Supreme Court judgement on time bar applicable to misdelivery cargo claims under both the Hague and the Hague Visby Rules.
This is an update on the English High Court judgement of Fimbank Plc -v- KCH. The High Court decided that the one-year time bar under article III rule 6 of the Hague Visby Rules also applies to claims for cargo misdelivery.
On appeal, the Court of Appeal agreed with the High Court. However, they also made a distinction if the Hague rules (rather than the Hague Visby rules) applied. Where the Hague rules applied, the one-year time bar would not apply to misdelivery after discharge. The rationale given was that the application of article III rule 6 cannot extend beyond the scope of the Rules themselves which only apply during the period of shipment on board the vessel.
The case then went to the Supreme Court where the key issues for determination were:
(1) Does article III, rule 6 of the Hague Visby Rules apply to claims for cargo misdelivery happening after discharge has been completed?
(2) If so, does clause 2(c) of the 1994 Congenbill form of bill of lading have the effect of disapplying article III, rule 6 of the Hague Visby Rules to events happening after completion of discharge? Clause 2 (c) above states that the carrier shall not be responsible for loss or damage to the cargo howsoever arising prior to loading into and after discharge from the vessel.
The Supreme Court held that the one-year time bar applies, in both the Hague and the Hague Visby rules, both to claims for cargo misdelivery after discharge and other claims occurring after discharge but prior to the cargo being delivered.
The Court based its judgement particularly on the wide wording of article III rule 6 with its focus being on delivery rather than discharge, the fact that some of the Rules apply outside the period of the carrier’s responsibility between loading and discharge and the need to achieve finality allowing the parties to close their books in connection with incidents happening during the duration of the contract of carriage. They held that English authorities supported their decision. In The Ot Sonja, the Court of Appeal held that having a “split regime” of time limits, as opposed to one where the scope of the limitation provisions is co-extensive with the carrier’s liabilities, would be “repugnant” to the purpose of the time bar clause.
The Supreme Court also rejected the Bank’s argument that clause 2 (c) of the 1994 Congenbill excludes the operation of article III rule 6. That clause is there to protect the carrier, and it is consistent with the period of responsibility under the Rules and article VII which allows the carrier to contract out of the rules before loading and after discharge.
This is a major decision for Carriers and cargo receivers alike that clarifies that the 1-year time bar under both the Hague and the Hague Visby Rules applies to misdelivery claims after discharge and to other claims after discharge and before delivery. The judgement brings consistency when dealing with any cargo claims due to incidents that may happen at any stage during the duration of the contract of carriage, which are subject to the Hague or Hague Visby rules.
