Owners of cargo lately laden on board the ship or vessel "Starsin" and others (Original Respondents and Cross-appellants) v. Owners and/or demise charterers of the ship or vessel "Starsin" (Original Appellants and Cross-respondents) and two other actions
150. In the Privy Council, Lord Wilberforce did not feel it necessary to enlarge on any of these points. He described his earlier judgment in The Eurymedon as having decided in principle that the 'Himalaya' clause was capable of conferring on third parties "defences and immunities conferred by the bill of lading upon the carrier" as if they were parties to "the contract contained in or evidenced by the bill of lading". (p.143)
151. I have not overlooked the judgment of Lord Goff in The Mahkutai  AC 650 PC in which he conducted a forward looking review of the cases to which I have already referred. The interest for present purposes is that it involved shipowners who were the actual carriers. But the shipowners were attempting to enforce an exclusive jurisdiction clause against the bill of lading holders and failed as a matter of construction both under the 'Himalaya' clause and the principle of bailment upon terms. In reaching this conclusion, Lord Goff repeated a statement found in one form or another in all the 'Himalaya' clause cases:
152. What emerges from these cases?
153. The first point is that the shipowners are the actual owners of the ship named on the front of the bill of lading, the Starsin, and the employers of her crew. They took possession of the goods and carried them. The consideration which they are giving to the shipper in order to make clause 5 enforceable between them - to "enact" the arrangement in the clause, to use Barwick CJ's language - is the actual carriage of the goods. That is the service - the "act or acts" - which they are performing for the cargo owners. They assumed the possession of the goods as carriers by way of sub-bailment and entered into a bailee-bailor relationship with the shipper (see Lord Pearson, sup). The bill of lading previously contained an inchoate contract of carriage - or "arrangement" - capable of becoming an enforceable contract when the shipowners enter upon the carriage of the shipper's goods. The shipowners have thus entered into a contract of carriage with the shipper. Both Lord Wilberforce and Barwick CJ treated the resultant contract as a mutual one but the mutuality arises from the performance of the service by the one party, here the carrying of the goods by the shipowners, and the agreement by the other that, should he do so, he shall be entitled to the stated protective provisions. Barwick CJ excluded an analysis involving an exchange of promises. Thus the person (the shipowners) performing the service (the carriage of the goods) does not promise in advance that he will do so nor that he will continue to do so. The 'Barwick' contract is not a contract with executory obligations; it is not a contract for the carriage of the goods. But it is a mutual contract of carriage which lasts as long as the shipowners remain the bailees of the goods as the actual performing carriers. The element of consideration and mutuality which the shipowners render to the shipper under the contract is their entering into this bailor/carrier relationship with the cargo owners and performing the carriage. In the event, they carried the cargo from Malaysia to Europe. Further, the contract is one which is "covered" by a bill of lading. Thus both the relevant person, here the shipowners, and the contract come within the definitions of "contract of carriage" and "carrier" in Article I (b) and (a) of the Hague Rules. Likewise, a contract of carriage which lasts only so long as the carrier concerned remains in possession of the goods as a carrier conforms to the Hague Rules definition of "carriage of goods" as covering "the period from the time when the goods are loaded on to the time they are discharged from the ship": Article I (e). (See also Article VII and the standard "Period of Responsibility" clause in the bills of lading.) The scheme of the Hague Rules is that they deal with the terms of the carriage not the destination to which they should be carried.
154. It may be asked why this consequence was not referred to in Midland Silicones, The Eurymedon or The New York Star. The answer is that they were all stevedore cases, as was the Canadian case ITO v Miida Electronics 28 DLR (4th) 641 referred to by my noble and learned friend Lord Steyn. (It is relevant to note in passing that the observations of McIntyre J in that case were made in the context of a carefully constructed contract between the carrier and the stevedore, the loss of the goods by theft subsequent to discharge, ie outside the Hague Rules period, and a 'Himalaya' clause which gave the stevedore no greater immunities than were given to the carrier by the bill of lading; contentious questions of the construction of the bill of lading nevertheless arose and required several pages of the judgment to resolve.) The stevedore is not a carrier. A stevedoring contract is not a contract of carriage. The 'Barwick' contracts did not include any element of carriage. A fundamental peculiarity of the present case is that the shipowners were the actual carriers who 'enacted' the 'Barwick' contract by becoming sub-bailees and performing the carriage of the claimants' cargo. The shipowners have escaped from being the original contracting carriers by relying upon the doctrine of privity of contract and the way in which the bills of lading were signed. They have brought themselves back in as a contracting carrier by relying upon clause 5 in the bills of lading and the privity of contract which it expressly creates.
