Judge J Englard: The appeal is directed against the judgment of the District Court, which overturned the decision of the Magistrate's Court, which rejected the respondent's claim due to the statute of limitations. The appeal focuses on a single legal question, and that is the interpretation of the provision of s III 6A of the Regulations regarding Bills of Lading in the Appendix to the Transport of Goods by Sea Ordinance (the equivalent of art 3.6 bis of the Hague-Visby Rules).

Pardes Ltd (Pardes), a co-operative association of citrus growers, exported a cargo of citrus fruit from Israel to England via the carrier Bellina Maritime SA Monrovia (the first appellant). The ship was chartered and operated by Agrexco Agricultural Export Co Ltd and EMA United Sea Agencies Ltd (the second and third appellants). The bill of lading was issued on 5 January 1996 and the cargo arrived at a port in England around 16 January 1996.

Pardes insured the cargo with Menora Insurance Co Ltd (Menora). The cargo was damaged, allegedly due to poor stowage. Menora compensated Pardes under the insurance policy. Menora then filed a lawsuit against the three appellants on 15 March 1998 for indemnification of the insurer on the insurance benefits. This indemnification claim is based on the insurer's right of subrogation under s 62 of the Insurance Contract Law 1981. In other words, the insurer steps into the shoes of the shipper, Pardes, by exercising the latter's right to compensation based on the appellants' liability under the contract of carriage.

The question under discussion is whether the indemnity claim was filed by the insurer in time, or whether it was statute-barred. The relevant provisions are s III 6 (equivalent to art 3.6 of the Hague-Visby Rules) and s III 6A of the Regulations regarding Bills of Lading in the Appendix to the Transport of Goods by Sea Ordinance. There is no dispute between the parties that the ship arrived at the destination port on 16 January 1996, and the goods were delivered to the customer the next day. Menora filed its claim on 15 March 1998, after Pardes approved the receipt of financial compensation from the insurer on 30 December 1997. In other words, the insurer's claim was filed after about two years and two months from the date of delivery of the goods, but within three months from the date of settlement of the claim between the insurer and the insured.

It follows that if s III 6 of the Regulations applies to the insurer's claim, this claim has become obsolete. That is to say, the statute of limitations set forth in s III 6 of the Regulations is substantive - the statute of limitations nullifies the right of claim. On the other hand, if the case falls within the scope of s III 6A of the Regulations, then according to the language of the provision, the insurer's claim was filed on time. Israeli law allows the filing of a claim for seven years under the Statute of Limitations Law 1958; and the insurer's claim was filed within three months from the date on which the claim was settled between it and the insured.

The central question is, therefore, does s III 6A of the Regulations apply to the case? The Magistrate's Court answered this question in the negative. The Magistrate's Court relied on two main grounds. First, according to the interpretation given to the provision of s III 6A in the case law and English literature, art 3.6 bis of the Hague-Visby Rules applies only while the indemnity claim is based on a different and separate bill of lading from the document on which the main action is based. Since in the case in question the insurer's claim relies on the bill of lading of the main claim, it is covered by s III 6 and not by s III 6A of the Regulations. The Magistrate's Court's other reason for denying the applicability of section III 6A relates on the nature of the subrogation, by virtue of which the insurer is suing. The implication of subrogation is that all of the insured's rights pass to the insurer upon payment of the insurance benefits. Hence, because of the subrogation, the insurer has no more rights than the insured at the time of the subrogation. Pursuant to s 62(a) of the Insurance Contract Law, the insured's rights pass to the insurer upon payment of the insurance benefits. In this case, at the time of payment of the insurance benefits, the insured's rights against the appellants had already expired under s III 6 of the Regulations. In the absence of a right in the insured there was nothing that could have passed to the insurer by virtue of the subrogation.

Following this decision of the Magistrate's Court, Menora filed an appeal before the District Court, which granted the appeal. As to the Magistrate's Court's first judgment ground, the District Court noted that the interpretation given in English law to the provision of art 3. 6 bis of the Hague-Visby Rules was irrelevant. As to the subrogated claim, the District Court held that s III 6A still applied in favour of the insurer. The District Court concluded that, although all the rights of the insured were transferred to the insurer, the insurer remained a third party who now wore the title of the insured's rights holder. Therefore, it seemed to the Court that the specialisation of the cause of action by virtue of subrogation did not exclude it from the scope of a third-party indemnification claim mentioned in s III 6A.

The appeal is admissible. The Hague-Visby Rules have been adopted by quite a number of countries, and since these are international shipments, it is of interest that the interpretation of these Rules should be as uniform as possible in the various countries. Both in the Magistrate's Court, in the District Court, and in the submissions of the parties, emphasis was placed on the question of the scope of application of s III 6A of the Regulations. This question is not conclusive in the controversy which arose in the present case. There will be cases where s III 6A of the Regulations will apply. The main question here is whether an insurer's subrogated claim against a carrier is an indemnity claim against a third party?

In this context it is appropriate to state the purpose of the short substantive limitation period set out in the Regulations. On this the authors of Carver, § 9-157 say:

The time bar

This is one of the most conspicuous features of the Hague and Hague-Visby Rules. A claim must be made against a carrier within a short period from discharge, or when discharge ought to have occurred. The reason normally given is that carriers can not be expected to keep records for long periods and must know rapidly, while the events are still reasonably fresh in the memory and on the record, to what claims they may be subject: the carrier must be able to 'clear his books'.

If this is the purpose of the substantive statute of limitations, then the District Court's approach will frustrate the legislature's purpose. The fact is that the vast majority of shippers, if not all, are insured, and if the insurer's claim is not limited in time the legislative purpose is not achieved.

As to the main issue, the idea that an insurer's subrogated claim against a carrier is a claim against a third party within the meaning of s III 6A of the Regulations should not be accepted. The carrier is a second party in the bill of lading between it and the consignor of the goods, and the entry of an insurer into the consignor's shoes does not have the power to turn the carrier into a third party. That is, the status of this carrier remains as it was, even if the rights of the contractor with it were transferred, by virtue of the principle of subrogation, to the insurer. The relationship between them remains a bilateral relationship.

The Magistrate's Court was correct in its reasoning that, at the time of the transfer, which is the date of payment of insurance benefits to the insured, the right of the consignor of goods against the carrier had already expired by virtue of the substantive statute of limitations provided by s III 6. There is no possibility of changing this state of affairs by virtue of the provision of s III 6A of the Regulations, as was held by the District Court.

Held: Therefore, the appeal is upheld, the judgment of the District Court is set aside, and the judgment of the Magistrates' Court is upheld.

Judge A Rivlin: I agree.

Judge T Strasberg-Cohen: I agree with Justice Englard that, since we are dealing with international transport, it is appropriate that the interpretation of the Hague-Visby rules adopted by a considerable number of States should be, as far as possible, uniform.

It is clear from the interpretation given to art 3. 6 bis of the Hague-Visby Rules in the case law and scholarly literature of England that it is not intended to apply to a situation where the insurer is suing the cargo carrier by virtue of the insurer's right of subrogation. This section - which stipulates an exception to the short one-year limitation period, set forth in art 3.6 - is intended to apply in situations where in addition to the cargo carrier with whom the consignor consigned the consignment, there is a third party, such as a subcontractor.

In such a situation, the concern is that the consignor of the goods will file its claim against the carrier near the end of the statute of limitations set forth in art 3.6, so that the carrier will not have enough time left to file its claim against the third party. Article 3.6 bis prevents the realisation of this concern. This rationale is not met by the insurer. As far as the defendant-carrier is concerned, it has no power to control the date of filing the claim against it. On the other hand, the insurer-plaintiff has the power to stipulate in the insurance policy a condition according to which the insured must present it with various documents to substantiate the claim within a specified period from the date of the event. Article 3.6 bis cannot be interpreted in isolation from art 3.6 preceding it. Article 3.6, which provides for a short limitation period, deals with the relationship between the direct parties to the bill of lading - the consignor of the goods and the carrier of the goods - where the consignor is the plaintiff and the carrier is the defendant. The insurer stood in the plaintiff's shoes. Article 3.6 bis uses the wording 'claim for indemnification against a third party', while the insurer's claim against the carrier is a claim against the direct party, who is the defendant of the shipper and the insurance company in its shoes, and is not a 'third party'.

A subrogated insurer's claim against a carrier is not an 'indemnity claim against a third party' within the meaning of section III 6A of the Regulations. The appeal should be granted, as stated in the judgment of Justice Englard.