Review of the English Court judgment: The STARSIN, 13 March 2003 [2003] UKHL 12.
Following the inconsistent judgments in the Queen's Bench Division (Commercial Court) in the HECTOR [1998] 2 Lloyd's Rep. 287, in the Queen's Bench Division (Admiralty Court) the FLECHA [1999] 1 Lloyd's Rep. 612, in the Queen's Bench Division (Commercial Court) the STARSIN [2000] 1 Lloyd's Rep. 85, the Court of Appeal's judgment in the STARSIN [2001] 1 Lloyd's Rep. 437 and the House of Lords' dissenting judgment in the STARSIN on 13 March 2003, the House of Lords decided three very important questions regarding Bs/L, the Himalaya Clause and title to sue in tort.
In October 1995, the STARSIN was time chartered by her owners on an NYPE C/P to Continental Pacific Shipping Ltd ("CPS") for a trip from ports in the South East Asia to the North of Europe. In November and December 1995, the STARSIN loaded consignments of plywood and timber from three ports to be discharged at Antwerp and Avonmouth.
On arrival, widespread damage to the cargo by wetting was found, and it was determined by the judgment at The Court of First Instance that 15% of the damage was attributable to rain prior to shipment and the balance of the damage to condensation caused by negligent stowage, for which the carrier was responsible. The claimants (four Bs/L holders) were the buyers of the cargo. The defendants were the owners of the ship.
By the time of the proceedings, CPS had become insolvent. All the claimants - except one, Makrous Hout - obtained title to their consignments only in the course of the voyage after the ship had left the last loading port, i.e. after the negligent stowage had been effected.
The Bs/L were all on the same "liner bill of lading" form bearing the name and emblem of the ship's time charterers, CPS. On the front of the B/L the CPS voyage No. was quoted. The face of the B/L contained an "attestation clause" which read "In witness whereof the Master of the said vessel has signed the number of bill of lading stated below …". However, the Bs/L were not signed "for the Master", but the signature box contained the signature of the port agent qualified by either the typed or stamped statement reading "as agent for Continental Pacific Shipping as Carrier" (emphasis added).
B/L Clauses
The reverse of the bill of lading contained a number of relevant clauses, as follows:
1. Definitions: (c) "Carrier" shall mean the party on whose behalf this bill of Lading has been signed.
5. ‘Himalaya’ Clause
[1] It is hereby expressly agreed that no servant or agent of the carrier …… including every independent contractor from time to time employed by the carrier shall in any circumstance whatsoever be under any liability whatsoever to the shipper, for any loss or damage or delay of whatsoever kind arising or resulting directly from any neglect or default on his part or acting in the course of or in connection with his employment and,
[2] without prejudice to the generality of the provisions in this Bill of Lading, every exception, limitation, condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature applicable to the carrier or to which the carrier is entitled hereunder shall also be available to and shall extend to protect every such servant or agent of the carrier who is or shall be deemed to be acting on behalf of or for the benefit of all persons who are or might be his servants or agents including ……. every independent contractor from time to time employed by the carrier and
[3] all such persons shall to this extent be deemed to be parties to the contract in or evidenced by this Bill of Lading.
[4]The shipper shall indemnify the carrier against any claim by third parties against whom the carrier cannot rely on these conditions; in as far as the carrier’s liability would be excepted if said parties were bound by these conditions. [Note that the numbers do not appear in the clause itself; they were inserted by the House of Lords simply for ease of reference]
33. Identity of Carrier
The contract evidenced by this Bill of Lading is between the merchant and the owner of the vessel named herein… and it is therefore agreed that said shipowner only shall be liable for any damage or loss due to any breach or non performance of any obligation arising out of the contract of carriage whether or not relating to the vessel’s seaworthiness. If despite the foregoing it is adjudged that any other is the carrier and/or bailee of the goods shipped hereunder, all limitation of and exoneration from liabilities provided for by law or by this Bill of Lading shall be available to such other. It is further understood and agreed that as the line, company or agent who has executed this Bill of Lading for and on behalf of master is not a principal in the transaction and the said line, Company or agent shall not be under any liability arising out of the contract of carriage, nor as a carrier nor bailee of the goods.
35. If the ocean vessel is not owned by 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 appeared to the contrary), this Bill of Lading shall take effect only as a contract of carriage with the owner or demise charterer as the case may be 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 in respect thereof.' [This clause was not named in the Bill but it is commonly known as the ‘Demise Clause’]
Clause 34 of the bills was an English law and jurisdiction clause.
Summary
In this very lengthy judgment (94 pages) following decisions were rendered:
A. Despite the existence of an "Identity of Carrier" and a "Demise Clause" on the reverse of the Bs/L, it was held that the Bs/L were charterers' rather than owners' Bs/L, primarily due to the signature on the front page of the Bs/L.
B. It was held that part 1 of the Himalaya clause that appeared in the Bs/L was an exemption from liability that could be invoked by an independent contractor and not a covenant not to sue enforceable only by the contractual carrier. But the protection afforded by part 1 of the clause to an independent contractor, whose service was the carriage of the goods by sea, was null and void by the operation of article III Rule 8 of the Hague Rules, which were also incorporated into the Bs/L.
C. Finally, it was also held that three out of the four cargo claimants (i.e. excluding Makrous Hout) did not have title to sue the shipowners in tort due to the fact that the negligence that caused the damage to the cargo occurred on or shortly after completion of loading and definitely before the claimants acquired title to the cargo.
Published with the kind permission of the Danish Defence Club.