Landmark Judgment: Package Limitation Under the Hague-Visby Rules

By the International Transport, Trade & Energy department

Facts of the case

In the recent case of Kyokuyo Co Ltd v A P Møller-Maersk A/S, Kyokuyo claimed as receiver of three container loads of frozen tuna, shipped under three separate waybills. The contracts of carriage initially contemplated issue of bills of lading and draft bills of lading were drawn up but waybills were issues instead due to delays. Two of the containers were delivered at Shimizu following the originally agreed discharge at Yokohama; the third was discharged at Yokohama. The claimant alleged that the tuna as delivered to it was damaged through raised temperatures during carriage and / or rough handling during re-stuffing into the replacement containers.

The High Court of Justice considered package limitation for containerised cargoes under the Hague-Visby Rules and the applicability of the Hague-Visby Rules where waybills were issued instead of bills of lading. The Court did not follow Greco v Mediterranean Shipping [2004] 2 Lloyd’s Rep 537, which has, up until now, been the only relevant authority on what constitutes a package or unit for containerised cargo under the Hague-Visby Rules. This case is also significant because the judgment resulted in considerable financial implications for the carrier.

Applicable law and judgment

It was argued, citing Rafaela S [2005] 2 AC 423, that the Hague-Visby rules did not apply because waybills were issued and not bills of lading. Following the decision in Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402, the judge found that it was enough that bills of lading were contemplated and would be issued in due course, and therefore the Hague-Visby Rules did apply.

The court then considered if the tuna loins were ‘units’ for the purposes of package limitation. The defendant argued they were not, because they could not have been shipped breakbulk without further packaging. The judge dismissed this line of argument and simply looked at the fact of the case; the loins had not been packaged together and therefore each one constituted a unit.

The defendant had argued, relying Greco, that the enumeration in the bill of lading must specify that the enumerated items were so packed as to be ‘packages or units’. The judge concluded that the ‘packages or units’ of the cargo as packed were the individual frozen loins and since they were identified and enumerated in the waybills as being the cargo, by operation of Article IV rule 5(c) of the Hague-Visby Rules they are the ‘packages or units’. The judge stated: “The language of enumeration is consistent with the truth (namely that the enumerated frozen loins were, “as packed”, individual articles of cargo, i.e. ‘units’). That suffices.”

Conclusion

English law may be authoritative (but not binding) in local proceedings and this judgment should give an indication of the likely finding as to whether individual cartons or packages within a container are to be regarded as a package for the purposes of limitation under the Hague Visby Rules.

For more information on the above, please contact:

Quintus van der Merwe
Head of the International Transport, Trade & Energy department
Shepstone & Wylie Attorneys
qvdm@wylie.co.za
+27 82 466 5062