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

(back to preceding text)

      Mr. Johnson relied on the concluding words of the section "as if the contract contained in the bill of lading had been made with himself." He argued that by these words Parliament intended that the name of the shippers should be deleted as the shippers named in the bill of lading, and the name of the receivers substituted. I do not agree. In my opinion the words serve only to underline the legislative purpose, namely, to create an exception to the rule that only the parties can sue on a contract.

      Much the strongest of Mr. Johnson's arguments depended on the language of section 2. Why, he asked, should Parliament expressly preserve the carrier's right to claim freight against the original shipper, if the shipper was to remain subject to all his original liabilities in any event? There is no very obvious answer to this question, other than that the words were inserted out of an abundance of caution. No doubt also the right to claim freight would be the right which would most readily spring to mind in the context of a shipper's liability. But whatever the historical or legislative explanation for section 2, I do not regard the express reference to the right to claim freight as excluding by implication the right to claim damages for shipping dangerous goods without the consent of the carrier. Indeed it might seem an odd result that the shippers should remain liable for the freight, but not for the consequences of shipping dangerous cargo.

      As to authority, Mr. Johnson relied mainly on Smurthwaite v. Wilkins (1862) 11 C.B.N.S. 842. In that case the carrier claimed freight from an intermediate holder of the bill of lading. It was contended that, like the original shipper, the intermediate holder remained liable for the freight, although he had parted with all interest in the goods by selling them on to a third party, and endorsing over the bill of lading. Erle C.J. described such a consequence as "monstrous" and "clearly repugnant to one's notion of justice." Parliament could not have intended such a result. Erle C.J. did not deal with the position of the original shipper.

      There is an unguarded observation of Williams J., on which Mr. Johnson relied, which might suggest that the endorsement of the bill of lading divests the original shipper of all his liabilities including, apparently, his liability for freight. But Williams J. cannot have meant this, in view of section 2 of the Act. His observation must have been intended to apply only to an intermediate endorsee, in which connection it makes good sense. I would respectfully disagree with the comment on Smurthwaite v. Wilkins in Carver's Carriage by Sea 13th ed. (1982) para. 95.

      A year earlier Pollock C.B. had put the position accurately when he said in Fox v. Nott (1861) 6 Hurl. & Nor., 630 at 636:

    "The statute creates a new liability, but it does not exonerate the person [i.e. the original shipper] who has entered into an express contract."

      More important, to my mind, than these early cases, are the views of the textbook writers, which, with the uncertain exception of Carver op cit are unanimous on the point. Many a claim must have been settled on the basis of the statement in the 19th ed. (1984) of Scrutton on Charter Parties and Bills of Lading at p. 28 and its predecessors: see now 20th ed. (1996) at p. 40. Insurance premiums must have been adjusted for many years on the same view of the law. I would be reluctant to disturb such a course of business unless convinced that the textbook writers are wrong. In my view they are not. It follows that the shippers have not been divested of their liability for shipping dangerous goods by the operation of the Act of 1855. It is satisfactory that this conclusion accords with the recommendations of the Joint Law Commissions, and that the result would have been the same under section 3(3) of the Carriage of Goods by Sea Act 1992.

Shipment of dangerous goods at common law

      Since the shippers are in my view liable in full for the consequences of shipping the infested groundnuts by virtue of Article IV, r. 6, the last question does not arise. But the question was fully argued, and although your Lordships are always reluctant to decide a point on which their views will be obiter, nevertheless it seems appropriate to make an exception in this case.

