Fimbank Plc v KCH Shipping Co Ltd [2024] UKSC 38

A Maltese bank claimed against a carrier for misdelivery of coal cargo discharged without presentation of bills of lading. The Supreme Court held that the one-year time bar in article III, rule 6 of both the Hague Rules and Hague Visby Rules applies to misdelivery claims occurring after discharge from the vessel.

Facts

The appellant bank (Fimbank Plc) financed the purchase of approximately 85,510 metric tonnes of coal shipped from Indonesia to India aboard the vessel ‘GIANT ACE’. The cargo was discharged at Indian ports between 1 and 18 April 2018 against a letter of indemnity and without production of the original bills of lading. The bank alleged it held the bills of lading as security and that the carrier (KCH Shipping Co Ltd) misdelivered the cargo to persons not entitled to receive it after discharge. The bills of lading incorporated the Hague Visby Rules via a charterparty clause.

Procedural History

The bank commenced arbitration on 24 April 2020, more than 12 months after delivery. The arbitral tribunal held the claim was time-barred under article III, rule 6 of the Hague Visby Rules. Sir William Blair dismissed the bank’s appeal, and the Court of Appeal upheld this decision, though it reasoned that the Hague Rules time bar would not apply to post-discharge misdelivery but the Hague Visby Rules time bar would.

Issues

The central issue was whether the one-year time bar in article III, rule 6 of the Hague Rules and Hague Visby Rules applies to claims for misdelivery of cargo occurring after discharge has been completed.

Judgment

Lord Hamblen (with whom all other Justices agreed) dismissed the appeal, holding that the time bar applies to misdelivery claims occurring after discharge under both the Hague Rules and the Hague Visby Rules.

Interpretation of Article III, Rule 6

The court found that the language of the provision indicates wide application:

“In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.”

Lord Hamblen noted the phrase ‘In any event’ indicates the time bar applies in every case, ‘all liability’ covers any liability however arising, and ‘in respect of’ loss or damage includes financial loss related to the goods.

Context and Purpose

The court emphasised that rule 6 itself focuses on delivery rather than discharge, recognising these are different concepts. The purpose of finality would be undermined if related claims were subject to different time limits:

“It makes little sense, for example, to have a time bar for claims for breach of the Rules, but not for contractual or tortious claims based on the same or substantially the same facts.”

Period of Responsibility

While acknowledging that the Rules establish a ‘period of responsibility’ from loading to discharge during which minimum liabilities cannot be reduced, the court held this does not mean all Rules operate only during that period. Article III, rule 6 and other provisions clearly contemplate matters outside this period.

Hague Visby Rules

The wider wording of the Hague Visby Rules (‘all liability whatsoever in respect of the goods’) and the travaux préparatoires confirmed the amendment was specifically intended to cover misdelivery claims:

“The object of the aforesaid amendment is to give the text a bearing as wide as possible, so as to embody within the scope of application of the one year period, even the claims grounded on the delivery of the goods to a person not entitled to them.”

Implications

This decision provides important clarification that carriers can rely on the one-year time bar for misdelivery claims regardless of whether misdelivery occurs during or after discharge. The ruling supports commercial certainty in international shipping by ensuring a unified limitation regime applies to all cargo claims under bills of lading governed by the Hague or Hague Visby Rules. It confirms that parties providing letters of indemnity for delivery without bills of lading can calculate with certainty when their exposure ends.

Verdict: Appeal dismissed. The one-year time bar in article III, rule 6 of both the Hague Rules and the Hague Visby Rules applies to claims for misdelivery of cargo occurring after discharge from the vessel. The bank’s claim was therefore time-barred.

Source: Fimbank Plc v KCH Shipping Co Ltd [2024] UKSC 38