The English Commercial Court issued a Judgment on 7/11/2012 holding a carrier liable for US$458,655.69 owing to its issuing 13 clean Bills of Lading for a consignment of steel pipes which had some pre-shipment damage. [2012 EWHC 3124 (Comm)]
This claim arose from the carriage of a consignment of steel pipes on the M/V Saga Explorer from Ulsan in Korea to ports on the West Coast of North America (Los Angeles, San Francisco and Vancouver) between September and October 2008; and which were found damaged on arrival. The relevant contracts of carriage were 13 Bills of Lading signed by Orion Shipping as agent; naming the Shipper as Nexteel and the Consignee and Notify Party as KOP.
The Bills of Lading were dated 25/9/2008 and contained a description of the goods:
E.R.W Steel Pipes Spec: ASTM A53B/ASME SA53B … Details are as per attached rider
The Bills of Lading included the following words on the front of the printed form:
SHIPPED in apparent good order and condition, weight, measures, marks, numbers, quality, contents, and value unknown, for carriage to the Port of Discharge … to be delivered in the like good order and condition at the aforesaid Port unto Consignees or their Assigns … In accepting this Bill of Lading, the Merchant expressly accepts and agrees to all its stipulations on both pages, whether written, printed, stamped or otherwise incorporated as fully as if they were all signed by the Merchant. One original Bill of Lading must be surrendered in exchange for the Goods or delivery order.
In addition the Bills of Lading included a RETLA Clause.
RETLA CLAUSE: If the Goods as described by the Merchant are iron, steel, metal or timber products, the phrase ‘apparent good order and condition’ set out in the preceding paragraph does not mean the Goods were received in the case of iron, steel or metal products, free of visible rust or moisture or in the case of timber products free from warpage, breakage, chipping, moisture, split or broken ends, stains, decay or discoloration. Nor does the Carrier warrant the accuracy of any piece count provided by the Merchant or the adequacy of any banding or securing. If the Merchant so requests, a substitute Bill of Lading will be issued omitting this definition and setting forth any notations which may appear on the mate’s or tally clerk’s receipt.
The attached rider contained details (including the length and weight of the bundles of steel pipes) and the reverse of the Bills of Lading contained Terms and Conditions which included an English Jurisdiction clause and an applicable US General Paramount Clause incorporating the US Carriage of Goods by Sea Act 1936 (COGSA).
The 1st Defendants were the Registered Owners, the 2nd Defendants were the Demise Charterers and the 3rd Defendants were the Time Charterers of the vessel. It was agreed between the parties that any claim for damage to the cargo lay only against the 3rd Defendants and it was convenient to refer to them as the Owners.
The main issue in the case related to the nature of the representation as to the condition of the pipes on shipment, whether it was relied on and what damage flowed from any breach.
KOP was indemnified against their loss by their German Insurers, who at all times acted through and by B&H. B&H claimed against the Owners on the basis that it satisfied the conditions of a ‘Procedural Agency’ under German law, being authorised to bring a claim in its own name on behalf of the Insurers.
A load port survey was carried out by Korea Surveyors and Adjusters (‘KOSAC’), whose report was dated 25/9/2008. This report noted that the cargo was,
in apparent good order & condition with the following damage/exception.
There then followed 16 pages of what was described as ‘Damage/Exception Prior to Loading’. This consisted of descriptions of the steel as ‘partly rust stained’, and variations of this description, ‘wetted before shipment by rain and partly rust stained and slightly scratched on surface’, ‘wetted before shipment by rain and partly rust stained in white oxidation on surface.’ The survey also noted:
All of the above damages/exceptions were acknowledged by the vessel’s master and duly noted/appended to the relevant Mate’s Receipt.
Attachment No.1 of the Survey Report (also dated 25 September) was a Recommendation Letter to the Master signed by the KOSAC Surveyor and the Chief Officer as follows,
As a result of the survey, we found that all the shipments loaded on board the vessel to be in apparent good order & condition except the shipments mentioned on the ‘Cargo Damage/Exception List’ attached hereto. With regard to the noted damages/exceptions to the shipments, we recommend that they shall be claused in or appended to the relevant Mate’s Receipt and Bills of Lading.
The Mate’s Receipts issued in respect of the cargo and signed by the Chief Officer contained a short form of Retla Clause (omitting reference to timber products) which was printed prominently:
The term ‘apparent good order and condition’ when used in this Bill of Lading with reference to iron, steel or metal products does not mean that the goods when received, were free of visible rust or moisture. If the shipper so requests, a substitute Bill of Lading will be issued omitting the above definition and setting forth any notations which may appear on the mates’ or tally clerks’ receipts.
and noted the receipt on board
Condition of Cargo as per Survey Report.
The Survey Report was identified as the KOSAC report.
Although the Mate’s Receipt contained the reservation that the cargo was received in the condition as noted in the KOSAC report, the Bills of Lading contained no such reservation. The reason why they were not claused was explained by Mr Kim of Orion Shipping.
The shippers in this case, Nexteel, did not demand or request any bill of lading showing ‘notations’. Instead Nexteel (having seen the KOSAC Report) requested that the Bills be issued unclaused against LOIs. I read the Mate’s Receipts and the KOSAC Report (including the section headed ‘Damage/Exception found Prior to Lading’), which I compared with what was stated in the RETLA clause and (on that basis) I considered there was no need to clause the Bills. Accordingly I agreed to Nexteel’s request and proceeded to sign the Bills. It was certainly not my intention to mislead anybody.
