This was an appeal from a decision of the High Court that the one-year time limit in art 3.6 of the Hague-Visby Rules applies to claims for misdelivery of cargo after discharge from the vessel: see FIMbank plc v KCH Shipping Co Ltd [2022] EWHC 2400 (Comm) (CMI1998).

The appellant bank was the holder of 13 bills of lading covering a cargo of coal shipped in bulk on the Giant Ace in Indonesia and discharged in India in April 2018. The respondent was the demise charterer of the vessel and the contractual carrier under the bills of lading. The bills of lading were on the Congenbill 1994 form and incorporated the terms of a voyage charterparty between Classic Maritime Inc Ltd as owner and Trafigura Maritime Logistics Pte Ltd as charterer. The charterparty was governed by English law and was subject to the Hague-Visby Rules.

The issue was whether art 3.6 of the Hague-Visby Rules applied to the appellant's misdelivery claim. If it did, the claim was extinguished: The Aries [1977] 1 WLR 185 (CMI2194). If it did not, the ordinary six-year period specified by the Limitation Act 1980 applied, and the appellant's claim was in time.

The respondent submitted that, as an international Convention, the Hague-Visby Rules should be interpreted in accordance with the principles set out in the Vienna Convention on the Law of Treaties 1969, which reflected pre-existing international law. It was therefore necessary to give effect to the object and purpose of the time bar in art 3.6 of the Hague-Visby Rules, which was to enable the carrier to close its books in the knowledge that, if suit had not been commenced, all claims were extinguished after one year from when the goods should have been delivered.

Held: Appeal dismissed.

In The Alhani [2018] EWHC 1495 (Comm), [2018] Bus LR 1552 (CMI154), discharge and delivery without production of the bill of lading occurred simultaneously, when the cargo was discharged onto another vessel by ship-to-ship transfer. David Foxton QC held that the words 'in any event' and 'all liability' in art 3.6 of the Hague Rules were wide enough to encompass liability for misdelivery, and that the object of finality which the Rule was intended to achieve would be seriously undermined if it did not apply to misdelivery claims. He rejected the argument that the Rule was limited to claims for breach of the Hague Rules obligations themselves. The Court agrees with that conclusion. As discharge and delivery occurred simultaneously in The Alhani, it was not necessary to consider whether the Hague Rules time bar applied to misdelivery occurring after discharge had been completed, and the Judge was careful to leave that question open.

In the Hague-Visby Rules, instead of providing for discharge from 'all liability in respect of loss or damage', the new Rule provides for discharge 'from all liability whatsoever in respect of the goods'. The words 'in any event' are retained. It is immediately apparent that the new Rule was intended to be of wider scope than the original Rule. The change in wording weakens or even removes the nexus with loss or damage to the cargo which was previously required. It is a reasonable inference that the new Rule was intended to apply even in cases outside the sphere of application of the Rules - in effect, to jettison the time limit relating to discharge.

Two points appear from the travaux préparatoires and leave no room for doubt. The first is that there was no settled understanding among the members of the CMI who proposed the Visby amendments whether the time limit in the original Hague Rules applied to misdelivery claims at all. The second is that the new Rule was intended to apply to such claims. The amended draft was put before a plenary session of the CMI on 14 June 1963, with the explanation (p 500) that:

The object of the aforesaid amendment is to give the text a bearing as wide as possible, so as to embody within the scope of application of the one year period, even the claims grounded on the delivery of the goods to a person not entitled to them, i.e. even in the case of what we call a wrong delivery.

The amendment was said (p 508) to concern 'the time limit in respect of claims for wrong delivery' or 'prescription en matierè de reclamations relatives a des délivrances à personnes erronées'. This is the necessary 'bull's-eye' in the travaux.

If the drafters had intended to limit the new art 3.6 of the Hague-Visby Rules to cases of misdelivery occurring during the carriage by sea (including the discharge operation itself), they could have been expected to say so. There is, however, no indication in the travaux that they intended to limit the new Rule in this way. On the contrary, the instruction given to the Drafting Committee was 'to prepare and submit a draft amendment to the third paragraph of Article III (6) of the Hague Rules, such amendment to provide for a one-year limitation of time to sue in the broadest possible terms', which (it was noted) would 'include the case of wrong delivery'. In choosing a time limit deliberately expressed 'in the broadest possible terms', the drafters plainly intended that the limit should apply to misdelivery even occurring after discharge. It is unlikely in the extreme that they intended the time limit to apply to misdelivery occurring during the voyage or simultaneously with discharge, but not to the typical case of misdelivery occurring after discharge.

It is true that there is Hong Kong authority (Cheong Yuk Fai v China International Freight Forwarders (HK) Co Ltd [2005] 4 HKLRD 749 (CMI1174) and Perfect Best Asset Management Inc v ASL Express Ltd [2021] HKCFI 2310 (CMI1543)) that art 3.6 of the Hague-Visby Rules does not apply to a claim for misdelivery occurring after discharge. However, two cases from one jurisdiction are not capable of amounting to an international consensus. In any event, the judgments in those cases did not consider either the significance of the language used in the Visby amendment to art 3.6 or the impact of the Visby travaux préparatoires. There is, therefore, nothing in those cases to call into question the view of the Court.

There is no reason why effect should not be given to the clear intention of those who drafted the new Rule that it should apply to claims for misdelivery occurring after discharge. That conclusion is consistent with the language and purpose of the Rule, as the travaux préparatoires make clear beyond any reasonable doubt. Accordingly, the Rule applies to extinguish the carrier's liability in this case.