THE DEMISE AND IDENTITY OF CARRIER CLAUSES IN BILLS OF LADING
论述提单中的光船租赁和承运人身份条款之冲突
黄海波
I. Introduction
When goods are shipped on a chartered vessel by a party other than the charterer, the primary problem facing the shipper or the aggrieved cargo owner in the event of the carg being lost or damaged during transit is that he has to identify the correct carrier against whom the cargo claim can be pursued since the normal rule in common law is that only one party, either the shipowner or charterer, is liable as carrier under any individual carriage contract. The problem is even more serious where the contract is governed by the Hague/Visby Rules under which any cargo claim is barred if it is not instituted within one year of the cargo’s delivery or of the date when the cargo should have been delivered.
In normal circumstances the shipowner would be regarded as the carrier since, notwithstanding the existence of any charterparty, he remains responsible for the management of the ship and the master signs any bills as his agent. Even in the situation where the charterer is apparently a party to the bill of lading contract, he may still transfer contractual liability to the shipowner. One method of achieving this object is to include a demise or identity of carrier clause in the bill of lading. The demise clause stipulates that if the ship is not owned or chartered by demise to the company issuing the bill, then the contract evidenced by the bill is solely with the owner or demise charterer, and that the party issuing the bill of lading (usually the time or voyage charterer) is merely an agent and has no personal liability whatsoever in respect of the contract. The identity of carrier clause, although more direct, has the same effect. It declares that, under the contract evidenced by the bill, the carrier is the shipowner and the time or voyage charterer who issues the bill is only the agent, with no liability.
A particular feature of modern demise and identity of carrier clauses is that they are to be found tucked away on the reverse side of the bill of lading in minuscule print. This does not matter if they merely confirm what is in the signature box or what is set out elsewhere on the front of the bill. But what happens if they do not? Art 23 (v) of the ICC Uniform Customs and Practice for Documentary Credits (UCP 500) states that banks will not examine the contents of the terms and conditions of printed on the back of bills of lading. A problem which has therefore arisen in achieving the certainty sought by the ICC is that of bills which refer to the charterer as the carrier on the front and have a demise or identity of carrier clause on the back. Such a conflict has arisen in several cases decided in the last nine years since the adoption in 1994 of the UCP 500. In the latest leading case of Homburg Houtimport B.V. v. Agrosin Private Ltd. and Others (The Starsin), in respect of this issue, there are two completely reverse judgments. At first instance, Colman J. gave effect to the words on the front of the bill which described the charterers as carrier in preference to the identity of carrier and demise clauses on the back. The majority of the Court of Appeal, however, reversed Colman J.’s decision and were of the view that the demise clause had to be given greater weight. The House of Lords finally applied business common sense to overrule unanimously the majority decision of the Court of Appeal and thus restored the judgment of Colman J.
This paper will first illustrate and explain the typical wording of demise and identity of carrier clauses in bills of lading and will review the development of these clauses. The potential disadvantages of the clauses to the parties to the contract of carriage will also be touched upon.
Second, three academic arguments for invalidating the demise and identity of carrier clauses and the situation under the Hamburg Rules 1978 will be set forth.
Third, the positions on the issue of the validity of the demise and identity of carrier clauses in England, the United States, Canada, and other British Commonwealth countries, as well as the Continental civilian European nations, principally France, Belgium, and the Netherlands, will be examined respectively, after which the estoppel from relying on these clauses will be addressed.
The recent English decisions regarding the conflict between the signature on the front of the bill which identified the charterers as carrier and the demise and identity of carrier clauses on the reverse side, in Sunrise Maritime Inc. v. Uvisco Ltd. (The Hector) and The Starsin will then be analyzed in detail.
Finally, I will summarize the issue of the validity of the demise and identity of carrier clauses under the Hague and Hague/Visby Rules, as well as under the Hamburg Rules 1978, and will anticipate the likely future of these clauses.
II. The Wording, Development and Disadvantages of the
Demise and Identity of Carrier Clauses
The demise clause states that the voyage or time charterer who issues the bill of lading is not a party to the contract of carriage and is thus not a carrier, of which the following is a typical example:
“If the ship is not owned or chartered by demise to the company or line by whom this bill of lading is issued (as may be the case notwithstanding anything which appears to the contrary) the bill of lading shall take effect as a contract with the owner or demise charterer, as the case may be, as principal made through the agency of the said company or line who act as agents only and shall be under no personal liability whatsoever in respect thereof.”
Such clause restricts the rights of suit of the shipper or consignee of lost or damaged cargo, merely permitting them to take an action in contract against the shipowner, even though it is the charterer who has concluded the contract of carriage, collected the freight, and performed most of the duties of a carrier.
An alternative method by which the charterer can avoid liability is to insert an identity of carrier clause in the bill of lading. A typical example of such a clause is the following:
“The contract evidenced by this bill of lading is between the Merchant and the Owner of the vessel named herein and it is, therefore, agreed that the said shipowner alone shall be liable for any damage or loss due to any breach or non-performance of any obligation arising out of the contract of carriage.”
Such a clause has much the same effect as a demise clause, but is perhaps more acceptable to the shipper in that it avoids ambiguity by clearly designating the shipowner as the carrier.
The demise clause was drafted at the beginning of the World War II by Sir William McNai. All merchant shipping was then controlled by the government who by requisition chartered the vessels. The limitation of liability to the shipper or aggrieved cargo owner for the loss of, and damage to, the cargo during transit under the U.K. Merchant Shipping Act 1894, the U.S. Limitation of Shipowners’ Liability Act 1851 and Convention of Limitation of Liability for Maritime Claims 1924 was, however, only available to the owner of a vessel or a demise charterer. William McNair therefore advised that the solution was to make all bills of lading owner’s bills. The way he did this was to draft words which declared that the contract was with the shipowners or demise charterers, as the case may be, and that the charterer issuing the bill had no personal liability. The demise clause continued to be used after the end of the World War II and after the enactment of the 1957 and 1976 Limitation Conventions, as well as after national legislation, such as the U.K. Merchant Shipping Act 1995 and the Canada Shipping Act 1985, which allow charterers to limit liability. Currently, most modern bills of lading in use by liner companies contain the demise and/or identity of carrier clauses.
From the cargo claimant’s perspective, the demise and/or identity of carrier clauses may have procedural advantages in being able to make the shipowner personally liable in order to arrest the ship. The underlying problems is, however, that these clauses restrict the rights of suit of the shipper or consignee of lost or damaged cargo, merely permitting them to take an action in contract against the shipowner, who is often a one-ship company of uncertain solvency in remote, foreign location.
In practice, the demise and/or identity of carrier clauses are not always beneficial to the charterer. An example would be that because these clauses declare that the charterer is merely the agent of the shipowner, the freight could be paid directly to the latter, while the former could be precluded from retaining cargo or claiming a lien on cargo for freight.
Finally, the demise and/or identity of carrier clauses specifically indicate the shipowner or demise charterer as carrier, something not necessarily beneficial to the owner. The Berkshire, NGO Chew Hong Edible Oil Pte. Ltd. v. Scindia Steam Navigation Co. (The Jalamohan), Fetim B.V. and Others v. Oceanspeed Shipping ltd. (The Flecha), and Paterson Steamships Ltd. v. Aluminium Co. are all instances of shipowners being held liable as carrier to the shippers or cargo owners by virtue of the demise and/or identity of carrier clauses in the bills.
III. Three Academic Arguments for Invalidating the Demise
and Identity of Carrier Clauses
Although the demise and identity of carrier clauses in bills of lading have been existent for over 60 years since the World War II, there are a number of arguments arisen by academics expert in this field, asserting these clauses as invalid non-responsibility provisions, incompatible with the Hague/Visby Rules. What follows are three of them.
