Trafigura Beheer BV v Golden Stavraetos Maritime Inc

This appeal arises out of a cargo claim brought by the appellant charterers against the respondent owners of the vessel SONIA for damages for breach of a voyage charterparty. The owners issued a Part 24 application for summary judgment on the basis that the claim had no real prospect of success. The application raised two questions, namely whether the owners had agreed to extend the period of one year in Article III Rule 6 of the Hague Visby Rules and, if not, whether suit was brought within the relevant period of one year. Morison J resolved both questions in favour of the owners and on 12 June 2002 gave judgment for them on the claim. He refused permission to appeal on the first point (the ‘extension of time point’) but granted permission on the second point (‘the Article III Rule 6 point’). The charterers now renew their application for permission to appeal the extension of time point, but it is convenient to consider first the Article III Rule 6 point, which raises an interesting question of construction of the Hague Visby Rules.

Article III Rule 6 of the Hague Visby Rules provides so far as relevant:

“ … the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered.”

The charterers chartered the SONIA from the owners under a voyage charterparty in an amended BEEPEETIME form dated 16 December 1999 for a voyage from 1/2 safe ports in Saudi Arabia to 1/2 safe ports in various places including West Africa at charterers’ option at a lump sum freight. The freight for a voyage to and discharge at Lagos was US$470,000 and, by clause 7, was payable immediately after completion of discharge. The charterparty naturally included detailed provisions for laytime and demurrage. It is not necessary to recite those clauses in detail, save perhaps to note that by clause 18 laytime was to be a total of 84 hours (subsequently amended to 96 hours) for loading and discharging and by clause 22 the demurrage rate was to be US$11,000 per running day or pro rata for part of a day. Clause 46 provided that the provisions of Articles III (other than Rule 8), IV, IV bis and VIII of the Schedule to the Carriage of Goods by Sea Act 1971 should apply to the charterparty. Those are of course articles of the Hague Visby Rules and thus include Article III Rule 6. Clause 52 provided that all bills of lading issued under the charterparty should include a clause paramount making the carriage subject to the Hague Visby Rules. Finally, clause 55 provided that the charterparty was governed by English law and, subject to an option of London arbitration, conferred exclusive jurisdiction on the High Court in London.

Between 8 and 10 January 2000 the vessel was loaded with a cargo of some 30,596.93 metric tons of Jet A-1 fuel for carriage from Rabigh in Saudi Arabia to Mombasa in Kenya under a bill of lading dated 10 January 2000. It is common ground that the relevant contract of carriage between the owners and the charterers is contained in the charterparty and not in the bill of lading. Shortly after the voyage began the parties varied the port of discharge to Lagos and the charterers provided the owners with a letter of indemnity requesting them to discharge the cargo at Lagos without production of the original bills of lading and agreeing to indemnify them against the consequences of relying upon the request. Given that Mombasa is not (so far as I can see) a port within the range of discharge ports in the charterparty, it is not clear why Mombasa was named as the discharge port in the bill of lading. However, neither party suggested in argument that the agreed change of discharge port from Mombasa to Lagos is relevant to the determination of the issues in this appeal.

The vessel arrived off Lagos at 2142 local time on 2 February 2000 and the master tendered notice of readiness. He tendered it only to the charterers because he had been told that the cargo was on ‘financial hold’. The cargo was subsequently sampled by the receivers who rejected it on the ground that it was off-specification.

On 11 February the charterers ordered the vessel to proceed to Abidjan for orders. The master complied and the vessel sailed from Lagos on the same day and arrived at Abidjan at 0400 on 13 February. Further samples of the cargo were thereafter taken and the vessel remained at Abidjan for some considerable time. Nearly a month later, on 7 March, the charterers indicated that they would like to sell the cargo, without prejudice to any future claim, ‘at best in an effort to mitigate damages’. Discussions then took place between the parties. They included a consideration of the possibility that the vessel would discharge the cargo in the Mediterranean. The owners quoted a figure of US$320,000 as a lump sum freight for taking the cargo to the Mediterranean.

On 9 March the charterers asked the owners to confirm the position and on the same day the owners replied that they were ‘requesting for west africa / med usd 320,000 lump sum basis 1/1 max d/a 20,000 usd’. On 10 March the owners faxed the charterers saying that they were happy to assist the charterers but that the contractual position needed to be resolved. They observed that the cargo was not discharged at Lagos ‘for reasons which still are not known to owners’. They added:

“Two issues need to be determined:

a.

Compensation in respect of waiting/storage off West Africa.

The basis on which the ship is presently employed by you has yet to be formalised. The ship has left the designated discharge port of Lagos and is now being effectively used as floating storage. Owners are happy to agree compensation for this activity to be at the demurrage rate.

b.

Addendum new charter in respect of on-carriage of cargo.

If the cargo has to be on-carried that is outside the scope of the presently agreed charter. Charterers’ discharge option has been exercised. For any new voyage an addenda to the present charter or a new agreement need to be made.”

During discussions on 11 March the charterers orally agreed to the owners’ quotation for freight for the voyage to the Mediterranean and to the proposal that they should pay storage charges at the demurrage rate plus the costs of the deviation to Abidjan. The vessel accordingly sailed from Abidjan towards Gibraltar for orders at about 2300 on 11 March. As the voyage progressed there were a number of exchanges between the parties. In fact they were I think between the owners’ managers and the charterers’ brokers but for simplicity I refer to them as being between the owners and charterers.

