Kyokuyo Co Ltd v A P Møller-Maersk A/S  EWHC 654 (Comm) Andrew Baker J.
- 1. Background facts
The claimant was the receiver of three container loads of frozen bluefin, made up of tuna loins and bags of tuna parts, shipped at Cartagena in Spain for carriage by the defendant (‘Maersk Line’) to Japan. The frozen loins and bags were all stuffed into the containers as individual items of cargo, without any further wrapping, packaging or consolidation. The claimant alleged that the tuna was delivered to it in damaged condition through raised temperatures during carriage and/or rough handling.
It was common ground that Maersk Line’s liability was governed by its standard terms and conditions of carriage current at the time which incorporated Articles I to VIII of the Hague Rules subject to any compulsory application (for the sea part of the movement) of the Hague-Visby Rules. The difference in limits was therefore between a) £100 ‘per package or unit’ limit in the Hague Rules (£100 sterling, not gold value, in the absence of incorporation of Article IX) and b) the greater of 666.67 units of account ‘per package or unit’ or 2 units of account ‘per kilogramme of gross weight of the goods lost or damaged’ in the Hague-Visby Rules.
The contract of carriage provided for the issue of a bill of lading on demand but no bill of lading was in fact issued. Rather non-negotiable waybills were later issued by agreement between the claimant and Maersk Line in place of bills of lading. Maersk Line did not however contend that this agreement amounted to a variation of the contract of carriage; nor even that it gave rise to any case of waiver, election or estoppel. It’s case was simply that that fact necessarily meant that the contract of carriage was “covered by” (to use the phrase in the Rules) the waybills and not by any bill of lading.
The parties disagreed as to which set of Rules applied; and in either case as to how the limits of liability thereunder fell to be applied. In particular, whether it be Hague or Hague-Visby, the parties disagreed as to whether the material ‘package or unit’ was the container or the individual tuna loins (or bags). The arguments were however not identical as between the older and newer Rules, because of the requirement under the latter for an enumeration in the bill of lading of the contents of containers in container shipments in terms that satisfy Article IV rule 5(c), if cargo interests are to avoid the container being the only relevant ‘package or unit’.
- Did the Hague-Visby Rules apply?
The judge held that the Hague-Visby Rules applied where the contract of carriage required issue of a bill on demand just as much as where it required issue of a bill of lading as a matter of course. He also held it to be immaterial that a) the right to a bill of lading was not insisted upon or, b) there was a failure to demand any (further) document in its place or even, c) as in the present case, after the event, waybills were by agreement issued instead of bills of lading,
This finding as to the compulsory application of the Hague-Visby Rules meant of course that those Rules applied, rather than the Hague Rules, to any sea transit damage but the nevertheless the judge proceeded in his judgement to consider the possible alternative outcomes under the Hague Rules on the facts as presented.
The issue of whether an agreement for the waybills to be issued rather than bills of lading would be void under Article III rule 8 where such agreement amounted to a variation of the contract of carriage or some act of waiver, election or estoppel was considered by the judge but did not arise for decision on the facts.
- Meaning of package or unit under the Rules in cases of containerised cargo
The judge first considered the notion of ‘package or unit’ under the Hague Rules and Hague-Visby Rules. He found nothing in Article IV rule 5(a) of the Hague-Visby Rules (or the travaux préparatoires of the Visby Protocol amendments) to indicate any change of meaning of ‘package or unit’ as between the Hague Rules and the Hague-Visby Rules.
It was common ground (The River Gurara  QB 610,  1 Lloyd’s Rep 225) that where goods are shipped already stuffed into a container, the Hague Rules ‘package or unit’ is not necessarily the container that what is the Hague Rules ‘package or unit’ in the case of any given container depends upon a consideration of its actual contents, as stuffed by the cargo interests or their agents, and not upon how, if at all, those contents are described in the bill of lading or other transport document or carrier’s receipt.
It follows that where a container as shipped in fact contains several (or perhaps many) separate items, each a Hague Rules ‘package or unit’, any provision of the contract of carriage purporting to provide that the container was the only ‘package or unit’ would be null and void under Article III rule 8, if applicable. But this still left open the question of what is required for an item inside a container to be a ‘package or unit’. Each of the bags of frozen tuna parts was clearly a separate Hague Rules ‘package’ but the individual frozen tuna loins, stuffed into the containers without any wrapping, packaging or consolidation, could not on any view be called ‘packages’.
The claimant argued that each tuna loins was a ‘unit’, because the loins were stuffed into the containers individually in that way; it being immaterial whether they could or could not have been shipped in that way if not containerised. In The Aqasia  EWHC 2514 (Comm),  2 Lloyd’s Rep 510. Sir Jeremy Cooke held that the word “unit” in the Hague Rules means a physical unit for shipment and not a unit of measurement or customary freight unit as is the case in the United States. Though that decision did not address the issues raised by containerisation the judge thought that there is no reason why ‘units’ should not be identified in the same way for a container load; i.e. by reference to the characteristics of the cargo as it was stuffed into the container. He found nothing in the source, language or purpose of Article IV rule 5 justifying a special rule calling for a focus not upon the cargo as shipped in the containers, but upon how (if at all) the cargo could have been shipped if it had not been not containerised.
Accordingly in this case, looking through the notionally transparent walls of the three containers to examine the cargo as shipped the conclusion for the purposes of limitation under the Rules was that the cargo was a mixed cargo of ‘packages’ (i.e. the bags, each bag being one package) and ‘units’ (i.e. the unpackaged tuna loins, each loin being one unit).
- If the Hague-Visby Rules apply were all or any of the individual pieces of tuna, packages or units enumerated in the relevant document as packed in each container for the purposes of Article IV r 5(c)?
The controversy concerned “as packed”, or rather more specifically what was meant by the “as” and whether rule 5(c) simply required that the bill of lading enumerate the contents of the container (the items enumerated being in fact ‘packages or units’ given how the container was packed) or rather required that bill of lading specify how the items enumerated were packed into the container?
The waybills made no mention of bags of tuna. Therefore, the ‘package or unit’ limit of liability under Article IV rule 5(a) applicable to the bagged tuna was 666.67 units of account, on the basis that the container is deemed by rule 5(c) to be the (only) relevant package or unit, even though if one looked into the container one would immediately identify that there were many packages (bags of tuna); in fact 460 of them.
As to the individual frozen tuna loins Maersk Line argued that the rule 5(c) meant that the enumeration used must specify (or at least must be consistent only with the possibility) that the enumerated items were so packed as to be ‘packages or units’. The judge rejected this requirement which, he considered, would give rise to an unduly restrictive interpretation of Article IV and lead to fine differences of wording producing markedly different and anomalous results. So “one container said to contain 100 car engine parts” is just as sufficient enumeration, on the judge’s view, as “one container with 100 car engine parts packed inside”.
- 5. Whichever of the Hague or Hague-Visby Rules applies, did limitation fall to be calculated by reference to the cargo collectively, or should limitation be calculated by separate treatment of the cargo in each container?
The question was whether the limit was truly a limit ‘per package or unit’; meaning in other words that the claimant could recover, for each frozen tuna loin or bag individually, up to the limit, but with no carry over of ‘unused’ balances between them.
By definition the cargo comprised identifiable, and identifiably separate, packages or units and the judge held that the ‘package or unit’ limit applies ‘package or unit’ by ‘package or unit’.
Accordingly if the Hague-Visby Rules applied each frozen loin as a separate ‘unit’ attracted a separate limit of 666.67 units of account; the limit of liability in respect of damage to the bagged tuna was the greater of 666.67 units of account and (2 x W) units of account, where W is the gross weight in kg of the bagged tuna damaged. If the Hague Rules had applied each frozen loin as a separate ‘unit’ would have attracted a separate limit of £100; for the bagged tuna, there would have been, also separately, a limit of liability of £100 for each bag.