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(1988)I9HSDi'c*.'mb*?r2i ISTMIAMDIS J ) ELECTROMATICCONSTRUCTIONSCO LTD , Plaintiffs ν 1 AZOV SHIPPING CO 2 CYPMEDSHIPPING CO 3 THE SHIP M/V«IVANKOROTEV». Defendants (AdmiraltyAction No 127/83) Contiacts—Clause limiting liability—The Contract Law, Cap 149, s28 — Theclause isoutside theambitof the section admiralty — Bill of Lading— Relationship between shipowner and consignee ofthegoods — TheBillsofLadingAct,1855,section 1 — Rights to sue transferred to the indorsee/consignee of the bill of lading— Limited to those under the contract,asexpressed by the Billof Lading 5 Admiralty — Carriage of Goods by Sea— The Hague Rules— The Carnage of Goods bySea Law,Cap
  1. section 2 — Ambitof Conflict of Laws— Contracts — Properlawof—Intention ofparties— Ifnot expressed, itshould beobjectivelyascertained 10 Conflict of Laws — Publicpolicy — Meaningof Theplaintiffsclaim asconsigneesunderabilloflading.C£503 98 for default of delivery of one carton of goods The first defendants raised a preliminary point that the liability of the shipowners is 15 limited by clause 13of theBillof Lading to250 roubles or Cyprus pound equivalent The shipowners area company of USS R The ship is underthe flag of US S R Counsel for the plaintiffs,invited the Court toignore clause 13on 20 the followinggrounds 768 L.R. ElectromaticConst,v.Azov ,> (a)Itiscontrary tosection 28ofthe Contract Law. Cap.
  2. (b) The Bill of lading does not contain the contract between the parties. (c)The rouble isnot freely convertible currency. (d)TheHagueRules. 1924areincorporated intheScheduletothe CyprusCarriage ofGoodsbySea Law,Cap.263.ArticleIV
(5)limits liabilityatonehundredpoundsperpackageorunit,orthe equivalent ofthatsum inothercurrency;underArticleIXthemonetary unitsare tobe taken tobe goldvalue. (e) It is contrary to clause 4 of the Bill of Lading, which is the paramount clause. Held:
(1)Section28ofCap. 149nullifies agreementsinrestraintof legalproceedings. Ithas no bearing in thiscase
(2)Doubthasbeen raisedsometimeswhether the Billof Ladingis a conclusive statement of the contract between the shipper and the shipowners. In the present case, however, the dispute is between the shipownerandtheconsignee.Theshipperisnotinvolvedatall.The consigneeacquiresnghtsonlybythe BillofLading.Hehasnoprivity of contract otherwise with the shipowner. The law with regard to consignees/indorsees iswellsettled. The rightsto sue transferred to the indorsee/ consiqnee are limited to those under the contract, as expressed intheBillof Ladingand no more.