155. It is argued that the 'Himalaya' clause contract is "collateral" to the bill of lading contract and therefore is not to be affected by such considerations as the Hague Rules. Why the use of the epithet "collateral" should have this effect is not clear. It does not address or affect the essential question: what is the 'Barwick' contract? In so far as a 'Himalaya' clause may include additional stipulations as between the person issuing the bill of lading and the shipper such as jurisdiction clauses or covenants not to sue, it may well be correct to use the word "collateral". But even then the substance may have to be looked at not just the form: The Hollandia  1 AC 565. But, as regards the persons referred to in the clause, clause 5 says that it is, for the purposes of all the provisions of the clause, made on behalf of such persons and to that extent all such persons shall "be deemed to be parties to the contract contained in or evidenced by this bill of lading". As between those persons and the shipper the resultant contract is not 'collateral'; it is the contract. The purpose of the additional use of these express words is to procure that transferees of the bill of lading shall be bound as well as the shipper: see the final sentence of the quotes from Lord Reid (sup) and Lord Wilberforce (sup). Clause 5 deliberately makes the contract between such persons and the shipper part of the bill of lading contract so as to obtain the benefit of it against other persons besides the shipper. Were it not for the inclusion of these words in the clause the shipowners would not have been able to rely upon as against any of the claimants in this litigation.
156. Then it is said that the contract is a "contract of exemption"; it merely exempts the other person. This may be a valid observation where the completion of the 'Barwick' contract does not involve the assumption of any special relationship towards the cargo owner. But, when the completion of the 'Barwick' contract involves becoming the sub-bailee of the goods and the actual performing carrier, the 'Barwick' is a contract of carriage, albeit purportedly on terms of complete exemption. True the contract does not include promises or executory obligations and will come to an end as soon as the relationship ceases, but that does not prevent the contract from being a contract and, while it subsists, a contract of carriage. To deny that it is a contract of carriage is to ignore the fact that the service being provided (and which makes the contract enforceable between them) and its subject matter is the carriage of the goods by the shipowners for the goods owner.
157. This leads on to the next point: what on the true construction of the bill of lading are the exemptions given to the shipowners as actual performing carriers? Is it a total exemption as stated in the opening words of the second paragraph of clause 5 or something less? Clause 5 provides, comprehensively, that "every exemption limitation, condition and liberty herein contained and every right exemption from liability, defence and immunity of whatsoever nature applicable to the carrier or to which the carrier is entitled hereunder shall also be available and shall extend to protect" the shipowners. Therefore one turns to clause 2 of the bill of lading
158. Clause 5 of the bills of lading is headed "Immunities" and starts with a long paragraph of exclusions from liability for loss or damage arising or resulting from a long list of possible causes. This paragraph is probably without any validity or effect whatsoever. In so far as it seeks to claim exemptions not permitted under the Hague Rules, it is under clause 2 and Article III r.8 invalid and void. In so far as it, in one or two instances, seeks to rely upon causes which are already excluded under the Hague Rules, eg, inherent vice (Art IV r.2(m)), it is redundant. The presence of this paragraph in this form of bill of lading is a clear illustration that substantial portions of the bill of lading terms may be without legal effect and/or be contradicted by other parts of the same clause or by other clauses of the bill of lading.
159. It is following this somewhat unpromising start that the reader arrives at the words relied upon by the shipowners, still part of the same clause but in a second and less long paragraph. It too starts with a blanket and comprehensive exclusion of any liability whatsoever. It is upon this part of the clause that the shipowners rely as containing the exemption. It is drafted widely enough to cover a very wide range of persons (including "any person who performs work on behalf of the vessel (sic) on which the goods are carried"). This part may present no problem for any entity, such as a stevedoring company, which is not a carrier and has no contract of carriage with the shipper. But for the shipowners it is by reason of clause 2 as ineffective as the preceding paragraph. It is not until one gets to the next part of the paragraph which contains the words given effect to in The Eurymedon and The New York Star, that the conflict with clause 2 of the bill of lading is resolved.
