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English law
Hague-Visby Rules - When does time start to run?

A recent decision of the English High Court1 looks at the question of whether under Article III (6) of the Hague-Visby Rules time starts to run on the actual delivery date or when the goods should have been delivered.

The vessel was chartered under a voyage charterparty to which the Hague-Visby Rules applied. She loaded her cargo of fuel oil in Saudi Arabia for delivery at Mombasa. Shortly after commencing her voyage, the destination was changed to Lagos, Nigeria. She arrived off Lagos on 2nd February 2000. The receivers refused delivery, allegedly because the cargo was off-spec after having been contaminated by residues from a previous cargo of soya bean oil. The charterers then ordered the vessel to continue to Abidjan where she arrived on 13th February 2000. On 7th March 2000 the charterers informed owners of their intention to sell the cargo elsewhere to mitigate their loss. The parties entered into a new contract of carriage for discharge in Greece. As instructed, the vessel commenced her voyage from Abidjan on 11th March 2000.

1  Trafigura Beheer BV v. Golden Stavraetos Maritime Inc. - QBD (Com Ct)(Morison J) - 12th June 2002. EWHC 1154 (Comm). LMLN 0590, dated 27th June 2002.

On 27th March 2001 the charterer commenced proceedings against the shipowners at the English High Court. The claim under the voyage charterparty consisted of damages for the difference between the value of the goods at the original discharge port and the price obtained at the sale in Greece, additional costs, storage and freight, and was in excess of USD 3 million.

The owners alleged that the claim was time-barred under Article III (6) of the Hague-Visby Rules, which provides:
"…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 owners contended that the claim was out of time because the suit had to be brought within one year of the date of delivery or when the cargo should have been delivered in Lagos, latest 6th February 2000. The claim related to the refusal by the receivers at Lagos, and under the relevant charterparty, the owner's obligation was to deliver the cargo at Lagos. Consequently, time started to run at the latest when the cargo should have been delivered at Lagos as per the contract. The suit was brought on 27th March 2001, more than a year after time started to run.

The charterers submitted that the cargo was delivered in Greece and that proceedings were commenced within one year from that date. They argued that the second "option" in the Hague-Visby Rules, Article III Rule 6 "should have been delivered" was not subject to the defendant's choice, and only applied where no delivery at all had taken place - for instance where the cargo was lost at sea or never loaded.

In order to decide whether the claim was time-barred, the court had to determine whether time ran from when the cargo "should have been delivered" at Lagos or when the cargo "was delivered" in Greece.

The court concluded that the complaint that had led to the proceedings in this particular case was the non-delivery at Lagos - allegedly due to its condition. The relevant issue was then a claim for damage to cargo during the contractual voyage from the loading port in Saudi Arabia to the discharging port at Lagos. The fact that the cargo was delivered in Greece at a later stage did not affect the fact that the intention as per the first contract was to deliver the cargo at Lagos, and the commercial purpose and effect of the Rule would be distorted if the second limb did not apply, because the goods were eventually delivered in Greece. To the relevant voyage charterer, the owner had fulfilled his obligations under the charterparty. The cause of action was consequently accomplished at Lagos and time started to run from the date the cargo should have been delivered there, that is, 6th February 2000. Delivery in Greece was a separate issue from the actual case, and was not part of the suit.

The court held that the charterers' claim was time-barred.

The relevance of the above decision may be restricted to cases in which the facts are fairly similar to the particular circumstances in question. Nevertheless, it provides guidance on one aspect of the important question of time limits under the Hague-Visby Rules. The possibility to avoid time-consuming and costly legal disputes on when time starts to run should be kept in mind, enabling the parties to focus on the merits. Better safe than sorry - be aware of the dates.

The decision is currently under appeal and Gard News will keep readers informed about developments.

Any comments to this article can be e-mailed to the Gard News Editorial Team.

Gard News is published quarterly by Gard Services AS, Arendal, Norway.