A. Inconsistency with UCP 500
By virtue of Art 23(a) of the ICC Uniform Customs and Practice for Documentary Credits (UCP 500), the carrier must be clearly identified on the face of the bill of lading where the bill covers a port to port shipment and is then negotiated to a bank in a documentary credit transaction. Some academic commentators therefore argued that the demise and/or identity of carrier clauses are incompatible with the UCP 500 and the latter may sound the death knell of these clauses. As Anthony D. Smith has phrased:
“The bill of lading’s demise clause provides that the unnamed owner of the ship is the carrier; this does not meet the UCP 500 requirement to identify the name of the carrier…Further, if the time charterer is named as the carrier and the bill of lading contains a demise clause, it is conceivable that a bank would still reject the document on the ground that the two provisions are inconsistent…The only solution to this problem is for time charterers to revise the provisions of their bills of lading and eliminate the demise clause. Concurrently, the name of the time charterer should be identified as the carrier on the face of the document.”
This argument has been partly upheld by the House of Lords in the recent case of The Starsin.
B. Breach of Art III rule 8 of Hague/Visby Rules or Similar Provisions
By inserting the demise and/or identity of carrier clauses in bills of lading, time (and possibly the voyage) charterers purport to deny that they ever were the contracting carriers and therefore reduce or remove the liability under the contract of carriage, despite their involvement in many facets of the ship’s operation. Art III rule 8 of the Hague/Visby Rules specifically prohibits a party from limiting or excluding its liability under a contract of carriage beyond the limitation regime found within the Rules themselves. As a result, it is submitted that the demise and identity of carrier clauses are null and void as illegal attempts by charterers to limit or exclude their liability. This argument was upheld by the United States Courts in the cases of Epstein v. United States, Blanchard Lumber v. S.S. Anthony II, and Thyssen Steel v. M/V Kavo Yerakas, although it has been expressly held, obiter, in the Australian case of Kaleej International Pty. Ltd. v. Gulf Shipping Lines, that the demise clause was a useful means of clarifying any ambiguities and did not seek to relieve the carrier of liability, but rather to define who the carrier was. Neither the English decisions nor the recent Canadian judgments mentioned Art III rule 8 of the Hague/Visby Rules. Unless a much wider view is taken of Art III rule 8 which refers more specifically to clauses relieving the carrier from liability, such a argument seems unlikely to succeed since the aim of the demise and identity of carrier clauses is merely to identify the party under the Rules rather than seeking to exclude liability.
C. Joint and Several Contractual Liability
In most cases, the shipowner and the charterer share the duties of a carrier; the charterer is usually responsible for loading, discharging at the ports visited (and any deviations), while the shipowner is responsible for care of the cargo during the voyage. It has therefore been strongly argued by Professor Tetley that the carriage of goods by sea is in reality a joint venture between shipowners and charterers, and that they are thus jointly and severally liable to third parties. Any agreement, including the demise and/or identity of carrier clauses in bills of lading, between a charterer and shipowner that there would not be joint and several liability between them, should not be defensible against third parties, such as shippers and consignees. The shipper should therefore be able to sue the time charterer alone for the entire amount of its provable damages. The concept of joint and several liability is recognized in many legal systems. The Scandinavian Maritime Codes provide for joint liability and their approach seems heavily to have influenced Art 10 of the Hamburg Rules 1978, which provides that the contracting carrier and actual carrier are jointly and severally liable to third parties. The Chinese Maritime Code 1992 Art 60 is similar. The notion of liability of joint and several contracting carriers, however, seems rarely to have been supported in England, Canada and the U.S., and has been rejected by the English Courts in the case of The Jalamohan and The Starsin , as well as by the Canadian Court in the recent cases of Union Carbide Corp. v. Fednav Ltd. and Jian Sheng Co. v. Great Tempo S.A, on the ground that these nations are contracting States parties to the Hague and/or Hague-Visby Rules and where the Rules apply, it is assumed that the only possibility is for there to be a contracting carrier who is to be sued in contract and an actual, or performing, carrier to be sued in tort. Such an argument might, in consequence, be thought too radical in the context of the existing case law on identity of carrier.
IV. Situation under the Hamburg Rules 1978
Art 1 of the Hamburg Rules 1978 makes a distinction between the contracting carrier and actual carrier. The contracting carrier could include the shipowner, the charterer, the freight forwarder, or any transport operator who has entered into the contract of carriage. Art 10 further provides that the contracting carrier and actual carrier are jointly and severally liable to third parties and the contracting carrier remains liable for the entire voyage and for the acts and omissions of the actual carrier.
Art 14 (2) of the Hamburg Rules deals with the authority issue and provides that a bill of lading signed by the master of the ship carrying the goods is deemed to have been signed on behalf of the carrier. The Hamburg Rules thus establish an original presumption that the contracting carrier (usually the time or voyage charterer) is bound under a bill of lading signed by the master or for him by an authorized person. This weakens the traditional concept underlying the demise and identity of carrier clauses under the common law and the Hague and Hague/Visby Rules, that a bill of lading signed by or for the master binds only the shipowner and not the charterer.
Moreover, Art 23 (1) also prohibits any stipulation in a contract of carriage by sea, in a bill of lading, or in any other document evidencing the contract of carriage by sea, which derogates, directly or indirectly, from the provisions of the Convention. This wording is much wider than Art III rule 8 of the Hague and Hague/Visby Rules which refers more specifically to clauses relieving the carrier from liability. Art 23 could certainly be used to argue that a demise or identity of carrier clause is null and void in that the clause indirectly derogated from the Convention where the charterer was the contracting carrier, named in the bill as required by Art 15, but the charterer claimed that the demise or identity of carrier clause operated so that it had no contractual liability.
The Hamburg Rules therefore seem to have resolved the controversy over the validity of the demise and identity of carrier clauses. However, nothing in the Hamburg Rules specifically defines who the contracting carrier is as between the shipowner and charterer, and there is no mention of the existence of the joint and several liability between the shipowner and charerer. Accordingly, even under the Hamburg Rules, the whole question as to the certainty of when a bill of lading with a demise or identity of carrier clause identifying the shipowner as carrier will be interpreted as an owner’s bill and when it will be treated as a charterer’s bill is still not clear.
V. The Positions on the Issue of the Validity of the Demise
and Identity of Carrier Clauses
In order to understand precisely the demise and identity of carrier clauses, it is imperative to review the positions on the issue of the validity of the demise and identity of carrier clauses in England, the United States, Canada, other British Commonwealth countries, and the Continental European nations.
A. English Position
The English courts have been generally, and continue to be, much more accepting of the demise and identity of carrier clauses in bills of lading without question.
In the leading case of The Berkshire, the plaintiffs, the shippers and receivers of the goods, sued the shipowner under a bill of lading containing a demise clause, for damage to the goods by sea during transit. Brandon J. stated that:
“Despite arguments to the contrary put forward for the shipowners, I see no reason not to give effect to the demise clause in accordance with its terms. It is not in dispute that the ship was not owned or chartered by demise to that company, but was on the contrary owned by the shipowners. It follows that the bill of lading is, by its express terms, intended to take effect as a contract between the shippers and the shipowners made on behalf of the shipowners by Ocean Wide as agents only...On the first point, therefore, I hold that the contract contained in or evidenced by the bill of lading purports to be a contract between the shippers and the shipowners, and not one between the shippers and the charterers.”
The words “and not one between the shippers and the charterers” are clearly obiter dictum as the charterers were not sued and were not parties to the action. Brandon J. further declared that:
“All the demise clause does is to spell out in unequivocal terms that the bill of lading is intended to be a shipowners’ bill of lading…In my view, so far from being an extraordinary clause, it is an entirely usual and ordinary one.”
The Berkshire remains the authoritative English decision on the validity of demise and identity of carrier clauses, and has indeed been followed in England, as in The Jalamohan and more recently in The Ines, and The Flecha.
