Paul Bugden, Bugden + Co., London
Ref: Maersk Guine-Bissau, SARL v Almar-Hum Bubacar Balde SARL [2024] EWHC 993 (Comm) Jacobs J.
In this case Maersk GB claimed to enforce against cargo interests (Almar -Hum) the Himalaya clause in a bill of lading issued by Maersk A/S on the basis of (i) the common law concerning the enforcement of such clauses, and/or (ii) the UK Contracts (Rights of Third Parties) Act 1999. The judgment contains a valuable summary of Maersk A/S’s booking process for containerised cargo as below:
- i) Booking Creation: The customer completes Maersk A/S’s online booking form and submits it to Maersk A/S. (The process bears some similarity to making an online flight booking with which most people will be familiar). The customer provides booking details and selects a schedule. Customers are required to tick a box confirming that they agree that Maersk’s standard terms will apply to the carriage. They cannot proceed with the booking without so agreeing. In order to click the button “Submit Booking”, the customer has to tick a box under which the customer agrees to the Maersk standard terms. The text immediately above the “Submit Booking” states: “By clicking submit booking you agree that the [hyperlinked] terms and conditions will govern your booking.” Clicking on the hyperlink leads to a website which displays Maersk’s standard terms. The online process is further described in Section D below.
- ii) Booking Confirmation: Once Maersk A/S receives the booking application with all relevant information, it will provide a booking confirmation. This will often be provided immediately.
iii) Shipping Instructions: Once the booking is confirmed, shipping instructions are provided by the customer, which includes the shipper name, consignee name, cargo description, port of origin, port of discharge, and payment terms. They are usually provided prior to the cargo being shipped, the deadline being three days before vessel departure, though in some cases cargo may be shipped with incomplete information so long as the discharge port is known. Shipping instructions can be entered on Maersk A/S’s website, or the relevant information can be provided by email to Maersk GB who would then match that information to the relevant bookings.
- iv) Creation of Draft Bills of Lading: The shipping instructions enable Maersk A/S to produce draft bills of lading, known as “Verified Copies”. If the customer subsequently amends the shipping instructions, new draft bills of lading are created.
- v) Approval of Freight Release (“AFR”): Maersk A/S provides an AFR once the customer has paid the “origin charges”. The “origin charges” are those which are payable at the place of shipment. They might include freight charges (if freight prepaid bills are required), although the system gives the customer of choosing freight to be paid at destination. The origin charges must be paid prior to the issue of the original bills of lading.
- vi) Final Bill of Lading Approval: The customer must provide final bill of lading approval by approving the draft bill of lading and confirming that an original bill of lading can be printed. Given that an original bill of lading cannot be printed without approval being given, it is in the customer’s interest to provide approval quickly, at least if it wishes to obtain the original bills promptly. It is at this time that the customer will make the payment of the local origin charges.
vii) Issuing Original Bill of Lading: The original bills of lading are issued once charges are paid and final approval is given by the customer. Once this has happened, the bills of lading can be issued immediately.
Then as to the nature and effect of Himalaya clauses the Judge cited the most recent (2024) edition of Scrutton on Charterparties and Bills of Lading as follows:
“Assuming that a cargo owner (A) wishes to circumvent one or more defences in its contract of carriage with carrier (B) by bringing a tort claim against a third party (C) with which B has or will have a contract, a Himalaya clause overcomes the problem of C’s lack of privity to the contract of carriage by creating a unilateral contract of exemption between A and C under which A promises to extend the relevant defences to C if C performs the contractual duties it owes to B. Such a clause provides the genesis of a potential contract by (1) evidencing an intention to extend the relevant defences, and (2) expressing an agency of B to contract on behalf of C, in addition to contracting on its own behalf in respect of the main contract. The contract is perfected by (3) the existence of authority, if necessary created retrospectively by ratification by C, and (4) the provision of consideration by C, normally through the performance by C of its contractual obligations owed to B. Of these four requirements, the first two are fulfilled by appropriate contract wording, while the fourth will be satisfied in the ordinary course of events. The third requirement, of authority, will easily be established where there is a course of dealing involving B employing the services of C in the performance of contracts of carriage.”
