This was an appeal from FIMbank plc v KCH Shipping Co Ltd [2022] EWHC 2400 (Comm) (CMI1998) and FIMBank PLC v KCH Shipping Co Ltd [2023] EWCA Civ 569 (CMI2192). The agreed issues on appeal to the Supreme Court were:

1. Does art 3.6 of the Hague-Visby Rules apply to claims for misdelivery of cargo occurring after discharge has been completed?
2. If so, does cl 2(c) of the 1994 Congenbill form of bill of lading have the effect of disapplying the provisions of the Hague-Visby Rules (including the time bar in art 3.6) to events occurring after discharge was completed?
3. If not, does the art 3.6 Hague-Visby Rules time bar nevertheless apply contractually under the bills of lading to claims for misdelivery of cargo occurring after discharge?

Held:

1. Articles 3.6 of both the Hague Rules and the Hague-Visby Rules apply to claims for misdelivery of cargo occurring after discharge has been completed;
2. No;
3. Issue does not arise.

The Hague Rules attempted to harmonise and standardise the rules applicable to international carriage of goods by sea under contracts of carriage covered by bills of lading. They represented a pragmatic compromise between the interests of shipowners and cargo interests. The shipowners' freedom to contract was restricted and they were made subject to defined responsibilities and liabilities and entitled to defined rights and immunities. In summary, the Hague Rules broadly succeeded in producing standardisation of the terms and rules governing bills of lading and in redressing the imbalance which had previously existed between the risks borne by shipowners and cargo interests.

Some 50 years after the adoption of the Hague Rules it was considered that it was time that they be reviewed. In 1959 the Comité Maritime International (CMI) at its conference at Rijeka instructed a Sub-Committee to study amendments to the Hague Rules. A final Protocol was signed on 23 February 1968. No major amendments to the Rules were made by the Protocol. The changes made were to limitation of liability; the availability of the defences and limits of liability provided for in the Rules to claims in tort; the conclusive effects of bills of lading when transferred to a third party acting in good faith; the time bar; and the application of the amended Rules. The amendment made to art 3.6 provided:

Subject to paragraph 6 bis 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.

Article 3.6 bis allowed for a longer time limit in prescribed circumstances in actions for an indemnity against a third person.

The approach to the interpretation of the Hague and Hague-Visby Rules is set out in Alize 1954 v Allianz Elementar Versicherungs AG (The CMA CGM Libra) [2021] UKSC 51 (CMI1619). (1) International Conventions should in general be interpreted by reference to broad and general principles of interpretation rather than any narrower domestic law principles. (2) The relevant general principles include art 31.1 of the Vienna Convention on the Law of Treaties 1969 which provides: 'A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.' (3) They also include art 32 of the Vienna Convention which provides that recourse may be had to 'supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion' in order 'to confirm the meaning' or 'to determine the meaning' when it is 'ambiguous or obscure' or 'leads to a result which is manifestly absurd or unreasonable'. (4) Regard may therefore be had to the travaux préparatoires as a supplementary means of interpretation of the Hague Rules. (5) In considering the object and purpose of the Hague Rules it is appropriate to have regard to their history, origin, and context. (6) It may also be appropriate to have regard to the French text of the Rules, as this is the official and authoritative version. (7) International Conventions should be interpreted in a uniform manner and regard should therefore be had to how they have been interpreted by the courts of different countries. This will be particularly important if there is a consensus among national courts in relation to the issue of interpretation.

Issue 1: Does art 3.6 of the Hague-Visby Rules apply to claims for misdelivery of cargo occurring after discharge has been completed?

In order to answer this question it is first necessary to consider whether art 3.6 of the Hague Rules would apply to such claims. As a matter of language, this provision is intended to be of wide application. First, it is introduced by the phrase 'In any event'. This is supported by the French text: 'en tout cas'. Secondly, it is to apply to 'all liability'. This indicates that the time bar applies to any liability, however it may arise, and is not limited, eg, to liabilities arising under the Rules. As such, the time bar is not just a feature of the Hague Rules obligations and is not inextricably tied thereto. Thirdly, it does not refer to loss or damage to the goods but to claims 'in respect of' loss or damage. This indicates that it is not limited to physical loss or damage to the goods but covers loss or damage which is related to those goods, such as claims for financial loss. Fourthly, the effect of the time bar involves absolute finality. 'All' liability is 'discharged'.

The immediate context of the time bar is that it appears in a rule focusing on 'delivery' of the goods. In many cases delivery will take place after discharge. This rule recognises the significance of the difference between delivery and discharge. Delivery relates to the transfer of possession of the goods to the person entitled to receive them and marks the completion of the contract of carriage under the bill of lading. Discharge relates to a physical operation. It is different conceptually, and often in time, to delivery.

