Homburg Houtimport BV v Agrosin Private Limited

The House of Lords determined three interrelated questions: (1) the identity of the contractual carrier under the bills of lading; (2) the effect and scope of the bill of lading Himalaya clause (condition 5) and its interaction with the Hague Rules (incorporated into the bills); and (3) whether the cargo owners could recover in tort from the shipowners for damage to cargo which began before title passed.

Key legal principles and holdings:

• Identity of carrier: the bills of lading were to be read from the standpoint of a reasonable mercantile reader; the prominent wording and signature on the face of the bills naming Continental Pacific Shipping (CPS) as "the Carrier" established CPS as the contractual carrier (charterer's bills) rather than the shipowner.
• Himalaya clause and Hague Rules: the clause was reconstructed to supply omitted words and was treated as capable in principle of conferring contractual exemptions on third parties. However, exemptions relied on by the shipowners could not extend to defeat the protective scheme of the Hague Rules where the clause, properly construed and applied to the performing carrier, would be inconsistent with Article III rule 8.
• Tort claims and title to goods: as a matter of principle a negligence cause of action for physical damage to goods accrues when significant damage is first caused. Where damage in substantial part occurred at or shortly after loading, subsequent holders who acquired title after that event could not recover in negligence for the same event; only Makros Hout, who had title before the material damage occurred, had a tort claim against the shipowners.

Background and parties: the motor vessel Starsin carried multiple consignments of timber and plywood on a voyage from Malaysia to Europe in December 1995. Seventeen consignments were seriously damaged owing to negligent stowage and condensation. The cargo owners (holders of transferable bills of lading) sued the shipowners (who had time‑chartered the ship to Continental Pacific Shipping (CPS)) for breach of the contracts of carriage evidenced by the bills of lading and, alternatively, in tort.

Procedural posture: the issues reached the House of Lords after trial before Colman J (Commercial Court) and a divided Court of Appeal ([2001] EWCA Civ 56 / [2001] 1 Lloyd's Rep 437). The House of Lords heard appeals by the shipowners and cross‑appeals by the cargo owners.

Nature of claims and relief sought: cargo owners sought damages for loss to cargo under the bills of lading (contract) or, if the bills were charterers' bills, damages in tort against the shipowners. The shipowners appealed to avoid contractual and tort liability, relying in particular on a wide Himalaya clause in the bills.

Issues framed by the court:

• Who was the contractual carrier under the bills of lading (shipowner or CPS)?
• If CPS was carrier, does the printed Himalaya clause (condition 5), properly construed (including interpolation of omitted words), protect the shipowners from liability?
• Were tort claims maintainable by the cargo owners who acquired title after loading, given that damage was progressive?

Reasoning and conclusions (concise):

• Identity of carrier: the House gave weight to what a reasonable merchant or banker would read on the face of the bill and to contemporary market practice (notably UCP 500 Article 23). The face and signature identifying "Continental Pacific Shipping (The Carrier)" were decisive; the bills were charterers' bills and CPS was the contractual carrier.
• Himalaya clause: the clause was defective in form and the court supplied the missing words necessary to give grammatical and commercial sense. The clause was capable in principle of conferring contractual exemptions on third parties (the Himalaya mechanism). But those exemptions cannot be applied so as to frustrate the protective purpose of the Hague Rules; where the clause, properly construed and applied to the performing carrier, would conflict with Article III rule 8, it is ineffective to the extent of that conflict. Different speeches examined this interaction with slightly divergent emphasis, but the practical consequence on the facts was that shipowners could not rely on an unrestricted immunity to defeat the statutory/convention protections.
• Tort and title: the House applied the principle in Leigh & Sillavan v Aliakmon that a claimant must have legal ownership or possessory title to sue in negligence for physical damage to goods. The court accepted the Court of Appeal reasoning that, where negligent stowage caused significant damage at loading, the single cause of action in respect of that negligent act is complete when the significant damage first occurs; subsequent owners who acquired title after that point cannot claim for the same damage. Only Makros Hout had title before the significant damage and therefore retained a viable tort claim against the shipowners.

Outcome: the House allowed the shipowners' appeal in part so that the cargo owners' claims were dismissed except in respect of Makros Hout BV, whose judgment in their favour was to stand. The House invited submissions on costs.

The House allowed the shipowners' appeal in part and dismissed the cargo owners' cross‑appeal. The bills were charterers' bills: Continental Pacific Shipping (CPS) was the contractual carrier (the face of the bills and market practice were decisive). The Himalaya clause, after reconstruction, is capable in principle of conferring exemptions on third parties, but those exemptions cannot be read so as to defeat the protective regime of the Hague Rules (Article III r.8). On the facts the tort claims of the cargo owners who acquired title after significant damage had already been caused failed because the cause of action was complete when the significant damage first occurred; Makros Hout (who obtained title before the damage) could recover. Consequently the shipowners' appeal succeeds except as to Makros Hout BV.

First instance: Commercial Court (Colman J) [2000] 1 Lloyd's Rep 85; Court of Appeal [2001] EWCA Civ 56 / [2001] 1 Lloyd's Rep 437 (divided). Final appeal to the House of Lords: [2003] UKHL 12 (13 March 2003).