In December 2019, 23 pontoons and 11 pallets were loaded onto the MV Dijksgracht at the port of Cork, Ireland, as breakbulk cargo. The cargo was consigned to Poralu Marine Australia Pty Ltd (Poralu) for installation at the Royal Geelong Yacht Club. The cargo was discharged in February 2020 at Geelong. Poralu alleges that the cargo was loaded on board the vessel in sound condition and that three pontoons were found to be damaged when the cargo was discharged.

Poralu commenced an action in rem against the vessel, alleging that the shipowner was the 'relevant person', ie, the person who would be liable on the claim in a proceeding commenced as an action in personam (Admiralty Act 1988 (Cth), s 3(1)). That liability was said to be on the basis of bailment and negligence, as there was no contractual nexus between Poralu and the shipowner. Poralu submitted that the shipowner was Scheepvaartonderneming Dijksgracht CV (SD), a company incorporated in The Netherlands. SD, Spliethoff Transport BV (ST), another Dutch company, and Rederij Dijksgracht (RD), a Dutch company claiming to be the actual owner of the vessel, all entered appearances in the in rem proceeding.

Secondly, Poralu commenced an action in personam against ST as the first defendant and SD as shipowner as the second defendant, although SD was substituted by RD as the second defendant. As in the in rem proceeding, Poralu alleged causes of action in bailment and negligence against the owner. As against ST, Poralu alleged:

(1) The existence of a contract of carriage between Poralu, as consignee, and ST, as carrier, arising from a series of emails in November 2019.

(2) By a sea waybill, the carrier acknowledged receipt of the cargo in good order and condition on 11 December 2019.

(3) The contract of carriage was subject to, and incorporated the Australian version of the Hague-Visby Rules (the AHVR), ie, the 'amended Hague Rules' in Sch 1A to the Carriage of Goods by Sea Act 1991 (Cth) (COGSA).

ST and RD denied any negligence by the owner and pleaded:

(1) The cargo was carried pursuant to a contract of carriage between Poralu as consignee and ST as carrier, but was subject to the terms and conditions of ST's booking note form.

(2) The sea waybill acknowledged receipt of the cargo only in 'apparent' good order and condition.

(3) The contract of carriage was not subject to the AHVR:

(a) the law of the Netherlands applied (cl 10);

(b) arts 1-8 of the Hague Rules applied by contractual incorporation, but the liability of the carrier was not to exceed GBP 100 lawful money of the United Kingdom per package or unit (cl 3(a));

(c) The Hague Rules applied by agreement within the meaning of art 10.2 of the AHVR, which is why the AHVR did not apply;

(d) Alternatively, the AHVR did not apply because the contract of carriage was a charterparty within the meaning of arts 10.6 and 10.7 of the AHVR.

Held: (1) With regard to the limitation of liability regime applicable to the plaintiff's claims in all the circumstances:

(a) Is any liability of the carrier limited to GBP 100 per package? - Yes.

(b) Is any liability of the carrier limited to the present value of GBP 100 of gold in 1924 per package? - No.

(c) Is any liability of the carrier limited to 666.67 units of account per package or 2 units of account per kg of gross weight of the goods (whichever is the higher)? - No.

(2) Does the answer to (1) apply equally to the plaintiff’s claims in bailment and negligence against the vessel’s owner? - Yes.

Terminology

The International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, opened for signature 25 August 1924 (entered into force 2 June 1931) was adopted by Diplomatic Conference at Brussels. It is sometimes referred to, as it is in COGSA, as the Brussels Convention. It had previously been adopted at a meeting of the International Law Association at The Hague in September 1921, which is where it gets its almost universal term of reference, namely the Hague Rules. Relevantly, in art 4.5, it limits the liability of the carrier and the ship to '100 pounds sterling per package or unit', and art 9 provides that those monetary units are taken to be gold value.

The Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, signed at Brussels on 25th August 1924, opened for signature 23 February 1968, 1412 UNTS 128 (entered into force 23 June 1977) was adopted by Diplomatic Conference at Brussels. The amendments were the outcome of deliberations of the Comité Maritime International (CMI) Conference in Stockholm in 1963, whereafter the CMI met in the City of Visby, which is where the Protocol gets its term of reference, namely the Visby Protocol. The Visby Protocol is not a self-standing or independent Convention, but rather effects amendments to the Hague Rules. The Hague Rules so amended are referred to as the Hague-Visby Rules. Relevantly, art 4.5 was amended to provide for limitation of liability for the carrier and the ship to 'the equivalent of 10,000 francs per package or unit or 30 francs per kilo of gross weight of the goods lost or damaged, whichever is the higher', with further provisions about what that means.

The Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 25 August 1924, as Amended by the Protocol of 23 February 1968, opened for signature 21 December 1979, 1412 UNTS 146 (entered into force 14 February 1984) was adopted by Diplomatic Conference again at Brussels, art 2 of which further amended art 4.5 of the Rules to limit liability of the carrier and the ship to '666.67 units of account per package or unit or 2 units of account per kilogramme of gross weight of the goods lost or damaged, whichever is the higher'. The 'units of account' referred to are Special Drawing Rights (SDRs) of the International Monetary Fund, with the result that the Protocol is generally referred to as the SDR Protocol. The Hague Rules as amended by the Visby Protocol and the SDR Protocol are also generally referred to as the Hague-Visby Rules, unless it is necessary in any particular context to make it clear that the version of the Rules being referred to is with or without the amendments brought about by the SDR Protocol.

COGSA does not give the force of law to the Hague-Visby Rules, but rather gives the force of law to a version of the Hague-Visby Rules peculiar to Australia as set out in Sch 1A to COGSA (the AHVR). Although that version of the Rules is sometimes referred to as the amended Hague Rules, including in ss 4(1) and 7(1) of COGSA, that reference is liable to confuse because the 'amended Hague Rules' is also sometimes used, internationally as well as domestically, to refer to the Hague Rules as amended by the Visby and/or SDR Protocols. Relevantly, in art 4.5 the AHVR adopt the same limitation as that in the SDR Protocol.

Although not featuring in this case, it is to be noted that COGSA also refers to the United Nations Convention on the Carriage of Goods by Sea 1978, opened for signature 31 March 1978, 1695 UNTS 3 (entered into force 1 November 1992) which was adopted at Hamburg and is referred to as the Hamburg Rules. There is also a further version of international rules governing bills of lading referred to as the Rotterdam Rules, being the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, opened for signature 11 December 2008, UN Doc A/RES/63/122, 48 ILM 659 (not yet in force). Neither the Hamburg nor the Rotterdam Rules has received much international support, and they are seldom, if ever, encountered in practice.

What is the contract?

On the evidence, the booking note in the form sent by Poralu on 8 November 2019 and accepted by ST on 20 November 2019 formed the contract of carriage. The sea waybill signed and stamped on behalf of ST on 31 December 2019 and accepted by Poralu did not amount to or evidence any new or varied contract between the parties, but served rather as a receipt for the cargo.

The relevant terms of the booking note include the following:

3. GENERAL PARAMOUNT CLAUSE

(a) Except in case of US Trade, articles I-VIII inclusive of the Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels, 25th August 1924, shall apply to this Booking-Note. ... In determining the liability of the Carrier, the liability shall in no event exceed £100 (GBP) sterling lawful money of the United Kingdom per package or unit. ...

10. LAW AND JURISDICTION

This Booking-Note shall be governed by and construed in accordance with the laws of the Netherlands, except as provided elsewhere herein and except for US Trade, as to which the US COGSA 1936 shall apply, and any dispute, claim or action under this Booking-Note shall be decided by the Court of Rotterdam, the Netherlands, to the exclusive jurisdiction of which the Merchant submits himself. The Court of Rotterdam has non-exclusive jurisdiction in respect of any dispute, claim or action by the Carrier under this Booking-Note.

Under cl 3(a) of the booking note, arts 1-8 of the Hague Rules were contractually incorporated. Article 3.3 of the Hague Rules provides that after receiving the goods into its charge the carrier or the master or agent of the carrier shall, on demand of the shipper, issue to the shipper a bill of lading. In this case, the booking note contract envisaged that either a bill of lading or a sea waybill would be issued, and it gave Poralu the right to demand a bill of lading. Poralu did not make such a demand, but instead accepted a sea waybill.

Are the Hague-Visby Rules compulsorily applicable under Dutch law?

In their reports, the experts on Dutch maritime law explained that in cases in which 'the conditions for the formal and material scope of application of the Hague-Visby Rules are met', Art 8:371(3) of the Dutch Civil Code (DCC) grants direct force of law to the Hague-Visby Rules, ie compulsory applicability. The 'formal' requirements for the application of the Rules are those set out in art 10 of the Hague-Visby Rules and art 8:371(3) of the DCC. The 'material' requirement is that reflected in the definition of “contract of carriage” in art 1.b of the Hague-Visby Rules, ie that the contract of carriage in question is 'covered by a bill of lading or any similar document of title'. The equivalent provision in the DCC is art 8:377 which provides that 'vervoerovereenkomst onder cognossement verstaan de vervoerovereenkomst neergelegd in een cognossement dan wel enig soortgelijk document dat een titel vormt voor het vervoer van zaken over zee'. In English, that translates as follows: '"contract of carriage under a bill of lading" means a contract of carriage embodied in (covered by) a bill of lading or any similar document forming a title for the carriage of goods by sea'.

