The Hague Rules and Paramount Clause Last updated 29-Feb-2016

The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply.

Because of difference in the package limitation regime contained in Article IV Rule 5 of the Hague-Visby Rules and the Hague Rules regime the owners’ exposure to the probable cargo claims also vary substantially. As it happened for example in Yemgas FZCO & Ors v Superior Pescadores S.A. [2016] EWCA Civ 101, for some of damaged packages the Hague Rules limit was higher than the Hague-Visby limit, and the claimants have claimed this higher limit, while for another packages, application of the Hague Rules yields a higher limitation figure. In the case of each package the claimants have claimed whichever limitation figure is the higher on the pretext that the wording in the Paramount Clause "as enacted in the country of shipment" when it relates to the country of shipment which adhered to the Hague-Visby Rules was thought to be able to produce such result.

The Court of Appeal dismissed claimants’ argument and held that in case where a bill of lading is issued incorporating the Hague Rules as enacted in the country of shipment and in which the country of shipment has enacted the Hague-Visby Rules, should be regarded as a case which is subject to the Hague-Visby Rules rather than the Hague Rules.

Notably that Tomlinson LJ went as far as note at para 48-49:

48. I am not sure what is the provenance of the expression "the Hague-Visby Rules". Strictly speaking there are no such Rules. There was signed at Brussels on 23 February 1968 a "Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading ("Visby Rules")". Those "Certain Rules" are of course the Hague Rules. The Protocol prescribes a series of amendments to the Hague Rules, and it is that series of amendments which in the title to the Protocol is termed the "Visby Rules".

49. … Had I been as well-informed about these matters in 2001 as I am now as a result of studying the materials helpfully produced by Counsel for the purposes of this appeal, I think that in my judgment in The Happy Ranger, … I would have expressed myself differently at paragraph 31. I do not think that I would simply have said that Italy has enacted the Hague-Visby Rules, because I am confident that when I said that I did not appreciate that the Hague Rules as amended by the Visby Rules had never in fact been promulgated as a single autonomous instrument, the Hague-Visby Rules. It would have been more accurate to say that Italy, like the UK, has enacted the Hague Rules as amended, which is exactly what is said in the sub-title to section 1 of the Carriage of Goods by Sea Act 1971.

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