TT Talk - Clarifying the operation of time-bars
An important decision given by the English Commercial Court clarifying the application of time-bars in relation to deliveries made after discharge from the ship. While potentially subject to appeal and clearly decided on specific contractual wording, this case brings welcome certainty.
Cargo carried under 13 sets of Congenbill bills of lading, subject to Hague-Visby rules, was delivered from stockpiles after discharge at the port against letters of indemnity without production of the bills of lading. As holder of the bills, the bank served a notice of arbitration on the carriers after the one year time-bar under Article III(6) of Hague Visby had expired. This happened because the bank’s lawyers had failed in time to establish the existence of a bareboat charter, which identified the responsible carrier.
The bank argued on two grounds that the time-bar did not apply:
- Misdelivery after discharge was beyond the ‘period of responsibility’ envisaged by Hague-Visby, which ends with discharge of cargo. Hague-Visby regulates the carriage of goods by sea, but not the obligation to deliver cargo; and
- The parties had agreed not to apply Hague-Visby by a term in the bills relieving the carrier of responsibility for loss or damage after discharge.
An ‘experienced’ arbitration tribunal, as a preliminary issue, rejected both these arguments and found that the time-bar did apply. The bank appealed to the Commercial Court.
The court, finding considerable speculation, but no clear precedent, on the misdelivery point in England, decided that Article III(6) did apply to claims for misdelivery after discharge. In reaching this conclusion, the court looked at the broader context and sought to avoid fine distinctions around the point at which discharge ended. The objective of the Article, and of time-bars generally, was to achieve finality and to enable a party to “clear its books”.
On the second point, the court found that the express terms of the bills did not disapply Hague-Visby after discharge. The court distinguished a precedent, the Court of Appeal decision MSC Amsterdam1, on the grounds that the bill of lading in that case referred explicitly to a period of bailment which commenced after the end of the “Hague Rules period”.
The court therefore agreed with the arbitrators and dismissed the appeal.
The court in the Alhani2 applied the Hague Rules one year time limit to a misdelivery claim arising on discharge within the ‘tackle to tackle period’. This left open the question whether it applied after discharge from the ship.
This case removes the remaining uncertainty (closes the gap) on this point, and is important.
However, it should be noted, firstly, that comparison with the MSC Amsterdam indicates that the judgment depended on the exact terms of the bill of lading and, secondly, that the judgment may be appealed.
FIMBANK PLC v KCH SHIPPING CO LTD
 EWHC 2400 (Comm)
1 EWCA Civ 794
2 2 Lloyds Rep 503
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Risk Management Director
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