QLU Summer 2017: Limitation under Hague-Visby Rules
The High Court discusses the application of package limitation under the Hague-Visby Rules to packages and units within containers, and the applicability of the Rules where waybills are issued instead of bills of lading.
KYOKUYO CO LTD V AP MØLLER-MAERSK A/S (T/A "MAERSK LINE") (Maersk Tangier)  EWHC 654 (Comm)
The claimant was the receiver of three container loads of frozen tuna, shipped at Cartagena, Spain, for carriage by the defendant to Japan. The tuna arrived in damaged condition as a result of raised temperatures during carriage and rough handling during restuffing in replacement containers.
The three container loads comprised of frozen Bluefin tuna loins, each weighing between 20 kg and 75 kg, and bags of frozen Bluefin tuna parts, each bag weighing 20 kg. The frozen loins were stuffed into the containers as individual items of cargo, without any wrapping, packaging or consolidation. The bags were stuffed into the containers as individual bags, without additional wrapping or packaging, and without consolidation. The three loads were made up as follows:
- Container A contained 206 frozen loins and the bags (said by the claimant to number 460).
- Container B contained 520 frozen loins.
- Container C contained 500 frozen loins.
The judge proceeded on the basis that there was a single contract, for the shipment, carriage and discharge of all 12 containers, which incorporated the Maersk Terms and contained an implied term entitling the shippers to demand that a bill of lading be issued by the defendant. In order to avoid delay in delivery the claimant and the defendant agreed to the issue of sea waybills rather than bills of lading. The defendant issued three sea waybills, one for each Container.
Each waybill contained the number of individual frozen tuna loins, i.e. 206, 520 and 500 respectively. The waybill for Container A made no mention of the bagged tuna parts.
The issues for determination were as follows:
- Is liability limited pursuant to Article IV Rule 5 of the Hague Rules or is it limited pursuant to Article IV Rule 5 of the Hague-Visby Rules (whether applicable compulsorily or contractually)? The contract provided for a bill of lading to be issued. That was sufficient to satisfy Article I(b) and therefore sufficient for the Hague-Visby Rules to have the force of law. Accordingly, liability in the present case was limited by Article IV Rule 5 of the Hague-Visby Rules, which applied with the force of law in relation to the sea carriage.
- If liability is limited pursuant to Article IV Rule 5 of the Hague Rules, are the relevant packages or units the containers or the individual pieces of tuna? In light of the answer to issue (1) this issue did not arise. However, any given item of cargo could not be both packaged and unitised cargo, although the entire cargo could be neither (e.g. bulk cargoes – see The Aqasia  2 Lloyd’s Rep 510 as reported in the UK P&I Club’s QLU: Spring 2017). The frozen loins might be “units”, but each bag of tuna was a “package”. For containerized cargo, containers are in the strict sense the packages; but (following The River Gurara  1 Lloyd’s Rep 225) the container walls were transparent under the gaze of Article IV Rule 5.
Looking through the transparent walls of the three containers to examine the cargo as shipped, one saw individual frozen tuna loins and also bags. Accordingly, for the purposes of Article IV Rule 5, the cargo in fact comprised:
i) In Container A, 206 “units” of frozen tuna loin, and 460 “packages”, comprising bags of frozen tuna parts;
ii) In Container B, 520 “units” of frozen tuna loin; and
iii) in Container C, 500 “units” of frozen tuna loin.
- For the purposes of Article IV Rule 5(c) of the Hague-Visby Rules, is it relevant to look at what is enumerated in the Draft Bill of Lading or is it only relevant to look at what is enumerated in the Waybills?
By agreement reached, it was only relevant to look at the Waybills.
- If liability is limited pursuant to Article IV Rule 5 of the Hague-Visby Rules, are the containers deemed to be the relevant package or unit for the purposes of Article IV Rule 5(a), or are the individual pieces of tuna the relevant packages or units? In particular, were all or any of the individual pieces of tuna, packages or units enumerated in the relevant document as packed in each container for the purposes of Article IV Rule 5(c)?
Article IV Rule 5(c) of the Hague-Visby Rules provides:
“Where a container ... is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such [container] shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned. Except as aforesaid such [container] shall be considered the package or unit.”
The effect of article IV Rule 5(c) was to make the container the only “package or unit” for the purpose of Rule 5(a) unless there was a sufficient specification of how the cargo inside comprised “packages or units”.
There was no difficulty in the case of the bags of frozen tuna parts in Container A. The waybill for Container A made no mention of bags of tuna. Therefore, insofar as the bags of tuna were concerned, the container was deemed by Rule 5(c) to be the (only) relevant package or unit.
As regards the frozen tuna loins, the “packages or units” of the cargo as packed were the individual frozen loins and since they were identified and enumerated in the waybills as being the cargo, by operation of Article IV rule 5(c) of the Hague-Visby Rules they were the “packages or units” (in fact “units”) for the purposes of article IV rule 5(a).
- Whichever of The Hague or Hague-Visby Rules applies does limitation fall to be calculated by reference to the cargo in all three containers collectively, or should limitation be calculated by separate treatment of the cargo in each container individually?
The Hague-Visby Rules apply and each frozen loin as a separate ‘unit’ attracted a separate limit of 666.67 units of account. The damage to the tuna in Containers A and B involved depreciation in value of 35% and 31% respectively. While the tuna in Container C was depreciated by 85%. The essential point to know was whether any “unused balance” of the Article IV Rule 5 limit referable to the tuna in Containers A and B was available to the claimant as compensation for the heavy damage to the tuna in Container C (“collectively”).The court took the view that there was a separate limit for each “package or unit”.
This case provides a detailed analysis of issues surrounding package limitations for containerised cargo. The packages or units carried in a container need to be enumerated in a bill of lading otherwise the actual container will be considered a unit for the purpose of Hague Visby Rules limitation. Cargo limits apply to each package/unit separately and any unused balance from one unit cannot be carried over to another unit to increase that unit’s limit of liability.