      The point at issue arises because of a difference of opinion in Brass v. Maitland (1856) 6 E. & B. 470. The facts in that case were that the plaintiffs were owners of a general ship. The defendants shipped a consignment of chloride of lime, better known as bleaching powder, on board the plaintiffs' vessel. Chloride of lime is a corrosive substance liable to damage other cargo if it escapes. The plaintiff shipowners were unaware of the dangerous nature of the cargo. They claimed damages from the defendants on two counts. The third plea by way of defence was that the defendants had bought the goods from a third party already packed, and that they had no knowledge, or means of knowledge, that the packing was insufficient, and that they were not guilty of negligence. It was held by the majority that the third plea was bad in law. Lord Campbell C.J. said, at p. 481:

    "Where the owners of a general ship undertake that they will receive goods and safely carry them and deliver them at the destined port, I am of the opinion that the shippers undertake that they will not deliver, to be carried in the voyage, packages of goods of a dangerous nature, which those employed on behalf of the shipowner may not on inspection be reasonably expected to know to be of a dangerous nature, without expressly giving notice that they are of a dangerous nature."

On the question whether absence of knowledge or means of knowledge on the part of the shippers is a good defence, Lord Campbell said, at p. 486:

    "The defendants, and not the plaintiffs, must suffer, if from the ignorance of the defendants a notice was not given to the plaintiffs, which the plaintiffs were entitled to receive, and from the want of this notice a loss has arisen which must fall either on the plaintiffs or on the defendants. I therefore hold the third plea to be bad."

Crompton J. took a different view. He would have held that knowledge on the part of the shipper is an essential ingredient of liability. At p. 492 he said:

    "I entertain great doubt whether either the duty or the warranty extends beyond the cases where the shipper has knowledge, or means of knowledge, of the dangerous nature of the goods when shipped, or where he has been guilty of some negligence, as shipper, as by shipping without communicating danger which he had the means of knowing and ought to have communicated."

A little later he said, at p. 493:

    ". . . where no negligence is alleged, or where the plea negatives any alleged negligence, I doubt extremely whether any right of action can exist."

      Mr. Johnson relies heavily on the dissenting judgment of Crompton J. and the commentary in the 13th edition (1892) of Abbott on Shipping, a work of great authority, where it is said that the powerful reasons urged by Crompton J. rendered the decision, to say the least, doubtful. In the 14th ed. (1901) it is said, at p. 647 that Crompton J.'s views are more in accordance with later authorities.

      But when one looks at the later authorities, and in particular at Bamfield v. Goole and Sheffield Transport Co. Ltd. [1910] 2 K.B. 94 and Great Northern Railway Co. v. L.E.P. Transport and Depository Ltd. [1922] 2 K.B. 742 it is the majority view which has found favour. It was suggested by Mr. Johnson that Bamfield v. Goole and the Great Northern Railway cases can be explained on the ground that the plaintiffs in those cases were common carriers. That may or may not be a relevant distinction. What matters is that in both cases the court regarded itself as being bound by the majority decision in Brass v. Maitland 6 E. & B. 470 which was not a case of a common carrier.

      Mr. Johnson advanced a number of more wide ranging arguments, that to hold the shippers strictly liable for shipping dangerous goods would be impracticable and unreasonable, and create an anomalous imbalance between the rights and liabilities of shippers and carriers. But equally strong arguments of a general nature can be advanced on the other side.

      The dispute between the shippers and the carriers on this point is a dispute which has been rumbling on for well over a century. It is time for your Lordships to make a decision one way or the other. In the end that decision depends mainly on whether the majority decision in Brass v. Maitland, which has stood for 140 years, should now be overruled. I am of the opinion that it should not. I agree with the majority in that case and would hold that the liability of a shipper for shipping dangerous goods at common law, when it arises, does not depend on his knowledge or means of knowledge that the goods are dangerous.

      An incidental advantage of that conclusion is that the liability of the shipper will be the same whether it arises by virtue of an implied term at common law, or under Article IV, r. 6 of The Hague Rules.

      For the reasons mentioned earlier I would dismiss the appeal.


My Lords,

      The answers to important questions arising in this case have been a matter of controversy in this country and elsewhere for many years. Moreover a divergence in approach between the courts of this country and the courts of the United States in regard to Article IV, r. 6 of the Hague Rules has emerged. In these circumstances I propose to explain the reasons for my conclusions.
Was the cargo "dangerous" within the meaning of Article IV, r. 6 of the Hague Rules?

