In Yemgas FZCO & Ors v Superior Pescadores SA [2016] EWCA Civ 101, the Court of Appeal considered whether the standard ‘Paramount Clause’ wording in the Congenbill incorporates the Hague Rules 1924 (the “HR”) or the Hague/Visby Rules (the “HVR”).

The ‘Paramount Clause’ set out on the reverse side of the bills of ladings in the present case provided that “The Hague Rules contained in the International Convention for Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract…

The wording, with one immaterial change, was therefore identical to the wording included in the Congenbill.

Machinery and equipment, intended for use in the construction of a liquid natural gas facility in Yemen, was loaded on board the vessel “SUPERIOR PESCADORES” in Belgium. Owners issued six bills of lading in the Conline form for carriage from Antwerp, Belgium to Balhaf, Yemen.

During the voyage, cargo in hold no.1 shifted, causing significant damage to part of the cargo itself. The total losses were said to be in excess of US$3.6 million.

A Club LOU provided to the cargo interests agreed that the claim would be subject to English law and jurisdiction.

Cargo interests claimed that the Paramount Clause was a contractual incorporation of the HR and that to the extent that the HR limit was higher than the HVR limit, the clause entitled them to claim the higher sum. This involved a degree of cherry picking as, for individual packages, the higher limit varied depending on whether the HR or HVR applied. In each case cargo interests claimed whichever limitation figure was the higher.

At first instance, Males J determined that he was bound by the authorities to hold that the Paramount Clause incorporated the HR, rather than the HVR. He held, however, that it was not an agreement for a higher limit pursuant to Article IV rule 5(g) of the HVR (which provides that “By agreement between the carrier, master or agent of the carrier and the shipper other maximum amounts than those mentioned in sup-paragraph (a) of this paragraph may be fixed…“). Cargo interests were therefore confined to recover damages limited by the HVR.

The issues for determination by the Court of Appeal were:

  • Whether, on the true construction of the Paramount Clause, it operates as an agreement between cargo interests and the shipowner that the HR or HVR apply.
  • If it is an agreement that the HR apply:
    • Does it constitute an agreement to fix maximum amounts for the purposes of Article IV Rule 5(g) HVR?
    • What is the date of conversion into relevant currency of the limit of £100 gold package or unit:
      • the date when the cargo was delivered in its damaged condition, or
      • the date of the judgment?

The Court of Appeal unanimously upheld the decision that cargo interests were bound by the HVR limits, albeit on different grounds. The judgments include further analysis and review of the line of authorities considered by Males J at first instance.

Tomlinson LJ also took the opportunity to correct his approach in the Happy Ranger [2001] Lloyd’s Rep 530 (which has to be read in light of the Court of Appeal’s decision [2002] 2 Lloyd’s Rep. 357).

It was held that in any case where a bill of lading is issued (i) incorporating the HR as enacted in the country of shipment; and (ii) the country of shipment has enacted the HVR, this should be considered as incorporating the HVR.

This meant that the further questions were not considered, but there is a helpful nod in the direction of the Rosa S [1998] QB 419 when considering the date of conversion into relevant currency of the limit of £100 gold package or unit.