[2005] Vol.

1 LLOYD’S LAW REPORTS 57

H.L.] Jindal Steel v. Islamic Shipping PART 2

HOUSE OF LORDS ing and/or inadequate stowage due to failure to provide

dunnage, failure to secure the coils and or stacking
them so that the bottom layers were excessively
Nov. 3, 4; Nov. 25, 2004 compressed.
—————— The parties agreed to the trial of preliminary issues
and issue 1 provided: whether on a true construction of
JINDAL IRON AND STEEL CO. LTD. AND (a) the charter-party dated Dec. 4, 1997 and (b) the
OTHERS contracts contained in or evidenced by the bills of
v. lading numbered 1 and 2 dated Jan. 2, 1998 the
ISLAMIC SOLIDARITY SHIPPING CO. defendants were under any liability for any damage to
JORDAN INC. the cargo caused as a result of loading, stowage, laying
(THE JORDAN II) of dunnage, securing or discharging.
————Held, by Q.B. (Com. Ct). (Mr. NIGEL TEARE,
[2004] UKHL 49 Q.C. sitting as a Deputy Judge) that the defendants had
no liability under the charter-party and there was no
Before Lord BINGHAM OF CORNHILL, liability under the bills either so long as the alleged
Lord NICHOLLS OF BIRKENHEAD, damage was not caused by acts or omissions of the
Lord STEYN, defendants their servants or agents.
Lord HOFFMANN and The claimants appealed arguing that art. III, r. 2 of
Lord SCOTT OF FOSCOTE the Hague-Visby Rules imposed an obligation on the
defendants to properly and carefully load, stow and
Bill of lading — Art. III, r. 2 — Construction — discharge the cargo and any provision to the contrary
Damage to cargo — Allegation damage caused by was made null and void by art. III, r. 8.
defective loading, stowage or discharge — Whether
rule imposed obligation to properly and carefully ————Held, by C.A. (WALLER and TUCKEY, L.JJ.
and BLACK, J.) that (1) if the contract was to transfer the
load, stow or discharge — Meaning and effect of
obligation to load stow and discharge from the owners
art. III, r. 2 of the Hague-Visby Rules — Whether
contractual provision transferring responsibility for to the charterers clear words were required; but there
handling, stowing and discharging cargo invalidated was no presumption that if the charterer had agreed to
by art. III, r. 8. pay for the cargo operation, he had also agreed to carry
it out or be liable if it was done badly;
House of Lords — Judicial precedent — Whether
House should depart from longstanding decision on (2) in some contracts so-called f.i.o.s.t. clauses did
interpretation of art. III, r. 2 of Hague Rules. transfer responsibilities to charterers but it did not
follow that use of the acronym on its own would always
By a voyage charter-party dated Dec. 4, 1997 the do so; the natural meaning of the word ‘‘Free’’ was at
defendants’ vessel Jordan II was chartered for the no cost; it was not suggested that it had any wider
carriage of a cargo of steel coils from Bombay to meaning and appearing as it did in the freight clause
Barcelona and Motril. The charter was on a Stemmor there was no reason why it should be given any wider
1983 form (designed for ore cargoes) and provided meaning in this contract particularly as cl. 17 said ‘‘Free
inter alia: of expense’’;
3. Freight to be paid at the rate of U.S.$ . . . per
(3) the submission that cl. 17 was so discordant with
metric tonne F.I.O.S.T. — lashed/secured/
the rest of the contract that it should be ignored
dunnaged . . .
altogether would be rejected; the discordance arose
7. Charterers to have full use of all vessel’s gear to from the reference to ‘‘trim’’ and its definition; there
assist in loading and discharging cargo. Vessel’s gear was nothing discordant or unclear about the words
should only be considered as supplementary to the ‘‘ . . . charterers to put cargo on board . . . and discharge
shore gear. Shore winch/cranemen to be used at all cargo free of expense to the vessel’’; those words not
times. only dealt with costs but also the obligation to carry out
17. Shippers/charterers/receivers to put cargo on the operation itself; the charterers must put the cargo on
board trim and discharge cargo free of expense to the board and discharge it;
vessel. Trimming is understood to mean levelling off (4) if one looked at cl. 3 it was clear that the parties
the top of the pile and any additional trimming had put their mind to what was required to stow the
required by the master is to be for owners steel coils; no trimming was required but after the letter
account . . . ‘‘T’’ there was a dash and what was required for this
The cargo was shipped under two bills of lading cargo was spelt out; cl. 17 was intended to transfer the
issued in Bombay on Jan. 2, 1998 to the first claimant obligation to perform all cargo work to the charterers
as shipper. The third claimant was named as consignee. and there was nothing in the remainder of the contract
The bills were on the Congenbill form and provided to suggest that this was not the intention of the parties;
that freight was payable ‘‘as per charter-party dated they must therefore have intended that the obligation to
4.12.97’’ and incorporated ‘‘all terms and conditions carry out trimming was intended to refer to what would
liberties and exceptions’’ of that contract. The Hague- actually be required which they set out in cl. 3; and they
Visby Rules applied. could not have intended that while the charterers would
The cargo was discharged at Motril in February, have to pay for stowing the cargo as well as loading
1998. The claimants alleged that the cargo was dam- and discharging it they did not actually have to do the
aged by rough handling during loading and/or discharg- stowing;
58 LLOYD’S LAW REPORTS [2005] Vol. 1

Jindal Steel v. Islamic Shipping [H.L.

