Fimbank Plc v KCH Shipping Co Ltd

The one-year time bar in article III, rule 6 of both the Hague Rules and the Hague-Visby Rules applies to a carrier’s misdelivery of goods after discharge but before or at delivery. Its application requires a sufficient nexus between the claim and identifiable goods carried or intended to be carried.

The Rules’ compulsory period of responsibility runs from loading to discharge. That period does not confine the operation of every rule. The broad language, delivery-centred context and purpose of finality support applying the time bar outside it. A contractual exclusion of responsibility after discharge does not disapply the time bar unless the contract demonstrates that intention.

A bank claimed damages against a contractual sea carrier for delivering a coal cargo without production of the original bills of lading. For the appeal, the alleged misdelivery was assumed to have occurred after discharge. Arbitration commenced more than one year after the cargo was or should have been delivered.

The arbitral tribunal held that the claim was time-barred under article III, rule 6 of the Hague-Visby Rules. The Commercial Court dismissed the bank’s appeal in [2022] EWHC 2400 (Comm). The Court of Appeal dismissed a further appeal in [2023] EWCA Civ 569. It held that the Hague Rules time bar did not cover post-discharge misdelivery, but that the wider Hague-Visby provision did.

The Supreme Court considered whether the Hague-Visby time bar applied to post-discharge misdelivery and whether clause 2(c) of the Congenbill 1994 form disapplied it.

1. Appeal dismissed unanimously. Lord Hamblen, with whom Lord Hodge, Lord Sales, Lord Leggatt and Lord Richards agreed, held that the one-year time bars in article III, rule 6 of both the Hague Rules and the Hague-Visby Rules apply to misdelivery occurring after discharge.

2. The Hague Rules provision is deliberately broad. The expressions “in any event”, “all liability” and “in respect of loss or damage” cover liability however arising, including financial loss and claims in contract, tort or bailment. The rule’s focus on delivery is important because delivery is conceptually distinct from discharge and commonly occurs later. The time bar may cover breaches before loading or after discharge where the claim has a sufficient nexus with identifiable goods carried or intended to be carried.

3. The Rules establish a compulsory period of responsibility beginning with loading and ending with discharge. During that period the carrier’s minimum liabilities cannot be reduced and its maximum immunities cannot be increased. That period does not delimit every provision of the Rules. Several provisions operate before loading or after discharge, and article II permits a penumbra around the loading-to-discharge period.

4. The time bar’s object is finality. It permits timely investigation and enables books and accounts to be closed. A uniform time bar avoids arbitrary distinctions based on the precise completion of discharge or the form of the claim. The travaux did not require a narrower interpretation. The English authorities supported the provision’s broad language and operation outside the compulsory period. The Court of Appeal’s contrary conclusion concerning the Hague Rules was rejected.

5. The Hague-Visby wording is wider still, covering “all liability whatsoever in respect of the goods”. Article IV bis and the travaux confirm that it was intended to encompass wrongful delivery, including the typical case occurring after discharge.

6. Clause 2(c) did not disapply the time bar. It protected the carrier by excluding responsibility in specified periods, contained no reference to the Rules or the time bar, and was consistent with article VII. The MSC Amsterdam was distinguishable because its contract expressly referred to loss after the end of the Hague Rules period. The alternative question of contractual incorporation did not arise.

1. United Kingdom Supreme Court: The appeal was dismissed unanimously in [2024] UKSC 38. The court agreed that the Hague-Visby time bar applied, but rejected the Court of Appeal’s conclusion that the Hague Rules time bar did not apply after discharge.
2. Court of Appeal: The bank’s appeal was dismissed in [2023] EWCA Civ 569; [2023] Bus LR 1464. The court held that the Hague Rules time bar did not apply to post-discharge misdelivery, but the Hague-Visby time bar did.
3. Commercial Court: Sir William Blair dismissed the appeal from the arbitral award in [2022] EWHC 2400 (Comm); [2023] 1 All ER (Comm) 736.
4. Arbitral tribunal: A Partial Final Award dated 1 September 2021 held that article III, rule 6 applied in principle to delivery after discharge and that the claim was time-barred.