Complexities of application of time bar

In its latest “Legal Eagle”, logistics and transport insurer TT Club considered the case of Deep Sea Maritime and allegations of misdelivery and whether time bars applied.

Deep Sea Maritime issued a bill of lading that indicated Monjasa as shipper, for carriage by Libya-flagged, 61,348 gt tanker Alhani (IMO 9331153) of bunker fuel from Lome, Togo to Cotonou, Benin. The bill incorporated a time charter party between Deep Sea Maritime and Unitaes Energy Sources Co Ltd (Unitaes), which provided for exclusive English law and jurisdiction.

Neither Benin nor Togo were parties to the Hague or Hague-Visby Rules; Hague was incorporated under the bill of lading.

Monjasa contracted to sell the cargo to Unitaes, but the associated letter of credit in favour was declined due to alleged documentary discrepancies. Unitaes’ agent then contracted to sell the cargo back to Monjasa.

Monjasa complained that it bought the cargo back without knowing that the property had never passed from Monjasa to Unitaes.

Deep Sea Maritime discharged the cargo without production of the bill, stating that this was on charterers’ orders.

Monjasa arrested the ship in Tunisia and subsequently in France and started proceedings in both jurisdictions. Monjasa also issued proceedings in contract, conversion and bailment in London (and against the ship owners in China). Of these proceedings, only the Tunisian claim was brought within 12 months of the date on which the cargo should have been delivered, as required by Article III Rule 6 of Hague. Deep Sea Maritime sought a declaration and summary judgment in the English Commercial Court that Monjasa’s claim was therefore time barred under Rule 6.

The court rejected Monjasa’s submission that misdelivery was not caught by Rule 6. The court looked at the Hague-Visby travaux préparatoires, but found these inconclusive.

The court rejected Monjasa’s submission that the time bar applied only to claims pleaded under Hague.

There was some precedent to the effect that the convention could not be circumvented by suing in tort in this way, and in any case misdelivery was a breach of the central obligation under Hague to care for and discharge the cargo.

The court also held that proceedings brought in one jurisdiction in breach of an exclusive agreement to bring proceedings in a different jurisdiction were not ‘suit’ for the purposes of Rule 6, unless there were exceptional circumstances, which were not found here.

Further, the Court found that there was no evidence of Monjasa having asked Deep Sea Maritime for a copy of the charter party which was incorporated into the bill of lading. Issue of proceedings in Tunisia within 12 months of delivery did not therefore prevent the claims from being time barred.

TT said that apparently this was the first English decision on the application of the Hague time bar to misdelivery claims, although there had been Commonwealth decisions on the point.

It was thought likely that this principle would apply equally to Hague-Visby, in view of the even clearer wording in the equivalent provision – where ‘all liability’ is reinforced by the additional word ‘whatsoever’.

This case was decided on the grounds that the misdelivery occurred during the Hague period of responsibility – the bunkers were delivered by ship to ship transfer. The position where misdelivery takes place outside that period, for example where cargo is collected from the terminal after discharge, remained undecided.

TT Club said that this case, which may be subject to appeal, was a warning of the importance of complying with an exclusive jurisdiction clause – but also gave clarity that time bars apply to misdelivery claims.

Deep Sea Maritime Ltd v Monjasa A/S (“Alhani”) [2018] EWCA 1495 (Comm)