Key takeaways
‘Suit’ within Article III rule 6 HVR
Requires proceedings that can decide a claim, so pure action for security is insufficient.
Always consider the clock
Take steps to ‘stop the clock’ for the purposes of the applicable time bar.
Clear drafting promotes certainty
Specifically identify in bills of lading cargo carried on deck, such as by parcel or serial number.
Batavia Eximp & Contracting (S) Ptd Ltd -v- Pedregal Maritime SA (Rev 1) (Taikoo Brilliance) [2025] EWCA Civ 1158
In an earlier decision, the Commercial Court held that cargo interests’ claim for misdelivery was time-barred because proceedings they had brought in Singapore to arrest a sister ship and obtain security for their claim did not interrupt time for these purposes.
The Court also looked at the scope of the ‘on deck’ exclusion from the definition of ‘Goods’ under the HVR.
See our article on that decision here: Hague-Visby Rules: Clock-Stopping Suits | Hill Dickinson.
The Court of Appeal has now dismissed cargo interests’ appeal in respect of the time bar issue and upheld the Owners’ appeal in respect of the ‘on deck’ exclusion point.
The background facts
In brief, the Owners of the Vessel issued four bills of lading (Bills) as carriers in respect of a cargo of timber (Cargo) that was transported from New Zealand to Kandla, India.
Two of the Bills referred to some of the Cargo being carried on deck (one referring to 22,994 pieces and the other referring to 11,092 pieces).
Discharge in Kandla subsequently took place without production of the original Bills and against Charterers’ letter of indemnity. The Holders of the Bills subsequently brought a claim for misdelivery of the Cargo.
The Bills incorporated a London arbitration clause. However, the Holders arrested a sister ship in Singapore in order to obtain security for their claim. Security was duly provided and the sister ship released from arrest.
The Singaporean Proceedings were subsequently stayed and the Holders commenced arbitration but did so more than one year after the alleged misdelivery of the Cargo. The Tribunal decided that the HVR one-year time-limit applied only to the cargo carried under deck, not on deck. The Holders appealed on this issue.
The Tribunal further held that it was sufficient that the Bills identified the amount of cargo carried on deck for the purposes of the ‘on deck’ exception in the definition of ‘Goods’ under Article 1(c) of the HVR. The Owners appealed on this issue.
The Commercial Court decision
The Commercial Court held that ‘suit’ for the purposes of Article III rule 6 of the HVR means substantive proceedings that can decide the claim. The Singaporean Proceedings aimed at obtaining security for the claim did not amount to ‘suit’ for these purposes. The Holder’s appeal on this issue was, therefore, dismissed.
Furthermore, whilst best practice might call for clearer statements on the Bills than was seen in this case in respect of deck cargo, the Court decided the Tribunal had not been wrong in law to regard the statement as to what was carried on deck as sufficient to engage the HVR exemption. The Owner’s appeal on this issue was, therefore, dismissed.
Both parties appealed.
The Court of Appeal decision
The Court of Appeal highlighted the proper approach to the interpretation of the HVR as summarised by the Supreme Court in Fimbank Plc v KCH Shipping Co Ltd [2024] UKSC 38 (13 November 2024) (Giant Ace).
The Court of Appeal considered two key questions as follows:
1. Is an action for security a ‘suit’ within Article III rule 6 of the HVR?
Whilst the Singaporean Proceedings required the Holders to plead their substantive claim to obtain security for their claim, the pursuit of the substantive claim in Singapore would have been in breach of the London arbitration clause. It was for this reason that the Proceedings were stayed after security had been provided. The Holders accepted that proceedings brought in breach of an exclusive jurisdiction or an arbitration clause would not be proceedings brought in a competent jurisdiction and could not, therefore, be classified as a ‘suit’. As such, the Court of Appeal considered that the Singaporean Proceedings must be regarded as involving a claim for security alone.
Having considered the key authorities on the one-year time bar in Article III rule 6, the Court of Appeal highlighted that the language of Article III rule 6 strongly indicated that ‘suit’ means proceedings to establish liability. However, this provisional view had to be considered in light of the object and purpose of the rule.
If the Holders were right that the Singaporean Proceedings were sufficient to interrupt time for the purposes of the time bar, this would not achieve finality and would give rise to extended or even completely open-ended claim periods. The object and purpose of the time bar in Article III rule 6 was to ensure the prompt making and pursuit of substantive claims for loss of or damage to goods.
The Court of Appeal, therefore, dismissed the Holder’s appeal on this issue.
2. What must be stated on the face of a bill of lading for cargo to be carried ‘on deck’ pursuant to Article I(c) of the HVR?
It is well established that the HVR excludes deck cargo from its ambit. As such, cargo carried (and stated to be carried in any bill of lading) as on deck will be subject to a different risk profile than that carried below deck.
If an entire cargo is carried on deck, the position is clear cut. However, in this case, only part of the consignment was carried on deck. As such, there were potentially two different regimes applying to the entire consignment, one incorporating the HVR (the below deck cargo) and the other one not (on deck cargo).
The clear purpose of Article I(c) was to permit the shipper or anyone to whom the Bills were endorsed to have knowledge of which items of cargo were being carried on deck and not subject to the HVR. This allowed them to protect their commercial interests and manage their risks. If items of cargo varied in value to any extent, it was necessary for those carried on deck to be identified so they could be distinguished from those carried below deck, such as by parcel or serial number. In this case, the pieces of timber compromising the cargo varied in weight and therefore value significantly.
The Court of Appeal, therefore, allowed the Owners’ appeal on this issue. In doing so, they held that the exclusion in Article I(c) was engaged in relation to ‘part only of the cargo consigned by a bill of lading consisting of items of differing value, the statement on the bill must specifically identify the cargo to be carried on deck, such as by parcel or serial number’.
However, the Court of Appeal left open the question of precisely what would have to be stated on a bill if some cargo is carried on deck when the cargo is homogenous or does not differ in value. It will be interesting to see if this is a point raised in subsequent cases.
Comment
On the time bar point, the decision confirms that substantive proceedings must be commenced in the appropriate forum if time is to be effectively interrupted. Proceedings brought purely in order to obtain security for the substantive claim, such as a ship arrest, are unlikely to stop the clock ticking. Cargo interests should, therefore, ensure that they bring suit before expiry of the one-year period and that they do so in the contractually agreed forum.
Carriers should ensure that bills of lading are drafted clearly to promote certainty, setting out which cargo is carried on deck including its quantity. If the consignment of cargo is only to be partly carried on deck and consists of items of differing value, the statement on the bill must specifically identify the cargo to be carried on deck by reference to parcel or serial number.
Whilst the Court of Appeal left open the question of the approach to be taken with homogenous cargoes or cargoes which do not differ in value, it would be prudent to adopt the same approach and include specific identification of such cargoes.
It remains to be seen whether leave to appeal to the Supreme Court will be sought and obtained.
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