This case involved multiple cargo claims brought against the defendant carrier in the Federal Court of Canada, in addition to 'protective actions' being brought in US courts. The plaintiffs sought a summary declaration that their claims against the defendant were not time-barred and had been validly brought in the Federal Court of Canada in accordance with cl 4 of the relevant bills of lading, as modified by letters of extension. The defendant moved for a summary judgment that the plaintiffs' actions in the Federal Court of Canada were time-barred.

The bills of lading covered the carriage of goods from Belgium to the United States. They were issued in Belgium. Clause 4 provided that: 'Any action by the merchant arising out of goods carried under this Bill of Lading shall be brought in the Courts of Canada within one year after delivery of the goods at the port of discharge or the date when the goods should have been delivered at such port.' The plaintiffs requested an extension of time to continue their claims. They did so before the expiration of the initial period of one year provided for in cl 4 of the bills of lading so that, if the defendant had refused to grant a time extension to the plaintiffs, they could nevertheless have brought their actions within the prescribed time. The defendant, in granting a time extension, specified in para 4 of its letters that the plaintiffs' actions should be brought, not before the Federal Court of Canada but rather in the United States, more particularly, as the case may be, in Chicago or Detroit. The plaintiffs' actions were brought within the time limit set out in the extension letters. However, rather than being commenced in the United States, they were commenced in Canada.

Held: Summary judgment for the plaintiffs; defendant's motion for summary judgment denied.

The plaintiffs submit that the Hague-Visby Rules apply in this case mandatorily, relying on s 7 of the Water Transport of Goods Act, which gives domestic effect to the Rules in Canada. They argue that, since s 7 provides that the Hague-Visby Rules have the force of law in Canada, a party cannot derogate from the Rules by contract. They argue that the paramount clause included in the bills of lading is invalid. The paramount clause provides: 'If either the port of loading or the port of discharge named on the face hereof is located in the United States of America, this bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States approved April 16, 1936, and the governing law of the contract evidenced by this bill of lading shall be the law of the United States'. The defendant does not dispute that the Hague-Visby Rules apply to the bills of lading, but claims that the Rules cannot be applied to extension letters.

The introductory paragraph to art 10 of the Hague-Visby Rules seems to be unequivocal when it provides that the Rules will apply to any bill of lading relating to the carriage of goods referred to in any of subparas a-c. Given the text of this paragraph, as soon as one or other of the conditions provided for in subparas a-c of this article is met, a clause included in a bill of lading cannot have the effect of ruling out the application of the Rules. It is therefore necessary to ask whether one or the other of the conditions provided for in subparas a-c is satisfied. In the present case, not only were the cargoes coming from a Belgian port, but the bills were also issued in Belgium. Since Belgium is a Contracting State, the conditions provided for in subparas a and b are met. In light of all of the foregoing, the Hague-Visby Rules alone are applicable with respect to each of the shipments in question.

Article 3.8 of the Hague-Visby Rules provides for the nullity of any provision included in a contract of maritime transport by which the carrier attempts to impose less responsibility than that which would otherwise result from the application of the Rules. The plaintiffs argue that, by including para 4 in the letters by which it granted an extension of time, the defendant was in fact trying to reduce the liability which would otherwise have arisen from the application of the Hague-Visby Rules. Paragraph 4 of the letters is therefore void and without effect.

Under the authority of the Hague-Visby Rules, the applicable limit of liability would be that provided for in art 4.5 of the Rules. This article provides for a limit of liability 'of 666.67 units of account per package or unit, or 2 units of account per kilogram of gross weight of lost or damaged goods, the highest limit being applicable'. This is a fairly high limit of liability. In the United States, given the much lower liability limit, the defendant would face somewhat lower claims. The limit of liability in the United States is USD 500 per package. This limit of liability is set by the US Carriage of Goods by Sea Act. The plaintiffs rely on the decision of the House of Lords in The Morviken (CMI597) in support of their claim. In that case, art 3.8 was applied to a jurisdiction clause which purported to make the Dutch courts competent. The Netherlands had not, at that date, adopted the Hague-Visby Rules. The jurisdiction clause therefore allowed the carrier to impose less responsibility than that which would otherwise have resulted from the application of the Hague-Visby Rules. The House of Lords came to the conclusion that the clause in question was null and void.

The defendant claims that art 3.8 of the Rules cannot be applied in this case since the extension letters are not an integral part of the maritime transport contract but rather constitute separate agreements. I do not agree with the defendant. In my opinion, art 3.8 of the Rules applies to the extension letters that are currently being discussed. It is indeed impossible for me to conclude that they in fact constitute an agrement separate from the maritime transport contract. Several elements militate in favour of such a conclusion. How can one say that the extension letters are distinct and separate from the bills of lading when, in fact, the only reason why they exist is because of cl 4 of these same bills of lading? The purpose of the extension letters was only to extend a period otherwise provided for in cl 4 of the bills of lading. The defendant submits that cl 4 of the bills of lading only repeats one of the requirements provided for in the Rules, in particular the rule in art 3.6, and that therefore the letters of extension were not based on the contract of carriage. I do not agree. Clause 4 of the bills of lading, although it only repeats a requirement otherwise provided for in the Rules, is no less a contractual clause from which the extension letters directly result.

The extension letters should be considered as an addendum to the initial shipping contracts. As such, they must be considered as forming an integral part of these same contracts. Paragraph 4 of the extension letters is clearly a jurisdiction clause by which the defendant seeks to modify a clause provided for bills of lading, namely cl 4. Insofar as this has the effect of obligating the plaintiffs to bring their claims in a jurisdiction where a limit of liability lower than that provided for by the Hague-Visby Rules is in force, it is null and void by application of art 3.8.

[For the unsuccessful appeal to the Federal Court of Appeal, see Fednav International Ltd v Sidmar NV (CMI965).]