      The first question is whether the cargo was "dangerous" within the meaning of Article IV, r. 6 of the Hague Rules as scheduled to the Carriage of Goods by Sea Act 1924. Having found that there was no damage to the vessel, Longmore J. concluded ( [1994] Lloyd's Rep. 171, at 180):

    ". . . There was, however, damage to the other cargo since it had eventually to be dumped at sea and was totally lost. . . The rejection and subsequent dumping of other cargo on board the same vessel seem to me to be a natural and not unlikely consequence of shipping Khapra-infested cargo, which is thus dangerous in the sense of being liable to give rise to loss of other cargo shipped in the same vessel.

    I therefore conclude that the ground-nuts shipped by the defendants were "goods of a dangerous nature" within art. IV. r. 6 of the Hague Rules."

What made the cargo dangerous was the fact that the shipment and voyage was to countries where the imposition of a quarantine and an order for the dumping of the entire cargo was to be expected. In that sense the Khapra-infested cargo posed a physical danger to the other cargo. On that factual basis the judge ruled that as a matter of law the cargo was "of a dangerous nature" within Article IV, r. 6. I agree.

      Given the somewhat philosophical debate at the Bar about the meaning of "goods of . . . [a] dangerous nature" in the context of notions such as attributes, properties and substance, I would mention only two practical matters. First, it would be wrong to apply the ejusdem generis rule to the words "goods of an inflammable, explosive or dangerous nature." These are disparate categories of goods. Each word must be given its natural meaning, and "dangerous" ought not to be restrictively interpreted by reason of the preceding words. Secondly, it would be wrong to detract from the generality and width of the expression "goods of . . . [a] dangerous nature" by importing the suggested restriction that the goods must by themselves, or by reason of their inherent properties, pose a danger to the ship or other cargo. For my part I would resist any temptation to substitute for the ordinary and non technical expression "goods . . . of a dangerous nature" any other formulation. Being in full agreement with the way in which Longmore J. approached and decided this point I need say no more about it.

Does Article IV. r. 6 provide a free-standing bundle of rights to carriers?

      The question to be resolved is whether Article IV, r. 6 provides a free standing bundle of rights and obligations or whether those rights and obligations are qualified by Article IV, r. 3. The answer to this question is far from obvious.

      Counsel for the shippers said that it is wrong to focus on Article IV, r. 6 in isolation and to form a presumptive view of its nature and scope on that basis. I agree. Like Longmore J. and Hirst L.J. I proceed to consider Article IV. r. 6 and Article IV, r. 3 in the context in which they appear. Article IV, r. 3 is cast in negative form. It provides for an immunity in favour of the shipper for loss sustained by carrier "from any cause without the act, fault or neglect of the shipper." It is a general provision. Article IV, r. 6 is a very specific provision. It falls into three parts. The first part allows the carrier to land, destroy or render innocuous goods of a dangerous nature to the shipment of which the carrier has not consented. The carrier may exercise this liberty without incurring any liability to pay compensation. The second part makes the shipper liable for all expenses directly or indirectly arising from such shipment. The words which I have underlined seem to be a reference back to a shipment as described in the first part. The third part concerns shipment of goods to which the carrier has consented with knowledge of their nature and character but which become a danger to the ship or cargo. Again the carrier is allowed to land, destroy or render innocuous the goods without incurring any liability "except to general average, if any." In such cases, however, the shipper is not liable in damages to the carrier.