(5) cll. 3 and 17 should be read together; the parties shippers, charterers and consignees was not invalidated
should obviously have deleted the second sentence of by art. III, r. 8 (see par. 12);
cl. 17 but their failure to do so was not fatal to what was (3) in international trade law, it was more important
the proper construction of the contract; the standard that a rule should be certain, than whether the rule was
definition of ‘‘trim’’ was contrary to the special defini- established one way or the other; the House of Lords
tion which the parties adopted for the purposes of might be persuaded under the Practice Statement to
cl. 3; depart from an earlier decision where that decision has
(6) if all cargo work had to be performed by the been demonstrated to work unsatisfactorily in the
charterers they would be liable if it was not properly market place and to produce manifestly unjust results;
and carefully carried out and the Judge reached the but, in a case such as the present, if that high threshold
right conclusion on issue 1(a); requirement was not satisfied, it would not be proper to
(7) there was nothing to prevent the shipowner reverse the earlier decision (see par. 16);
making a contract with the shipper on terms that the ————Vallejo v. Wheeler, (1774) 1 Cowp. 143;
shipper would be responsible for loading, the receiver Homburg Houtimport B.V. and Others v. Agrosin Pri-
would be responsible for discharging and the shipowner vate Ltd. and Another (The Starsin), [2003] 1 Lloyd’s
responsible for neither unless it be art. III, r. 2 of the Rep. 571; [2004] 1 A.C. 715 considered;
Hague-Visby Rules; but art. III, r. 2 did not compel the (4) the House would not venture a concluded view on
shipowner to be responsible for loading and unloading; the correctness of the interpretation of art. III, r. 2 of the
it simply compelled the shipowner to load and unload Hague and Hague-Visby Rules adopted in G. H. Renton
properly if he undertook those functions; neither the & Co. v. Palmyra Trading Corporation (see par. 26);
receiver nor the shipper had any independent cause of
action against the shipowner in relation to loading or (5) even if the cargo owners’ interpretation of art. III,
discharging unless the shipowner had intervened; r. 2 was correct, the case against departing from Renton
was nevertheless overwhelming; Renton had stood for
(8) cll. 3 and 17 were intended to relieve the nearly half a century; if the decision in Renton had
defendants of all responsibility for cargo operations; worked unsatisfactorily in practice one would have
these clauses were incorporated into the contract of expected the matter to have been raised at the 1968
carriage contained in the bills of lading; and it did not Brussels Protocol which led to the adoption of the
follow that the defendants should be responsible for the Hague-Visby Rules; nor had British cargo interests
failure of the shippers, the receivers or the charterers to raised the matter when Parliament was considering
carry out any part of the loading and discharging enacting the Carriage of Goods by Sea Act, 1971; there
operations properly and carefully; the cross-appeal on had been no criticisms of the Renton decision in United
issue (b) would be allowed to the limited extent of Kingdom trade journals and publications; and no aca-
deleting the Judge’s qualification that the first and third demic writers had argued that Renton should be
claimants could not claim under the bill of lading so reversed; shipowners, charterers, shippers, consignees,
long as the alleged damage was not caused by the acts insurers and P&I Clubs had acted on the basis that it
or omissions of the defendants their servants or correctly stated the law; moreover, there had to be
agents. many outstanding disputes which would now be
The first and third claimants (the cargo owners) affected by a departure from Renton; F.I.O.S.T. clauses
appealed. They accepted the decisions of the lower were in wide use; cargo damage caused by loading,
Courts to the effect that cll. 3 and 17 of the charter- stowage and discharging was an everyday occurrence
party had the effect of transferring responsibility for in maritime transport, and many such transactions
handling, stowing and discharging the cargo, but they might still be open (see pars. 27, 28 and 29);
argued (1) that art. III, r. 2 of the Hague and Hague- (6) moreover, the operation of the Hague Rules and
Visby Rules imposed upon the carrier the duty to Hague-Visby Rules was under constant review; in 1990
perform the functions described therein and the respon- UNCTAD had produced a report on charter-parties
sibility for the proper and careful performance of those included a specific reference to the Renton decision,
functions, and (2) that the agreement evidenced by cll. and UNCITRAL was currently undertaking a revision
3 and 17 of the charter-party transferring responsibility of the rules governing the carriage of goods by sea; that
for handling, stowing and discharging the cargo was exercise involved a large scale examination of the
invalidated by art. III, r. 8. The cargo owners invited the operation of the Hague-Visby Rules; it extended to
House of Lords to depart from its previous decision in art. III, r. 2 and would take into account representations
G. H. Renton & Co. v. Palmyra Trading Corporation, from all interested groups, including shipowners, chart-
[1956] 2 Lloyd’s Rep. 379; [1957] A.C. 146. erers, cargo owners and insurers; by itself that factor
————Held, by H.L. (Lord BINGHAM OF CORNHILL, made it singularly inappropriate to re-examine the
Lord NICHOLLS OF BIRKENHEAD, Lord STEYN, Lord Renton decision now (see pars. 30 and 31);
HOFFMANN and Lord SCOTT OF FOSCOTE), that (1) under
(7) the House would refuse to depart from the
the common law the duty to load, stow and discharge
Renton decision, and the appeal would be dismissed
the cargo prima facie rested on shipowners but it could
(see par. 32).
be transferred by agreement to cargo interests (see
par. 11);
——————
(2) the ratio decidendi of G. H. Renton & Co. v.
Palmyra Trading Corporation was to the effect that an
agreement transferring responsibility for loading, stow- The following cases were referred to in the
age and discharge of the cargo from the shipowners to judgments:
[2005] Vol. 1 LLOYD’S LAW REPORTS 59

