(back to preceding text)

    20.  I would accordingly give an expansive interpretation to the expression "bill of lading or any similar document of title", which seems to me apt to cover the document issued in this case. I have no difficulty in regarding it as a document of title, given that on its express terms it must be presented to obtain delivery of the goods. But like Rix LJ (para 145) I would, if it were necessary to do so, hold that production of the bill is a necessary pre-condition of requiring delivery even where there is no express provision to that effect.

    21.  The most recent decisions on this subject, as I understand them, support these conclusions. In The Duke of Yare (ARR-RechtB Rotterdam, 10 April 1997) the Dutch court considered a straight bill of lading, and observed in para 4.1 of its judgment, as translated:

"First of all, the question needs to be answered as to whether the documents ….. can be considered as bills of lading or as 'similar documents'. As stated before under 3.1, the documents contain the wording 'Bill of Lading' in the top right hand corner and are in the name of the addressee. According to Dutch Law - in which the Hague-Visby Rules are incorporated [references omitted] - the straight bill of lading, also called 'rektacognossement', exists alongside the bearer or order bill of lading. The fact that a straight bill of lading cannot be treated in the same way as a bearer or order bill of lading does not detract from the fact that the present straight bill of lading meets the legal requirements to be considered as such.

As opposed to a non-negotiable seaway bill - said document not normally considered 'a similar document' in English and Dutch literature - the holder of a straight bill of lading has the exclusive right to delivery of the goods, therefore delivery of the bill of lading is a requirement for obtaining the load."

The Court of Appeal of Singapore also considered a straight bill, although not in the context of the Hague or Hague-Visby Rules, in Voss v APL Co Pte Limited [2002] 2 Lloyd's Rep 707. The issue was whether a straight bill had to be produced by the consignee to obtain delivery, and it was held that it had. The main characteristics of a bill of lading (para 48) were its negotiability and its recognition as a document of title, requiring presentation to obtain delivery of the cargo. While a straight bill lacked the first of these characteristics, there was no reason to infer that the parties intended to do away with the other also. This conclusion was, in the court's opinion, supported by considerations of commercial efficacy and convenience. The decision of the 2nd Division of the Court of Appeal of Rennes on appeal from the Commercial Court of Le Havre in The MSC Magallanes also concerned straight bills of lading. The court observed (as translated):

"These documents bear the comment 'on board' proving that the merchandise had been loaded; by making this comment the common carrier acknowledged that the merchandise was loaded on board the vessel and guaranteed the delivery of the cargo to the bearer of the original bills of lading. It is of little relevance [therefore] that, following the example of the sea waybill, this bill of lading is nominative and non-negotiable."

The court continued:

"It follows that these documents constitute bills of lading, it is the responsibility of MSC [as carrier] to hand over the merchandise to the consignee Delta Shipping, as stipulated in the bills of lading …..

In effect, having given the original bills of lading and documents of title of the merchandise to Delta Shipping, MSC could only follow the instructions given by the legitimate bearer of the bills of lading, these documents giving rights …..

Calberson [the shipper's agent] cannot therefore reproach MSC for having committed a fault in executing the contract of carriage, in accordance with particulars of the bill of lading. Far from contravening its obligations the carrier has ensured the respect owed to the documents of title to the merchandise, …..

…..Calberson could not be unaware of the fact that MSC could only deliver the merchandise to the bearer of the original bills of lading."

    22.  It is plain, as Rix LJ accepted in para 94 of his judgment, that a straight bill of lading is not a bill of lading for the purposes of the Carriage of Goods by Sea Act 1992. It is also correct, as appears from para 2.50 of their report "Rights of Suit in respect of Carriage of Goods by Sea" (HC 250, March 1991), quoted by Rix LJ in para 88 of his judgment, that the Law Commission and the Scottish Law Commission did not consider a straight bill of lading to be a document of title at common law. The conclusion of such bodies, following wide consultation, must command respect. But a 1991 report and a 1992 statute cannot govern the meaning of Rules given statutory force in 1924 and 1971, and the question before the House is not whether a straight bill of lading is a document of title at common law but whether it is "a bill of lading or any similar document of title" for purposes of the Hague and Hague-Visby Rules. It is noteworthy that, by section 5(5) of the 1992 Act, the provisions of the Act are to have effect without prejudice to the application, in relation to any case, of the rules (the Hague-Visby Rules) having the force of law by virtue of the 1971 Act.

