A recent decision provides authority for the broadly accepted
understanding that a "unit", for the purposes of
limitation under Article IV Rule 5 of the Hague Rules, cannot apply
to a bulk cargo – it can only mean a physical unit for
shipment and not a unit of measurement or a customary freight unit
(the unit of measurement used to calculate freight).
The cargo in question was 2,000 tonnes of fish oil, loaded into
the ship's tanks. The (disponent) owner contended that each
tonne was a "unit" for these purposes and thus it had a
right to limit its liability for damage to the cargo. The
Commercial Court disagreed.
Had the Court found otherwise, presumably more bulk cargoes
would be nominated by lesser units in future (e.g.
This was one of those peculiarly academic arguments that amuse
shipping lawyers, at least.
Although there was no Clause Paramount (or variant), the
charterparty permitted the owner to rely upon the package or unit
limitation in the same circumstances as it would have been entitled
to do so, had the Hague Rules been incorporated in full. Therefore
the decision has broad application. Albeit, not if the Hague-Visby
Rules apply, as Rule 5(a) therein provides for an alternative
weight-based limitation that is apt to include a bulk cargo, in any
The issue, for the Court at least, was whether the word
"unit", as used in Article IV Rule 5, was apt to include
a bulk cargo. If the use of the word could not mean a unit of
measurement in that context, then the owner's case, and the
argument that bulk cargoes were included, had to fail.
The Court found it compelling that the word "unit"
(which can be understood to be a physical item or a means of
measurement) was in this context accompanied by the word
"package", which could only refer to a physical item.
Particularly given that, elsewhere, the Rules specifically refer to
a "quantity" or "weight" when units of
measurement are intended.
A detailed trawl through the travaux preparatoires and
history of the Hague Rules, earlier decisions of the English and
other common law jurisdictions (including that of the Australian
Federal Court in El Greco), practitioner textbooks and
commentaries convinced the Court that the intention behind
including the word "unit" in Rule 5 (in addition
to the word "package") was to cover unpackaged
items (and to avoid debate about the extent and nature of the
packaging). This position, in part, reflects that the bulk cargoes
of the time (when the Hague Rules were negotiated) would have been
unlikely to hold sufficient value to merit such attention.
It is anticipated that the decision will not be appealed.
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In a landmark judgment handed down this week, the Commercial Court has decided what constitutes a 'unit' for the purposes of limitation under Article IV Rule 5 of the Hague Rules and the Hague-Visby Rules.
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