Relooking at FIM Bank plc v KCH Shipping Co Ltd

1. In the FIM Bank p.l.c v KCH Shipping Co. Ltdⁱ, the English Court of Appeal upheld the decision of the first instance judge confirming that the time bar provision in Article III Rule 6 of the Hague Visby Rules (“HVR”) applied to mis delivery claims even after discharge of the cargo. This is because Art III R 6 wordings included for the word “whatsoever” and which results in the wider application of the time bar provisions.
2. The case was with respect to a shipment of coal under a Charterparty shipped from Indonesia to India. This C/P incorporated the HVR to govern the contract of carriage. The Dispute Resolution Clause provided for LMAA Arbitration with English Law to apply. The Claimants appealed against the Partial Final Award of an arbitral tribunal against the imposition of the one-year time bar based on Art III r.6 of the HVR.
3. This shipment is of a cargo in bulk. Given that the HVR are also used for other types of shipment, we submit that the application of this case should be restricted to its unique facts. In this regard, our thoughts are as follows:
   1. Time Bars:
      1. Procedural or substantive: The first question to ask is whether Time Bars are procedural or substantive remedies?
         1. The Hague or HVR time are considered substantive in nature as they extinguish the entire claim.
         2. With respect to time bar provisions available in lawⁱⁱ, they are considered as procedural in nature. This being the case, the location where the matter is heard is also important given that the time bar provisions provided in the procedural law would apply even if the law governing the contract or cause of action, is some other lawⁱⁱⁱ.
         3. The shipment was from Indonesia, and which has not ratified the Hague or HVR^iv or legislated any compulsory law to apply for shipments (both inwards and outwards). The application of the HVR was hence contractual for this shipment.
         4. If the shipment was instead from India (or for that matter any location where similar laws apply), the Indian COGSA 1925^v would compulsorily apply. Although the Indian COGSA 1925, after amendments, has incorporated the provisions of the HRV, Art III R 6 of the Indian COGSA 1925^vi does not have the word “whatsoever” and therefore the expansive view taken by the English COA will not apply.
      2. The case in point provided for English Law as the law of the contract. Instead, if the law of the contract was, say Indian Law, then automatically, the Indian Contract Act 1872^vii and the Indian Limitation Act 1963^viii would apply^ix. If the contract of carriage also provides for the contractual incorporation of the HVR, while this will not conflict with the existing provisions of the Indian COGSA 1925 which applies for the period from loading to discharge, we submit that the 1-year time bar will not apply for the period before loading and after discharge. This is because of the application of S 28 of the Indian Contract Act^x which bars any provision which disentitles a party from the usual legal proceedings in the ordinary tribunals.
      3. Himalaya Clause: Third party service providers (“SP”) in Liner/Container situation, will invariably require that the Owners/Carriers include a Himalaya Clause^xi to allow them to defend any claims brought against them for their negligence. Basically, a Himalaya Clause entitles a SP to the defences available in the contract of carriage/Bills of Lading. The question would be whether the SP’s would be entitled to the HVR time bar provisions when a claim has been brought against them outside the period the HVR i.e. before loading or after discharge of the cargo. We submit that while the SP’s may indeed be entitled to benefit out of the limitation of liability provisions of the HVR, it is not a given that they would be entitled to the time bar provisions particularly when they override the compulsorily applicable domestic legislations.
      4. Multimodal shipments:
         1. The HVR, as stated in Art II, is meant to apply from the time of loading to the time of discharge. Art VII of the HVR also permits parties to enter into various contractual agreements for the period before loading and after discharge. Some multimodal / combined transport contracts provide for the application of a 9 months’ time bar^xii while others preferring to maintain the 1-year time bar^xiii.
         2. The application of the HVR would also depend on whether there are any compulsory/mandatory multimodal laws applicable. In this regard, some jurisdictions such as India and Singapore^xiv have legislated laws to govern multimodal shipments, and which provide for shorter time bars (9 months).
         3. Accordingly, even though the multimodal documents may refer to the HVR, the shorter time bar provision of multimodal laws would apply basis the provisions of say the Multimodal Transport of Goods Act 1993^xv or the Multimodal Transport Act 2021^xvi and in which case, the “whatsoever” provision of the HVR will not apply.
         4. Where the Multimodal Acts are not compulsorily applicable, the provisions of local and international conventions may apply to the period before loading and after discharge. For example, if the cargo is moved by road or rail from say Rotterdam (The Netherlands) to Hamburg (German), then the provisions of the Convention on the Contract for the International Carriage of Goods by Road (“CMR”) or International Carriage by Rail (“COTIF”) would apply. While the general limitation period for these conventions is 1 year, in certain circumstances the time bars can be extended as provided in the convention. We submit that the provisions of the time bar of the HVR will not apply given that there are other laws/conventions specifically applicable for the period before loading and after discharge of the cargo.

4. In conclusion, while the judgement of the English COA may be of succor to Owners, it should be restricted to its facts and mainly may be of assistance for bulk shipments. If the contract of carriage does provide for other terms, then the application of time bar would depend on whether there are any other mandatory conventions or law and, in its absence, contractual provision, and which may depend on both the law of the contract and the location where the cargo was shipped from and to.
   

We thank Ashwin Shankar of Chambers of George Rebello for considering our article and clarifying on various issues. The views expressed in this article together with all errors are entirely ours.

^i. cif-weekly.pdf (shlegal.com)
^ii. For instance the Limitation Act 1980 applicable in the UK or the Indian Limitation Act 1963.
^iii. This is a developing law and would depend also on the substantive law of the contract – see article on Relevance of Indian Limitation Law vis-à-vis Foreign Seated International Arbitration with Indian Law as the applicable substantive law by Harshal Morwale
^iv. Shipping 2023 – Indonesia | Global Practice Guides | Chambers and Partners
^v. Comparisons | Global Practice Guides | Chambers and Partners
^vi. The Indian COGSA 1925 incorporates the Hague Rules. In 1993, India amended the COGSA and included some provisions including the limits of the Hague Visby Rules.
^vii.A187209.pdf (indiacode.nic.in)
^viii.a1963-36.pdf (indiacode.nic.in)
^ix. We would argue that this would be the case for other jurisdictions such as Malaysia which has a similar Contracts Act 1950 and Limitation Act 1953.
^x. Clause 28 of the Indian Contract Act states “ Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent. The Limitation Act 1963 allows for a 3 year time bar for a simple debt.
^xi. https://en.wikipedia.org/wiki/Himalaya_clause
^xii. See Clause 6 F of TT Series 100 Bill of Lading wordings.
^xiii. See Clause 9 of the Maersk Bills of Lading Terms and Conditions.
^xiv. The Singapore Multimodal Transport Act 2021 is applicable if the MTO is a member of the Singapore registry.  Our article, The Singapore Multimodal Transport Act 2021 – 2 discusses this aspect.
^xv. Microsoft Word – A1993-28.docx (indiacode.nic.in). See also our article, Unintended Consequences of the Indian MTGA 1993. The MTGA 1993 applies for outward shipments from India which are multimodal in nature.
^xvi.  Multimodal Transport Act 2021 – Singapore Statutes Online (agc.gov.sg). See also our article The Singapore Multimodal Transport Act 2021 and The Singapore Multimodal Transport Act 2021 – 2.