Confirmation On The Operation Of Time-Bars

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Credits: Venti Views/ Unsplash

The English Court of Appeal confirms the Commercial Court decision clarifying the application of time-bars in relation to deliveries made after discharge from the ship. Further appeal has been denied, so this case brings welcome certainty, albeit clearly decided on specific contractual wording and factual situation.

The Facts

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. As holder of the bills, the bank served a notice of arbitration on the carriers, but after the one year time bar under Article III(6) of Hague Visby had expired. This happened because the bank’s lawyers had failed in time to establish the existence of a bareboat charter, which identified the responsible carrier.

The bank argued on two grounds that the time-bar did not apply:

  1.  Mis delivery 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; and
  2. The parties had agreed not to apply Hague-Visby by a term in the bills relieving the carrier of responsibility for loss or damage after discharge.

The Judgment

The courts, finding considerable speculation, but no clear precedent, on the misdelivery point in England, decided that Article III(6) did apply to claims for misdelivery after discharge. The language of Hague-Visby was distinguished 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, the court found the intention of the drafters to be persuasive. The objective of the Article, and of time-bars generally, was held to achieve finality and to enable parties to ‘clear their books’.

On the second point both courts found, on a matter of construction, that the express terms of the bills did not display Hague-Visby after discharge. The court distinguished a precedent, the Court of Appeal decision in MSC Amsterdam1, 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”.

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Source: TTClub