The Letters of Indemnity referred to by Mr Kim, dated 25 September and headed ‘Letter of Indemnity for Issuance of Clean Bills of Lading’, were addressed to the Owners. After noting the ‘exceptions to the cargo’s apparent condition observed prior to shipment’ as noted on the Mate’s Receipt ‘per surveyor’s cargo exception’, the details of which were set out, the letters continued,
but we hereby request you to issue ‘clean’ bills of lading without making any remarks on the bill as to the cargo damaged condition whatsoever and to deliver the said cargo accordingly against production of a least one original bill of lading In consideration of your complying with our above request, we hereby agree as follows: 1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of complying with our request. 2. In the event of any proceedings being commenced against you or any of your servants or agents, in connection with our request aforesaid, to provide you or them on demand with sufficient funds to defend the same.
The indemnity was stated to be governed and construed according to English Law, and was reinforced by undertakings to put up bail if the vessel were arrested at the suit of cargo interest, and to submit to the Jurisdiction of the High Court in London.
The very much more likely explanation was that Nexteel realised that if the Bills of Lading were claused they would not be paid and persuaded Mr Kim that Owners should issue clean bills of lading in exchange for the Letter of Indemnity.
The vessel arrived at the three discharge ports during the course of October 2008. There, and in subsequent surveys, the cargo was found to be rusted to a greater or lesser extent.
KOP gave evidence about KOP’s contracts with Nexteel for the supply of steel pipes. KOP made cash deposits available to Nexteel in order to relieve its cash-flow problems; and cash was released by KOP on receipt of clean on board Bills of Lading and invoices.
Under s.3(3)(c) of US COGSA, after shipment of the cargo on board the vessel the Master (or his agent) is bound on demand to issue to the shipper a bill of lading showing ‘the apparent order and condition of the goods’. Before he can do that the Master (or his agent) must form an honest and reasonable, non-expert view of the cargo as he sees it and, in particular, as to its apparent order and condition. The Master may ask for expert advice from a surveyor but ultimately it will be a matter of his own judgment on the appearance of the cargo being loaded.
The Bills of Lading in the case in question contained a statement on their face that the cargo was shipped ‘in apparent good order and condition’. If there had been no RETLA clause, this would amount to a representation of fact which could be relied on as reflecting the reasonable judgment of a reasonably competent and observant master.
In the case of Tokio Marine & Fire Insurance Company Ltd v Retla Steamship Company [1970] 2 Lloyd’s Rep 91 (US 9th Circuit CA), the Court was concerned with construing provisions as to the apparent good order and condition of the cargo and a Rust clause in the following terms:
The term ‘apparent good order and condition’ when used in this Bill of Lading with reference to iron, steel or metal products does not mean that the goods when received, were free of visible rust or moisture. If the shipper so requests, a substitute Bill of Lading will be issued omitting the above definition and setting forth any notations which may appear on the mates’ or tally clerks’ receipts.
These were the words used under the heading ‘Retla Clause’ in the Mate’s Receipts in the case in question, although the wording of the RETLA clause in the case in question was slightly different. In the Tokio Marine case there was rust and wetness which was described in the Mate’s receipts as ‘heavy rusty’, ‘white rusty’, ‘rusty’, ‘heavy flaky rust’ and ‘wet before loading.’ The US 9th Circuit, having referred to the Privy Council case of Canada and Dominion Sugar Company Ltd v. Canadian National Steamships Ltd [1947] AC 46, held (p.95-96) held that,
… the bills of lading here, ‘read fairly as a whole’, show that the term ‘good order and condition’ was qualified by the clause defining the term with respect to iron, steel or metal products.
This part of the reasoning is uncontroversial. The conclusion of the Court is more debateable. Having referred to the fact that the Rust clause appeared boldly and capitalised on the bill of lading and to the shippers’ express right to request substitute bills setting out any notations in the Mate’s receipts; the Court found that there was no affirmative representation by the owners that the pipe was free of rust or moisture when it was received by the carrier. In summary, all surface rust of whatever degree was excluded from the representation of apparent good order and condition.
The Owners submitted that English law should follow the Tokio Marine case in holding that the RETLA clause was not limited to rust which was in some sense, ‘minor’ or ‘superficial.’ The Owners drew attention to the inherent ambiguity and uncertainty of such terms; and referred to Scrutton on Charterparties where the Owners submitted the case was cited with approval.
In the 21st edition, the editors noted (at Artcle.63):
The practice is now developing of including in the bill of lading a definition of ‘good order and condition’ which makes it clear that the representation does not imply that the cargo is free from the type of defect which commonly affects the cargo in question, e.g. rust (metal goods) or moisture (timber). There appears to be no reason why these clauses should not be valid: and they do not appear to offend the Hague-Visby Rules.
In the 22nd edition, the editors reframed their view of the law in Article 77 at 8-031,
… wording may clarify (and restrict) the representation being made. Thus, a bill of lading may attest to the apparent good order and condition while including a definition of ‘good order and condition’ which makes it clear that the representation does not import that the cargo is free from certain defects, often a type of defect that commonly affects the cargo in question, e.g. rust (metal goods) or moisture (timber).
In each of the two editions there is a foot-note reference to the Tokio Marine case.
The cargo insurer submitted that the RETLA clause did not render the words ‘apparent good order and condition’ meaningless. The provisions should be read together and each provision given proper effect. To the extent that the RETLA clause was designed to except from liability it should be read restrictively. The cargo insurer argued that the RETLA clause only excluded (surface) rust which was likely to be found in any normal cargo and which would not detract from its overall quality and affect its merchantability.
There would seem to be a number of problems with this formulation, for example: what was the degree of ‘surface rust’ which fell outside the representation, what was a ‘normal’ cargo of steel and why was merchantability relevant to the representation by the Master of the carrying vessel?
