The Maersk Tangier concerns the compulsory application of the Hague-Visby Rules where no bill of lading is issued, and application of the package limitation provisions in those rules to containerised cargoes. Robert Thomas QC and Benjamin Coffer appeared for the successful claimants.

In a judgment handed down today, the Court of Appeal has dismissed the carrier’s appeal against the judgment of Baker J and held that:

• The Hague-Visby Rules are compulsorily applicable to any contract of carriage which expressly or impliedly provides the shipper with the right to demand the issue of a bill of lading, whether or not that right is exercised, and whether or not some other carriage document (such as a waybill) is eventually issued.
• The English Courts will not follow the decision of the Federal Court of Australia in El Greco v. Mediterranean Shipping [2004] 2 Lloyd’s Rep 537, which requires the manner of packing to be included in the description of the cargo in the bill of lading in order to satisfy Article IV.5(c).
• Instead, any description of the cargo which states the number of items which are in fact ‘units’ or ‘packages’ inside the container will be sufficient enumeration for the purposes of Article IV.5(c).
• A ‘unit’ is any physical item which is not packaged up; and there is no additional requirement that the item must have been capable of shipment breakbulk.

The appeal

The claim arose out of damage to a cargo of large unpackaged pieces of tuna stuffed in three refrigerated containers, during carriage by the Defendant container line. Andrew Baker J was asked to determine a number of preliminary issues relating to package limitation. The carriers appealed against his findings. The appeal was dismissed by Flaux LJ and Gloster LJ, with Flaux LJ giving the leading judgment (the Court sat as a two-person tribunal, after the third member of the Court was struck down by a sudden illness part-way through the hearing).

Were the Hague-Visby Rules compulsorily applicable?

The Hague-Visby Rules only apply to contracts of carriage which are ‘covered by a bill of lading’ (Article I(b)). A waybill is not a bill of lading for the purposes of the Hague-Visby Rules: The Rafaela S [2005] 2 AC 423. However, there are series of English and Commonwealth cases in which the Rules have been held applicable where bills of lading were contemplated but never issued. In most of these cases, the cargo was damaged during loading and was therefore never actually shipped (e.g. Pyrene v Scindia [1954] 2 QB 402).

In The Maersk Tangier, it was common ground that the contracts of carriage initially provided for the issue of bills of lading, but that after delays during carriage the parties agreed  for practical reasons that waybills would be issued instead. The carrier therefore argued that because waybills had been issued, the Hague-Visby Rules did not apply. The Court of Appeal upheld the decision of Baker J rejecting the carrier’s argument, and holding that the Hague-Visby Rules were applicable. The relevant question was not whether a bill of lading is actually issued, but whether the issue of a bill is contemplated under the terms of the contract. If the issue of a bill is contemplated, the Rules continue to apply even where a waybill is subsequently issued, at least in the absence of a contractual variation or some form of waiver or estoppel.

What is a ‘unit’ for the purposes of the Hague Rules and the Hague-Visby Rules?

Each piece was approximately 20 to 70 kg, and unpackaged. The carrier argued that the individual tuna pieces could not be said to constitute ‘units’ because they could not have been shipped breakbulk (e.g. in a reefer vessel) without further packaging. The Court rejected the carrier’s argument: the individual tuna pieces were ‘units’ whether or not they could have been shipped breakbulk without any further packaging.

The only relevant question is therefore whether individual physical items have been packaged together. If so, the individual items are not units, but instead form part of a single package: Bekol B.V. v. Terracina Shipping Corporation (‘The Jamie’) (unreported, 13 July 1988). If not, each physical item is a ‘unit’. Containers will not constitute a ‘package’, in light of the decision of the Court of Appeal in The River Gurara [1998] 1 Lloyd’s Rep. 225. On the facts of The Maersk Tangier, the individual pieces of ‘tuna’ were therefore ‘units’.

El Greco and enumeration of cargo under Article IV.5(c)

Article IV.5(c) of the Hague-Visby Rules provides that “Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned.” What is required for the number of packages or units to be sufficiently enumerated for the purposes of the rule?

Prior to the judgment at first instance, the only available guidance on this point had been the decision of the Federal Court of Australia in El Greco v. Mediterranean Shipping. In that case, the majority held that the rule required it to be clear from the face of the bill of lading not only how many items were contained within a container, but also whether those items had been packaged together. For that reason, a bill of lading that simply referred to “1 container said to contain 200,945 pieces” was not a sufficient enumeration: it did not enumerate the number of pieces of cargo in the container “as packed”.

Like Andrew Baker J, the Court of Appeal declined to follow the reasoning of the majority, holding that Article IV.5(c) did not require enumeration of the cargo “as packed”. It merely required that the number of packages or units inside the container be accurately stated in the bill of lading. In this case, the waybills stated that the containers contained a certain number of pieces of tuna. Each piece of tuna was in fact a ‘unit’. The waybills therefore accurately enumerated the number of units in the containers.

Robert and Ben were instructed by Simon Culhane, Clyde & Co LLP.