And the judgment of the House of Lords in Homburg Houtimport BV v Agrosin Private Ltd (“The Starsin”) [2003] UKHL 12; [2004] 1 AC 715 where Lord Hoffmann said:
“93. A Himalaya clause in a contract of carriage is designed to create contractual relations between the shipper and any third parties whom the carrier may employ to discharge his obligations. It does so without infringing the English doctrines of privity of contract and consideration, which, until the Contracts (Rights of Third Parties) Act 1999, prevented third parties from claiming benefits under contracts. The way it works is this. The shipper makes an agreement through the agency of the carrier with the third party servant or contractor. Such third parties may have authorised the carrier in advance to contract on their behalf or they may afterwards ratify the agreement. The terms of the agreement are that if such a third party renders any services for the benefit of the cargo owner in the course of his employment by the carrier, he will be entitled to the exemptions and immunities set out in the clause. At that stage, the agreement is not a contract. The third party makes no promise to the shipper to render any services and, until he has actually rendered them, no contract has come into effect. It is the act of rendering the services which provides the consideration and brings into existence a binding contract under which the third party is entitled to the exemptions and immunities…”
As to the first two requirements identified by Scrutton, the Claimants submitted that, construing the clause as a whole, Maersk A/S was contracting not only as contractual carrier, but also on behalf of its Subcontractors through whom it would perform some of its obligations in relation to the shipment and carriage. The judge agreed with that submission, and also with the Claimants’ argument in that regard that the clause showed an intention to contract on behalf of Subcontractors and other agents. Then as to the third requirement, namely authority, in circumstances where both Claimants are Maersk entities, and where there had been a regular course of dealing involving Maersk A/S using the services of Maersk GB in the performance of the contract of carriage, the judge held there was no realistic point to be taken here. Finally, as to the fourth requirement, namely the provision of consideration by Maersk GB, the judge considered again this was easily satisfied here as Maersk GB was running the operation on the ground in Guinea-Bissau, and services were rendered to Almar-Hum which provided consideration and brought a binding contract into existence.
Accordingly, Maersk GB could enforce the terms of the Himalaya clause at common law. That meant, in particular, that it could enforce Almar-Hum’s undertaking that no claim or allegation whatsoever would be brought against Maersk GB. Indeed, the judge observed that once it is decided, applying the above contractual analysis, that a third party (here Maersk GB) is entitled to enforce the terms of the Himalaya clause, there is no logical reason why enforcement should be confined to reliance on the clause by way of defence and there were good reasons why enforcement should not be so confined, in order that a party can avail itself of the full protection that the clause is designed to confer.
Maersk GB also contended that it was entitled to enforce the Himalaya clause (but not Clause 26) pursuant to the Contracts (Rights of Third Parties) Act 1999. Section 1 of the 1999 Act entitles a third party, in certain circumstances, to enforce a contractual term. It provides as follows:
“(1) Subject to the provisions of this Act, a person who is not a party to a contract (a “third party”) may in his own right enforce a term of the contract if—
(a) the contract expressly provides that he may, or
(b) subject to subsection (2), the term purports to confer a benefit on him.
(2) Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party…
(6) Where a term of a contract excludes or limits liability in relation to any matter references in this Act to the third party enforcing the term shall be construed as references to his availing himself of the exclusion or limitation…”
However, the 1999 Act only applies in a limited way to contracts for the carriage of goods by sea. Section 6 (5) provides as follows:
(5) Section 1 confers no rights on a third party in the case of –
(a) a contract for the carriage of goods by sea,
…
except that a third party may in reliance on that section avail himself of an exclusion or limitation of liability in such a contract.”
This meant that the effect of section 6 (5) was that Maersk GB’s entitlement to enforce the clause was limited to its availing itself of the exclusion or limitation of liability contained in the Himalaya clause rather than relying upon the clause for the purposes of advancing a claim in damages against Almar-Hum.