The Jalamohan is one of the strongest cases to support the demise clause, where the shipowners chartered the vessel by a charterparty to the charterers. Under another charterparty the charterers as disponent owners sub-chartered the vessel on back-to-back terms to the sub-charterers. The charterers and sub-charterers were both members of the AFEA Group. A fixture note had been concluded between the shippers and the sub-charterers which showed the carrier as AFEA Liberia and Clause 10 stated “other terms as for carrier’s bills of lading”. The note was signed by ASA as agents for the sub-charterers. Freight prepaid bills of lading were then issued by ASA and signed by them “as agents”. The bills contained a printed flag with the words “AFEA Line”, but the words “incorporated in Hong Kong” were deleted and the words “incorporated in Liberia” typed in. The shipowners withdrew the vessel from the charterers for non-payment of hire and claimed freight from the shippers in respect of the shipowner's completion of the voyage to the discharge port. The central point at issue before the court was whether the bills of lading contained or evidenced contracts between the shippers and the owners, that is to say, whether the shipowners were bound by the fact that freight prepaid bills of lading had been issued. In this situation, a court would have been entitled to find that the carriage contract was between the shipper and AFEA, probably the sub-charterers. However, the bills of lading contained a demise clause which provided that the contract of carriage evidenced by the bill of lading was between the shipowner or demise charterer of the vessel and the merchant. The Court therefore stated that:
“Express (the charterers) and AFEA Hong Kong (sub-charterers) were both members of the AFEA group, and the bills of lading here were on the standard AFEA group form. The demise clause was one of the printed clauses on this form. Those closely involved in a market of this kind are generally familiar with the contents of such forms...Consequently it would be natural for the shippers to anticipate that the other terms as for carriers’ bill of lading would include the demise clause on the charterers’ usual printed form. Whatever the position may be in other jurisdictions, I reject the suggestion, based on the quotation from Professor Tetley, that under English law there is anything anomalous about demise clauses. As the quotation above from The Berkshire shows, this argument was presented to and rejected by Mr. Justice Brandon in that case…the shippers have demonstrated that the bills of lading purport to be contracts between the shippers and the shipowners.”
The Court further found that by virtue of the head charterparty, the shipowners had expressly authorized the issue on their behalf of the bills of lading, which were in the charterers usual form. Consequently, the Court held that:
“The shippers having succeeded on both the salient issues…the owners are not entitled to the declaration which they sought that they are not bound by the bills of lading under which the shippers’ cargo had been loaded, and are in consequence not entitled to any freight over and above the sums prepaid by the shippers.”
The Jalamohan was a case where the shipper was relying on the demise clause in bills of lading. The decision is questionable as a reasonable commercial conclusion on the validity of the demise clause and identity of the carrier, in so far as the other terms of the fixture note would have led a reasonable shipper to suppose that the contract was with AFEA. Moreover, whatever the merits of the decision, it does reject the Tetley view that demise clauses are anomalous and the court refused to interpret The Berkshire as turning on the fact that the bill in that case had been indorsed.
In the case of The Ines, the shipper/cargo owner negotiated a contract of carriage of telephones from Antwerp to St. Petersburg with the time charterer of the vessel Ines. In the signature box of the bill of lading issued by Eimskip, the charterer’s agents, the printed form contained the words: “Signed as agents for the carrier Maras Linja” which was the name of a liner service operated by the charterer. Moreover, the bill had the usual statement “…In Witness whereof the Master or the Agent of the said vessel has signed the number of original bills of lading stated…” and an identity of carrier clause in Clause 19 of the bill which provided that the contract evidenced by this bill was between the shipper and the shipowner. When the vessel arrived in St. Petersburg, the master did not insist on the presentation of an original bill of lading and the cargo was discharged and delivered to the notify party without presentation of an original bill and without the plaintiffs’ consent. The shipper therefore sued the shipowner and charterer for the alleged misdelivery of the telephones. The shipowner denied liability contending that the charterer was the contractual carrier. The question summarized by the Court is whether the shipowner or the charterer was the contractual carrier under the contract contained in or evidenced by the original bills of lading.
As to the “In Witness” statement, Clarke J. stated that:
“It is submitted by Mr. Sussex (for the plaintiffs) and Mr. Berry (for the defendant charterers) that the expression ‘…IN WITNESS whereof the Master or the Agent of the said vessel has signed…’ is a strong pointer to the contract having been made on behalf of the owner because the natural meaning of ‘agent of the vessel’ is ‘agent of the owners of the vessel’. They submit that the natural meaning of the attestation clause is that the master (or agent as the case might be) will sign on behalf of the owners… I accept those submissions.”
Later in the decision, Clarke J. gave effect to the identity of carrier clause by following The Berkshire and declared that:
“The plaintiffs and charterers also rely upon cl. 19, which they say is a typical demise clause...In The Berkshire Mr. Justice Brandon was considering a demise clause very similar to that discussed above. He held that the bill of lading in question was a shipowners’ bill...Mr. Hancock (for the defendant owners) submits that cl. 19 was intended to deal with a different type of situation from that with which I am concerned here. However I am unable to accept that submission. It seems to me that a joint service means no more than a service where a line is using one or more chartered vessels to provide its liner service. In my judgment this is such a case.”
Consequently, the Court held that as a matter of construction of the bill of lading itself, this was a shipowners’ and not a charterers’ bill. The parties to the contract of carriage contained in or evidenced by the bill were the shipper and the shipowner. The shipowner was, therefore, liable to the cargo owner for breach of contract and the shipowner did not have any defence under the terms of the contract.
The significance of the decision in The Ines is not only that the identity of carrier clause was conclusive, but also that it is necessary to examine the whole document and indeed to consider the whole context in which it came into existence, that is to say, to consider the other clauses and the document as a whole.
In The Flecha, shipped bills of lading were issued on the form of the time charterers. The bills, on their face, contained the words “as agents for continental Pacific Shipping (the time charterers) as carriers”. However, on the reverse of the bills, there were a comprehensive identity of carrier clause and a demise clause, which indicated that the contract evidenced by the bill of lading was between the shipper and shipowner. The issue in the case was whether as a matter of construction these bills of lading were owners’ or charterers’ bills.
Following The Ines, Moore-Bick J. stated that:
“The forms of signature taken by themselves may well suggest that the time charterers are contracting as carriers, but in common with Mr. Justice Clarke I consider that it is necessary to look at the contract as a whole and also at its wider context. If one does that, it seems to me plain that this is a case in which the contract as set out in the printed form was intended to be a contract between the owners of the vessel and the owners of the goods…I have already drawn attention to the identity clause, cl. 33, which states in terms that the contract evidenced by the bill of lading is between the merchant and the owner of the vessel, and which further states that the line, company or agent who has executed the bill for and on behalf of the master is not a principal in the transaction. Clause 35 reinforces that…In these circumstances, it is plain that the terms of the bill of lading as a whole contemplate a contract of carriage between the owners of the vessel and the owners of the goods.”
As far as the words “as agents for Continental Pacific Shipping as carriers” are concerned, Moore-Bick J. further declared that:
“It seems to me that the forms of signature in this case, while they raise questions as to the purpose of describing Continental Pacific as carriers, do not go far enough to make it clear that the parties intended that Continental Pacific Shipping were contracting in place of the owners contrary to all the terms of the bill of lading to which I have referred.”
This case again illustrates that the English courts are prepared to give considerable effect to the express demise and identity of carrier clauses, even in the face of the bill appearing in the charterer’s form and with an apparently clear signature. However, after the House of Lord’s decision in The Starsin, the judgment in The Flecha has been reversed.
B. The United States Position
As long ago as 1876, in Bank of Kentucky v. Adams Express Co., a carriage of goods by rail case, the United States Supreme Court held that the defendant express company was actually the common carrier, although the inclusion of a non-responsibility clause in the defendant’s bill of lading reduced its liability to that of an ordinary bailee for hire . The judgment by Strong J. in this case remains quite relevant to the validity of the demise clause in maritime transportation:
“We have already remarked the defendants were common carriers...What they were is to be determined by the nature of their business, not by the contract they made respecting the liabilities which should attend it. Having taken up the occupation, its fixed legal character could not be thrown off by any declaration or stipulation that they should not be considered such carriers. ... It is not to be presumed the parties intended to make a contract which the law does not allow.”
