Our previous analysis of the High Court and Court of Appeal decisions can be accessed here and here.
"There is no Hague Rules 'nest' which requires all the rules to apply only during the period of responsibility."
Although the appeal was dismissed, the UK Supreme Court did disagree with the Court of Appeal on some points, as discussed below.
| Date | Event |
|---|---|
| 24 April 2020 | FIMBank commenced arbitration against KCH under the B/Ls. i.e. two years after discharge. The application of the time bar was dealt with as a preliminary issue in the arbitration. |
| 1 September 2021 | The arbitration tribunal issued a Partial Final Award holding that the claim was time-barred because Article III, Rule 6 of the Hague-Visby Rules applied, even if the misdelivery happened after discharge. |
| 22 December 2021 | Permission to appeal granted by Butcher J. |
| 28 September 2022 | Sir William Blair gave judgment dismissing the appeal. He granted permission to appeal from his decision to the Court of Appeal. |
| 24 May 2023 | The Court of Appeal dismissed the appeal. In relation to the Hague Rules, it held that Article III, Rule 6 did not apply to misdelivery after discharge. In relation to the Hague Visby Rules, however, it held that Article III, Rule 6 did apply to misdelivery after discharge. |
| 23 October 2023 | The Supreme Court granted permission to appeal. |
| 13 November 2024 | Decision of the Supreme Court - both the Hague Rules and the Hague Visby Rules time bars apply to claims for misdelivery occurring after discharge. |
Partner London
Senior Associate London
"Article III, rule 6 time bar in the Hague Rules does apply to breaches of duty by the carrier which occur after discharge but before or at the time of delivery, including misdelivery."
The main questions before the Supreme Court were:
The short answer is yes.
The parties agreed that it was appropriate to first consider whether the Hague Rules time bar applied. If it did so, the Hague Visby Rules time bar certainly would as it was broader in scope.
The third paragraph of Article III, Rule 6 of the Hague Rules provides that:
“In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.”
Ordinary Words
The court looked first at the ordinary meaning of the words:
Relevant Context
The relevant context for considering the application of the rule was that it focussed on delivery of the goods. There is a difference between delivery and discharge of the goods. Delivery relates to the transfer of possession of the goods to the person entitled to receive them and marks the completion of the contract of carriage under the bill of lading. Discharge relates to a physical operation. Such an operation is different (conceptually and in time) to delivery. The fact that rule 6 focuses on delivery supports an interpretation of the time limit by which it can apply to events after discharge and up to and including delivery.
FIMBank argued that that the period of responsibility provided for under the Hague Rules was limited to the period between the commencement of loading and the completion of discharge and that the time bar equally relates and relates only to breaches of duty which occur during that period of responsibility.
The basis for this argument was the fact that article I(b) defines a “contract of carriage” as being one that only relates to “the carriage of goods by sea” and that the “carriage of goods” is defined in article I(e) as covering “the period from the time when the goods are loaded on to the time when they are discharged from the ship”.
The Supreme Court in fact agreed with FIMBank’s submissions – i.e. that “period of responsibility begins with the commencement of loading and ends with the completion of discharge. Those operations bookend the period of responsibility.” However, it disagreed with FIMBank’s assertion that the Rules are only concerned with that period of responsibility, holding that Article III, Rule 6 is concerned with the period up to delivery, including events which occur after discharge.
Object and Purpose
As with any time bar, the main object and purpose of Article III, Rule 6 is finality. There would be practical difficulties arising out of the operation of a time bar dependent upon the completion of discharge.
"As with any time bar, the main object and purpose of the article III, rule 6 time bar is finality."
Based on the above reasoning, the Supreme Court held that that the Article III, Rule 6 time bar in the Hague Rules applies to breaches of duty by the carrier which occur after discharge but before or at the time of delivery, including misdelivery. It may equally apply to breaches of duty which occur before loading. If the Hague Rules time bar applies to misdelivery occurring after discharge then the Hague Visby Rules time bar necessarily does so, given its still wider wording – it refers to all liability “whatsoever” and to claims “in respect of goods”.
The court held that clause 2(c) did not have that effect. It provides that: “The Carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising prior to loading into and after discharge from the Vessel [or] while the cargo is in the charge of another Carrier, nor in respect of deck cargo or live animals.”
The court considered that given the clause was intended to protect the carrier, it would be counter-intuitive for it to have the effect of preventing the carrier from relying on an otherwise applicable time bar so as to increase rather than reduce the carrier’s liability. The clause does not refer to the Hague/Hague Visby Rules, still less to Article III, Rule 6 or the time bar.
Question 3 was not considered in light of the answer to question 1.
Please contact the authors if you have any queries on the above or wish to discuss any similar issues.
Partner London
Senior Associate London