The Judge came to the following conclusions as to the proper construction of the two provisions in the Bills of Lading.
The RETLA clause could and should be construed as a legitimate clarification of what was to be understood by the representation as to the appearance of the steel cargo upon shipment. It should not be construed as a contradiction of the representation as to the cargo’s good order and condition, but as a qualification that there was an appearance of rust and moisture of a type which might be expected to appear on any cargo of steel: superficial oxidation caused by atmospheric conditions. The exclusion of ‘visible rust or moisture’ from the representation as to the good order and condition was thus directed to superficial appearance of a cargo which was difficult, if not impossible, to avoid. It was likely to form the basis of a determination as to whether there had been a further deterioration due to inherent quality of the goods on shipment under s.4(2)(m) of US COGSA, or Article 4(2)(m) of the Hague-Visby Rules.
It followed that the Judge rejected the Owner’s argument, based on the facts of the decision in the Tokio Marine case, that the RETLA clause applied to all rust of whatever severity. First, because such a construction would rob the representation as to the good order and condition of the steel cargo on shipment of all effect. Secondly, because of what appeared to be a misapprehension as to the nature of the trade. One of the grounds for the decision in the Tokio Marine case was that the Rust clause provided that it was always open to the shipper to call for a substitute bill of lading showing the true condition of the cargo as set out in the Mate’s Receipt, (see p.961 of the report). However, the objection to this part of the reasoning is that it is highly unlikely that a shipper of cargo would ask for a claused bill of lading reflecting the terms of a Mate’s Receipt: rather the contrary, as the case in question reveals. The matter has been put in clear and emphatic terms by Professor Michael F Sturley in an article in the ‘Journal of Maritime Law and Commerce’ (April 2000) pages 245-248.
Some courts, led by the Ninth Circuit in Tokio Marine & Fire Insurance Co. V Retla Steamship Co., have nevertheless permitted carriers to include standard clauses in their bills of lading that essentially disclaim all responsibility for the required statement. Although COGS A ß 3(8) explicitly prohibits any clause lessening a carrier’s liability ‘otherwise than as provided in this Act’, ‘rust clauses’ have been justified on the ground that that the shipper had the option of demanding a different bill of lading that did not contain the offending clause. In practice, such a demand would be unlikely, for the typical effect of a rust clause is to permit a seller to ship rusty steel to its customer while still obtaining the ‘clean’ bill of lading that enable it to be paid under a letter of credit. … Permitting the carrier to escape liability for the statement of apparent order and condition undermines the Hague Rules’ goal of protecting the bill of lading as a commercial document on which third parties can rely. Indeed, one of the principal abuses that the Hague Rules were intended to correct was the carriers’ use of ‘reservation clauses’ to exonerate themselves from responsibility for the description of the goods. Thus the rules required the bill of lading (if one were issued) to include the specified information without reservation unless the exception (found in the proviso to COGSA ß 3(3)) applied. A carrier’s use of a reservation clause when the exception did not apply would be ‘null and void’ under COGSA ß 3(8). … The phrase ‘on demand of the shipper,’ upon which the Retla court relied so heavily, does not alter the carrier’s obligation to include the information required by COGSA ß 3(3) wherever it does issue a bill of lading.
The Tokio Marine case has not been consistently followed; and this position is reinforced by a bulletin issued by the UK P&I Club (221-11/01). After referring to the reason why US Courts have upheld the Retla Clause, the bulletin continues.
However, there remains a risk to Members using such clauses as, whilst some courts in the United States may have upheld the clause, other U.S. courts and courts in other jurisdictions have not. The only safe means of avoiding claims arising from pre-shipment damage is to ensure that the bill of lading is claused to reflect the apparent order and condition of the goods at the time of loading. Failure to properly describe the condition of the cargo leaves the carrier open to allegations of being a party to a misrepresentation, particularly from third-party purchasers of the cargo who have only contracted to do so based on a bill of lading and who have not been shown any pre-shipment survey by the sellers.
The final sentence is both accurate and pertinent.
It was clear that all parties considered that the Bills of Lading should have been claused in the form of the Mate’s Receipts up to the point when Mr Kim decided that clean Bills of Lading should be signed and a Letter of Indemnity issued ‘in consideration’ of Owners complying with Nexteel’s request. The KOSAC report and the Mate’s Receipts described the appearance and condition of the cargo; and this was not reasonably and honestly represented by the Bills of Lading as signed. The Judge did not accept the evidence of the Owners that this cargo was shipped in a normal and unexceptional condition for this type of cargo, or otherwise fell within the RETLA Clause. Those who saw the cargo being loaded plainly did not regard the condition as normal and unexceptional. The Judge accepted the cargo insurer’s view that this cargo should have been (at a minimum) described as ‘rust spotted’ or ‘partly heavily rusted’. In addition it was common ground that that there was no significant deterioration of cargo during the sea passage from South Korea to the US Pacific ports. It was therefore material that none of the numerous surveyors who attended on discharge or soon after (including those appointed on behalf of Owners) considered that the damage to the cargo carried under the Bills of Lading was ‘normal’ or ‘to be expected’. On the contrary, they noted extensive oxidation, described as ‘moderate to severe’ and ‘severely oxidised.’ Cullen Maritime, who attended on behalf of the Owners during discharge in October 2008 found ‘heavily rusted condition’ and ‘rust to ‘varied degrees’, including ‘in heavily rusted condition in stow prior to discharge.’ These observations were made in relation to cargos which had been notified to have been shipped in apparent good order and condition.