On 14 March the owners faxed the charterers with an invoice which claimed US$470,000 (less address commission of US$5,875) in respect of the lump sum freight to Lagos under the charterparty, US$21,370 in respect of deviation costs to Abidjan and US$426,257.64 (less US$150,000 paid on account) in respect of ‘demurrage/storage’. The total was US$761,752.64.

Although this point was not discussed in argument, the documents appear to me to show that the figure of US$21,370 was calculated as if the order that the vessel proceed to Abidjan was a revised instruction to vary the discharging port from Lagos to Abidjan within the meaning of clause 24 of the charterparty and charging demurrage and other expenses as set out in the clause. The figure of US$426,257.54 was arrived at by reference to a time sheet which in essence showed the following. Laytime began to run at Rabigh in Saudi Arabia. The 96 hours’ laytime expired at the load port and the vessel was thus on demurrage while still at Rabigh. She was again on demurrage at Lagos from six hours after notice of readiness was given until she sailed at 1805 on 11 March. As just stated, the period of the voyage to Abidjan was treated as if under clause 24. Finally the vessel was treated as on demurrage at Abidjan from her arrival at 0400 on 13 February to her departure at 2300 on 11 March. The total figure of US$426,257.54 thus comprised just under 2½ days at Rabigh, just over 8½ days at Lagos and just over 27¾ days at Abidjan. That invoice, which was sent under cover of a fax headed ‘TRAFIGURA CP 16.12.99’, was paid on 24 March.

In the meantime it appears that the vessel was proceeding towards Gibraltar, although the documents show that there was a short period in which the vessel drifted waiting for precise orders. In a fax of 18 March, headed ‘C/P 16.12.99 TRAFIGURA’, the owners told the charterers that the vessel was proceeding towards Gibraltar for orders ‘for the final port of discharge’ and that any sampling of the cargo done at Gibraltar would be at the charterers’ expense. They added that ‘as already stated, the cargo remains always Charterers’ property and vessel is at their disposal and expenses until the time the cargo is discharged’. On 22 March in a similarly headed telex the charterers asked the owners to instruct the vessel to proceed to Agioi Theodori ready to discharge and deliver to Motor Oil (Hellas) SA, although again subject to specific instructions because of a ‘financial hold’ on the cargo.

Also on 22 March, the owners faxed the charterers with a further invoice in respect of freight from Abidjan to the new discharge port of Agioi Theodori in Greece in the sum of US$316,000, which was the agreed freight of US$320,000 less address commission. That fax was headed ‘TRAFIGURA CP 9.3.00’. The invoice was paid on 3 April.

On 24 March the charterers sent the owners a further telex, again headed, ‘CP DD 16.12.99’ which included the following, having referred to the cargo and the bill of lading:

“The above cargo was shipped on the above vessel … at Rabigh … for delivery at the port of Mombasa but we, Trafigura Beheer BV, hereby request you to order the vessel to proceed to Agioi Theodori and give delivery of the said cargo at the port of Agioi Theodori and give delivery to Motor Oil (Hellas) SA without production of the original bill(s) of lading.”

The telex continued that in consideration of the owner’s complying with that request the charterers would indemnify them against the consequences of delivering the cargo without production of the original bill of lading. The document was in almost identical form to that previously provided when it was proposed to deliver the cargo in Lagos. The owners agreed on the same day in a telex headed ‘CP DD 16/12/99’, saying

“Chrts latest LOI, for the delivery of the goods at Ag Theodori, rcvd and found in order.

The master instructed accordingly.”

Later on 24 March there was an exchange of telexes regarding a possible addendum to the charterparty to reflect the agreement reached. There is in the bundle a document entitled ‘Addendum Nr 2’ which states that ‘it has been mutually agreed and understood between’ the owners and the charterers that:

“Owners grant the option to charterers to discharge in the Med Area as follows:

Rate: Lumpsum 320,000 USD basis 1/1

Max D/A for owners account USD 30,000

All other terms, conditions, details remain unaltered.”

The document was sent to the owners by the charterers attached to a fax sent on 24 March which simply stated: ‘kindly find attached herewith charter party + addendum nr 1 – nr 2’.

The judge said in paragraph 4 of his judgment that in formal terms the parties agreed an addendum no 2 to the original charterparty. He must have had the above ‘Addendum Nr 2’ in mind. However, the owners say in their respondent’s notice that the judge was wrong to hold that the parties agreed addendum no 2. They say that they rejected the proposed addendum and that, following that rejection, no further addendum was drawn up. They rely upon the reply which they sent to the charterers’ fax, also on 24 March, which includes the following:

“… many tks indeed for yr addendum no 2 which its content dly ntd and pls note that the same is referred to the new voyage which vsl is performing right now and therefore as per our freight invoice dtd 9.3.00 has to have a complete different cp date ie 9.3.00.

Not only but on top of it you should specify that the l.sum of usd 320,000 has been agreed to perform a voyage ex novo ie from Abidjan to eastmed and all other terms and conditions remain unchanged as per cp dtd 16.12.99 hope above clear enough to enable you to draw the addendum accordingly. …”

It is not I think suggested that the charterers replied to that fax.

In compliance with the charterers’ requests the vessel in fact proceeded to Agioi Theodori. She tendered notice of readiness at about 0700 on 27 March and made fast at noon. In a document said to have been attached to an invoice dated 31 March it was estimated that discharge would be complete and her hoses disconnected at about 2400 on 31 March. In the event discharge of the cargo at Agioi Theodori by delivery to Motor Oil (Hellas) SA was completed on 1 April.