In Epstein v. United States, the Southern District of New York rejected the charterer’s claim that the carriage contract was between the shipper and owner. The Court held that the demise clause was obviously a fraud on the shipper and constituted a clear violation of Section 1303(8) of the U.S. Carriage of Goods by Sea Act.
Approximately seventeen years later, in Blanchard Lumber v. S.S. Anthony II, another Southern District of New York decision which cited Epstein v. United States also held that the demise clause was invalid under Section 1 of the Harter Act. Levet, D.J. expressed that:
“[I]t is my opinion that American law, and specifically the Harter Act in this case, must be applied in order that the strong American policy of protection to shippers, evidenced by both the Harter Act and the Carriage of Goods by Sea Act, may be maintained.”
In the more recent case of Thyssen Steel v. M/V Kavo Yerakas, the Fifth Circuit held that the demise clause is invalid under Section 1303(8) of the U.S. Carriage of Goods by Sea Act as it is an attempt to avoid or lessen the carrier’s liability.
Furthermore, in Nippon fire & Marine Ins. Co. v. M/V Spring Ware, the Eastern District of Louisiana refused to apply a bill of lading providing for Japanese law and jurisdiction, primarily because of the real risk that a Japanese court might uphold the demise clause in the bill of lading which was characterized by the Court as unlawful for the shipowner under Section 1303(8) of U.S. Carriage of Goods by Sea Act. A similar decision was also rendered by the Southern District of New York in Central National-Gottesman Inc. v. M/V Certrude Oldendorff, which held that enforcing an exclusive London jurisdiction clause in a bill of lading would likely lessen the rights of the cargo owner below the extent guaranteed by Section 1303(8) of U.S. Carriage of Goods by Sea Act, because the English court would uphold the identity of carrier clause in the bill, and would thereby deprive the claimant cargo owner of recourse under U.S. Carriage of Goods by Sea Act against the charterer as carrier.
The aforesaid cases show that all American Courts which have confronted the issue of the acceptability of demise or identity of carrier clause have determined it to be an unlawful attempt to exclude the mandatory liability of the carrier of goods by sea, primarily because it is contrary to the U.S. Carriage of Goods by Sea Act and the Harter Act. In consequence, it is accurate to conclude that the American legal authority is against the validity of the demise and identity of carrier clauses.
C. Canadian Position
A number of older Canadian cases, including Apex (Trinidad) Olifields, Ltd. v. Lunham & Moore Shipping, Ltd., Delano Corp. of America v. Saguenay Terminals Ltd., Grace Kennedy & Co. v. Canada Jamaica Line, West India Trading Co. v. Saguenay Shipping, and Atlantic Trader’s Ltd v. Saguenay Shipping Ltd, have held the demise and identity of carrier clauses valid as against the shipper. Most of these cases have invoked the Supreme Court of Canada’s decision in Paterson Steamships Ltd. v. Aluminium Co. and Aris Steamship Co. v. Associated Metals & Minerals Corp, although neither of the two decisions involved a demise or identity of carrier clause and they merely held as a general rule that the owner is the sole carrier.
Before two recent Federal Court of Canada decisions in Union Carbide Corp. v. Fednav Ltd. and Jian Sheng Co. v. Great Tempo S.A, the former by the Trial Division in 1997 and the latter by the Appeal Division in 1998, the demise and identity of carrier clauses had been expressly held invalid or their intended effect had been denied in two judgments in Canficorp v. Cormorant Bulk Carriers and Carling O’Keefe Breweries v. C.N. Marine, and were also questioned in Canastrand Industries Ltd. v. The Lara S.
The facts of the case of Canficorp v. Cormorant Bulk Carriers differed from most other cases involving demise clauses, in that it was the shipper who invoked the identity of carrier clause in denying that the time charterer was a party to the contract of carriage. The Federal Court of Appeal found that the time charterer’s name appeared evidently on the bill of lading; in contrast, no mention of the shipowner was made on it. Moreover, the time charterer undertook actual responsibilities under the contract of carriage. The Court held the identity of carrier clause null and void as an clause intending to relieve the carrier from liability in breach of Art III rule 8 of the Hague Rules and therefore accepted that the charterer was a carrier.
In Carling O’Keefe Breweries v. C.N. Marine, the Federal Court of Appeal affirmed a conclusion that the time charterer is the carrier under the contract of carriage, in spite of the existence of the demise clause. The Court dismissed the appeal by the following reasons:
1) The Supreme Court’s judgments in Paterson Steamships Ltd. v. Aluminium Co. and Aris Steamship Co. v. Associated Metals & Minerals Corp. are merely effective on the validity of the demise clause in ordinary cases and one must not lay down a hard and fast rule to determine who undertook to act as carrier;
2) The vessel was not named in the bill of lading;
3) The demise clause was invalid as a non- responsibility clause under Art III rule 8 of the Hague/Visby Rules.
In the case of Canastrand Industries Ltd. v. The Lara S, the bill of lading contained an identity of carrier clause and the consignee and purchaser of the goods sued the shipowner and time charterer since the cargo was damaged on arrival. Reed J. of the Federal Court stated that the charterers and shipowners should be held jointly and severally liable as carrier in Canadian maritime law because the carriage of goods by sea is effectively a joint venture.
Furthermore, the Federal Court of Canada in Methanex New Zealand Ltd. v. The Kinugawa, subsequently refused to enforce a Japanese jurisdiction clause in a bill of lading, on the basis that a Japanese court would apparently give effect to the identity of carrier clause in the bill and hold the shipowner alone to be the carrier, whereas in Canada, the clause had been held null and void in Carling O’Keefe Breweries v. C.N. Marine. Accordingly, referring the litigation to a Japanese court would lessen the charterer’s liability.
In 1997 and 1998, however, two recent Federal Court of Canada decisions have seemingly rehabilitated in Canadian maritime law the demise and identity of carrier clauses in bills of lading.
In Union Carbide Corp. v. Fednav Ltd, Clause 26 of the charterparty between the charterer and the shipowner provided that “nothing herein stated is to be construed as a demise of the vessel to the time charterers.” The defendant time charterer therefore invoked an identity of carrier clause in defence to disclaim liability. Nadon J. found that unless there is a clear undertaking by the time charterer that he will carry the shipper’s goods, the shipowner is the carrier and that in the present case, the time charterer made no such undertaking to carry the goods. Moreover, he found that the booking note issued by the time charterer did not evidence an undertaking that the time charterer will carry the shipper’s cargo. Accordingly, Nadon J. upheld the identity of carrier clause as binding upon the shipowner and the bills of lading are without doubt shipowners’ bills of lading.
With regard to Tetley's concept of an implicit joint venture of shipowners and charterers and Art I (a) of the Hague and Hague/Visby Rules which defines the carrier as including the shipowner or the charterer who enters into a contract of carriage with the shipper, Nadon J. held that:
“There cannot be a joint venture between owners and charterers unless there has been a meeting of the minds between the parties to the joint venture…The carrier shall either be the owner or the charterer, but not both.”
However, in Nadon J.’s judgment, there is no mention of Art III rule 8 of the Hague/Visby Rules, the mandatory character of those Rules, which was analyzed in detail at the heart of the judgment rendered by Reed J. in Canastrand Industries Ltd. v. The Lara S.
In the case of Jian Sheng Co. v. Great Tempo S.A, the plaintiff/appellant, the notify party on a bill of lading, sued three defendants: the owner of the ship, Great Tempo S.A. (the respondent), the charterers and operators of the ship, Sinotrans Canada Inc. (Sinotrans), and the ship, for the loss of a substantial portion of cargo carried pursuant to a contract of carriage evidenced by a bill of lading. The bill of lading was signed by Sinotrans “As agents only for Carrier: Trans Aspiration.”
The clause at issue before the court in the various documents of carriage was a standard identity of carrier clause in the bill of lading, which indicated that the contract evidenced by the bill of lading is between the shipper and the shipowner.
At first instance, Prothonotary Hargrave referred with approval to the Tetley method of joint venture and therefore invalidated the identity of carrier clause in the bill of lading.
