Judgments - Owners of cargo lately laden on board the ship or vessel "Starsin" and others (Original Respondents and Cross-appellants) v. Owners and/or demise charterers of the ship or vessel "Starsin" (Original Appellants and Cross-respondents) and two other actions

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    169. The other two cases can be taken more shortly. The Gadsden case was applied in Sydney Cooke v Hapag-Lloyd [1980] 2 NSWLR 587, Yeldham J. The proposition for which the judge cited it (p.595) was "that a 'carrier' in order to be subject to the obligations and subject to the rights and immunities conferred in the Hague Rules must be a party to the contract of carriage covered by the bill of lading or similar document of title in so far as the latter relates to the carriage of goods by sea". This raises no question not already discussed (and would appear to support my conclusion). The bill of lading was a consolidation combined bill of lading. It was issued by the first defendant Hapag-Lloyd whose ship carried the container from Hamburg to Sydney. At Sydney the container was discharged and delivered to the depot of the second defendants where the container was unstuffed by the second defendants and the plaintiffs' consignment set aside to await collection. Owing to the negligence of the second defendants' servants the goods were damaged. The plaintiffs sued the second defendants as the party liable, joining Hapag-Lloyd as first defendants. Hapag-Lloyd applied for the action to be stayed on the ground that it contravened the covenant in the bill of lading against suing sub-contractors. The judge granted the stay. The arguments of the plaintiffs were essentially all based on construing the elaborate bill of lading clauses which treated the contract as being divided up into separate stages. Although the anti-suit clause had some similarities to parts of a Himalaya clause, the judge said that the clauses under consideration in The New York Star were quite unlike those in the bill of lading before him. (p.595)


    Chapman Marine v Wihelmsen Lines [1999] FCA 178, Emmett J. The plaintiff's cruiser was very seriously damaged by the negligence of stevedores at Melbourne. In a word, whilst restowing other cargo, they knocked the cruiser off the deck of the ship onto the wharf 20 metres below. It was a CTL. The case was really about whether the plaintiffs could find a way round the package limit of $500 in the bill of lading and the US COGSA. The contracting carriers who were the shipowners admitted liability subject to the limit. The plaintiffs therefore sued the stevedores as well. The stevedores relied upon a 'Himalaya' clause in the bill of lading and the carriers asked for an injunction under a covenant (also contained in the bill of lading) not to sue anyone other than themselves. The judge upheld the defendants' contentions. He held that the stevedores' activities came within the scope of the 'Himalaya' clause in the bill of lading. He held that the covenant not to sue did not offend against Article III r.8. None of this impacts upon the decision of the present case and therefore does not assist the shipowners here. The facts of the case raise some interesting questions which will certainly have to be considered when and if they arise in an English case; but they are not relevant to the present case.

    171. Finally there is the question of the lack of clarity and certainty in these bills of lading. As printed, clause 5 did not have the effect for which the shipowners contend. This was in effect the main reason why the judge and the Court of Appeal rejected the shipowners' case on clause 5. I have not found it necessary to decide this appeal on this ground. But it is a real point none the less. If a party chooses to put an ineffective exclusion clause in his contract, it is not for the courts to fashion one which will give him what he ought to have asked for. The opposite party is entitled to rely upon has been written and is not obliged to go away and research what might have been written. This applies a fortiori to a transferable documentary contract. As is again illustrated by Mr Gee's Australian cases, there are quite a number of different kinds and versions of 'Himalaya' type clauses. In the present bills of lading, the reader does not even have the assistance of a relevant heading to the clause. If the shipowners' contentions in the present case at least recognised the judicially stated function of the Eurymedon/New York Star clause, the position might be capable of some moderation. But they do not. They run directly contrary to that function.


    172. For these reasons I would allow the appeal of the shipowners in respect of all consignments except those of Makros Hout BV. The judgment in favour of Makros Hout BV should stand.


My Lords,

    173. I shall confine my remarks to what appear to me to be the two issues of general importance: (i) the identity of the parties to the bills of lading; and (ii) the validity of the contractual exemption from liability which the Himalaya Clause in the bills of lading purports to afford to the owner or demise charterer of the ship on which the goods were laden.

