30/05/2023

Court of Appeal affirms that Hague-Visby Rules time bar applies to misdelivery after discharge

FIMBank p.l.c. v KCH Shipping Co., Ltd (The Giant Ace) [2023] EWCA Civ 569

On 24 May 2023, the Court of Appeal (Males, Popplewell and Nugee LJJ) handed down judgment in FIMBank p.l.c. v KCH Shipping Co., Ltd. The Court held that the time bar in Article III rule 6 of the Hague-Visby Rules applies to claims in relation to misdelivery after discharge, in light of the wording of the provision and the intention of its drafters, as evidenced by a “bull’s-eye” in the travaux préparatoires to the Rules.

The Court’s decision affirms the decisions of the Commercial Court (Sir William Blair) and an LMAA tribunal comprising Julia Dias KC, Sir Bernard Eder, and Timothy Young KC. It resolves an important question which had not previously been decided by the English courts, and which has divided leading academic commentators as well as judges in other common law jurisdictions.

Background

The appeal relates to a claim brought by FIMBank p.l.c. (“FIMBank”), as the holder of bills of lading, for the alleged misdelivery of cargo by the contractual carrier, KCH Shipping Co., Ltd (“KCH”). The bills were concluded on the Congenbill form, and were subject to the Hague-Visby Rules, including the time bar in Article III r 6 of one year after delivery which applies to claims against carriers.

FIMBank served a Notice of Arbitration on KCH after that time bar expired. Its position was that its claim was nevertheless not caught by the time bar, contending that: (a) on the facts, delivery took place after discharge; and (b) as a matter of law, the time bar did not apply to claims for misdelivery occurring after discharge. In its submission, this was so given that the Hague-Visby Rules do not regulate a carrier’s obligation to deliver cargo (as opposed to the carriage of goods by sea), and only relate to a ‘period of responsibility’ which ends with the discharge of cargo. FIMBank further argued that the parties had, in any event, contractually disapplied the Rules in respect of the period after discharge, insofar as Clause 2(c) of the Congenbill form provided: “The Carrier shall in no case be responsible for loss and damage to the cargo, howsoever arising prior to loading into and after discharge from the Vessel …”.

FIMBank’s arguments were rejected by the arbitral tribunal and the Commercial Court, which each held that: (i) the Hague-Visby Rules time bar can apply to claims relating to misdelivery occurring after discharge; and (ii) Clause 2(c) of the Congenbill form does not disapply the Rules in respect of the period after discharge.

The Court of Appeal’s reasoning

The Court of Appeal upheld the Commercial Court’s decision on both questions, and therefore dismissed the appeal. It has also refused FIMBank permission to appeal these questions to the Supreme Court.

On the first question, the Court considered “the better view” to be that the Article III r 6 time bar in the unamended Hague Rules did not apply to claims for misdelivery occurring after discharge, but, in line with the Rules in general, only applied in respect of the period between the loading and discharge of goods.

However, the Court held that the position was different for Article III r 6 of the Hague-Visby Rules, which did apply in respect of misdelivery occurring after discharge. The amended wording of the provision indicated that the time bar intended to be of wider scope than the original rule. Crucially, the travaux préparatoires to the Hague-Visby Rules, to which the Court referred pursuant to Article 32 of the Vienna Convention, showed that the object of the amendment was to “give the text a bearing as wide as possible”, and evinced a clear intention on the part of its drafters that it should apply to claims for misdelivery that post-dated discharge. This was the necessary “bull’s-eye” that meant that the travaux could, and would, be determinative of the question of the construction of Article III r 6 (cf The Giannis NK [1998] AC 605 at 623 per Lord Steyn).

On the second question, the Court found that Clause 2(c) of the Congenbill did not disapply Article III r 6 in relation to the period after discharge. As the Court observed, either Clause 2(c) applies to exclude all liability of the carrier after misdelivery, in which case the issue of time bar does not arise, or it does not apply to exclude liability for misdelivery at all, in which case there is no basis for concluding that it does apply to exclude the effect of the time bar.

Matthew Chan acted for KCH, led by Simon Rainey KC of Quadrant Chambers and instructed by Kyri Evagora and Thor Maalouf of Reed Smith LLP.

Read the judgment.