This important Court of Appeal case concerned the scope of the Hague and Hague-Visby Rules and their application to the carriage of goods by sea in containers.
Kyokuyo (the respondent to the appeal and the claimant cargo interest) claimed as the receiver of three container loads of frozen tuna shipped at Cartagena in Spain for carriage by Maersk to Japan and said to be redelivered by Maersk in a poor condition.
The cargo in the three containers comprised frozen tuna loins each weighing at least 20kg and up to 75kg and also, in the case of one of the three containers, bags of frozen tuna parts, each bag weighing about 20kg. The frozen tuna loins were stuffed into the containers as individual items of cargo, without any wrapping, packaging or consolidation. The bags were stuffed into the containers as individual bags, without additional wrapping or packaging, and without consolidation.
It was common ground that though contract of carriage provided by implication for the issue of bills of lading on demand no bills of lading were ever in fact issued in respect of any of the three containers. Instead at its own suggestion, and with the consent of the Kyokuyo, Maersk issued three sea waybills. Maersk did not however advance any case that this action led to a variation or waiver by estoppel of the original contract. It followed therefore that the contract of carriage remained one which by implication provided for the issue of a bill of lading, even after the sea waybills were issued.
It was also common ground that any liability of Maersk was governed by the Hague-Visby Rules or if not (by reason purely of contractual application) the Hague Rules.
The limits of liability under the Rules (Article IV rule 5 in each case) of both Rules are £100 “per package or unit” in the case of the Hague Rules and, in the case of the Hague-Visby Rules, 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 addition the latter Rules also make special provision for containerised cargo by stipulating that; “Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned. Except as aforesaid such article of transport shall be considered the package or unit.”
The issues before the Court in short were; a) whether the Hague Visby Rules were still of application (all other requirements admittedly being met) notwithstanding the fact that no bills of lading were here ever requested or issued and that cargo interests had assented to issue instead of waybills, and if so, whether the containers themselves or rather are the individual pieces of tuna were the relevant package or unit for the purposes of those Rules and, b) if instead the Hague Rules applied whether the relevant packages or units were the containers or rather the individual pieces of tuna.
Compulsory application of the Hague-Visby Rules where no bill of lading issued
It was clear from long established authority that it was no answer to the application of the Hague or Hague Visby Rules to simply say that no bill of lading was ever in fact issued but Maersk argued here that the critical distinction between all the earlier authorities (English and Commonwealth) and the present case was that in none of the other cases had sea waybills been issued by agreement between the parties.
However, the court took the view that the position could not altered where as here and simply for expediency the parties had chosen to use sea waybills. Absent any variation or waiver or estoppel the contract remained unaltered and fully enforceable and one which was ‘covered’ by a bill of lading for the purposes of article I of the Hague and Hague-Visby Rules and which still by implication provided for the issue of a bill of lading, even after the sea waybills were issued. Cargo could in fact still have demanded a bill or bills of lading, even after the sea waybills were issued.
Article X(b) of the Rules (the relevant provision here because carriage was from Spain, a contracting state) which by its terms refers only to: “every bill of lading relating to the carriage of goods between ports in two different States” accordingly fell to be read purposively in cases, as here, where no bill of lading was ever in fact issued so as to give effect to the case law on the application of the Rules to contracts of carriage ‘covered by a bill of lading’.
Likewise the reference to enumeration in the bill of lading in Article IV rule 5(c) had to be read accordingly in such cases as encompassing any other document (here the sea waybills) which actually contained the enumeration and which would have been in the bill of lading if such a bill had been issued.
The relevant packages or units for the purposes of limitation under Article IV rule 5(c) of the Hague-Visby Rules
The court held that the words “enumeration…as packed” did not justify the additional requirement for which the Maersk contended, namely that the bill of lading (or here the waybill) had to go on to specify how the packages and units had been packed in the container. The court thought that Maersk’s construction had the potential to create uncertainty and lead to fine distinctions dependent on the precise language used and was also unjustified by the travaux préparatoires.
The relevant “package or unit” for the purposes of limitation under Article IV rule 5 of the Hague Rules
This issue would only arise if, contrary to the court’s conclusion, the Hague-Visby Rules did not apply and as such became academic by reason of the conclusions above but since it was fully argued the court dealt with it anyway.
In the view of the court there was nothing in the wording of Article IV rule 5 of the Hague Rules which justified the gloss which Maersk sought to place upon it; namely that where the cargo is stuffed in containers, the cargo interests must be able to show that the cargo could have been shipped “as is” break bulk without additional packaging.
Although the genesis of “unit” in the travaux préparatoires for the Hague Rules may have been to cover large items carried without packaging such as cars and boilers so that, in the context of the Rules, a “unit” can be regarded as synonymous with a “piece”, the court held that they are both descriptive of a physical item of cargo which is not a “package”, because, for example, it is incapable of being packaged or is not in fact packaged.”
That definition was wide enough to encompass the frozen tuna loins stuffed in the containers without further packaging. There was no warrant for concluding that each cannot be a “unit” within that definition unless hypothetically they could also have been carried break bulk without being packaged in some way.