(3)The value of the rouble ison the uncontested evidence before thisCourtascertainable atanytime. Itisimpermissible fortheCourttodeclare thatthe rurrency of one of the major countries oftheworld cannot be used bythe citizensof thatcountry intheircontractswithpeopleoutside U.S.S.R., man era like the present one, where international trade is expanding and movingsorapidly.Certainlythisdoesnotoffend publicpolicyinthis country arid itisnot prohibited byanylaw. '
(4)The CarriageofGoodsbySea Law,Cap.263providesthatthe ruleswhich were set out in the Schedule {ArticlesI to IX)shall have effect in relation to and in connection with the carriage of goods by sea inshipscarryinggoodsfrom anyportinCyprustoanyother port inoroutsideCyprus.Itfollows thatthiscase,wherethe carriage was from a port of U.S.S.R., the saidrulesare not applicable. 769 BectromatlcConst,v. Azov
(1988)
(5)(
  1. a)As it clearly emanates from clauses 4 and 5* of the Bill of Lading it is clear that the Hague Rules are not applicable, if the proper law of the contract is the Russian Law They are only applicable if the national law of anothercountry isthe properlaw of the contract,where thematteris determinedby theCourtinanother country,and theirapplicationinthatothercountryisobligatory tobe incorporated inthe Bill of Lading 5 (
  2. b)The proper law of a contract is the law which the parties intended to apply That intention is objectively ascertained, and.if not expressed, willbe presumed from thetermsof the contractand 10 the relevant surrounding circumstances (c)There can be nodoubtthatinthiscase theparties intendedthe Merchant Shipping Code of U S S R , 1968. to be the Law applicable for the carnage under thisBill of Lading (
  3. d)Public policy must be understood in a wider sense Nostatute 15 of this country torbids the application of the provisions of the Merchant Shipping Code of the U S S R, 1968 The objection on grounds of public policy fails
(6)Itfollows thattheliability of thedefendants - shipowners,under the Bill of Lading, does notexceed 250 - Russian roubles, which on the material date were equivalent toC£145 805 20 Orderaccordingly Costsincause, but in any event, not against defendants Cases referred to Domestica Ltd ν Adnatica Societa Per Azioni DiNavagazione and /*nof/ier
(1981)lCLR 85. 25 Fraser ν Telegraph Construction Co [1982J L R 7 Q Β 566, Clyn, Mills and Co ν Eastand West IndiaDock Co [1882] 7 App Cas.591; Leduc and Co, ν Word and Others [1886-1890] All E.R.Rep.266; 30 TheArdennes, 84 U L. Rep.340; Jadranska Slobodna Blovidba v.Photos Photiades and Co.
(1965)1 C L R 58, Archangelos Domain Ltd ν Adnatica Societa Per Azzione Di Navigatione
(1978)1 C.L.R.439; 'Quoted atρ 777post 770 35 1C.L.R. Electromattc Const, v. Azov DobellandCo. v.SteamshipRossmore Company{1895]2Q.BD 408; VitaFoodProducts Inc ν UnusShipping Co Ltd [19391 1 All F R 513 5 Preliminary point. Preliminary point raised by the shipowners to the effect that under Clause 13of theBillof Lading theirliability if any islimited to 250 roubles or theirequivalent inCyprus pounds St McBnde, for the applicants-defendants 10 Chr. Mitsides,for respondents-plaintiffs Cur adv vult STYLIANIDESJ read the following decision The plaintiffs by this action claim C£503.926 for default of delivery of one carton No 275 of goods Thedefendants No 1 a company of U S SR 15 are theshipowners DefendantNo 3 is theship underthe flag of U S S R owned by defendants No 1 In the petition it is alleged that there was a contractof carnage evidenced byaBillof Lading No 3dated 13th May 1982andthat t,ie amount of the value of the short landed carton box and/oi 20 damage is £503 926 In the answer of the defendants No 1 it is alleged thai under Clause 13 of theBillof Lading theliability if any is limitedto 250 roubles or Cyprus pound equivalent The pointraised in the answerof the shipownerswas taken by theCourt,after anappropriateapplication asapreliminarypoint pursuant toRule 87 of the Rules of theSupreme Courtof Cyprus m its Admiralty Junsdichon, which provides thateitherparty may apply tothe Courtor Judge to decide any question of fact or law raised by any pleading and the Court or Judge shall thereupon 30 makesuchorderas itshallseem fit to him. 25 35 Itiscommongroundthattheplaintiffs are consignees of the Bill of Lading No 3 dated 13th May, 1982 Counsel for defendants No 1contended thatthe Bill of Lading as between a consignee/ indorsee and the shipowner and the ship contains thecontract. tnattheBillof Lading inthiscase isgoverned by theRussian Law 771 Styllanidet» J . Qectromatic Const, v. Azov