On appeal, Tremblay-Lamer J. of the Federal Court, Trial Division, agreed with Nadon J. in Union Carbide Corp. v. Fednav Ltd that there could be no joint venture between the shipowner and its charterer unless there is an express undertaking on the charterer’s part to this effect, and therefore gave effect to the identity clause in the bill of lading.
The case went before the Federal Court of Appeal on the essential issue of the validity of the identity of carrier clause, that is to say, whether the bill was a shipowner’s or a charterer’s bill. Decary J.A. undertook an analysis of the identity of carrier clause and expressed that:
“In shipowners’ bills of lading, there is a presumption that the shipowner is the carrier. In charterers’ bills of lading the presumption is that the demise charterer is the carrier. Any other can be the carrier only where those presumptions have been rebutted, and such rebuttal occurs only when there is evidence that such other has actually assumed the role of carrier under the contract of carriage with the shipper”
In relation to the appellant’s suggestion that there could be more than one carrier, Decary J.A. followed the reasoning of Nadon J. in Union Carbide Corp. v. Fednav Ltd and stated that:
“The implicit joint venture concept is in my respectful view incompatible with the gist of the decisions of the Supreme Court in Paterson SS and in Aris Steamship and of the decisions of this Court in Cormorant and in Carling O'Keefe. The concept has been found unsound by Nadon J. in Union Carbide, at page 264 and I entirely agree with his reasons for reaching that conclusion.”
Decary J.A., in consequence, gave effect to the identity of carrier clause and held that the clause in effect established a rebuttable presumption that the shipowner was the carrier.
The foregoing decisions illustrate that notwithstanding the earlier Canadian judgments held the demise and identity of carrier clauses invalid, or at least inoperative with respect to the cargo claimant, the Federal Court of Canada recently rejected the concept of joint and several liability between shipowners and charterers and expressly rehabilitated the demise and identity of carrier clauses in Canadian maritime law.
D. British Commonwealth and Continental European Positions
In the Australian case of Kaleej International Pty. Ltd. v. Gulf Shipping Lines, the time charterer, whose agent had signed the bill of lading for the master, pleaded the demise clause in defence, claiming that it was not a party to the contract of carriage evidenced by the bill of lading, despite the presence of its name in printed form on the bill. The New South Wales Court of Appeal upheld the demise clause and decided that the demise clause does not itself relieve the carrier from liability but defines who the carrier is and the shippers’ and consignees’ rights would not be prejudiced because they always have resource to the admiralty action to arrest the vessel or a sister vessel owned by the shipowner.
The demise and identity of carrier clauses have also been upheld by the Court of Appeal of Singapore in Cascade Shipping v. Eka Jaya Agencies, and by the Singapore High Court in The Arktis Sky respectively.
Nevertheless, the foregoing Australian and Singapore decisions do not clearly maintain that the demise clause is valid with reference to Art III rule 8 of the Hague and Hague/Visby Rules.
In contrast, in continental Europe, the demise and identity of carrier clauses have rarely been upheld, and are constantly suspect.
In France, the demise and identity of carrier clauses are, in general, without effect when they are invoked by the charterer in order to evade or deny liability against third parties, including the shippers, consignees and even shipowners. The Brussels Court of Appeal of Belgium in The Ferdia and The Renata Schroeder held the identity of carrier clause to be “inopposable” to a third-party cargo owner, as well as to the shipowner. In the Netherlands, the identity of carrier clause has been held in The Hof’s Gravenhage to be invalid on the ground that it does not allow the court having proper jurisdiction to be determined and it therefore violates Art 17 of the 1968 Brussels Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, while in Germany, the demise clause was held to be invalid because the time charterer did not have written authority to bind the shipowner.
VI. Estoppel from Relying upon the Demise Clause
In the case of Pacol Ltd. v. Trade Lines Ltd. and R/I Sif IV (The Henrik Sif), where by a time charter, the shipowners let their vessel Henrik Sif to Trade Lines, the charterers. Bills of lading containing the traditional demise clauses were issued by Trade Lines on their standard form for cartons of cocoa butter from Apapa to Sharpnes. The cargo owners alleged that the cargo when discharged was found to be contaminated with brass filings, root ginger and that it was in part short delivered, they therefore claimed damages against Trade Lines’ general agents Tideway. Tideway did not however tell the shippers that Trade Lines were not the proper party to proceed against but on the contrary dealt with the claim in such a way that the cargo owners thought their assumption that Trade Lines were the proper party was correct. Acting upon that assumption the cargo owners obtained various extensions of time from Trade Lines but did not obtain any extensions of time from the shipowners. On Mar. 21, 1979, the cargo owners issued proceedings against the Trade Lines and shipowners. The former denied that they had acknowledged the shipment of cargo on board the vessel by the bills of lading, and the latter contended that the action against them was time barred, the 12 months limitation period had expired on Apr. 6, 1978. The cargo owners therefore pleaded that Trade Lines were estopped from denying that they were parties to the bill of lading and/or from relying upon the demise clause. Although it was assumed by Webster J. (and the parties) that the demises clauses in the bills of lading would be effective to transfer liability to shipowners, Webster J. further declared that:
“On all the evidence I am satisfied that…by Mar. 23, 1978, and probably from about June, 1977, Mr. Pocock (on behalf of Tideway) knew the effect of the demise clause... realized that the plaintiffs had no claim on the bills of lading against Trade Lines but that their only claim on the bills of lading was against the owners, and realized that Mr. Engledew was mistakenly under the impression that Trade Lines were the parties which his principals, the plaintiffs, would have to sue…in the light of the facts which I have found, Mr. Pocock was, in my judgment, under a duty to alert Mr. Engledew to the true facts: a reasonable man would, in my judgment, have expected him, acting honestly and responsibly, to have informed Mr. Engledew in one way or another that he was seeking extensions of time from the wrong party. In my judgment, therefore, the plaintiffs have established the estoppel by silence or acquiescence on which they rely”
Consequently, the Judge concluded that:
“Accordingly, in my judgment the first defendants (time charterers) are estopped from denying that they are parties to the bills of lading and/or from relying on the demise clause in the bills of lading.”
It is unclear how far The Henrik Sif can be supported on all its grounds on estoppel, but it would seem that the strongest argument is to rely on the doctrine of estoppel convention.
VII. Two Recent English Decisions Regarding the Conflict between the Signature on the Front of the Bill and the Demise and
Identity of Carrier Clauses on the Reverse
The relationship between the modern demise and identity of carrier clauses, normally lurking on the reverse of the bill of lading, and the signature identifying the time charterer as carrier and carried on the front of the bill, has recently caused considerable controversy in two English cases of The Hector and The Starsin.
A. The Hector
In The Hector, shipowners chartered the vessel Hector to time charterers in the form of amended NYPE terms including authority for the charterer’s agents to issue bills of lading. The time charterers in turn sub-chartered the vessel to voyage sub-charterers. The bill of lading was authorized by the time charterers and issued by voyage sub-charterers. Towards the top of the bill, in a prominent position on the right hand side, appeared the typed words “CARRIER: U.S. EXPRESS LINES (time charterers).” In the signature box appeared the following: “FOR AND ON BEHALF OF THE MASTER…” On the reverse, there was an identity of carrier clause which indicated that the contract evidenced by this bill of lading was between the merchant and the owner of the vessel. The voyage sub-charterers paid the freight under their voyage charter to the account of the time charterers. Because of the financial failure of the time charterers at the very outset of the voyage, an instalment of hire fell due and went unpaid. The time charterers informed shipowners that they were unable to complete the voyage due to cash flow problems. Finally, the shipowners withdrew the vessel and sued for a declaration that they were not bound toward the voyage sub-charterers to deliver a cargo under a bill of lading issued by the sub-charterer “for and on behalf of the master.” The first essential issue before the Court was whether the bill of lading was an owner’s or charterer’s bill.
