The Owners of Cargo Laterly Laden on Board the Ship "Dong Do" v. The Owners and/or Demise Charterers of the Ships "Dong Do" and Others
Read the full judgment text of HCAJ 95/1988 on BabelCite. This HCAJ judgment was delivered on 4 June 1991.
1. This is an admiralty action in rem for damage to cargo. In early May 1987, three parcels of electrical machinery and equipment were loaded onto the vessel "bong DO" at Kobe in Japan. The goods were destined for Hong Kong. Upon discharge, the cargo was found to have been damaged.
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HCAJ000095/1988 HEADNOTE Admiralty action - bills of lading - proper law of the contract - shipowners' or charterers' bills - demise clauses in Hong Kong and Japanese Law. 1988, Folio AJ95 IN THE SUPREME COURT OF HONG KONG HIGH COURT ADMIRALITY JURISDICTION _______________ Admiralty Action in rem against: The ships "DONG DO', "BA DINH", and "HANOI 1" BETWEEN
______________ Coram: The Hon. Mr. Justice Sears in Court Dates of Hearing: 18, 19, 20, 21, 22, 25 and 26 February Date of Delivery of Judgment: 4 June 1991 __________ JUDGMENT __________ 1. This is an admiralty action in rem for damage to cargo. In early May 1987, three parcels of electrical machinery and equipment were loaded onto the vessel "bong DO" at Kobe in Japan. The goods were destined for Hong Kong. Upon discharge, the cargo was found to have been damaged. 2. The plaintiffs in the case are the cargo owners and the main owner is Mitsubishi of Japan. This vessel had been, pursuant to a Fixture Note of April 24th 1987 voyage-chartered to Meishin shipping Co. Ltd. pursuant to the terms of a GENCON charterparty. Meishin Shipping Co. Ltd. issued six bills of lading dated 1st May 1987, including the three bills of lading in respect of the cargo. 3. The issues in this case turn on the construction to be placed on the three bills of lading which are marked "KH-2, 3 & 6". 4. The plaintiffs, the cargo owners, have brought this claim against the vessel's owners, seeking to recover their loss by virtue of the damaged cargo, as a result of the failure to take due care in handling the cargo whilst on board the vessel. The claim is made in bailment and/or tort. 5. The defendants raise no defence to their liability in tort, but assert that they were parties to the contract of carriage contained in or evidenced by the three bills of lading, and that the claim is time barred either by virtue of provisions within the bills of lading or by the Hague Rules. 6. The issue, therefore, to be decided is whether the person who entered into the contract of carriage with the shipper under the bill of lading was the shipowner or the charterer. I should say at the outset that I am grateful to counsel for having set out their submissions clearly on this difficult issue. If I have failed to appreciate the full purport of their submissions, then the fault is mine and not theirs. 7. In order to decide the issue, I must answer three questions. 8. First, does Japanese law or Hong Kong law govern these bills of lading and their construction? Secondly, if Hong Kong law, are the shipowners parties to the contract of carriage evidenced by those bills of lading; and thirdly, if Japanese law, are the shipowners similarly parties. 9. I turn then to the first question. There is no dispute as to the court's approach. This question must be determined by Hong Kong conflicts of laws, that law being the lex fori, see Compagnie Tunisienne de Navigation S.A. v. Compagnie Armement Maritime S.A. [1971] AC 572 at 603, also the principles applicable to this question are to be found in Dicey and Morris on the Conflict of Laws, 11th Ed. at pages 1161 to 1197. Rule 1080 states -
10. Clause 2 of the bill of lading reads as follows :-
11. It is submitted by Mr. Haddon-Cave that Clauses 2 & 26 read together amount to an express choice of Japanese law. Clause 26, in my judgment, only gives an option to the carrier and does not purport to make Japanese law, the proper law, except where that option to sue in Japan has been exercised. 12. In my judgement, sub-rule 1 has not been satisfied. Sub-rule 2 states :-
13. I must look, therefore, at the terms and nature of this bill of lading. From the general circumstances of the case, the only references to be found to a specific system of law are to Japanese law. In Clause 2, the parties have stated that the bills of lading shall have effect subject to Japanese COGSA as the first preference. Further, there is to be found in clause 2 these words "if for any reason Japanese law is not applied". In my judgment, the inferred intention of the parties here was that Japanese law would govern the contract. 14. Even if I am wrong on this matter, sub-rule 3 states :-
