The plaintiff insurer brought a claim against the defendant shipowner of the Hope 1 in respect of its insureds' cargoes of sheets of Indonesian plywood imported into the UK, which arrived in a severely damaged state. The plaintiff argued that the defendant was responsible for the deficiencies and damage to the goods. The plaintiff had paid the insured consignees for the damage which they had suffered, and was therefore subrogated into their rights in accordance with the insurance policy and the law.

The defendant argued that it was not the legitimate defendant in this case. There was no legal relationship between the plaintiff and the defendant, and the defendant owed no contractual obligations to the plaintiff. If the Court decided that there was any legal relationship between the parties on the basis of the bills of lading covering the goods in question, the plaintiff's claims had already prescribed according to law. In the alternative, the Court had no jurisdiction because of the exclusive jurisdiction clause in the bills of lading in favour of the courts of the country in which the 'carrier' has its 'principal place of business', which was outside Malta. In the alternative, any liability on the part of the defendant was excluded by the Hague Rules, in particular art 4.5 [sic: 4.2.n] of the Rules, which deals with damage resulting from insufficiency of packing, for which the carrier is not liable. Further in the alternative, any liability of the defendant was also limited according to the bill of lading in question (ie the Hague Rules) and/or according to Pt IX of Ch 234 of the Laws of Malta (the LLMC 1957).

The Civil Court, First Hall held for the defendant on the basis that the bills of lading were charterers' rather than owners' bills of lading, and thus Pan Ocean Shipping Co Ltd was liable, rather than the defendant (see CMI1877). The plaintiff appealed to the Court of Appeal.

Held: Appeal partially upheld.

The plaintiff is very upset about the decision in The Starsin [2003] UKHL 12 (CMI605). This case was decided at the first instance by Coleman J (in favour of the plaintiff's thesis). This decision was overturned by the English Court of Appeal composed of three Judges, one of whom, Rix LJ, disagreed with the other two and pronounced a dissenting judgment. An appeal was lodged with the House of Lords and the five Judges of this Court agreed that the judgment of the two majority Judges of the Court of Appeal should be revoked. Thus, a total of seven Judges out of nine substantially agreed with the thesis which the defendant is arguing in the present case, namely that when the reverse of the bill of lading contains a printed identity of carrier clause (which basically indicates the shipowner as the carrier), this clause becomes virtually worthless unless the charter is identified as the carrier, with words to that effect, added on the front page in the signature box. This is because the details which are written on the front and which clearly show the intention of the parties to the bill of lading should prevail over the standard clauses which are written in fine print on the reverse of the bill of lading.

The plaintiff agrees that in the case of the '36 bills of lading', there is something to be said for the thesis of the defendant. However, the plaintiff argues that the arguments accepted by the two Judges of the Court of Appeal, despite being rejected by the House of Lords, are more in line with Maltese rules of interpretation on contracts, rather than the arguments accepted by the House of Lords, because the Civil Code favours a subjective rather than an objective interpretation of intention.

This Court does not agree. There is no doubt that the rule of interpretation contained in the Civil Code is obviously of great value. Equally, however, it can be said that the mercantile approach based on what is actually practiced by stakeholders in the particular business, is not a system alien to the Maltese legal system. In fact, the same trade practices, which are born of such a constant practice of traders, are very important in the Maltese trading system. So much so that art 3 of the Commercial Code (Ch 13 of the Laws of Malta) gives priority to the use of trade over the rules contained in the Civil Code.

Certainly, clauses printed in contracts, and therefore also in bills of lading, should be given the force that their words have from a legal point of view. However, it is well established in local case law that agreements which have been specifically agreed between the parties shall prevail over standard printed agreements. In other words, where there are handwritten or typed words or clauses which are incompatible with the printed words or clauses, the latter shall not be given effect. This is because clauses or words that have been specifically added should be interpreted and considered as express derogations to the printed clauses.

In this case, it is clear that the typewritten words inserted in the signature box at the bottom right of the front of the '36 bills of lading' in question explicitly indicate Pan Ocean as the carrier. This unambiguous signalling is an express derogation from the first sentence contained in the printed clause numbered 30 on the reverse indicating the shipowner as the carrier:

Identity of Carrier: The contract evidenced by the bill of lading is between the Merchant and the owner of the vessel named herein (or substitute) and it is therefore agreed that the said ship owner only shall be liable for damage or loss due to any breach or non performance of any obligation arising out of the contract of carriage whether or not relating to the vessel’s seaworthiness.

All in all, this Court concludes that the House of Lords' decision in The Starsin is substantially compatible with the Maltese mercantile legal system, and is therefore acceptable to this Court. Therefore, as regards the '36 bills of lading' where the carrier is identified on the front of the bill as Pan Ocean, the liability for damage and deficiencies in the goods relating to the same bills shall be borne by the charterer, ie Pan Ocean, and not the defendant shipowner. The judgment of the first instance Court appellant is thus confirmed as regards these '36 bills of lading'.

Regarding the '22 bills of lading', where Pan Ocean is not described as a carrier in the signature box as a carrier, it should be emphasised that below the line where the signature is to be placed, are the words printed 'For Master'. As far as these bills of lading are concerned, this Court, after much deliberation, has come to the conclusion that it cannot share the conclusion of the first instance Court that the defendant produced sufficient evidence to show that it cannot and should not be identified as the carrier of the carriage of goods relating to these bills of lading.

The fact that the defendant's own name does not appear anywhere on these bills of lading is not a significant factor, because this company is identifiable in so far the representations in words such as 'master, captain, owner of the vessel named herein' are used. The fact that Pan Ocean's agent signed the signature box as an agent does not change the fact that the words 'For Master' are printed under the same signature. The fact that Pan Ocean was not described as the carrier in the signature box means that in relation to the '22 bills of lading' there is no incompatibility between the contents of this signature box and the content of the identity of carrier clause (cl 30). This clause clearly states in its first sentence that the shipowner is the carrier and, as such, is solely responsible for any damage or deficiencies suffered by the cargo during the contract of carriage.

Finally, the Court of first instance found comfort in concluding that Pan Ocean had paid several claims of other individuals for damages in other goods being carried during the same journey. Even this fact alone, in the view of this Court, is not unequivocal proof that Pan Ocean was seen as the carrier in respect of the contracts of carriage in question. This is because no concrete evidence was presented to explain in detail the relevant transactions.