    1. The Identity of the Carrier.

    174. As the trial Judge observed, it would strike any one unfamiliar with maritime law, as I am, as quite extraordinary that there should have grown up an immense body of decided cases devoted to this issue. For my own part, I regard it as not only extraordinary but lamentable.

    175. The identity of the parties to a contract is fundamental. It is not simply a term or condition of the contract. It goes to the very existence of the contract itself. If it is uncertain, there is no contract. Like the nature and amount of the consideration and the intention to create legal relations it is a question of fact and may be established by evidence. Such evidence is admissible even where the contract is in writing, at least so long as it does not contradict its express terms, and possibly even where it does: see Young v Schuler (1883) 11 QBD 651 Chitty on Contracts 28th edn p 633. But bills of lading are transferable documents of title, and the claimants are holders of the bills by endorsement. Consequently the evidence must be found within the four corners of the bills themselves.

    176. Where a contract is contained in a signed and written document, the process of ascertaining the identity of the parties and the capacity in which they entered into the contract must begin with the signatures and any accompanying statement which describes the capacity in which the persons who appended their signatures did so. This may require interpretation, and to this extent the process may without inaccuracy be described as a process of construction. But it is not of the same order as the process of construing the detailed terms and conditions of the contract. These describe the incidents of the contract and the nature and extent of the parties' obligations to each other. But the identity of the parties themselves is not an incident of the contract. Where a signature is accompanied by a description of the capacity in which the signatory has appended his signature the description is not a term or condition of the contract. It is part of the signature and so part of the factual evidence of the identity of the party which is undertaking contractual liabilities under the contract.

    177. The bills of lading in the present case were on pre-prepared printed forms. Printed on the front of each form in large letters are the words "Liner Bill of Lading, the name "Continental Pacific Shipping" and the group's logo. The bills of lading are thus on Continental Pacific Shipping's own printed forms.

    178. The forms themselves were prepared and intended for use as owners' bills. On the front of each bill was printed a testimonium for signature by the Master. The Master would, of course, be the natural person to sign on behalf of the owner or demise charterer of the ship. The detailed terms in miniscule print unreadable by the naked eye on the back of each form were also those appropriate for an owner's bill. Clauses 33 (Identity of Carrier) and 35 (Demise Clause), though not identified as such by any heading or marginal note, stated in terms that the party which was undertaking the contract of carriage was the ship owner or demise charterer as the case might be. Since the printed forms were unmistakably Continental Pacific Shipping's forms and were unambiguously intended for use as owners' bills, the inference must be that Continental Pacific Shipping had vessels of their own and that the forms were prepared for the carriage of goods on such vessels, whether or not they were subject to a time charter in favour of another.

    179. The front of each bill of lading contained, as one would expect, boxes to be completed with the particulars of the intended voyage. There were boxes for the names and addresses of the shipper and consignee, the ports of loading and discharge, particulars of the goods, and the name of the vessel on which they were to be laden. These were filled in typescript. The name of the vessel was given as "M.V. Starsin".

    180. As completed prior to signature, therefore, the bills of lading appeared to be owners' bills for the carriage of goods on Continental Pacific Shipping's vessel M.V. Starsin prepared for signature by the Master of the vessel.

    181. Continental Pacific Shipping, however, were not the owners or demise charterers of this vessel. They were only time charterers. Moreover none of the bills was signed by or on behalf of the Master. They were all signed by Port Agents "As Agents for Continental Shipping (the Carrier)", or with variants thereof. All the contractual obligations of carriage set out in the small print on the back of each bill were undertaken by "the Carrier", and Clause 1(c) identified "the Carrier" as "the party on whose behalf this Bill of Lading has been signed", ie Continental Pacific Shipping.

    182. What we have, therefore, are charterers' bills, that is to say bills signed for and on behalf of the charterer as the party undertaking the contract of carriage, but on printed forms intended for use as owners' bills. To my mind the problem to which this gives rise presents no difficulty. It is not appropriate to embark on the unrewarding task of attempting to reconcile the irreconcilable. The charterers must simply be taken to have used the wrong form, probably because it was the form that they or their agents were accustomed to use. Their agents signed the bills on their behalf as contracting parties, and any of the detailed terms and provisions on the back of the printed forms which are inconsistent with their use as charterers' bills must be modified accordingly or treated as not applicable: see The Okehampton [1913] P 173 at p 180 per Hamilton LJ.

