The defendant contracted with the plaintiff for the shipment of cases of citrus fruit from Famagusta to Trieste on the m/v Santa Maria ex Lilika, or a substitute vessel to be provided by the defendant. The plaintiff alleges that the defendant failed to provide the Santa Maria or a substitute. In view of this, the plaintiff shipped its citrus cargo on another vessel, the m/v Marigouila, at a higher rate of freight. The plaintiff filed an action for the difference in freight.​ The defendant argued that the plaintiff's claim was statute-barred, relying on the provisions of the third para in art 3.6 of the Schedule to the Carriage of Goods by Sea Law, Cap 263. That law reproduces the provisions of the Carriage of Goods by Sea Act 1924 (UK), which gives effect to the Hague Rules.

Held: The plaintiff's claim is not time-barred.

The application of the Hague Rules is largely a matter of construction and in construing the Rules the usual canons of construction should be applied by the Court. In construing art 3.6, the third para of that Rule, which provides for the one-year limitation period, should be read in the whole context of the Rule and not taken out of context and read and interpreted separately.

The first para of art 3.6 provides that notice of 'loss or damage' and the general nature of such loss or damage shall be given in writing to the carrier or its agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery, or if the loss or damage is not apparent, within three days, and that such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. Obviously this paragraph presupposes that the goods were loaded on the ship, that they were carried on the voyage, reached their destination and were discharged.

The second para of art 3.6 provides that the notice in writing need not be given if the state of the goods has 'at the time of their receipt' been the subject of a joint survey or inspection. There again, that provision presupposes the loading, carrying and discharge of the goods.

The third para of art 3.6 is the relevant limitation provision. It refers to the discharge from all liability of the carrier and the ship in respect of 'loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered'.

Finally, the fourth para of art 3.6 provides that in case of any actual or apprehended loss or damage the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. This provision presupposes that the goods were loaded on the ship and would seem to refer to the first para of the same Rule.

The object of the provisions of art 3.6 is clear: it is to give an early opportunity to the carrier to take note and inspect or survey an alleged loss or damage to the goods while there is time and before material evidence is destroyed. That is why the limitation period of one year is laid down for bringing suit, so that the carrier may not be at a disadvantage in defending a claim of loss or damage to goods. On the other hand, if the claim is for damages for breach of contract to provide a ship or shipping space the same considerations do not apply, and it may well be that it was intended that the ordinary limitation period of six years for claims of breach of contract should be applicable in such cases.

The Hague Rules apply only where there is a 'contract of carriage', that is, a contract 'covered by a bill of lading or any similar document of title' (art 1.b). This definition includes any contract of affreightment, however informally made in its inception, the parties to which intend that, in accordance with the custom of that trade, the shipper shall be entitled to demand at or after shipment a bill of lading setting forth the terms of the contract. To such a contract the Rules will apply even though no bill of lading was in fact demanded or issued.

Article 2 is the crucial provision applying the rights and liabilities in the subsequent provisions to the operations it enumerates, that is to say, the Hague Rules are applied to every 'contract of carriage' of goods by sea in relation to the 'loading, handling, stowage, custody, care and discharge of such goods'.

Under arts 1.e and 7, the Rules only apply from loading to discharge and the parties may make what terms they please as to the period 'prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by sea'.

Consequently, in construing art 3.6, in the absence of any authority to the contrary, the provisions of the third para do not begin to apply until the stage of the loading of the goods on the ship agreed upon by the parties is reached and not before. It therefore follows that where goods were never loaded on the ship agreed upon which never came to port, as in the present case, the plaintiff's claim for damages for breach of the contract to carry the goods is not within the ambit of art 3.6.

The plaintiff's claim is thus not barred by lapse of time as the limitation period applicable to such actions is six years and not one year (see s 5 of the Limitation of Actions Law, Cap 15).