KYOKUYO CO LTD v A.P. MØLLER – MAERSK A/S

A contract of carriage remains “covered by a bill of lading” for the Hague-Visby Rules where, when concluded, it required a bill of lading on demand, even though the parties later agree to issue sea waybills instead. The Rules therefore apply compulsorily under Carriage of Goods by Sea Act 1971, subject to any distinct post-discharge inland stage governed by the contract. For containerised cargo, the relevant “packages or units” are identified by examining the cargo as packed in the container. Unpackaged, separately identifiable items may be units. Under article IV rule 5(c), an enumeration must identify and number the packages or units actually comprising the cargo as packed. The package or unit limit applies separately to each package or unit, rather than as a single aggregate limit.

The claimant, as receiver of frozen tuna, brought contractual and bailment claims against the defendant carrier. The tuna was shipped in three containers from Spain to Japan. No bills of lading were issued. Instead, the parties agreed that sea waybills would be issued, although the original carriage arrangements entitled the shipper to demand bills of lading.

The parties agreed four preliminary issues concerning the applicable liability regime, the meaning of “package or unit”, the effect of article IV rule 5(c) of the Hague-Visby Rules, and whether the limitation applied collectively or separately. The court also considered the effect of the Maersk Terms on any damage occurring during onward carriage from Yokohama to Shimizu.

1. Applicable regime. The Hague-Visby Rules had the force of law under sections 1(2) and 1(4) of Carriage of Goods by Sea Act 1971. Article I(b) and section 1(4) focus on the contract as concluded. It was sufficient that the contract provided for a bill of lading to be issued on demand. The later agreement to issue sea waybills did not, on the facts, vary or remove that contractual right. The conclusion followed Pyrene Co Ltd v Scindia Navigation Co Ltd, [1954] 2 QB 402, and the subsequent authorities.
2. The Hague-Visby Rules governed the sea carriage. For Containers B and the Replacement Container, if Maersk proved that damage arose during the final transit after discharge at Yokohama, liability was instead limited under clause 7.2(c) of the Maersk Terms to 2 SDR per kilogramme.
3. Packages and units. The container was not automatically the only package or unit. Following The River Gurara, [1998] QB 610, the court examined the actual contents as packed. Each separately identifiable, unpackaged frozen tuna loin was a unit. Each bag of tuna parts was a package.
4. Article IV rule 5(c). For the loins, the Waybills enumerated the relevant units as packed in each container. That displaced the container default under rule 5(c). The bags in Container A were not enumerated, so the container remained the sole package or unit for that cargo. The court accepted the result in El Greco (Australia) Pty Ltd v Mediterranean Shipping Co S.A., [2004] 2 Lloyd’s Rep 537, but rejected as unnecessary its additional suggestion that enumeration must be consistent only with the items having been separately packaged or consolidated.
5. Calculation. The package or unit limit applied separately to each frozen loin. For the bagged tuna under the Hague-Visby Rules, the applicable limit was the greater of 666.67 SDRs and 2 SDRs per kilogramme of damaged cargo. The preliminary issues were answered accordingly. Costs and the precise form of order were reserved.