JI Macwilliam Co Inc v Mediterranean Shipping Company S.A.

A straight bill of lading may be a bill of lading or similar document of title within the Hague and Hague-Visby Rules despite lacking negotiability. A named consignee is a third party requiring the Rules’ protection, while the bill remains transferable once from the shipper to that consignee.

Where the document requires surrender of an original bill in exchange for the goods, that requirement applies to its straight form. Production is essential to the consignee’s entitlement to delivery, protects the shipper’s security and makes the instrument a document of title. The document should not be treated as a sea waybill merely because the words “or order” are absent.

The appellant purchased machinery which was carried from Durban to Felixstowe and then to Boston under arrangements made by the respondent carrier. The machinery was damaged on the second leg. In a preliminary arbitration, the parties disputed whether liability was limited under US law or by the more liberal package limitation of the Hague-Visby Rules.

The arbitrators found one contract of carriage and held that the straight bill was not a bill of lading within the Carriage of Goods by Sea Act 1971. Langley J upheld the latter conclusion and dismissed the appeal, although he considered that there were two contracts. The appellant brought a second appeal. The central questions were whether there were separate contracts, whether Felixstowe was a United Kingdom port of shipment, and whether the straight bill fell within the statutory and Convention regime.

1. Appeal allowed unanimously. Rix LJ delivered the leading judgment. Jacob J agreed with the result and gave additional reasons. Peter Gibson LJ agreed with Rix LJ.

2. The original bill governed carriage by the respondent only from Durban, the stated port of loading, to Felixstowe, the stated port of discharge. Clause 3 made the respondent the shipper’s agent for arranging carriage from Felixstowe to Boston and confined its liability as carrier to the first leg. A new arrangement under which the respondent carried the goods onwards was therefore a separate contract of carriage. Felixstowe was the port of shipment under that second contract.

3. A straight bill of lading can fall within “a bill of lading or any similar document of title” in article I(b) of the Hague-Visby Rules and section 1(4) of the Carriage of Goods by Sea Act 1971. Negotiability, in the sense of repeated transferability by endorsement or delivery, is not indispensable. A straight bill used in ordinary international trade can be transferred once to the named consignee, who is as much a third party requiring protection from onerous carriage terms as a consignee under an order bill.

4. The Rules’ international origin required a broad construction rather than one controlled by antecedent domestic classifications. Their history and travaux préparatoires did not establish an intention to exclude straight bills. Article VI’s exceptional regime for a non-negotiable receipt concerned special shipments and did not place ordinary commercial carriage under a straight bill outside the Rules.

5. The attestation clause required surrender of an original bill in exchange for the goods whether the form was used as an order bill or a straight bill. The words concerning due endorsement applied only where endorsement was appropriate. Production protected both the carrier and the shipper, particularly where the shipper retained the document as security pending payment.

6. Because production was essential to the consignee’s right to delivery, the instrument was a document of title. It was also a similar document of title for the Rules. Rix LJ further considered, obiter, that a traditional straight bill should in principle require production even without an express surrender clause, but that wider question was unnecessary to decide.

1. Court of Appeal: The appeal was allowed unanimously. The court held that the second leg was governed by a separate contract and that the straight bill was a bill of lading or similar document of title within the Hague-Visby Rules and the Carriage of Goods by Sea Act 1971.

2. Commercial Court: Langley J dismissed the appeal from the award because the straight bill was not within the statutory expression, although he disagreed with the arbitrators and found two contracts.

3. Arbitration: The arbitrators found a single contract and held that the straight bill was not a bill of lading under the Carriage of Goods by Sea Act 1971.