Although the general rule that a bill of lading signed by the master or his agents is an owner’s bill, and the identity of carrier clause would normally have supported the holding that the shipowner was bound by the contract of carriage, Rix J. stated that:
“In the present case, the vessel was not demised but in the possession of her owners, the bill was expressly signed ‘for and on behalf of the master’, and for good measure the bill contained an identity of carrier clause, cl. 17…However, I have not been able to satisfy myself that the stipulation that the carrier is USEL (time charterers) is to be shrugged off as ambiguous…‘Carrier’ is the expression in which the party with the obligations to carry out the bill of lading contract is clothed. That is made clear by the bill of lading terms as a whole…The bill of lading therefore stipulates that the carrier under the bill of lading is USEL. Although the master may be the servant of the owners, and cl. 17 says that the owners are the carriers, the only party which is identified expressly by name in the bill of lading as the carrier is USEL…In this case, there is nothing on the face of the bill to say who the owners (and therefore the carrier) are, save for the clause stipulating that USEL are the carrier…therefore, as a matter of construction, the bill of lading contract is with USEL not owners.”
The Commercial Court further held that the bill of lading was authorized by the time charterers, and that in any event the shipowners had not authorized it. The shipowners were therefore entitled to a declaration that they were not bound by the bill of lading, and that they were not otherwise bound to sub-charterers to carry the cargo to the destination.
The Hector is of importance because it is the first English decision in which a bill of lading containing an identity of carrier clause was held to be a charterer’s bill. Nevertheless, the judgment makes no reference to the validity of the demise or identity of carrier clauses since neither the shipowners nor the voyage sub-charterers opposed the effectiveness of these clauses and the judgment was in favour of the signature on the front of the bill rather than the identity of carrier clause on the reverse.
B. The Starsin
The Starsin involved the same charterers as The Fletcha , Continental Pacific Shipping (CPS), and the similar conflict between the signature on the front of the bill and identity clauses on the reverse side of the bill. During the course of 1995, while the vessel Starsin was on time charter to CPS, bills of lading on CPS’s liner form were issued for 17 parcels of timber and plywood carried between ports in Malaysia and Antwerp/Avonmouth. The signature box on the face or front of the bill of lading prominently carried a signature “As Agent for Continental Pacific Shipping (The Carrier)”. The definition clause, Clause 1(c) was consistent with what appears on the face of the bill of lading: it defined “carrier” as the party on whose behalf this bill of lading has been signed. So far the document was in harmony. But tucked away in minuscule print on the back of the bill of lading were two clauses which contradict the contractual position revealed by the face of the bill. Clause 33 indicated that the contract evidenced by the bill of lading was between the merchant and the shipowner. Clause 35, a demise clause, provided that the bill of lading shall only take effect as a contract of carriage “with the owners or demise charterers.” The cargo was damaged and the receivers sued the shipowners for breach of contract or, alternatively, in tort in the event that the bills of lading were charterer’s bills. The first issue before the court was, therefore, whether the bills of lading were charterer’s or shipowner’s bills, that is to say, who is the cargo claimant’s “carrier”, the shipowner identified in the demise and identity of carrier clauses, or the charterer identified as the carrier in the signature box?
At first instance, Colman J., while not expressly declining to follow The Fletcha, did in practice apply different weight to the various factors than had been applied in that case. He thought that the real question in this case was in what sense the shipper could be expected to have understood the words used in the bills of lading. Adopting this approach, Colman J. held that:
“Above all, no shipper reading the contents of the signature box would assume either that the bill had been signed by the master, as stated in the attestation box, or that the agents had signed on behalf of Continental acting in turn on behalf of the carrier. By the words used the agents had represented that Continental was content that it could be treated as the carrier whenever that word appeared in the reverse-side terms…For these reasons I am not able to accept the argument, based on The Flecha, that the use of that word is too vague and uncertain to displace the printed provisions, cll. 33 and 35, and the attestation wording. By analogy with the reasoning of Mr. Justice Rix in The Hector, with which I entirely agree, I therefore conclude that as a matter of construction these were charterers' bills and not contracts binding the shipowners.”
By analyzing The Ines and The Flecha, Colman J. further declared:
“The effect of these two judgments is thus that the precedence of the demise clause will not normally be displaced unless the words in the signature box were clearly intended to have that effect.”
Unfortunately, Colman J.’s quite reasoned decision on this point was reversed by the Court of Appeal. The majority of the Court were of the view that the demise clause had to be given greater weight. Chadwick L.J. held that:
“In my view, the question whether the description of CPS as ‘carrier’ in the signature box must yield to the opening words of cl. 33 (which identify the carrier as the shipowner) is answered by construing the bill of lading as a whole. When that is done it is clear, as it seems to me, that the parties have provided the answer to that question by incorporating cl. 35 as a term of their contract. For those reasons I would allow the appeal on the first issue; and would hold that the shipowner is liable in contract under the bills of lading issued in the present case.”
Sir Morritt V.-C. decided that:
“The bill of lading must be construed as a whole. The signature box is part of the bill of lading. The normal rule whereby greater importance is attributed to specific provisions, including the signature box, put into a standard form is qualified by and to the extent that cl. 35of the standard conditions is applicable...Clause 35 applies because the bill of lading was issued by the time charterer, not the owner or demise charterer of the vessel. Accordingly the bill of lading takes effect ‘only’ as a contract of carriage with the owner deemed to have been made as principal through the agency of the time charterer. The only contrary indication in the bill of lading is the addition in the signature box of the words ‘as carrier’. But cl. 35 is to take effect notwithstanding those words. It follows that the definition contained in cl. 1(c) refers to the principal by whom the bill of lading was issued, that is the shipowner…For all these reasons I consider that Mr. Justice Colman reached the wrong conclusion on the construction of the bills of lading in this case. In my view the contract of carriage was with the shipowners so that they are liable in contract as claimed.”
However, Rix L.J. dissented strongly, agreeing with the judgment given at first instance, and expressed that:
“Given that in practice a demise clause is printed in tiny print on the back of a form, and in the present case is not even identified by any title, I do not see that commercial certainty or honesty is promoted by the submission that the form of signature, which on a bill of lading is on the front of the form, and which in mercantile contracts generally, including bills of lading, has always been a focus of attention, should be ignored…For these reasons, if the choice is the straightforward one presented between owners’ bills or charterers’ bills, I am bound to conclude that the bills in question are charterers’ bills.”
Given the speed at which international trade is transacted, there is little time for examining the impact of barely legible printed conditions at the time of the issue of the bill of lading. The House of Lords subsequently applied business common sense to overrule unanimously the majority decision of the Court of Appeal, in agree with the dissent of Rix L.J., and thus restored the judgment of Colman J.
With regard to the conflicts between the signature on the front of the bill and identity clauses on the reverse side of the bill, Bingham L.J. decided that:
“It is plain…that the bill was drafted to express or evidence a contract between the shipper (and any transferee of the bill) and the owner of the vessel. Conditions 33 and 35 so state. The provision for signature by the master of the vessel so indicates. But a very cursory glance at the face of the bill is enough to show that the master has not signed the bill. It has instead been signed by agents for CPS which is described as “The Carrier”…I have great difficulty in accepting that a shipper or transferee of a bill of lading would expect to have to resort to the detailed conditions on the reverse of the bill (and to persevere in trying to read the conditions until reaching conditions 33 and 35) in order to discover who he was contracting with. And I have even greater difficulty in accepting that he would expect to do so when the bill of lading contains, on its face, an apparently clear and unambiguous statement of who the carrier is.”
Steyn L.J. expressed that:
“How is the problem to be addressed? For my part there is only one principled answer. It must be approached objectively in the way in which a reasonable person, versed in the shipping trade, would read the bill. The reasonable expectations of such a person must be decisive. In my view he would give greater weight to words specially chosen, such as the words which appear above the signature, rather than standard form printed conditions. Moreover, I have no doubt that in any event he would, as between provisions on the face of the bill and those on the reverse side of the bill, give predominant effect to those on the face of the bill.”
