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SARAH C DERRINGTON[*]
It is somewhat surprising that, until February 2005, the true status of a straight bill of lading, namely a bill of lading providing for delivery of goods to a named consignee and not to order or assigns or bearer, and so not transferable by endorsement, had not been authoritatively settled by an English Court. The commercial shipping industry has, however, now been left in no doubt that a straight bill of lading is a ‘bill of lading or any similar document of title’ for the purposes of the Hague and the Hague-Visby Rules and that the production of such a bill is a necessary pre-condition of requiring delivery of the goods to which the bill relates. Such were the conclusions of the House of Lords in J I MacWilliam Company Inc v Mediterranean Shipping Company SA (the Rafaela S),[1] in which their Lordships unanimously upheld the decision of the Court of Appeal.[2]
The dispute in the Rafaela S arose out of damage sustained to four containers of printing machinery in the course of their carriage from Felixstowe to Boston, the carriage having commenced in Durban. The contract of carriage from Durban to Felixstowe was covered by a straight bill of lading which had been issued in Durban. As matters transpired, no document was issued in respect of the journey from Felixstowe to Boston, but it was agreed for the purposes relevant to the appeal to the House of Lords that, had any document been issued, it would have been in the same form as that issued for the first leg of the carriage. It was also agreed that the buyer, J I MacWilliam Company Inc, had title to sue and that the carrier, Mediterranean Shipping Company SA, was responsible for the damage sustained to the printing machinery. The sole issue before the House of Lords was whether the Hague-Visby Rules applied to the bill of lading in question, in which case the carrier’s liability was limited to approximately US$150,000. If the Hague-Visby Rules did not apply to the bill of lading, the carrier’s liability was limited to US$2000 pursuant to the US Carriage of Goods by Sea Act 1936.
The doubt surrounding the true status of a straight bill of lading was a likely consequence of the commonly accepted characteristics of a bill of lading, viz:
1. a receipt by the carrier acknowledging the shipment of goods on a particular vessel for carriage to a particular destination;
2. evidence of the contract of carriage which will usually have been concluded prior to the issuance of the bill itself;
3. a document of title to the goods which enables the consignee to take delivery of the goods at their destination or to dispose of them by the endorsement or delivery of the bill of lading.
It is this latter feature which has confused the understanding of the role of a straight bill of lading. It has been generally understood in English law that a bill of lading loses its characteristic as a document of title if it is not negotiable.[3] Such a bill is not a ‘true’ bill of lading and, therefore, cannot be ‘a similar document of title’ to which the Hague or Hague-Visby Rules apply. Support for this argument has been found in the now repealed Bills of Lading Act 1855 which referred in its preamble to ‘a bill of lading of goods being transferable by endorsement’. At first blush, this statement would seem to preclude any suggestion that the term “bill of lading” extended to anything other than a negotiable bill of lading. In the Rafaela S, their Lordships dismissed such a restrictive construction of the Bills of Lading Act 1855, section 1, which provided that:
Every consignee of goods named in a bill of lading, and every endorsee of a bill of lading, to whom the property in the goods therein mentioned shall pass upon or by reason of such consignment or endorsement, shall have transferred to and vested in him all rights of suit, and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself.
