Tanga Pharmaceuticals Plastics Limited & Ors v Emirates Shipping Line FZE (The “Alion”)

DMC/SandT/25/05

England

Tanga Pharmaceuticals Plastics Limited & Ors v Emirates Shipping Line FZE (The “Alion”)

English Commercial Court: Mr Justice Bright: [2025] EWHC 368 (Comm): 27 February 2025

Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2025/368.html:

Benjamin Coffer and Caleb Kirton (instructed by Kennedys) for Cargo Interests

Michael Collett KC and Patrick Dunn Walsh (instructed by Ehlermann Rindfleisch Gadow) for The Carrier

CARRIAGE OF GOODS BY SEA: BILLS OF LADING CONTRACTUALLY INCORPORATING HAGUE RULES: ADDITIONAL CONTRACTUAL TIME-BAR CLAUSES MORE FAVOURABLE TO THE CARRIER THAN HAGUE RULES: WHICH OF CONFLICTING CLAUSES TAKE PRECEDENCE: THE EFFECT OF ARTICLE III RULES 6 AND 8 OF THE HAGUE RULES ON THE EXPRESS CONTRACTUAL TIME-BARS

Summary

The Carrier, in applying for summary judgment, sought to rely upon the express exculpatory terms incorporated into its Bills of Lading (see clause 18 below) to argue that the cargo claims pursued by Cargo Interests were time-barred. Cargo Interests rejected this position by reliance on the Clause Paramount incorporated into the Bills of Lading, specifically the time limit at Article III Rule 6 and the anti-repugnancy provision at Article III Rule 8.

The High Court held that the contractually incorporated Hague Rules took precedence over other terms set out in the Bills of Lading where there was no clear contractual term to the contrary.  Accordingly, the Carrier’s application failed.

Case note contributed by Sheridan Steiger, LLM (International Trade and Commercial Law), LLB (Hons), BA (Hons), Solicitor of England & Wales and International Contributor to DMC’s CaseNotes

Background

Tanga Pharmaceuticals Plastics Limited (“Cargo Interests”) were the owners, or had interests in, 548 containers and their contents (“Cargo”), which were shipped on board the “ALION” (“Vessel”) in September 2021. Emirates Shipping Line FZE (“the Carrier”) was named as the contractual Carrier under the various Bills of Lading issued for the Cargo.

The Cargo was shipped on board the Vessel under materially identical Bills of Lading (“Bills of Lading”) for carriage from India, the UAE and Saudia Arabia to Mombasa.

The Vessel suffered motor engine failure on 15 September 2021.

On 20 September 2021, salvage services were rendered under the terms of a Lloyd’s Standard Form of Salvage Agreement (“LOF”). The LOF was terminated and thereafter general average was declared on 5 October 2021.

The Vessel discharged the Cargo at Mombasa on 6 December 2021 and subsequently was released to receivers upon receipt of salvage security and general average security.

On 3 November 2022, Cargo Interests notified the Carrier they intended to bring a claim under the contracts of carriage contained in or evidenced by the Bills of Lading, seeking an indemnity for their liability to salvors and (in some cases) for cargo damage.

On 3 November 2022, the Carrier granted a time extension to Cargo Interests until 20 March 2023. A further extension was granted until 20 June 2023.

Cargo Interests issued a claim form dated 16 June 2023. On 27 June 2024, Cargo Interests obtained an order from the High Court, extending the period of the validity of the claim form for service, until 16 December 2024. Service took place on 5 July 2024.

The reverse of the Bills of Lading included the following material terms:

2. CLAUSE PARAMOUNT

(1) Save where the English Carriage of Goods by Sea Act 1971 applies the Hague Visby Rules compulsorily to this Bill of Lading, in which event this Bill of Lading shall be subject to the Hague Visby Rules, the Hague Rules shall apply and the Carrier shall be entitled to the benefit of all privileges, rights and immunities contained in Articles I to VIII of the Hague Rules…

18. NOTICE OF LOSS OR DAMAGE, TIME BAR

… Any claim against the Carrier for any adjustment, refund of or with respect to freight, charges or expenses or any claim other than for loss or damage to Goods must be submitted fully documented to the Carrier or its agent in writing within 20 days from the day when the Goods were or should have been delivered, failing which such claim will be time-barred.

[the “20-day Provision”]

… In any event, the Carrier and the Vessel shall be discharged from any liability for loss of or damage to the Goods or with respect to freight, charges or expenses, or the refund thereof or any claim of whatsoever kind, nature or description, with respect to or in connection with the Goods unless suit is brought within one year of delivery…Suit shall not be considered to have been brought within time specified unless process shall have been actually served and/or jurisdiction obtained over the Vessel or The Carrier within such time.

[the “Service Provision”]

24. LAW AND JURISDICTION

The Bill of Lading and any claim or dispute arising hereunder shall be subject to English law…

It is also relevant to refer to Article III Rules 6 and 8 of the Hague Rules, which materially state:

6. …the Carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.…

8. Any clause, covenant, or agreement in a contract or carriage relieving the the Carrier or the ship from liability for loss or damage to or in connection with goods arising from negligence, fault, or failure in the duties and obligations provided in this article, or lessening such liability otherwise than as provided in this convention, shall be null and void and of no effect.

Judgment

The Judge first usefully summarised the common ground between the parties.

The parties agreed that in this instance the Hague Rules were applicable as a matter of contract and not compulsorily.

They went on to agree that, had the Hague Rules been applied compulsorily, Article III Rule 6 would have applied to Cargo Interests’ claims and the limitation period would have been one year from the date of delivery (or the date when the goods should have been delivered). They further agreed that any contractual provision seeking to relieve the Carrier’s liability, by imposing more stringent limitation provisions, would have been rendered null and void by virtue of Article III Rule 8.