H.L.] Jindal Steel v. Islamic Shipping [LORD STEYN

Arawa, The, [1977] 2 Lloyd’s Rep. 416, This was an appeal by the first and third claim-
424–425; ants Jindal Iran and Steel Company Ltd. and Hiansa
Associated Metals and Minerals Corporation v. S.A, the shippers and consignees of a cargo of steel
M/V The Arktis Sky, 978 F.2d 47 (2nd Cir. coils carried on board the vessel Jordan II, from the
1992); decision of the Court of Appeal (Lord Justice
Brys & Glysen v. Drysdale & Co., (1920) 4 Waller and Tuckey, and Mr Justice Black), [2003] 2
Ll.L.Rep. 24; Lloyd’s Rep. 87 dismissing the claimants’ appeal
from the decision of Mr. Nigel Teare, Q.C. sitting as
Chandris v. Isbrandtsen-Moller Co. Inc., (C.A.) a Deputy Judge of the Q.B.D. who had determined
(1950) 84 Ll.L.Rep. 347; [1951] 1 K.B. 240; a preliminary issue in favour of the defendant
Ciechocinek, The, (C.A.) [1976] 1 Lloyds Rep. 489, shipowners Islamic Solidarity Shipping Company
493; Jordan Inc.
Coral, The, (C.A.) [1993] 1 Lloyd’s Rep. 1; Mr. Simon Rainey, Q.C. and Mr. Nicholas Craig
East and West Steamship Co. v. Hossain Brothers, (instructed by Messrs. Jackson Parton) for the
(1968) 20 P.L.D. S.C. 15; appellant cargo owners; Mr. Timothy Young, Q.C.
Filikos, The, [1981] 2 Lloyd’s Rep. 555; and Mr. Sudhanshu Swaroop (instructed by
Messrs More Fisher Brown) for the respondent
Fothergill v. Monarch Airlines Ltd., (H.L.) [1980] 2 shipowners.
Lloyd’s Rep. 295; [1981] A.C. 251;
The further facts are stated in the judgment of
Holstencruiser, The, [1992] 2 Lloyd’s Rep. 378; Lord Steyn.
Homburg Houtimport B.V. and Others v. Agrosin Judgment was reserved.
Private Ltd. and Another (The Starsin), (H.L.)
[2003] 1 Lloyd’s Rep. 571; [2004] 1 A.C. 715; Thursday, Nov. 25, 2004
Hunter Grain Pty. Ltd. v. Hyundai Merchant Marine
Co. Ltd., (1993) 117 A.L.R. 507; ——————
International Ore & Fertilizer Corporation v. East
Coast Fertilizer Co. Ltd., [1987] 1 N.Z.L.R. 9;
New India Assurance Co. Ltd. (The) v. M/S JUDGMENT
Splosna Plovba, (1986) A.I.R. Ker. 176;
Nikolay Malakhov Shipping Co. Ltd. v. SEAS Lord BINGHAM OF CORNHILL:
Sapfor Ltd., (1998) 44 N.S. W.L.R. 371; 1. My Lords, I have had the advantage of reading
Panaghia Tinnou, The, [1986] 2 Lloyd’s Rep. in draft the opinion of my noble and learned friend
586; Lord Steyn. I agree with it, and would dismiss the
Pyrene Co. Ltd. v. Scindia Steam Navigation Co. appeal for the reasons which he gives.
Ltd., [1954] 1 Lloyd’s Rep. 321; [1954] 2 Q.B. Lord NICHOLLS OF BIRKENHEAD:
402; 2. My Lords, I too would dismiss this appeal. I
R. v. G. and Another, (H.L.) [2004] 1 A.C. 1034; express no view on the correctness of the inter-
R. v. Governor of Brockhill Prison, Ex p. Evans pretation of art. III, r. 2 of the Hague and the
(No. 2), (H.L.) [2001] 2 A.C. 19; Hague-Visby rules adopted by Mr.. Justice Devlin
in Pyrene Co. Ltd. v. Scindia Steam Navigation Co.
Renton (G. H.) & Co. v. Palmyra Trading Corpora-
Ltd., [1954] 1 Lloyd’s Rep. 321; [1954] 2 Q.B. 402
tion (The Caspiana), (H.L.) [1956] 2 Lloyd’s
and by your Lordships’ House in G. H. Renton &
Rep. 379; [1957] A.C. 149;
Co. Ltd. v. Palmyra Trading Corporation of Pan-
Riverstone Meat Co. Pty. Ltd. v. Lancashire Ship- ama, [1956] 2 Lloyd’s Rep. 379; [1957] A.C. 149.
ping Co. Ltd. (The Muncaster Castle), (H.L.) But for the reasons given by my noble and learned
[1961] 1 Lloyd’s Rep. 57; [1961] A.C. 807; friend Lord Steyn I agree this interpretation should
Sea Joy, The, (1998) (1) S.A. 487; not now be disturbed.
Shipping Corporation of India v. Gamlen Chemical Lord STEYN:
Co. A/Asia Pty. Ltd., (1980) 147 C.L.R. 142; 3. My Lords, this appeal concerns the inter-
Strathnewton, The, (C.A.) [1983] 1 Lloyd’s Rep. pretation of the Hague and Hague-Visby Rules. By
219, 222; art. III, r. 2 and 8, they provide as follows:
Tubacex Inc. v. M/V Risan, 45 F. 3rd 951 (5th Cir. 2. Subject to the provisions of art. IV, the
1995); carrier shall properly and carefully load, handle,
Vallejo v. Wheeler, (1774) 1 Cowp. 143. stow, carry, keep, care for and discharge the
goods carried.
—————— ...
60 LLOYD’S LAW REPORTS [2005] Vol. 1

LORD STEYN] Jindal Steel v. Islamic Shipping [H.L.

