Fimbank claimed that a sea carrier had delivered a cargo of coal to someone not entitled to it, without production of the bills of lading, and said that this misdelivery occurred after the coal had left the ship. The Supreme Court held that the one-year time limit in both the Hague Rules and the Hague-Visby Rules covers such a claim. A bill of lading clause excluding the carrier’s responsibility after discharge did not remove the time bar, so the bank’s appeal failed.
The shipment and the claim
A cargo of coal was carried on the GIANT ACE under bills of lading incorporating the Hague-Visby Rules. Fimbank financed its customer’s purchase of the cargo and ultimately held the bills.
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The coal was discharged in April 2018 without production of the bills. The bank alleged that the carrier subsequently delivered it to the wrong person. For the purpose of deciding the time-bar issue the Court assumed misdelivery after discharge. It did not decide whether the alleged misdelivery had occurred.
The bank began arbitration on 24 April 2020. That was more than one year after the cargo was delivered or should have been delivered. The carrier contends that the claim is time-barred. Its defence had not yet been served; the time-bar question was decided first.
The one-year limit
Carriage of goods by sea under bills of lading is commonly governed by the Hague Rules, a 1924 convention, or by those Rules as amended by the 1968 Brussels Protocol, the Hague-Visby Rules. Article III, rule 6 of the Hague Rules provides that “in any event” the carrier and the ship are discharged from “all liability in respect of loss or damage” unless suit is brought within one year after delivery, or the date when the goods should have been delivered. The Hague-Visby wording is wider: the carrier is discharged from “all liability whatsoever in respect of the goods”.
Although the contract was governed by the Hague-Visby Rules, the parties agreed that the court should first ask whether the Hague Rules time bar would cover misdelivery after discharge. If it would, the wider Hague-Visby wording necessarily would too.
Discharge and delivery are different. Discharge is the physical operation of removing the goods from the ship. Delivery is the transfer of possession to the person entitled to them and often happens later, for example after storage ashore. The Rules also create a period of responsibility from the start of loading to the completion of discharge. During that period the carrier has minimum responsibilities which cannot be reduced and maximum protections which cannot be increased. The bank argued that the time bar, like the Rules generally, could apply only to breaches during that period.
Why the limit covers misdelivery after discharge
Lord Hamblen, with whom Lord Hodge, Lord Sales, Lord Leggatt and Lord Richards agreed, rejected that restriction. “In any event” and “all liability” are broad. The bar is not limited to physical damage to the goods or to breaches of the Rules themselves. It can cover related financial loss and claims in contract, tort or bailment, so long as the claim has a sufficient connection with identifiable goods carried or to be carried. It may also apply to breaches before loading.
Rule 6 is concerned with delivery rather than discharge. It deals with notice of loss, surveys and facilities for inspection, matters which often arise after the goods have left the ship. Other provisions also operate outside the loading-to-discharge period, including the obligation to issue a bill after receiving goods and the duty, before the voyage, to exercise due diligence to make the ship seaworthy. Article II applies “in relation to” the listed cargo operations, which allows some rules to operate around the period of responsibility.
The rule enables carriers to close their books after a fixed period and to investigate claims while evidence remains available. That purpose would be undermined if the time limit depended on precisely when a wrong delivery occurred in relation to the physical discharge of the goods.
The Hague Rules define a period of responsibility, but that did not mean every provision was confined to events within it. The Court disagreed with the Court of Appeal on the scope of the original Hague time bar. The wider wording of the Hague-Visby version reinforced its application.
The Hague-Visby time bar therefore also applies. Its wider language, and article IV bis, show that the defences and limits apply to actions in contract or tort, not merely to breaches of the Rules. The preparatory work for the 1968 Protocol shows that the amendment was intended to cover “wrong delivery” in the broadest possible terms. The drafters did not limit it to misdelivery during the voyage or at the moment of discharge, nor did they change the definition of the period of responsibility. On that Hague-Visby conclusion the Supreme Court agreed with the Court of Appeal.
The exclusion clause
Clause 2(c) of the Congenbill says that the carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising, before loading or after discharge, while the cargo is in another carrier’s charge, or in respect of deck cargo or live animals. The bank argued that this disapplied the Rules, including the time bar, after discharge.
The exclusion clause did not remove the time limit. It would be commercially surprising if a clause intended to protect the carrier after discharge instead deprived it of a defence. It was unnecessary to decide the further question about contractual application of the Rules where they would not otherwise apply.
Verdict: The Supreme Court unanimously dismissed the bank’s appeal. Under both sets of Rules the one-year time bar extended to a claim for misdelivery after discharge, and clause 2(c) did not disapply it. The arbitration had been started too late; the Court made no finding that the carrier had in fact misdelivered the cargo.