160. It is relevant at this point to observe in passing that the bills of lading already contemplate that there may be more than one carrier. Two clauses deal with this situation, clauses 16 and 17, respectively headed "Forwarding and Transhipment" and "Pre-Carriage and On-Carriage". Both of these subject matters are commercially commonplace in the international carriage of goods. They show that any application of clause 5 to carriers who are not the person who issued the bill of lading must be approached with caution and may raise problems of the construction of the bill of lading as a whole. This is not the place to discuss the law about the impact of the Hague Rules, and their successors, on these situations save to note that they do not countenance any evasion of the responsibilities and liabilities under those Rules. Clause 17 can be used as an illustration.
161. The same type of points can be made on clause 16 "FORWARDING AND TRANSHIPMENT" which is a much longer and more complex clause. It deals with a situation which is very similar to that arising in the present case, carriage of the goods on a ship which is not owned by the party on whose behalf the bill of lading was issued. It expressly contemplates more than one carrier. Where it applies, it contradicts and must displace clause 5. The scheme which it introduces is an authorised re-bailment or sub-bailment to another carrier. This is what happened in the present case, both factually and legally. The only difference in the present case is that the carriage on the Starsin was not pursuant to a liberty to tranship. In commercial terms, this is not a difference of substance. The same point can be made in relation to clause 16.
162. Therefore, applying The Eurymedon and The New York Star, the shipowners' attempt to get round clause 2 of the bill of lading and the Hague Rules fails and accordingly their defence fails. It is reassuring that this conclusion also conforms to the judicial statements as to the purpose (or function) of the 'Himalaya' clause and to the outcome which would be arrived at in jurisdictions which are not circumscribed by contractual criteria or by common law concerns with privity and consideration. Nor would a different conclusion have been arrived at under the Hague-Visby or Hamburg Rules. Nor would it be different if the Contracts (Rights of Third Parties) Act 1999 had applied; it would still have been necessary see what exemptions this bill of lading on its proper construction, including clause 2, conferred upon the shipowners. I can take the further points more shortly. Some are contentious.Total exemption as consideration:
163. This, as recognised by Barwick CJ, is a potential problem. (It was also the subject of comment by Lord Simon of Glaisdale in his dissent in The Eurymedon  AC at p.179.) It was not necessary to decide the point in either of the leading cases because in each the stevedores was able to rely upon the time limit and that sufficed to discharge them from all liability. But the problem is a real one: an agreement without legal content is not a legally enforceable contract. (See the well known dictum of Devlin J in Firestone v Vokins  1 Lloyds 32 at p.39.) Failure to take account of this problem in considering Lord Reid's fourth head, will lead to absurdities. (Factual circumstances giving rise to absurdities can also be postulated.) Like Barwick CJ, I would wish to give much closer consideration to the question before accepting the proposition that the 'Himalaya' contract can support a total absence of legal responsibility. However in the present case this point does not arise upon the correct construction of this bill of lading and, in a case such as the present, it may suffice that the third party actually assumes the possession of the claimant's goods together with the resultant bailee-bailor relationship and, indeed, joins in a common maritime adventure with the legal consequences that that entails, eg general average.Agency and authority:
164. The relevant elements were proved as facts in The Eurymedon and The New York Star. But the present case is not such a case. There was already a contract between the person issuing the bill of lading and the 'sub-contractor'. It was the timecharter. This made express provision for what any bill of lading contract involving the shipowners was to contain. This did not include any form of Himalaya clause. The bill of lading was to contain a Hague Rules clause paramount ("as attached"). It did not contain any authority to stipulate for a complete immunity. It should be remembered that one of the purposes of a clause paramount is to avoid a situation where the carrier by claiming too much loses even that which he could have claimed: see Article III r.8, inf. Thus the clause paramount provided: "If any term of this bill of lading be repugnant to any extent to any legislation by this clause incorporated, such term shall be void to that extent but no further." The preservation of this situation is of real value to an actual carrier and may well be a condition of its P&I cover. As previously explained the sub-bailment was on these terms. Also, the Hague Rules are not without other benefits to the carrier, for example the liability of the shipper in connection with the shipment of dangerous goods.
