INSIGHT 143, 1996
01 SEP 1996
It has become common practice to incorporate the Hague or Hague-Visby Rules into time charters through the use of a Clause Paramount.
In such cases the English courts have held that the immunity given to shipowners by Article IV of the Hague and Hague-Visby Rules in respect of "loss or damage" extends beyond physical loss or damage to cargo.2
In the recent case of the "MARINOR" the English Commercial Court had to consider what degree of connection with actual carriage of cargo must exist so that the protection afforded by Article III (6) of the Hague-Visby Rules may be invoked.
The relevant part of Article III (6) of the Hague-Visby Rules reads:
"Subject to paragraph 6bis 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." 3
The "MARINOR" was time-chartered under a long-term charter to carry sulphuric acid from Canada to the USA. The charterparty contained a Clause Paramount which incorporated the Hague-Visby Rules.
After a period without incidents, problems occurred in four consecutive voyages, when the cargo was discharged in a contaminated condition. As a consequence, the charterers chartered another vessel for the following voyage with sulphuric acid to Savannah. However, they agreed to give the "MARINOR" a last chance and employed her in a voyage (voyage 32) involving the carriage of acid to Tampa, where the cargo could be used by the receivers even if outturned in a contaminated condition.
The cargo carried by the "MARINOR" in voyage 32 was discharged in Tampa in a contaminated condition. Charterers then notified the owners that they would charter two other vessels to transport the acid cargo intended to be carried by the "MARINOR" and would use her solely for the carriage of clay slurry. Some time later, after remedial action, the "MARINOR" resumed acid shipments pursuant to the time charter party.
The charterers commenced arbitration proceedings against the owners claiming damages for breach of the charter party, in connection with voyage 32 (the claim was for the difference between the market price of the acid at Tampa and the price which could have been obtained in Savannah for uncontaminated acid, plus extra expenses) and for the need for substitute tonnage to carry the acid cargo (cost of the substitute tonnage less hire which would have been paid to the "MARINOR"). The charterers did not put forward any claim concerning physical loss or damage to cargo.
The owners argued that the claims were time barred by virtue of Article III (6) of the Hague-Visby Rules. Charterers contended that the time bar did not apply to the claims in question because these were not the type of claims which a cargo owner could bring against a carrier and they were therefore not the kind of claims to which the Article III (6) time bar was designed to apply. It was the proximity of connection between the claim and a given cargo, charterers argued, which was of paramount importance in determining whether the time bar applied to that claim.
In deciding the matter Colman, J. examined other judgments involving issues arising from the incorporation of the Hague or Hague-Visby Rules into charter parties and noted that the protection provided by Article IV was restricted to claims in respect of loss or damage which the parties could be taken to envisage might be caused by the owners to the charterers in the course of performance of the charter. As for the protection in Article III (6), he concluded that there was no reason in principle why it should not apply to an equally broad spectrum of claims, provided that it was possible to identify a date when goods sufficiently relevant to the claim were delivered or should have been delivered. The words "in respect of goods" in Article III (6) of the Hague-Visby Rules could not, in the context of a time charter, be construed as meaning a liability which would also found a claim by a cargo owner in the context of a bill of lading contract. They should be construed as meaning liability involving a particular cargo or intended cargo, and sufficiently involving that cargo so that the financial loss sustained may be referable to what was done with that cargo or was directly associated with it.
It was held that the time bar applied to the voyage 32 claim but not to any of the substitute tonnage claims.
The decision clarifies that where the Hague-Visby Rules are incorporated into a time charter, the time bar in Article III (6) may be relied against a claim for breach of any term of the charter party, even if not co-extensive with obligations under the Rules, provided that:
(1) the claim asserts
a liability involving physical loss or damage to the goods, or
a liability for financial loss sustained in relation to goods and
(2) the goods in question were either shipped or were intended to be shipped pursuant to the charter. In the case of goods intended to be shipped, it is necessary for a particular voyage or voyages to have been in the contemplation of both parties at the time when the breach preventing shipment on that voyage occurred.
1Noranda Inc. and Others v. Barton (Time Charter) Ltd. and Another - "THE MARINOR" (1996)1 Lloyds Rep. 301.
2See for instance Adamastos Shipping Co. Ltd. v. Anglo Saxon Petroleum Co. - "THE SAXON STAR" (1958) 1 Lloyds Rep. 73; "THE ALIAKOM PROGRESS" (1978) 2 Lloyds Rep. 499.
3The corresponding part of Article III (6) of the Hague Rules reads as follows:
" In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered."