Yemgas FZCO & Ors v Superior Pescadores SA
Yemgas FZCO & Ors v Superior Pescadores SA
English Court of Appeal; Longmore, Tomlinson, McCombe LJJ;  EWCA Civ 101; 24 February 2016
Mr Robert Thomas QC (instructed by Clyde & Co LLP) for Yemgas FZCO & Ors, Appellants / Cargo
Mr David Goldstone QC & Mr Ben Gardner (instructed by Davies Johnson) for Superior Pescadores SA, Respondents / Owner
CARRIAGE OF GOODS BY SEA: BILLS OF LADING: LIMITATION OF LIABILITY: CLAUSE PARAMOUNT: WHETHER REFERENCE IN THAT CLAUSE TO HAGUE RULES MEANT HAGUE RULES LIMITS OF LIABILITY APPLIED EVEN WHERE HAGUE-VISBY RULES OTHERWISE APPLIED
Cargo intended for a LNG facility in Yemen was damaged en route. The cargo interests (Yemgas FZCO and others) sued the shipowners under bills of lading. Compensation was paid up to the Hague-Visby Rules limitation level, but cargo interests argued – by reference to the terms of the Paramount Clause contained in the bills of lading - that where the Hague Rules provided for a higher limit, that higher limit should be applied. In upholding the decision of the High Court, the Court of Appeal decided that only the limits of liability provided by the Hague-Visby Rules limits were to be applied.
This note has been contributed by Justin Gan, Solicitor (England & Wales, Hong Kong), Advocate & Solicitor (Singapore, non-practising), with kind assistance from Andrew Gong.
In early January 2008, machinery and equipment were loaded on the "Superior Pescadores" in Antwerp, Belgium. These were intended for the construction of a LNG plant in Yemen. 6 bills of lading were issued in the Conline form. On 17 January 2008 cargo shifted while the vessel was crossing the Bay of Biscay, causing cargo damage of about US$3.6m.
Parties agreed on English law and jurisdiction. Owners admitted liability to pay about US$400,000, based on the Hague-Visby Rules limit on liability, and so paid. Cargo interests claimed the Hague Rules applied and that where the Hague Rules limit exceeded the Hague-Visby Rules limit, they were entitled to the higher limit. The difference was an additional US$200,000 or so.
The Clause Paramount on the reverse of the bills of lading stated: "The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply."
The Judge at first instance (Males J) felt constrained by authority to find that the Clause Paramount as worded in this case incorporated the Hague Rules and not the Hague-Visby Rules – even where, as here, the cargo had been shipped from a country (Belgium) which had adopted the Hague-Visby Rules. However, he rejected cargo interests' argument that by incorporating the Hague Rules, the parties had therefore agreed on a liability limit higher than that in the Hague-Visby Rules.
Cargo interests' appeal was dismissed on the basis that the Clause Paramount incorporated the Hague-Visby Rules only.
At first instance, Males J had referred (amongst others) to the case of Parsons Corporation v C.V. Scheepvaartonderneming Happy Ranger – “The Happy Ranger” –  2 Lloyd’s Rep. 530 and  2 Lloyd’s Rep.356 (Court of Appeal) as authority for the proposition that a Clause Paramount stating "The Hague Rules…dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract" incorporated the Hague Rules and not the Hague-Visby Rules. “The Happy Ranger” was a 2001 judgment of Tomlinson J (now LJ, and sitting on this Court of Appeal).
Longmore LJ (with whom Tomlinson and McCombe LJJ concurred) held that as a matter of construction, the Clause Paramount before him incorporated the Hague-Visby Rules:
- It referred to "…as enacted in the country of shipment", and under Belgian law the Hague-Visby Rules had been enacted. (No evidence of Belgian law was adduced so the Court assumed Belgian law to be same as English law, which enacted the Hague-Visby Rules into law via the Carriage of Goods by Sea Act 1971.)
- The view expressed in the 4th Edition of Wilford, Coghlin & Kimball on Time Charters that since 1977, a Clause Paramount which did not differentiate in terms between the Hague Rules and Hague-Visby Rules would be "taken by shipping men" to incorporate the Hague-Visby Rules was correct.
Tomlinson LJ added that his approach in The Happy Ranger (2001) had been mistaken. He acknowledged that – based on information from Professor W Tetley QC’s Marine Cargo Claims (4th Edition, 2008, Vol.1 at pp.11-12 - what is now known as the Hague-Visby Rules is not a separate convention or single autonomous instrument, but rather reflects the Visby Rules (Brussels Protocol 1968) amending the Hague Rules (Brussels Convention 1924). So, the words "Hague Rules as enacted in the country of shipment" can refer to the Hague-Visby Rules.
In any event, under English law, which the parties had agreed to apply, the Hague Rules as enacted were those in the Carriage of Goods by Sea Act 1971, that is, the Hague-Visby Rules.
This confirms the view taken in Time Charters and helpfully confirms the effect of what is common Clause Paramount wording. As a matter of interpretation though, it would apply only in cases where the Clause Paramount itself does not distinguish between the Hague Rules and the Hague-Visby Rules.