Your are here: Home >> Decisions

Carriage of Goods by Sea

Jindal Iron & Steel Co Ltd and Others -v- Islamic Solidarity Shipping Co Jordan Inc.

The "Jordan II"

November 2004

Article III rule 2 of the Hague and Hague-Visby Rules provides as follows:

"Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried."

Precisely fifty years ago the future Lord Devlin decided in Pyrene -v- Scindia Navigation Co that the effect of this rule was not to override freedom of contract to allocate responsibility for loading and unloading cargo; the rule simply compels the carriers to load and unload properly and carefully if they perform those functions. Two years later, the House of Lords approved that interpretation of the rule in G.H.Renton & Co -v- Palmyra Trading Corp. In the period that has since elapsed no English textbook writer has challenged the correctness of the decision, which has been adopted in other jurisdictions, including Australia, New Zealand and India. International opinion is, however, divided and the courts of the United States have taken the view that the obligations of the carrier referred to in Art. III rule 2 are "non-delegable". In this action, the Indian shippers of a cargo of steel coils ("Jindal") urged the House of Lords to take account of the American interpretation of the rule and reconsider its decision in Renton.

In its judgment (which was summarised on this website in February 2003) the Court of Appeal had upheld the trial judge's finding that the contract for the carriage of steel coils from India to Spain between Jindal and the defendant owners of the vessel Jordan II ("the Owners") had effectively transferred the responsibility for loading and discharge from the Owners to Jindal and the receivers, respectively. In those circumstances both the judge and the Court of Appeal had considered themselves bound by Renton to hold that the Owners had no liability for cargo damage caused by defective loading, stowage or unloading. Jindal appealed from that decision. In the House of Lords the only issue for determination was whether an agreement that purports to relieve a carrier of responsibility for cargo work was invalidated by Art. III rule 8, which renders null and void any clauses that derogate from the protection afforded by the Hague and Hague-Visby Rules.

Delivering the judgment of the House of Lords, Lord Steyn observed that in Pyrene -v- Scindia Lord Devlin had adopted a purposive, rather than literal, interpretation of Art. III rule 2. This allowed the responsibility for cargo work to be transferred to the party who selects and pays for the stevedores. Whilst expressing no concluded view on the best contextual interpretation of Art. III rule 2, the House of Lords was satisfied that Lord Devlin's approach was both principled and reasonable and that the case for adopting his interpretation was "formidable".

Lord Steyn pointed to the need for certainty in international trade law, emphasising in that context that it would not be proper for the House of Lords to reverse an earlier decision unless it had worked unsatisfactorily in the market place and produced manifestly unjust results. The House was satisfied that the decision in Renton did not fall into that category. The decision had been applied consistently for half a century; if it had worked unsatisfactorily in practice the House supposed that there would have been criticism in trade and legal publications, and that the opportunity would have been taken to address the problem in 1968 in the discussions that led to the introduction of the Hague-Visby Rules. The case against departing from Renton was "overwhelming". His Lordship also referred to the revision of the rules governing the carriage of goods by sea which is currently being undertaken by UNCITRAL, which by itself was a factor that in his view made it singularly inappropriate to re-examine the Renton decision.

Jindal's appeal was, therefore, dismissed.

Return to Decisions