Trafigura Beheer BV & Anor v Mediterranean Shipping Company SA

A bill of lading may incorporate the Hague-Visby Rules contractually where the relevant voyage is one for which those Rules are compulsorily applicable at the port of shipment. The parties may define the temporal scope of the Rules, including by limiting the carrier’s responsibility to discharge from the vessel. Where the contract so limits that responsibility, post-discharge custody is governed by the contractual bailment, and a package limitation does not apply unless clearly extended to that period. In conversion, damages may be assessed by reference to the value at judgment where that fairly compensates the claimant. Hedging losses remain unrecoverable if their mechanism was not reasonably foreseeable, although foreseeable litigation costs may be recovered.

Trafigura Beheer BV purchased copper cathodes and sold them to HMC Company Limited. The cargo was shipped from Durban to Shanghai under a bill of lading issued by Mediterranean Shipping Company SA. Fraudsters obtained a false bill of lading and a delivery order from MSC’s Shanghai agents. MSC accepted that this constituted conversion and breach of the carriage contract.

The cargo remained in a Shanghai container terminal under MSC’s control. The issues concerned the contractual incorporation and temporal scope of the Hague-Visby Rules, the effect of the contractual limitation clause, and the proper measure of damages, including claims for hedging losses and litigation costs.

1. Hague-Visby Rules. Clause 1(a), construed under English law, made the Hague-Visby Rules applicable as a matter of contract. The phrase “if compulsorily applicable” extended to a voyage from a state whose law made the Rules compulsory. South African legislation therefore triggered the contractual incorporation, although the Rules did not apply by force of English law.
2. Post-discharge period. Clauses 4 and 7 limited the carrier’s responsibility and the Hague-Visby Rules period to discharge from the vessel. After discharge MSC remained a contractual bailee, but the Hague-Visby Rules, including article IV(5), did not govern that period.
3. Limitation clause. Clause 22 did not extend the limitation of liability beyond the period for which MSC accepted responsibility. It therefore did not limit liability for the post-discharge conversion and misdelivery. The obligation to deliver only against a genuine bill of lading was of fundamental importance, and clear words would have been required to limit liability for its breach outside the agreed period.
4. Damages. Under section 3 of the Torts (Interference with Goods) Act 1977, the appropriate value was the value of the cargo at judgment. The continuing uncertainty over recovery of the cargo, rising copper prices, and the reasonableness of maintaining the hedge justified that assessment. Hedging losses were not reasonably foreseeable and were not recoverable as consequential or mitigation losses. Foreseeable costs incurred in the Chinese proceedings were recoverable.
5. MSC’s liability was accordingly assessed on the basis of the judgment-date value of the cargo, without hedging losses, but with the agreed litigation costs. Payment for the whole interest would extinguish Trafigura’s title under section 5 of the 1977 Act.

First-instance decision in the Commercial Court. No prior appellate decision is stated in the judgment.