    23.  In paragraphs 117-133 of his judgment, Rix LJ reviewed in some detail the leading academic and practitioner texts applicable to the present issue, some of them heavily and understandably relied on by the carrier. He concluded in para 133:

"[Counsel for the carrier] submitted that the textbooks were almost uniformly in favour of the carrier's case. However, in my judgment the position is more complex and mixed, and it can also be said that, on the basis that the bill of lading expressly requires its surrender to obtain delivery, there is something like uniformity in the opposite direction."

This seems to me a fair assessment.

    24.  Like Professor Sir Guenter Treitel QC, FBA ("The Legal Status of Straight Bills of Lading" (2003) 119 LQR 608, 620) I am a little puzzled by the third sentence of para 145 of Rix LJ's judgment. Subject to that minor qualification, I agree with his conclusions set out in paras 134-146, for the reasons which he gives, and also with the reasons and conclusions of Jacob J. I am also in agreement with the opinions of my noble and learned friends Lord Steyn and Lord Rodger of Earlsferrry, which I have had the benefit of reading in draft.

    25.  I would accordingly dismiss the appeal with costs.

    LORD NICHOLLS OF BIRKENHEAD

My Lords,

    26.  I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Bingham of Cornhill, Lord Steyn and Lord Rodger of Earlsferry. For the reasons they give, with which I agree, I would dismiss this appeal.

My Lords,

    I. The question of construction.

    27.  The Hague Rules (as scheduled to the Carriage of Goods by Sea Act 1924) and the Hague-Visby Rules (as scheduled to the Carriage of Goods by Sea Act 1971) provide by article I(b) that the rules contained in those international maritime conventions apply only to contracts of carriage "covered by a bill of lading or any similar document of title". In a London maritime arbitration the question arose - apparently for the first time in a United Kingdom court or tribunal - whether a bill of lading consigned to a named consignee, a so-called straight bill of lading, is a conforming document under article I(b) of the Hague-Visby Rules. Such a straight bill of lading is to be contrasted with an "order" or bearer bill of lading each of which permits the transferability of the bill of lading to any number of transferees in succession, respectively by endorsement or delivery. In a dispute arising from cargo damage CIF buyers, the named consignees, as claimants alleged in the arbitration proceedings that article I(b) of the Hague-Visby Rules applied to the straight bill of lading in question. If that were correct the relatively generous package limitation under article IV Rule 5 of the Hague-Visby Rules would have been applicable, resulting in a claim of the order of US$150,000. On the other hand, the carrier contended that the straight bill of lading is akin to a sea waybill, which merely operates as a receipt. Accordingly, it was argued that article I(b) of the Hague-Visby Rules is inapplicable, and that package limitation is governed by section 4(5) of the US Carriage of Goods by Sea Act 1936, restricting the claim to US$2,000.

II. The arbitration award.

    28.  The arbitrators (Messrs Mabbs, Hamsher and Moss) sensibly directed that a preliminary question be determined on a legal issue, the thrust of which was whether package limitation under the Hague-Visby Rules or under the USCOGSA was applicable. For the purposes of determining this preliminary issue it was agreed that the damage to the goods, and the consequent loss, was the result of a breach of contract or negligence or breach of duty by the carriers and that the buyers had title to sue in relation to such loss and damage in both contract and tort.

    29.  By an award dated 30 May 2001 the arbitrators held that a straight bill of lading falls outside the scope of article I(b) of the Hague-Visby Rules and that the applicable package limitation regime was therefore that under the USCOGSA.

III. The decisions in the Commercial Court and Court of Appeal.

    30.  On appeal to the Commercial Court under section 1 of the Arbitration Act 1979, Langley J upheld the decision of the arbitrators: J I MacWilliam Co Inc v Mediterranean Shipping Co SA ("The Rafaela S") [2002] 2 Lloyds LR 403. The buyers appealed. The Court of Appeal (Peter Gibson and Rix LJJ and Jacob J) held that the Hague-Visby Rules did apply to the carriage of the goods and that the relevant package limitation regime was that under article IV rule 5 of the Hague-Visby Rules: J I MacWilliam Co Inc v Mediterranean Shipping Co SA [2004] QB 702.

IV. The Commercial Dispute and Context.

    31.  A United States company bought a printing machine and ancillary equipment on CIF terms from an English company. The sellers consigned the goods to the buyers. The carriers were a container liner operator and the demise charterers of the vessels "Rosemary" and "Rafaela S". The goods were shipped from Durban aboard the "Rosemary," as evidenced by a document entitled "Bill of Lading" dated 18 December 1989, which was issued by the demise charterers at Durban. The bill of lading evidenced a contract for the carriage of the cargo to Felixstowe and for on-carriage to be subsequently arranged to the final destination at Boston. The Bill of Lading named the buyers as consignees.