The decision to issue and sign clean Bills of Lading involved false representations by the Owners which were known to be untrue and intended to be relied on. What occurred was not an ‘honest and reasonable non-expert view of the cargo as it appeared,’ but a deceitful calculation made on behalf of the Owners by their authorised agent at the request of the Shippers and to the prejudice of those who would rely on the contents of the Bills of Lading. In view of the Judge’s conclusion that the representation in the Bills of Lading was fraudulent, a presumption arose that the innocent party (in the case in question the holder of the Bills of Lading, KOP) was influenced by it. It is open to the fraudulent party to rebut this presumption; but despite the points made by the Owners, the Judge had concluded that the Owners had failed to do so. The Judge accepted KOP’s evidence that it relied on the representations in the Bills of Ladings to its detriment by taking up the bills and sending them to its discharge port agents and taking delivery of the cargo pursuant to their terms. It was inherently unlikely that it would have done so if they had been claused. The Judge accepted KOP’s evidence that it would not have credited monies against the relevant Nexteel invoices and would have rejected the cargo and the Bills of Lading if it had been aware that the Bills of Lading materially misrepresented the apparent order and condition of the cargo. This was not, in its view, cargo which was either sound or acceptable, nor was it cargo which was simply suffering from minor damage. At the very least KOP would have insisted on another survey of the cargo before accepting it.
The Judge accepted the evidence of the cargo insurer in relation to KOP’s loss. On this basis the calculation of loss was agreed at US$430,996.19, with an overall loss when surveyor’s fees were included of US$458,655.69. It followed that the cargo insurer was entitled to Judgment in the principal sum of US$458,655.69.
Please feel free to contact us if you have any questions or you would like to have a copy of the Judgment.
23/F, Excel Centre, 483A Castle Peak Road, Lai Chi Kok, Kowloon, Hong Kong 香港九龍荔枝角青山道483A卓匯中心23樓 Tel: 2299 5566 Fax: 2866 7096 E-mail: gm@smicsl.com Website: www.sun-mobility.com A MEMBER OF THE HONG KONG CONFEDERATION OF INSURANCE BROKERS 香港保險顧問聯會會員
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The Hong Kong High Court issued a Judgment on 25/8/2017 to determine whether the Hong Kong Court or the Yangon Court was the natural and appropriate forum in an in rem legal proceedings in relation to a cargo damage claim of USD143,852.02. [HCAJ 101/2015]
The High Court of Hong Kong issued a Decision on 31/8/2018 concerning a feeder company’s claim against a shipping company’s lawyer for wasted costs. [HCA1919/2016] [2018HKCFI1879]
The Hong Kong Court of Final Appeal (“the CFA”) issued a Judgment on 10/9/2014 dismissing a cargo owner’s (“the Assured”) cargo insurance claim of US$1,555,209.00 against an insurance company (“the Insurer”) on the ground that the Assured had breached an insurance warranty relating to the carrying vessel’s deadweight capacity. [FACV No. 18 of 2013]
The High Court of Hong Kong issued a Judgment on 21/7/2014, in which some legal principles relating to the in rem jurisdiction of the Court to arrest vessels were explained. [HCAJ 241/2009]
The Hong Kong High Court issued a Judgment on 13 August 2021 holding a forwarder liable to pay nominal damages of HKD1,000 to a shipper in a cargo misdelivery claim case of USD1,299,189.87. [HCA 937/2016] [2021 HKCFI 2310]
The Hong Kong High Court issued a Judgment on 2/6/2017 dealing with the liability apportionment among 3 vessels in 2 almost simultaneous collisions that happened near Hong Kong on 14/5/2011. [HCAJ158/2012 and HCAJ49/2013 and HCAJ48/2011]
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The High Court of Hong Kong issued a Judgment on 3/2/2012 concerning which currency (US$ or Euro) should be the proper one for the cargo owners in a shipment to claim against the forwarder for compensation in a cargo damage case. [HCAJ 152/2010]
The Hong Kong High Court issued a Judgment on 29/4/2013 relating to a discovery order ancillary to and in support of a Mareva injunction. [HCA 2124/2011]
The Hong Kong High Court issued a Judgment on 23/12/2013 dealing with an application for security for costs in relation to a ship sinking case. [HCAJ 213/2009]
Does the law require forklift trucks to have the third party insurance of motor vehicles? The Hong Kong High Court’s Judgment [Magistracy Appeal No 241 of 1996] dated 2/5/1996 explained the legal principles to answer this question.
The Hong Kong High Court issued a Judgment on 24/11/2015 dealing with a mandatory injunction and specific performance in respect of a letter of indemnity in connection with a delivery of cargo without production of the original bills of lading. [HCCL 12/2015]
In the issue of our Chans advice last month, we talked about the major provisions of the Montreal Convention (which is for the international carriage of goods by air). In this issue, we would like to discuss the major terms of an equally important international convention for the international carriage of goods by sea, viz. the Hague Visby Rules.
In Chans advice/14 dated 28/2/2002, we discussed this topic 15 years ago. In its Judgment dated 16/10/2017, the District Court of New South Wales in Australia had to deal with, inter alia, a malpractice that a forwarder issued its own house B/Ls but signed off with as agent for China Ocean Shipping, Pacific International Lines, Mitsui O.S.K. Lines Limited or Orient Overseas Container Line without authority. [2017 NSWDC 279]
The Hong Kong High Court issued a Judgment on 18/11/2016 dismissing a shipping company’s application for summary judgment against its former deputy general manager (Mr Ma) for restitution of the sum of HK$387,655,303.70 on the ground of money had and received and/or unjust enrichment. [HCA 619/2016]
The Montreal Convention is an international treaty agreed by 140 states in respect of governing carriers’ liability for injury or death of passengers, damage to or loss of baggage and cargo and losses caused by delays. Hong Kong has adopted it through the Carriage by Air Ordinance (Cap 500).