(1988)iiiui AriiJc IS6 _: tii*. ^ierchant Maiine Code of U.S.S.R provides:«Forthesea carriagetheCarriershallinnocasebeliable in an amount exceeding Rbls 250 per package or unit or the equivalent of thatsum inothercurrency, unlessvalue declared on Bill of Lading» and that Clause 13 of the Bill of Lading limits 5 liability to 250 roubles and the Hague Rules are not appicable. Counsel for theplaintiffs contended thattheBillofLading does not contain the contract between the parties in the litigation. Clause 13 is invalid as it iscontrary to Clause 4 the «paramount clause».The Hague Rules, 1924areincorporated intheSchedule 10 to the Cyprus Carriage of Goods by Sea Law, Cap. 263.Article IV
(5)limitsliability atone hundred poundsperpackage orunit,or J h e equivalent of that sum inother currency; under Article IXthe •, monetary units are to be taken to be gold value. Furthermore Clause 13ofthe BillofLadingisillegal,itbeingcontrarytosection 15 .--28 ofourContractLaw,Cap.149,asitlimitstheliabilityanddoes notallowthisCourtthefreedomforascertainmentandassessment ofthedamages.Andfinallyitisillegal,becausetheRussianrouble isnotfreely convertible. Counsel's forthe defendants reply to the lastargument isthat 20 the value of the rouble isascertainable and itisnot permissible to declare that the Russians cannot contract in their currency or stipulate as the measure of ascertainment their own liability by their own currency. SECTION 28 OFCAP. 149: 25 I may say from the outset that section 28 of our Contract Law Cap. 149hasnobearinginthiscaseand thecontention of counsel for the plaintiffs is ill conceived and unfounded. Under the provisions of this section an agreement which restricts absolutely the enforcement of rights under or in respect of any contract, by 30 the usual legal proceedings inthe Courts, or which provides that a suit should be brought for the breach of any terms of the agreement within a time shorter than the period of limitation prescnbed by law, is void to that extent. It nullifies, in effect agreements in restraint of legal proceedings. (Pollock and Mulla 35 Indian Contract and SpecificRelief Acts9thEd.p.295, Domestica Ltd., v. 1AdriaticaSocieta PerAzioni DiNavigazione andAnother
(1981)1C.L.R. 85.) BILLOFLADING: Doubt has been raised sometimes whether the Billof Ladingis 40 772 1 C.L.R. Qectromatic Const,v.Azov Stytianides J. a conclusive siawm^nl of the contract between the shipper and the shipowners. In the present case, however, the dispute is between the shipowner and the consignee. The shipper isnot involved at all. 5 The consignee acquires rights only by the Bill of Lading. He has no privity of contract otherwise with the shipowner. Prior to the Bills of Lading Act, 1855, the contract of carriage was not transferred bya transfer of the property inthe goods bythe Billot Lading.Thetransferee didnotacquireanyrighttosueforabreach 10 of the contract in his own name. {Thompson v. Dominy, 14 L.J. Ex.320). As, however, by the custom of merchants a Bill of Lading of goods, being transferable by endorsement, the property in the goods might thereby pass to the indorsee, but nevertheless all 15 rights in respect of the contract contained in the Bill of Lading continued inthe originalshipper orowner, inordertoremedy this situation,the BillsofLadingAct.1855waspassed.Section 1reads as follows:20 25 «1. Everyconsignee of goods named inabillof lading, and every indorsee of a billof ladingtowhom the property in the goods therein mentioned shall pass, upon or by reason of such consignment or indorsement, shall have transferred to and vested inhimallrightsofsuit,and besubject tothe same liabilities inrespect of such goods as ifthe contract contained inthe billof ladinghad been made with himself.» InFraserv.Telegraph Construction Co. [1872]L.R. 7Q.B. 566 Blackburn, J. said atp. 571:- 30 «The bill of lading, notwithstanding some-case that Mr. Cohen referred tointhe Common Pleas,mustbetaken to be the contract under which goods are shipped, and until Iam told different bya court oferror, I shallso hold.» In Clyn, Mills &Co. v. Eastand West IndiaDock Co. [1882] 7 App. Cas.591,Lord Selborne said at p.576:-• 35 «Everyone claiming as assignee under a bill of lading must be bound by its terms, and by the contract between the shipper of the goods and the shipowner therein expressed. Theprimary office andpurpose of abillof ladingalthough by mercantile lawandusage itisasymboloftherightofproperty 773 Stytianides J. Qectromatic Const, v.Azov