8. Any clause, covenant or agreement in a I. The charter-party and bills of lading

contract of carriage relieving the carrier or the 5. Islamic Solidarity Shipping Company Jordan
ship from liability for loss or damage to, or in Inc. are the owners of the vessel Jordan II. By a
connection with, goods arising from negligence, charter-party on the Stemmor form dated Dec. 4,
fault or failure in the duties and obligations 1997 at Hamburg the owners chartered the vessel to
provided in this Article or lessening such liability TCI Trans Commodities A.G. for a voyage from
otherwise than as provided in these Rules, shall Mumbai in India to Barcelona and Motril in Spain.
be null and void and of no effect. Jindal Iran and Steel Company Ltd. and Hiansa
Article IV, r. 2, reads as follows: S.A. are respectively the sellers and purchasers of
Neither the carrier nor the ship shall be respon- 435 steel coils. The goods were shipped from
sible for loss or damage arising or resulting Mumbai aboard the vessel as evidenced by two bills
from of lading on the Congenbill form, both dated Jan. 2,
... 1998, which were issued on behalf of the ship-
owners at Mumbai. The bills of lading contained or
(i) Act or omission of the shipper or owner of evidenced contracts of carriage to Motril, in Spain.
the goods, his agent or representative; The bills of lading named Jindal Iron and Steel
... Company Ltd. as the shippers and Hiansa S.A. as
(q) Any other cause arising without the actual consignees. The relevant provisions on the face of
fault or privity of the carrier, or without the fault the bills of lading were as follows:
or neglect of the agents or servants of the Freight payable as per CHARTER PARTY
carrier . . . dated Dec. 4, 1997
The central issue is whether (as shippers and On the reverse of the bill of lading, the relevant
consignees argue) art. III, r. 2 of the Rules defines terms of the contact of carriage provided as
the irreducible scope of the contract of service to be follows:
provided by the carrier by sea or (as the carrier (1) All terms and conditions, liberties and
argues) art. III, r. 2 merely stipulates the manner of exceptions of the charter party, dated as overleaf,
performance of the functions which the carrier has are herewith incorporated . . .
undertaken by the contract of service. In cases (2) General Paramount Clause
where the parties to a contract of carriage agree that
loading, stowage and discharge are to be performed The Hague Rules contained in the Inter-
by shippers, charterers, and consignees, the specific national Convention for the Unification of
question is whether the carrier is nevertheless liable certain rules relating to bills of lading, dated
to cargo owners when the latter, or their stevedores, Brussels Aug. 25, 1924 as enacted in the
perform those functions improperly or carelessly. country of shipment shall apply to this con-
In other words, the question is whether such an tract. When no such enactment is in force in
agreement, which transfers responsibility for these the country of shipment, the corresponding
operations from the shipowners to shippers, chart- legislation of the country of destination shall
erers or consignees, is invalidated by art. III, r. 8. apply, but in respect of shipments to which no
such enactments are compulsorily applicable,
4. Long-standing precedent is to the effect that the terms of the said Convention shall apply.
such a reallocation of risk by agreement is permis-
sible and that in the postulated circumstances the Trades where Hague-Visby Rules apply
carrier is not liable: Pyrene Co. Ltd. v. Scindia In trades where the International Brussels
Steam Navigation Company Ltd., [1954] 1 Lloyd’s Convention, 1924 as amended by the Protocol
Rep. 321; [1954] 2 Q.B. 402 per Mr. Justice Devlin; signed at Brussels on Feb. 23, 1968 — the
G. H. Renton & Co. Ltd. v. Palmyra Trading Hague-Visby Rules — apply compulsorily, the
Corporation of Panama, [1956] 2 Lloyd’s Rep. provisions of the respective legislation shall be
379; [1957] A.C. 149. Cargo owners unsuccessfully considered incorporated in this Bill of
challenged the existing rule in the High Court Lading.
(before Mr. Nigel Teare, Q.C., sitting as a Deputy The bills of lading incorporated the voyage
High Court Judge) and before the Court of Appeal charter-party. The Hague-Visby Rules as enacted in
(Lords Justices Waller and Tuckey, and Mrs Justice Indian legislation were applicable to this shipment.
Black): Jindal Iron & Steel Company Ltd. and They correspond to the draft Hague Rules as
Others v. Islamic Solidarity Shipping Company enacted in the United Kingdom by the Carriage of
Jordan Inc. and Another (The Jordan II), [2003] 2 Goods by Sea Act, 1924, which in material respects
Lloyd’s Rep. 87. Cargo owners invite the House to are the same as the Hague-Visby Rules scheduled to
reverse the existing rule. the Carriage of Goods by Sea Act, 1971.
[2005] Vol. 1 LLOYD’S LAW REPORTS 61

H.L.] Jindal Steel v. Islamic Shipping [LORD STEYN

6. Clauses 3 and 17 of the charter-party, so far as cargo). Secondly, that the agreement evidenced by
material, provided: cll. 3 and 17 of the charter-party transferring
3. Freight to be paid at the after the rate of responsibility for handling, stowing and discharg-
U.S.$ . . . per metric tonne F.I.O.S.T. — ing the cargo is invalidated by art. III, r. 8. Recog-
LASHED/SECURED/DUNNAGED . . . nizing that the decision of the House in Renton
17. Shippers/Charters/Receivers to put the stands in the way of this argument, Counsel for
cargo on board, trim and discharge cargo free of cargo owners invite the House to depart from that
expense to the vessel. decision under the Practice Statement (Judicial
Precedent), [1966] 1 W.L.R. 1234. The shipowners’
The acronym F.I.O.S.T. stands for Free In and position is straightforward. While they accept that
Out Stowed and Trimmed. There was, therefore, the whole contract of carriage is subject to the
under the charter-party an agreement that the Hague-Visby Rules, they contend that the extent to
‘‘Shippers/Charterers/Receivers’’ were to put the which loading, stowage and discharging are
cargo on board, stow it, lash it, secure it, dunnage it brought within the carrier’s obligations may prop-
and discharge it free of expense to the vessel. It was erly be a matter for agreement between the parties.
plainly an agreement designed to transfer responsi- They say that properly construed the Rules do not
bility for these particular functions from the ship- invalidate an agreement transferring the responsi-
owners to shippers, charterers and consignees. The bility of the shipowners for those functions to the
cargo owners no longer contest the decisions at first shipper, charterer or consignee. In any event, they
instance and in the Court of Appeal to this effect. rely on the binding authority of the decision of the
7. Both the bills of lading and the charter-party House in the Renton case to that effect.
are governed by English law.
V. The existing rule
II. The claims 11. Under the common law the duty to load, stow
8. In February, 1998 the cargo was discharged at and discharge the cargo prima facie rested on
Motril. The shippers and consignees alleged that shipowners but it could be transferred by agreement
the cargo was damaged by rough handling during to cargo interests. In Pyrene v. Scindia Navigation,
loading and/or discharging, and/or inadequate [1954] 2 Q.B. 402 Mr. Justice Devlin observed that
stowage due to failure to provide dunnage, failure the effect of art. III, r. 2 of the Hague-Visby Rules
to secure the coils and/or stacking them so that the was not to override freedom of contract to reallo-
bottom layers were excessively compressed. cate responsibility for the functions described in
that rule. He said (at 417–418):
III. The preliminary issue The phrase ‘‘shall properly and carefully load’’
9. Title to sue has been assumed to vest in either may mean that the carrier shall load and that he
the shippers or consignees. On the assumption that shall do it properly and carefully: or that he shall
the allegations of the claimants are correct the do whatever loading he does properly and care-
parties agreed to the trial of a preliminary issue. fully. The former interpretation perhaps fits the
The principal issue was whether the agreement in language more closely, but the latter may be
the charter-party (evidenced by cll. 3 and 17), more consistent with the object of the Rules.
which purported to transfer responsibility for load- Their object, as it is put, I think, correctly in
ing, stowage and discharge from the shipowners to Carver’s Carriage of Goods by Sea, 9th ed.
shippers, charterers and consignees, is invalidated (1952), p. 186, is to define not the scope of the
by art. III, r. 8. That is now the only issue before the contract service but the terms on which that
House. service is to be performed. The extent to which
the carrier has to undertake the loading of the
vessel may depend not only upon different sys-
IV. The submissions in outline tems of law but upon the custom and practice of
10. The dispute before the House is between the port and the nature of the cargo. It is difficult
shipowners, shippers and consignees: the voyage to believe that the Rules were intended to impose
charterers did not take part in the appeal. The a universal rigidity in this respect, or to deny
principal submissions of cargo owners (the appel- freedom of contract to the carrier. The carrier is
lants) were as follows. First, that art. III, r. 2 of the practically bound to play some part in the loading
Hague and Hague-Visby Rules imposed upon the and discharging, so that both operations are
shipowners as carrier of the goods under the bills of naturally included in those covered by the con-
lading the duty to perform the functions described tract of carriage. But I see no reason why the
therein and the responsibility for the proper and Rules should not leave the parties free to deter-
careful performance of those functions (which mine by their own contract the part which each
involve loading, stowing and discharging the has to play. On this view the whole contract of
62 LLOYD’S LAW REPORTS [2005] Vol. 1