The Hong Kong Court of Appeal issued a Judgment on 29/1/2016 dealing with a case of one or two days’ delay in appeal in relation to a barge sinking accident. [HCMP 3172/2015]
Remember Chans advice/142 and Chans advice/145 that the High Court of Hong Kong held the forwarder liable for cargo misdelivery without production of original bills of lading? The Court of Appeal of Hong Kong issued a Judgment on 31/1/2013 dismissing the forwarder’s applications for an extension of time to appeal. [HCMP 2366/2012 & HCMP 2367/2012]
The Hong Kong Court of Appeal issued a Judgment on 17/7/2014 holding a Hong Kong forwarder liable to pay US$852,339 plus costs and interest (as damages for conversion) to an Indian bank in an air cargo misdelivery case. [CACV 282/2012]
The 12th annual SMIC seminar on uncollected cargoes pulled some 300 participants to attend with much curiosity for 3 hours in the YMCA Assembly Hall. The accumulated questionmarks and enigmas about the subject matter lurking in the trade were unleashed among the audiences.
In the last issue of Chans advice, we reported the case that the Hong Kong Court of Appeal rejected the mortgagee’s appeal against the High Court’s order of granting a stay until 24 April 2019 for the sale of the Vessel Brightoil Glory. On 17 May 2019, the Court of Appeal issued another judgment refusing the shipowners’ appeal in respect of their application for a further stay of the sale of the Vessel until 22 May 2019. [CAMP81/2019] [2019 HKCA 561]
The Hong Kong District Court issued a Judgment on 26 April 2022 dealing with a case concerned with transfer of business and lifting the corporate veil, and held a forwarder and its shareholder and director jointly and severally liable for a debt of HK$975,733.71. [DCCJ 2104/2019] [2022 HKDC 289]
The Hong Kong Court of Appeal issued a Judgment on 12/2/2018 to deal with the cargo owners’ seeking leave to appeal against the High Court’s Judgment reported in our Chans advice/209 last month. [CAMP 38/2017] [2018 HKCA77]
The High Court of Hong Kong issued a Decision on 23 May 2018 allowing a shipowner to be represented by 2 different firms of solicitors (one appointed by its hull underwriters and the other appointed by its P&I Club). [HCAJ84/2017] [2018HKCFI1136]
The Hong Kong Court of Appeal issued a Judgment on 20 February 2019 dismissing Changhong Group’s appeal against the High Court’s Decision of 15 November 2018 (reported in Chans advice/215) because Changhong Group had not obtained leave to appeal from the Hong Kong High Court. [CACV576/2018] [2019HKCA246]
SMIC has finally jumped on the bandwagon of the cyber media rush by its presence on the Facebook. We would have done this for a long time had it not been for the daily chores and that we were then not too convinced of its value in the commercial world. Thereafter, it becomes obvious that more and more firms are capitalizing on this new media; and unlike the old economies where information flow was imperfect, consumers of the new economies tend to prefer looking up for information by themselves from the web, or augmenting information they are given.
More and more junior staff of the banks insist all the Bills of Lading to be signed and issued with the above remark “As agent for the Carrier”. This is of course right if the concerned Carrier does not have its own office in the place of issuing the Bill of Lading and therefore instruct its agent there to issue the Carrier’s Bill of Lading.
The Hong Kong High Court issued a Decision on 4 March 2020 dismissing a shipowner’s application for a stay of proceedings in favour of arbitration in a case of cargo misdelivery without presentation of original bill of lading. [HCAJ 5/2019] [2020 HKCFI 375]
The PRC Supreme Court on 26/11/2015 issued a Judgment holding a shipping company’s container demurrage claim against a shipper time barred. [2015民提字第119號]
The English Court of Appeal issued a Judgment on 13/12/2017 dealing with a cargo damage claim of EUR2,654,238 and a charter hire claim of USD1,012,740 in connection with a NYPE charterparty. [2017 EWCA Civ 2107] [2017 WL 06343564] [Case No. A3/2016/4770]
The Hong Kong High Court issued a judgment on 12/4/2016 to dismiss a cargo owner’s action in respect of breaking a barge owner’s tonnage limitation. [HCAJ 178/2014]
The Court of Appeal of Hong Kong issued a judgment on 28 March 2019 dealing with a matter concerning the sale pendente lite of an oil tanker Brightoil Glory. [CAMP49/2019][2019HKCA395]
The Hong Kong High Court issued a ruling on 2/12/2016 dealing with a shipowner’s interrogatory application in relation to an uncollected cargo case. [HCAJ 118/2015]
The English High Court issued a Judgment on 2/4/2014 holding the Hague Visby Rules instead of the Hague Rules (as incorporated by a Paramount Clause) to apply to a shipment ex Belgium. [Case No: 2012 Folio 102, 2014 EWHC 971 Comm, 2014 WL 1219313]
The limit of liability for international carriage of cargoes by air under the Montreal Convention has been revised from 19 SDR/Kg to 22 SDR/Kg of the gross weight of the cargoes effective from 28 December 2019. We have received many enquiries from freight forwarders about changing their house Air Waybills’ terms to cope with the new limit of liability. We would like to take this opportunity to discuss some essential terms in house Air Waybills.
The Hong Kong Court of Appeal on 1 December 2021 allowed a charterer’s appeal against a High Court’s Decision dated 13 April 2021 (which disallowed the charterer’s charter hire claims of US$234,955 against the shipowner because the High Court was not satisfied the claims were well founded). [CACV 294/2021] [2021 HKCA 1865]
The Hong Kong High Court issued a Decision on 19 March 2018 dealing with some legal principles in relation to granting relief against unless orders in a ship collision case. [HCAJ 84/2017] [2018 HKCFI 609]
In this issue, we would like to continue with the case (CSAV v Hin-Pro) mentioned in our monthly newsletter of Chans advice/169 two months ago. The Hong Kong Court of Appeal issued its Judgment on 11/3/2015 discharging the Mareva Injunctions and the receivership orders granted by DHCJ Saunders against Hin-Pro and Soar. [CACV 243/2014]
In our last issue of Chans advice/253, the Hong Kong District Court’s judgment dated 26 April 2022 mentioned a case authority of China Ocean v Mitrans Shipping. We would like to discuss this judgment dated 11 July 1995 of the Hong Kong Court of Appeal in our Chans advice this month. [1995 No. 71 Civil]
The Hong Kong High Court issued a Decision on 2 October 2024 dismissing a shipping company’s application to strike out a forwarder’s third party indemnity claim in a cargo (frozen beef) damage case. [HCAJ 9/2023, HCAJ 22/2023, 2024 HKCFI 2708]
The Hong Kong Court of Appeal issued a Judgment [CACV144/2017] [2018HKCA299] on 29/6/2018 upholding the High Court’s Judgment dated 2/6/2017 (which was reported in our Chans advice/201).
In Chans advice/191 and Chans advice/206, we reported a case relating to a shipping company’s claim against its former deputy general manager (Mr Ma) over the alleged theft of the company’s money. The Hong Kong High Court on 16 December 2020 sentenced Mr Ma to 15 years’ imprisonment. [HCCC 20/2018] [2021 HKCFI 195]
The Hong Kong High Court issued a Decision on 15 March 2021 converting a domestic Mareva injunction into a worldwide Mareva injunction in a shipowner’s freight and demurrage claim against a charterer. [HCMP 1190/2020] [2021 HKCFI 680]
Remember our Chans advice/138 regarding the Hong Kong High Court’s Judgment holding the He Da 98’s owners fully liable in the collision that happened off Shanghai? The Hong Kong High Court issued its Decision on 18/1/2013 dealing with the damages to be paid to the Pontodamon’s owners. [HCAJ 200/2007]
What is the difference between a straight bill of lading and an order bill of lading? This can be illustrated in the Wuhan Maritime Court’s Judgment dated 17 September 2019 concerning a cargo misdelivery claim of US$89,838.
The Shanghai Maritime Court issued a Judgment on 24/12/2009 to deal with the question whether a shipping company could charge the container demurrage based on the tariff published on its website.
The United States District Court (Southern District of New York) issued an order on 29 November 2021 to deny a shipping company’s motion to rely on the Singapore jurisdiction clause in its bill of lading. [1:19-cv-5731-GHW-RWL]
The High Court of Hong Kong issued a Judgment on 4/5/2012 explaining some legal principles as to when shipowners should fear the arrest of their ships. [HCAJ 141/2010]
The Hong Kong District Court issued a Judgment on 28/4/2014 dismissing a seller’s cargo misdelivery claim of US$122,302.80 against a freight forwarder and holding the seller liable to pay the outstanding freight charges of US$28,855 to the forwarder. [DCCJ 344/2010]
The amendment to the International Convention for the Safety of Life at Sea (SOLAS) 1974 Chapter VI, Regulation 2 in respect of the verified gross mass of a container carrying cargo (laden container) is for entry into force globally on 1 July 2016.
Remember our Chans advice/165 (reporting the Hong Kong Court of Appeal holding the Hong Kong forwarder liable to pay US$852,339 plus costs and interest to the Indian bank in the air cargo misdelivery case)? On 19/5/2016, the Court of Final Appeal dismissed the Hong Kong forwarder’s application for seeking leave to appeal. [FAMV Nos 45 & 52 of 2015]
The Hong Kong Court of Appeal issued a Judgment on 9/7/2015 in relation to the High Court Judgment dated 21/7/2014 (reported in our Chans advice/167 dated 28/11/2014). [HCMP 2315/2014]
Remember our Chans advice/171 of 31/3/2015 reporting that the Hong Kong Court of Appeal discharged the Mareva injunctions against Hin-Pro? The Hong Kong Court of Final Appeal issued a Judgment on 14/11/2016 reversing the Court of Appeal’s Judgment of 11/3/2015. [FACA No. 1 of 2016]
While the MOL Comfort incident was a disaster widely talked about among forwarders, all who suffered loss without exception will try whatever means to recover their losses down the line wherever the legal regimes permit.
