QCR Spring 2017: The Court of Appeal provides guidance on the interpretation of a Clause Paramount incorporating the Hague Rules

Superior Pescadores [2016] 1 Lloyd's Rep. 561 

Facts

The claimant cargo owners brought claims against the defendant shipowners in respect of damage to their cargo. The cargo had been loaded at Antwerp, Belgium for carriage to Yemen. The cargo was damaged while the vessel, Superior Pescadores, was crossing the Bay of Biscay. The shipowners admitted liability for the cargo damage but disputed quantum.

The parties agreed that the claim would be subject to English law and jurisdiction.  English law rendered the Hague Visby Rules applicable as a matter of statute law when the carriage was from a port in a contracting state, such as Belgium.

The shipowners paid the cargo owners the HagueVisby package limitation amount. However, the cargo owners argued that the clause paramount constituted a contractual incorporation of the Hague Rules and so to the extent that the Hague Rules provided for higher limits than the Hague Visby Rules, they were entitled to those higher sums. 

Each bill of lading contained a clause paramount identical to that in the Congenbill clause, containing the following sentence: "The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract." 

The Court of Appeal held that in England in any case where a bill of lading is issued containing (i) a Clause Paramount which incorporated the Hague Rules as enacted in the country of shipment; and (ii) that country of shipment has enacted the Hague Visby Rules, then the bill of lading should be considered as incorporating the Hague  Visby Rules.

The Court of Appeal also held that the legal position in Belgium would be the same as in England. In other words, a Clause Paramount would incorporate the Hague Visby Rules into the bill of lading.

It is only after the event that it can be established whether the Hague or Hague Visby regime will yield a higher package limitation.  The compensation payable under the Hague Rules depends on the gold value at the date of delivery of the goods (or when they should have been delivered). The compensation payable under the Hague Visby Rules depends on the value of the conversion from the Special Drawing Right amount specified in the Article IV Rule 5 of Hague-Visby Rules into the national currency.  In England, the conversion date is the date of judgment. 

Comments

The Hague Visby Rules were principally designed to increase the limits of liability of the Hague Rules but at the same time also to extend the defences and limits of liability to tort claims, and offer protection to the servants and agents of the carrier. The Hague Visby Rules also amended the method of calculating the carrier's limit of liability, the right to break the limit and extended the time limit for indemnity claims.

The decision of the Court of Appeal in the Superior Pescadores achieves certainty. The default position is that the Hague Visby Rules apply and clear words will be required if the parties intend the Hague Rules to apply.  It remains to be seen whether foreign courts will interpret the Clause Paramount in the same way as the Court of Appeal.