LORD STEYN] Jindal Steel v. Islamic Shipping [H.L.

carriage is subject to the Rules, but the extent to 13. This view has consistently been applied in
which loading and discharging are brought subsequent cases: see The Ciechocinek, [1976] 1
within the carrier’s obligations is left to the Lloyds Rep. 489, 493 per Lord Denning, M.R.; The
parties themselves to decide. Arawa, [1977] 2 Lloyd’s Rep. 416, 424–425, per
It is true that, in the language of precedent, this Mr. Justice Brandon; The Filikos, [1981] 2 Lloyd’s
was an obiter dictum. But it was a carefully Rep. 555, 557–558, per Mr. Justice Lloyd; The
considered statement by one of the most distin- Strathnewton, [1983] 1 Lloyd’s Rep. 219, 222, per
Lord Justice Kerr; The Panaghia Tinnou, [1986] 2
guished commercial judges of the 20th century,
Lloyd’s Rep. 586, 589 (my judgment); The Hol-
who believed firmly in the principle that it is the
stencruiser, [1992] 2 Lloyd’s Rep. 378, 380, per
task of a judge to administer the law as it stands: see Mr. Justice Hobhouse; The Coral, [1993] 1 Lloyd’s
the entry for Lord Devlin, written by Professor Rep. 1, 5, per Lord Justice Beldam.
Tony Honoré, in the Oxford Dictionary of National
Biography, 2004, Vol. 15, pp. 985–988. 14. The existing position is summarized in the
20th edition of Scrutton on Charterparties and Bills
12. Two years after the decision in Pyrene the of Lading, 1996, as follows [at 430–431]:
very same point came before the House for decision The whole contract of carriage is subject to the
in the Renton case. In the present case the Court of Rules, but the extent to which loading and
Appeal held (at pars. 33 and 34 of the judgment of discharging are brought within the carrier’s obli-
Lord Justice Tuckey), and it is now common gations is left to the parties themselves to decide.
ground, that the ratio decidendi of the House in Thus, if the carrier has agreed to load, stow or
Renton, is to the effect that an agreement transfer- discharge the cargo, he must do so properly and
ring responsibility for loading, stowage and dis- carefully, subject to any protection which he may
charge of the cargo from the shipowners to enjoy under art. IV. But the Rules do not inval-
shippers, charterers and consignees is not invali- idate an agreement transferring the responsibility
dated by art. III, r. 8. In these circumstances it is not for these operations to the shipper, charterer or
necessary to analyse the facts of the case and the consignee.
detailed treatment of the issues by the Law Lords In my view this is an accurate statement of the
sitting in Renton. Such an analysis is to be found in existing law.
the lucid judgments of the Judge (at pars. 49–55)
and Lord Justice Tuckey in the Court of Appeal (at
pars. 30–34). The majority in Renton consisted of VI. The course of the argument in the House
Lord Morton of Henryton, Lord Cohen and Lord 15. Before considering the arguments on inter-
Somervell of Harrow. Lord Morton of Henryton pretation, it is necessary to draw attention to the
cited the observation of Mr. Justice Devlin in fact that the rule in Renton has stood for almost 50
Pyrene in full: at 169 and 170. He expressed years. It is probable that an enormous number of
agreement with it but added that ‘‘not only is the transactions have taken place on the assumption
construction approved by Mr. Justice Devlin more that Renton represents the law. Moreover, it seems
consistent with the object of the rules, but it is also likely that there are many open transactions, not yet
the more natural construction of the language’’: at finalized by judgment, arbitration award or settle-
170. Lord Cohen agreed with Lord Morton of ment, which were concluded in reliance on the rule
Henryton: at 173. Lord Somervell of Harrow in Renton. Against this background, Counsel for
referred to art. III, r. 2, and observed (at 174): cargo owners invited the House to rule that Renton
was wrongly decided. Even if exceptionally a
It is, in my opinion, directed and only directed
prospective overruling of a decision of the House
to the manner in which the obligations under- could be permitted, it would be of no use to cargo
taken are to be carried out. Subject to the later owners: compare R. v. Governor of Brockhill
provisions, it prohibits the shipowner from con- Prison, Ex p. Evans (No. 2), [2001] 2 A.C. 19, at
tracting out of liability for doing what he under- 27B (per Lord Slynn of Hadley); 27E (per Lord
takes properly and with care. This question was Browne-Wilkinson; at 29F, (my opinion); at 36E
considered by Mr. Justice Devlin in Pyrene Co. (per Lord Hope of Craighead); at 48H–49C (per
Ltd. v. Scindia Navigation Co. Ltd. in relation to Lord Hobhouse of Woodborough). Cargo owners
the words ‘‘shall properly and carefully load’’. I ask the House not to regard the impact of past
agree with his statement, which has already been transactions as a factor of significance and to decide
cited. retrospectively that Renton was wrongly decided in
Thus there was a clear ratio decidendi in Renton. 1957.
That Viscount Kilmuir, L.C. and Lord Tucker 16. Against this background an observation in
decided Renton on a different ground does not Vallejo v. Wheeler, (1774) 1 Cowp. 143 is apposite.
detract from the controlling force of the decision. Lord Mansfield observed (at 153):
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H.L.] Jindal Steel v. Islamic Shipping [LORD STEYN

