TT Talk - Legal Eagle: UK Supreme Court clarifies time bar applicability in cargo misdelivery cases

In a landmark judgment, the UK Supreme Court has provided crucial clarity on the applicability of the Hague-Visby Rules to claims for cargo misdelivery after discharge. The decision, which upheld the rulings of the lower courts, has significant implications for the interpretation of time bars in maritime law and the responsibilities of carriers post-discharge.

AMS AMEROPA MARKETING & SALES AG & Anor v OCEAN UNITY NAVIGATION INC (“Doric Valour”) 
FIMBANK PLC v KCH SHIPPING CO LTD (The “Giant Ace”) 
[2024] UKSC 0038 

The Facts 

This case, which was originally reported in TT Talk in July 2023, has now reached the UK Supreme Court. 

Cargo carried under 13 sets of Congenbill bills of lading from Indonesia, subject to Hague-Visby rules, was delivered into stockpiles after discharge in India against letters of indemnity without production of bills of lading.  The bank, as holder of the bills, served a notice of arbitration on the carrier, after the one year time bar under Article III(6) Hague Visby had expired.  This happened because the bank’s lawyers had failed in time to establish the existence of a bareboat charter, identifying the carrier. 

The bank argued on two grounds that the timebar did not apply.  One, misdelivery after discharge was beyond the “period of responsibility” envisaged by Hague-Visby which ends with discharge of cargo.  Hague-Visby regulates the carriage of goods by sea, but not the obligation to deliver cargo.  Two, the parties had agreed to disapply Hague-Visby by a term in the bills relieving the carrier of responsibility for loss or damage after discharge.   

A (strong) arbitration tribunal, as a preliminary issue, rejected both arguments and found that the timebar did apply.  The bank appealed to the Commercial Court and subsequently to the Court of Appeal and the Supreme Court.  All three appeals were dismissed. 

The Judgment 

The Court of Appeal, finding considerable speculation but no clear precedent on the first ground in England, decided that Hague-Visby Article III(6) did apply to claims for misdelivery after discharge. The Court of Appeal distinguished Hague-Visby from the narrower corresponding wording in the Hague Rules.  Reference to the Hague-Visby travaux préparatoires indicated a clear intention to avoid fine distinctions around the point at which discharge ended, particularly in view of the normal commercial practice that delivery takes place after discharge.  In legal terms, a “bull’s eye” had been hit, allowing the court to be persuaded by the intention of the drafters. The objective of the Article, and of timebars generally, was held to achieve finality and to enable parties to “clear their books". 

On the second ground the Commercial Court and the Court of Appeal found, on a matter of construction, that the express terms of the bills did not disapply Hague-Visby after discharge.  The court distinguished a precedent, the MSC Amsterdam ([2007] EWCA Civ 794), on the grounds that the bill of lading in that case referred explicitly to a period of bailment which commenced after the end of the “Hague Rules period”. 

The Supreme Court took a similar approach to that taken by the two lower courts, save that it did not distinguish the positions under Hague and Hague-Visby, as the Commercial Court had done.  The Supreme Court therefore held that both Hague and Hague-Visby applied to claims for misdelivery after discharge. This additional judgment could be considered controversial since Hague Rules were not directly relevant to the present case (although it supported an argument that, if a claim was allowable under Hague, it would certainly be allowable under the wider provisions in Hague-Visby). Nevertheless, the judgment in respect of Hague as well as Hague-Visby was made on the basis of commercial certainty, logic and consistency with other provisions within Hague Rules, and the impact of the expressions “in any event” and “all liability”, which are used in this context in both Hague and Hague-Visby.  

Comment 

The court in the Alhani ([2018] 2 Lloyds Rep 503) had already applied the Hague Rules one year time limit apply to a misdelivery claim arising on discharge within the “tackle to tackle period”. This had left open the question whether it applied after discharge from the vessel. This case, and in particular the Supreme Court decision, removes the remaining uncertainty (closes the gap) on this point, at least under English law, and is important.   

However, as pointed out earlier in TT Talk, comparison with the MSC Amsterdam may indicate that this judgment depends on the exact terms of the bill of lading.  There may also remain some doubt as to the situation where the time period between discharge and delivery is prolonged. 

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