    32.  For present purposes the relevant provisions on the face of the Bill of Lading were as follows:

"(2) Consignee: (B//L not negotiable unless "ORDER OF")

J I MacWilliam Company Inc.,

Box 6, New Town Branch,

Boston, Mass. 02258, USA

(11) Number of Original Bs/L  3 (THREE)

Freight Payable at      DESTINATION

On-carriage to Boston to be arranged by MSC agents

RECEIVED in apparent external good order and condition the containers, other packages or units bearing marks or numbers indicated in the "Carrier's Receipt" above said by the shipper to contain the quantity of goods, weights and measurements indicated in the "Particulars Furnished by the Shipper" above which particulars have not been checked by the Carrier. Such particulars are for Shipper's and Consignee's use only, are not part of the bill of lading terms and are not binding on the carrier.

IN ACCEPTING this Bill of Lading, the Merchant agrees to be bound for all the terms and exceptions and limitations whether printed, stamped or written hereon and on the reverse side and in particular agrees that the Carrier shall have the right to stuff cargo in containers and to carry on deck all kinds of containers, including trailers, tanks, flats, canvas tops, pallets or similar articles used to consolidate goods.

IN WITNESS whereof the number of Original Bills of Lading stated above all of this tenor and date, has been signed, one of which being accomplished, the others to stand void. One of the Bills of Lading must be surrendered duly endorsed in exchange for the goods or deliver order."

    It is to be noted that the bill of lading was not rendered transferable by an appropriate alteration of box 2. The last quoted provision on the face of the bill of lading is called the attestation clause. Subject to the fact that the bill of lading could not be transferred by endorsement beyond the consignee the face of the bill of lading is in familiar and standard form as one would expect to find in any order bill of lading.

    33.  On the reverse of the bill of lading, the relevant terms of the contract of carriage were set out in a small print. The opening words provided:

"This contract is between the Merchant and the Master, acting on behalf of the Carrier. Wherever the term 'Merchant' occurs in this Bill of Lading, it shall be deemed to include the Shipper, the Consignee, the holder of the Bill of Lading, the receiver and the owner of the goods …"

Then detailed provisions followed of the type that one would expect to see in any bill of lading. Except for the fact that the bill of lading was only transferable to the named consignee, it contained the usual terms regarding the matters relevant to the allocation of risks between the parties which are to be found in bills of lading.

    34.  The goods were carried from Durban to Felixstowe, discharged there and then loaded aboard the "Rafaela S". This vessel carried the goods to Boston. No fresh bills of lading or other shipping document was issued in respect of the Felixstowe-Boston leg of the voyage. However, it is agreed that if any fresh bill of lading had been issued, it would have been in the same terms as that issued in respect of the carriage from Durban to Felixstowe. Whatever its import the bill of lading issued governed the voyage during which cargo damage was allegedly caused.

V. The issue on the appeal.

    35.  The issues have been narrowed since the Court of Appeal's decision in this case. The sole issue on the appeal before the House of Lords is now whether a bill of lading not made out to order or bearer but to a named consignee (a straight bill of lading) is a bill of lading or similar document of title within the meaning of article I(b) of the Hague-Visby Rules and hence within section 1(4) of the Carriage of Goods by Sea Act 1971.

    36.  Rix LJ has comprehensively set out the competing arguments placed before the Court of Appeal which were repeated before the House: [2004] QB 715F-716G. It would serve no useful purpose for me to cover the same ground in this opinion. Instead I can move directly to considering the answer to the question before the House.

    37.  One must start with the function of the bill of lading in international trade. Through the centuries that role has changed. What started as a bailment receipt of goods developed into a receipt containing the contract of carriage, and in the course of time acquired a third characteristic, that of a negotiable document of title. It has long been understood that negotiability in this context is used in a special sense: it does not involve the idea that the endorsee gets a better title than his assignors. But it means that the document is transferable by endorsement not only to the consignee but successively to others.

    38.  In modern commercial usage the bill of lading is one of the pillars of international trade, providing the credit necessary for the financing of mercantile trade. The principal characteristics of the modern bill of lading are threefold. It operates as:

    (a)  a receipt by the carrier acknowledging the shipment of the goods on a particular vessel for carriage to a particular destination;

    (b)  a memorandum of the terms of the contract of carriage, which will usually have been concluded before the signing of the document;

    (c)  a document of title to the goods which enables the consignee to take delivery of the goods at their destination or to dispose of them by the endorsement and delivery of the bill of lading.

