The claimants were the cargo interests in respect of 548 container contents shipped on the MV Alion to Mombasa, Kenya, in September 2021. The defendant was the carrier under the applicable bills of lading. The vessel suffered engine failure on 15 September 2021 in the Arabian Sea. On 20 September 2021, Tsaviliris Salvage International rendered salvage services under the terms of a Lloyd's Standard Form of Salvage Agreement (LOF) to vessel and cargo. The LOF was terminated and thereafter general average declared on or around 5 October 2021. The vessel discharged on 6 December 2021.

On 3 November 2022, the claimants notified the defendant of claims they intended to bring under the bills, seeking indemnity for their liability to the salvors and (in some cases) for particular average. On 27 June 2024, the claimants obtained an order from the Court extending the period of the validity of the claim form for service until 16 December 2024. Service took place on 5 July 2024.

The front of each bill provided:

2. CLAUSE PARAMOUNT (1) Save where the English Carriage of Goods by Sea Act 1971 applies the Hague Visby Rules compulsorily to this Bill of Lading, in which event this Bill of Lading shall be subject to the Hague Visby Rules, the Hague Rules shall apply and the Carrier shall be entitled to the benefit of all privileges, rights and immunities contained in Articles I to VIII of the Hague Rules, save that notwithstanding the provisions of Article III Rule 8 of the Hague Rules, the limitation sum for the purpose of Article IV Rule 5 of the Hague Rules shall be £100 pounds sterling.

Clause 18 of the bills provided that:

Any claim against the Carrier for any adjustment, refund of or with respect to freight, charges or expenses or any claim other than for loss or damage to Goods must be submitted fully documented to the Carrier or its agent in writing within 20 days from the day when the Goods were or should have been delivered, failing which such claim will be timebarred.

It was agreed that the Hague Rules were applicable contractually, pursuant to cl 2(1) of the bills, except where the Carriage of Goods by Sea Act 1971 (UK), the Hague-Visby Rules, the US COGSA, or the Hamburg Rules might be applicable. It was common ground that, in such circumstances, the combination of cll 2 and 9 was intended to apply the Hague Rules not only where the only carriage was from one port to another, but also to the port-to-port element of intermodal carriage. It was also common ground that, if the Hague Rules had been compulsorily applicable (rather than merely by contract), and in the absence of any contractual provisions to the contrary, art 3.6 would have applied to the claimants' claims and the limitation period would have been one year from the date of delivery or the date when the goods should have been delivered. Furthermore, art 3.8 would have made any contractual provision that sought to relieve the carrier’s liability, by imposing more stringent limitation provisions, null and void.

Under English law and procedure, suit is commenced when the claim form is issued. The claims were not yet time-barred when the first extension was granted, because this was less than one year after delivery. The claim form was issued before the extensions expired. This follows inevitably from the long-established principle that art 3.6 is not confined to claims for actual loss of or physical damage to the goods, but applies to any claim for loss or damage suffered by the claimant which is related to the goods: see Cargill International SA v CPN Tankers (Bermuda) Ltd (The OT Sonja) [1993] 2 Lloyd’s Rep 435, and the line of authorities referred to by Hirst LJ.

The defendant argued that, because the Hague Rules applied only as matter of contract, it was open to the parties to agree to amend or depart from the Hague Rules limitation regime. The incorporation of the Hague Rules was intended to be subject to cl 18, in so far as that had a contrary effect.

There are thus three principal questions: i) Is the incorporation of the Hague Rules in cl 2 subject to cl 18?; ii) If cl 18 prevails, does the 20-day provision apply?; iii) In any event, is the service provision compatible with arts 3.6 and arts 3.8 of the Hague Rules?

Held: The defendant's application fails.

Where the Hague Rules apply only as a matter of contract, the parties are able to modify them by agreeing to do so: Dairy Containers Ltd v Tasman Orient Line CV (The Tasman Discoverer) [2004] UKPC 22 [16] (CMI566). However, if a party wishes to exclude or limit liability, clear words must be used: ibid [12], citing Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2003] UKHL 12 [144] (CMI605). Also relevant here is that parties do not forego valuable rights without making clear that that was their intention: MUR Shipping BV v RTI Ltd [2024] UKSC 18 [43].

In general, where provisions that are incorporated from a text outside the contract are incorporated by a mere incorporation clause, an express provision in the body of the main contractual text may be presumed to have been intended to take precedence, in the event of inconsistency. This applies to the Hague Rules, when incorporated into a bill of lading, as it does to any other incorporated text: Finagra (UK) Ltd v OT Africa Line Ltd [1998] 2 Lloyd’s Rep 622, 627. However, sometimes the various clauses of the incorporating document will give indications as to which takes precedence over the others. This can be achieved in a number of ways, including the use of what are sometimes called repugnancy clauses - clauses that state that they and the provisions associated with them have priority over anything inconsistent or repugnant. These may include repugnancy clauses in the incorporating document, or may include a repugnancy clause in the incorporated text - as is the case where the incorporated text includes art 3.8. They must be read together, and in their context.

Here, there is no doubt that cl 18 does not prevail over the Hague Rules - or, more particularly, over arts 3.6 and 3.8.

First, it is highly significant that cl 2 is entitled 'CLAUSE PARAMOUNT'.

Second, it is significant that arts 3.6 and 3.8 are incorporated at all. Clause 2 is not a mere 'vanilla' incorporating provision, which incorporates the entire Hague Rules, but says nothing more. On the contrary, it deliberately does not incorporate the entire Hague Rules – notably, omitting art 9. If the parties’ intention had been for cl 18 to prevail, one easy way to achieve this would have been to omit art 3.8; or, taking the defendant's case at its highest, art 3.6. This has not been done.

Third, cl 2 does not merely incorporate art 3.8 in general terms. It then goes on to identify a specific circumstance where art 3.8 is not to prevail - namely, in relation to the limitation sum for the purposes of art 4.5. This would not be necessary if art 3.8 were never intended to prevail. The implication is that, outside the specifically identified circumstance, it has its usual effect, as an incorporated repugnancy clause.

Fourth, on the basis that cl 9 is intended to apply both to pure port-to-port carriage and to the port-to-port element of intermodal carriage, the first sentence of cl 9 expressly provides that the defendant’s liability is to be determined in accordance with cl 2. In this case, that means according to the Hague Rules. This is a clear indication that cl 2 and the Hague Rules prevail over other provisions - not vice versa.

Fifth, cl 18 does not contain any indication that it is intended to prevail over cl 2.

Sixth, given the incorporation of the Hague Rules by the Clause Paramount in cl 2, and in the light of cl 9, the bills are subject to arts 3.6 and 3.8. If it had been intended that the claimants were to forego the valuable rights under arts 3.6 and 3.8, it is to be expected that this would have been made clear.