On 31 March the owners sent the charterers a fax under the heading ‘CP 09.03.00’ attaching an invoice for US$28,410.30 in respect of drifting expenses off West Africa, sampling at Gibraltar roads and 12 hours estimated demurrage at Agioi Theodori. The first two items were presumably simply costs said to have been incurred. The third was calculated on the basis that laytime would began to run at 1200 on 27 March, that the laytime allowed was four days and that it followed that, if the hoses were disconnected at 2400 on 31 March, the owners would be entitled to 12 hours demurrage at US$11,000 per day or pro rata for part of a day. There is no other evidence of an agreement relating to laytime at the discharge port of Agioi Theodori. The charterers paid the invoice on 3 April.

The contractual position seems to me to have been as follows. I would accept the submission that the owners did not agree addendum no 2 as proposed by the charterers on 24 March. Nor, as I see it, did the charterers accept the proposal in the owners reply fax. The position is that no further written agreement was drawn up, either by way of fresh charterparty or by way of addendum to the existing charterparty. There is, however, no doubt that the parties reached an agreement with regard to the voyage to and delivery of the cargo at Agioi Theodori. The question is what the agreement was.

As already stated, it was an oral agreement reached on 11 March. The freight was agreed as US$320,000. It was also agreed that the charterers would pay storage charges at the demurrage rate plus the costs of the deviation to Abidjan. As indicated above, the charterers paid the invoices which the owners sent them. There was thus no issue in respect of the voyage to Abidjan. The owners were paid their expenses together with demurrage at the charterparty rate. Nor was there any issue as to the freight for the voyage to the Eastern Mediterranean or as to the charterers’ liability to pay the expenses connected with sampling off Gibraltar.

The exchange of telexes on 24 March suggests that both parties were content that an addendum to the charterparty should be drawn up. It appears that the owners’ objection to the proposed addendum no 2 was that it referred to an option being granted by owners, whereas since the vessel was performing a new voyage, the addendum should be given a ‘completely different cp date’. For some reason the owners referred to a charterparty of 9 March, although it is correctly accepted by Mr Boyd that no agreement was made on 9 March which was capable of being drawn up either by way of separate charterparty or by way of addendum to the existing charterparty.

Subject to the question whether the agreement made on 11 March should be described as a new charterparty or not, there seems to me to have been little, if anything, between the parties. Indeed, in the exchanges of 24 March both parties expressly contemplated that there should be an addendum to the charterparty. The charterers suggested ‘all other terms, conditions, details remain unaltered’, whereas the owners suggested ‘all other terms and conditions remain unaltered as per cp dtd 16.12.99 hope above clear enough to enable you to draw the addendum accordingly’.

To my mind the difference between the parties is not of any real importance for present purposes. I agree with the judge that whether the new arrangements amounted to a variation of the original charterparty or to a new charterparty is not decisive of the real issue between the parties. If necessary, I would hold that they amounted to a variation of the charterparty, if only because the parties cannot have contemplated that there should be new obligations, for example, of seaworthiness. The purpose of the agreement of 11 March was that the cargo already on board the vessel should be taken to a discharge port and delivered in accordance with the charterers’ instructions on terms that the owners would be paid freight for the new voyage, any extra expenses incurred and demurrage at the discharge port. It was also important to the parties, especially the owners, that any possible dispute as to the basis upon which they had carried the cargo to Abidjan and (as it were) stored it off Abidjan should be resolved at the outset. I agree with the judge that the issues should be decided on the basis of the substance of the matter.

As the judge put it, on any view there was an agreement for a new voyage at a new freight rate. I am more doubtful whether it was agreed that there was a new period of laytime. There is no evidence that a new period of laytime was agreed on or before 11 March. Thus it does not appear that the parties applied their minds to that question when the oral agreement was made, although it seems likely that they contemplated that the demurrage rate would be the same as in the charterparty. What seems to have happened with regard to laytime is that for some reason, when the owners sent the invoice of 31 March, they included an estimate for demurrage based on 96 hours laytime at Agioi Theodori. That compares with the total laytime of 96 hours for both loading and discharging in the charterparty. Why they should have given charterers a further period of laytime at the new discharge port is something of a mystery. One might have thought that they would have asserted either that, since the vessel was already on demurrage, it was not appropriate to allow any laytime or that, since 96 hours was originally allowed for both loading and discharging, the appropriate rate for discharging was, say, no more than 48 hours.

If it were important to ascertain what, if any, agreement was made as to laytime on 11 March, it would in my view be necessary for the evidence to address this point more precisely. However, I do not think that it is. The facts set out above seem to me to be sufficient to resolve the Article III Rule 6 point.

It is common ground that ‘suit was brought’ within the meaning of Article III Rule 6 of the Hague Visby Rules when the claim form was issued on 27 March 2001. The question is whether the owners had by then been discharged from liability in respect of the goods because suit had not been brought ‘within one year of their delivery or of the date when they should have been delivered’ within the meaning of Article III Rule 6 as applied to the facts of this case.

