hague Rules applies to claims for wrongful delivery, where the shipowner has delivered the cargo to a third party without production of the bill of lading, and
  2. whether the requirement in Article III Rule 6 that “suit is brought within one year after delivery of the goods or the date when the goods should have been delivered” can ever be satisfied if proceedings are commenced in the courts of one country, when the bill of lading incorporates a clause from a charterparty giving exclusive jurisdiction to the courts of another country.

Judgement

The court concluded that:

  1. Ordinarily the English Court will not regard proceedings commenced in a foreign court in breach of an exclusive jurisdiction or arbitration clause as “suit” for the purposes of Article III Rule 6 in respect of the issue of whether proceedings before the English Court are time-barred.
  2. That will be the case even if the foreign court might itself allow the proceedings on merits there to continue notwithstanding that the proceedings have been commenced in breach of exclusive jurisdiction or arbitration clause.
  3. However it does not follow that the English Court should always be willing to give a declaration that a claim brought in a foreign court in breach of an arbitration or exclusive jurisdiction clause is time-barred in the proceedings before a foreign court.
  4. In particular, it might be argued that the particular issue of what constitutes the bringing of “suit” in a jurisdiction involves questions peculiar to that jurisdiction, rather than simply issues of English law as the proper law of the bill of lading contract.
  5. A further reason for caution is that it is possible to conceive of circumstances in which an English Court might allow proceedings commenced here in breach of an exclusive jurisdiction clause to continue, and, if it did so, it seems eminently arguable that those proceedings could be relied upon as an answer to any Article III Rule 6 defence advanced in that action.

Comments

This decision should be welcomed by shipowners given that it finally clarifies that mis-delivery/ non-delivery claims under a bill of lading subject to Hague Rules incorporating an exclusive jurisdiction of the English court are subject to one-year time bar, and that arresting the vessel in a foreign jurisdiction within the one year will not protect time unless there are special circumstances, such as for example that the cargo owner was not aware of the exclusive jurisdiction clause. Even if the claim is time barred in England, it is still open to the cargo owner to pursue a claim on the merits in the jurisdiction where the vessel was arrested. The Club would expect that the same principle will apply to cargo claims subject to the Hague Visby Rules.

We remind Members that delivery of cargo without production of the bill of lading may prejudice Members’ P&I cover. Members should also bear in mind that the Hague/ Hague Visby Rules will not protect Members if the mis-delivery occurs outside of the Member’s contractual period of responsibility. In the “MSC Amsterdam” [2007] EWCA Civ 794), certain clauses in the bill of lading sought to limit MSC’s responsibility to the time commencing with loading and ending with discharge and in one instance referred to “after the end of the Hague rules period.” .The Rules were found not to apply to the period after discharge when the cargo was mis-delivered from the container terminal, albeit that the goods were still under MSC’s custody

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