    183. This conclusion can be reached by a number of different routes, all of which yield the same result. It is a well established canon of construction that, where there is inconsistency between the printed terms of a standard form and the terms which the parties have themselves written into the document, the latter should prevail: see Robertson v French (1803) 4 East 130 at p 136 where Lord Ellenborough distinguished between the written words as "the immediate language and terms selected by the parties themselves" and the printed words of the form as "a general formula adapted equally to their case and that of all other contracting parties upon similar occasions and subjects." The passage has been approved in your Lordships' House in Glynn v Margetson [1893] AC 351 (and by Scrutton LJ in Re An Arbitration between L Sutro & Co and Heilbut, Symons & Co [1917] 2 KB 348 at pp 361-2.

    184. This principle is applicable even where the inconsistent provisions are of equal importance and the printed form is appropriate to the particular case as well as to the general. How much more must primacy be given to the written words where they describe the main intent and object of the particular contract. In Glynn v Margetson the House refused to permit a printed clause in a standard form of bill of lading to defeat the object and intent of the contract as derived from the words written into the contract by the parties themselves. The printed form was applicable to many voyages; the written words were specially agreed upon in relation to the particular voyage.

    185. This principle is not peculiar to English law. Article 305b of the German Civil Code, for example, provides

    "Specific stipulations of the parties override clauses contained in standard form contracts."

Where, therefore, the name of the charterer was prominently printed on the first page of a bill of lading signed by agents of the charterer, the Bundesgerichtshof applied Article 305b to override an Identity of Carrier Clause and conclude that the bill was a charterer's bill: (decision of 22nd. January 1990, VersR 1990, 503).

    186. In every contract some terms are fundamental. In the case of a contract for the sale of land, such terms are the parties, the property, and the price. In a contract of carriage, they are the parties, the goods, the vessel, and the ports of loading and discharge. Such terms are both necessary and sufficient. They describe the main object and intention of the contract. If any of them are not agreed, there is no contract. If they are agreed, all else is detail.

    187. Some at least of such terms may, of course, be varied in particular circumstances by the detailed terms and conditions of the contract. These may, for example, provide for a reduction or increase in the consideration in a specified event, or for transhipment or deviation, so long as the variations do not defeat the main object of the contract. But the identity of the contracting parties is of a different order altogether. I do not think that this is capable of variation by the detailed terms and conditions of the contract. How can provisions which purport to prescribe the incidents of a contract between A and B convert it into a contract between B and C?

    188. A further consideration which it is relevant to bear in mind is that of market practice. I need no persuasion that businessmen expect the identity of the carrier, together with other variables which describe the object of the particular voyage, such as the vessel, the goods, and the ports of loading and discharge, to be found on the face of the bill of lading and not tucked away among the standard terms and conditions printed on the back. Since 1994 the practice of the market has been adopted by the ICC Uniform Customs and Practice for Documentary Credits, Article 23 of which indicates that banks do not in practice examine the contents of the terms and conditions of carriage on the reverse of a bill of lading. That of course is a matter between the bank and its customer, not between the shipper or consignee and the carrier; but against such a commercial background it would create an unacceptable trap to allow the detailed conditions on the back of a bill of lading to prevail over an unequivocal statement of the identity of the carrier on the face of the bill.

    189. All these considerations yield the same conclusion, so that there is no need to choose between them. Cumulatively they indicate not only that the Canadian Pacific Shipping was the carrier, but that it used the wrong form. I would make this the basis of my own decision.

    190. As a fall-back position the Respondents submit that the owner of the ship and the time charterer are both liable as contracting parties. The submission must be rejected. All the provisions of the bills, both back and front, indicate the existence of a single carrier, though they do not agree upon its identity. Two inconsistent provisions cannot be reconciled by adopting a construction which is consistent with neither. The carrier must be one or the other; it cannot be both.

    191. Accordingly, and in respectful agreement with the trial Judge and with Rix LJ, I would hold these bills to be charterers' bills.