Delivery has a particular significance in the context of carriage of goods by sea and indeed any bailment. The carrier acknowledges in the bill of lading the apparent order and condition of a stated quantity of goods on shipment (arts 3.3 and 3.4). Delivery of a lesser quantity of goods or of goods which do not reflect their apparent order and condition is a prima facie breach of the contract of carriage. The rights in respect of such a breach arise at the time of delivery. It is then for the carrier to show that there has been no breach of duty or none for which it is contractually responsible. It is not necessary for the cargo owner to aver how loss or damage has been caused to the goods or when it occurred. It has a cause of action as a result of the goods not being delivered in the quantity or apparent order and condition acknowledged by the bill of lading. Given that legal context, it is entirely understandable that any time limit should focus on the time of delivery and be linked to the fact of short or damaged delivery, not the precise cause thereof. The importance of delivery is emphasised in the other parts of art 3.6.

The Hague Rules set out what has been generally referred to as a 'period of responsibility' during which the carrier is subject to minimum responsibilities and liabilities, which cannot be reduced, and entitled to maximum rights and immunities set out, which cannot be increased. During that period there can be no avoidance or lessening of such liabilities - art 3.8. After that period there may be - art 7. This is permissible under art 3.8 as that rule only applies 'otherwise than as provided in these Rules' and art 7 does so provide. Responsibility begins with the commencement of loading and ends with the completion of discharge. Those operations bookend the period of responsibility.

However, the Rules are not only concerned with that period of responsibility. Art 3.6 is concerned with the period up to delivery, including events which occur after discharge. Similarly, art 3.3, which concerns the carrier’s obligation to issue a pre-shipment bill of lading is concerned with the period prior to loading and events during that time. Article 3.1 imposes an obligation on the carrier to exercise due diligence to make the ship seaworthy 'before' the voyage. The reference to 'all liability' in art 3.6 is clearly capable of applying to liabilities which arise otherwise than by reason of the breach of the Rules and, if so, to liabilities which may not be confined to the period of responsibility under those Rules.

The main object and purpose of the art 3.6 time bar is finality. This object and purpose is best met if all related claims are covered by the time bar. An all-embracing time bar regime serves that object and purpose much better than a split regime. A further way in which finality is undermined with specific reference to misdelivery claims was highlighted in the discussions leading up to the amendments made by the Protocol to art 3.6. Where delivery is not given against presentation of a bill of lading, the carrier will almost invariably be provided with a letter of indemnity or similar guarantee. The sub-committee which produced the draft Protocol noted that a 'recurrent practical problem' was how long a person who provided such an indemnity or guarantee had to keep it open. It stated that a fixed time limit for misdelivery claims would be both 'useful and practical', would have the 'great advantage' of addressing this problem and would be in the interests of cargo owners and their insurers (Report of CMI Sub-Committee on Bill of Lading Clauses (1959) as published by the CMI Stockholm Conference (1963) p 77).

The relevant passages of the travaux on 'discharge' and 'delivery' confirm the intention that there should be a 'period of responsibility' set out in the Rules, commencing on loading and ending on discharge, outside of which the carrier would enjoy freedom to contract. They do not, however, address the issue of whether no Rules should apply outside that period, still less whether the art 3.6 time bar should do so. In relation to the time bar, the main debate was as to the length of the period. Given the historical context, the fixing of a one year limit was seen as a 'big win' for cargo interests. As such, it would have been perceived to be in their interests for its application to be as all-embracing as possible. There are indications to support that intention. So, eg, in the International Law Association 1921 Conference, Lord Phillimore queried the Rule 6 text which was adopted and suggested: 'I think it ought to be put in some quite different way (I have not thought how) to show that it is a contract by the shipper that he will not sue after 12 months. I think the real way to put it is something of this sort: "and the consignee undertakes to make no claim unless he brings it within 12 months" - something of that kind.'

The English authorities are to the effect that as a matter of language art 3.6 applies to misdelivery claims and that this accords with the purpose of the rule. The Bank relies on authorities in Malaysia and Australia in support of its case that art 3.6 has no application to matters after discharge. While it may be instructive to have regard to the reasoning in such cases, authorities from two countries do not establish an international consensus. The leading Malaysian case is the decision of the Federal Court of Malaysia in Rambler Cycle Co Ltd v P & O Navigation Co [1968] 1 Lloyd's Rep 42 (CMI670). In that case it was held that art 3.6 did not apply to a claim brought by the shipper after the cargo had been discharged into the harbour board’s warehouse. Rambler Cycle was followed and applied more recently in Minmetals South-East Asia Corp Pte Ltd v Nakhoda Logistics Sdn Bhd [2018] MYCA 212, [2018] 6 MLJ 152 (CMI323). In Teys Bros (Beenleigh) Pty Ltd v ANL Cargo Operations Pty Ltd (1989) 2 Qd R 288 cargo was damaged before loading began, while in the carrier’s custody. The Supreme Court of Queensland held that the Hague Rules time bar could not be relied on by the carrier, because its liability arose outside and before the period covered by the operation of the Hague Rules. In Kamil Export (Aust) Pty Ltd v NPL (Australia) Pty Ltd [1996] 1 VR 538 (CMI2003), the Supreme Court of Victoria Appeal Division held that the Hague Rules time bar did not apply in respect of loss and damage to goods occurring after discharge. An Australian case which contains a judgment to contrary effect is PS Chellaram & Co Ltd v China Ocean Shipping Co (The Zhi Jiang Kou) [1991] 1 Lloyd’s Rep 493 in which the New South Wales Court of Appeal held that a claim for misdelivery after discharge was time-barred. In summary, there is no international consensus that art 3.6 does not apply after discharge and the decisions in Malaysia and Australia differ in their approach from that taken by the English courts. None of them addresses the core arguments in this case.

There is therefore nothing in the travaux, the English authorities, the international case law, or the textbooks which calls for, still less compels, a contrary conclusion. There is a defined period of responsibility under the Rules, but that does not mean that all the Rules concern and operate only during that period. If the Hague Rules time bar applies to misdelivery occurring after discharge, the Hague-Visby Rules time bar necessarily does so, given its still wider wording. That the Hague-Visby time bar was meant to apply to such misdelivery is borne out by a number of matters. First, the wider wording in which it is expressed covering all liability 'whatsoever' and 'in respect of goods' rather than 'in respect of loss or damage'. Secondly, the addition of art 4 bis providing: 'The defences and limits of liability provided for in these Rules shall apply in any action against the carrier in respect of loss or damage to goods covered by a contract of carriage whether the action be founded in contract or in tort'. This makes it clear that the application of the Rules is not limited to claims for breaches of obligations under the Rules but extends to all breaches of duty, whether in contract, tort, or bailment. This includes misdelivery claims. Thirdly, the travaux make it clear that the reason for broadening art 3.6 was to cover misdelivery, referred to as 'wrongful delivery'. The Sub-Committee appointed by the CMI noted that differing views were held as to whether the Hague Rules time bar applied to wrongful delivery claims. It considered that the time bar should apply:

Were the Convention to contain a rule laying down that a time limit should operate also in respect of claims based upon wrong delivery of the goods such a rule would solve a recurrent practical problem: How long should a person who has received the goods without producing the [bill of lading] and who therefore has had to put a bank guarantee be obliged to keep the guarantee running? If a time limit for the claim is definitely fixed this would also determine the necessary duration of the bank guarantee. The Sub-Committee felt that it would be useful and practical to have a rule on this particular point. One great advantage would undoubtedly be that a bank guarantee given against claims for wrong delivery would be reduced to more reasonable periods and would thus actually operate to the benefit of consignees as well as carriers.

When the formal approval of the session was sought, the amendment was said to concern 'the time limit in respect of claims for wrong delivery' or 'prescription en matierè de réclamations relatives à des délivrances à personnes erronées'. It is therefore very clear from the travaux that the amendments made were intended to cover claims for misdelivery. In discussions and in drafting misdelivery was referred to in generalised terms. There was no discussion of limiting the categories of misdelivery claim to which the amended rule would apply, still less of excluding the paradigm case of misdelivery.

The Hague-Visby Rules time bar does apply to misdelivery which occurs after discharge. It does so notwithstanding that the period of responsibility under the Hague-Visby Rules is defined in the same terms as under the Hague Rules. This supports the conclusion reached in relation to the Hague Rules that the period of responsibility under the Rules does not preclude the time bar from operating outside that period.

Issue 2: Does clause 2(c) of the 1994 Congenbill form of bill of lading have the effect of disapplying the provisions of the Hague-Visby Rules (including the time bar in art 3.6) to events occurring after discharge was completed?

Clause 2(c) provides: 'The Carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising prior to loading into and after discharge from the Vessel [or] while the cargo is in the charge of another Carrier, nor in respect of deck cargo or live animals.' Clause 2(c) is clearly intended to protect the carrier and relieve it from liability for loss or damage. It would be counter-intuitive, if not perverse, for it to have the effect of preventing the carrier from relying on an otherwise applicable time bar so as to increase rather than reduce the carrier's liability. The clause does not refer to the Hague/Hague-Visby Rules, still less to art 3.6 or the time bar. The clause is consistent with the Hague/Hague-Visby Rules period of responsibility and art 7, which allows for the carrier’s responsibility and liability for loss or damage to be reduced or exempted prior to loading and after discharge. The premise upon which this issue falls to be considered is that the clause does not exclude the carrier from liability for misdelivery. If so, there is no reason why the time bar should not apply to such a claim. If the language is not clear enough to exclude liability for misdelivery claims, it is equally not clear enough to exclude reliance on the time bar in relation to such claims.

Issue 3: Does art 3.6 of the Hague-Visby Rules time bar apply contractually under the bills of lading to claims for misdelivery of cargo occurring after discharge?

Given the conclusion on Issue (1), this question does not arise and it is unnecessary to address it.