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Mis-delivery of cargo – Time bar

Jagan - January 31, 2019 - 1 comment

  1. The Hague and Hague Visby Rules invariably apply to Bills of Lading as provided by the compulsory application of COGSA or by way of the Paramount Clause. Art II of both the Hague and Hague Visby Rules are similar and provide for the responsibilities and liabilities of the Carrier from “loading, handling, stowage, carriage, custody, care and discharge of such goods”. The question which arises is whether the Hague & Hague Visby Rules apply to mis-delivery of cargo? (If the Hague or Hague Visby Rules apply, then the time bar would be 1 year. If they do not apply, then the time bar would be what is provided in the law of the contract i.e. 6 years in English / Singapore Law under the relevant limitation acts). Both the Malaysia and the UK Courts in 2018 ruled on the application of 1-year time bar for mis-delivery claimsunder the Hague Rules.
  2. Malaysia : The Malaysian Court of Appeal in Minmetals South-East Asia Corporation Pte Ltd v Nakhoda Logistics Sdn Bhd [2018] MYCA 212  decided that mis-delivery of cargo does not fall within the ambit of limitation as provided in Art III Rule 6 of the Hague Rules. This is because the Hague Rules apply to breaches of contract or duty that took place between loading to discharge only as provided by Art II of the Hague Rules.While this case dealt with time bar, it is submitted that it would similarly apply to limitation of liability i.e. £ 100 per package (Art IX of the Hague Rules provide for “The monetary units mentioned in these Rules are to be taken to be gold value”). It is also submitted that the 1 year bar time for the Hague Visby Rules would not apply for such mis-delivery claimsii given that they fall outside the ambit of Art II of the Hague Visby Rules (the wordings in both the Hague and Hague Visby Rules are the same).
  3. United KingdomiiiThe English High Court in Deep Sea Maritime Ltd v/s Monjasa A/S (The Alhani) held that the 12 month time limit in Article III Rule 6 of the Hague Rules applied to mis-delivery claims. The Court held that Art III Rule 6 was drafted on wide enough terms and that the clause “in any event” and “all liability” in respect of loss or damage were wide enough to apply to mis delivery claims. Mis delivery claims were claims concerning the clearest breach of Art III Rule 2 obligation of the carrier i.e. to properly and carefully care for and discharge the goods carried. We understand that the case has been appealed and we await with interest the decision of the English Court of Appeal.
  4. It appears to us that the crucial difference between the Malaysian Court of Appeal and the English High Court judgement is that the Malaysian judgement dealt with mis delivery of cargo after discharge whereas the English judgement dealt with cargo being discharged and delivered to the incorrect party by ship to ship transfer. Accordingly, it needs to be first established if the mis-delivery was during the period of responsibility or after the period of responsibility. If it is within the period of responsibility, then both the time bar and limitations of liability in both the Hague and Hague Visby Rules would be available as of right. If it is outside the period, then unless there is some other provisioniv&v in the contract which provides for this eventuality, the Carrier would then be liable for the full value of the cargo and the time bar would be as provided under the law of the contract (The UK Limitation Act 1980 and the Singapore Limitation Act Cap 163 provides for 6 years for property claims).
  5. In conclusion, given that failure to protect time bars may result in the loss of the right to pursue recovery, it is better to be safe than sorry. Accordingly, we would suggest that  time extensions should be sought after considering whether any contractual time bars apply (9 months as provided in say the TT Series 100 /Multi Doc 95 Bills of Lading,) or the Hague / Hague Visby Rules  (in which case, the time is  1 year) instead of arguing on the non-applicability of the Time Bar completely (which may indeed be agreed by the Courts but may result in unnecessary costs).

i.See article written by Mr William KW Leung 2008 in the Journal of Maritime Law and Commerce Vol 39, No 2, April 2008 which deals with the application of the mandatory legal regime for the Hague and Hague Visby Rules and the time bar.
ii.Steam Ship Mutual in their briefing on The Alhani comment that the Hague and Hague Visby time bar may not protect a carrier where the mis delivery takes place outside the period of responsibility provided in the convention. Please also see their briefings on MSC Amsterdam and which is more to this point.
iii.We thank CJC Singapore for their seminar conducted on 10thJan 2019 in which they discussed on the various developments in 2018 including The Alhani.
iv.See Clause 4(G) of the TT Series 100 Bills of Lading wordings and which states “The Carrier shall be discharged of all liability unless suit is brought in the proper forum and written notice thereof received within nine months after delivery of the Goods or the date when the Goods should have been delivered. …” .
v.Some jurisdictions have allowed the validity of these contractual time bars – see article on the Singapore Law Gazette by Vivian Ang of Allen and Gledhill.


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