Negotiating contracts of carriage and competing cargo liability regimes
Poralu Marine Australia Pty Ltd v MV Dijksgracht [2023] FCAFC 147 - 8 September 2023
The Full Federal Court of Australia has recently considered which cargo liability regime would apply in circumstances where the terms of a booking note, a sea waybill and various ‘recapitulation’ emails all contained different terms regarding liability.
The case concerned damage to three pontoons that were shipped from the port of Cork, Ireland, to the port of Geelong, Australia, on board MV Dijksgracht for installation at the Royal Geelong Yacht Club. Poralu Marine Australia Pty Ltd, the consignee, brought proceedings in rem against the vessel and in personam against Spliethoff Transport BV, the carrier, and Scheepvaartonderneming Dijksgracht, the owner of the vessel, for the damage.
During negotiation of the carriage, the parties exchanged two recapitulation emails followed by the provision by the carrier of a bill of lading, a sea waybill and a booking note. Each of those communications contained terms that prescribed different rules and as a result, competing cargo liability regimes. The central issue to the determination of the applicable liability limit was which of those communications constituted the contract of carriage.
At first instance, Stewart J found that the contract of carriage was concluded in the booking note sent on behalf of the consignor (Poralu) to the representative of the carrier (Spliethoff). By virtue of the operation of the Himalaya clause in clause 11 of the booking note, both the carrier and the owner were able to rely on the limitation of liability of GBP100 for each pontoon and the law of the Netherlands was held to apply to the contract.
On appeal to the Full Federal Court, Rares, Derrington and Feutrill JJ found that the contract of carriage was constituted by the second recap email which stated that a bill of lading would be issued.
In a joint judgment, Rares and Derrington JJ considered the second recap to contain sufficient details to signify that “the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms” (applying the first category of Masters v Cameron (1954) 91 CLR 353 at 360) even though more precise terms were yet to be agreed (applying Lloyd LJ’s fourth principle in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601 at 619; RTS Flexible [2010] 1 WLR at 773 [49]). The filling out and return of the booking note after the second recap was seen as an attempt to proceed consistently with the intention to be bound by the terms of the second recap. Although a sea waybill was eventually issued, not a bill of lading, the Hague-Visby Rules as enacted in Ireland, as the country of shipment, were held to apply to the contract of carriage by reason of the contemplation of the bill of lading. The effect was that liability of the carrier and the owner was limited to 666.67 units of account per package or 2 units of account per kilogramme of gross weight of the goods (whichever is higher).
The Full Federal Court noted that it was somewhat surprising that the applicable liability regime for shipments of this kind remained unclear, and in the first instance decision Justice Stewart identified four separate liability regimes that were potentially applicable to the damage to the cargo. The lack of uniformity of liability rules creates uncertainty for those involved in the carriage of international cargo and it is important that parties to shipping contracts carefully consider the terms of carriage to ensure there is no uncertainty about the applicable liability regime in the event of damage.