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17 July 2013
The Malaysian courts recently considered(1) the applicability of a plea of limitation under the Hague Rules 1924, as incorporated into national law through the Carriage of Goods by Sea Act 1950, as well as the so-called 'Himalaya clause'.
The plaintiff was the shipper of cargo said to contain 973 cartons of frozen whole kernel corn packed into one refrigerated container. The cargo was shipped under a house bill of lading issued by Seaquest Line, a non-vessel operating common carrier. The first defendant was Seaquest Line's agent.
The first defendant approached the second defendant for shipment of the cargo on board its vessel MV Melinda. The second defendant, in its role as agent of CMA CGM SA (the ocean carrier), issued an ocean bill of lading for the shipment.
The cargo was shipped from Port Klang in Malaysia to Jeddah Port in Saudi Arabia. The vessel departed from Port Klang on April 22 2011 and arrived at Jeddah Port on May 4 2011, where the container containing the cargo was discharged to the consignee. However, the plaintiff alleged that the consignee had rejected the cargo, claiming that the cargo was severely damaged due to faulty refrigeration.
On October 23 2012 the plaintiff brought an action claiming damages for loss of the cargo and loss of business and cartons from the consignee.
The issue that arose by way of preliminary determination was whether the plaintiff's claim against the first defendant was time barred under Article III, Rule 6 of the Hague Rules (given effect by Section 2 of the Carriage of Goods by Sea Act), on the basis that the first defendant, which was acting as agent for the carrier Seaquest Line, could also benefit from all of those provisions from which the carrier benefited, as such provisions were expressly for its benefit. Section 2 of the act provides that:
"Subject to this Act, the Rules set out in the First Schedule (hereinafter referred to as 'the Rules') shall have effect in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in Malaysia to any other port whether in or outside Malaysia."
In Terengganu Forest Products Sdn Bhd v Cosco Container Lines,(2) the High Court reaffirmed that the act, which gives effect to the Hague Rules, provides for its compulsory application to bills of lading and similar documents of title issued in relation to outward bound cargo.
The court agreed with the first defendant's submission that it was an agent of Seaquest Line, as evidenced by the endorsement on the house bill of lading which read "as agents for and on behalf of carrier, SEAQUEST LINE".
Article III, Rule 6 of the Hague Rules provides, among other things, that:
"In any event, the carrier and the ship shall be discharged from all liability in respect of loss and damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered."
The above article is given effect in Malaysia by Article III, Rule 6 of the Carriage of Goods by Sea Act, which contains the same wording.
The court found that the plaintiff's claim was time barred, as it was filed after the expiry of the one-year period stipulated under Article III, Rule 6 of both the Hague Rules and the act (it was not in dispute that the container was discharged and delivered to the consignee on May 4 2011 and that the plaintiff filed its claim only on October 23 2012).
Clause 4 of the house bill of lading incorporated what is commonly referred to as the 'Himalaya clause' (named after the ship in the celebrated case of Adler v Dickson),(3) which read as follows:
"The Merchant agrees that (other than the Carrier) no person (which expression shall include any servant or agent of 'The Line' or any independent contractor or carrier employed by 'The Line' and his servants and agents…) shall in any circumstances be liable to the Merchant for any loss, damage or delay of whatsoever kind howsoever caused to the Goods… Without prejudice to the foregoing, every such person shall be entitled to the benefit of all provisions herein benefiting the Carrier as if such provisions were expressly for his benefit."
Once incorporated into a bill of lading, a Himalaya clause operates to extend to agents and sub-contractors the benefits of defences and limitations available to the carrier.(4)
The court held that as the plaintiff's claim was brought after the expiry of the one-year limitation period under Article III, Rule 6 of the Hague Rules, it was time barred and the plea of limitation was therefore a valid defence. In its reasoning, the court referred to the judgment in Thye Lam & Co v The Eastern Shipping Corp Ltd,(5) which dealt with the same provision under the Hague Rules and in which the judge observed:
"I am not concerned with the morality of the defence, but simply whether the plea of limitation constitutes a valid defence in law … The Schedule of the Act and the condition in the Bill of Lading seem to be clear and unequivocal beyond argument … it was, in my view, the clear duty of the plaintiffs, as prudent persons, to enforce their threat of legal proceedings and protect their right of action by issuing a Writ of Summons. In my view, the plea of limitation must succeed, and I sincerely regret that I have no alternative but to dismiss the action."
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