Lord Steyn expressed the view that the substantive provisions of section 1 cannot sensibly be read as applying only to a consignee named in an order bill. His Lordship gave two reasons for this construction. First, a named consignee was within the mischief sought to be cured by the 1855 Act, viz., the lack of privity between carrier and consignee.[4] Secondly, if named consignees were not encompassed within the provision, there would have been a major gap in the Act because a named consignee in a straight bill of lading could neither sue nor be sued on a contract of carriage evidenced by the bill of lading.[5] As his Lordship observed, ‘[i]n the hands of the named consignee the straight bill of lading is his document of title’.[6] Thus, the answer to the true meaning of a straight bill of lading was not to be found by reference to the Bills of Lading Act. Nor was it to be found in the statute which replaced the Bills of Lading Act, the Carriage of Goods by Sea Act 1992 (COGSA 92). COGSA 92 treats straight bills of lading as akin to sea waybills, and so a straight bill is not a bill of lading for the purposes of that Act. In the Report which led to the enactment of COGSA 92, the Law Commission and the Scottish Law Commission were clear that they did not consider a straight bill of lading to be a document of title at common law.[7] However, as Lord Bingham emphasised,[8] the question before the House was not whether a straight bill was a document of title at common law, but rather whether it is ‘a bill of lading or any similar document of title’ for the purposes of the Hague and the Hague-Visby Rules. Their Lordships were of the unanimous view that it is for the following reasons:
• reference to the history of events leading to the adoption of the Hague, and subsequently the Hague-Visby Rules, and to relevant English and international case law leads to the inference that the Rules were intended to apply to straight as well as to order bills;[9]
an expansive interpretation is to be given to the expression ‘bill of lading or any similar document of title,’ and the phrase ‘document of title’ is not interpreted by reference to principles of English domestic law nor by reference to domestic statutes;[10]
an interpretation which excludes straight bills of lading from the operation of the Rules depends upon fine and technical distinctions and arguments which would not accord with the understanding of straight bills of lading commonly held by traders, bankers and insurers;[11]
named consignees of goods are just as much in need of the protection of the Rules against unduly onerous terms in the contract of carriage as are consignees or endorsees under transferable bills of lading and there is no rational reason for giving the protection of the Rules to a consignee under a transferable bill but not to a consignee under a straight bill.[12]
The very clear conclusion reached by their Lordships is yet another example of the English courts’ deference to commercial reality, coupled with a welcome application of principles of international comity in relation to the interpretation of international conventions.[13]
The bill of lading in issue in The Rafaela S required on its express terms that it must be presented to obtain delivery of the goods. The Court of Appeal had left open the question as to whether a carrier should require presentation of a straight bill where the bill does not require presentation. Having referred to recent Dutch, French, and Singaporean decisions on the point,[14] Lord Bingham held that, if it were necessary for him do so, he would hold that production of the bill is a necessary pre-condition of requiring delivery even where there is no express provision to that effect.[15] Lord Steyn also expressed the view that the decision of the Court of Appeal of Singapore in Voss v APL Co Pte Ltd,[16]that presentation of a straight bill of lading is a requirement for the delivery of the cargo, is correct.[17]Albeit obiter dicta, their Lordships have left the commercial shipping industry in no doubt that a carrier should require presentation even of a straight bill of lading.
While the extent of the application of the relevant provision of the Hague and Hague-Visby Rules can now be considered settled, its interaction with the domestic COGSA 92, and the equivalent Australian Sea-Carriage Documents Acts[18] is much less clear. Professor Charles Debattista commented that the decision of the Court of Appeal left straight bills sitting somewhat uncomfortably across two English statutes relating to the carriage of goods by sea.[19] The House of Lords did not resolve the conflict. Neither COGSA 92 nor the Australian Sea-Carriage Documents Acts consider straight bills of lading to be ‘true’ bills of lading. As such, the consignee named on such a bill does not enjoy the benefit of the estoppel – granted by those statutes to lawful holders of order bills of lading – which binds carriers to statements made about the goods on the bill of lading. By contrast, now that it is clear that straight bills of lading do fall within the ambit of the Hague-Visby Rules, the consignee will take the benefit of the estoppel created by Article III, rule 4, which binds the carrier to statements about the goods on the bill of lading. There is, therefore, a direct conflict on the issue to which their Lordships did not refer, despite having read Professor Debattista’s observations on the conflict.[20] It is suggested, however, that the conflict may turn out to be more theoretical than practical. If the Hague or Hague-Visby Rules apply to the bill of lading, then any issue of estoppel must fall to be governed by those Rules and not by reference to any conflicting domestic legislation.[21]
The decision of the House of Lords has not changed the common law understanding of the characteristic of a negotiable bill of lading as a document of title. Nor has it expanded the function of a straight bill of lading. Rather, the decision has clarified in English law the types of bills to which the Hague and Hague-Visby Rules apply. Further, it has settled the question of whether a straight bill of lading must be presented to the carrier in order to obtain delivery of the goods – the answer will no doubt be of comfort to both carriers and their insurers.
