The first to third appellants, collectively referred to as the Polish Steamship Co (PSC), are companies established in Poland and engaged in shipping. PSC sees itself as having acted as one body in relation to the proceedings which are the subject of the appeals. The first respondent, Red Rock (RR), is a company established in the United States, which is engaged in financing international trade transactions. At the time of filing the proceedings, RR was in liquidation proceedings. The second and third respondents, the Banque Nationale de Paris, New York (BNP), and AMRO Bank NV (ABN), are New York branches of banking corporations. These banks provided RR with loans to finance the transactions. The fourth appellant, Yaakov Caspi Ltd (Caspi) and the fourth respondent, JP Ships & Operations Agent Ltd (JP) are ship agents, whose role is to handle the unloading of cargo ships arriving at the port.

Ram Steel Industries Ltd (Ram) was part of a group of companies controlled by Reuven (Ruby) Asa, an Israeli businessman. In August 1992, a receivership order was issued against the group of companies of which Ram was a member. The proceedings are subject to appeal. It revolved around two of three steel cargoes, which Ram had acquired in the years prior to the liquidation proceedings.

The steel cargoes were purchased by Ram from Impexmetal in Poland. In order to transport the cargoes from Poland to Israel, Impexmetal entered into charterparties with PSC. The first cargo of steel ingots was transported on a ship that sailed from Poland and arrived at the port of Ashdod on 1 August 1991. The second and third cargoes were also transported by sea from Poland, arriving at the port of Ashdod on 30 September 1991 and 8 January 1992 respectively.

Financing of the transactions for the purchase of the steel cargoes was effected as follows. In the first place, Ram approached RR, and the latter undertook to finance the purchase transaction. RR, for its part, took out loans from various banks for the purpose of financing the transaction. RR received the financing for the first cargo from BNP-Suisse Bank. The financing for the second cargo was received from Dresden Bank (the European banks). The funding for the third cargo was obtained from ABN. Ram was to repay its debt to RR within 180 days from the date of issuance of the relevant bills of lading, and the banks expected repayment of the loans granted to RR on those dates respectively. In February 1992, RR approached BNP with a request to refinance the first and second cargoes. BNP complied with the request, and as part of the refinancing repaid the European banks.

The bills of lading issued for the bills were used as collateral for the repayment of the loans as follows. The original bills of lading issued for each of the cargoes were transferred to the financing banks, who transferred them on their behalf, directly or through RR, to the Union Bank Trust Co Ltd. The role of the trust company was to hand over the bills of lading to Ram, so that it could release the cargoes when they arrived at the destination port, but only after Ram repaid the amounts taken as a loan to finance the purchase of the cargo. In practice, however, the bills of lading did not fulfil their purpose of being used as collateral by the financing authorities, since the cargoes were released from the port and came into the hands of Ram without the original bills of lading being presented.

JP handled the technical matters related to the unloading of the ships. Caspi served as a shipping agent on behalf of the appellants, but it was JP who actually handled the unloading of the cargo, following a request from Ram and its owner, Ruby Asa. The steel cargoes were removed from the port according to delivery orders issued by JP without the original bills of lading being presented, as required. The cargo was transferred to Ram's control. The group of companies of which Ram was a member ran into financial difficulties and entered into liquidation proceedings. The final destination of the steel cargoes was not known and could not be located, after they were apparently used in construction or industry.

Against this background, RR, ABN, BNP, and the trust company filed a lawsuit in the Haifa District Court against the appellants as well as against Caspi and JP for the financial losses caused by the misdelivery of the cargo. The proceedings on behalf of the trust company were terminated, at its request, at the outset. During the proceedings, a settlement agreement was submitted between ABN and the appellants and Caspi, which was given the force of a judgment. The District Court was therefore required to rule on the ABN lawsuit against JP, and on the RR and BNP lawsuits against all of the respondents.

A month prior to the date the lawsuit was filed in the District Court, RR filed a lawsuit against the appellants in a New York court. BNP sought to be joined as an additional plaintiff in the lawsuit filed by RR in New York, and the court there granted its request and agreed to view BNP as the party who filed the lawsuit by RR with the consent of the parties. Proceedings were stayed in the New York court until the finalisation of proceedings in Israel. The issue of the New York lawsuit is of importance in connection with the statute of limitations claim.

The District Court held that RR had no title to sue on the bills of lading. With regard to the BNP claim against the appellants (which is the subject of this appeal) and Caspi, the trial Court ruled that PSC 'did not act with due diligence to fulfil its obligation to deliver the cargo to the holder of the bills of lading, and did not take the necessary precautionary steps'. PSC did not properly instruct its employees, led by the ships' masters, to adhere to the procedures whereby goods carried on ships will be delivered only against presentation of original bills of lading. The Court ruled that Caspi should be regarded as the shipping agent, and JP as its representative and 'sub-agent' for the purpose of handling the cargo, with the consent of PSC. Accordingly, it held that PSC was liable for the actions of JP. Having determined that it was clear to PSC that the cargo unloading would actually be carried out by JP and not by Caspi, the District Court decided not to impose separate liability on Caspi, and the claim against it was therefore dismissed. The Court further held that since BNP granted refinancing to RR, it was entitled to claim the possession of the cargo from PSC on the basis of the bills of lading. The District Court also rejected PSC’s contention that the BNP claim in relation to the first cargo should be dismissed on the ground of statute of limitations. PSC appealed.

Held: PSC’s appeal is dismissed, with the exception of the claims regarding interest and costs, which are partially accepted.

PSC claims that since it was determined that the first cargo was unloaded at the port of Ashdod in August 1991, the date the ship left the port, and the claim was filed in the District Court on 24 September 1992, this was after the expiration of the special statute of limitations of only one year. The appellants claim, therefore, that the claim as far as the first cargo is concerned should be dismissed outright.

Article 3.6 of the Hague-Visby Rules stipulates (in its wording in the Hebrew language, as it appears in the Appendix to the Transport of Goods by Sea Ordinance) that: ‘Subject to the provisions of Article 6A, the carrier and the vessels shall, in any case, be exempted from any liability in respect of the goods, unless a claim has been made to the court within one year from the date of delivery of the goods or from the date on which they were to be delivered’. While the statute of limitations under the Statute of Limitations, 5718-1958, is merely procedural, and s 2 of that Law directs that it does not ‘revoke the right to a claim’, the statute of limitations under s III 6 is substantive (see Bellina Maritime SA Monrovia v Menora Insurance Co Ltd (CMI1072)).

As stated in s III 6, there are two alternatives for the date of commencement of the limitation period: one – ‘the date of delivery of the goods’, and the other – ‘the date on which [the goods] were to be delivered’. Lawful delivery made to the person who was entitled to receive the cargo under the bill of lading does not apply in this case, since the delivery of the cargo was made here to a person who was not entitled to receive it. The District Court ruled that the second alternative is relevant in this case. The District Court held that 'the question of when the cargo was to be delivered is a factual question to be applied according to the facts proved'. The evidence indicated that the first unloading was completed on 8 August 1991 and that the cargo was immediately delivered to Ram, which completed its receipt of the cargo by November 1991. This date was set by the District Court as the relevant date for the commencement of the second alternative, and accordingly the claim was filed before the statute of limitations ran out. The Court further held that the statute of limitations race was discontinued after BNP joined the lawsuit against PSC, filed by RR in August 1992, in the New York court. The New York court, it was clarified, agreed to view BNP as having filed the lawsuit on the original date it was filed, and it was not disputed that this lawsuit was filed on time.

The ruling of the Court of first instance, according to which the relevant date for the commencement of the statute of limitations expires in November 1991, is correct. However, the statute of limitations claim must be rejected for the additional reason stated by the Court in its ruling. The District Court held, on the basis of the evidence before it, that from August-November 1991 the steel cargoes were stored in private bonded warehouses in the name of Ram and under its control. The District Court held that the date on which Ram needed to use the cargo - which is the date on which it removed the cargo from the warehouses – was November 1991, which was also the date on which the cargo 'was to be delivered'.

There does not appear to be a time to decide the question of what is the date of commencement of the limitation period under the alternative of 'the date on which [the goods] were to be delivered'. The existence of the first alternative for calculating the limitation period – 'the date of delivery of the goods' - is determined on the factual basis in the relevant case. However, the second alternative, which is relevant to this case, is a future alternative that concerns an event that has not yet occurred. Clearly the relevant date under this alternative should not, of course, ignore the special facts for each case. If the date of unloading is known, this will be the determining date. Otherwise, it must generally be assumed, unless otherwise stipulated, that the date on which the goods were to be delivered applies a few days after the ship arrives at the port, and at the latest on the date of its departure from it.

