J I MacWilliam Company Inc (Respondents) v. Mediterranean Shipping Company SA (Appellants)

A straight bill of lading, naming a consignee without being transferable to order or bearer, is a bill of lading within article I(b) of the Hague-Visby Rules and section 1(4) of the Carriage of Goods by Sea Act 1971. Transferability is not essential.

The Rules require an expansive, internationally uniform and commercially realistic interpretation. A straight bill requiring presentation for delivery is a document of title in the relevant sense and is distinct from a sea waybill. Neither domestic common-law classifications nor the later Carriage of Goods by Sea Act 1992 narrow the Rules. Accordingly, the Hague-Visby limitation regime applies to carriage covered by such a bill.

Four containers of printing machinery were damaged during carriage from Felixstowe to Boston. The buyer was the named consignee under a non-transferable, or straight, bill of lading issued for the preceding Durban-to-Felixstowe leg. It was agreed that any document for the onward carriage would have been in the same form and that its non-issue was immaterial.

Maritime arbitrators held that a straight bill fell outside article I(b) of the Hague-Visby Rules. Langley J upheld that conclusion in [2002] EWHC 593 (Comm). The Court of Appeal reversed it in [2003] EWCA Civ 556.

The issue was whether a straight bill was “a bill of lading or any similar document of title” under article I(b) and section 1(4) of the Carriage of Goods by Sea Act 1971. The answer determined whether the more generous Hague-Visby package limitation or the United States statutory limitation applied.

1. Appeal dismissed unanimously. Lord Bingham delivered a leading speech. Lord Steyn and Lord Rodger gave concurring reasons, and Lord Nicholls and Lord Brown agreed. The straight bill was within article I(b) of the Hague-Visby Rules and section 1(4) of the Carriage of Goods by Sea Act 1971. The Hague-Visby limitation in article IV rule 5 therefore governed the buyer’s claim.

2. Per Lord Bingham, the court determines a mercantile document’s legal character from its substance, although it should be slow to reject the description borne by a document issued bona fide in ordinary trade. The document called itself a bill of lading, was issued in three originals, contained conventional bill-of-lading terms and required surrender of an original for delivery. Its lack of transferability by endorsement did not turn it into a receipt or sea waybill.

3. Per Lord Steyn, a straight bill retains the bill of lading’s functions as a receipt, evidence of the contract and a document entitling the consignee to delivery. It differs from an order bill only in its restricted transferability. Presentation is required for delivery, whether from the express surrender clause or the issue of several originals, one of which being accomplished renders the others void.

4. Per Lord Bingham and Lord Steyn, article I(b) must receive an expansive, internationally uniform and commercially realistic construction. The words “or any similar document of title” extend rather than restrict the provision. Domestic technical meanings of “document of title” cannot govern an international convention. The Rules were designed to protect third parties and to prevent carriers from avoiding minimum standards through the form of shipping document used.

5. Per Lord Rodger, commercial usage already recognised a non-transferable bill naming a consignee as a bill of lading. Nothing in the language or policy of the Hague Rules justified giving “bill of lading” a special narrower meaning. His further view that the document would alternatively be a similar document of title was tentative and unnecessary to the result.

6. The Carriage of Goods by Sea Act 1992 did not alter that conclusion. Its domestic classification of straight bills could not control Rules given statutory force earlier, and section 5(5) expressly preserved the Hague-Visby Rules.

1. House of Lords: The carrier’s appeal was dismissed unanimously. The Court of Appeal’s conclusion that the Hague-Visby Rules applied was affirmed: [2005] UKHL 11.
2. Court of Appeal: The buyer’s appeal was allowed. The court held that a straight bill was within article I(b) and that article IV rule 5 governed the limitation of liability: [2003] EWCA Civ 556, reported at [2004] QB 702 and [2003] 2 Lloyd's Rep 113.
3. Commercial Court: Langley J upheld the arbitrators’ conclusion that a straight bill fell outside article I(b): [2002] EWHC 593 (Comm), reported at [2002] 2 Lloyd's Rep 403.
4. Maritime arbitration: The arbitrators determined a preliminary issue in the carrier’s favour and held that the United States limitation regime applied.