165. How then is it said that a carriage performed on Hague Rules terms can, after all performance has been completed, become a contract performed on terms of complete immunity? (It cannot satisfy the 'Barwick' analysis which requires a contract or 'arrangement' already made at the time of the issue of the bill of lading.) It is said: by the carrier later asserting a complete immunity in answer to subsequent litigation. I venture to suggest that this is both legal and commercial nonsense. It arises in the present case because the party invoking clause 5 is the actual carrier who had an express agreement with the timecharterer as to the terms upon which he was to carry the goods and what was to be put in the bills of lading and is then attempting to use the clause retrospectively to evade the Hague Rules. It shows that to accede to the shipowners' case involves the acceptance of very far reaching and anomalous propositions which would find no resonance in other jurisdictions. It is another reason why in my opinion the shipowners' defence must fail in this case.
166. During the discussion in argument of the references to "the ship" or "the vessel" in the bill of lading clauses and in the Hague Rules, particularly in Article III r.8, Mr Gee made various submissions in order to fit the words to his argument. It is correct that, say, in a charterparty forming part of a chain of charterparties in respect of the same voyage, each person chartering out the vessel assumes the role of her owner and, on a contractual incorporation of the Hague Rules, the legal obligations and liabilities of a carrier and that the same applies the other way round to the charterer in each charterparty, say, for freight. Each is acting as a principal and the charterparties should be construed accordingly. (Chains of commodity contracts are another example.) It is also correct to say that in some circumstances considerable verbal manipulation is permissible to give effect to what the court considers is the clear intention of the parties. The most striking example of this is Adamastos Shipping v Anglo-Saxon Petroleum  AC 133 where a clause paramount simply attached to a consecutive voyage party was held to apply to delays during the ballast legs. But the fact that Mr Gee's arguments do require some verbal manipulation of the bill of lading wording to make them fit does disclose that questions of construction and reconciliation do arise as I have made clear in relation to clause 5 on the one hand and clauses 16 and 17 on the other.
167. Article III r.8 provides
168. Mr Gee also cited and placed particular emphasis upon three New South Wales cases. The first was Gadsden v Australian Coastal Commission  1 NSWLR 575, CA. The defendants were the owners of a ship which carried the plaintiffs' goods from Port Kembla in New South Wales to Kwinana Western Australia. During the course of the carriage the goods were damaged as a result of the negligence of the defendant's servants. The ship was at the time under timecharter. The bills of lading were issued and signed on behalf of the timecharterers not the defendants. They did not contain any form of 'Himalaya' clause. The action was started after one year had expired. The Court of Appeal held that nevertheless the action should succeed. The defendants put their case on two grounds. The first was that, relying upon the Elder Dempster case, they could rely upon a clause in the bill of lading incorporating the time limit. The second was that they had in some way a statutory right to the defence. Moffitt P and Samuels JA (Hutley JA agreeing) summarily rejected the first defence as involving an unjustified extension of Elder Dempster and being inconsistent with the Wilson v Darling Island case, giving no other reasons save for adopting whatever the trial judge had said . Why this was thought to be so is not clear and is contrary to the judgment of the Privy Council in The Pioneer Container and, on my reading, with Fullagar J's judgment in Wilson v Darling Island. (Gilchrist Watts & Sanderson was referred to in argument but not in the judgments nor is there anywhere any reference to the terms of the timecharter.) This case provides no answer to Lord Goff's reasoning. Once the first defence was rejected, the second defence did not stand a chance. The defendant was a stranger to the bill of lading and any contract with the plaintiffs. The legislation in force in Australia at that time was still the Sea Carriage of Goods Act 1924 and its effect was only to incorporate the Hague Rules compulsorily into bills of lading contracts of carriage. Since the plaintiffs had no contract, they had no gateway into the statute. They sought to treat the statute as providing them with a freestanding defence under Article III r.6 because that rule included the words "and the ship". This was a hopeless argument because it did not address the relevant flaw in their case but it provided Samuels JA with the opportunity to discuss the nature of the action in rem in the course of which Samuels JA said at p.585: