Web Alert: The effect of a Paramount Clause under English law, where the Hague-Visby Rules are compulsorily applicable – Part 2

​The English Court of Appeal has recently handed down their decision in The Superior Pescadores [1] which focuses on the effect of a clause paramount in a bill of lading, in circumstances where the Hague-Visby Rules are already compulsorily applicable as a matter of English law.

Background

The club reported on the High Court decision in September 2014. In summary, the Superior Pescadores loaded a cargo of machinery at Antwerp, Belgium, for carriage to Yemen and the relevant bills of lading contained a clause paramount as follows:

'The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply.'

The claimant cargo owner subsequently made claims against the defendant carrier in respect of damage to the cargo while the ship was crossing the Bay of Biscay. The parties agreed that the claim would be subject to English law and jurisdiction. As such, the Hague-Visby Rules as incorporated by the Carriage of Goods by Sea Act 1971 were applicable, as the carriage of the goods was from a contracting state (Belgium).

On that basis the ship-owner calculated their liability based on the Hague-Visby package limits. However, the cargo owner contended that the clause paramount meant that the old Hague Rules had been incorporated which meant that they could rely on higher limits where applicable.

The High Court decision

The judge concluded that the wording of the paramount clause incorporated the old Hague Rules as a matter of construction. However, it did not operate as an agreement for a higher limit and the court rejected the ‘pick and mix’ approach of the cargo owner.

The Court of Appeal decision

The court dismissed the cargo owner’s appeal. They held that where a bill of lading is issued, incorporating the Hague Rules 'as enacted in the country of shipment', and the country of shipment has in turn enacted the Hague-Visby Rules, the new Hague-Visby Rules will be applicable.

Under both English and Belgian law the Hague Rules 'as amended' by the Hague-Visby Rules have been enacted. Therefore, the Hague-Visby package limits were held to be applicable in this case.

This article intends to provide general guidance on the issues arising. It is not intended to provide legal advice in relation to any specific query. The law is also not static. If in doubt, The Standard Club is always on hand to assist.
--------------------------------------------------------------------------------

[1] [2016] EWCA Civ 101​