The Law of Carriage of Goods by Sea

This book, written in three parts, covers the basics of the international trade, financing and the legal framework related to the law of carriage of goods by sea, elaborates on bills of lading in depth and sea waybills and ship’s delivery orders in brief and charterparties in depth. While the book is based on the English law, cases and materials from other jurisdictions, particularly Singapore, Malaysia, India, the USA, and Australia are brought in to provide an international perspective. The practical analyses, commentary and critiques of cases would be a useful guide for practitioners in developing case arguments. Although written with practitioners, academicians and students in mind, the book will also serve as a useful guide for sea carriers, freight forwarders, international traders, financiers, etc. as the complex subject is presented in reader-friendly and easy to grasp manner. Preface Acknowledgements List of Cases Table of Legislation, Rules, Conventions and Model Laws About This Book Contents About the Author Abbreviations Part I Introduction and International Trade 1 Introduction and Legal Framework 1.1 Introduction 1.2 Preliminaries 1.2.1 Terms of Carriage-Contract 1.2.2 Transferability of Bills of Lading 1.2.3 Payment Mechanism in International Trade 1.3 Legal Framework 1.3.1 Hague/Hague-Visby Rules, etc. 1.3.2 Transferability of Bills of Lading 1.3.3 Bailment, Conversion, Negligence and Evidence 1.3.4 Contact Law and Third-Party Rights 1.3.5 Sale of Goods Act 1.3.6 Legal Framework in Singapore and Malaysia 1.4 Cargo Claims: A Glimpse 2 Shipping Documents 2.1 Introduction 2.2 Bill of Lading 2.2.1 Common Terminologies 2.2.2 History of Bill of Lading 2.2.3 Characteristics and Functions of Bill of Lading 2.2.4 Shipped Bill v. Received for Shipment Bill 2.2.5 Bill of Lading Issued by NVOCs 2.2.6 Bill of Lading Issued by Time-Charterers 2.2.7 Through Bill of Lading 2.2.8 Document of Title v. Document of Possession 2.2.9 Negotiability v. Transferability 2.2.10 Transferability of Bills of Lading 2.2.11 Period of Responsibility Under Bill of Lading 2.2.12 Contract on Terms of the Would-Be Bill Even Before Issuance of Bill 2.2.13 Application of International Conventions to Carriage Contracts 2.2.14 Electronic Bills of Lading 2.3 Sea Waybill 2.4 Ship’s Delivery Order 3 International Trade 3.1 Introduction 3.2 Shipment Terms 3.2.1 Classical Shipment Terms: fob, c&f, and cif 3.2.2 Variants of Fob Term 3.2.3 Incoterms: FOB, CFR, CIF, E Terms, D Terms 3.3 Passing of Risk 3.4 Passing of Property 3.5 Letter of Credit 3.5.1 The Mechanism of Payment Through Letters of Credit 3.5.2 Fraud Exception to Autonomy of Letters of Credit Part II Bills of Lading 4 Cargo Claims: Legal Bases 4.1 Introduction 4.2 Contract-Action 4.2.1 Direct Contract 4.2.2 Statutory Contract 4.2.3 Contract by Agency Principle 4.2.4 Implied Contract 4.3 Bailment-Action 4.3.1 Bailment-Action Only for Bailor Against Head or Sub-Bailee 4.3.2 Burden of Proof in England and Wales 4.3.3 Burden of Proof in Commonwealth Countries with Evidence Act and Contract Act 4.3.4 Burden of Proof in Commonwealth Countries with Evidence Act but not Contract Act 4.3.5 Utility of Bailment-Action in Carriage of Goods by Sea 4.3.6 Terms of Bailment in Carriage of Goods by Sea 4.4 Tort-Action: Negligence 4.4.1 Negligence Action in General 4.4.2 Limitations to Negligence Action in Carriage of Goods by Sea 4.4.3 Rule Against