The charterers’ claim may be summarised shortly as follows. They were the owners of the cargo and the holders of the bill of lading. Clause 2 of the charterparty provided, so far as relevant:

“Owners shall before, at the commencement of, and throughout the voyage exercise due diligence to make and maintain the Vessel, her tanks, pumps, valves and pipelines, tight, staunch, strong, in good order and condition, in every way fit for the voyage and fit to carry the cargo provided for in Clause 3, with the Vessel’s machinery, boilers and hull in a fully efficient state … ”.

The charterers say that the owners were under a duty as carriers and/or bailees for reward to carry the cargo to Lagos and there deliver it in the same good order and condition as when shipped and to take reasonable care not to lose or damage the cargo. The owners also owed similar duties under Article III Rules 1 and 2 of the Hague Visby Rules, which were incorporated into the charterparty by clause 46.

The charterers say that the owners were in breach of each of the above duties in that they tendered delivery of the cargo in a condition in which it was ‘severely damaged and/or off specification’ due to contamination by residues of soya bean oil. The particulars of claim include an allegation that the owners failed to take reasonable care of the cargo in that they failed to clean the tanks properly before loading. On arrival at Lagos the cargo was rejected by the original receivers because of alleged contamination. In reasonable mitigation of their loss the charterers arranged for the vessel to proceed to Abidjan thence to Gibraltar and Agioi Theodori where the cargo was discharged pursuant to a contract of sale between the charterers and Motor Oil (Hellas) Corinth Refineries SA.

The quantum of the alleged loss is US$2,980,811.92 which is (or is said to be) made up of four items. The first is the difference in the value of the cargo under the original sale to receivers in Lagos and under the sale to Motor Oil. The second is comprised of the additional costs referred to above which were paid to the owners in respect of the deviation from Lagos to Abidjan, the ‘demurrage/storage costs Lagos/Abidjan’, the freight from Abidjan to Agioi Theodori and the ‘demurrage Gibraltar Roads and drifting expenses in West Africa’. The third is the time value of money and the fourth is what is said to be ‘cargo hedging and SWAPS loss’. We are not of course concerned with the validity of any of those claims.

There has been some debate between the parties as to how the charterers’ claim should properly be described. The charterers say that the owners classified it as a claim for misdelivery, whereas the owners say that they did not. However, whether they did or not, it seems to me that this is a standard cargo claim in which the charterers’ principal claim is a claim for damages in respect of damage to cargo which is said to have been caused by contamination which is in turn said to have been caused by the owners’ failure properly to prepare the tanks and to look after the cargo. The principal head of claim is loss of value of the cargo which is said to have been so caused, namely the difference between the value of uncontaminated cargo in Lagos and its value where they could reasonably realise it, namely in Greece. In addition they claim what they say are the reasonable costs of mitigating their loss.

In short, this is a standard cargo claim. It is important to note that it is not a claim in respect of misdelivery of the cargo in the sense of delivery to the wrong receiver. It was delivered to the charterers by being delivered to Motor Oil (Hellas) SA in accordance with the charterers’ request.

The judge held that the court must adopt a process of construction of Article III Rule 6 which is appropriate to the interpretation of a set of rules agreed internationally and enacted into United Kingdom law. He added that such a process is both purposive and practical. I entirely agree. It seems to me to be appropriate, however, to consider first the wording of the rule. By Article III Rule 6 a carrier is discharged from liability in respect of the goods ‘unless suit is brought within one year of their delivery or of the date when they should have been delivered’. It is to my mind important to note that the rule does not expressly provide ‘unless suit is brought within one year of delivery or of the date when the goods should have been delivered, whichever is the earlier’ or indeed ‘whichever is the later’ (my emphasis). The rule naturally means, and I think can only mean9 that the carrier’s liability is only to be discharged if suit is not brought either within a year of delivery or within a year of the date when the goods should have been delivered. Thus, if suit is brought within a year of delivery, the carrier is not discharged from liability even if suit is not brought within a year of the date when the goods should have been delivered.

It seems to me that in every case the first question is whether there was ‘delivery’ of the goods within the meaning Article III Rule 6. If there was, there remains a second question, namely whether suit was brought within a year of that delivery. If there was not, two further questions arise. The first is on what date the goods ‘should have been delivered’ and the second is whether suit was brought within a year of that date. I do not understand Mr Boyd to submit the contrary.

It follows that, in my opinion, the essential question here is whether there was delivery of the cargo within the meaning of Article III Rule 6. Mr Lord submits that there was. He submits that there was delivery to the charterers at Agioi Theodori, delivery being of the same cargo on board the same vessel under the same bill of lading and being completed on 1 April 2000. Mr Boyd submits, on the other hand, that there was no delivery of the cargo within Article III Rule 6 at all. The judge preferred the submissions of Mr Boyd. The issue in this appeal is whether he was right to do so.

There is no doubt that the cargo was in fact delivered by the owners to the charterers (by delivery to Motor Oil) in Greece. Indeed in paragraph 12 of his judgment the judge posed the question as being whether time runs from the date when the goods should have been delivered in Lagos or when they were delivered in Greece. It is to my mind natural to describe the cargo as being delivered to the charterers in Greece. Mr Lord submits that in those circumstances it is also natural to hold there was ‘delivery’ of the cargo within Article III Rule 6.