(1988)in the goods, isto express the terms of the contract between theshipper and the shipowner.» InLeduc &Co. v. Wardand Others[1886-90]AllE.R. Rep.266 (20 Q.B.D. 475), an action by an indorsee for a lossof the goods during a deviation from the voyage, Lord Esher, M.R., said at p. 268:- 5 «The question inthiscase is,whatisthecontract contained in the bill of lading? Itwassuggested that a billof lading is,in all circumstances, nothing but a receipt for the goods, and contains no contract, except that the goods have been 10 received by the shipowners and are to be delivered by them at the place named. Thisisan instrument which has received oneconstructionfromthemercantileworldandthecourtsfor morethan a hundred years.Wherethere isacharterparty, the bill of lading is only a receipt for the goods, because all the- 15 terms of the contract of carriage, as between the shipowner and the charterer, are contained in the charterparty, and the billof lading isonly given toenable the charterer todeal with the goods during transmission. But even where there is a charterparty, although the bill of lading is only a receipt as 20 between the charterer and the shipowner, itis more than a receipt as between the endorsee and the shipowner; it containsthe contract between them.» And atp.269:«Itseems to me impossible to say that a bill of lading does 25 not contain the terms of the contract of carriage.» Fry, L.J. said at p.270:«Inmyview avery largeportion oftheargument which we have heard in this case isconcluded by the provisions of the Billsof LadingAct, 1855.Theplaintiffs entered intoacontract 30 with merchants abroad for the purchase of goods to be shipped from a foreign port. The substance of that contract was that the vendors were to deliver shipping documents to the purchasers, and that thepurchasers were topaythe price in exchange for the documents. The Bills of Lading Act 35 provides, by s.l, that » After he recites the section he continues:«Those words appear to metobe applicable tothe present 774 1 C.L.R. 5 Electromauc Const, v. Azov Stytianides J. case The plaintiffs are endorsees of a bill of lading to whom the property inthegoods thereinmentionedhaspassed onor by reason of theendorsement The legislature have declared that thereisa contractinthebill of lading,andthatthe benefit of thatcontractisvested intheendorsees Itseems tometobe impossible inthe face of thatsection for thecourttosay thata bill of lading containsnocontract» And further down 10 15 20 25 30 35 « I prefer to rest my judgment on the view that the provision of the statute making the contractcontained inthe bill of lading assignable is inconsistent with the idea that anything which took place between the shipper and shipowner, notembodied inthebill of lading, couldaffect the contract ... as Ihave said, where astatute has madethebenefit of a contractassignable tothethirdparty,itisinconsistentwiththe policy of the statute to allow anything which took place between thepartiestothecontract,butwhich isnotembodied in it,toaffect thecontract» InThe «Ardennes», 84 LIL Rep 340 atρ 345 we read «Leduc & Co ν Ward and Others, 20 Q Β D 475, on which Sir Robert so strongly relied, was a case between shipowner and indorsee of the bill of lading, between whom its terms are conclusive by virtue of the Bills of Lading Act, 1855, so that no evidence was admissible in that case to contradict orvary itsterms Between those parties thestatute makes itthecontract» In Jadranska Slobodna Plovidba ν Photos Photiades & Co
(1965)1CLR 58 aclearanddistincbve differentiation was made between the shipper on the one side and those who acquired a nght undertheBillsof Lading Act, 1855. Atρ 65 itwas said «Where a bill of lading has been held to be the contractit was eitherso by reason of section 1of theBill of Lading Act, 1855 (as in the case of Leduc ν Ward20 Q Β D 475) orthe partiesappear tohave agreed thatitshould be so Itappears tobe wellsettled thatabill of lading isnotinitself the contractbetween theshipowner andtheshipperof goods, thoughithasbeensaidtobe excellentevidence ofitsterms» 775 Stytianides J . Electromatic Const, v. Azov
(1988)InArchangelos Domain Limited v.Adnatica Societa PerAzione Di Navigatione through their Cyprus Agents Messrs. A.L. Mantovani & Sons Ltd.,
(1978)1 C.L.R.