Recovery of Economic Loss in Negligence-Action 4.4.4 Negligence Action Subject to Contractual Limitations 4.4.5 Action in Negligence Versus Action in Bailment 4.5 Conversion (Tort)/Non-delivery (Contract) 4.5.1 Non-delivery v. Misdelivery 4.5.2 Misdelivery 4.5.3 Assessment of Damages for Misdelivery/Non-delivery 4.5.4 Excluding or Limiting Liability for Misdelivery/Non-delivery 4.5.5 Spent Bills 5 Protection and Action for Third Parties 5.1 Introduction 5.2 Contracts (Rights of Third Parties) Act 1999 5.3 Himalaya Clause 5.3.1 Himalaya Clauses Recognised 5.3.2 Event within Responsibility Period of Carrier 5.3.3 Third-Party Dealing with Shipper on Third Party’s Own Terms 5.3.4 Himalaya Protection to Shipowner Limited to Rules Threshold 5.3.5 Jurisdiction and Choice of Law Clauses 5.4 Circular Indemnity Clause 5.4.1 Utilities of Circular Indemnity Clause 5.4.2 Limitations to Effectiveness of Circular Indemnity Clause 5.4.3 Pure Indemnity Claim 5.5 Suit for Benefit of Another 5.6 Representative Action 6 Proof of Damages: Presumptions and Estoppels 6.1 Introduction 6.2 Preliminaries 6.2.1 Claused and Clean Bill 6.2.2 Three Levels of Evidentiary Value of Representations 6.3 Sources of Presumptions and Estoppels 6.3.1 Estoppels at Common Law 6.3.2 Presumptions Under Hague Rules (Prima Facie Evidence) 6.3.3 Presumptions Under Hague-Visby Rules (Conclusive Evidence) 6.3.4 Presumptions Under COGSA 1992 Section 4 (Conclusive Evidence) 6.4 Role of Presumptions in Proof of Transit-Damage 6.4.1 Why is Time of Damage Crucial? 6.4.2 Role of Presumptions in Proof of Damages During Carriage 6.4.3 Period of Carriage Under Hague or Hague-Visby Rules 6.5 Popular Clausings 6.5.1 ‘Quantity or Weight Not Known’ Clausing 6.5.2 ‘Contents not Known’ Clausing 6.5.3 ‘Said to Contain’ Clausing 6.5.4 ‘Condition not Known’ Clausing 6.5.5 ‘Retla’ Clausing 6.6 ‘Apparent Good Order and Condition’ Statement 6.6.1 Condition Different from Quality 6.6.2 Specific Clausing to Limit ‘Apparent Good Order and Condition’ 6.7 Shipper’s Indemnity 6.8 Other Actions for Misstatements in Bill of Lading 6.8.1 Action for Tort of Deceit 6.8.2 Action for Tort of Negligent Misstatement 6.8.3 Action Under Section 2(1) of UK Misrepresentation Act 1967 6.8.4 Tort or Misrepresentation Act Action Subject to Hague or Hague-Visby Limitations? 6.8.5 Action Under Contract Act 1950 in Malaysia 7 Implied Terms and Exclusion Clauses 7.1 Introduction 7.2 Common Law Implied Terms 7.2.1 Relationship Between Common Law and the Rules 7.2.2 Relationship Between Seaworthiness and Cargoworthiness 7.2.3 Seaworthiness 7.2.4 Cargoworthiness 7.2.5 Deviation 7.2.6 Quasi-deviation (Carriage on Deck) 7.2.7 Obligation to Take Reasonable Care of Cargo 7.3 Exclusion Clauses 7.3.1 ‘Perils of the Sea’ Exception 7.3.2 Excluding Liability for ‘Negligence’ 7.3.3 Burden of Proof 8 Hague/Hague-Visby Rules: Application 8.1 Introduction 8.2 Significance of Distinction Between Statutory and Contractual Application 8.3 Conflict Between Terms of Bill and the Rules 8.4 Statutory Application of the Rules 8.4.1 Criteria for Application of the Rules 8.4.2 Circumventing Rules by Choice of Law and Jurisdiction Clauses 8.5 Article IVbis of Hague-Visby Rules 8.5.1 Article IVbis(1) 8.5.2 Article IVbis(2) 8.5.3 Article IVbis(3) 8.5.4 Article IVbis(4) 8.6 Interpretation 9 Hague/Hague-Visby Rules: Carriers’ Obligation and Defences 9.1 Introduction 9.2 Articles III(1) and IV(1) 9.2.1 Operation of Doctrine of Stages