Hoffmann L.J. further directly pointed that:
“I think that if the carrier is plainly identified by the language on the front of the document, one never gets to the demise clause on the back. The language on the front simply takes priority and no attempt at reconciliation is required.”
Art 23 (a)(v)of the ICC Uniform Customs and Practice for Documentary Credits (UCP 500) requires that ocean bills of lading should identify the carrier, the signatory and the capacity in which he signs on the front of the bills, and states that banks will not examine the contents of the terms and conditions of carriage, that is to say, the terms printed on the back. These requirements are essential to banks which extend credit to buyers of goods on the faith of those goods which are in the possession of carriers who, after 1994, are clearly identified on the face of bills of lading held by the banks in security.
In practice, the UCP 500 has another possibly unintended effect: illegible scrawls at the foot of bills of lading have been replaced by the clearly authenticated information, which makes it far easier than it ever was to identify the contracting carrier by scanning the face of the bill. Litigation regarding the identity of the carrier has therefore tapered off, at any rate where the bill of lading contains no demise and/or identity of carrier clauses. Where there are such clauses, however, the increased details in the signature box at the foot of the bill have increased the chances of an explicit conflict between the front and the reverse sides of the bill. Such a conflict has arisen in The Hector, The Flecha, and the present case since the adoption in 1994 of the UCP 500.
In order to resolve the contradiction between the signature on the face of the bill of lading and the demise and identity of carrier clauses on the reverse side of the bill, and to identify the contracting carrier, the Lordships in the present case adopted the view of market practice and relied upon the UCP 500, and therefore unanimously found that businessmen expected the identity of the carrier together with other variables which described the objects of the particular voyage, such as the vessel, the goods, and the ports of loading and discharge, to be found on the face of the bill and not tucked away among the standard terms and conditions printed on the back. The Law Lords also observed that under the UCP 500 it would create an unacceptable trap to allow the detailed conditions on the back of a bill to prevail over an unequivocal statement of the identity of the carrier on the face of the bill. Hoffmann L.J. stated that:
“The proposition that bankers do not examine the contractual terms, including the demise and identity of carrier clauses, on the back of a bill of lading has long been common general knowledge and for many years the Courts have said that they were not expected to do so: see Scrutton L.J. in
National Bank of Egypt v. Hannevig’s Ban [1919] 3 L.D.A.B. 213, 214 and Salmon J. in British Imex Industries Ltd. v. Midland Bank Ltd. [1958] 1 Q.B. 542, 551 and 552. In more recent times, bankers have issued public statements to this effect in the form of the ICC Uniform Customs and Practice for Documentary Credits.”
Steyn L.J. further clearly pointed that:
“As Lord Justice Rix observed, commercial certainty and indeed honesty is promoted by giving greater effect to the front of the bill of lading. This conclusion is reinforced by the ICC Uniform Customs and Practice for Documentary Credits. Article 23(a) reads as follows…In par. v. it is expressly stated that banks will not examine the contents of terms and conditions on the back of the bill: see further Position Paper No. 4: UCP 500 - Transport documents articles. At the very least this material suggests that, faced with the need for prompt decisions in international trade, this is how parties involved in such a transaction would view the bill of lading. It demonstrates how far removed from the real world of commerce the technical approach advocated by the cargo-owners in this case is. Moreover, insofar as there is a choice between two competing interpretations, this material strongly suggests that the best interpretation is to give predominant effect to the face of the bill…”
Consequently, the Lordships resolved the conflict in favour of the signature on the front of the bill rather than the demise and identity of carrier clauses on the reverse.
In relation to the argument that, arisen by Mr. Milligan Q.C., who appeared for the cargo owners, Art 23 governed relations between issuing bank and beneficiary, not shipper or consignee and carrier, and therefore was irrelevant and had nothing to do with the interpretation of the bill of lading as between the parties (or alleged parties) to the contract of carriage, Hoffmann L.J. and Bingham L.J. responded that:
“It is true that the purpose of art. 23, when UCP 500 has been incorporated into the terms of a letter of credit, is to specify what will count as a conforming bill of lading. But what it also shows is that, if the conditions for identifying the carrier have been satisfied, the bank will treat the document as having identified that party as the carrier. In other words, art. 23 and the position paper show that if a document bears upon its face the words ‘ABC Co. Ltd. as agent for XYZ Shipping, carrier [signature]’ the bank will treat it as meaning that XYZ Shipping is the carrier…it would be very surprising, and also (in my opinion) very unsatisfactory, if a practice accepted in one field were not accepted in another so closely related.”
Moreover, the Law Lords analyzed the Tetley theory of the joint and several liability between the shipowner and the charterer, submitted by Mr. Milligan. Steyn L.J. stated that:
“Counsel for the cargo-owners raised an alternative argument. He argued that words like ‘The Carrier,’ ‘For the Carrier,’ and ‘As Carrier,’ can be treated as adding the personal liability of CPS rather than excluding the liability of the owners. This is a question of interpretation. Counsel for the owners showed convincingly that the bill of lading contemplated a single carrier. It is only necessary to mention specifically that the completed signature box, as well as the definition clause, points to a single carrier. I would reject this alternative argument. I conclude that CPS was the sole carrier under the bill of lading. The owners were not parties to the contract of carriage and are not liable under the bill of lading contracts.”
Hoffmann L.J. further held that:
“Mr. Milligan also submitted that CPS may have contracted both for themselves and the shipowners, the latter being unnamed or undisclosed principals. Lord Justice Rix, who appears to have floated this theory in the Court of Appeal, said that it might be considered ‘novel and inconsistent with the settled expectation of the shipping trade’. He would know this better than I, but I do not think that any reasonable merchant or banker who might be assumed to be the notional reader of this bill of lading would imagine that there was more than one carrier or that the carrier was anyone other than CPS.”
Given the Lordship’s decision in The Starsin, more bills are likely to be charterer’s bills, with the effect that charterer are likely to be faced with more claims. Depending on the cause of the loss or damage, shipowners may, however face fewer claims. Moreover, regrettably, the Law Lords did not consider the issue of the validity of the demise and identity of carrier clauses because of the same causes as The Hector.
VIII. Conclusion
Correctly identifying the party who bears the responsibility of carrier under bills of lading including demise and/or identity of carrier clauses is understandably a primary concern of cargo claimants and their lawyers around the world. Unfortunately, courts in different parts of the world have taken divergent positions on this important matter in suits arising under the Hague and Hague/Visby Rules and national laws. Despite the enforcement of demise and identity of carrier clauses in countries like England and Canada, the emphasis on the signature on the front of the bill has been welcomed as providing a clearer and more certain guide in an area where the documents are frequently wholly unclear, and at any rate, the inclusion of a demise or identity of carrier clause should not be decisive. The Hamburg Rules 1978 distinguish the contracting carrier as already described, from the actual carrier and make clear that the contracting carrier and actual carrier are jointly and severally liable to third parties. The Convention also prohibits any stipulation in a contract of carriage by sea or in a bill of lading, which derogates, directly or indirectly, from its provisions. However, nothing in the Hamburg Rules specifically defines who the contracting carrier is as between the shipowner and charterer, and there is no mention of the existence of the joint and several liability between the shipowner and charerer. Therefore, even under the Hamburg Rules, the controversy over the validity of the demise and identity of carrier clauses is still not resolved.
The conclusion of the foregoing description and analysis is that the demise clause was a World War II provision, designed to protect the charterer who could not limit its liability under the statutes in the U.K. and the U.S. However, after the enactment of the 1957 and 1976 Limitation Convention, as well as after national legislation, such as the U.K. Merchant Shipping Act 1995 and the Canada Shipping Act 1985, which allow charterers to limit liability, the original purpose of the demise clause has been achieved by other means. The demise clause is, therefore, no longer necessary in the U.K. or those contracting States parties to the 1957 or 1976 Conventions. At present, the demise and identity of carrier clauses are purely a subterfuge for charterers who use it as a non-responsibility clause, and have attached a number of litigation over the recent years. It was, therefore, to be hoped that the Courts or the legislature could have the occasion to sound the final death knell of the demise and identity of carrier clauses in bills of lading. However, the House of Lord’s decision in The Starsin has been disappointing for many people who expected the invalidation of the demise and identity of carrier clauses because the Law Lords should have considered the issue of the validity of these clauses although neither the shipowners nor the charterers opposed the effectiveness of these clauses and the judgment was in favour of the signature on the front of the bill rather than the identity of carrier clause on the reverse.