It was also agreed that English law and procedure provides that suit is commenced once a claim form is issued, not when it is served.

The Carrier argued that, where the Hague Rules were only applicable as a matter of contract, it was open to the parties to agree to amend or depart from the Hague Rules’ limitation regime.

They also argued that Cargo Interests’ claims were not for “loss or damage to Goods”; rather, they were in respect of charges or expenses.

With regard to the 20-day Provision set out in clause 18, the Carrier’s position was that it prevailed over the inclusion of the Hague Rules in clause 2 of the Bills of Lading.

Regarding the Service Provision, the Carrier again argued that the clause prevailed over clause 2. However, the Carrier went on to argue that, even if Article III Rule 8 was applicable, the Service Provision should not be treated as relieving or lessening the Carrier’s liability. It was argued that Article III Rule 6 did not prescribe when a suit is brought: in many countries a suit was not considered to have been brought until service had been carried out. Accordingly, the Service Provision imposed no more onerous a term than might be experienced in other jurisdictions.

Cargo Interests noted that the Bills of Lading were expressly subject to English law and that, as a result, the requirement to prevent the claim from becoming time-barred was only to ensure the claim form was issued within the relevant period, not served.

Cargo Interests also argued that the 20-day Provision did not apply in this instance because it was not intended to apply to claims for “loss or damage to Goods” and the claims fell within that category.

Against that background, the Judge outlined the questions before him:

1. Was the incorporation of the Hague Rules in clause 2 made subject to clause 18, such that clause 18 prevailed in so far as there might be any inconsistency?

2. If clause 18 prevailed, did the 20-day Provision apply?

3. In any event, was the Service Provision compatible with Article III Rule 6 and Rule 8?

Answering the first question, the Judge noted that it is accepted under English law that, where the Hague Rules are only applied as a matter of contract, the parties may modify them by agreement; however, where the intent is to exclude or limit liability, clear words must be used (fn.1).

The Judge went on to note that the general position when construing a contract under English law is to presume that - in the event of inconsistency - an express provision in the body of the main contractual text has precedence over a term incorporated into that text by a mere incorporation clause.

However, this principle of construction must always take into account the particular circumstances of the case in question. The Judge noted that it is possible that various clauses in the incorporating document may give an indication as to which term is to take precedence (fn.2). He noted that this is sometimes achieved by the use of repugnancy clauses: a clause that states in terms that they and the provisions associated with them are to have priority over anything inconsistent.

In construing the terms of the Bills of Lading, the Judge formed the view that the exercise in determining which clause had priority was not complex and that clause 18 was subject to Article III Rules 6 and 8 of the Hague Rules. He reached this view for the following key reasons:

1. Clause 2 is titled “CLAUSE PARAMOUNT” and this term is familiar in the shipping industry. Lord Denning MR set out its meaning in The “Agios Lazaros” (fn.3):

“It means a clause by which the Hague Rules are incorporated into the contract evidenced by the bill of lading and which overrides any express exemption or condition that is inconsistent with it.”

2. Clause 2 did not incorporate the Hague Rules in their entirety. Instead, it notably only incorporated Articles I – VIII. Had it been the intention of the parties to omit Article III Rule 8 it would have been possible for them to do so, but they did not.

In holding that clause 18 did not prevail over the Hague Rules, the Judge held that it was fatal to the case advanced by the Carrier and, as a result, his comments on questions 2 and 3 above were strictly obiter.

In considering whether claims relating to the salvors were “loss or damage to Goods”, the Judge held that “damage to Goods” might include economic damage, referring to Sir Nigel Teare’s comments in The “Thorco Lineage” (fn.4):

“goods lost or damaged physically or economically” …is the ordinary meaning of “goods lost or damaged.”

This would have been sufficient to render the 20-day Provision irrelevant. However, the Judge also noted that Sir Nigel Teare had made obiter comments in The “Thorco Lineage” that a maritime lien, such as the one salvors had over the Cargo, is a specific kind of damage that is sustained by the goods in question.

Addressing the Carrier’s argument that contractually stipulating when suit is considered to have been brought does not fall foul of Article III Rule 6 as that Article does not specify what constitutes the bringing of a suit, the Judge noted that clause 24 of the Bills of Lading expressly provided for English law and jurisdiction. He therefore held that the proper construction of the Bills of Lading bears this in mind and recognises that English law and procedure deems a suit to have been brought once the claim form is issued, not served. It followed that the Service Provision was, therefore, an attempt to relieve liability such that it would have been null and void under Article III Rule 8 of the Hague Rules.

Accordingly, the Carrier’s application failed.

Comment

The judgment serves as a reminder to parties looking to incorporate the Hague Rules (or, for that matter, the Hague-Visby Rules) whilst limiting or lessening the liability of the Carrier, that the English courts will require clear wording if they are to give effect to this intent.

Footnote 1:  Dairy Containers Ltd v Tasman Orient Line CV (The “Tasman Discoverer”) [2004] UKPC 22, at [16] and Homburg Houtimport BV v Agrosin Private Ltd (The “Starsin”) [2003] UKHL 12 at [144]

Footnote 2: Finagra (UK) Ltd v OT Africa Line Ltd [1998] 2 Lloyd’s Rep 622

Footnote 3: Nea Agrex SA v Baltic Shipping Co Ltd (The “Agios Lazaros”) [1976] QB 93

Footnote 4: Trafigura Pte Ltd v TKK Shipping Pte Ltd (The “Thorco Lineage”) [2023] EWHC 26 (Comm)