Art X – Hague Visby Rules

1. The recent Marine Brief of Kennedysⁱ provided an update of a Australian judgement (MV Dijksgracht) which touched on the application of the Hague Visby Rules (“HVR”). In the MV Dijksgracht, the Australian COGSA would have applied if a negotiable document was issued (the Australian COGSA applies for both inward and outward shipments). However, as the documents issued were non-negotiable documentsⁱⁱ, the Australian COGSA did not apply, and which resulted in the Courts considering whether the HVR applied on the basis of Art X and which has a requirement of “contracting states”. The court held that the HVR did not apply and instead, the contractual provisions applied which provided for the application of Art I-VIII of the Hague Rules with limitation amount of £ⁱⁱⁱ100 per package^iv (the Carriers were hence entitled to limit liability to a sum of £300). 
2. The number of countries who have either ratified or acceded to the HVR appears to be around 32. Some states have however implemented the HVR without either ratifying or acceding to the convention such as the Peoples Republic of China, India, South Korea, United Arab Emirates, etc. While the facts of the MV Dijksgracht are unique given that arguably both parties were of equal bargaining power, it does appear that there is potential for Carriers to deny the application of the HVR for Liner shipments, particularly, when cargo is loaded from a “non contracting” state (who may have implemented the HVR in their legislation). Accordingly, if cargo claimants from these non-contracting jurisdictions pursue the Carrier for recovery in a contracting state, say due to a jurisdiction clause, they may face similar results as in the MV Dijksgracht. 
3. We submit that this obviously would go against the very reasons why the cargo conventions came into place, and which was to provide a balance between the Carriers and Cargo interests including Intermediate Carriers (“CIC”). If the matter is instead heard in the country of loading (which has implemented the HVR without becoming a contracting state), the courts would be duty bound to apply the provisions of HVR as legislated in their jurisdiction^v. Accordingly, it does appear to us that CIC’s should consider initiating action in the jurisdiction where the cargo was loaded so as to avoid the potential denial of the HVR on the basis of  “Contracting States” provision.
4. Accordingly, CIC’s should:
   1. seek express confirmation from the overlying Carriers that, if there is a jurisdiction clause, the Carriers expressly agree to the application of the HVR and waive any  “contracting state” provision of the HVR.
   2. if the Carriers are unagreeable
      1. CIC’s should consider initiating action in the local courts seeking relief given that the application of the jurisdiction clause may result in ousting the limits provided in the HV Rules as legislated in their jurisdiction.
      2. on the other hand, if Carriers have already initiated action against CIC’s, then they should consider initiating anti-suit injunction, if available in their jurisdiction, to force the Carrier to deal with the issues at the courts of the CIC’s choice.
5. The other possibility to deal with this issue is for courts of “Contracting States” to consider
   1. the intention of the convention instead of following the strict wordings of the HVR and which, we submit, should result in the application of the HVR even if the shipment was effected from a non-contracting state.
   2. if the BL’s can be issued in a HV Country, say by a Switch B/L or otherwise, then the court should adopt the HV Rules provided in the issuing country (of say the Switch B/L), and which would result in the application of the HVR (similar to what was decided in the English Case of The Maersk Tangier^vi).
   3. Only time will tell whether the Courts of other Contracting States would be willing to take an expansive instead of restrictive interpretation to ensure the application of HVR.
6. In conclusion,
   1. CIC’s should be aware of the potential issues on the application of HVR
      1. if the country of shipment is not a contracting state, and
      2. consider whether they can pursue the Carrier in their courts to avoid any denial of the HVR on the basis of “contracting states” provision. 
   2. Carriers and CIC’s should voluntarily consider working together to provide for a Clause Paramount which provides for the application of HVR given that this would not have a material effect on the premium spends to the Carrier (the prevailing liability covers available to the Carriers is based on the HVR^vii)

^i. See Oct 22 Kennedys Marine Brief
^ii. The Maersk Tangier was considered but was not followed – see our earlier article, Back to Basics – Contract of Carriage.
^iii.  Great Britain Pounds
^iv. See our earlier article, Art IX of the Hague Rules
^{v. See Art III (8) of the HVR ” Any clause, covenant, or agreement in a contract of carriage relieving the carrier of ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in the Convention, shall be null and void and of no effect…”
vi}. See ii above.
^vii. For instance, R 34.1 iii) on Cargo Liability of the Gard Rules of 2022