J I MacWilliam Company Inc v Mediterranean Shipping Company SA

The House of Lords held that a straight bill of lading (a bill made out to a named consignee and not transferable by endorsement) falls within the phrase "a bill of lading or any similar document of title" in article I(b) of the Hague‑Visby Rules as given force of law by section 1(2) and (4) of the Carriage of Goods by Sea Act 1971. Consequently the Hague‑Visby limits (including article IV rule 5) governed the buyer's claim rather than the more restrictive limits under United States COGSA section 4(5).

The Lords applied a purposive, international and commercial construction of the Rules, having regard to their history, the travaux préparatoires, comparative practice and mercantile usage, and to the Bills of Lading Act 1855 which treats named consignees as within the class of persons empowered to sue under a bill of lading. The Court rejected arguments that straight bills should be equated to sea waybills or otherwise excluded from the Rules.

Background and parties. The dispute arose from damage to containers carrying printing machinery shipped from Durban to Boston with transhipment at Felixstowe. The carrier was Mediterranean Shipping Company SA (MSC); the consignee and claimant was J I MacWilliam Company Inc (the buyer). The bill of lading issued named the buyer as consignee and stated on its face "B/L not negotiable unless 'ORDER OF'", so it was a straight bill. The buyer sought to recover under the regime of the Hague‑Visby Rules which impose article IV package limits; the carrier contended that US COGSA limits applied.

Procedural history. A preliminary question was submitted to arbitration (award 30 May 2001). The arbitrators held a straight bill fell outside article I(b) of the Hague‑Visby Rules. Langley J in the Commercial Court upheld the arbitrators' decision. The Court of Appeal reversed, holding the Hague‑Visby Rules applied. The House of Lords heard the appeal from the Court of Appeal.

Nature of the issues and relief sought. (i) The immediate issue was whether the carriage contract was "covered by a bill of lading or any similar document of title" within article I(b) of the Hague‑Visby Rules (and so within section 1(4) of the 1971 Act), such that the Hague‑Visby package limitation regime applied. (ii) If not, whether the United States COGSA limits applied. Relief sought was judgment on the limitation regime governing the buyer's claim.

Key factual and agreed points. It was assumed for the preliminary issue that the buyer had title to sue and that the carrier was liable for the damage. No fresh bill was issued for the Felixstowe‑Boston leg but it was common ground that, had one been issued, it would have been in the same straight form.

Court's reasoning. The Lords adopted a broad, purposive construction of article I(b). They emphasised the international and negotiated nature of the Hague Rules, the intention to establish minimum standards applicable to ordinary commercial shipments and to prevent circumvention. The court examined mercantile practice and comparative law showing straight bills were known and routinely described as bills of lading; it relied on authorities such as the Bills of Lading Act 1855 which empowers named consignees, and on judicial and foreign decisions treating straight bills as documents of title requiring production to obtain delivery. The court rejected the carrier's attempt to equate straight bills with sea waybills and rejected a narrow domestic law conception of "document of title" where that would frustrate the international object of the Rules. The House concluded that the straight bill in the present case was within article I(b), so the Hague‑Visby Rules applied.

Subsidiary and contextual findings. The Lords noted that subsequent domestic legislation (the Carriage of Goods by Sea Act 1992) and Law Commission views treating straight bills differently do not affect the construction of the earlier international Rules. They also observed that article VI of the Rules permits contracting out only in narrow circumstances and so does not support a wide exclusion for straight bills.

Appeal dismissed. The House of Lords held that a straight bill of lading is covered by the expression "a bill of lading or any similar document of title" in article I(b) of the Hague‑Visby Rules (as given force of law by the Carriage of Goods by Sea Act 1971). Because the straight bill in this case fell within that expression, the Hague‑Visby package limitation (article IV rule 5) applied rather than the limits under US COGSA; the Lords reached this conclusion by applying a purposive, commercially realistic construction of the Rules, informed by the 1855 Act, comparative practice and the French text of the convention.

Arbitral award (preliminary issue) 30 May 2001: arbitrators held a straight bill excluded the Hague‑Visby Rules. Commercial Court (Langley J) [2002] EWHC 593 (Comm), [2002] 2 Lloyd's Rep 403 upheld the arbitrators. Court of Appeal [2003] EWCA Civ 556, [2004] QB 702 allowed the buyer's appeal and held the Hague‑Visby Rules applied. House of Lords [2005] UKHL 11 dismissed the carrier's appeal, affirming the Court of Appeal.