  1. Mr. Justice Hadjianastassiou, after reviewing the English Case Law on the subject, held that the Bill of Lading is not in itself the contract 5 between the shipowner and theshippers of goods though itisan excellent evidence of its terms. At p. 467 he clearly adopted the Leduc's case and said: «That was a case between shipowner and endorsee of the billoflading,between whom itstermsareconclusivebyvirtue 10 of the Bills of Lading Act, 1855, so that no evidence was admissible inthatcasetocontradictorvaryitsterms.Between those parties the statute makes itthe contract.» Thelawwith regard toconsignees/indorsees iswellsettled.The rights to sue transferred to the indorsee/consignee are limited to 15 those under thecontract, asexpressed intheBillofLading,and no more. CLAUSE13 The material part of Clause 13ofthe Billof Lading reads: «
  2. Limitation of Responsibility. For the sea carriage the 20 Carriershallinno case beliableinanamount exceeding Rbls 250 per package or unitorthe equivalent of thatsuminother currency, unlessvalue declared on the Billof Lading». Itwas contended that thisstipulation inthe Billof Lading isnot valid,astherouble isnotfreely convertible currency.Thevalueof 25 the roubleisontheuncontested evidencebefore meascertainable at any time. Itistobe noted thatMr.McBrideaddressed alettertothe Trade Representation of the U.S.S.R. inthe Republicof Cyprus on 30th October, 1984, inquiring astothe conversion rate ofthe U.S.S.R. 30 Rouble totheUSDollaron20thMay,1982,andtheDeputyTrade Representative of the U.S.S.R. after consulting the Bank of Foreign Trade of the U.S.S.R. certified the conversion rateon the date requested. (See ExhibitA in the affidavit of Maro Panayidou dated 20th November, 1984). 35 Itisimpermissible for thisCourt to declare that the currency of one of the major countries of the world cannot be used by the citizens of that country in their contracts with people outside 776 1 C.L.R. Bectromarlc Const, v.Azov Stytianides J. U.S.S.R.. inaii'-rn like thepresent one,where international trade is expanding and moving so rapidly. Certainly this does not offend publicpolicyinthiscountry and itisnot prohibited by any law. 5 CARRlAGEOF GOODS BY SEA LAW, CAP. 263 Ata meeting of the International Law Association at Hague on 3rdSeptember, 1921, «theHagueRules»wereoriginally adopted. Theywereadoptedataninternationalconference onthe maritime law held at Brussels in October, 1922 and after their amendment 10 at a further conference inBrusselsinOctober, 1923,received the form of an international convention and -were intended for. adoption bymunicipal legislation.IndeedArticlesIXtoXI! contain provisions regarding the adoption of those rules by municipal legislation and regarding accession to, and ratification, 15 denunciation and amendment of the proposed convention. Bythe CarriageofGoodsbySeaLawenacted on4th February, 1927, it was provided that the rules which were set out in the Schedule (Articles Ito IX)shall have effect in relation to and in connection with the carriage of goods by sea in ships carrying 20 goods from any port in Cyprus to any other port in or outside Cyprus. As the carriage and voyage in.the present case do not come within the ambit of section 2 of Cap. 263 this Law is inapplicable. · THECONTRACTOFTHEPARTIES: 25 30 ' We have to*turn to the contents of the Billof Lading. Clause 4 reads: r • • «
  3. Paramount Clause.Carriage bywater under thisBillof Lading shall have effect subject to the provisions of the Merchant ShippingCode oftheU.S.S.R., 1968;orthe Hague Rules contained in the international Convention for the unification of certain rules relating to the Bills of Lading . dated 25th August, 1924, if no national law is applied in accordance with cl. 5.» Clause 5 reads: 35 «5.Jurisdiction. Disputes arising under Bill of Lading shall bedeterminedattheplace,wheretheCarrierhashisprincipal place of business. No proceedings may be brought before other courts; unless the parties both expressly agree on the choice ofanother court or arbitration.» 777 StytianidesΛ. EtectromaticConst,v.Azov