2. The Himalaya Clause.

    192. I agree with all your Lordships on the construction of Clause 5 of the bills of lading (the Himalaya Clause). The clause does not make grammatical sense as it stands, and it is obvious that words have been omitted. The Court must, therefore, supply the omission by implying at least the minimum necessary for the clause to make grammatical sense. This is what all the judges below did. But the authorities show that in a proper case the Court will go further. Where it can see, not only that words have been omitted, but what those words are, then it is its duty to supply them. It is not necessary that the Court should be certain precisely what words have been omitted; it is sufficient that it knows their gist. The process is one of construction, not rectification; this is evident from the fact that the Court of Chancery not infrequently supplied omissions in wills at a time when it had no jurisdiction to rectify them.

    193. The Respondents submit that it is inappropriate to adopt such a liberal approach in the case of an exemption clause. More should not be read into such a clause, they say, than is absolutely necessary to make sense of it, particularly where to do more would relieve a party from any obligation at all: see Tor Line AB v Alltrans Group of Canada Ltd [1984] 1 WLR 48 at pp 58-9. I cannot accept this as a proposition of universal application. I agree, of course, that an exemption clause must be strictly construed and not given a wider application than can fairly be derived from the words used. But the argument in the present case is not concerned with the scope of the exemption, but with the presence or absence of the mechanism of agency which is critical to the efficacy of the clause. The principle which the Respondents invoke has no application in such a case.

    194. It is obvious that the clause is not an original work of legal draftsmanship but is taken from a precedent. Several versions of the Clause are in circulation, and it is impossible to identify the particular precedent from which the defective clause in the present case was taken. But they all employ the same mechanism of agency to give legal efficacy to the clause; they all do so by identical or nearly identical words; and they all incorporate the mechanism at precisely that part of the present clause where words have been omitted. In my opinion this is a clear case where the Court can and should supply the missing words.

    195. I also agree with all your Lordships that the opening words of the clause are words of exemption; they cannot be construed as a covenant not to sue. They are the very antithesis of such a covenant, which presupposes the continued existence of liability, albeit a liability which the covenantor undertakes not to enforce. The present clause by contrast operates to prevent any liability from arising in the first place.

    196. It is well established by the authorities that the Himalaya Clause has the effect of bringing into being a separate or collateral contract between the cargo owner and a third party, usually an independent contractor such as a stevedore, under which the third party enjoys exemption from liability to the cargo owner. They also establish that the contract is a unilateral or "if" contract by which the third party undertakes no obligation to the cargo owner of any kind, but the cargo owner promises that if the third party does anything in the course of its employment which damages the cargo it will have the benefit of the protective provisions of the clause: see The Eurymedon [1975] AC 154 at p 168 per Lord Wilberforce; The New York Star [1981] 1 WLR 138 The Makhutai [1996] AC 650.

    197. Such a contract is a promise for an act, not a promise for a promise. If in the course of its employment the third party performs an act in relation to the goods, which it is under no obligation to the cargo owner to perform, it will at the one and same time bring the contract with the cargo owner into existence and supply the consideration for the cargo owner's promise of exemption from liability. In The New York Star Lord Wilberforce, at p 144, expressly approved the analysis of the clause which was adopted by Barwick CJ in the same case in the High Court of Australia (though contrary to the general usage he preferred to regard it as a bilateral contract): see [1979] 1 Ll Rep 298 at p 305 where he said:

    "To agree with another that, in the event that the other acts in a particular way, that other shall be entitled to stated protective provisions only needs performance by the doing of the stated act or acts to become a binding contract….The performance of the act or acts at the one moment satisfied the test for consideration and enacted the agreed terms."

The consideration provided by the owner or demise charterer of the ship is the performance of its contract with the carrier. Since this is an act and not a counterpromise, the question whether a promise which does not involve any potential liability on the part of the promisor is capable of constituting sufficient consideration to support a contract does not arise.

    198. As my noble and learned friend Lord Hobhouse of Woodborough has observed, the present case goes further than any previous decision. In all previous cases, it seems, the third party has either been a stevedore or some person other than the owner or demise charterer of the ship (The Eurymedon; The New York Star; Sidney Cooke Ltd v Hapag Lloyd Aktiengesellschaft [1980] NSWLR 587; Chapman Marine Pty Ltd v Wilhelmson Lines A/S [1999] FCA 178; or has relied on the clause not to claim exemption from liability but merely to claim the benefit of a time limit or jurisdiction clause (The Eurymedon; The New York Star; The Makhutai; The Pioneer Container; J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] NSWLR 587). In the present case the third party is the owner of the ship on which the goods were carried and relies on the clause to claim a complete immunity from liability at the suit of the cargo owner.

