TT Talk - Legal eagle: application of time bar

TT Talk - Legal eagle: application of time bar

Litigation can throw up complex issues – here considering whether time bars apply to misdelivery claims and the impact of commencing proceedings contrary to exclusive jurisdiction provisions.

Factual background
Deep Sea Maritime issued a bill of lading, indicating Monjasa as shipper, for carriage by the tanker ‘Alhani’ of bunker fuel from Lome, Togo to Cotonou, Benin. The bill incorporated a time charter party between Deep Sea Maritime and Unitaes Energy Sources Company Limited (Unitaes), which provided by Clause Paramount for exclusive English law and jurisdiction. 

Neither Benin nor Togo were parties to the Hague or Hague-Visby Rules; Hague was incorporated under the bill of lading.

Monjasa contracted to sell the cargo to Unitaes, but the associated letter of credit in favour was declined due to alleged documentary discrepancies. Unitaes’ agent then contracted to sell the cargo back to Monjasa. Monjasa complained that it bought the cargo back not knowing that property had never passed from Monjasa to Unitaes.

Deep Sea Maritime discharged the cargo without production of the bill, stating that this was on charterers’ orders.

Monjasa arrested the ship in Tunisia and subsequently in France and started proceedings in both jurisdictions. Monjasa also issued proceedings in contract, conversion and bailment in London (and against the ship owners in China). Of these proceedings, only the Tunisian claim was brought within twelve months of the date on which the cargo should have been delivered, as required by Article III Rule 6 of Hague. Deep Sea Maritime sought a declaration and summary judgment in the English Commercial Court that Monjasa’s claim was therefore time barred under Rule 6.

The judgment
The court rejected Monjasa’s submission that misdelivery was not caught by Rule 6, as there was no ‘settled understanding’ to the contrary. In reaching this decision, the court considered the width of the language of Hague, particularly the use of the words ‘in any event’ and ‘all liability’, and the need for finality.  On Monjasa’s application, the court looked at the Hague-Visby travaux préparatoires, but found these inconclusive.

Finally, the court rejected Monjasa’s submission that the time bar applied only to claims pleaded under Hague. There was some precedent to the effect that the convention could not be circumvented by suing in tort in this way, and in any case misdelivery was a breach of the central obligation under Hague to care for and discharge the cargo.

The court also held that proceedings brought in one jurisdiction in breach of an exclusive agreement to bring proceedings in a different jurisdiction were not ‘suit’ for the purposes of Rule 6, unless there were exceptional circumstances (not found here). Further, there was no evidence of Monjasa having asked Deep Sea Maritime for a copy of the charter party which was incorporated into the bill of lading. Issue of proceedings in Tunisia within twelve months of delivery did not therefore prevent the claims from being time barred.

This is apparently the first English decision on the application of the Hague time bar to misdelivery claims (although there have been Commonwealth decisions on the point). 

It is likely that this principle will apply equally to Hague-Visby, in view of the even clearer wording in the equivalent provision – where ‘all liability’ is reinforced by the additional word ‘whatsoever’.

This case was decided on the grounds that the misdelivery occurred during the Hague period of responsibility – the bunkers were delivered by ship to ship transfer. The position where misdelivery takes place outside that period, for example where cargo is collected from the terminal after discharge, remains undecided.

This case, which may be subject to appeal, is a warning of the importance of complying with an exclusive jurisdiction clause – but also gives clarity that time bars apply to misdelivery claims.

Deep Sea Maritime Ltd v Monjasa A/S (“Alhani”) [2018] EWCA 1495 (Comm)

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.
We look forward to hearing from you.

Peregrine Storrs-Fox
Risk Management Director, TT Club

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