What then led the judge to reach a different conclusion? As I read his judgment, his conclusion depends upon an analysis of the nature of the charterers’ claim. In paragraph 12 he identified the complaint which led to the ‘suit’ as the non-delivery of the cargo at Lagos, due allegedly to its condition. He said that that was the substance of the claim and observed that no complaint was made about the voyage from Abidjan to Greece or delivery there. The voyage was an attempt by the charterers to mitigate their loss arising from ‘the non-delivery of the cargo in Lagos’. He added:

“Whether the voyage to Greece was a new venture or an amendment to the old one, the fact is that it did not impinge on the previous contractual obligations, otherwise there could have been no claim in relation to the events at Lagos and no claim for damages following on from the voyage to Abidjan and thence to Greece.”

The considerations which persuaded the judge to hold that the relevant period of one year had expired are essentially contained in paragraphs 13 and 14 of his judgment, which are in these terms:

“13.

It seems to me, on the facts of this case, that the relevant suit (referred to in the Rule) is a claim which is essentially for damaging the cargo during the contractual voyage from the load port to Lagos. The commercial purpose and effect of the Rule would be distorted if, as Mr Lord suggests, the second limb does not apply because the goods were eventually delivered in Greece. The delivery in Greece is not the subject of the suit and it would be contrary to the underlying need for certainty and clarity to suggest that time started on delivery in Greece. The cargo might never have been delivered or the vessel lost. In either event, there was a completed cause of action when the vessel was in Lagos and no good reason could be advanced for suggesting that time did not run from that moment; the fact that the cargo was either lost or subsequently delivered does not, I think, alter the position. Lagos was the only legitimate place of delivery in relation to the voyage about which complaint is made; and there was a wrongful refusal by the Claimant at Lagos to take delivery there; the defendant had fulfilled the owners’ obligations under the voyage charter, subject to any claims that might have been made in relation to the state of the cargo. It would be entirely artificial to extend the contractual time limit period as a result of the new arrangement for the voyage to Greece. Had there been a further problem during the second voyage then Article III Rule 6 would operate and time would start running from the date of delivery in Greece.

14.

In short, I reject Mr. Lord’s submission that “[t]here is no basis for saying that ‘delivery’ during the currency of the contract of carriage pursuant to which the cargo was loaded”. What must be identified is the relevant suit; that is, what the Claimant is alleging. If the cause of action was complete then it makes good commercial sense in a case such as the present to hold that time starts to run from that date. The Owners say that the cargo should have been delivered at Lagos; the Claimant complains that it was not. At that time the parties were aware of their rights and an action could have been started there and then. If the cargo was destroyed, stolen or sold on and subsequently delivered to a third party [as here] that would affect the amount of any recovery but not delay the running of time. Had the vessel sunk en route to Greece time would not start running from that time, but rather from the time when delivery should have occurred in Greece, assuming the fulfilment of all contractual obligations; but it could not cause time to start running from the events in Lagos. The delivery in Greece and the non-delivery in Lagos are two separate and distinct events.”

In reaching those conclusions the judge essentially accepted the submissions which had been made to him by Mr Boyd, who submits that the judge was right for the reasons he gave. As I read those paragraphs of the judgment, the key reasons for the judge’s conclusions were that the relevant suit was for damage to cargo during the voyage to Lagos and nothing that happened thereafter was relevant to the question he had to decide. In particular the delivery in Greece was not the subject of the suit and was not the relevant delivery because Lagos was the only legitimate place of delivery in relation to the voyage about which complaint is made. The judge also stressed that the charterers’ cause of action was complete in Lagos and that it made good sense to hold that time starts to run ‘from that date’ although I am not quite sure what specific date the judge had in mind.

I am not sure that the judge was asking himself the correct question, which to my mind is whether the delivery which undoubtedly took place in Greece was ‘delivery’ within Article III Rule 6 on the facts here. However, if he was asking himself that question he answered it in the negative and, if he was not, it seems clear that he would have answered it in the negative. For my part, I have reached a different conclusion from the judge.

The judge was of course right to say that the charterers’ claim did not arise out of the voyage from Abidjan to Greece and that their cause of action had accrued before the vessel left Lagos. In fact, since the charterers assert a number of breaches of contract, they no doubt have a number of causes of action accruing on different dates. For my part, I do not think that those facts, while perhaps relevant, are of any real assistance in deciding whether the cargo was ‘delivered’ within the meaning of Article III Rule 6.

The judge also said in paragraph 13 that the cargo might never have been delivered or the vessel lost, which is of course true. In that event there could have been no delivery and the relevant period of one year would expire one year after the date when the cargo should have been delivered. That consideration does not, however, seem to me to help to answer the question whether the goods were delivered. Nor, to my mind does an analysis of the nature of the suit. The judge was correct to hold (as in my opinion he did) that the nature of the suit was a claim for damages in respect of cargo damage which had occurred before arrival in Lagos. However, for my part, I do not see that either the nature of the suit or the accrual of the cause of action is central to the question for decision, which is whether there was delivery of the goods. Thus I do not see that the conclusion that delivery in Greece and the non-delivery in Lagos were, as the judge put it, two separate and distinct events helps to determine whether delivery in Greece was relevant ‘delivery’ within Article III Rule 6.

Was there delivery of the goods within the meaning of Article III Rule 6? It is common ground that there is no English authority which assists in identifying the correct approach to this question. We have, however, been referred to a number of American cases which were unfortunately not cited to the judge but which seem to me to be of some assistance. It is perhaps appropriate to refer briefly first to such English materials as are available, which were referred to by the judge.

