In the arbitration of a dispute arising from cargo damage, the buyer (the plaintiff) alleged that art 1.b of the Hague-Visby Rules applied to the straight bill of lading in question. If that were correct, the relatively generous package limitation under art 4.5 of the Hague-Visby Rules would have been applicable. However, the carrier (the defendant) contended that the straight bill of lading was equivalent to a sea waybill, which merely operated as a receipt. Accordingly, the defendant argued that art 1.b of the Hague-Visby Rules was inapplicable.

The arbitrators held that a straight bill of lading fell outside the scope of art 1.b of the Hague-Visby Rules. The decision of the arbitrators was upheld by the first instance Court (JI MacWilliam Co Inc v Mediterranean Shipping Co SA [2002] EWHC 593 (Comm) (CMI2236)). The plaintiff appealed. The Court of Appeal (JI MacWilliam Co Inc v Mediterranean Shipping Co SA [2003] EWCA Civ 556) (CMI2231) held that the Hague-Visby Rules and therefore the package limitation regime under art 4.5 of the Hague-Visby Rules applied to the carriage. The defendant appealed to the House of Lords.

The sole issue on appeal before the House of Lords was whether a straight bill of lading was a bill of lading or similar document of title within the meaning of art 1.b of the Hague-Visby Rules and hence within s 1(4) of the Carriage of Goods by Sea Act 1971 (UK) (COGSA 1971).

Held: Appeal dismissed.

Before the adoption of the Hague/Hague-Visby Rules, the practice of issuing straight bills of lading was known, and such documents were described and treated as bills of lading. Therefore, the Hague/Hague-Visby Rules were intended to apply to straight bills of lading.

Reading arts 1.b and 5 of the Hague/Hague-Visby Rules together, it is plain that the Rules do not apply to charterparties at all and that they apply to bills of lading issued under charterparties only 'from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same'. This is explained by the intention of the Rules to afford protection not to the immediate parties to the contract of carriage but to third parties in the context of charterparties. Subject to that exclusion, the scope of the Hague/Hague-Visby Rules is generously expressed.

According to s 1(6) of the COGSA 1971 and art 6 of the Hague/Hague-Visby Rules, it is clear that the Hague/Hague-Visby Rules were intended, subject to the charterparty exclusion already mentioned, to govern the great majority of ordinary commercial shipments.

Therefore, there is no difficulty in regarding a straight bill of lading as a document of title for purposes of the Hague/Hague-Visby Rules, given that on its express terms it must be presented to obtain delivery of the goods.

It is also worthy of note that although Carriage of Goods by Sea Act 1992 (UK) (COGSA 1992) treats straight bills of lading as sea waybills, s 5(5) of the COGSA 1992 specifically provides that the Act will not affect the Hague-Visby Rules. Therefore, the terms of COGSA 1992 cannot alter the fact that a straight bill of lading is a document of title.