TABLE OF CASES
Apex (Trinidad) Olifields, Ltd. v. Lunham & Moore Shipping, Ltd. [1962] 2 Lloyd’s Rep.203.
Aris Steamship Co. v. Associated Metals & Minerals Corp. [1980] 2 S.C.R. 322.
Arktis Sky, The [2001] 1 S.L.R. 57 (Singapore High C.).
Atlantic Trader’s Ltd v. Saguenay Shipping Ltd (1979) 38 N.S.R. (2d) 1 (N. Sup. Ct.).
Bank of Kentucky v. Adams Express Co. 23 L. Ed. 872 (1876).
Berkshire, The [1974] 1 Lloyd’s Rep. 185.
Blanchard Lumber v. S.S. Anthony II [1966] 2 Lloyd’s Rep. 437.
British Imex Industries Ltd. v. Midland Bank Ltd. [1958] 1 Q.B. 542.
Cascade Shipping v. Eka Jaya Agencies [1993] 1 S.L.R. 980 (C.A.).
Canastrand Industries Ltd. v. The Lara S. [1993] 2 F.C. 553 (Fed. C.Can); [1994] 176 N.R. 31 (Fed. C.A.).
Canficorp v. Cormorant Bulk Carriers 1985 AMC 1444 (Fed.C.A.).
Carling O’Keefe Breweries v. C.N. Marine (1990) 104 N.R.166 (Fed.C.A.).
Central National-Gottesman Inc. v. M/V Certrude Oldendorff 2002 AMC 1477 (S.D.N.Y. 2002).
Delano Corp. of America v. Saguenay Terminals Ltd. [1965] 2 Ex. C.R. 313.
Epstein v. United States 1949 AMC 1598.
Ferdia, The JPA 1963, 329.
Fetim B.V. and Others v. Oceanspeed Shipping ltd. (The Flecha) [1999] 1 Lloyd’s Rep. 612.
Grace Kennedy & Co. v. Canada Jamaica Line [1967] 1 Lloyd’s Rep. 336.
Hof’s Gravenhage, The [1998] E.T.L. 263.
Homburg Houtimport B.V. v. Agrosin Private Ltd. and Others (The Starsin) [2000] 1 Lloyd’s Rep. 85; [2001] 1 Lloyd’s Rep. 437; [2003] 1 Lloyd’s Rep. 571.
Jian Sheng Co. v. Great Tempo S.A (1998) 225 N.R. 140 (Fed. C.A.).
Kaleej International Pty. Ltd. v. Gulf Shipping Lines (1986) 6 N.S.W.L.R. 569 (C.A.).
MB Pyramid Sound v. Briese Schiffahrts GmbH & Co. [1995] 2 Lloyd’s Rep.144.
M.B. Pyramid Sound N.V. v. Briese Schiffahrts G.M.B.H. (The Ines) [1995] 2 Lloyd’s Rep. 144.
Methanex New Zealand Ltd. v. The Kinugawa [1998] 2 F.C. 583 (Fed. C.Can.).
National Bank of Egypt v. Hannevig’s Ban [1919] 3 L.D.A.B. 213.
NGO Chew Hong Edible Oil Pte. Ltd. v. Scindia Steam Navigation Co. (The Jalamohan) [1988] 1 Lloyd’s Rep. 443.
Nippon fire & Marine Ins. Co. v. M/V Spring Ware, 2000 AMC 1717 (E.D.La.2000).
Pacol Ltd. v. Trade Lines Ltd. and R/I Sif IV (The Henrik Sif) [1982] 1 Lloyd’s Rep. 456.
Paterson Steamships Ltd. v. Aluminium Co. [1951] S.C.R. 852.
Renata Schroeder, The JPA 1964, 9.
Sunrise Maritime Inc. v. Uvisco Ltd. (The Hector) [1998] 2 Lloyd’s Rep. 287.
Thyssen Steel v. M/V Kavo Yerakas 1995 AMC 2317.
Union Carbide Corp. v. Fednav Ltd. (1998) AMC 429 (Fed. C. Can.).
Wehner v. Dene Steamship Co. [1905] 2 KB 92.
West India Trading Co. v. Saguenay Shipping [1975] R.P. 403.
TABLE OF STATUTES
The Hague Rules, International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1968
The Hague-Visby Rules, The Hague Rules as Amended by the Brussels Protocol 1968
Hamburg Rules, United Nations Convention on the Carriage of Goods by Sea, 1978.
The UCP 500, The International Chamber of Commerce (ICC) Uniform Customs and Practice for Documentary Credits.
Convention of Limitation of Liability for Maritime Claims 1924,1957 and 1976.
Brussels Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 1968.
Canada
Shipping Act 1985
China
Maritime Code 1992
United Kingdom
U.K. Merchant Shipping Act 1894
U.K. Merchant Shipping Act 1995
United States
Limitation of Shipowners’ Liability Act 1851
Harter Act 1893
Carriage of Goods by Sea Act 1936
Scandinavia
Maritime Codes
BIBLIOGRAPHY
BOOKS
Boyd, SC, Burrows, AS and Foxton, D (eds), Scrutton on charterparties, 20th edn, Sweet & Maxwell (1996).
Chorley & Giles, Shipping Law, 8th edn, Pitman Publishing (1994).
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Debattista, C, Sale of Goods Carried by Sea, 2nd edn, Butterworths (1998).
Gaskell, N, Asariotis, R and Baatz, Y, Bills of Lading: Law and Contracts, LLP Professional Publishing (2000).
Tetley, W, Marine Cargo Claims, 3rd edn, Blais (1988).
Tetley, W, Marine Cargo Claims, 4th edn, (to be published March 2005).
Todd, P, Bills of Lading and Documentary Credits, 2nd edn, LLP Professional
Publishing (1998).
Schoenbaum, TJ, Admiralty and Maritime law, 3rd edn, West Publishing (2001).
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Articles
Allen, J, “Starsin – clarity or confusion?”, P & I International, April 2003, 17(4).
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Pejovic, E, “The Identity of Carrier Problem Under Time Charters: Diversity Despite Unification of Law”, 2000 Journal of Maritime Law and Commerce 379.
Pritchett, RW, “The demise clause in American courts” [1980] Lloyd’s Maritime and Commercial Law Quarterly 387.
Reynolds, FMB, “Case Comment on The Newfoundland Coast” [1990] Lloyd’s Maritime and Commercial Law Quarterly 494.
Reynolds, FMB, “Case comment on The Jalamohan” [1988] Lloyd’s Maritime and Commercial Law Quarterly 285.
Reynolds, FMB, “Time Charterparties: Is the Owner the Carrier?” [1990] II Diritto Marittimo 1083.
Roskill, “The Demise Clause” (1990) 106 The Law Quarterly Review 403.
Smith, AD, “UK: Time is Right to Kill Off the Unpopular Demise Clause”, Lloyd’s List, August 30, 1994, p.3.
Tetley, W, “The Demise of the Demise Clause?” (1999) 44 McGill Law Journal 807.
Waldron, A, “Owner’s or Charterer’s Bill of Lading? The Mystery Deepens”
(1999) Lloyd’s Maritime and Commercial Law Quarterly 4.
Walker, R and Williams, C, “UK: Opening Pandora’s Box?”, Lloyd’s List, December 18, 1993, p.7.
作者介绍:黄海波,山东和安律师事务所律师/主任，英国南安普敦大学（University of Southampton）海商法/国际贸易法硕士，2003/2004年在伦敦Elborne Mitchell律师事务所从事注册外国律师工作。
