Mediterranean Shipping Co SA (MSC), the respondents, were the demise charterers of the vessels Rosemary and Rafaela S. Cargo was shipped on the Rosemary at Durban, South Africa, and carried to Felixstowe, UK. On arrival at Felixstowe, the cargo was unloaded and shipped on the Rafaela S, bound for Boston, USA. A fresh bill of lading (b/l) was not issued for the Felixstowe-Boston voyage. A b/l was issued at Durban, which named the claimant buyers as consignees but did not contain the additional words 'order of', and stated that 'B/L not negotiable unless "ORDER OF"'. The b/l also stated that '[o]ne of the Bills of Lading must be surrendered duly endorsed in exchange for the goods or delivery order.'

The reverse of the b/l contained a paramount clause, which provided:

this Bill of Lading shall have effect subject to the ... Hague Rules ... the Hague Rules shall not apply where ... this bill of lading is subject to any compulsory applicable enactment, including Hague-Visby Rules ... . If goods are shipped to or from the United States, this bill of lading shall be subject to US Carriage of Goods by Sea Act 1936.

Clause 21 of the b/l provided:

In case goods are shipped to or from the United States, the carrier's liability shall be limited to $500 per package or customary freight unit, unless excess value is inserted on the face hereof and extra charge is paid ...

The buyers alleged that the cargo was damaged during the Felixstowe-Boston voyage. An arbitration award dealt with the preliminary issue of whether MSC was entitled to limit its liability under the US Carriage of Goods by Sea Act 1936 (US COGSA) or the more generous regime of the Hague Rules (HR) or Hague-Visby Rules (HVR) enacted by the UK Carriage of Goods by Sea Act 1971 (COGSA 1971) favoured by the buyers. Two questions had to be determined. First, whether the 'straight consigned' b/l issued by MSC was a b/l within the meaning of COGSA 1971, s 1(4) (Issue 1). The parties agreed that the b/l issued in this case was a straight b/l. Section 1(4) of COGSA 1971 provides that:

nothing in this section shall be taken as applying anything in the Rules to any contract for the carriage of goods by sea, unless the contract expressly or by implication provides for the issue of a bill of lading or any similar document of title.

Second, whether the 'port of shipment' for the carriage of the goods under that b/l was a port in the UK (namely Felixstowe) within COGSA 1971 s 1(3) (Issue 2). Issue 2 itself depended upon whether there was a single contract of shipment (Durban-Boston), or two contracts of shipment (Durban-Felixstowe and Felixstowe-Boston). Neither South Africa nor the US were parties to the HR or HVR.

If either Issue 1 or 2 was to be answered in the negative, the parties accepted that US COGSA applied. That was because even if there were two contracts of carriage, the buyers accepted that each would have been on the terms of the straight consigned b/l: Pyrene Co Ltd v Scindia Steam Navigation Co Ltd [1954] 2 QB 402, 419-20 (CMI2100); Stafford-Allen & Sons Ltd v Pacific Steam Navigation Co [1956] 1 Lloyd's Rep 104.

The buyers argued that the HVR applied compulsorily to the Felixstowe-Boston voyage because: (1) the contract of carriage evidenced by the b/l terminated at Felixstowe; (2) a fresh b/l ought to have been issued for Felixstowe-Boston; (3) that fresh b/l would have been issued in the UK; (4) the port of shipment would be Felixstowe, and the HVR would apply compulsorily. MSC argued that the HVR did not apply because: (1) a straight consigned b/l is not a b/l within section 1(4) of COGSA 1971. The HVR were therefore not compulsorily applicable to the b/l nor would they have been applicable to a fresh b/l had one been issued for Felixstowe-Boston; (2) the whole voyage was governed by one contract of carriage; the port of shipment was Durban and not Felixstowe.

MSC succeeded on Issues 1 and 2 in the arbitration. The buyers appealed to the High Court.

Held: Appeal dismissed.

The legal authorities contradict the buyers' arguments. The established definition of a b/l includes the characteristic of transferability of title to the goods. Section 1(2) of the UK Carriage of Goods by Sea Act 1992 indicate that a straight consigned b/l is not a document of title at common law. The travaux préparatoires for the Hague Rules support the same conclusion. Section 1(6)(b) of COGSA 1971 itself makes express provision for circumstances in which 'a non-negotiable document' may result in application of the Rules.

A 'document of title' in this context is the antithesis of a document which can evidence the title of only one person. It is general; not specific to one person. It is a document by which goods can be transferred by endorsement and delivery of the document itself. A straight consigned b/l is not such a document. The parties could choose whether to constitute the b/l as a document of title.

MSC were obliged to deliver the cargo to, and only to, the consignees. Whether the consignee has or surrenders the b/l is immaterial. Delivery against the b/l was unnecessary despite the printed words of the b/l requiring surrender of the b/l.

The Court accepted that:

the expression bill of lading as used in both section 1(4) of the COGSA 1971 and in Article 1(b) of the Rules set out in the Schedule thereto must refer to a negotiable or transferable document of title. … [T]he language used, with its reference to any similar document of title, does not readily admit of any other construction.

See The Happy Ranger [2001] 2 Lloyd's Rep 530, 539, citing The Captain Gregos [1990] 1 Lloyd's Rep 310 (CA) 317-318. See also Hugh Mack & Co v Burns & Laird Lines (1944) 77 Ll L Rep 377 (NICA) 383.

It is unnecessary to fully address Issue 2. Contrary to the arbitrators' conclusion, the contract provided for two shipments under two separate contracts.

[For the subsequent successful appeal to the Court of Appeal, see JI MacWilliam Co Inc v Mediterranean Shipping Co SA (The Rafaela S) [2003] EWCA Civ 556, [2004] QB 702 (CMI2231).]