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19 December 2012
On June 13 2012 the Genoa Court of Appeal issued an interesting decision on the scope of application of the Brussels International Convention for the Unification of Certain Rules of Law relating to Bills of Lading as amended by the Brussels Protocol 1968 and by the Brussels Protocol 1979 (the 'Hague-Visby rules'). In particular, the court was asked to decide on the application of the limit of liability set down by the rules in circumstances where the cargo to be carried suffered damages during loading operations and before the relevant bill of lading was issued.
A yacht was sold under free on board Genoa conditions "water to water" and arrangements were made for it to be shipped from Genoa to Hong Kong on board the liner vessel M/V Ever Given. During loading operations, the yacht was hoisted up on bands, but one of the bands broke before the yacht could be lowered and put in place. The yacht fell onto the vessel and consequently suffered serious damages.
The purchaser of the damaged yacht issued proceedings against all parties involved, summoning before the Tribunal of Genoa the carrier, the freight forwarder, the terminal and the companies which the terminal employed to handle loading operations.
The tribunal found the carrier liable for the damage that had occurred on board, as the yacht had passed the ship's rail when the damage occurred and thus had been delivered to the carrier. Further, the tribunal held that the terminal was liable to indemnify the carrier, and in turn the company which operated and provided the bands was liable to indemnify the terminal. Among the key issues argued before the tribunal was whether the Hague-Visby rules applied in the circumstances.
In that respect, the tribunal held that the Hague-Visby rules did not apply, and consequently the limitation of liability contained in Article 4(5)(A) did not apply. The tribunal based its decision on the fact that no bill of lading had been issued in respect of the carriage of the damaged yacht.
The carrier appealed.
The Genoa Court of Appeal reversed the decision of the first instance tribunal. Although it confirmed the carrier's liability, the appeal court held that the Hague-Visby rules applied to the circumstances, and thus the carrier's liability should be limited.
The court acknowledged that the shipment was intended to be an international carriage of goods between ports in two different states, in accordance with Article 10 of the rules. Crucially, however, the court stated that the mere fact that the bill of lading had still not been issued was irrelevant with regard to the application of the Hague-Visby rules.
The court affirmed that in this respect, it was sufficient that it had been agreed that a bill of lading would be issued on completion of the loading operations. The court further stated that as the carriage in question was a liner carriage, the issuance of a bill of lading was common practice.
Consequently, even though the relevant bill of lading still had not been issued due to the fact that the damage to the yacht occurred during loading operations, the court stated that the Hague-Visby rules were yet to apply in circumstances where the carrier was under a duty to issue such a bill of lading and it intended to do so on completion of loading operations.
The Genoa Court of Appeal referred to the only relevant Italian precedent on the matter: a decision of the Tribunal of Genoa issued on June 9 1967 which reached the same conclusion. This interpretation is consistent with the opinions of numerous authors who have underlined that if the rules are not applied in cases where damage occurs during loading operations and before issuance of the bill of lading, it would render the system of the rules inconsistent with the obligations imposed on the carrier.
Further, in such cases disapplication of the rules would allow the parties to interfere with the cogent application of the rules, and therefore would interfere with their mandatory nature.
Finally, the conclusion reached by the Genoa Court of Appeal is in line with the interpretation of the Hague-Visby rules under English case law and is expressly aimed at international uniform application.
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