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In
an exclusive contribution this
week, Nicholas Woo a partner with
Richards Butler, a leading law
firm in London, warns of the
liabilities charterers face when
issuing house bill of ladings.
The
decision of the Court of Appeal in
The Starsin[2001] 1 Lloyds Rep 347
could have far-reaching
implications for owners who allow
charterers to issue their own
house bills of lading.
This
usually happens when Liner bills
are issued (for example if
container vessels are long-term
chartered to a carrier or
forwarder, although this is not
necessarily always the case, as
happened in The Starsin.)
In
a sense, the question of whether
bills of lading are charterers
bills or owners bills is not a new
one. The last major decision
in the English courts was that of
Mr Justice Rix (as he then was) in
The Hector [1998] 2 Lloyds Rep
287.
The
brief facts of The Starsin is as
follows. 3 parcels of timber
was shipped from Malaysia to
Antwerp and Avonmouth.
The
cargo was damaged by bad stowage
and condensation. Cargo
owners sued the vessel owners and
the vessel owners said, among
other things, that they were not
liable contractually to the cargo
owners since they did not issue
the bills of lading.
The
owners allowed charterers
(Continental Pacific) to issue
their own “house” bills.
These bills were headed
“Continental Pacific” and were
signed by agents “on behalf of
the carrier, Continental
Pacific”.
To
those who are used to negotiating
such bills, one would normally
assume that these were clearly
charterers own bills, ie. the
contract of carriage evidenced in
the bills of lading was between
the charterers and the third party
holder of that bill.
If
there was any cargo damage, for
example, the third party holder
would not have a cause of action
against the owner of the carrying
vessel (meaning that that vessel
could not be properly arrested).
However,
the Continental Pacific bill also
contained two very important
clauses which I will set out below
verbatim:
“33.
IDENTITY OF CARRIER The contract
evidence by this Bill of Lading is
between the merchant and owner of
the vessel...and...the..ship owner
only shall be liable for any
damage...arising out of the
contract of carriage.
35.
If the ocean vessel is not owned
or chartered by demise to the
company or line by whom this Bill
of Lading is issued (as may be the
case notwithstanding anything that
appears to the contrary) this Bill
of Lading shall take effect only
as a contract of carriage with the
owner...as principal made through
the agency of the said company or
line who act solely as agent and
shall be under no personal
liability whatsoever.”
The
Court of Appeal (by a majority of
2-1, Lord Justice Rix [he of The
Hector fame] dissenting) decided
that although the front of the
bill was headed in Continental
Pacific’s name and was signed on
their behalf, the bill of lading
had to be construed as a whole
document, ie. both the front and
the back..
In
particular, the majority felt that
clause 35 acted to over-ride the
general rule in English law that
the manuscript clause takes
precedence over the type-written
one (ie. the fact that it was
signed on behalf of Continental
Pacific in the front of the bill).
Moreover,
the Court of Appeal said that a
third party holder could easily be
misled into thinking that he was
entering into a contract with
Continental Pacific, the owners of
the Starsin.
While
a third party holder could easily
check the ownership details, he
was not called upon to do so when
presented with a bill of lading.
Does
this mean that The Hector is dead?
Probably not.
The
majority in the Court of Appeal
conceded that the equivalent of
clause 35 was not contained in
that situation.
However,
it is now apparently clear that
where wordings like clauses 33 and
35 are contained in charterers
house bills of lading, then the
owners cannot rest easy and assume
that they are free from arrest and
liability for cargo damage.
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