Fastport Cargo Service Ltd (plaintiff) is a Hong Kong freight forwarding company. KFIC Logistics (Hong Kong) Ltd (defendant) engaged the plaintiff to ship goods described and/or represented as ‘Hair Fresh Supply’ from Hong Kong to New York. The goods were in fact garlic oil. The plaintiff in turn engaged Capital Express International Inc (Capital Express), a US company, to ship the defendant’s goods to New York. The plaintiff entered into a bill of lading with Capital Express indicating the goods as described by the defendant. Upon arrival in New York the defendant’s goods were discovered to have contaminated the other goods shipped in the same container.

The plaintiff, Capital Express and four other defendants were sued by the owner of the damaged cargo, VX Intimate Inc (VX) in the US. Eventually, both the plaintiff and Capital Express settled the US claim with VX. The plaintiff indemnified Capital Express for sums paid to VX and its legal fees, as contractually required under the bill of lading. The plaintiff claimed against the defendant to recover this sum and its legal fees. The defendant applied to strike out the statement of claim on the grounds that it was frivolous or vexatious and/or was otherwise an abuse of the process of the court because it was time-barred inter alia by virtue of the Hague-Visby Rules, which have the force of law in Hong Kong under s 3 of the Carriage of Goods by Sea Ordinance (Cap 462).

Article 3.6 of the Schedule to the Carriage of Goods by Sea Ordinance provides as follows:

6. Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered. This period may, however, be extended if the parties so agree after the cause of action has arisen; and

6bis. An action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph if brought within the time allowed by the law of the Court seized of the case. However, the time allowed shall be not less than three months, commencing from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself.

The defendant argued that, although art 3.6 of the Hague-Visby Rules is silent on whether the one-year limitation period could apply for claims against the shipper, read in conjunction with the phrase in art 3.6 bis '[a]n action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph', it was clearly implied that the one-year limitation period was intended to apply to claims against the shipper as well (as a matter of 'business efficacy').

Held: The defendant had failed to demonstrate that the plaintiff's claim against the defendant in the action was time-barred and its application to strike out the statement of claim was unmeritorious. The judge was not convinced that reading art 3.6 and 3.6 bis together produced the result that the one-year limitation period should apply to claims against the shipper as well. The Hague-Visby Rules would have contained an express provision to cover claims against the shipper had there been intent to do so.