Fimbank plc-v-KCH Shipping (2022)ECWH 2400 is an important judgment by the English Commercial High Court where it has been held for the first time that the one year time bar under article III rule 6 of the Hague Visby rules also applies to claims for cargo misdelivery after discharge.
The relevant part of Article III rule 6 reads as follows:
“…the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered.“
The judgement is issued in connection with an appeal of a partial arbitration award under section 69 of the Arbitration Act 1996. Section 69 provides a limited scope for appeal on a question of law in matters of general public importance. The appeal was allowed.
The facts of the case are as follows:
In March 2018 the vessel “Great Ace“ called ports in Indonesia to load a cargo of coal to be discharged at Jaigarh and Dighi in India. Bills of lading were issued “to order” in the Congenbill form. The bills were subject to the Hague Visby rules. On arrival in India the cargo was discharged against Letters of indemnity and placed in port stockpiles. Fimbank who stands in the position of the cargo owners under the bills, brought a claim against KCH as carriers for alleged cargo misdelivery after the cargo was discharged from the stockpiles against delivery orders.
Fimbank claim was brought more than 1 year after the goods should have been delivered, therefore the claim was brought outside the limitation period under the Hague Visby rules. The arbitration Tribunal held that the claim was time barred under Article III rule 6.
Fimbank appealed the Tribunal’s partial award. The two questions put forward for appeal were:
- Whether Art.III, r.6 of the Hague-Visby Rules applies to claims for misdelivery of cargo after discharge.
- Whether clause 2(c) of the Congenbill bill of lading form disapplies the Hague-Visby Rules to the period after discharge (Clause 2(c) reads as follows: “The Carrier shall in no case be responsible for loss of damage to the cargo howsoever arising prior to loading into and after discharge from the Vessel…“
In arguing their case, Fimbank maintained that the Hague Visby rules only applied to the carriage of goods by sea and therefore any immunities that protect the carrier including the one year time bar end after the cargo is discharged from the vessel; anything happening in connection with delivery of cargo from shore storage after discharge including a claim for misdelivery falls outside the Rules.
In upholding the Tribunal’s decision, the court agreed with KHC argument that that the contract of carriage evidenced by a bill of lading applies prior to the cargo passing the ship’s rail and continues after discharge and up to the time the cargo is delivered to the consignees. It was also submitted that the reference to the carrier’s “custody“ obligation and the carrier’s duty to keep and care for the goods” in the Rules must necessarily last until the goods are delivered under the bill.
The Court agreed with the grounds of the Tribunal’s decision that the parties had agreed to apply the Rules to “any Bill of lading issued under this charterparty“ but also by implying a term to the same effect as shown by prior English law authorities. It would have been open to the parties to contract out of the Rules before loading or after discharge but this was not the case here.
The Court further held that its decision was strengthened by the consideration that article III rule 6 is intended to achieve finality in respect of any claims to be presented against the carrier in connection with the carriage of goods under the particular bill of lading contract.
This is a favourable judgement for carriers as it provides uniformity on the time bar that applies to claims arising under the contract of carriage evidenced by the bill of lading when the Hague Visby rules apply. However the result may be different if the parties have contracted out of the Hague Visby rules for the period before loading or after discharge .
Further, the judgement may have limited application in certain jurisdictions as there does not appear to be international consensus on the construction of Article III rule 6.