The sequence of events in the life of a bill of lading has been usefully summarised in Bills of Lading, Report by the Secretariat of UNCTAD, a United Nations publication published in New York, 1991, as follows [para 21]:

"(a)  The shipper's description of the goods, with his own name and that of the consignee inserted on the carrier's form; particulars of the total gross weight and the measurement, for freight calculation purposes, and where necessary, the value of the goods, are also inserted by the shipper;

(b)  The lodging of the bill of lading at the office of the shipowner or his agent or broker;

(c)  The completion and checking of the contents of the bill of lading by the shipowner or broker against tallying details taken at the time of loading the cargo;

(d)  The freight calculation;

(e)  The signature of the bill of lading by or on behalf of the carrier or the ship's master and by such other parties as may by law be required to do so in different countries;

(f)  The release by the shipowner or his agent of the signed bill of lading to the shipper against payment of freight if the freight is prepaid; and, where appropriate, a mate's receipt or equivalent document;

(g)  The dispatch of the bill of lading by the shipper to the buyer or consignee or its lodgement with a bank when a letter of credit is involved;

(h)  The surrender of the bill of lading by the consignee to the shipowner's agent at the port of discharge in order that he may obtain delivery of his goods."

Except in one respect, this is probably an adequate explanation of the usual course of dealings regarding bills of lading. The additional factor to be noted is that in practice it is left to the shipper to choose the words to be inserted in the 'consignee' box. So far as the carrier is concerned the inclusion or exclusion of the words "to order" is entirely adventitious: the shipper makes the decision. For the issues in the present case this factor is relevant inasmuch as, on the carrier's argument, the applicability of the convention will depend on the shipper's decision, usually made after the contract of carriage was made: Pyrene v Scindia [1954] 2 QB 402, at 419-420.

    39.  Before the era of international maritime conventions the general understanding of the role of a contract of carriage was explained in Hansson v Hamel & Horley Ltd 1921 Lloyd's List LR 432 at 433, as follows:

" … What is meant by the expression 'Contract of Affreightment'? In my opinion, to satisfy the requirements with reference to contract of affreightment, the seller must bring into existence a contract embodied in a form capable of being transferred to the buyer and which when transferred will give the buyer two rights: (a) a right to receive the goods, and (b) a right against the shipowner, who carries the goods, should the goods be damaged or not delivered'. …"

    An appeal in Hansson was dismissed by the House of Lords: [1922] 2 AC 36. This quality of transferability came about in the laws of maritime nations in different ways - sometimes by statute law and sometimes by the evolution of the general law. In the United Kingdom the pivotal development was the enactment of the Bills of Lading Act 1855.

    40.  The 1855 Act provided:

"Whereas, by the custom of merchants, a bill of lading of goods being transferable by endorsement, the property in goods may thereby pass to the endorsee, but nevertheless all rights in respect of the contract contained in the bill of lading continue in the original shipper or owner; and it is expedient that such rights should pass with the property: And whereas it frequently happens that the goods in respect of which bills of lading purport to be signed have not been laden on board, and it is proper that such bills of lading in the hands of a bona fide holder for value should not be questioned by the master or other person signing the same on the ground of the goods not having been laden as aforesaid:

1.  Consignees, and endorsees of bills of lading empowered to sue. - Every consignee of goods named in a bill of lading, and every endorsee of a bill of lading, to whom the property in the goods therein mentioned shall pass upon or by reason of such consignment or endorsement, shall have transferred to and vested in him all rights of suit, and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself."

  [My emphasis]

The importance of this statute for the general development of our maritime law is apparent. Specifically, it also casts light on the way in which the specific question before the House should be approached.

    41.  Contrary to arguments of the carrier, it is in my view impossible to give a restrictive construction to section 1 so as to exclude straight bills of lading. Section 1 provides that "every consignee named in a bill of lading" is empowered to sue on it. It is true that the preamble only speaks of the custom of merchants by which a bill of lading is transferable by endorsement. But the substantive provisions of section 1 are wider and quite general. They cannot sensibly be read as applying only to a consignee named in an order bill. A named consignee is within the mischief which the 1855 Act sought to correct: before the Act was passed property in the goods passed to the named consignee but he had no right to sue in contract in respect of cargo damage suffered during the voyage unless it could be proved that the shipper had effected the original contract as agent for the consignee. Moreover, if the carrier's restrictive interpretation is accepted, there would have been a major gap in the 1855 Act because a named consignee in a straight bill of lading on that basis could neither sue nor be sued on a contract of carriage evidenced by the bill of lading. Such an implausible interpretation must be rejected.

