Hague Rules Time Limit Applies To Misdelivery Claims

Deep Sea Maritime Ltd v Monjasa A/S (The Alhani) [2018] EWHC 1495 (Comm) The Court has held that a ship-owner, who had delivered the shipper's cargo to a third party without production of the relevant bill of lading, could nonetheless rely on the one-year time limit in Article III Rule 6 of the Hague Rules to defeat the shipper's claim for misdelivery.

The background facts

The dispute arose in relation to a shipment of bunker fuel oil on board the Owners' oil product tanker from Lome, Togo and destined for Cotonou, Benin. The bill of lading incorporated an exclusive English law and jurisdiction clause from the relevant charterparty, as well as the Hague Rules, which took effect as a matter of contract.

In the event, the cargo was discharged via ship-to-ship transfer off-shore Lome. The cargo was delivered, but without production of the bill of lading, to the buyer under the sale contract. The seller/shipper subsequently contended that it had not received payment for the bunker fuel and that it remained the owner of the cargo. It sought to claim against the Owners for non-delivery of the cargo.

The shipper commenced a number of proceedings in different jurisdictions, including arresting the vessel in Tunisia and subsequently commencing substantive proceedings there in order to determine the merits of the claims. Those proceedings were later dismissed, but remained subject to appeal. The Tunisian proceedings were commenced within 12 months of the misdelivery.

The Owners commenced English proceedings, seeking summary judgment and/or a declaration of non-liability in respect of the shipper's claims on the ground that these were time-barred pursuant to Article III Rule 6 of the Hague Rules. This 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."

The Commercial Court decision

The Court found in favour of the Owners. It considered that the words used in Article III Rule 6 ("in any event" and "all liability") were wide enough to encompass any breach of a ship-owner's obligations under the bill of lading, including liability for delivering the goods to someone not entitled to take delivery of them. The object of finality (allowing a ship-owner to close its books) that the time bar was intended to achieve would be undermined if it did not apply to misdelivery...