Package Or Unit Limitation Under The Hague-Visby Rules

In a landmark judgment handed down this week, the Commercial Court has decided what constitutes a 'unit' for the purposes of limitation under Article IV Rule 5 of the Hague Rules and the Hague-Visby Rules. The Court also gave important guidance on whether the Hague-Visby Rules can be compulsorily applicable even though the carrier issued a sea waybill rather than a bill of lading. Last but not least, the Court declined to follow what until now has been the only relevant authority on what constitutes a package or unit for containerised cargo under the Hague-Visby Rules, namely the Full Federal Court of Australia decision in El Greco v MSC, from 2004.

Facts

The Defendant agreed to carry the Claimant's cargo of deep frozen tuna, comprising 6,448 unpackaged pieces of tuna loin weighing between about 20kg and 75kg each, stuffed into 3 of the Defendant's 'super freezer' containers. One of the containers also contained 460 bags of other types of tuna meat.

The Defendant prepared a draft bill of lading covering 12 containers of cargo including the subject 3 containers.

As a result of errors in transhipment, delivery of the 3 containers was delayed and although it was initially envisaged that the bill of lading would be issued, instead, in order to avoid any further delay the parties subsequently agreed to the issue of 3 sea waybills, one for each of the 3 containers and each of which identified the Claimant as consignee. The cargo was described in the same way in each sea waybill, for example, as follows:

1 Container Said to Contain 206 PCS FROZEN BLUEFIN TUNA LOINS - 18740.000KGS

The reference to the 460 bags of tuna which had appeared in the draft bill of lading, was mistakenly omitted from the cargo description in the sea waybill.

Upon delivery, the cargo in all 3 subject containers was found to have suffered damage allegedly due to reefer machinery failure. The Defendant carrier did not admit liability for the cargo damage but it was recognised that if a number of questions relating to the limitation applicable to the claim could be answered, this would likely encourage the parties to settle their dispute. In early March 2017 a hearing took place before the Commercial Court to determine agreed preliminary issues as follows:

Were the Hague-Visby Rules compulsorily applicable to the contract of carriage?

The Claimant argued that the Hague-Visby Rules applied by force of law pursuant to the Carriage of Goods by Sea Act 1971 ('the Act') because...