In Aries Tanker Corporation v Total Transport [1997] 1 WLR 185 Lord Wilberforce said, obiter, (at p 188) that the purpose of providing for discharge of claims of this kind after 12 months meets an obvious commercial need, namely to allow shipowners after that period to clear their books. In The Ot Sonja [1993] 2 Lloyd’s Rep 435 this court held that the limit applied where goods had not been loaded and that time would start to run from the date when the goods ought to have been delivered. Unfortunately neither of those cases helps to identify what is meant by ‘delivery’.

In Carver on Bills of Lading, first edition, 2001, edited by two distinguished former professors, namely Sir Guenter Treitel QC and Francis Reynolds QC, paragraph 9-165 is in these terms:

“‘The term ‘delivery’ in a bill of lading is ordinarily taken to refer to transfer of possession to a consignee … or to the consignee’s agent …. It certainly does not mean the same thing as ‘discharge’’. [See Cooke, Voyage Charters, (1993) p 738] It seems that the first date provides the rule, with the second providing a variant, principally for the case where the goods are lost or in some other way not delivered (eg because they are so damaged as to have lost their commercial character as goods of the type shipped) or because they are delivered wrongfully, for example not against a bill of lading. The choice, where there is one, must however be that of the claimant. Thus if the goods are delivered late, even though there may be a date at which they should have been delivered, it will be to the claimant’s advantage to take the date of actual delivery for the purposes of the time bar.”

For my part, subject to one point of difference between those views and the views of the editors of Cooke on Voyage Charters (see below) and subject to one small point, I respectfully agree with that passage, although unfortunately it does not help on what amounts to delivery. The small point is that I am not sure that it is entirely apt to describe the claimant as having a choice. It is simply that if suit is brought within a year of their delivery, the effect of Article III Rule 6 is that the shipowner is not discharged from liability even though suit was not brought within a year of the date when they should have been delivered.

In the second edition of Cooke (and others) on Voyage Charters, paragraph 85.189 and 85.190 include the following:

“85.189

The Hague Rules distinguish discharge (eg Article I(e)) and delivery (Article III rule 6). Discharge is a purely physical act, whether performed by carrier, charterer or receiver, whereas delivery is a legal concept concerned with the passing of actual or constructive possession. The two are not coextensive. The latter is the concept by reference to which time starts to run under the Hague Rules. However the Rules offer no definition of ‘delivery’ and various different situations may arise.

i)

Delivery of the proper quantity of goods, even in a damaged condition, is clearly delivery for this purpose. There is no reason to produce a different result when the damage is such that the goods are no longer inspecie and no longer “the goods” as shipped.

ii)

Where there is no delivery of any goods at all, the rule adopts the starting point “or of the date when they should have been delivered” and for those purposes one must assume that all parties had performed their obligations and then find when the goods ought to have been delivered.

iii)

There are hybrid situations where, by an over-carriage, goods are not delivered when they ought to be but are delivered subsequently or where part of the shipped goods are actually delivered (albeit late) but the rest have been lost, but ought to have been delivered earlier or where the vessel lawfully discharges at a place short of the intended one, or where delivery is tendered but not taken.

iv)

Delivery of goods may be spread over a period of time and receivers can take the different deliveries from the same consignment separately. Does one start time counting from the moment of the first such delivery, on the basis that that is when the undelivered balance “should have been delivered”, or is constructively delivered? or does one treat the last such delivery as starting time running, on the basis that it is only then that delivery is complete? or does one count a time period in respect of each instalment of delivery?

85.190

It is thus necessary to impose a gloss as a matter of construction of the rule to give effect to its business purpose and it is important that there should be a practical and easily identifiable starting time. It is therefore submitted that the purposive or pragmatic construction of the Rules, consistent with the reasoning of the Court of Appeal in The Ot Sonja, should be that, where the goods in respect of which the claim is made (or what is left of the goods shipped) actually arrive at a legitimate place of delivery and absent any wrongful refusal by the receiver, time starts when that delivery (or the material part) is completed, and, in all other cases, time starts from the time when delivery of the relevant goods ought to have been completed assuming due performance of all contractual obligations.”

It can be seen that there is a difference between the views expressed in that passage and the views expressed in Carver so far as goods no longer in specie are concerned. However, it is not necessary to express a view on that question here and I do not do so. Indeed, the passage raises a number of questions which might arise in future cases. The editors do not address the precise question which arises here. Nevertheless the passage, in my opinion correctly, stresses the importance of there being a practicable and easily identifiable starting time.

Thus the editors, again in my view correctly, say that where the goods in respect of which the claim is made actually arrive at a legitimate place of delivery time starts when delivery is completed and, in all other cases, time starts when delivery of the relevant goods ought to have been delivered assuming the due performance of all contractual obligations. For my part I agree with that approach, subject to what is meant by a legitimate place of delivery. Was Agioi Theodori a legitimate place of delivery in the sense in which the phrase is used in Cooke?In my view it was. It is I think in connection with questions of this kind that the American cases are of some assistance.

Before turning to the American cases, I should note a reservation which I have as to the qualification in paragraph 85.190 ‘absent any wrongful refusal by the receiver’. If the goods are delivered to the charterer or contractual receiver I do not think that the qualification can have any effect. It seems to me that there is no reason why there should not be ‘delivery’ of the goods even if, for example the charterer or receiver initially wrongfully refuses to accept delivery. It may be that the qualification is simply included to make the point that there will be no ‘delivery’ if there is misdelivery in the sense that the goods are misdelivered to the wrong receiver.

