Edward Alder considers the Hong Kong implications of FIMBank plc v KCH Shipping [2022] EWHC 2400 (Comm) (The Giant Ace) (a s.69 arbitration appeal). Blair J held that the one-year time bar under the Hague Visby Rules (HVR) Article III, r.6 applies to misdelivery of a cargo (bulk coal) after discharge from the ship in the port environs.  The position was previously unclear in England with debate both ways. The Alhani [2018] EWHC 1495 (Comm) held that r.6 did apply to misdelivery, but that involved oil pumped off the ship direct to the receiver so ‘discharge’ and ‘misdelivery’ occurred simultaneously.

Blair J dealt with three points. First, r.6 as part of the HVR rules governing ‘custody’ and specifically dealing with ‘delivery’, as a matter of construction, applies after discharge up to (mis) ‘delivery’ and to all loss and damage. This avoids ‘fine distinctions’ between rival sets of rules said to apply during sea carriage and in the phases before or after, which rational parties would not want. Second, the CONGENBILL terms contained an implied term that continued the HVR body of rules after discharge and until delivery takes place, in line with the The MSC Amsterdam [2007] EWCA Civ 794 (which point may not apply in every such case). Third, a term in the bill that the carrier would not be liable for loss and damage ‘howsoever arising … after discharge from the Vessel …’ did not assist the carrier because of the first two points.

This point has arisen often in Hong Kong. In Wily Products v Hecny Shipping [1995] 3 HKC 47 (CA) Lui JA held that the HVR (package limit) did apply to misdelivery after discharge before hand over to a land carrier, but the majority held the point did not arise. Another division of the CA in Computronics Intl v PIFF Shipping [1997] 2 HKC 53 did not accept Lui JA’s view, but that was an appeal on want of prosecution and the issue was not fully argued.

Blair J considered Hong Kong authority [43]. In Cheong Yuk v China Intl Freight Forwarders [2005] 4 HKLRD 749 (CA) the (mis)delivery took place after further land carriage (Hamburg to Moscow) long after discharge from the ship. The Court said that to be covered by the HVR, the misdelivery would have to occur during the period governed by HVR which it had not. Given the facts, that conclusion was hardly surprising. Cheong Yuk was followed on more conventional facts in Perfect Best Asset Management v ADL Express [2021] HKCFI 2310 (where Edward Alder argued the time bar point for the carrier), where the court held that Cheong Yuk applied and was not distinguishable, and the r.6 defence did not apply.

Conclusion: Perfect Best is recent first instance authority that Cheong Yuk applies even to misdelivery in or near the port environs, contrary to FIMBank. However, the point is open for argument. A future Hong Kong Admiralty Judge may follow FIMBank rather than Perfect Best on the basis that Cheung Yuk was distinguishable and should not have been followed.

13 October 2022