THE HAGUE-VISBY RULES REVISITED

Citation(1994) 6 SAcLJ 25
Date01 December 1994
Published date01 December 1994

This article examines the uncertainty in Singapore surrounding the application of the Hague-Visby Rules scheduled to the Carriage of Goods by Sea Act

FOR almost a decade the precise extent of the applicability of the Hague-Visby Rules scheduled to the Carriage of Goods by Sea Act1 has depended on the views of the Singapore High Court expressed in “The Epar2. Until recently, it was thought that the views expressed in “The Epar” represented the conventional wisdom of the collective judiciary in Singapore. However, in mid-1993, the Singapore High Court in Pacific Electric Wire & Cable Co. Ltd. & Anor. v. Neptune Orient Lines Ltd. (Tokyo Kaiun Kaisha Ltd., third party and Prima Shipping Sdn. Bhd., fourth party).3 took the opportunity to cast doubts on the correctness of the views espoused in “The Epar”.

I. “THE PRIMA SATU

In Pacific Electric Wire & Cable Co. Ltd. & Anor. v. Neptune Orient Lines Ltd. (Tokyo Kaiun Kaisha Ltd., third party and Prima Shipping Sdn. Bhd., fourth party) (hereinafter referred to as “The Prima Satu”),4 Selvam J.C. (as he then was) gave judgment on a preliminary point of law as to whether the carriage of goods on board the motor vessel ‘Prima Satu’ covered by an ocean bill of lading issued in Taiwan was governed by the law of Taiwan or the law of Singapore. The plaintiffs who were shippers5 under the ocean bill of lading had, inter alia, contended that the bill of lading was subject to the Hague-Visby Rules scheduled to the Carriage of Goods by Sea Act (hereinafter referred to as “COGSA”). The point of the plaintiffs’ contention was that, should it be held that the Hague-Visby Rules were applicable (in particular Article IV rule 5), they would be able to obtain more damages in respect of their claim arising from the delivery of the damaged goods in Singapore. The learned Judicial Commissioner pointed out that by clause 21 of the bill of lading, the parties had agreed that the contract evidenced by or contained in the bill of lading was to be governed by Singapore law. His Honour went on to state that the Hague-Visby Rules was inapplicable to the plaintiffs’ claim notwithstanding that Singapore law governed the contract of carriage evidenced by the bill of lading.

According to the learned Judicial Commissioner, the Hague-Visby Rules were inapplicable because COGS A (which contained the Hague-Visby Rules) “has application only to cargo loaded in Singapore and no application to cargo discharged in Singapore.”6 It is obvious that by making reference to cargo loaded in Singapore, the learned Judicial Commissioner was focussing on section 3(1) of COGSA as the relevant provision which circumscribes the ambit of the Hague-Visby Rules. Thus, his Honour did not view Article X of the Hague-Visby Rules scheduled to COGSA as being relevant to the matter of the ambit of the Hague-Visby Rules.

What is particularly significant of “The Prima Satu” is the view of the court that:

“The Hong Kong7 and Singapore Carriage of Goods by Sea Acts which adopt the Hague-Visby Rules continue to employ the ‘clause paramount’ technique which enables parties to contract out of the Hague-Visby Rules and be governed by the law chosen by the bill of lading: see Chellaram & Co. Ltd. v. China Ocean Shipping Co.[1989] 1 Lloyd’s Rep. 413 (Sup. Ct. of N.S.W.) where the bill of lading issued at Hong Kong provided for Chinese law. Carruthers J. applying the Vita Food case held that the bill of lading had contracted out of the Hague-Visby Rules and that there were no grounds of public policy which would militate against the choice of Chinese law and the incorporation of the liabilities, responsibilities, rights and immunities contained in the Hague Rules.”8

Although, in “The Prima Satu”, no reference was made to “The Epar”, it is unlikely that the learned Judicial Commissioner was unaware of the views expressed by Kulasekaram J. in “The Epar” on the mandatory and overriding nature of COGSA and the Hague-Visby Rules scheduled thereto.

It is sufficient to say, at this juncture, that “The Prima Satu” has brought to the fore the doubts surrounding the reasoning employed in “The Epar” on the matter of the mandatory and overriding nature of COGSA and the Hague-Visby Rules scheduled thereto. Since the premise on which the decision in “The Epar” is founded has been challenged in “The Prima Satu”, it is opportune to re-examine9 the facts and ratiocination of Kulasekaram J. in “The Epar”.

II. “THE EPAR

It will be recalled that in “The Epar”, Kulasekaram J. held that the Hague-Visby Rules scheduled to COGSA have the force of law in Singapore in the sense that the Hague-Visby Rules are mandatory in nature and as such, parties could not agree to contract out of the operation of the Hague-Visby Rules.

