Owners of cargo lately laden on board the ship or vessel "Starsin" and others (Original Respondents and Cross-appellants) v. Owners and/or demise charterers of the ship or vessel "Starsin" (Original Appellants and Cross-respondents) and two other actions

An unequivocal identification of the carrier in the signature box on the face of a transferable bill of lading prevails over inconsistent boilerplate identity-of-carrier or demise clauses on its reverse.

A Himalaya clause may create an exemption contract between the cargo owner and an independent contractor through the carrier's agency. Where the actual shipowner obtains protection by being treated as a party to the bill of lading, however, article III rule 8 of the Hague Rules invalidates a complete exemption from liability for negligent cargo damage.

A negligence claim for property damage belongs to the person owning or possessing the property when significant damage first occurs. Progressive deterioration from one negligent act does not generate fresh causes of action after title changes hands.

Seventeen parcels of timber and plywood were damaged progressively during a sea voyage because they had been negligently stowed. The transferable bills of lading were signed by port agents for the time charterer, Continental Pacific Shipping, expressly described on their faces as the carrier. Standard conditions on the reverse stated that the shipowner was the carrier.

Colman J held that the bills were charterer's bills but that their Himalaya clause did not defeat the cargo owners' tort claims: [2000] 1 Lloyd's Rep 85. The Court of Appeal majority held that they were shipowner's bills, while Rix LJ dissented: [2001] EWCA Civ 56; [2001] 1 Lloyd's Rep 437. The Court of Appeal also rejected the contention that continuing deterioration created new causes of action as title passed.

The House considered the identity of the contractual carrier, the shipowner's reliance on the Himalaya clause and the Hague Rules, and whether cargo owners acquiring title during the voyage could recover in negligence.

1. Disposition. The shipowner's appeal was allowed except in respect of Makros Hout BV, whose judgment in negligence stood. The cargo owners' cross-appeal was dismissed. The decisive ruling on the Himalaya clause was by a majority of four to one.

2. Identity of the carrier. Lords Bingham, Steyn, Hoffmann, Hobhouse and Millett held that Continental Pacific Shipping was the sole contractual carrier. The reasonable merchant, banker or transferee would treat the unequivocal words in the signature box on the face of the bills as determinative. Specially completed words prevailed over boilerplate provisions on the reverse, including the identity-of-carrier and demise clauses. The bills were therefore charterer's bills, and the shipowner was not liable in contract.

3. Construction of the Himalaya clause. All five Law Lords agreed that words had plainly been omitted and that the clause could be reconstructed by supplying the identifiable agency wording. The shipowner was an independent contractor employed by the charterer to perform the carriage. The clause's statement that such a contractor should be under no liability was an exemption, not a covenant not to sue. Performance of the services supplied consideration for the contract made through the carrier's agency, consistently with The Eurymedon [1975] AC 154 and The New York Star [1981] 1 WLR 138.

4. Effect of the Hague Rules. Lords Bingham, Hoffmann, Hobhouse and Millett held that article III rule 8 of the Hague Rules invalidated the complete exemption as applied to the actual shipowner. The clause treated the shipowner as a party to the bill of lading to the extent necessary to obtain its protective provisions. It could not obtain that contractual protection while avoiding the rule which nullified an exemption from liability for negligent cargo damage. This limited participation did not impose the positive carrier obligations in article III rules 1 and 2. Lord Hobhouse additionally reasoned that the shipowner's performance and possession created a contract of carriage. Lord Steyn dissented: he regarded the Himalaya contract as a collateral exemption contract outside article III rule 8.

5. Negligence. Lords Bingham, Steyn, Hoffmann and Hobhouse applied The Aliakmon [1986] AC 785. A claimant must have legal ownership or possessory title when significant physical damage first occurs. One negligent stowage and its inevitable progressive consequences produced a single cause of action; later deterioration did not create new causes as title passed. Makros Hout had acquired title before damage began. The other cargo owners had not proved the necessary title at that time.

1. House of Lords: By [2003] UKHL 12, allowed the shipowner's appeal except as to Makros Hout BV and dismissed the cargo owners' cross-appeal. It reversed the Court of Appeal's conclusion that the shipowner was the contractual carrier.
2. Court of Appeal: By [2001] EWCA Civ 56, reported at [2001] 1 Lloyd's Rep 437, Sir Andrew Morritt V-C and Chadwick LJ held that the bills were shipowner's bills; Rix LJ dissented. The court rejected the argument that progressive damage generated new causes of action after title passed.
3. Commercial Court: Colman J held that the bills were charterer's bills and that the Himalaya clause did not provide the shipowner with complete immunity. He permitted recovery for damage occurring after acquisition of title, except where title could not be proved: [2000] 1 Lloyd's Rep 85.