Effort Shipping Company Limited v. Linden Management SA and Others  continued

(back to preceding text)
    "The criticism of Scrutton and MacKinnon was then concentrated upon their language. They gave dire and in the event wholly unwarranted warnings of the problems which would arise as to their construction with uncertainty and endless litigation replacing what they saw as the clarity of the existing law based upon freedom of contract. In truth, as every commercial lawyer knows, it is remarkable how few cases there have been in this country upon the construction of the Rules."

Scrutton L.J.'s observation was the outcome of an hostility to the very concept of a multilateral trade convention. His tentative observation on Article IV. r. 6 is of no value.

      That leaves the overall position that the language of Article IV r. 6, read with Article IV, r. 3, tends to suggest that Article IV, r. 6 was intended to be a free-standing provision. I have already described the two pointers in that direction. As against that there is the fact that the United States courts have interpreted Article IV, r. 3 as qualifying Article IV, r. 6. Given the desirability of a uniform interpretation of the Hague Rules, the choice between the competing interpretations is finely balanced. But there is a contextual consideration which must also be weighed in the balance. It is permissible to take into account the legal position in the United Kingdom and in the United States regarding the shipment of dangerous cargo before the Hague Rules were approved. It is relevant as part of the contextual scene of the Hague Rules: Riverstone Meat Co. Pty. Ltd. v. Lancashire Shipping Co. Ltd. [1961] A.C. 807 per Viscount Simonds at p. 836. In Brass v. Maitland (1856) 6 E. & B. 470 the majority held that under a contract of carriage there is a term implied by law that a shipper will not ship dangerous goods without notice to the carrier; the obligation is absolute. The same view prevailed in the Court of Appeal in Bamfield v. Goole and Sheffield Transport Co. Ltd. [1910] 2 K.B. 94 and in Great Northern Railway Company v. L.E.P. Transport and Depository Ltd. [1922] 2 K.B. 742. This view was controversial. It was disputed in a strong minority judgment in Brass v. Maitland and in Bamfield v. Goole and Sheffield Transport Co. Ltd.; see also Mitchell Colts & Co. v. Steel Brothers & Co. [1916] 2 K.B. 610, per Atkin J at pp. 613-614; and Abbot on Merchant Ships and Seamen, 13th ed. (1892) at p. 522. Nevertheless, the law of England was as held by the majority in Brass v. Maitland. That view probably would have been regarded as authoritative in most countries in what was then the British Empire. In 1861 a court in the United States adopted the majority holding in Brass v. Maitland as a sound rule on the policy grounds viz that "It throws the loss on the party who generally has the best means of informing himself of the character of the article shipped:" Pierce v. Winsor 2 Sprague 35; see also Parsons, A Treatise of the Law of Shipping, (1869) Vol 1 at pp. 265-266. That remained the legal position in the United States until the conferences that led to the adoption of the Hague Rules. The United States was then already a great maritime power. Its shipping law was a matter of great importance. The British Empire was in decline but collectively the trading countries under its umbrella controlled a considerable proportion of ocean-going world trade. That means that at the time of the drafting of the Hague Rules the dominant theory in a very large part of the world was that shippers were under an absolute liability not to ship dangerous goods. This circumstance must have been known to those who drafted and approved the Hague Rules. No doubt they also knew that there was an the alternative theory namely that the shipper of dangerous goods ought only to be liable for want of due diligence in the shipment of dangerous goods. If this contextual scene is correctly described, and I have not understood it to be disputed, one is entitled to pose the practical question: What would the framers of the Hague Rules have done if collectively they had been minded to adopt the step of reversing the dominant theory of shippers liability for the shipment of dangerous goods? There is really only one realistic answer: they would have expressly provided that shippers are only liable in damages for the shipment of dangerous goods if they knew or ought to have known of the dangerousness of the goods. In that event the three parts of Article IV, r. 6 would have had to be recast to make clear that the shippers actual or constructive knowledge was irrelevant to the carriers right to land dangerous cargo but a condition precedent to the liability of the shippers for damages in the second part. Moreover, if this idea had been put forward for discussion the travaux preparatoires would no doubt have reflected the observations of carriers on such a fundamental change to their rights. The idea was never put forward. The inference must be that the framers of the Hague Rules proceeded on what was at that time an unsurprising assumption that shippers would be absolutely liable for the shipment of dangerous cargo.

      In all these circumstances I am constrained to conclude that despite the decisions of the United States courts, the best interpretation of the language of Article IV, r. 6 read with Article IV, r. 3, seen against its contextual background, is that it created free-standing rights and obligations in respect of the shipment of dangerous cargo.

The remaining issues:

      Given my conclusion in respect of Article IV, r. 6, it follows that the shippers are liable unless they are excused from liability under the Bill of Lading Act 1855. That is the only other issue which needs to be considered.