15. Although these goods were being carried to Hong Kong and the consignees were in Hong Kong, and the sale contract was itself expressed to be subject to Hong Kong law in arbitration proceedings, nevertheless, in my judgment, the following factors indicate that the contract has its closest and most real connection with Japan. First, the bills of lading were all issued and signed in Tokyo. Secondly the shippers and charterers were both Japanese corporation. Thirdly, the place of shipment was Kobe. Fourthly, the terms and conditions of the bills of lading incorporate Japanese COGSA. I therefore hold on this question that these bills of lading are governed by and to be construed in accordance with Japanese law. 16. It is necessary however, to examine the second question with regard to Hong Kong law which as far as this case is concerned, is the same as English law. There is a rebuttable presumption that foreign law is the same as Hong Kong law and as I have held that these bills are to be construed according to Japanese law the plaintiffs have the burden of proving that Japanese law is different from Hong Kong law, were I to hold that applying Hong Kong law these bills are shipowners' bills. 17. I turn then to the second question. This is essentially a question of construction of this particular document. 18. There have been a variety of authorities cited to me, which all indicate that it is a question of fact on the evidence in each particular case, whether or not, on a true construction of the document, it is a shipowner's or a charterer's bill. I should, however, state these general propositions that when goods are loaded on board vessel for carriage, the owner of the ship is prima facie liable for any loss or damage to those goods, either in bailment or in tort. It is not surprising, therefore that the Hague Rules were enacted to regulate the relationship between shipowner and shipper, and to limit his liability. These rules therefore impose certain duties on the shipowner and grant him defences, including a right to limit his liability in terms of quantum, and to provide for a time bar for claims brought more than one year after the goods had been discharged from the ship. In SCRUTTON on Charterparties, at page 409 is set out the history of these rules. Secondly under the Fixture Note, the vessel was chartered to carry a cargo from Kobe to Hong Kong on payment of freight, and this is a contract of affreightment known as a voyage charterparty. The contract incorporates the terms and conditions of the GENCON form (Vol 2 p.135a). 19. Under Clause 9 of that form, the master is to sign bills of lading as presented without prejudice to the charterparty. As was said by Sheen J. in The Venezuela 1981 LLR 393 at p. 395 :-
20. It is, therefore of vital importance when construing this document to examine what the document contains. I annex to this judgment at Appendix A a copy of the face of the bill of lading. It can be seen that it is headed Meishin line bill of lading, with a little flag with the letter 'M'. At the bottom right-hand corner is contained a box 'For Meishin Shipping Co. Ltd. and lower down a signature with the words following "on behalf of master" It is submitted by the plaintiffs that the bill of lading here was signed by an officer of Meishin Shipping Co. Ltd. on behalf of the master for Meishin, so that Meishin will have contracted as a principal. 21. The defendants submit that it has been signed by the officer on behalf of the master or, agent of the ship. I should add that the fact that the signatory is an officer of Meishin is irrelevant. This is clearly a Meishin bill because that is its name appearing on the document, and it has been submitted to me in the course of argument that these types of bills in this form are utilized perhaps for the purposes of advertisement so that the line's name is brought to the attention of other persons. 22. However, I must seek to construe this document and also have regard to the words which are on the left-hand side of the box which states "In accepting this bill of lading, the shipper, owner and consignee of the goods and the holder of the Bill of lading agree to be bound by all its stipulations, exceptions and conditions where the written, stamped or printed, as fully as if they were all signed by such shipper, owner, consignee or holder notwithstanding any local customs or privileges to the contrary and agree teat this Bill of lading supersedes all other agreements for the shipping of these goods. In witness where the master or agent of the said ship has signed the number of bills of lading stated above all of this tenor and date, one of which being accompanied the others thus to stand void." 23. The general approach to matters of construction have been fully set out, and I do not repeat them by Brandon. J. (as he then was) in The Berkshire (1974) LLR 135. That judge adopted a two stage approach. First does the bill of lading purport to be a contract with the shipowners or the charterers; and secondly if so, did the shipowners authorizes its issuance on their behalf? 24. As far as the second matter is concerned there is no dispute between the parties and this does not arise. The only matter for decision, therefore is whether these bills are contracts with "the shipowners or charterer. This is a question of contruction, and I must examine the whole of the document, that is the face of the document and all the clauses contained at the rear. I must also look at the words used in their ordinary generally accepted meaning. 25. The submissions on this aspect of the case have been very wide and detailed, and I hope I will be forgiven if I have not done justice to all of the many intricate arguments which have been placed before me. 26. Although as I have said, I must give effect to all the words used and the box at the right hand bottom corner has the words in black capitals "FOR MEISHIN SHIPPING CO. LTD." in my judgment, this appears to be a charterer's bill. The signature which is appended to the document appears to be a signature on behalf of the master for Meishin Shipping Co. Ltd. 27. I must, however, construe the document in its totality. Clause 3 of the bill says :-
