Judgments - Jindal Iron and Steel Co Limited and others (Appellant) and others v. Islamic Solidarity Shipping Company Jordan Inc (Respondents)

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    21.  Since the decision of the House in Renton in 1956 no English textbook writers have challenged its correctness. The editors of Scrutton on Charterperties, 20th ed. 1996, at pages 430-431 treat it as correctly stating the law; the editors of Contracts for the Carriage of Goods By Land, Sea and Air 1993-2000, Lloyds, para 1.1.3.5, is to the same effect; the editors of Carver on Bills of Lading 2001 discuss the rival arguments (at paras 9-114 - 9-115) but do not argue that Renton should be reversed.

The decisions in foreign jurisdictions.

    22.  Counsel placed great reliance on decisions of the Second Circuit Court of Appeal in Associated Metals and Minerals Corp v M/V The Arktis Sky 978 F.2d 47 (2nd Cir 1992) and the Fifth Circuit Court of Appeal in Tubacex Inc v M/V Risan 45 F 3rd 951 (5th Cir 1995) in which it was held that loading, stowing and discharging under section 3(2) of the United States Carriage of Goods By Sea Act are "non delegable" duties of the carrier. In neither of these decisions is there any reference to the earlier English decisions in Pyrene and in Renton. Counsel for the cargo owners pointed out that The Arktis Sky has been followed at first instance in South Africa: The Sea Joy (1998) (1) SA 487 at 504. And with reference to Tetley, Marine Cargo Claims, 4th ed in preparation, chapter 25, at p 21, he said that in France a shipowner may not contract out of responsibility for improper stowage by an F.I.O.S.T. clause.

    23.  On the other hand the Renton decision has been followed in Australia: Shipping Corporation of India v Gamlen Chemical Co A/Asia Pty Ltd (1980) 147 CLR 142 and Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507; compare, however, doubts expressed in Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NS WLR 371, per Handley JA, at 380, Sheller JA at 387-388, and Cole JA, at 418. Similarly, New Zealand courts have applied Renton: International Ore & Fertilizer Corp v East Coast Fertiliser Co Ltd [1987] 1 NZLR 9. In Pakistan the English rule has been adopted: see e.g. East and West Steamship Co v Hossain Brothers (1968) 20 PLD SC 15. In India (the country of shipment in the present case) the English rule is followed: see The New India Assurance Co Ltd v M/S Splosna Plovba (1986) AIR Ker 176 (Court: Balakrishna, Menon and K Sukumaran JJ).

    24.  Internationally there is no dominant view. The weight of opinion in foreign jurisdictions is fairly evenly divided. The argument that the law as enunciated in Renton ought to be brought into line with subsequently decided United States decisions, which did not address the arguments in Pyrene and Renton, is rather weak. This plank of the cargo owners case cannot therefore materially assist in the challenge to the decision of the House in Renton.

Third party bill of lading holders.

    25.  It is true, as counsel for cargo interests emphasised, that third party bill of lading holders will in practice often not have seen the charterparty or had advance notice of relevant charterparty clauses. This is a point of some substance. It is, however, an inevitable risk of international trade and cannot affect the correct interpretation of article III, r. 2.

No concluded view.

    26.  Everything ultimately turns on what is the best contextual interpretation of article III, r. 2. I have already discussed this matter without venturing a concluded view.

VIII. Is a departure from Renton justified?

    27.  It is now necessary to return to the question whether, if it is to be assumed that the cargo owners interpretation is correct, it would be right to depart from a decision of the House which has stood for nearly half a century. An opportunity arose in 1968 to improve the operation of the Hague Rules. But an international conference took the view that only limited changes were necessary: Carver's, Carriage by Sea 13th ed 1982, Vol 1, para 448. If the decision in Renton had worked unsatisfactorily in practice, one would have expected that to have emerged at the conference which led to the Protocol signed at Brussels on 23 February 1968 and the adoption of the Hague-Visby Rules. The interpretation assigned to article III, r. 2, by the English courts was an important part of the corpus of law governing the application of the Hague Rules. It would have been well known in shipping circles. Yet article III, r. 2, remained in unaltered form in the new Rules. The issue was not raised in any way: Anthony Diamond Q.C. The Hague-Visby Rule, 1978 Lloyd's Maritime and Commercial Law Quarterly, 225. If in the United Kingdom there had been dissatisfaction with the effect of the Renton decision, one would have expected British cargo interests to have raised it when Parliament considered the Bill which was to become the Carriage of Goods by Sea Act 1971. If invited to do so, Parliament could have considered whether Renton should be reversed. The matter was not raised at all. Instead, article III, r. 2, was re-enacted in unaltered form: see for the best account of the position placed before Parliament the speech of Lord Diplock, Hansard (HL Debates), 25 March 1971, cols 1028-1034. If there had been dissatisfaction with the impact of the Renton decision, one would have expected it to have been a matter of discussion in trade journals and publications in the United Kingdom. There have been no such criticisms. And since the decision in Renton no academic writers have argued that Renton should be reversed.