    42.  It is now necessary to turn to the relevant provisions of the Hague Rules which in material respects mirror the later Hague-Visby Rules. The relevant provisions are:

"Article I.

(b)  "Contract of carriage" applies 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, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charterparty from the moment at which such bill of lading or any similar document of title regulates the relations between a carrier and a holder of the same.

The provisions of these Rules shall not be applicable to charterparties, but if bills of lading are issued in the case of a ship under a charterparty they shall comply with the terms of these Rules …

Notwithstanding the provisions of the preceding Articles, a carrier, master or agent of the carrier, and a shipper shall in regard to any particular goods be at liberty to enter into any agreement in any terms as to the responsibility and liability of the carrier in respect of such goods … provided that in this case no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a receipt which shall be a non-negotiable document and shall be marked as such.

Any agreement so entered into shall have full legal effect.

Provided that this Article shall not apply to ordinary commercial shipments made in the ordinary course of trade, but only to other shipments where the character or condition of the property to be carried or the circumstances, terms and conditions under which the carriage is to be performed, are such as reasonably to justify a special agreement."

Rix LJ explained with reference to articles I(b) and V that once "the bill of lading is transferred into the hands of a third party, then it springs into life as a separate contract of carriage, which is why it must comply at the outset with the requirements of the Rules" [2004] QB, at 723F, para 51. Article VI caters for an exceptional situation and gives no aid to the argument that a straight bill of lading dealing with ordinary commercial shipments would fall outside the international minimum standards envisaged by the Rules.

    43.  The question is whether a straight bill of lading triggers the application of the Rules, that is the provision that the Rules are only engaged in respect of contracts of carriage "covered by a bill of lading or any similar document of title". Before the adoption of the Hague Rules the practice of issuing straight bills of lading was known, and such documents were described and treated as bills of lading. For the United Kingdom this proposition is made good by the decision of the Privy Council in C P Henderson & Co v Comptoir d'Escompte de Paris (1873) LR 5 PC 253, 259-260. In the United States the straight bill of lading was sufficiently recognised to be regulated by the Pomerene Bills of Lading Act 1916; see the judgment of Rix LJ, paras 47 and 48, at 721F-722A. In continental legal systems the straight bill of lading was well known and treated as a bill of lading: Tiberg, Legal Qualities of Transport Documents (1998) 23 Mar. Law 1 and Treitel, The Legal Status of Straight Bills of Lading, (2003) 119 LQR 608. It is true, of course, that the vast preponderance of transactions took place on the basis of order bills of lading. But it is a matter of contextual significance that straight bills of lading were in use before the Hague Rules were adopted. The travaux préparatoires of the Hague Rules are plainly inconclusive and cannot be used to determine the intentions of the framers on the precise question before the House. But it is a fair inference that the framers of the Hague Rules could not have been unaware of the relatively widespread mercantile use of straight bills of lading at that time. If it had been intended to exclude these bills of lading, special provision to that effect would surely have been made. Instead the gateway to the application of the Hague Rules was expressed in the wide and general terms of the existence of a bill of lading or any similar document of title.

    44.  The very words in question - "bills of lading or any similar document of title" - are words of expansion as opposed to restriction. They postulate a wide rather than narrow meaning. The attempt by the carriers to treat those words as importing a restrictive meaning of a conforming document under article I(b) involves a distortion of the plain language. It also reveals a preoccupation with notions of domestic law regarding documents of title which ought not to govern the interpretation of an international maritime convention. Instead the Rules must be construed by reference to "broad principles of general acceptation" appropriate to the international mercantile subject matter: see Stag Line v Foscolo Mango & Co [1932] AC 328, at 350. This view is reinforced if one considers the French text of the 1924 Hague Rules, which was at the time the authoritative version of the Rules: Pyrene v Scindia [1954] 2 QB 402, at 421, per Devlin J. The French text refers in article I(b) to a "contrat constaté par un connaissement ou par tout document similaire formant titre pour le transport des merchandises par mer …". It contains no reference to the English concept of a 'document of title' at all. Instead it focuses on the right to possession of the goods vesting in the holder of the document. This makes it singularly inappropriate to invoke the meaning of 'document of title' at common law. But even the English text is more consistent with an interpretation of article I(b) which treats straight bills of lading as included rather than excluded.