      The shippers submit that if they were otherwise liable to the owners under the bill of lading in respect of the Khapra infested cargo, they were nevertheless divested of such liability by section 1 of the Bill of Lading Act 1855 when the property in the cargo passed to their immediate purchasers upon the endorsement of the bill of lading. The shippers must rely on the effect of section 1. That section does not expressly divest the shipper of his liabilities. Indeed, it contains no words which are capable of being construed as words extinguishing the liability of the shippers. On the contrary, there is a marked contrast between the provision that rights are transferred and vested and the provising merely making the endorsee subject to liabilities.

      Putting to one side the plain language of section 1, counsel for the shippers was asked to explain why Parliament would have wanted to relieve the shippers of an accrued liability. Counsel said that such an interpretation would have the advantage of logical symmetry. That may be true. But in the real world it would be a strong thing for Parliament to do. It would involve taking away a carrier's right of action against a shipper who in many cases may be known and substituting for it a right of action against an unknown endorsee who may be insolvent or unreachable by effective legal process. Such a drastic legislative inroad upon the rights of carriers would require a rather specific form of words.

      It is true that the argument of the shippers is supported by certain dicta: see Smurthwaite v. Williams (1862) 11 C.B.N.S. 842 and Ministry of Food v. Lampart & Holt Line Ltd [1952] 2 Lloyd's Rep. 371, at 382. The issue was not squarely addressed in those cases and the dicta relied on can no longer be supported. The interpretation put forward by the shippers is ruled out by the obvious meaning of the plain words of section 1.


      For these reasons, which are substantially the same as the reasons contained in the speech of my noble and learned friend Lord Lloyd of Berwick, except in respect of the United States cases, I would dismiss the appeal.


My Lords,

      Having had the advantage of reading in draft the speeches of my noble and learned friends, Lord Lloyd of Berwick and Lord Steyn, I fully agree with their essential reasoning and wish only to add some brief observations.

      On a straightforward reading of both the Hague Rules and the Bills of Lading Act 1855, I should have thought it plain, virtually beyond argument, that by Article IV, r. 6 of the Rules, in the absence of informed consent on behalf of the carrier to the dangerous shipment, the shipper was liable for all damages and expenses directly or indirectly arising out of or resulting from the shipment of dangerous goods; and equally plain that section 1 of the Act contains nothing to relieve the shipper of that liability. It is perhaps a tribute to the skill and learning of counsel versed in this branch of the law that the case occupied nearly four days of argument before your Lordships' Appellate Committee. It is to be noted, however, that the suggestion that Article IV, r. 3 might arguably reduce the shipper's liability under Article IV, r. 6 to one for negligence only was first put forward in the reply of counsel for the appellant shippers in the Court of Appeal following an intervention from the bench. Evidently it had previously not been thought worth raising.

      Before your Lordships' Committee counsel for the respondent shipowners introduced the expression "free-standing" to describe the rights and obligations under Article IV, r. 6. It does not seem to me that this is a happy description. Like every other legal document, the Rules have to be read as a whole and Article IV, r. 6 is an integral part of them. In truth there is no difficulty in reconciling with it Article IV, r. 3 if in the latter the word "act" is treated as including an act of shipping dangerous goods without consent under r. 6. I can see no sound reason against that natural interpretation and would accordingly adopt it. It is not necessary to decide whether the word extends to all acts of shipment, even of non- dangerous goods, and if so whether in the case of non-dangerous goods some element of culpability is envisaged.

      If, however, there were any prima facie conflict between the general provisions of Article IV, r. 3 and the special provisions of Article IV, r. 6, it would seem to be almost a classic case for applying the maxim generalia specialibus non derogant. This would not be to treat Article IV, r. 6 as free-standing: quite the reverse. It would be to conclude that on a fair reading of the Rules as a whole Article IV, r. 6 must take priority over Article IV, r. 3. Further reasons supporting that conclusion as representing the likely intention of the drafters have been given by my noble and learned friends, and it would be superfluous to repeat them. I would add only that the generalia specialibus maxim, as its traditional expression in Latin indeed suggests, is not a technical rule peculiar to English statutory interpretation. Rather it represents simple common sense and ordinary usage. It falls within the category explained as follows in Francis Bennion's Statutory Interpretation 2nd ed. (1992) at p. 805:

     "A linguistic canon of construction reflects the nature or use of language generally. It does not depend on the legislative character of the enactment in question, nor indeed on its quality as a legal pronouncement. It applies in much the same way to all forms of language . . . Linguistic canons of construction are not confined to statutes, or even to the field of law. They are based on the rules of logic, grammar, syntax and punctuation; and the use of language as a medium of communication generally."

      The United States cases cited in argument do not appear to me to be of material help, as they contain no discussion of the point about the relationship of rules 3 and 6 arising in the present case.

      For these reasons I, too, would dismiss this appeal.


My Lords,

      I have had the advantage of reading a draft of the speech of my noble and learned friend Lord Lloyd of Berwick. For the reasons he has given, I too would dismiss this appeal.


© Parliamentary copyright 1998
Prepared 22 January 1998