    28.  Since Renton was decided shipowners, charterers, shippers and consignees have acted on the basis that it correctly stated the law. It has formed the basis of countless bills of lading, voyage charterparties and time charterparties. Charterparties would frequently have incorporated the Hague or Hague-Visby Rules on the express basis that the shipowner transferred responsibility for stowage of cargo to cargo interests. Similarly, insurances have been placed, Protection and Indemnity Club Rules have been drafted, and the Inter-Club New York Produce Exchange Agreement concluded (see Wilford Coghlin and Kimball, Time Charters, 5th ed, 2003, at para 20-39), on the basis that Renton accurately reflected the law. Risks would often have been assessed in reliance on the decision of the House in Renton as to how they should be borne. But for the reliance on Renton it is likely that different freight rates and insurance premiums would sometimes have been charged. Moreover, at the very least there must be many outstanding disputes which would now be affected by a departure from Renton. After all F.I.O.S.T. clauses are in wide use. And cargo damage caused by loading, stowage and discharging is an everyday occurrence in maritime transport. The House has no idea how many such transactions are still open. There may be many.

    29.  For these reasons, even if I had been persuaded that the cargo owners' interpretation of the Hague and Hague-Visby Rules was correct, in my view the case against departing from Renton is nevertheless overwhelming.

    30.  There is, however, another factor. The operation of the Hague Rules and Hague-Visby Rules is under constant review. On 22 October 1990, at Geneva, the United Nations Conference on Trade and Development (UNCTAD) published Charterparties: A Comparative Analysis. With specific footnote references to Pyrene and Renton the report stated:

    "341. … charterparty terms relating to the loading, stowing and discharge of cargo may have a profound effect upon third party holders of charterparty bills of lading (even if the bill of lading is subject to the Hague and Hague-Visby Rules) where the words in the bill of lading incorporating the charter are widely framed. If the incorporating words in the bill of lading are sufficiently widely framed the third party bill of lading holder may find for example that he is unable to claim against the shipowner under the bill of lading for damage to cargo caused in the course of loading or stowing the cargo. This would be so if the charterparty contained terms removing from the shipowner the responsibility for loading and stowing. These terms, if there was a wide incorporating clause, would be read as part of the bill of lading contract. They would not be nullified by the requirements of article [III], r. 2 of the Hague Rules that 'the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried' because according to English law those words do not define the scope of the contract service but the terms upon which the agreed service is to be performed.

    342. In regard to loading, stowage or discharging, the Hague Rules, on these authorities, only impose obligations if the shipowner has contractually undertaken to perform those obligations. If under the terms of a charterparty the shipowner is relieved to that extent of the obligations of performance, the shipowner will also be relieved of responsibility for loading, stowing or discharging as against a third party bill of lading holder, always providing that the bill of lading and charter contain sufficiently widely drawn clauses. This will be so even if the bill is subject to the Hague or Hague-Visby Rules: and even if the third party bill of lading holder has neither seen the charterparty referred to, nor has any advance notice of the relevant charterparty clauses.

    343. Other charterparty clauses which may affect a third party bill of lading holder particularly are law clauses, lay time and demurrage clauses and lien clauses."

The report showed in successive paragraphs how the position of third party bill of lading holders is part of a larger picture affecting, for example, lay time and demurrage clauses and lien clauses: paras 346 and 347. The report concluded:

    "354. It can be seen from the foregoing that charterparty terms can have an impact upon third party bill of lading holders in several important respects and it is suggested that in considering in any standardisation, harmonisation or improvement of charterparty terms and the necessity for international legislative action, due account should be taken of the interests of third party bill of lading holders as well as those of charterers and shipowners."

That is, of course, the way in which such problems affecting international trade law are best addressed.

    31.  The United Nations Commission on International Trade Law (UNCITRAL) is currently undertaking a revision of the rules governing the carriage of goods by sea. This exercise involves a large scale examination of the operation of the Hague-Visby Rules. It apparently extends to article III, r. 2. It will take into account representations from all interested groups, including shipowners, charterers, cargo owners and insurers. By itself this factor makes it singularly inappropriate to re-examine the Renton decision now.

    IX. Conclusion.

    32.  I would express no concluded view on the issue of the interpretation of article III, r. 2. I would refuse to depart from the Renton decision. I would dismiss the appeal.

LORD HOFFMANN

My Lords,

    33.  I have had the advantage of reading in draft the speech of my noble and learned friend Lord Steyn. For the reasons he gives, with which I agree, I would dismiss this appeal.

LORD SCOTT OF FOSCOTE

My Lords,

    

 
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