      That brings me directly to the competing arguments. Counsel for the owners said that Article IV, r. 6 is not expressed to be "subject to Article IV, r. 3" and suggested that this omission is significant. Counsel for the shippers put forward the counter argument that Article IV, r. 6 could have been introduced as applying "Notwithstanding Article IV, r. 3." Judged simply as language that could have been used, but was not used, I regard these points as self cancelling makeweights. Counsel for the owners also drew attention to Article IV, r. 5 which provides that the shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity and weight, as furnished by him. Plainly this provision imposes a free-standing and absolute obligation on shippers. The owners pointed out that Article IV, r. 3 is not expressly made subject to Article IV, r. 5. They argued that this factor supports the argument that Article IV, r. 3 also does not qualify Article IV, r. 6. This is a type of argument that might have some attraction in the construction of a conveyancing document. But in the interpretation of a multi-lateral trade convention it is a rather insubstantial point on which I would not wish to put any weight. The search ought to be for more secure footholds on which to make a judgment in regard to the meaning of provisions in the Hague Rules.

      This much we know about the broad objective of the Hague Rules: it was intended to reign in the unbridled freedom of contract of owners to impose terms which were "so unreasonable and unjust in their terms as to exempt from almost every conceivable risk and responsibility" ((1992) 108 L.Q.R, 501, at p. 502); it aimed to achieve this by a pragmatic compromise between interests of owners and shippers; and the Hague Rules were designed to achieve a part harmonization of the diverse laws of trading nations at least in the areas which the convention covered. But these general aims tells us nothing about the meaning of Article IV, r. 3 or Article IV, r. 6. One is therefore remitted to the language of the relevant parts of the Hague Rules as the authoritative guide to the intention of the framers of the Hague Rules.

      Counsel for the owners relied on two factors of substance in support of his submission that Article IV, r. 6 is a free-standing provision. First, the immunities provided for in Article IV, r. 3 are expressed in language of generality. On the other hand Article IV, r. 6 spells out a specific bundle of rights in respect of the shipment of goods which may become a danger to the ship or cargo. Counsel for the owners relied on the generalia specialibus non derogant principle which informs the drafting techniques of English Parliamentary draftsmen. The point can, however, be put on a broader basis. In our daily lives we do not necessarily regard general instructions as impinging on specific instructions. Similarly, in the construction of documents we may proceed on a initial premise that a general provision does not necessarily qualify a specific provision in the same document. That common sense consideration also applies to international conventions. But it is not a mechanical rule. Everything depends on the context. And ultimately the matter is one of judgment. In the present case my view is that the contrast between the generality of Article IV, r. 3 and the specificity of Article IV, r. 6 goes some way to supporting the proposition that the latter ought be construed as free-standing. But I am not saying that on its own this is a decisive factor in favour of the interpretation put forward by the owners. The second point of substance is the argument that Article IV, r. 6 in its three different parts points in a similar direction. The right given in the first and third parts to the carrier to land, etc, dangerous cargo cannot sensibly depend on whether the shippers knew or ought to have known of the dangerous nature of the cargo. That would be impractical: the carrier must be able to land, etc, dangerous cargo irrespective of his shippers actual or constructive knowledge. Counsel for the shippers did not dispute this proposition. But he said that this liberty to land dangerous cargo already existed under the common law. That is no answer: pro tanto the Hague Rules upon their enactment displaced the common law. It follows that the liberty to land dangerous cargo under the first and third parts derives exclusively from Article IV, r. 6. And in respect of the first and third parts it exists irrespective of the actual or constructive knowledge of the shippers. If one were now to accept the shippers' argument there would be this difference between the first and third parts as contrasted with the second part: only in respect of the second part would the rights of the owners be conditional upon the actual or constructive knowledge, or due diligence, of the shippers. But this is prima facie implausible because the rights to land, etc, dangerous cargo, and to claim damages seem to arise in the same circumstances. Indeed the second part in imposing liability for damage resulting from "such shipment" refers back the "shipment" of dangerous cargo, etc, in the first part. The natural construction is therefore that in neither the first nor the second parts (or for that matter the third part) are the rights of owners conditional upon the actual or constructive knowledge, or due diligence, of shippers. This is a point of some weight.