Thus, in respect of the material requirement under Dutch law, it would have to be concluded that the contract of carriage in this case was a contract 'neergelegd in', ie, laid down or embodied in or 'covered by', a bill of lading, notwithstanding that there was no obligation to issue a bill of lading in the absence of a demand for one, there was no demand for a bill of lading, no bill of lading was ever issued, the consignee accepted a sea waybill and the actual contract was the booking note. It is common ground that the sea waybill was not 'a similar document of title'.

In English law, where a contract of carriage at its inception provides for the issue of a bill of lading on demand, the contract of carriage is 'covered by a bill of lading' within the meaning of art 1.b of the Hague-Visby Rules even where no bill of lading is ever issued: Kyokuyo Co Ltd v AP Møller-Maersk A/S (The Maersk Tangier) [2018] EWCA Civ 778, [2018] 2 Lloyd’s Rep 59 (CMI137). Much of the debate between the Dutch law experts centred on whether or not, and if so to what extent and in what circumstances, a Dutch court would follow, or depart from, The Maersk Tangier.

The Dutch law experts disagreed regarding the application of the Hague-Visby Rules where the carrier and the shipowner did not agree, when concluding the contract, whether a bill of lading or sea waybill will eventually be issued. They disagreed about whether the mere existence of the unexercised right of the shipper to demand a bill of lading (pursuant to art 3.3 of the Hague-Visby Rules or art 8:399 of the DCC) is sufficient for the material application of the Rules, or whether the shipper has to actually exercise its right to demand a bill of lading. The experts agreed that that question is undecided by the Dutch courts. Prof Smeele left the question open, whereas Dr Eckoldt was of the opinion that in those cases, if the shipper did not demand a bill of lading and the carrier issued a sea waybill, the contract was not 'covered by a bill of lading or similar document of title'.

There are three possible bases on which the 'formal' requirements expressed in art 10 of the Hague-Visby Rules might be met. Article 8:371(3) of the DCC is to equivalent effect. The plaintiff contends that each of arts 10.a, 10.b and 10.c is satisfied, and the defendants contend that none is. Since two of the paragraphs refer to a Contracting State, and if Ireland is a Contracting State art 10.b will undoubtedly be satisfied, it is convenient to begin by considering whether Ireland is a Contracting State. The questions that arise in this section are to be answered with reference to the applicable law, namely Dutch law, specifically art 8:371(3) of the DCC, rather than Art 10 of the Hague-Visby Rules. However, because the Dutch law experts did not address them, the Court must do so, to the extent necessary, on the presumption that Dutch law on the questions is the same as Australian law. No peculiar rules of Australian law are called in aid to answer these questions; there are principles of international treaty law that are relevant, as well as the provisions of international instruments.

The evidence is that Ireland adhered to the Hague Rules of 1924 on 30 January 1962. The Merchant Shipping (Liability of Shipowners and Others) Act 1996 was introduced to enable the Irish State to accede to the Visby and SDR Protocols in due course. Ireland's signatures to the Visby and SDR Protocols were lodged with the depositary state, Belgium, on 15 April 1998. However, Ireland has not ratified, or adhered, or acceded to, the Visby or SDR Protocols. Poralu argues that the acts of signing the Protocols and lodging them with the depositary, taken together with the enactment of their terms in domestic law, gives rise to the conclusion that Ireland has 'consented to be bound' by the Protocols. Both the Visby Protocol (art 11.1) and the SDR Protocol (art 6.1) provide that the Protocols 'shall be ratified'. Aside from the possibility of accession specifically provided for (in arts 12 and 7 respectively), it is hard to avoid the conclusion that those words mean that ratification is required, and that signature alone is insufficient. In the circumstances, Ireland is not a Contracting State to the Visby Protocol or the SDR Protocol.

Alternatively, art 10.a of the Hague-Visby Rules requires that the bill of lading was 'issued in a Contracting State'. Poralu contends that the sea waybill was issued by ST in the Netherlands by email on 6 January 2020, that the electronic signature and nominated place of issue (ie Cork) are not conclusive of its place of issue, and that the issuing of the sea waybill was a step in issuing the contemplated bill of lading. On that basis, Poralu says that art 10.a of the Hague-Visby Rules is satisfied because, notionally, the bill of lading was issued in the Netherlands. However, if no bill of lading is issued, as in this case, art 10.a of the Hague-Visby Rules cannot be satisfied. To hold otherwise is too artificial a result. If that conclusion is wrong, any contemplated bill of lading would most likely have been issued in Ireland, being the country of shipment. That is the most obvious and usual place for a bill of lading to be issued. A second answer, if the first answer is wrong, is that, on the reasoning in The Maersk Tangier, the only obvious existing proxy to the fictitious bill of lading is the sea waybill. That records on its face that it was issued in Cork, Ireland, and the evidence is that it was signed on behalf of ST in Ireland.