In my opinion it is a question of fact to be determined in all the circumstances of the case whether there has been ‘delivery’ of the goods or not. The American cases have considered the problems which can arise where goods have been delivered under what some of them have called an entirely separate and distinct transaction. We were referred to five cases. In all of them the contract of carriage was subject to the Hague or the Hague Visby Rules so that Article III Rule 6 (or its equivalent) fell to be considered.

The first in time was Leo Hess International Corporation v Isthmian Steamship Company 1958 AMC 1380, which was a decision of the Appellate Division of the Supreme Court of the State of New York. The facts were very unusual and I do not think that it is necessary to set them out. The court observed that Article III Rule 6 is a disjunctive limitation provision and held (consistently with the view I expressed earlier) that, where delivery occurs after the goods should have been delivered, time runs from the date of delivery. It then considered whether ‘delivery really was made in discharge of the bill of lading’ on the facts and held that that question could not be decided on an application for summary judgment.

The second case was Western Gear corporation v States Marine Lines Inc (1966) F 2d 328, a decision of the Ninth Circuit of the United States Court of Appeals. The facts were these. A Barc (a Barge, Amphibious Re-Supply Craft) was shipped on a ship called P&T NAVIGATOR for carriage from Seattle to New Orleans. On 11 March 1963 it was swept overboard. It was recovered by the US Coast Guard and returned to the shipper. The extensive damage to it was repaired and it was shipped on another of the original carrier’s ships under a new bill of lading, again for carriage from Seattle to New Orleans. This time it arrived safely and was delivered on 23 August 1963. Suit was brought on 13 August 1964, which was less than a year after delivery on 23 August 1963 but more than a year after it would and should have been delivered from the P&T NAVIGATOR.

The court held that there had not been ‘delivery’ within Article III Rule 6. Its reasoning can be seen from the following passage (at p 331):

“The Court [ie in Leo Hess] concluded that the issue of fact which precluded summary judgment was whether or not the June 1952 delivery and acceptance of the goods was made in discharge of the bill of lading.

This rationale seems to us to be entirely correct. Whenever there is an actual delivery of the goods in performance by the carrier of its obligations under the contract of carriage, the time to sue runs from the date of delivery rather than from the date when the goods should have been delivered. The difficulty with the instant case is that the undisputed evidence shows that the delivery of Barc No 26 on August 23 1963 was not in the performance of the obligations of the contract of carriage (Bill of Lading 106-1395) upon which suit was brought. On the contrary, it was finally delivered under an entirely separate contract of carriage, to wit, Bill of Lading 206-2943. This is not to imply that the presence of two bills of lading would necessarily be conclusive in every case, but here Marine Lines [the carrier] has confirmed, without dispute, that the two shipments, first on the SS P&T Navigator and next on the SS Copper State, were entirely separate and distinct transactions.”

That case seems to me to be of considerable assistance because it stresses that delivery under an entirely separate and distinct transaction will not be ‘delivery’ of the goods for the purposes of Article III Rule 6. On the other hand the court made it clear that the fact that there were two bills of lading would not necessarily be decisive. I respectfully agree. All will depend upon the circumstances of the particular case. However, it does seem to me that it is helpful to ask whether the delivery can properly be regarded as delivery under the relevant contract of carriage or under and entirely separate and distinct transaction.

The third case was New Hampshire Insurance Company v Saipan Shipping Company Inc 1973 AMC 792 but it does not seem to me to be of any real assistance here; so I say no more about it.

The fourth case was Cerro Sales Corporation v Atlantic Marine Enterprises Inc 1976 AMC 376, which was a decision of the United States District Court for the Southern District of New York. The relevant voyage was from San Fernando to Callao, Peru. During the voyage a fire broke out on board and the vessel was abandoned. The vessel was subsequently salved and taken to Honolulu under tow. At Honolulu the cargo was transhipped into another vessel, largely at the plaintiffs’ expense and carried to Callao. It was delivered on 31 October 1968. Suit was brought on 23 July 1969, which was less than a year after that delivery but more than a year after the goods should have been delivered.

The plaintiffs said that delivery took place in Callao. The court rejected that argument in this way (at pp 377-8):

“The delivery eventually made at Callao was made under a separate and distinct bill of lading separate and distinct from the contract of carriage sued upon here. In such cases the delivery date is of no importance and the limitations period runs from the date the goods should have been delivered. Western Gear Corporation v States Marine Lines Inc. … ”

There was a second point which does not seem to me to be directly relevant. However, as can be seen , the court followed the approach in Western Gear.

The fifth and most recent case was the decision of the United States District Court for the Southern District of New York in Universal Ruma Company v Mediterranean Shipping Company 2001 AMC 110. The facts were that palm oil was shipped in a single container for carriage from Dar Es Salaam to Baltimore under a single bill of lading which was subject to the Hague or the Hague Visby Rules, including Article III Rule 6. During the voyage, which was initially on a ship called the MSC FLORIANO the palm oil was found to be leaking and about half of it was transferred to another container so that the consignment was now in two containers. Both containers seem to have been transhipped in Felixstowe. The original container was shipped to Baltimore on board the MSC LEVINA and arrived on 8 June 1988, whereas the second container, which (as the report puts it) was misplaced, was shipped to Baltimore on board the MSC BOSTON and arrived on 3 October 1998. The claimant said that it was not aware of the arrival of the second container until 5 November 1998. Suit was brought on 28 October 1999.

