Delays – Container Shipments

1. Container shipments may be delayed due to various reasons, and which could include
   1. vessel arriving at the load port much after the ETA.
   2. delays during transshipment due to delayed arrival of vessel, congestion, work stoppages, etc.
   3. cargo not loaded or shut out due to operational issues and / or providing priority to high freighted cargo.
   4. average incidents during the voyage.
      Whether the alleged delay is actually a delay is a question of fact and which would be ascertained from all of the circumstances including the vessel schedule, port rotation, transhipment planning, external incidents etc. Although delays may occur in Bulk shipping, it is relatively less given that the number of parties involved, rarity of transshipments and that the vessel generally proceeds directly to the discharge port.This article will consider the potential liability and available defences to the contractual carrier for delay related claims initiated by the cargo interests.
2. Bills of Lading (B/L) issued by Carriers in the container liner industry would invariably incorporate a clause to deal with delays and which would read like “… does not promise or undertake to load, carry, or discharge the Goods on or by any particular Vessel, date or time…”ⁱ. This clause would then generally go on to provide that the Carrier would not be held liable for any consequential damagesⁱⁱ and if they should be liable, the liability would be restricted to the amount of freight paid. Hence, we would therefore need to also consider the effect of this clause and whether any other compulsorily applicable laws would apply to override the provisions of this clause.
3. Container shipments invariably are by sea and may be coupled with road / rail transits. As these shipments are generally international in nature, various compulsory conventions / laws would govern the contract of carriage. While there are still no International Convention applying to two or more modes of transportⁱⁱⁱ, some countries have however legislated provisions to apply for such multimodal movements^iv. Given the above, we propose to consider the application of the delay clause for both a sea and multimodal shipment.
   1. Sea shipments: The Hague or Hague Visby Rules (“the Rules”) invariably^v apply either by force of law^vi or by incorporation by way of the Clause Paramount^vii.The question would then be whether the provisions of the Delay Clause would be held valid when the contract of carriage / B/L’s are governed by the Rules?
      1. The relevant provisions of the Rules are as follows:
         1. Art I (e) states “”Carriage of goods” covers the period from the time when the goods are loaded on to the time they are discharged from the ship.”
         2. Art III Rule 2 of the Rules provides for “…the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried”.
         3. Art III Rule 8 provide that any clause which reduces the effect of the provisions of the Rules is null and void^viii. Hence, if the application of the “delay” clause impacts any of the provisions of the Rules, then it would be struck down as null and void.
         4. Art IV R 5 (e) of the Hague Visby Rules (this provision is not available in the Hague Rules) states “Neither the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result”.
         5. The Rules do not have any specific provisions for Delay. However, we submit that there is an implied duty on the Carrier to prosecute the voyage with utmost dispatch. Alternatively, the provisions of Art III Rule 2 “carry” provides for the same duty.
      2. If the delay occurs prior to loading:
         1. The application of rules is after loading (see 3aiI) above), we submit that the provisions of the “delay” clause should apply to deal with any claims submitted. This clause would entitle the Contractual Carrier to either deny or limit liability to the amount of freight involved in the carriage.
         2. We submit that the freight involved would generally not be a significant amount vis-à-vis the loss suffered. Additionally, cargo interests should they pursue for recovery would incur  some unrecoverable costs. This being the case, cargo interests may sometimes be better off holding any pursuit for recovery.
         3. If the delay is however due to carrier’s reckless behavior, we submit that the courts may well restrict the application of the delay clause such that the Carriers would not be entitled to the benefit of any limitation. This would obviously depend where the issue is heard together with the law of the contract.
         4. The question is what would be construed as reckless behavior. If the delay is due purely for the carrier’s convenience, say by giving priority to high freighted cargoes by discharging already loaded or planned cargo, unless this has been contractually agreed, we submit that this should be construed as reckless behavior. We submit that the wordings of the delay clause in the present form as mentioned in 2 above do not apply to reckless behavior such that Carriers would have to deal with valid delay claims.
      3. If the delay occurs after loading:
         1. given that the Rules apply compulsorily, we would need to consider the provisions of the Rules.
            •  As mentioned above (3aiV)), the Rules do not have any specific provisions for delay. It was previously thought that to claim, there must a “physical” loss. Accordingly, if there was a pure economic loss claim, the Rules would not apply and instead the contractual provisions of Bills of Lading such as the Delay clause would apply.