In all mercantile transactions the great object for a single standard of carrying out properly and
should be certainty: and therefore, it is of more carefully not only loading and discharging but also
consequence that a rule should be certain, than caring for the goods carried. Mr. Justice Devlin
whether the rule is established one way or the certainly did not suggest that the owner may by
other. Because speculators in trade then know agreement under art. III, r. 2, transfer responsibility
what ground to go upon. for caring for the cargo during the voyage. Sec-
Recently, in Homburg Houtimport B.V. and Oth- ondly, the French text of the Hague Rules and
ers v. Agrosin Private Ltd. and Another (The Hague-Visby Rules provide as follows:
Starsin), [2003] 1 Lloyd’s Rep. 571; [2004] 1 A.C. Le transporteur sous réserve des dispositions
715, par. 13, at 738, Lord Bingham of Cornhill de l’article 4, procédera de façon appropriée et
reaffirmed in an international trade law case the soigneuse au chargement, à la manutention, à
importance of this consideration. That is, of course, l’arrimage, au transport, à la garde, aux soins
not to say that the House might not be persuaded et au déchargement des marchandises
under the Practice Statement to depart from an transporteés.
earlier decision where that decision has been dem- [My emphasis]
onstrated to work unsatisfactorily in the market In context the word ‘‘procédera’’ means ‘‘to
place and to produce manifestly unjust results: see undertake’’: Robert-Collins, Dictionnaire
R. v. G. and Another, [2004] 1 A.C. 1034, par. 35, Français~Anglais, Anglais~Français, s.v. ‘‘pro-
at 1056, per Lord Bingham of Cornhill. But, in a céder’’, p. 560; Le Nouveau Petit Robert, s.v.
case such as the present, if that high threshold ‘‘procéder.’’ The French text is the authoritative
requirement is not satisfied, it would not be proper language of the Hague Rules and the English and
to reverse the earlier decision. French texts are equally authentic in the case of the
17. At the end of the oral argument of Counsel Hague-Visby Rules. The French text tends to sup-
for the appellants, the House was satisfied that it port the interpretation put forward by cargo owners.
had not been shown that the Renton decision (It is to be noted that in Pyrene Lord Devlin
worked unsatisfactorily and led to unjust results. referred to the French text: at 421.) For my part, the
Despite the careful and helpful arguments placed concession of Mr. Justice Devlin was realistic. It
before the House by Counsel for cargo owners, the follows that the common thread and ratio decidendi
House decided that it was unnecessary to call on of the majority judgments in Renton is a purposive
Counsel for the shipowners to address the House on rather than literal reading of art. III, r. 2.
any aspect of the case. I will explain my reasons for 19. Mr. Justice Devlin did not base his inter-
agreeing to this decision more fully later in this pretation on linguistic matters. He relied on the
judgment. But it is necessary to set out the shape of broad object of the Rules. It has often been
the arguments on interpretation. It is, however, explained that the Hague Rules and Hague-Visby
necessary to emphasize again that the House did not Rules represented a pragmatic compromise
hear any oral argument on behalf of the shipowners. between the interests of owners, shippers and con-
But the House did have the benefit of studying in signees. The Hague Rules were designed to achieve
advance the excellent printed cases prepared by a part harmonization of the diverse laws of trading
both sides. nations. It achieved this by regulating freedom to
contract on certain topics only: Chandris v.
VII. The interpretation of the Rules Isbrandtsen-Moller Co. Inc., (1950) 84 Ll.L.Rep.
347; [1951] 1 K.B. 240, at 247. In interpreting art.
The text III, r. 2, its purpose and context is all important. For
18. In interpreting art. III, r. 2, the starting point example, it is obvious that the obligation to make
is the language of the text. Counsel for cargo the ship seaworthy under art. III, r. 1, is a funda-
owners was assisted by the fact that in Pyrene Mr. mental obligation which the owner cannot transfer
Justice Devlin accepted that the phrase ‘‘shall to another. The Rules impose an inescapable per-
properly and carefully load’’ fits more closely the sonal obligation: Riverstone Meat Co. Pty. Ltd. v.
interpretation which he rejected. Moreover, at first Lancashire Shipping Co. Ltd., [1961] 1 Lloyd’s
instance the Judge similarly accepted that this is so: Rep. 57; [1961] A.C. 807. On the other hand, art.
[2003] 2 Lloyd’s Rep. 87, par. 62, at 97. It is true III, r. 2, provides for functions some of which
that in Renton Lord Morton of Henryton (with (although very important) are of a less fundamental
whom Lord Cohen agreed) thought that Lord Dev- order e.g. loading, stowage and discharge of the
lin’s interpretation was also supported by the natu- cargo. Those who are not attracted to literal inter-
ral construction of the language. I would not accept pretations of an international Convention, reliant
this part of the reasoning in Renton. Two points in principally on linguistic matters, may find it
particular made by Counsel for cargo owners mili- entirely possible to conclude that the context and
tate against it. First, the language appears to provide purpose of art. III, r. 2, would not be undermined by
64 LLOYD’S LAW REPORTS [2005] Vol. 1

LORD STEYN] Jindal Steel v. Islamic Shipping [H.L.

