Bills of lading very frequently incorporate the Hague or Hague-Visby Rules and charterparty terms. Conflicts between the terms of a bill of lading and the incorporated Rules can sometimes appear.

In Tanga Pharmaceuticals Plastics Limited and others v Emirates Shipping Line Fze [2025] EWHC 368 (Comm), the English Commercial Court had to consider conflicting time bar clauses and decide which one prevailed over the other.

Key facts

The claimant cargo interests shipped containers aboard the defendant carrier’s vessel under the defendant’s bills of lading which were governed by English law and subject to English jurisdiction.

The vessel suffered a main engine failure which led to salvage, indemnity and particular average claims. The claimants started proceedings within the one-year time bar under the Hague Rules but did not serve those proceedings for another year due to problems with serving on the carrier.

The defendant’s bills of lading incorporated the Hague Rules by Clause 2 which is entitled “Clause Paramount”. Article III Rule 6 contains the one-year time bar. Article III Rule 8 provides that any clause relieving the carrier from liability or lessening such liability otherwise than as provided in the Hague Rules shall be null and void and of no effect. Clause 2 is quoted as follows:-

“2. CLAUSE PARAMOUNT

(1) Save where the English Carriage of Goods by Sea Act 1971 applies the Hague Visby Rules compulsorily to this Bill of Lading, in which event this Bill of Lading shall be subject to the Hague Visby Rules, the Hague Rules shall apply and the Carrier shall be entitled to the benefit of all privileges, rights and immunities contained in Articles I to VIII of the Hague Rules, save that notwithstanding the provisions of Article III Rule 8 of the Hague Rules, the limitation sum for the purpose of Article IV Rule 5 of the Hague Rules shall be £100 pounds sterling. …”

The defendant applied for summary judgment against the claimants on the basis that the claimants’ claims were time-barred, relying on two sentences of clause 18 of the bills of lading to the effect that the claims had neither been notified within 20 days nor served within 1 year:

The “20-day Provision”

“Any claim against the Carrier for any adjustment, refund of or with respect to freight, charges or expenses or any claim other than for loss or damage to Goods must be submitted fully documented to the Carrier or its agent in writing within 20 days from the day when the Goods were or should have been delivered, failing which such claim will be time-barred.”

The “Service Provision”

“Suit shall not be considered to have been brought within time specified unless process shall have been actually served and/or jurisdiction obtained over the Vessel or Carrier within such time.”

Did clause 18 prevail over the incorporation of the Hague Rules in clause 2?

It was accepted that, where the Hague Rules apply purely as a matter of contract, the parties are free to modify them by agreement. However, if a party wishes to exclude or limit its liability, clear words are necessary.

In general, an express provision in the body of the main contractual text may be presumed to have been intended to take precedence, in the event of inconsistency. This applies to the Hague Rules, when incorporated into a bill of lading, just as it does to any other incorporated text.

In this case, Bright J held that clause 18 did not prevail over Article III Rules 6 and 8 of the Hague Rules for the following reasons:

1. Clause 2, entitled “CLAUSE PARAMOUNT”, is well-known and widely understood to mean that, citing Lord Denning MR in The Agios Lazaros [1976] QB 933 at 943D–E, “the Hague Rules are incorporated into the contract evidenced by the bill of lading and which overrides any express exemption or condition that is inconsistent with it.”
2. Clause 2 deliberately omitted Article IX and did not incorporate the full Hague Rules. If the parties intended clause 18 to prevail, they would surely have omitted Article III Rules 6 or 8.
3. Clause 2 does not merely incorporate Article III Rule 8 in general terms but identifies a specific circumstance, namely the limitation sum, where it is not to prevail. This would not be necessary if Article III Rule 8 was never intended to prevail.
4. Clause 9 which deals with the carrier’s liability expressly provides that the defendant’s liability is to be determined in accordance with clause 2. This is a clear indication that clause 2 and the Hague Rules prevail over other provisions. The defendant’s argument that the face of the bills of lading referred to by the opening words of clause 9 “Save as otherwise indicated on the face hereof…” includes the reverse page such that clause 18 (on the reverse page) prevails was rejected because (1) the face of each bill of lading is its front page; the reverse is not generally referred to as the face and (2) even so, clause 2 itself would be on the face of the bill, making the intention of clause 9 somewhat obscure.
5. Clause 18 does not contain any indication that it is intended to prevail over clause 2. The words “In any event, …” in clause 18 have the result that the outcome prescribed by Article III Rule 6 will apply even more widely than the Hague Rules require, effectively making Article III Rule 6 more, not less potent.
6. Given the incorporation of the Hague Rules, and in light of clause 9, the bills of lading were subject to Article III Rules 6 and 8. If it had been intended that the claimants were to forego the valuable rights under Article III Rules 6 and 8, this would have been made clear.

Bright J concluded that clause 18 did not prevail over the Hague Rules, as incorporated, and therefore that the Hague Rules time bar prevailed over the 20-day Provision.

Does the 20-day Provision apply? – Obiter

While it was held that Article III Rules 6 and 8 of the Hague Rules rendered the 20-day Provision null and void, Bright J went on to consider obiter whether the 20-day Provision applied in light of clause 18 providing that “[a]ny claim against the Carrier… with respect to freight, charges or expenses or any claim other than for loss or damage to Goods must be submitted… within 20 days”.

The court rejected the defendant’s argument that a claim for an indemnity for liability to salvors is a claim for salvors’ charges and/or for the expense of the salvage operation. The court found that words such as “charges” or “expenses” might be appropriate for a fixed fee salvage contract, but they are not the most natural way of describing salvors’ remuneration under the LOF terms.

The court further rejected the defendant’s argument that “loss” means that the goods are literally lost and that “damage to Goods” means physical damage, as distinct from economic damage. The court held that the clauses undoubtedly include economic damage, for example if the goods are physically unaltered, their value has been adversely affected:

1. the court questioned whether there is a clear dividing-line between physical damage to goods and economic damage e.g., when goods are lost overboard and it is theoretically possible to recover them, but the cost would exceed their value, the goods are both a physical loss and an economic loss.
2. salvors had rights of lien over the cargo, meaning they were not obliged to discharge it, or then to deliver and release it, until settlement/payment, which makes a legal and also a physical difference, in terms of where the cargo was on any given date, and on the bill of lading holders’ ability to take possession. They could not do so, without settling and/or paying, because the goods were physically secured and restrained.
3. a maritime lien is a specific kind of damage that is sustained by the goods in question (rather than merely inflicting economic damage on their owner), being property damage to the goods.
4. it did not matter that salvors’ liens had been lifted, and the cargo had been released, prior to the issue of the claim form.

Is the Service Provision compatible with Article III Rule 6 and Rule 8?

Finally, the court rejected the defendant’s argument that the Service Provision relieved the carrier from liability or lessened its liability under Article III Rule 8. The defendant argued that, in many common law countries, suit is brought when the claim form (or equivalent) is issued, whereas in many civil law countries, suit is brought upon service. Therefore, there is nothing offensive to the Hague Rules about a deeming provision that assimilates the position to that which would in any event obtain in many other countries.

The court found that clause 24 expressly provided for English law and jurisdiction. Under English law and procedure, suit is brought when the claim form is issued. As such, the court held that the Service Provision would be capable of relieving the carrier from liability.

Comments

While a clause in the main contractual text may be presumed to have been intended to take precedence where there is inconsistency with incorporated terms, this case shows that parties should pay heed to the incorporating text and be careful to exclude or limit liability clearly when needed.