            • The earlier position is no longer tenable given the recent English Court’s judgement in The “Thorco Lineage” [2023] EWHC (Comm)^ix which held that the Hague Visby’s limitation of liability also included pure economic losses.
            • If the limitation of liability available under the Rules exceed the freight charges (which would in most cases be the case), then the “delay clause” of the Bill of Lading would be struck down by the application of Art III R 8 and instead the Carrier would only be entitled to limit liability as provided in the Rules. On the other hand, if the freight charges exceed the limitation of liability under the Rules, then provisions of the delay clause would apply given that it does not lessen/reduce the provisions of the Rules.
            • If the delay results from an act or omission of the carrier (see 3aiIV) above), then under the Hague Visby Rules, the Carrier would not be entitled to the limitation provisions. However, there is no such bar under the Hague Rules.
         2. If the delay occurs during transshipment:
            • If the B/L issued is for a specific vessel, given that the delay occurs prior to loading or after discharge, the Rules should not apply. Instead, the provisions of the Delay clause would apply such that the Carriers would be entitled defend any claims on the contractual provisions.
            • On the other hand, if B/L issued is a Through B/L i.e., it will cover from the time of loading till discharge including transshipments, the provisions of the Rules^x would apply such that Carriers would have to deal with any claims on the basis propounded in 3aiii above.
   2. Combined / Multimodal Transport Bills of Lading:
      1. Application of the Multimodal Acts: Some countries, such as India and Singapore, have legislated Multimodal Acts to govern the multimodal carriage of goods i.e., more than one mode of transport. While the acts apply for outward shipments only, they may not be mandatory (for instance, the Singapore act only applies if the Multimodal Transport Operator is registered with either the Singapore or the relevant ASEAN national body). This being the case, one would have to first ascertain as to whether the relevant Multimodal Transport is  applicable.
      2. Provisions of the Multimodal Acts: Both the Indian and Singapore acts entitle Carriers to exclude liabilities for some claims and in its absence limit liability for delay related claims to the value of freight earned for the subject shipment. Given that the Delay clause provides for limitation to be based on the freight earned, we submit that the application of either the Multimodal acts or the Delay Clause in the B/L’s would provide similar results. However, if the delay is due to the reckless act of a carrier, then both the Indian and Singapore disentitles the carrier from the limitation defence such that they would be liable for the loss suffered by the cargo interests.
4. In conclusion,
   1. Delays may result in commercial losses and for whcih cargo interests must consider adequate risk management measures to deal with.
   2. To pursue a delay claim, it has to be first established if the Carrier were at fault and / or have any defences.
   3. The English Court has held that pure economic losses can be pursued under the Rules. This being the case, whenever the Rules apply (for sea carriage) it is possible for cargo interests to pursue for recovery at least up to the value of their losses subject to any limitation defence.
   4. Both the Multimodal Acts and the contractual provisions of the B/L entitle a Carrier to limit liability to the amount of freight and which may be insufficient to cater for the losses suffered by the cargo interests.

^i. Clause 8 of MSC and Clause 8.1 of Maersk Bills of Lading.
^ii. Some clauses define these to include direct or indirect consequential damages.
^iii. For instance, The UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, known as the Rotterdam Rules and which is yet to receive the international recognition that it does deserves.
^iv. For instance, India has legislated the Multimodal Transport of Goods Act 1993 and Singapore has legislated the Multimodal Transport Act 2021.
^v. The Rules do not apply to non-negotiable documents. However, the Bills of Lading wordings generally provide for the Rules to apply by a Clause Paramount, the Rules will also generally apply for non-negotiable documents.
^vi. Most of the countries have legislated the provisions of either the Hague or the Hague Visby Rules such that these rules would apply to B/L’s and similar documents of Title as provided in the Rules.
^vii. See article on Clause Paramount revisited published by the Standard Club and which can be viewed at 2277755-clause-paramounts-revisited.pdf (standard-club.com).
^viii.“ Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connexion 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 this Convention, shall be null and void and of no effect….”
^ix. See article by Dr Arun Kasi and which can be viewed at The_Thorco_Lineage_KS_and_Arun_Article.pdf (4-5.co.uk)
^x.See Mayhew Foods v OCL [1984] 1 Lloyd’s Rep 317 where the Carrier was not entitled to limit liability on the basis of their B/L provisions and instead, were entitled to limit liability on the basis of the Hague Visby Rules.