permitting owners to transfer responsibility for Airlines Ltd., [1980] 2 Lloyd’s Rep. 295; [1981]
loading, stowage and discharge to shippers and A.C. 251. It is, however, equally well settled that the
others. Mr. Justice Devlin thought that it was travaux can only assist if, as Lord Wilberforce put it
difficult to believe that the Rules were intended to in Fothergill, they ‘‘clearly and indisputably point to
impose a universal rigidity about such essentially a definite legislative intention’’: 278B. The general
practical secondary functions. This reasoning is thrust of the travaux closely match the interpretation
supported by the reality that in practice shore based put forward by cargo owners. The Judge recognized
stevedores rather than the crew load and discharge this. But he also pointed out that nowhere in the
vessels. Who must pay them? This can not unrea- travaux is there any statement that art. III, r. 2,
sonably be viewed as an economic matter which the prevents an owner and merchants from reallocating
parties may determine by their specific contracts. A responsibility for loading, stowage and discharge of
literal interpretation of the Rules no doubt leads to the cargo to the merchants. It is not enough to show
the conclusion that, where shippers and consignees that the draftsmen proceeded on the basis of the
select and pay for stevedoring, as they often do in normal common law rule that loading stowage and
practice, cargo claimants may recover compensa- discharging is the duty of the shipowner, without
tion from owners for the negligence of cargo considering the effect of different contractual
owners or the negligence of their stevedores. The arrangements. If the issue had been directly con-
point was touched on by Mr. Justice Greer in Brys fronted by draftsmen, it is far from obvious that they
& Glysen v. Drysdale & Co., (1920) 4 Ll.L.Rep. 24. would have concluded that a shipowner should be
He said, at p. 25: liable to cargo owners for damage caused by cargo
It would be an odd state of things if one were owners themselves when they undertook the rele-
to hold that a shipowner who has no contract vant duty and did it badly. In these circumstances the
whatever with the stevedore, and who cannot say Judge held that the requirements enunciated in
to the stevedore: You have broken your contract Fothergill were not satisfied. In my view he was
with me, and therefore I will not have you any entirely right to do so. The travaux cannot therefore
longer in my vessel; and who has no control over assist the argument of the cargo owners.
what is to be paid to the stevedore, should be
responsible for the failure of the stevedore to do
The views of the textbook writers
his duty.
A purposive interpretation such as Mr. Justice 21. Since the decision of the House in Renton in
Devlin preferred, which permits transfer of the 1956 no English textbook writers have challenged
responsibility for such functions to the party who its correctness. The editors of Scrutton on Charter-
selects and pay for the stevedores, avoids these parties, 20th ed., 1996, at pp. 430–431 treat it as
unreasonable results. On balance I am satisfied that correctly stating the law; the editors of Contracts
Mr. Justice Devlin adopted a principled and reason- for the Carriage of Goods By Land, Sea and Air,
able approach to the interpretation of art. III, r. 2. 1993–2000, Lloyd’s, par. 1.1.3.5, is to the same
And his interpretation was not based on any techni- effect; the editors of Carver on Bills of Lading,
cal rules of English law: it was founded on a 2001 discuss the rival arguments (at pars.
perspective relevant to the interests of maritime 9-114–9-115) but do not argue that Renton should
nations generally. Moreover, it may be right to say be reversed.
that where conflict arises between purely linguistic
considerations and the broad purpose of an inter-
national convention, the latter should generally The decisions in foreign jurisdictions
prevail. In my view the case for the adoption of 22. Counsel placed great reliance on decisions of
Lord Devlin’s interpretation, if it were proper to the Second Circuit Court of Appeal in Associated
reconsider the matter afresh today, is formidable. Metals and Minerals Corporation v. M/V The Arktis
Sky, 978 F.2d 47 (2nd Cir. 1992) and the Fifth
Circuit Court of Appeal in Tubacex Inc. v. M/V
Travaux préparatoires
Risan, 45 F. 3rd 951 (5th Cir. 1995) in which it was
20. With the aid of Michael F. Sturley’s The held that loading, stowing and discharging under
Legislative History of the Carriage of Goods by Sea s. 3(2) of the United States Carriage of Goods by
Act and the Travaux Préparatoires of the Hague Sea Act are ‘‘non delegable’’ duties of the carrier. In
Rules (1990), Vols. 1 to 3, Counsel for cargo neither of these decisions is there any reference to
owners took the House on an extended tour of the the earlier English decisions in Pyrene and in
travaux. It is, of course, a well established supple- Renton. Counsel for the cargo owners pointed out
mentary means of interpretation: art. 32 of the that The Arktis Sky has been followed at first
Vienna Convention on the Law of Treaties, Vienna, instance in South Africa: The Sea Joy, (1998) (1)
May 23, 1969 (Cmnd. 4140); Fothergill v. Monarch S.A. 487 at 504. And with reference to Tetley,
[2005] Vol. 1 LLOYD’S LAW REPORTS 65

H.L.] Jindal Steel v. Islamic Shipping [LORD STEYN

Marine Cargo Claims, 4th ed. in preparation, chap- arose in 1968 to improve the operation of the Hague
ter 25, at p. 21, he said that in France a shipowner Rules. But an international conference took the view
may not contract out of responsibility for improper that only limited changes were necessary: Carver’s,
stowage by an F.I.O.S.T. clause. Carriage by Sea, 13th ed., 1982, Vol 1, par. 448. If
23. On the other hand the Renton decision has the decision in Renton had worked unsatisfactorily
been followed in Australia: Shipping Corporation of in practice, one would have expected that to have
India v. Gamlen Chemical Co. A/Asia Pty. Ltd., emerged at the conference which led to the Protocol
(1980) 147 C.L.R. 142 and Hunter Grain Pty. Ltd. v. signed at Brussels on Feb. 23, 1968 and the adoption
Hyundai Merchant Marine Co. Ltd., (1993) 117 of the Hague-Visby Rules. The interpretation
A.L.R. 507; compare, however, doubts expressed in assigned to art. III, r. 2, by the English Courts was an
Nikolay Malakhov Shipping Co. Ltd. v. SEAS Sapfor important part of the corpus of law governing the
Ltd., (1998) 44 N.S. W.L.R. 371, per Handley, J.A., application of the Hague Rules. It would have been
at 380, Sheller, J.A. at 387–388, and Cole, J.A., at well known in shipping circles. Yet art. III, r. 2,
418. Similarly, New Zealand Courts have applied remained in unaltered form in the new Rules. The
Renton: International Ore & Fertilizer Corporation issue was not raised in any way: Anthony Diamond,
v. East Coast Fertilizer Co. Ltd., [1987] 1 N.Z.L.R. Q.C. The Hague-Visby Rule, 1978 Lloyd’s Mar-
9. In Pakistan the English rule has been adopted: see itime and Commercial Law Quarterly, 225. If in the
e.g. East and West Steamship Co. v. Hossain United Kingdom there had been dissatisfaction with
Brothers, (1968) 20 P.L.D. S.C. 15. In India (the the effect of the Renton decision, one would have
country of shipment in the present case) the English expected British cargo interests to have raised it
rule is followed: see The New India Assurance Co. when Parliament considered the Bill which was to
Ltd. v. M/S Splosna Plovba, (1986) A.I.R. Ker. 176 become the Carriage of Goods by Sea Act, 1971. If
(Court: Balakrishna, Menon and K. Sukumaran, JJ.). invited to do so, Parliament could have considered
24. Internationally there is no dominant view. whether Renton should be reversed. The matter was
The weight of opinion in foreign jurisdictions is not raised at all. Instead, art. III, r. 2, was re-enacted
fairly evenly divided. The argument that the law as in unaltered form: see for the best account of the
enunciated in Renton ought to be brought into line position placed before Parliament the speech of
with subsequently decided United States decisions, Lord Diplock, Hansard (HL Debates), Mar. 25,
which did not address the arguments in Pyrene and 1971, cols. 1028–1034. If there had been dissatisfac-
Renton, is rather weak. This plank of the cargo tion with the impact of the Renton decision, one
owners’ case cannot therefore materially assist in would have expected it to have been a matter of
the challenge to the decision of the House in discussion in trade journals and publications in the
Renton. United Kingdom. There have been no such criti-
cisms. And since the decision in Renton no aca-
demic writers have argued that Renton should be
Third party bill of lading holders
reversed.
25. It is true, as Counsel for cargo interests 28. Since Renton was decided shipowners, chart-
emphasized, that third party bill of lading holders erers, shippers and consignees have acted on the
will in practice often not have seen the charter-party basis that it correctly stated the law. It has formed the
or had advance notice of relevant charter-party basis of countless bills of lading, voyage charter-
clauses. This is a point of some substance. It is, parties and time charter-parties. Charter-parties
however, an inevitable risk of international trade would frequently have incorporated the Hague or
and cannot affect the correct interpretation of Hague-Visby Rules on the express basis that the
art. III, r. 2. shipowner transferred responsibility for stowage of
cargo to cargo interests. Similarly, insurances have
No concluded view been placed, Protection and Indemnity Club Rules
26. Everything ultimately turns on what is the have been drafted, and the Inter-Club New York
best contextual interpretation of art. III, r. 2. I have Produce Exchange Agreement concluded (see Wil-
already discussed this matter without venturing a ford Coghlin and Kimball, Time Charters, 5th ed.,
concluded view. 2003, at par. 20-39), on the basis that Renton
accurately reflected the law. Risks would often have
been assessed in reliance on the decision of the
VIII. Is a departure from Renton justified? House in Renton as to how they should be borne. But
27. It is now necessary to return to the question for the reliance on Renton it is likely that different
whether, if it is to be assumed that the cargo freight rates and insurance premiums would some-
owners’ interpretation is correct, it would be right times have been charged. Moreover, at the very least
to depart from a decision of the House which has there must be many outstanding disputes which
stood for nearly half a century. An opportunity would now be affected by a departure from Renton.
66 LLOYD’S LAW REPORTS [2005] Vol. 1