In “The Epar”, the issue before the Singapore High Court was whether, in view of clauses 16 and 17 of the bills of lading, the plaintiffs’ action was to be stayed in favour of the court in Djakarta. The plaintiffs had commenced suit in the Singapore High Court to enforce their claim for damage caused to the goods carried under three bills of lading. The goods had been loaded in Singapore for delivery at Belawan in Indonesia. Clause 16 of the bills of lading provided that the bill of lading shall be governed by Indonesian law and further, it provided that the contents of the bill of lading “must be considered as cancelled in so far as these (sic) contents are contrary to the stipulations of section 470 of the Commercial Code of Indonesia.” The relevant part of clause 17 in the bills of lading provided that “Any claim for loss, damage or short delivery or otherwise, arising out of the bill of lading, shall be dealt with, at the option of Pelayaran Nasional Indonesia in the court (Pengadilan Negeri) of Djakarta, to the exclusion of proceedings in any other court.” Thus, the defendants’ application to stay the Singapore proceedings in “The Epar” was founded on the Djakarta court being the forum conveniens and the exclusive jurisdiction clause which was clause 17 of the bills of lading.

Dealing with the exclusive jurisdiction clause, Kulasekaram J. examined COGSA and the Hague-Visby Rules scheduled thereto. His Honour stated that if the plaintiffs’ claim were to be heard by the Djakarta court, the court would apply Indonesian law (as mandated by clause 16 of the bills of lading) and under Indonesian law, the liability of the carrier may be fixed by contract. Since clause 9 of the bills of lading fixed the carrier’s

liability at 100 pounds Sterling per package, the carrier’s liability under the bills of lading was “much less than what was provided under the Hague-Visby Rules.” That being the case, the plaintiffs’ claim if heard before the Djakarta court would be subjected to a maximum limit much lower than the maximum limit to which the claim would be subjected if the claim were heard by a Singapore court. As such the effect of the exclusive jurisdiction clause was to lessen the liability of the carrier otherwise than provided by the Hague-Visby Rules. Hence, Kulasekaram J. held that Article III rule 8 of the Hague-Visby Rules nullified the exclusive jurisdiction clause. Thus far, the reasoning of the learned judge in “The Epar” is unexceptionable inasmuch as the relevant bills of lading had been issued in Singapore in respect of carriage of goods out of Singapore.

However, in response to the defendants’ contention that the parties were free to contract out of COGSA and the Hague-Visby Rules contained therein, and that the choice of law clause together with the exclusive jurisdiction clause were the very means by which the parties had agreed to contract out of COGSA, Kulasekaram J. stated that the defendants’ contention:

“ignore[d] the provisions of Article X rule l(a) and (b) … [and was] also … contrary to the stated purpose of the international convention, viz., the unification of the domestic laws of the contracting States.”10

Although, the defendants in advancing their contention had pointed out that COGSA was not in the same terms as the United Kingdom Carriage of Goods by Sea Act 1971,11 (hereinafter referred to as the “U.K. 1971 Act”) and therefore it was permissible for parties to agree to contract out of COGSA, Kulasekaram J. was not persuaded that the difference in language between COGSA and the U.K. 1971 Act was material. By taking the view that notwithstanding the difference in language between COGSA and the U.K. 1971 Act, parties were not free to contract out of COGSA and the Hague-Visby Rules scheduled thereto, Kulasekaram J. ascribed to COGSA the force of being a mandatory overriding law. In essence, his Honour ascribed to COGSA the same force as its counterpart in the United Kingdom.

At this juncture, it is relevant to state that the U.K. 1971 Act is the national law12 passed by the British Parliament to give statutory force to the

International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924, as amended by the Brussels Protocol of 1968.

Returning to “The Epar”, it is obvious that the reason for Kulasekaram J.’s view that COGS A is to be interpreted as having force of law in Singapore lies in the defendants’ contention that since section 3(1) of COGSA states that the Hague-Visby Rules “have effect”, the contracting parties were free to contract out of the Hague-Visby Rules, And, according to the defendants, the parties did just that by agreeing to Indonesian law being the applicable law governing disputes under the bills of lading and to the Court of Djakarta having exclusive jurisdiction to settle any claim arising from the bills of lading. Thus, it was necessary for Kulasekaram J. to hold that COGSA is mandatory law for otherwise the court had to recognise that the parties may contract out of the Hague-Visby Rules.13

III. SECTIONS 3(1) AND 5 OF COGSA

As mentioned earlier, the significance of “The Prima Satu” lies in the court’s acceptance of the...

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