The claimant said that the relevant ‘delivery’ was delivery of the second container and that delivery was not complete until it was aware of the arrival of the container. On the first question the court held that the relevant ‘delivery’ was indeed delivery of the second container. In doing so it applied the principles in Western Gear. Its approach can be seen from the following extracts from the judgment of Denise Cote, District Judge:

“In Western Gear Corporation v States Marine Lines Inc … [t]he Ninth Circuit reasoned that a COGSA claim is in essence a breach of contract claim arising from the contract of carriage or bill of lading. Consequently, ‘only a delivery in performance of that contract … fixes the date from which time runs’. … Because the delivery in Western Gear was made under a second bill of lading the court concluded that there were ‘two entirely separate and distinct transactions’, the first of which gave rise to the cause of action and therefore provided the date of reference for the statute of limitations, that is the date delivery should have been made under the original bill of lading. …

… where a delayed shipment is made pursuant to the original bill of lading. In that situation [Article III Rule 6] is best understood to mean that the statute runs from actual delivery; the statute runs from the time delivery should have been made only where there is no delivery at all. … Here, where there was a single bill of lading I hold that the statute ran against Universal Ruma from the date of the delivery of the second bill of lading.”

There was again a second point which is not relevant for present purposes.

As already indicated, those cases do seem to me to be of some assistance. They say that the question is whether the delivery is delivery in performance of the contract but they also seem to me to make it clear an important question in deciding that question is whether the delivery was made under an entirely separate and distinct transaction. In my opinion if, looking at all the circumstances of the case, it can fairly be said that there was delivery under the contract of carriage, even if that contract has been varied in some respects in the light of problems that have arisen during the voyage, it will in general be appropriate to hold (subject perhaps to the circumstances of a particular case) that there has been ‘delivery’ within the meaning of Article III rule 6. If, on the other hand, the delivery is under an entirely separate and distinct transaction it will in general be appropriate to hold that there has been no such ‘delivery’.

It might be said that there cannot be delivery under the contract of carriage unless delivery takes place at the original contractual place of delivery or at a place of delivery in accordance with an amended contract of carriage where the amendment is made without reference to the breach of contract of either party. However, for my part, I would not so hold. There is nothing in Article III Rule 6 to restrict the meaning of ‘delivery’ in that way. In my opinion, so to restrict it would be to give Article III Rule 6 too narrow a meaning. The question should be the broad one, whether in all the circumstances of the case the delivery was ‘delivery’ within the rule.

As appears from the extracts from his judgment set out above, the judge did not approach the problem in quite the way suggested above. He would I think have been more likely to do so if he had had the assistance of the American cases. Mr Lord submits that there was here delivery under the contract of carriage, albeit as varied, and that the delivery was not made under an entirely separate and distinct transaction, whereas Mr Boyd submits, on the other hand, that the voyage from Abidjan in West Africa to Agioi Theodori in the Eastern Mediterranean was an entirely new voyage to a different discharge port and that delivery cannot fairly be held to have been under the contract of carriage.

I prefer the submissions of Mr Lord. For my part, I would hold that there was delivery of the goods within the meaning of Article III Rule 6. The principal considerations which have led me to that conclusion are these:

In short, I have reached the clear conclusion that if all the circumstances of the case are taken into account, there was here ‘delivery’ of the goods within the meaning of Article III Rule 6 at Agioi Theodori and that suit was therefore brought within a year of the delivery. In these circumstances I would allow the appeal.

Although the judge was considering the question of delivery in the context of the owners’ application for summary judgment and not at a trial, I did not understand Mr Boyd to be saying that if we allowed the appeal on this basis, there would be any purpose in a trial of the question whether there was relevant delivery. Subject to hearing submissions on the question of appropriate relief, I would allow the appeal and make a declaration that the suit was brought within a year of delivery of the goods and that the owners are not discharged from liability by reason of Article III Rule 6 of the Hague Visby Rules.

I note by way of postscript that the conclusion which I have reached seems to be consistent with the views at first formed by those advising the parties. For example, the extension of time point arises out of correspondence between the parties in March 2001 because, as Clyde & Co put it in a fax to the owners’ club dated 22 March 2001 ‘it appears that the anniversary of the discharge of the cargo will shortly be upon us’ and asked for an extension of time. There followed exchanges between the parties in which the owners’ club indicated that it had been verbally advised that owners would give a extension. Clyde & Co issued proceedings because they were not quite sure whether an extension had in fact been granted and the club subsequently expressed disappointment on the basis of the indication that an extension would be granted. No-one seems to have contemplated the possibility that time had already expired. Also, in a skeleton argument drafted by leading counsel then representing the owners (not Mr Boyd) it was stated that the charterers issued proceedings on 27 March 2001 ‘just 3-4 days before the expiry of the contractual time limitation for such a claim’. The point now taken was not taken until the defence served on 2 November 2001.

Finally, difficult questions can sometimes arise as to when cargo should have been delivered for the purposes of Article III Rule 6 but, at any rate in the light of the conclusion reached above, they do not arise here.

The conclusion on the Article III Rule 6 point makes it unnecessary to consider the charterers’ application for permission to appeal on the extension of time point. I will not therefore further lengthen this judgment by doing so.

For the reasons I have given, I would allow the appeal on the ground that the cargo was delivered at Agioi Theodori and that suit was brought within a year of that delivery.

I agree.

I also agree.