LORD SCOTT OF FOSCOTE] Jindal Steel v. Islamic Shipping [H.L.

After all F.I.O.S.T. clauses are in wide use. And the third party bill of lading holder has neither
cargo damage caused by loading, stowage and seen the charter-party referred to, nor has any
discharging is an everyday occurrence in maritime advance notice of the relevant charter-party
transport. The House has no idea how many such clauses.
transactions are still open. There may be many. 343. Other charter-party clauses which may
29. For these reasons, even if I had been per- affect a third party bill of lading holder partic-
suaded that the cargo owners’ interpretation of the ularly are law clauses, lay time and demurrage
Hague and Hague-Visby Rules was correct, in my clauses and lien clauses.
view the case against departing from Renton is The report showed in successive paragraphs how
nevertheless overwhelming. the position of third party bill of lading holders is
30. There is, however, another factor. The opera- part of a larger picture affecting, for example, lay
tion of the Hague Rules and Hague-Visby Rules is time and demurrage clauses and lien clauses:
under constant review. On Oct. 22, 1990, at Geneva, pars. 346 and 347. The report concluded:
the United Nations Conference on Trade and Devel- 354. It can be seen from the foregoing that
opment (UNCTAD) published Charter-parties: A charter-party terms can have an impact upon
Comparative Analysis. With specific footnote refer- third party bill of lading holders in several
ences to Pyrene and Renton the report stated: important respects and it is suggested that in
341. . . . charter-party terms relating to the considering in any standardisation, harmonisa-
loading, stowing and discharge of cargo may tion or improvement of charter-party terms and
have a profound effect upon third party holders the necessity for international legislative action,
of charter-party bills of lading (even if the bill of due account should be taken of the interests of
lading is subject to the Hague and Hague-Visby third party bill of lading holders as well as those
Rules) where the words in the bill of lading of charterers and shipowners.
incorporating the charter are widely framed. If That is, of course, the way in which such
the incorporating words in the bill of lading are problems affecting international trade law are best
sufficiently widely framed the third party bill of addressed.
lading holder may find for example that he is
31. The United Nations Commission on Inter-
unable to claim against the shipowner under the
national Trade Law (UNCITRAL) is currently
bill of lading for damage to cargo caused in the
undertaking a revision of the rules governing the
course of loading or stowing the cargo. This
carriage of goods by sea. This exercise involves a
would be so if the charter-party contained terms
large scale examination of the operation of the
removing from the shipowner the responsibility
Hague-Visby Rules. It apparently extends to art. III,
for loading and stowing. These terms, if there
r. 2. It will take into account representations from
was a wide incorporating clause, would be read
all interested groups, including shipowners, charter-
as part of the bill of lading contract. They would
ers, cargo owners and insurers. By itself this factor
not be nullified by the requirements of art. [III],
makes it singularly inappropriate to re-examine the
r. 2 of the Hague Rules that ‘‘the carrier shall
Renton decision now.
properly and carefully load, handle, stow, carry,
keep, care for and discharge the goods carried’’
because according to English law those words do IX. Conclusion
not define the scope of the contract service but 32. I would express no concluded view on the
the terms upon which the agreed service is to be issue of the interpretation of art. III, r. 2. I would
performed. refuse to depart from the Renton decision. I would
342. In regard to loading, stowage or discharg- dismiss the appeal.
ing, the Hague Rules, on these authorities, only Lord HOFFMANN:
impose obligations if the shipowner has con-
tractually undertaken to perform those obliga- 33. My Lords, I have had the advantage of
tions. If under the terms of a charter-party the reading in draft the speech of my noble and learned
shipowner is relieved to that extent of the obliga- friend Lord Steyn. For the reasons he gives, with
tions of performance, the shipowner will also be which I agree, I would dismiss this appeal.
relieved of responsibility for loading, stowing or Lord SCOTT OF FOSCOTE:
discharging as against a third party bill of lading 34. My Lords, I have had the advantage of
holder, always providing that the bill of lading reading the opinion prepared by my noble and
and charter contain sufficiently widely drawn learned friend Lord Steyn. For the reasons he has
clauses. This will be so even if the bill is subject given, with which I agree and to which I have
to the Hague or Hague-Visby Rules: and even if nothing to add, I too would dismiss this appeal.