Note: on May 15 2003, the Court of Appeal overruled the decision of Morison J. reported below. For a note on the Court of Appeal's decision, click here
In a case where, on arrival at the original contractual destination, the cargo interests refused to accept delivery of the cargo on the grounds that it was damaged, and subsequently arranged with the shipowners for it to be carried to and delivered at another port, the time limit under Article III Rule 6 of the Hague-Visby Rules began to run from the time at which the cargo "should have been delivered" at the original port of discharge and not from the time that discharge was completed at the new port of discharge. The Claimants’ suit was therefore time-barred and summary judgment was entered in favour of the defendant shipowners.
DMC Category Rating: Confirmed
Trafigura alleged that the shipowners were in breach of contract in tendering a notice of readiness at Lagos when the cargo had been contaminated by residues within the vessel's tanks of soya bean oil. They commenced proceedings in London against the owners on March 21 2001.The issue was the application of Article III Rule 6 of the HVR, which provided for the shipowners’ liability to be discharged unless "suit was brought within one year of the delivery [of the goods] or of the date when they should have been delivered". The question was whether time started to run from the date of delivery in Greece, which was within the one-year limit, or from the date when the cargo "should have been delivered" at Lagos, namely, at the latest by 6 February 2000.
The charterers’ argument was that the cargo had been delivered in Greece and that the proceedings were commenced within one year from that date. Accordingly, the second part of Article III Rule 6 of the HVR (the "should have been delivered" part) did not come into play.
The judge found that the complaint that had led to proceedings being brought in this case was the non-delivery of the cargo at Lagos, due allegedly to its condition. The relevant suit was, therefore, the claim for damaging the cargo during the contractual voyage from the load port to Lagos. "Lagos," he said, " was the only legitimate place of delivery in relation to the voyage about which complaint is made; and there was a wrongful refusal of [Trafigura] to take delivery there; the defendant had fulfilled the owners’ obligations under the voyage charter, subject to any claims that might have been made in relation to the state of the cargo".
The cause of action was therefore complete at Lagos and time would start to run from the date that the cargo "should have been delivered" there. The delivery in Greece and the non-delivery in Lagos were two separate and distinct events. The delivery in Greece was not the subject of the suit and it would be contrary to the underlying need for certainty and clarity to suggest that time started on delivery in Greece.
As a result, the judge gave summary judgment in the owners’ favour, on the grounds that Trafigura’s action was time-barred.
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