      Cumulatively, the two factors identified in the last paragraph point to Article IV, r. 6 being of a free-standing nature. But now I have to set against this initial impression three matters upon which counsel for the shippers relied. First there are the decisions of the courts of the United States to which my noble and learned friend Lord Lloyd of Berwick has referred. Counsel for the owners criticised the reasoning in some of those cases. For my part I regard it as unnecessary to discuss these cases in detail. I have found the analysis of the position in the United States in Wilford, Coghlin and Kimball, Time Charters, 4th ed., (1995), at pp. 169 and 173-176, of assistance. Mr. Kimball is the senior partner of a New York law firm and a distinguished maritime lawyer. No doubt he was responsible for the separate discussions of United States law in this book. It is stated in this book that the courts in the United States have taken the view that Article IV, r. 3 qualifies Article IV, r. 6: at 169. Like Mustill J. in The Athanasia Comninos [1990] 1 Lloyd's Rep. 277 I am satisfied that this is the established position in the United States. That is a weighty factor against my initial view that Article IV, r. 6 contains a bundle of free-standing rights in favour of the owners. In the construction of an international convention an English court does not easily differ from a crystallised body of judicial opinion in the United States.

      That brings me to the argument for the shippers based on the travaux preparatoires of the Hague Rules. Those materials are now readily accessible: see Michael F. Sturley, The Legislative History of the Carriage of Goods by Sea Act and The Travaux Preparatoires of the Hague Rules (1990) Volumes 1-3. Although the text of a convention must be accorded primacy in matters of interpretation, it is well settled that the travaux preparatoires of an international convention may be used as "supplementary means of interpretation": compare art 31, Vienna Convention the Law of Treaties, Vienna, 23 May 1969. Following Fothergill v. Monarch Airlines Ltd. [1981] A.C. 251, I would be quite prepared, in an appropriate case involving truly feasible alternative interpretations of a convention, to allow the evidence contained in the travaux preparatoires to be determinative of the question of construction. But that is only possible where the court is satisfied that the travaux preparatoires clearly and indisputably point to a definite legal intention: see Fothergill v. Monarch Airlines Ltd., per Lord Wilberforce, at 278C. Only a bull's eye counts. Nothing less will do. In the present case the shippers relied on the fact that on 11 October 1922 at the London Conference the chairman stated with reference to Article IV, r. 3 his view that "the words framed have been designed to give the shipper the largest protection that could be devised for him" and that the conference agreed. Neither this passage nor any other exchanges reflected in the travaux preparatoires throw any light on the question whether Article IV, r. 6 was intended as a free-standing provision. The statement that Article IV, r. 3 was designed to give the shipper "the largest protection that could be devised for him" was undoubtedly intended to give comfort to shippers but it is singularly uninformative even as to the scope of Article IV, r. 3. It was no more than a statement that under Article IV, r. 3 shippers get the largest protection that in a practical world could be afforded to them. In context the chairman's statement can be seen to be weasel words. The resort to the travaux preparatoires provided nothing worthy of consideration in the process of the interpretation of Article IV, r. 3 and Article IV, r. 6.

      Counsel to the shippers also relied on evidence given by Scrutton L.J. before the Joint Committee on the Carriage of Goods by Sea Act in June 1923 at the time when the United Kingdom had already decided that effect should be given to the Hague Rules: see 1923 V Parliamentary Papers, 27 June 1912, par 442, at p. 94. Scrutton L.J. offered the view that the committee should consider whether Article IV, r. 3 "would in any way limit the shippers and others as to shipping dangerous goods." But, as Lord Roskill pointed out in an elegant piece in the Law Quarterly Review Scrutton L.J., notwithstanding a changing order in regard to world trade, was a passionate protagonist of the freedom of owners to dictate their terms: (1992) 108 L.Q.R. 501-505. Referring to the evidence of Scrutton L.J. and Frank MacKinnon Q.C. before the committee Lord Roskill observed, at p. 502: