This was a claim for MTL 4,772 brought by the plaintiff against the defendant freight forwarder for breach of their contract of carriage of goods by sea, and in particular, misdelivery of the goods to the consignee without presentation of the relevant bill of lading, which allowed the consignee to avoid paying for the goods. The defendant argued that the plaintiff's claim was time-barred under cl 17 of the bill of lading, which provided for a 9-month time bar, and that it was not the appropriate defendant. The defendant argued that if there was any liability, it fell upon the English company, EUF Group Ltd, which had handled the delivery of the goods in the UK.

Held: Judgment for the plaintiff.

The Court notes that although the bill of lading is a type used worldwide by the International Federation of Freight Forwarders Associations (FIATA) and the British International Forwarders Association (BIFA) and their members, and the defendant contends that its main business is that of freight forwarding, in this case the defendant's role was not limited to that of freight forwarder. Instead, the defendant assumed the role of a carrier. That is, the defendant acted not merely as an intermediary for the transport of goods from Malta to the UK, but also undertook the transport of the same goods.

It is a well-known fact that parties involved in such commercial operations - ie carriage of goods - often assume a function and a legal status which differs from their usual one. It all depends on the functions which they perform. As stated in Atlas Insurance Agency Ltd NOE v Gollcher Co Ltd NOE, Civil Appeal No 588/01, 20 October 2003, this is the case for shipping agents, shipping companies, and even freight forwarders. A freight forwarder usually wears the legal vestments of an intermediary to deliver the goods from one point of destination to another point of destination in a triangular operation which normally involves the shipper and the receiver of the goods. The ship's broker, agent, and carrier will also be involved in such an operation. However, a freight forwarder can also be the carrier and therefore, in addition to its usual function as an intermediary for goods and its delivery, it also assumes the ancillary function of a carrier. All this means that the conditions contained in the bill of lading in force between the contending parties - including the conditions on liability and limitation of liability - must be interpreted in the context of a relationship between a client/consignor - the plaintiff - and the carrier - the defendant.

An examination of the bill of lading in force between the contending parties shows that cl 7, entitled 'Paramount Clause', provides:

The Hague Rules contained in the International Convention for the unification of certain rules relating to Bills of Lading, dated Brussels 25th August 1924, or in those countries where they are already in force the Hague-Visby Rules contained in the Protocol of Brussels dated 23rd February 1968, as enacted in the Country of Shipment, shall apply to all carriage of goods by sea and also to the carriage of goods by inland waterways, and such provisions shall apply to all goods whether carried on deck or under deck.

It is clear from this clause that the terms of the bill of lading are subject to the mandatory provisions of international Conventions or national law applicable to the contract evidenced by bill of lading, and to the Hague Rules which by virtue of this clause shall be given contractual force between the parties. If one or more of the terms of the bill of lading are contrary to the rules provided for in the international Conventions or national law applicable to the bill of lading, or contravene the Hague Rules, the latter will prevail, and not the terms of the bill of lading.

The relevant bill of lading, issued in Malta and relating to the carriage of goods from Malta to the UK, notably to Oldham, is governed by Maltese law as provided in the Carriage of Goods by Sea Act (Ch 140 of the Laws of Malta), which incorporated the Hague Rules into the Maltese legal system - in this Act 'the Rules' mean the rules on bills of lading set out in the Schedule to this Act (art 2). Although there may be contrary provisions in the Commercial Code, the Rules shall have effect, in accordance with the provisions of this Act on and in respect of the carriage of goods by sea on any ship used for that purpose, for the purpose of transporting cargo from Malta to another port, but not if that ship is carrying cargo in the waters of Malta, ie from one island to another or from one side to the other islands (art 3).

There is therefore no doubt that the relevant bill of lading is subject to the Hague Rules, and it must therefore be determined whether cl 17 relied on by the defendant complies with the Rules on the responsibilities and duties of a carrier, thus relieving it of any liability towards the plaintiff. Article 3.6 of the Hague Rules provides that in any case the carrier and the ship shall be released from any liability for loss or damage unless action is taken within one year of the delivery of the goods or from the date on which the goods were due to be delivered, while cl 17 invoked by the defendant imposes a time limit for action against it of nine months from the delivery of the goods, or from the date on which the goods should have been delivered, or from the date on which the goods were to be regarded as lost.

It is quite clear that the time limit laid down in the bill of lading is shorter than the time limit laid down in the Hague Rules. Article 3.8 of the Hague Rules provides:

Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connexion with, goods arising from negligence, fault, or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in this Convention, shall be null and void and of no effect.

A very similar issue was examined by the Court of Appeal in Galdes NOE v Gollcher, and in Staines NOE v Bianchi, both decided on 7 April 1998. The Court held that in the light of the doctrine and foreign case law cited, there could be no reasonable doubt that the nine-month period laid down in the bill of lading should be regarded as null and void because it effectively reduced by three months the period within which the consignee may bring its claim for damages. By such a clause, the carrier would be reducing its liability by shortening and reducing, to the detriment of the rights of the consignee, the useful time expressly given to it by law, during which it will be able to adequately safeguard its rights by exercising appropriate action. The Hague Rules (or the Hague-Visby Rules, in that case) set the minimum liability of the carrier and it was not lawful for it to reduce its liability beyond that set out in the Rules. In the Court's view, there was indeed a 'repugnancy' between the clause in the bill of lading and art 3.6 of the Hague-Visby Rules. Therefore, the term of nine months must be discarded and instead the legal term of one year must be applied in accordance with the Rules.

In Galdes the Court of Appeal went into detail on this matter and also dealt with the earlier conflicting case-law given by the Maltese Courts which had suggested that the prohibition in art 3.8 affected substantive limitations of liability, but not procedural issues such as limitation of actions (time bars). The Court of Appeal rejected this distinction, noting that 'an agreement which reduces the period of one year in which an action may be brought in accordance with paragraph 6 of Article III itself is an agreement which in itself incorporates a limitation of liability, which affects the substantive law and not just procedural law'.

Applying these considerations to this case, the Court concludes that cl 17 invoked by the defendant is null and void because it is contrary to the provisions of the Hague Rules. It reduces by three months the period within which the plaintiff may bring an action for damages against it. The preliminary objection raised by the defendant must therefore be rejected.

Further, having regard to the time limit within which the plaintiff's action was brought against the defendant, and having regard to the wording of art 3.6 of the Hague Rules, the Court considers that the period of one year stipulated is still not applicable to this case. Article 3.6 of the Hague Rules provides:

Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his 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 thereof under the contract of carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.

If the loss or damage is not apparent, the notice must be given within three days of the delivery of the goods.

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 joint survey or inspection.

In any event the carrier and the ship shall be discharged from all liability 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.

In the 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.

It is very clear from the wording of art 3.6 that this deals with loss of or damage to goods and the action relating thereto, and therefore the one-year period laid down therein applies to an action against a carrier due to loss of or damage to the goods. The present action, however, is not an action against the defendant for loss of or damage to the goods carried, but is an action for damages suffered by the plaintiff as a consequence of the fact that the defendant negligently delivered the goods, without the consignee first having paid for them under the letter of credit arrangement in place between the parties. The consignee was able to achieve this because the defendant delivered the goods without insisting on presentation of the original bill of lading. Since the plaintiff's action is not an action for loss or damage to the goods, but rather an action for damages for failure and negligence on the part of the defendant, it is clear that the one-year period laid down in art 3.6 of the Hague Rules does not apply to this case.