The High Court of Hong Kong issued a Decision on 21/9/2017 dealing with the principles in respect of the real risk of dissipation of assets in a case of Mareva Injunction involving a shipowner and a charterer. [HCMP 1010/2017]
The VGM laws have come into operation in Hong Kong since 1/7/2016. They are mainly contained in Section 3 and Section 3A of the Merchant Shipping (Safety) (Carriage of Cargoes and Oil Fuel) Regulation (Chapter 369AV) as follows:
The Hong Kong High Court issued a decision on 31 May 2022 ordering a South Korean shipowner to provide a Hong Kong shipowner with security for costs in the amount of HK$600,000 in relation to a ship collision case that happened in Hong Kong during the super typhoon Hato in August 2017. [HCAJ 80-85/2019] [2022 HKCFI 1631]
The Hong Kong High Court issued a Judgment on 11 January 2019 dealing with a dispute of US$335,858.31 between a bunker supplier and a ship agent. [HCA119/2015] [2019HKCFI57]
The Hong Kong High Court issued a Decision on 9/5/2017 allowing a time extension for some cargo interests to claim against the Tonnage Limitation Fund constituted by the owner of one of the two vessels involved in a collision that happened on 7/11/2013. [HCAJ 189/2013]
The Hong Kong Court of Appeal’s Judgment dated 11/4/2008 explained some legal principles relating to whether indemnity claims are allowed by in rem legal actions against vessels. [CACV 257/2007]
The Hong Kong High Court issued a Decision on 30 September 2021 holding a shipowner’s Defences as an abuse of process in a case of unpaid crew wages. [HCAJ 76/2020] [2021 HKCFI 2961] [HCAJ 91/2020]
The Hong Kong High Court issued a judgment on 30/4/2015 dealing with the legal principles in respect of the order of priorities in distributing the sale proceeds of an arrested ship. [HCAJ 129/2013]
In our Chans advice/169 last month, we mentioned the English Court’s Judgment dated 14/10/2014 holding CSAV’s bill of lading’s English jurisdiction clause to be an exclusive jurisdiction clause. In this issue, let’s look at that English High Court Judgment [2013 Folio No 1248, 2014 EWHC 3632 Comm, 2014 WL 5113447] issued by Justice Cooke in detail.
On 5/8/2011, the District Court of Hong Kong dismissed a shipping company’s container claims against a forwarder for want of prosecution and abuse of process. [DCCJ 765/2005]
The Ningbo Maritime Court issued a Judgment on 25/5/2016, and dismissed a cargo insurer’s (PICC Ningbo) recovery claim of USD25,238.40 against Mitsui O.S.K. Lines Ltd (“MOSK”) in relation to the vessel MOL Comfort sinking into the Indian Ocean on 17/6/2013.
The Hong Kong Court of Appeal issued a Judgment on 4 October 2019 upholding the High Court’s Decision dated 9 April 2018 (reported in our Chans advice/208). [CACV593/2018][2019HKCA1101]
Our Chans advice/191 reported a Hong Kong High Court’s case concerning a shipping company’s restitution claim against its former deputy general manager (Mr Ma) for HK$387,655,303.70. The latest development of this case is: the Hong Kong High Court issued a Judgment on 1/2/2018 and a Decision on 9/2/2018 holding that Mr Ma was in contempt of Court as a result of his breach of a Mareva Injunction Order and that he be committed to prison for 4 months. [HCMP1115/2017] [2018 HKCFI176] [2018 HKCFI328]
In the transport industry, the contracts of carriage (e.g. Bills of Lading, Air Waybills) usually contain an exclusive jurisdiction clause for settling disputes. However, it is not uncommon that the shippers and consignees sue the transport operators in a court other than the one specified in the exclusive jurisdiction clause. In Hong Kong, the transport operators may rely on the Foreign Judgments (Restriction on Recognition and Enforcement) Ordinance to tackle this kind of situation.
The Hong Kong High Court issued a Judgment on 22/8/2016 dealing with a case that a forwarder wanted to strike out a cargo misdelivery claim on the ground that the claim disclosed no reasonable cause of action. [HCCL 5/2015]
We reported in our Chans advice/252 that the Hong Kong High Court held Hyundai Hong Kong’s ex-Deputy General Manager (Mr Ma) liable to compensate HK$387,655,303.70 to Hyundai Hong Kong in the case of his theft of his employer’s money. On 23 December 2022, the Hong Kong High Court issued a decision ordering a sum of HK$500,000 (which was deposited by Mr Ma as bail money) to be released to Hyundai Hong Kong in partial satisfaction of Mr Ma’s judgment debt. [HCA 619/2016] [2022 HKCFI 3798]
The Hong Kong High Court issued a decision on 11/9/2013 concerning a shipowner’s application to extend the validity of a writ of summons against a Taiwan hull and machinery insurer. [HCAJ 95/2012]
The High Court of Hong Kong issued a Judgment on 26/8/2011 to determine which ship to blame in a collision case that occurred at Shanghai. [HCAJ 200/2007]
The English High Court issued a Judgment on 31/7/2015 dismissing a cargo owner’s conversion claim US $565,891.58 against a shipowner in an uncollected cargo case. [(2015) EWHC 2288 (Comm), (2015) 2 C.L.C. 415]
Remember our Chans advice/112 that the Hong Kong High Court held the Rotterdam terminal liable to pay the cargo value of €950,071.20 for the misdelivery of one container of Sony Play Stations? On 2/4/2013, Judge To of the Hong Kong High Court issued another Judgment holding that the forwarder was entitled to limit its liability to US$24,392 in accordance with its B/L terms. [HCAJ 106/2008]
More than 10 years ago, we broke new grounds unheard of before among insurance brokers by introducing genuine claim support (by truly employing a team of professional transport claim handlers) independent of that from the insurers. Since then, the knowledge advantage of the insurer over that of the transport operator insured has been evened. Those who buy transport liability insurance are truly better protected with professionals standing at their side who really know the freight industry and are conversant in transport insurance and claims handling.
We have received a lot of cargo claims from our forwarder clients in the recent months. In this issue, we would like to discuss in general how the forwarders should handle the cargo claims.
The Hong Kong High Court issued a Judgment on 5/8/2015 holding that a shipment of formula milk powder without the legally required export licence should not be forfeited. [HCMA171/2015]
The Hong Kong Court of Appeal issued a Judgment on 18/12/2014 in connection with a cargo misdelivery claim of US$27,835,000 involving also anti-suit injunction and worldwide freezing order issued by the English Court. [CACV 243/2014 & HCMP 1449/2014]
The Hong Kong High Court issued a Judgment on 3/2/2017 holding Natural Dairy liable to pay HK$4,360,948.38 to Schenker being the outstanding freight charges. In the Judgment, the Judge also explained the principles regarding the meaning of notice of the forwarder’s standard trading conditions. [HCA 1755/2011].
Following the issue of Chans advice last month, we would like to report the latest decision issued by the court over this theft case. On 17 January 2023, the Hong Kong High Court dismissed Mr Ma’s application to withdraw HK$1.5 million out of his frozen assets for paying the legal costs for his appeal against conviction in theft. [HCA 619/2016] [2023 HKCFI 197]
This continues the Q&A in our off-line real seminar on Uncollected and Undelivered Cargo on 28 May 2024. Participants were keen to know more about seaway bills, how war plays in insurance? How modes of transport differ mis-delivery claims handling? What is insurers’ attitude towards transloading claims? And finally, why mis-delivery and uncollected cargo claims deserve special attention. SMIC deals with similar questions daily. Each case varies in its cause, and therefore healing recipe differs. But if you are conversant with fundamentals. They could be simple.
The Hong Kong High Court issued a Decision on 22 Feb 2021 holding that the wreck removal claims of a ship sunk were not subject to the Convention on Limitation of Liability for Maritime Claims 1976. [HCAJ 98/2019] [2021 HKCFI 396]
In our Chans advice/244, we reported the Hong Kong High Court case [HCA937/2016] [2021 HKCFI 2310] that the forwarder was held liable to pay nominal damages of HKD1,000 to the shipper in the cargo misdelivery claim of USD1,299,189.87. On 20 October 2021, the Hong Kong High Court issued a Decision on Costs holding the shipper liable to pay the costs of the forwarder. [2021 HKCFI 3021]
The Hong Kong High Court issued a Judgment on 9/4/2018 dealing with a cargo total loss case in which a NVOC in Malta was wrongly sued (because it had the same name as that of the correct NVOC in BVI). [HCAJ 65/2016], [2018 HKCFI 699]
Remember Chans advice/142 dated 31/10/2012 that the High Court of Hong Kong held the forwarder liable for cargo misdelivery without production of original bills of lading? The High Court of Hong Kong issued another Judgment on 4/12/2012 dealing with the interest and costs. [HCCL 20/2011 & HCCL 21/2011]
The District Court of Hong Kong issued a Judgment on 21/4/2011 dismissing a forwarder’s cargo indemnity claim of US$46,201.81 against a trucking company. [DCCJ 2092/2009]
The Hong Kong High Court issued a Decision on 25 February 2019 dealing with Changhong Group’s delayed application for leave to appeal in relation to the collision case reported in our Chans advice/218 and Chans advice/215. [HCAJ3/2018, 2019HKCFI542]
In our newsletter last month, we talked about some essential terms in house Air Waybills. In this issue, as the continuation of the loss prevention exercise for freight forwarders, we would like to discuss some essential terms in house Bills of Lading.
There are three ways of fulfilling the deposit requirement of the Ministry of Transport (“MOT”) in the People’s Republic of China (“PRC”) for your NVOCC license.
The English High Court issued a Judgment on 15/5/2015 maintaining an anti-suit injunction to restrain the Xiamen Maritime Court’s legal proceedings in breach of a London arbitration agreement. [Case No: 2015-515], [2015 WL 2238741], [2015 EWHC 1974 COMM]
The High Court of Hong Kong issued a summary Judgment on 28/9/2012 holding a forwarder liable for US$626,389 plus costs and interest for misdelivery of cargoes without production of the original bills of lading. [HCCL 20/2011 & HCCL 21/2011]
The Hong Kong High Court issued a Decision on 20/12/2017 dealing with a dispute of US$948,802.05 (as the price of bunkers supplied to a vessel) between a vessel charterer and a bunker supplier. [HCA2265/2016]
The Hong Kong High Court issued a Decision on 21 July 2023 in relation to a case that an aircraft (worth at least USD 80 million) and its cargoes were destroyed by a fire caused by the goods of chlorine dioxide disinfection tablets. [HCA 837/2022] [2023 HKCFI 1896]
The Hong Kong High Court issued a Judgment on 21/7/2014 discharging a Mareva injunction in relation to a cargo misdelivery claim of about US$12 million. [HCA 2368/2012]
The Hong Kong Court of Appeal issued a Judgment on 20 September 2019 declining to give leave of appeal to Changhong Group in relation to the High Court Decision dated 29 January 2019 (reported in our Chans advice/221). [CAMP197/2019] [2019HKCA1061]
The Hong Kong District Court issued a Decision on 30 April 2021 dealing with a personal injury case in relation to a container terminal. [DCPI 110/2020] [2021 HKDC 463]
We mentioned in our Chans advice/225 that the limit of liability under the Montreal Convention for carriage of cargoes was increased from 19 SDR/kg to 22 SDR/kg of the gross weight of the cargoes effective on 28 December 2019. We have recently received some forwarders’ request asking us to talk about the major terms in the Montreal Convention. We in this issue would like to introduce the Montreal Convention’s major provisions as follows:
The High Court of Hong Kong issued a Judgment on 1/11/2012 ordering the USA/Canada owners of a cargo (a yacht) to put up HK$250,000 as further security for costs in their legal action against the ship owners. [HCAJ 177/2009]
The Hong Kong High Court issued a Judgment on 11/12/2013 holding that a Hong Kong plaintiff needed to put up a security for costs in a court case concerning a yacht sinking incident. [HCCL 5/2013]
The High Court of Hong Kong issued a Judgment on 22/5/2017 holding that the District Court has jurisdiction to determine bill of lading and bailment cases. [HCAJ 150/2014]