28. This is commonly known as a demise clause. Such a clause is usual and ordinary as was stated by Brandon, J. in the Berkshire. 29. It is accepted by the parties that this clause is a valid one in Hong Kong law see Mitsui v. Goldstar Line (1975) HKLR 74, although Mr. Haddon Cave reserves the right to invite a higher court to determine that it is invalid. He submits however, that the additional sentence at the end of this clause "if however it shall be adjudged. etc." sufficiently distinguishes the effect of the clause from the authorities I have previously cited. 30. Mr. Haddon Cave submits that the first part of Clause 3 deals with those who issue bills of lading in the sense of physical issue whereas the second part deals with the situation where some other person has in fact not only issued the bill of lading, but has also undertaken to be the contracting carrier. 31. I confess I find these submissions difficult to follow. The general effect and validity of a demise clause is not now in question on the authorities as they stand. (See also The Jalamohan (1988) 1 LLR at p. 443, where Hirst J. makes it clear that there is nothing anomalous about such a clause in English law.) 32. The additional words, in my judgment do not affect the validity of the first part nor lessen its effect. It appears to be an attempt to provide additional protection for persons other than the owner, or demise charterer who might be a carrier or a bailee. This could be for example a substituted carrier. I therefore find that this demise clause is a valid clause and is the best indication that this bill of lading is indeed a shipowner's bill. 33. On this question therefore I hold that construing these bills of lading according to Hong Kong law they are shipowners bills and the protection afforded within the bill as to a time bar effectively prevents the plaintiffs now suing the defendants. 34. The third question must now be answered. 35. As I have held that applying Hong Kong law this is a shipowner's bill the burden of proof is on the plaintiffs to show that Japanese law would produce a result different from that of Hong Kong law. Issues of foreign law are questions of fact for me to decide having regard to tile evidence. 36. A Japanese expert has given evidence on behalf of both parties, and they have conveniently produced reports of their views on foreign law. I naturally am somewhat diffident in seeking to disagree with one of these experts but I must do so. Further, my task is somewhat complicated by what is an imitation of Japanese culture, that views of learned writers may be expressed in modest and temperate words, although, such an approach may be an indication that views are strongly held. I am told it is part of Japanese culture that an expert is not dogmatic and therefore I must bear this in mind. Further, the principle of judicial precedent appears to be absent from Japanese jurisprudence. 37. What the parties do agree on, however is that it is a question of construction whether or not this bill of lading was a shipowner's or charterer's bill, and that in order to construe it I must look at the document as a whole. 38. Mr. Nishiyama is a partner in a Japanese law firm in Tokyo and he gave evidence on behalf of the plaintiffs. He examined the bills of lading and the pleadings in the case. He was one of the Japanese experts consulted in the "Griesheim" case decided by Power J. and the Court of Appeal in 1984 and he states that that decision shows an excellent analysis of Japanese law and that he considers that the Griesheim Judgments are an authority for the present case. 39. Whilst I have naturally paid the greatest respect to what has been said in the Court of Appeal and I am bound by any decisions oh principle to which they come nevertheless the construction of contracts or bills of lading depend on the particular circumstances of each case. It is apparent from that decision in the Court of Appeal that Japanese law recognizes that there can only be one carrier in respect of the carriage of a particular cargo. Nevertheless, whether this is a shipowner's or charterer's bill depends on the particular facts and circumstances of this bill of lading. 40. Mr. Nishiyama embarks in his report on a learned discussion on Japanese Cogsa and also the Commercial Code but his short point on construction is found at page 159 of, the bundle when he says this in relation to the words "for Meishin Shipping Co. Ltd." printed in the right hand bottom board "I assure, that it is self evident from this that who ever signed the bills of lading did so on behalf of Meishin Shipping Co. Ltd. which was a voyage charterer of the vessel. Question then is whether an additional phrase "on behalf of master" printed below the space for signature would in anyway affect the foregoing interpretation. I believe it would not since if the master was to sign the bills of lading by himself this phrase would not have been required and his signing would have meant that he did so on behalf of Meishin Shipping Co. Ltd. Thus it is quite logical to conclude that whoever signed the bills of lading did so on behalf of the master who is authorized to issue them on behalf of Meishin Shipping Co. Ltd. which as will be discussed later in (e) We believe was the carrier in the present case." 41. Mr. Hiratsuka is a senior partner of a law firm in Tokyo; he has had a distinguished professional life and is well versed and experienced in maritime law. He construes the bill of lading as an owner's bill principally because,
