Misdelivery and the Hague Rules time bar limit

Deep Sea Maritime Ltd v Monjasa A/S (The “ALHANI”) [2018] EWHC 1495 (Comm) considered whether the one year time limit for claims against a carrier found in Article III rule 6 of the Hague Rules applies to misdelivery claims.

The shippers Monjasa shipped a cargo of marine fuel oil in the ALHANI at Lome for carriage to Cotonou. In the event the vessel discharged the cargo by way of a ship to ship transfer off Lome to a third party without production of the bill of lading.

Monjasa claimed that the cargo had not been delivered to them and commenced proceedings against the ship in Tunisia within the one year time limit. Subsequently the Tunisian courts found that they did not have jurisdiction. Once the one year time limit had expired, the owners commenced English High Court proceedings seeking a declaration that they were not liable because the claim was out of time, and applied for summary judgment.

The High Court was required to decide two questions:

Does the Article III Rule 6 one year time limit apply to claims for misdelivery? If so, had the commencement of proceedings in Tunisia been effective to protect the one year time limit? The answer to the latter was no: the proceedings in Tunisia were in breach of the exclusive jurisdiction provisions in the bill of lading. They were not effective to protect the one year time limit if it applied to claims for misdelivery.

The one year time limit in Article III r 6 of the Hague Rules extends:

“…to breaches of the shipowner’s obligations which occur during the period of Hague Rules responsibility, and which have a sufficient nexus with identifiable goods carried or to be carried…”

In considering whether the one year time limit applies to misdelivery the judge considered that the inclusion of the words “in any event” and “all liability” showed that the rule, on its own wording, was intended to be very wide and should be interpreted as such. Misdelivery claims could be covered. It was suggested, however, that this had not been the intention of the delegates who drew up the Hague Rules and an examination of their work ensued. Nevertheless, the judge could not derive any “settled understanding” on this point.

Further, judicial precedent has consistently stressed that the Article III Rule 6 time bar was intended to achieve finality. As the judge put it that aim “would be seriously undermined if the Rule did not apply to misdelivery claims”.

Monjasa sought to argue that the one year time limit could only apply to breaches of the Hague Rules. Since the rules do not address the question of delivery, nor impose an obligation to deliver against production of an original bill of lading, they argued that the time bar could not apply.

In answer to that point the judge held:

“Pumping the Cargo out of the ship into the hands of someone who is not in fact entitled to delivery of it seems the plainest breach of the Article III Rule 2 obligation “properly and carefully [to] load, handle, stow, carry, keep, care for, and discharge the goods carried.””.

That was sufficient for his decision but in fact he formulated the answer to the question in wider terms by holding that the one year time limit in Article III r 6 of the Hague Rules extends:

“…to breaches of the shipowner’s obligations which occur during the period of Hague Rules responsibility, and which have a sufficient nexus with identifiable goods carried or to be carried…”

Quite how far that extends remains to be seen. One thing is clear from this case though. Misdelivery claims are subject to the Article III Rule 6 one year time bar.

Pumping the Cargo out of the ship into the hands of someone who is not in fact entitled to delivery of it seems the plainest breach of the Article III Rule 2 obligation “properly and carefully [to] load, handle, stow, carry, keep, care for, and discharge the goods carried.”

David Foxton QC (sitting as a Deputy Judge of the High Court)

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