(1988)The material provision of Clause 13 has already been quoted verbatim. It was submitted by counsel for defendants No. 1 that the law applicable in thiscase is the Russian Law. Itis clear thatthe Hague Rules are notapplicable, if the proper 5 law of the contractis the Russian Law. They are only applicable if the national law of another country is the proper law of the contract, where the matter is determined by the Court inanother country, and theirapplicationinthatothercountry isobligatory to be incorporated inthe Bill of Lading. (Dobell& Co. v. Steamship \Q Rossmore Company [1895] 2 Q.B.D., 408 and Vita Food Products Inc. v. Unus Shipping Co., Ltd. [1939} 1All E.R. 513.) The proper law of a contract is the law which the parties intendedtoapply. Thatintentionisobjectively ascertained,and, it notexpressed, willbe presumed from thetermsofthecontractand 15 the relevant surrounding circumstances. The intention of the parties will be ascertained by the intention expressed in the contract which will be conclusive. In VitaFood Products (supra) Lord Wright said at ρ. 521: «It is true that,in questions relating to the conflict of laws, 20 rules cannotgenerally be stated in absolute terms, but rather as prima facie presumptions, but, where the English rulethat intention is the test applies, and where there is an express statement by the parties of their intentiontoselect the law of the contract, it is difficult to see what qualifications are 25 possible, provided the intention expressed is bona fide and legal,and providedthereisno reason for avoiding the choice on the ground of publicpolicy.» We have to look at the contract and the Bill of Lading. The contractmust be read as a whole. Clauses 4,5, ?.nd 13 read togetherand,subject, topublic policy in this country, leave no doubt that the parties intended the Merchant Shipping Code of U.S.S.R, 1968, to be the Law applicable for the carriageunderthisBillof Lading. Public policy should be understood in a wide sense. If the 35 contractisforbidden by a localstatute,orisdeclared tobevoid, or nullified for disobedience toastatutory provision, thenforeign law is excluded andstipulations inthe contractfor the foreign law are I 1C.L.R. ElectromatlcConst,v.Azov Stytianides nullified. Public policy, however, as was said by Lord Wright, is betterserved byrefusing to nullify a bargain, save on serious and sufficient grounds. No statute of this country forbids the application of the 5 provisions of the Merchant Shipping Code of the U.S.S.R.,
  1. The objection on grounds of public policy fails. To sum up the contract between plaintiffs - consignees and defendants 1-shipowners iscontained conclusively in the Billof Lading. The relevant provisions in the Billof Lading are Clauses 10 13,4 and
  2. The law governing this Billof Lading isthe Russian Law. The Carriage of Goods by Sea Law, Cap. 263, is not applicable and has nobearing on thiscase.Theapplication of the Merchant Shipping Code of the U.S.S.R., 1968, cannot in any waybe excluded on groundsof publicpolicy.Thisisthe intention 15 of the parties expressed in the Bill of Lading, as this is the only construction that can be placed on the words of the written contract of the parties. The fact that Russian rouble is not freely convertible, though its convension value is ascertainable, is no obstacle tothe application of the lawof the contract -the Russian 20 Law. ' Section 28oftheContractLawreferstoagreementsinrestraint of legal proceedings.Thismatter does not arise inthiscare. Apart from special circumstances, which may affect the case in suchways,thevalueofthegoodsforwhichcompensation mustbe 25 made, when they have been lost ordamaged, isthatwhichthey would havehad atthetime andplaceatwhichtheyoughttohave been delivered. From the facts of this"case, having regard to the above, the materialdate isthe20th May,
  3. 30 The liability of the defendants -ship owners, under the Billof Lading, does not exceed 250.- Russian roubles, which on the material date were equivalent toC£145.
  4. Thisdeterminesthepreliminarypointraised inthe pleadings. Costs of thisapplication tobe costs inthe cause,but atany rate 35 not againstthe defendants. Orderas above. 779

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