Shipping covered by Hague/Visby Rules

The basic formula for application of the Rules focuses on the document covering the carriage contract rather than on the contract of carriage itself. Thus Art I(b) states that the Rules are applicable ‘only to contracts of carriage covered by a bill of lading or any similar document of title in so far as such document relates to the carriage of goods by sea’. This approach is reinforced by s 1 of the Carriage of Goods by Sea Act 1971, which gives legislative effect to the Rules and provides in subsection (4) that ‘Subject to subsection (6) . . . nothing in this section shall be taken as applying anything in the Rules to any contract for the carriage of goods by sea unless the contract expressly or by implication provides for the issue of a bill of lading or any similar document of title.’ From the above quotations it would appear that the Rules are not designed to cover con- tracts of carriage which envisage the issue of a waybill or other non-negotiable document since these do not constitute documents of title. Nor would the Rules apply to charterparties, or even bills of lading issued under charterparties, at least so long as such bills remain in the hands of the charterer. In such circumstances the bill merely acts as a receipt and does not ‘cover’ the contract of carriage, the terms of which are to be found exclusively in the charter- party. Once the bill is assigned to a third party, however, the position will change and the Rules will operate ‘from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same’. On the other hand, if the parties envisage that the contract of carriage will be covered by a bill of lading, it would appear that the Rules will take effect even though, in the event, no such document is in fact issued. This was established in the case of Pyrene Co Ltd v Scindia Navigation Co where a consignment of fire tenders had been delivered alongside the vessel for shipment. While one of the tenders was being lifted aboard by the ship’s tackle it fell back onto the dockside and was seriously damaged. The remaining tenders were loaded safely and the bill of lading which was eventually issued made no reference to the damaged tender. When the carrier sought to limit his liability under Art IV rule 5 of the Hague Rules, the shipper argued that he was unable to do so because the carriage of the damaged tender was not ‘covered by a bill of lading’. The trial judge held that the important factor was whether the parties, in contracting, envisaged the issue of a bill of lading and not whether one was in fact actually issued.  While the operation of the Hague Rules was restricted by the Carriage of Goods by Sea Act 1924 to bills of lading issued in respect of outward voyages from the United Kingdom, Art X of the Hague/Visby Rules has a considerably wider ambit extending to: ‘every bill of lading relating to the carriage of goods between ports in two different states if:
a) the bill of lading is issued in a contracting State or b) the carriage is from a port in a contracting State, or  c) the contract contained in or evidenced by the bill of lading provides that these Rules, or legislation of any State giving effect to them, are to govern the contract, whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person.’ The wording of Art X clearly envisages an international contract of carriage ‘between ports in different states’, although s 1(3) of the Carriage of Goods by Sea Act 1971 extends the operation of the Rules, so far as the United Kingdom is concerned, also to cover the coastal trade.
Two of the situations specified in Art X satisfy the basic requirement that a bill of lading be issued, namely, where the bill is issued in a contracting state and also where the bill expressly incorporates the Rules, irrespective of the geographical location of the port of loading in either case. The third alternative refers simply to carriage from a port in a contracting state. Here there is a latent ambiguity since, unless the outward shipment itself automatically triggers the operation of the Rules, their application could be avoided by the carrier issuing some form of non-negotiable document in place of the required bill of lading. While Art III rule 3 undoubtedly confers a right on the shipper to demand the issue of a bill on receipt of the cargo by the carrier or his agent, such right would only be effective if the Rules were already in operation. As the main objective of the draftsmen of both the Hague and Hague/ Visby Rules was to make their application mandatory in respect of outward shipments of cargo from contracting states, a rational resolution of this ambiguity is essential. Perhaps the most logical interpretation would be to hold the Rules applicable in all cases of outward ship- ments from the United Kingdom except in circumstances where the shipper was not entitled to demand the issue of a bill or other document of title, since such issue was not in accordance with the custom of a particular trade or the intention of the parties. Such an interpretation would account for the prevalence of the use of waybills in the container trade and for roll on/roll off traffic and would be in line with the spirit of s 1(4) of the Carriage of Goods by Sea Act 1971 which provides that ‘nothing in this section shall be taken as applying anything in the Rules to any contract for the carriage of goods by sea unless the contract expressly or by implication provides for the issue of a bill of lading or any similar document of title’.
It is only fair to add, however, that a number of writers are of the opinion that the parties have no power to exclude the operation of the Rules, where otherwise applicable, either by mutual agreement or by the shipper accepting a waybill and refraining from exercising his right under Art III rule 3 to demand the issue of a bill. Such a power of exclusion by agreement would be essential for the implementation of the new documentary procedures outlined in a previous chapter. This problem of interpretation is further complicated by the wording of Art VI, which, in essence, permits the carrier and shipper to avoid the provisions of the Hague/ Visby Rules and to negotiate their own terms in respect of the carriage of ‘particular goods’. Such goods are envisaged as ‘one-off ’ cargoes not in the usual course of trade, where either the particular character or condition of the goods or the circumstances in which they are to be carried, justifies a special contract. Obvious examples are experimental cargoes or contracts for the carriage of nuclear waste. The Article further requires that such cargoes should be covered by a non-negotiable receipt. The object is to prevent the peculiar incidents of such a contract being transferred to anyone other than the original shipper. A final proviso specifies that the provisions of Art VI ‘shall not apply to ordinary commercial shipments made in the ordinary course of trade’. This proviso may be interpreted merely as an attempt to emphasise the fact that the special provisions are applicable only to the carriage of ‘particular goods’. Some commentators, however, construed it as ruling out any possibility of excluding the operation of the Hague/Visby Rules in respect of normal commercial cargoes by shipping them under waybills or other non-negotiable receipts. Finally, it is important to note that the operation of the Hague/Visby Rules has been further extended by s 1 of the Carriage of Goods by Sea Act 1971. Not only does s 1(3) extend coverage to the coastal trade in the United Kingdom, but under s 1(6)(b) the Rules are given the force of law in relation to ‘any receipt, which is a non-negotiable document marked as such, if the contract contained in or evidenced by it is a contract for the carriage of goods by sea which expressly provides that the Rules are to govern the contract as if the receipt were a bill  of lading’.  It would  appear  that  the  object  of this  sub-section is to  indicate  the  legal effect of a clause in a non-negotiable receipt  expressly incorporating the  Rules, rather  than any  attempt to  delimit  the  circumstances in  which  the  Rules will be applicable to  such  a document.