    199. But the wording of the clause is plain and unambiguous. It provides (inter alia") that

    "……….no servant or agent of the carrier (…. including every independent contractor from time to time employed by the carrier) shall in any circumstances whatsoever be under any liability whatsoever to the shipper….."

It would be difficult to frame a clause which more clearly conferred a complete immunity from liability on the third party. Several of the cases concern charterers' bills (J Gadsden Pty Ltd v Australian Coastal Shipping Commission is an example) and it has not been contended that a Himalaya Clause is inappropriate in the case of such a bill. In the case of such a bill the owner or demise charterer of the ship on which the goods are carried is an independent contractor of the charterer which carries the goods under its own subcontract with the charterer. It therefore falls squarely within the class of person on whom the immunity is conferred.

    200. In many of the cases the function of a Himalaya Clause has been described in limited terms: ie to make available to the third party the same exemptions and limitations as are available to the carrier. This was sufficient for the purpose of those cases, and I do not read them as limiting the purpose for which the Clause may legitimately be employed in other cases.

    201. I am satisfied, therefore, that, as a matter of construction, Clause 5 of these bills of lading creates a collateral contract between the cargo owner and the owner or demise charterer of the ship which exempts the latter from all liability to the cargo owner if it undertakes the actual carriage of the goods. This brings me to the critical question, which is whether the exemption of the owner or demise charterer of the ship on which the goods were carried (as distinct from a mere stevedore for example) from liability for loss or damage to the goods is contrary to the Hague Rules, to which the bills of lading were expressly made subject. This is a very difficult question, on which I have changed my mind more than once.

    202. Article III Rule 8 of the Hague Rules invalidates any condition of a contract of carriage which purports to relieve "the carrier or the ship" from liability for loss or damage to the goods. The Hague Rules apply only to contracts of carriage by sea covered by a bill of lading or similar document and to which the party which claims relief from liability is a party: see Article I(b) and J Gadsden Pty Ltd v Australian Coastal Shipping Commission. The question, therefore, is whether the contract between the cargo owner and the owner or demise charterer of the ship created by the Himalaya Clause is a contract for the carriage of goods by sea within the meaning of the Hague Rules.

    203. In my opinion it is not. A contract of carriage of goods is a contract by which one party, the carrier, undertakes a contractual obligation to carry the goods. Each of the bills of lading contained or evidenced such a contract between the charterer and the cargo owner. It could not legitimately relieve the charterer from liability for loss or damage to the goods, and it did not purport to do so.

    204. But the collateral contract between the cargo owner and the owner or demise charterer of the ship contained in the Himalaya Clause did not oblige the owner or demise charterer of the ship to carry the goods. It merely exempted it from liability to the cargo owner if it did so. During the voyage the owner or demise charterer of the ship would not be carrying the goods pursuant to any contract with the cargo owner. It would merely be providing consideration for a promise on the part of the cargo owner that it would not be liable for any damage which might be caused to the goods.

    205. Such a contract cannot properly be characterised as a contract of carriage. It is rather a contract of exemption which is ancillary or collateral to other contractual arrangements (the time charter and the bill of lading) which were necessary to achieve the carriage of the goods on the chosen vessel. This is the conclusion reached by the Australian cases to which I have referred, and with which I respectfully agree. In The Eurymedon Lord Simon of Glaisdale, who dissented in the result, said (at p 179) that he confessed to difficulty in grasping the very concept of a contract which consisted only of an exemption clause. The majority agreed that the content of the contract was as he described it, but did not consider that this gave rise to any conceptual difficulty.

    206. The question, of course, is not whether the contract created by the Himalaya Clause would be characterised as a contract of carriage as a matter of English law, but whether it is such a contract within the meaning of the Hague Rules. The terms of Article III Rules 1 and 2 indicate that it is not. They import into a contract of carriage of goods by sea positive obligations on the part of the carrier (including the owner or demise charterer of the ship) which enters into a contract of carriage with the cargo owner: (see Article I(a)). These include obligations relating to the loading, handling, and stowage of the goods. It would be remarkable if a contract entered into for the sole purpose of granting a party exemption from liability had the paradoxical effect of subjecting it to liabilities to which it would not otherwise be subject.

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