Under the Rules Regime 9.2.2 Due Diligence and Burden of Proof 9.2.3 Article IV(2) Defences not Apply to Article III(1) Obligations 9.3 Articles III(2) 9.3.1 Free-In and Free-Out 9.3.2 Properly and Carefully 9.3.3 Non-Delegable Nature of Duty 9.4 Article IV(2) Defences 9.4.1 Initial Observation 9.4.2 Article IV(2)(a) and (b) 9.4.3 Article IV(2)(c)-(q) 9.5 Article III(2) and IV(2): Burden of Proof 9.5.1 Volcafe v CSAV [2018] UKSC 61 9.5.2 Application of Volcafe in Malaysia and Singapore 10 Hague/Hague-Visby Rules: Carriers’ Liability and Time Limitations 10.1 Introduction 10.2 Tonnage Limitation Preserved 10.3 Comparison Between Schemes in the Rules: A Glimpse 10.4 Article III(6) and III(6)bis: Time Limitation 10.4.1 Article III(6) 10.4.2 Article III(6)bis 10.5 Article IV(5): Liability-Limitation 10.5.1 Hague Rules 10.5.2 Hague-Visby Rules 10.6 Loss of Protection in Case of Deviation 11 Shipper’s Obligation for Dangerous Goods 11.1 Introduction 11.2 Duty Under Common Law 11.3 Duty Under Article IV(6) 11.3.1 Part 1 of Article IV(6) 11.3.2 Part 2 of Article IV(6) 11.3.3 Article IV(3) Defence to Shipper 11.4 Transfer of Shipper’s Liability to Bill of Lading Holder Part III Charterparties 12 Charterparty: Introduction 12.1 Introduction 12.2 Types of Charterparty 12.2.1 Demise Charter 12.2.2 Time Charter 12.2.3 Voyage Charter 12.2.4 Trip Charter and Importance of Classification 12.2.5 Standard Forms of Charterparty 12.3 Some Common Terms in Charterparties 12.3.1 Clause Paramount 12.3.2 Allocation of Risk in Deck Cargo 12.3.3 Exceptions Clauses 12.3.4 Construction of Competing Clauses 12.4 Title to Bunkers 12.5 Sale of Ship While Serving Charter 12.6 Cancelling Date and Approach Voyage 12.6.1 Cancelling Date 12.6.2 Approach Voyage 12.7 Frustration 12.7.1 Consequences of Frustration 12.7.2 Self-induced Frustration 12.7.3 Judging Frustration 12.8 Dispute Resolution 13 Voyage Charter: Freight and Lien 13.1 Introduction 13.2 Freight v. Hire 13.3 Bases of Freight Calculation 13.4 Earning of Freight 13.4.1 Concept of Freight Earned and No Set-Off 13.4.2 Freight Payable Upon Delivery 13.4.3 Case of Cargo Ex Galam/Voyage Interrupted by Charterer 13.4.4 Applicability of Principles to Bills of Lading 13.5 Obligation of B/L Holder to Pay Charter-Freight 13.6 ‘Cesser’ Clause 13.7 Lien 13.7.1 Conditions for Lien: Contractual Link/Completion of Carriage 13.7.2 Manner of Exercising Lien and Sale of Cargo 13.7.3 Lien on Sub-freight 13.7.4 Lien on Sub-hire 14 Voyage Charter: Laytime and Demurrage 14.1 Introduction 14.2 Laytime Definitions 14.2.1 Calculation of Laytime 14.2.2 Weather Day and Working Day Qualifications 14.3 Charterer’s Obligations 14.4 Starting of Laytime 14.4.1 Notice of Readiness 14.4.2 Arrived Ship 14.4.3 Ready to Load/Discharge 14.4.4 Pre-conditions for Notice 14.4.5 Manner and Timing of Issuance of Notice 14.5 Suspension of Laytime 14.5.1 Laytime Exceptions 14.5.2 Loss of Laytime Attributable to Shipowner 14.6 Termination and Demurrage 14.6.1 Termination 14.6.2 Demurrage 14.6.3 Detention Distinguished from Demurrage 15 Time Charter: Orders and Indemnity 15.1 Introduction 15.2 Legitimate v. Illegitimate Orders 15.3 Breach v. Indemnity Claims 15.4 Limitations to Indemnity Claim 15.4.1 Employment V Navigation Orders 15.4.2 Proximate Causation 15.4.3 Voluntarily Assumed Risk 15.5 Common Types of Order 15.5.1 Orders About Issuing Bills of Lading 15.5.2 Orders About Cargoes to Be Loaded 15.5.3 Orders About Ports to Call 15.5.4 Orders for Delivery Against Indemnity-Undertaking 16 Time Charter: Withdrawal, Off-Hire and Redelivery 16.1 Introduction 16.2 Termination and Withdrawal 16.2.1 Obligation to Pay Hire 16.2.2 Termination 16.2.3 Withdrawal 16.2.4 Suspending Performance 16.3 Off-Hire 16.3.1 Triggering Event 16.3.2 Calculating ‘Off-Hire’ Period 16.4 Redelivery 16.4.1 Redelivery Window 16.4.2 Early Redelivery 16.4.3 Late Redelivery 17 Time Charter: Apportionment of Cargo-Claims Liability 17.1 Introduction 17.2 Inter-Club Agreement 17.3 No Special Clauses Relating to Cargo Claims Appendix A Hague Rules of 1924 Appendix B Hague-Visby Rules of 1968 Appendix C Hague-Visby Rules as amended by SDR Protocol of 1979 Appendix D Hague Rules, Hague-Visby Rules, Hague-Visby Rules as amended by SDR Protocol (Compared) Appendix E Bills of Lading Act 1855 (UK) Appendix F Carriage of Goods by Sea Act 1924 (UK) Appendix G Carriage of Goods by Sea Act 1971 (UK) Appendix H Carriage of Goods by Sea Act 1992 (UK) Appendix I Carriage of Goods by Sea Act 1936 (US) Index This book, written in three parts, introduces the reader to the basics of the international trade and elaborates on bills of lading and charterparties in depth. While the book is based on the English law, cases and materials from other jurisdictions, particularly Singapore, Malaysia, India, the USA, and Australia are brought in to provide an international perspective. The practical analyses, commentary and critiques of cases would be a useful guide for practitioners in developing case arguments. Although written with practitioners, academicians and students in mind, the book will also serve as a useful guide for sea carriers, freight forwarders, international traders, financiers, etc. as the complex subject is presented in reader-friendly and easy to grasp manner. Arun Kasi is a barrister specializing in maritime law. He undertakes court matters as well as work as arbitrator and arbitration counsel under the terms of London Maritime Arbitrators Association (LMAA) and Singapore Chamber of Maritime Arbitration (SCMA). He holds a doctorate degree in maritime law. He graduated with his law degree when he was 19 years old and has been working in the field since then. To date, over a span of three decades, he has authored six books and about 50 articles This book, written in three parts, introduces the reader to the basics of the international trade and elaborates on bills of lading and charterparties in depth. While the book is based on the English law, cases and materials from other jurisdictions, particularly Singapore, Malaysia, India, the USA, and Australia are brought in to provide an international perspective. The practical analyses, commentary and critiques of cases would be a useful guide for practitioners in developing case arguments. Although written with practitioners, academicians and students in mind, the book will also serve as a useful guide for sea carriers, freight forwarders, international traders, financiers, etc. as the complex subject is presented in reader-friendly and easy to grasp manner. Arun Kasi is a law-practitioner and arbitrator, specialising in maritime law. While being an active practitioner, he has always been highly academically inclined. He graduated with his law degree when he was 19 years old and has been working in the field since then. To date, over a span of 30 years, he has authored or co-authored six law books and about 40 articles