High Court ruling confirms clauses paramount are just that

A RECENT High Court ruling underlines that clauses paramount in shipping contracts really are paramount in the dictionary definition of the word, according to a senior associate at law firm Watson Farley & Williams.

The comments from Archit Dhir come after the recent Tanga Pharmaceuticals Plastics & Ors v Emirates Shipping Line ruling.

Mr Justice Bright held that a clause paramount enshrining the Hague Rules overrode a time bar clause designed to limit liability, contrary to their stipulations.

Once the Hague Rules are incorporated as a matter of law or a matter of contract, they restrict the period for the commencement of proceedings to one year.

“If you ask any lawyer, a time bar is equivalent to a timebomb. You have to be really careful with it,” said Dhir.

In Tanga v Emirates Shipping Line, the claimants were shippers who owned the cargo in 548 containers on the boxship Alion (IMO: 9238882), operated by the defendant as charterer, under bills of lading governed by English law.

The B/Ls contained a clause paramount incorporating the Hague Rules into the contract of carriage.

The Hague Rules, signed in Brussels in 1924, were incorporated into English law that same year as the Carriage of Goods by Sea Act, widely known by the acronym COGSA.

Alion developed engine failure on a voyage, leading to the need of salvage operations. General average was declared.

The claimants sought summary judgment, seeking indemnity for liability for salvage costs.

A claim form was issued four days before expiry of the time bar set down in the B/Ls, but not served until 13 months later. Emirates Shipping Line insisted the time bar provision should stand.

The court considered the arguments in light of article III rules 6 and 8 of the Hague Rules, which prevent contractual limitations on liability.

Bright J ruled that the Hague Rules did indeed take precedence over the contractual provisions.

The 20-day notice provision was deemed null and void under Article III rule 8, which states: “Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with goods… or lessening such liability otherwise than as provided in this convention, shall be null and void and of no effect.”

Bright J also held that the one-year service requirement was incompatible with English law, as it would contravene the Hague Rules by relieving the carrier from liability.

Dhir commented: “The approach of the court

— and rightly — was that unless the parties were absolutely clear that they wanted the time bar to be 20 days, the court is unlikely to read such restrictive provisions into the contract if it includes a clause paramount.”

In Tanga v ESL, the contract did indeed contain a clause paramount, stating that it incorporated the Hague Rules.

This is standard practice and a convenient shortcut in drawing up contracts for the carriage of goods, specifying a default rather than including each of Hague Rules articles individually.

“It says paramount, so it is paramount. It does what it says on the tin,” Dhir stated. Tanga had instead highlighted other provisions.

“They were saying, read this, read that, it may mean this. The judge said, if you want something included, you have to clearly say that. If the parties had intended for a shorter period to apply, they would have said so.”

The Hague Rules are not the only game in town.

There are other rules for the carriage of goods by sea, including the Hague-Visby Rules, a modification of the Hague Rules convention, and the more modern Hamburg Rules.

But there are relatively few differences between the three, although there are nuances on quantum and how liability is ascertained.

As ever, the onus is on the parties involved to draft a clear contract on terms acceptable to both sides.

While all court decisions are contingent on the facts of each case and no ruling is definitive, Tanga v ESL does provide a degree of clarity in these matters, Dhir concluded.

“I really don’t see circumstances in which the principle which has been applied

by the court can be disputed.”

Effectively, the existing understanding within the shipping community has been reinforced, in what is a common sense ruling.

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Lloyd's List Daily Briefing 18 April 2025