None of the bases for the application of the Hague-Visby Rules in art 10 (or DCC art 8:371(3)) is therefore satisfied. Therefore, the Hague-Visby Rules do not apply compulsorily under Dutch law, regardless of whether the correct conclusion under Dutch law is that the carriage was 'covered by a bill of lading' in circumstances where no bill of lading was actually demanded or issued.

Are the Australian Hague-Visby Rules compulsorily applicable?

The defendants submit that the AHVR are not applicable because the contractual incorporation of arts 1-8 of the Hague Rules amounts to giving effect by agreement to the Hague Rules. The defendants submit that the omission of arts 9-16 of the Hague Rules from the contractual incorporation, and the effective modification of art 4.5 of the Hague Rules to provide that GBP 100 is a reference to the lawful currency of the UK and not gold value, are not so significant a change to the Hague Rules as to mean that those Rules are not 'in substance' applicable, in order to displace the application of the AVHR.

However, the modification very significantly lessens the liability of the carrier. It is also not the equivalent in national currency of the limitation amount 'indicated in [the] Convention ... in round figures' as contemplated by art 9 of the Hague Rules. It is therefore not a modification that could be made by a Contracting State under art 9, so there is no reason to suppose that it was contemplated that a carrier could make such a modification with the result that the Hague Rules would nevertheless be regarded as applying under art 10.2 of the AHVR. For those reasons, under s 10(1)(b)(i) of COGSA and art 10.2 of the AHVR, but subject to art 10.6 of the AHVR, the AHVR apply to the carriage in question.

By art 10.6 of the AHVR, these Rules do not apply to the carriage of goods by sea under a charterparty, unless a sea carriage document is issued for the carriage. Further, under art 10.7 of the AVHR, these Rules apply to a sea carriage document issued under a charterparty only if the sea carriage document is a negotiable sea carriage document. Article 5 of the Hague Rules is to like effect in so far as the exclusion of application of the Rules to charterparties is concerned. The Visby Protocol made no amendment to art 5, so the Hague-Visby Rules are to the same effect. As an aside, art 2.3 of the Hamburg Rules and art 6.1 of the Rotterdam Rules also exclude applicability to charterparties, thereby underscoring the importance of a dividing line between charterparties and non-charterparty contracts of carriage of goods by sea.

The following features of the circumstances of the conclusion of the contract of carriage in this case, and its characteristics and terms support a conclusion that it is properly to be regarded as a charterparty:

(1) Its terms were negotiated by the exchange of emails over a period of time between a broker on behalf of Poralu and ST, being parties at arms' length with no apparent inequality of bargaining power.

(2) There was an identified performing vessel, with an allowance for the nomination of a final performing vessel by a particular date, and the final performing vessel was then nominated by that date. That is to say, the contract was with regard to the services of a specific vessel.

(3) The negotiations dealt at some length with the specialist capabilities or characteristics of the intended performing vessel, particularly with regard to loading and discharge.

(4) The terms of the recap email that were then included in the final booking note form describe ST as 'owners' and its counterparty as 'charterers', although the pre-printed booking note form itself describes those parties as 'carrier' and 'merchant'.

(5) The vessel is a specialised breakbulk vessel on a tramp trade.

(6) There were various conditions to which the fixture was subject, including nomination of the performing vessel, notification of the intended rotation of the vessel prior to arrival at the load port, and approval by the carrier of the charterer’s transport/technical drawings.

(7) There were detailed provisions for the allocation of the costs of loading and discharge, and for detention (perhaps more accurately called demurrage, given the specified rate).

(8) There was a specified laycan.

(9) The maximum transit time for the voyage was specified, with agreed penalties for late arrival, and there was thus an allocation of 'misfortune' risks of delay.

(10) There was provision for the fumigation of the cargo, and the allocation of liability for taxes, dues, and duties.

(11) The contract itself provided for and contemplated the issue of a sea carriage document (in the neutral sense), being either a bill of lading or a sea waybill.

For those reasons, the booking note contract is a charterparty, with the result that the AHVR do not apply to it. ST can therefore rely on the limitation in cl 3(a) of the contract, namely that its liability shall in no event exceed GBP 100 sterling lawful money of the United Kingdom per package or unit.

[For the successful appeal to the Full Court of the Federal Court of Australia, see Poralu Marine Australia Pty Ltd v MV Dijksgracht [2023] FCAFC 147 (CMI2280).]