42. However, he accepts, that Article 7 of Japanese COGSA provides that bills of lading shall have
43. In the GRIESHEIM the Court of Appeal held that the omission of the name of the actual carrier did not render the bill invalid and textbook writers support that view. My task is however to construe the document which is accepted as being valid to discover who the carrier is. I have had regard to the arguments carefully set out in the respective opinions and if I only had to construe this document on its face it would appear that this is a charterer's bill. This is the same conclusion at which I arrived on a first blush construction as in Hong Kong law. However it is necessary to examine the document as a whole. 44. Clause 3 the demise clause is important and the experts have come to opposite views on its validity and effect. While considering my judgment the Defendants sought leave to adduce further expert evidence which I granted. I have received an additional affidavit from each expert commenting on a recent decision of the Tokyo District Court with which Mr. Hiratsuka was concerned. The Jasmine was decided by a Court equivalent to the Hong Kong High court and the Chief Justice was one of the Judges. Whilst the decision appears to be based on a contextual construction of the bill of lading certain observations are made about the demise clause which is in the standard form. I am informed that this decision is to appealed but the general approach of the Court to the demise clauses appear in my opinion to equate more closely to Hong Kong law. 45. The main points taken by Mr. Nishiyama are that clause 3 (i) effectively resurrects Article 759 (which provided that only the shipowner could as sued) and this Article is excluded from Japanese COGSA and (ii) a demise clause is contrary to Article 15(i) of Japanese COGSA. 46. However, underlying Mr. Nishiyama's reasoning is his opinion that, as under Japanese law there can only be one carrier, where a ship is chartered the ship-owner could not be the carrier. He was asked in cross-examination what would be the position if a ship is voyage -chartered and the shipowner wants to be the contracting party he answered that this could not be done. He sought to explain this answer by saying that the space in the ship has been given to the charterer who then becomes the carrier. This line of reasoning only emerged in oral evidence and seems, in my judgment to be contrary to the generally held proposition that in a voyage charterparty the court has to construe the bill of lading to ascertain which of the two competing parties - the ship-owner or the charterer - is the carrier. This exercise is unnecessary if Mr. Nishiyama's assertion is correct. 47. As a matter of fact, having considered all the evidence availabe to me I consider Mr. Nishiyama to be in error. This wrong approach may well have clouded his opinion on demise clauses. 48. Article 15(1) of COGSA renders "null and void" any term which is unfavourable to the shippers or is contrary to the provisions of Article 3. 49. I confess I find nothing in this point. The carrier's liabilities are not being lessened-all the clause does is to identify the contracting carrier. This view is supported by Professor Toda who had examined the position of time charterers This proposition was challenged by the Plaintiffs as unhelpful as this bill of lading involves a voyage charter party. 50. There was handed in a longer translation from Professor Toda and on reading that it seems to me that there is no valid distinction between the two types of charter party. At bundle 2 pages 237-241 Professor Toda discusses the Relationship between the Tine Charter and the Third Party. He is of the opinion that a time charter party "is a normal charter party which is a kind of contract of carriage? 51. I have considered the evidence placed before me and it has not been proved to my satisfaction that Japanese law on demise clauses is different from English (Hong Kong) law. 52. When I then construe this bill of lading in its entirety, I have come to the conclusion that under Japanese law it is a ship owner's bill. 53. This is the same conclusion I reach under Hong Kong law. 54. The result is that I find this is a shipowner's bill and the Plaintiffs claim is defeated by virtue of the time bar.
Representation: Mr. Charles Haddon Cave & Mr. Joseph Fox instructed by M/S. Clyde & Co. for the Plaintiffs Mr. Clifford Smith instructed by M/S. Holman Fenwick & Willan for the Defendants. |