Paul Bugden, Bugden + Co., London
Ref: Tanga Pharmaceuticals Plastics Ltd v Emirates Shipping Line FZE [2025] EWHC 368 (Comm) Bright J.
In this case the issues for determination were, a) whether a contractual time bar clause by clause 18 of the bill lading applying to any claim for “damage to Goods” applied to economic loss claims and if so whether, b) it prevailed over a ‘Clause Paramount’ at Clause 2 of the bill of lading which incorporated the Hague Rules.
As the loss claimed was economic loss the first question was whether Clause 18 in referring to “damage to Goods” was concerned with the running of time in relation not only to claims for physical damage to goods rather than claims for economic loss related to the goods such as, say, where the goods are physically unaltered in themselves but their value has been adversely affected. The judge held that a claim for economic loss were in principle within the Hague Rules then Clause 18 should likewise be given a broad reading to embrace all economic loss claims as well as those for physical damage.
As to the second question the judge observed that there is no doubt that, 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 but that nevertheless if a party wishes to exclude or limit its liability, clear words must be used: Homburg Houtimport BV v Agrosin Private Ltd (The “Starsin”) [2003] UKHL 12, at [144].
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.
However parties do not forego valuable rights without it being made clear that that was their intention: MUR Shipping BV v RTI Ltd [2024] UKSC 18 (a point especially apt in the context of bills of lading that contain a provision such as clause 2) and, as Finagra itself demonstrates, the application of the above principle will depend on the circumstances. Sometimes, the various clauses of the incorporating document will give indications as to which takes precedence over the others. Sometimes, the specific incorporating provision will indicate whether it, or the text that it incorporates, is to take precedence.
This can be achieved in a number of ways, including the use of what are sometimes called repugnancy clauses – clauses that state in terms that they and the provisions associated with them are to have priority over anything inconsistent or repugnant. These may include repugnancy clauses in the incorporating document, or they may include a repugnancy clause in the incorporated text – as is the case where the incorporated text includes Article III Rule 8. They must all be read together, and in their context. What is required is careful contractual construction, by a unitary exercise following the iterative process that has been explained so often, not least by Lord Hodge in Wood v Capita Insurance Services Ltd. [2017] AC 1173, at [10]–[15].
Here the judge had no doubt that clause 18 did not prevail over the Hague Rules – or, more particularly, over Article III Rules 6 and 8 – for a variety of reasons.
The judge found it highly significant that clause 2 entitled “CLAUSE PARAMOUNT” in the context of bills of lading had the well-known and legally recognized meaning in Nea Agrex SA v Baltic Shipping Co Ltd (The “Agios Lazaros”) [1976] QB 933 namely a clause by which the Hague Rules are incorporated into the contract evidenced by the bill of lading and which overrides any express exemption or condition that is inconsistent with it. Given the incorporation of the Hague Rules by the Clause Paramount in clause 2, and in the light of clause 9, the Bills of Lading were subject to Article III Rules 6 and 8 as if it had been intended that the Claimants were to forego the valuable rights under Article III Rules 6 and 8, it is to be expected that this would have been made clear.
Furthermore Clause 2 was not a mere, ‘vanilla’ incorporating provision, which incorporated the entire Hague Rules, but said nothing more. On the contrary, it expressly omitted Article IX. If the parties’ intention had been for clause 18 to prevail, one easy way to achieve this would have been to omit Article III Rule 8. Clause 2 went on in fact to identify a specific circumstance where Article III Rule 8 was not to prevail – viz., in relation to the limitation sum for the purposes of Article IV Rule 5. This would not be necessary if Article III Rule 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. This was especially so as Clause 18 does not contain any indication that it is intended to prevail over clause 2.