FIMBank Plc v KCH Shipping Co Ltd

Article III, rule 6 of the Hague Visby Rules applies to a claim for misdelivery after discharge. Although the Rules generally regulate carriage by sea from loading to discharge, the amended time bar expressly extends to all liability in respect of the goods. Its purpose, confirmed by the travaux préparatoires, is to include wrong-delivery claims in the broadest possible terms.

Accordingly, a bill of lading holder must commence suit within one year of delivery or the date when delivery should have occurred. A clause excluding responsibility for cargo after discharge does not disapply that time bar where the carrier remains liable for the misdelivery.

The appellant bank held bills of lading for a coal cargo discharged in India in April 2018. It alleged that the contractual carrier released the cargo from a bonded stockpile without production of the bills of lading.

The bills incorporated the Hague Visby Rules. The bank commenced valid arbitration more than one year after the date when the cargo should have been delivered. The arbitrators held that Article III, rule 6 extinguished the claim. Sir William Blair dismissed the bank’s appeal under section 69 of the Arbitration Act 1996: [2022] EWHC 1765 (Comm).

The central issue was whether the one-year time bar applied to misdelivery occurring after discharge, and whether clause 2(c) of the Congenbill form displaced it.

1. Appeal dismissed unanimously. Lord Justice Males, with whom Lord Justices Popplewell and Nugee agreed, held that Article III, rule 6 of the Hague Visby Rules extinguished the bank’s claim because suit was not brought within one year of the date when the goods should have been delivered.

2. The general scope of the Rules is confined to carriage by sea. Articles I and II limit that period to loading through discharge. Thus, absent a specific provision, the Rules do not govern misdelivery of cargo stored ashore after discharge. Discharge is a physical operation; delivery is the separate legal transfer of possession.

3. Article III, rule 6 is the relevant specific provision. The Visby amendment changed the discharge from liability for loss or damage to discharge from all liability whatsoever in respect of the goods. That wording deliberately gives the time bar a wider operation than the corresponding Hague Rules provision.

4. The Rules had to be construed by their ordinary meaning, context, object and purpose. The travaux préparatoires were admissible and decisive because they clearly showed that the amendment was intended to cover wrong-delivery claims in the broadest possible terms. That purpose encompasses the usual case in which cargo is released from storage after discharge without production of a bill of lading.

5. The court expressed substantial doubt that the Rules could instead be implied as a general contractual term governing the post-discharge period, but did not decide that issue. Clause 2(c) did not disapply the time bar. Assuming that the clause did not itself exclude liability for misdelivery, there was no reason why the Article III, rule 6 limit should not apply to that liability.

• Court of Appeal (Civil Division): Dismissed the bank’s appeal and upheld the application of Article III, rule 6 of the Hague Visby Rules: [2023] EWCA Civ 569.
• Commercial Court: Sir William Blair dismissed the bank’s section 69 appeal from the arbitral award, while granting permission for a further appeal: [2022] EWHC 1765 (Comm).
• Arbitration: The tribunal decided preliminary issues and held that the one-year time bar applied.