In this case, the facts as determined by the District Court are that the ship carrying the first cargo arrived at the port of Ashdod on 1 August 1991 and finished unloading it on 8 August 1991. As it turned out, from the moment the first charge was unloaded, it was in fact available to Ram and was under its control. In the absence of any other evidence, the presumption is that the date of delivery or the date on which the delivery was to be made, is the last date on which the carrier holds, or could have held, a degree of control over the cargo. After the delivery has taken place - an operation which in itself must be carried out in co-operation with the carrier and the person entitled to receive the cargo - the cargo ceases to be under the carrier's control. It seems that the logic underlying the determination in s III 6, according to which the relevant date for the commencement of the statute of limitations applies to the date of practical or theoretical delivery, lies in the fact that from this date onwards the cargo is no longer under the carrier's control.

PSC argues that the manner in which s III 6 is worded in the Rules under which 'the carrier and the vessels are exempt ... unless a claim has been filed in court within another year' indicates that the burden of proof is on the plaintiff to show that its claim is not time-barred. In contrast, BNP's contention is that the burden of proving the statute of limitations claim, as with any defence claim, rests with the defendant. Notwithstanding the wording of s III 6 above, in the matter of the burden of proof there is no difference between a claim for limitation of the claim under the Hague-Visby Rules and any other defence claim, in respect of which the burden of proof rests on the defendant. The relevant date according to the theoretical alternative is deduced from the date of unloading and the date of departure of the ship from the port and there is no dispute that these dates have been proven.

The District Court held that the statute of limitations race was also terminated for another reason - the filing of the suit against PSC in New York. This lawsuit was filed in August 1992 by RR. Subsequently BNP asked to join the lawsuit, and the court agreed to view it as the party who filed the lawsuit on the original date it was filed.

PSC does not dispute that the New York lawsuit was filed before the statute of limitations expired. As stated, s III 6 of the Hague-Visby Rules provides that the carrier shall be exempt from liability after one year from the date of the practical or theoretical delivery ‘unless a claim has been filed in court’ during the period of the year. The question that needs to be decided is whether the statute of limitations race is stopped only when a claim is filed in a local court, or does the filing of a claim outside the State also lead to the same result? This question should be decided - by virtue of cl 2 of the terms of the bill of lading - under Polish law.

Expert evidence on Polish law indicates that there is no ruling on this issue in Poland and there is no consensus amongst scholars. The issue must be regarded as an undecided matter in Polish law. Therefore, the issue must be decided by relying on the proper interpretation of art 3.6 of the Hague-Visby Rules, given the underlying purposes of the provision. When the Court comes to determine the proper interpretation of ‘unless a suit is brought’ in art 3.6 of the Rules, as well as in any other case where the Court is required to apply rules derived from international conventions and documents, it must give great weight to the consideration of unification. This is especially the case in matters related to international transportation and trade. The Court must instruct itself, in any case that comes before it, to take a purposive interpretation of the Rules, and not settle for a narrow literal interpretation.

When the Hague Rules were enacted and a limitation period of one year was set, although it was a short period relative to what is customary in the general statute of limitations, it was a strengthening of the status of cargo rights holders, who had to agree to bills of lading. On the other hand, the short statute of limitations reflects a desire not to overburden carriers, who come into contact with many different parties around the world and enter into agreements with them, in a way that will require them to keep evidence and stand ready for a lawsuit filed against them for a year. It seems that filing a lawsuit in a court within the period of the year is sufficient to inform the carrier that there is a lawsuit against him, and in this matter it is not important to identify the country in which the lawsuit was filed. The appellants have raised concerns that recognising a claim in a foreign forum as halting the statute of limitations race will result in filing claims in forums other than the correct forums for submitting them in order to prevent the statute of limitations expiring, thus frustrating the purpose of art 3.6.

This concern does not lead to a change in the aforesaid conclusion. There may be cases where the Court is satisfied that a claim filed in another forum within the statute of limitations was a frivolous claim. For example, it can be stated in relation to a claim, where it is clear and obvious from the outset that the foreign court lacks jurisdiction to hear it, that that claim is not a claim for the purposes of s III 6, so we would not say that ‘a claim has been filed’. Here, PSC does not dispute that the New York court is empowered to hear the claim filed against it and that this claim was filed before the statute of limitations in the Hague-Visby Rules with respect to the first cargo expired. PSC knew, therefore, that a claim had been filed against them for the first cargo before the expiry of the limitation period. The lawsuit filed by BNP in Israel was filed about a month and a half after the lawsuit in New York was stayed until the finalisation of proceedings in the country. There is no dispute that NBP was lawfully attached to the New York lawsuit and that its joining this lawsuit is from the date on which it was filed by RR.