[*] Reader in Law, Marine & Shipping Law Unit, TC Beirne School of Law, The University of Queensland, Barrister.
[2] [2003] EWCA Civ 556; [2004] QB 702; [2003] 2 Lloyd’s Rep 113. The arbitrators and Langley J at first instance ([2002] 2 Lloyd’s Rep 403) had concluded that a straight bill of lading did not fall within the ambit of the Hague-Visby Rules.
[3] See generally, for example, John F Wilson, Carriage of Goods by Sea (5th ed, 2004) 132ff; Gaskell, Asariotis & Baatz, Bills of Lading: Law and Contracts (2000) 1C.3; Simon Baughen, Shipping Law (3rd ed, 2004) 8; Cooke et al, Voyage Charters (2nd ed, 2001) 18.142 -18,143
[4] [2005] UKHL 11, [41].
[5] [2005] UKHL 11, [41].
[6] [2005] UKHL 11, [46]. (Emphasis in original).
[7] Rights of Suit in Respect of Carriage of Goods by Sea, Law Commission, (1991) para 2.50.
[8] [2005] UKHL 11, [22].
[9] See, for example, [2005] UKHL 11, [8]-[16] (Lord Bingham of Cornhill).
[10] See, for example, [2005] UKHL 11, [20] (Lord Bingham of Cornhill), [44] (Lord Steyn).
[11] See, for example, [2005] UKHL 11, [45], [48] (Lord Steyn).
[12] See, for example, [2005] UKHL 11, [70] (Lord Rodger of Earlsferry).
[13] [2005] UKHL 11, [48] (Lord Steyn). See generally, Homburg Houtimport BV and others v Agrosin Private Ltd and another (“The Starsin”) [2003] 2 WLR 711; River Gurara v Nigerian National Shipping Line Ltd [1997] 3 WLR 1128; Shipping Corporation of India Ltd v Gamlen Chemical Co (Australasia) Pty Ltd (1980) 147 CLR 142, 159; Great China Metal Industries Co Ltd v Malaysian International Shipping Corp, Berhad (The Bunge Seroja) [1998] HCA 65; (1998) 196 CLR 161.
[14] The Duke of Yare (ARR-RechtB Rotterdam, 10 April 1997); The MSC Magallanes (2nd div, Cour d’Appel, Rennes); Voss v APL Co Pte Ltd [2002] 2 Lloyd’s Rep 707.
[15] [2005] UKHL 11, [20].
[16] [2002] 2 Lloyd’s Rep 707.
[17] [2005] UKHL 11, [45].
[18] Sea-Carriage Documents Act 1996 (Qld); Sea-Carriage Documents Act 1997 (NSW); Sea-Carriage Documents Act 1997 (WA); Sea-Carriage Documents Act 1997 (Tas); Sea-Carriage Documents Act 1998 (Vic); Sea-Carriage Documents Act 1998 (SA); Sea-Carriage Documents Act 1998 (NT).
[19] C. Debattista, ‘Straight Bills of lading: a continuing saga in the English Courts. Questions Resolved, Untouched and Mooted by The Rafaela S’, paper delivered at International Congress of Maritime Arbitrators (ICMA) XV, London, April 2004.
[20] [2005] UKHL 11, [49]: their Lordships referred to C. Debattista, ‘Straight Bills Come In From the Cold – Or Do They?’ Lloyd's List 23 April 2003, 6.
[21] Stag Line Limited v Foscolo, Mango and Company Limited [1932] AC 328.
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