This was an appeal from a judgment of the Maritime and Commercial High Court: see CMI1557.

The appellant, North of England P&I Association Ltd (NE), as the representative of Green Feeder Ltd (GF), filed a claim against Unifeeder A/S (U) for damage to three containers caused during international sea transport as a result of water damage during a storm. 

NE argued that it had one year to make recourse claims against U, calculated from the payment date to United Arab Shipping Co (UA), and that the payment date was 25 May 2018. The claims became time-barred on 25 May 2019. NE's recourse claim was therefore not obsolete - see s 501(2) of the Merchant Shipping Act, which corresponds to art 3.6 bis of the Hague-Visby Rules - as an action was brought before the Maritime and Commercial High Court on 15 April 2019.

U essentially reiterated its pleas before the Court below.

Section 501 of the Merchant Shipping Act reads as follows:

(1) The limitation period for the following claims shall be ...

(vi) for a claim for compensation pursuant to §§ 275 and 276 or for incorrect or incomplete information in a bill of lading, one year from the day when the goods were handed over or should have been handed over ...

(2) For recourse claims in connection with receivables as mentioned in subsection 1, nos. ii, v and vi, the limitation period is one year from the day when the claim was paid or a lawsuit about it was raised. In the event of recourse in connection with claims as a result of personal injury, cf. 1(ii), the time limit for the recourse claim is calculated only from the day when the compensation was paid.

It appears from Report No 642 of 1972, submitted by the Committee for the revision of the Merchant Shipping Act, 54-56, that the background for the Merchant Shipping Act, s 501(2), is found in art 3.6 bis of the Hague-Visby Rules:

This provision, which relates to certain recourse claims, reproduces in the 1st sentence Art. 3.6 bis, as this was amended by the Visby rules. The Convention refers here to the lex fori, ie the law of the country in which the court sits, but sets a minimum time limit of 3 months from the day on which the claim was paid, or an action is brought against it. In line with the other Nordic countries, the committee proposes a limitation period of 1 year from this date.

Article 3.6 bis of the Hague-Visby Rules reads as follows:

An action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph if brought within the time allowed by the law of the Court seized of the case. However, the time allowed shall be not less than three months, commencing from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself.

Article 3.6 bis of the Hague-Visby Rules was presented and adopted at the Comité Maritime International's Stockholm conference on 10-12 June 1963, and the following appears from the preparatory work for the provision:

The Sub-Committee discussed whether it should recommend a special time limit in respect of recourse actions.

An example will illustrate the point:

When the goods reach their destination some of them are found to be damaged. The consignee puts forward a claim against the carrier. The claim is, however, presented near the end of the one year prescription period. The carrier pays damages (or refuses to pay and is sued just before the one year period comes to an end). The carrier feels satisfied that the damage to the goods actually occurred while they were in the hands of another carrier who performed one part of the transport. He therefore tries to recoup the amount he has paid (or for which judgment has meanwhile been delivered against him) from that carrier. Irrespective of the merits of his case he fails to obtain recovery because his claim against the said carrier has meanwhile become time barred.

Article 487 of the Netherlands Commercial Code deals with this problem and provides:

If the carrier on his part is party to a contract with another carrier, the former's claim against the latter shall not be barred until three months have elapsed after he himself has paid or has been sued, provided one of these events has taken place within the said term of one year. ...

Decision:

The members of the Sub-Committee do not regard this problem as a very important one. Many of them are not aware that any difficulties have made themselves felt in practice. The Netherlands Code has dealt with the problem and any other country which feels this problem to be of sufficient magnitude might of course do the same. As already stated the Sub-Committee took the view that recommendation for action should be restricted to those points where this appears essential. In these circumstances it does not feel inclined to recommend any action on this particular point.

Held: Appeal allowed. Judgment for GF.

For the reasons stated by the Maritime and Commercial High Court, this Court agrees that GF is the right plaintiff for the claims raised.

As stated by the Maritime and Commercial High Court, the main question in the case is from what time the one-year limitation period for recourse claims in s 501(2) can be calculated at the latest, including in particular whether the time limit is to be calculated from the time of the expiry of the one-year limitation period for the main claim (s 501(1)(vi)), or only from the time of the actual payment of the disputed main claim, regardless of whether the payment has taken place after the expiry of the one-year limitation period for the claim.

The problem is mentioned in the preparatory works for art 3.6 bis of the Hague-Visby Rules, which states that the Comité Maritime International's Bill of Lading Committee did not find grounds to propose a general rule according to which recourse claims become obsolete, unless the person entitled to recourse had paid the original claim, or had been sued within a one-year period from the time of the damage. Instead, it was left to individual countries to decide whether such a rule should be incorporated into national law.

This Court notes that such a provision has not been incorporated into the Merchant Shipping Act, and finds that neither in the wording, nor in the preparatory works of s 501(2), is there support to be found that the limitation period for recourse claims for damages covered by ss 275 and 276 of the Merchant Shipping Act (which correspond to arts 3 and 4 of the Hague-Visby Rules) should begin to run from an earlier time than the actual payment of the main claims or from legal proceedings. In addition, damages covered by ss 275 and 276 of the Merchant Shipping Act are characterised in part by the fact that the tortious events took place under the auspices of the party liable for recourse, who is thus already aware of the damage from the time of the claim, and that there are potentially a large number of players in the recourse chain between the tortfeasor and the ultimate injured party, in respect of whom the individual claims are to be settled.

This Court therefore finds, after an overall assessment, that in respect of the Merchant Shipping Act, s 501(2), read together with s 501(1)(vi), a total limitation period for claims of a total of a maximum of two years from the time of the damage cannot be interpreted. This Court thus finds that the limitation period for recourse claims only begins to run from the time of the actual payment of the main claims, or from the filing of an action against the person entitled to recourse.

GF's recourse claim was raised on 15 April 2019, ie within one year after 25 May 2018, when the main claim in the case was paid by GF to UA by carrying out an internal transfer at NE. The recourse claims are thus not obsolete. Section 501(2) contains a complete regulation of the statute of limitations for recourse claims for damages covered by ss 275 and 276 of the Merchant Shipping Act, which is why the statute of limitations' ordinary three-year limitation period does not apply.