#5124 - The Hollandia - Conflict of Laws BCL

The Hollandia (1982)

Facts

My Lords, on March 21, 1978, some nine months after the Carriage of Goods by Sea Act 1971 ("the Act of 1971") came into force, the respondents ("the shippers") shipped from the port of Leith a large machine weighing 9906 kilograms upon a vessel, Haico Holwerda, belonging to the appellants, the Royal Netherlands Steamship Co. ("the carriers"), for carriage to Bonaire in the Netherlands Antilles.

The shippers claim that the machine was damaged during the course of discharge from the carrying vessel at Bonaire as a result of the negligence of the servants of the carrying vessel which for the ocean leg of the voyage was in fact a ship under the Norwegian flag, the Morviken, of which the carriers were charterers.

On February 26, 1980, the shippers commenced an action in rem in the High Court against the Hollandia, a sister ship of the Haico Holwerda, belonging to the carriers. The Hollandia was within the jurisdiction of the Admiralty Court though she was not in fact arrested because, as so often happens, the carriers' solicitors agreed to accept service of the writ without prejudice to their right to move the Admiralty Court for a stay of all further proceedings.

The clause relied upon was condition 2 which was in the following terms:

Paragraph 1: "Law of application and jurisdiction. The law of the Netherlands in which the Hague Rules, as adopted by the Brussels Convention of August 25, 1924, are incorporated - with the exception of article 9 - shall apply to this contract. The maximum liability per package is D.fl. 1,250. For goods loaded or discharged at a Belgian port, the rules of article 91 of chapter 2 of the Belgian Commercial Code shall apply.

Paragraph 3: "All actions under the present contract of carriage shall be brought before the Court of Amsterdam and no other court shall have jurisdiction with regard to any such action unless the carrier appeals to another jurisdiction or voluntarily submits himself thereto."

Legal Regime applicable in Netherlands: My Lords, as is apparent from the first paragraph of the clause, the Netherlands at the time of the issue of the bill of lading were parties to the Brussels Convention of 1924, commonly known as the Hague Rules, which were scheduled to the Carriage of Goods by Sea Act 1924 ("the Act of 1924"); but the Netherlands had not by then ratified the Brussels Protocol of 1968 amending the Hague Rules, commonly known as the Hague-Visby Rules, which are scheduled to the Act of 1971.

Legal Regime in England: The provisions of the Act of 1971 that are most directly relevant to the instant appeal are subsections (1) to (3) of section 1 which reads as follows:

(1) In this Act, 'the Rules' means the International Convention for the unification of certain rules of law relating to bills of lading signed at Brussels on August 25, 1924, as amended by the Protocol signed at Brussels on February 23, 1968. (2) The provisions of the Rules, as set out in the Schedule to this Act, shall have the force of law. (3) Without prejudice to subsection (2) above, the said provisions shall have effect (and have the force of law) in relation to and in connection with the carriage of goods by sea in ships where the port of shipment is a port in the United Kingdom, whether or not the carriage is between ports in two different states within the meaning of article X of the Rules."

Article III of the Hague-Visby Rules:

8. Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. A benefit of insurance in favour of the carrier or similar clause shall be deemed to be a clause relieving the carrier from liability.

Holding

Express Limitation of Liability – Void

The first paragraph of condition 2 of the bill of lading, prescribing as it does for a per package maximum limit of liability on the part of the carriers for loss or damage arising from negligence or breach of contract instead of the higher per kilogram maximum applicable under the Hague-Visby Rules, is ex facie a clause in a contract of carriage which purports to lessen the liability of the carriers for such loss or damage otherwise than is provided in the Hague-Visby Rules. As such it is therefore rendered null and void and of no effect under article III, paragraph 8.

Choice of Law – Overriden by Hague-Visby Rules

The first paragraph of clause 2 of the bill of lading down to the first full stop is ambiguous. It may mean that the general law of the Netherlands (including its private international law) relating to carriage of goods by sea is adopted as the "proper law" of the contract of carriage or it may mean, as the absence of a comma between "Netherlands" and "in which" might suggest, that only that part of the law of the Netherlands which incorporates the Hague Rules is to be applicable to the contract which, in other respects, is to be governed by what the court seized of any claim under the contract would treat as being its "proper law." In the case of a contract made in Scotland for the carriage of goods from a port in Scotland, the "proper law" would, prima facie at any rate, be Scots law, and this, so far as contracts of carriage of goods by sea are concerned, is in all relevant respects the same as English law. But whether the first paragraph of condition 2 of the bill of lading be given the wider or the narrower meaning, in so far as it purports to lessen, as it expressly does, the liability of the carriers for which article IV, paragraph 5 of the Hague-Visby Rules provides, it unquestionably contravenes article III, paragraph 8 and by that rule is deprived of any effect in English or Scots law.

Choice of Forum Clause – Void

Counsel for the carriers sought to justify the judge's decision on this point by putting a narrow literalistic interpretation on article III, paragraph 8 of the Hague-Visby Rules. A choice of forum clause, he contended, is to be classified as a clause which only prescribes the procedure by which disputes arising under the contract of carriage are to be resolved. It does not ex facie deal with liability at all and so does...