The Alion – suit deemed invalid 'unless pigs fly, or England win the World Cup'

Posted: 28/03/2025

A recent decision of the Commercial Court in Tanga Pharmaceuticals Plastics Limited and others v Emirates Shipping Line FZE, The Alion [2025] EWHC 368 (Comm)) has provided useful guidance on the approach to be taken where the Hague Rules are contractually incorporated into a bill of lading but conflict with another clause of the contract.

The case concerned the dismissal of the carrier's application for summary judgment on grounds that the cargo owners' claim was time barred by virtue of contractual time-bar provisions affording a shorter time limit than the one-year time bar set out in art III rule 6 of the Hague Rules.

Facts

The claimants were the owners of 548 containers and their contents shipped aboard MV Alion for carriage from India, the UAE and Saudi Arabia to Mombasa in September 2021 under identical bills of lading issued by the shipowners. The bills were subject to English law and jurisdiction and incorporated a clause paramount.

During the voyage, the vessel suffered engine failure, salvage services were rendered on LOF terms and general average declared.  

The cargo interests notified the carrier of claims they were seeking to bring under the bills of lading for an indemnity in respect of their liability to the salvors (security having been provided and a settlement reached).

The cargo claims were issued within the usual one-year Hague Rules period, but were not served for a further year due to difficulties effecting service on the carrier in Dubai.

The bills of lading

The carrier’s standard bill of lading terms contractually incorporated the Hague Rules by way of a clause paramount. The following provisions were of particular relevance:

Art III rule 6:  

'…In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered...'

Art III rule 8: 

'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 connexion with, goods arising from negligence, fault, or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in this Convention, shall be null and void and of no effect…'

However, the carrier sought to rely on clause 18 ('Notice of Loss or Damage, Time Bar') in the standard terms in the bills of lading.  In the second sentence of clause 18, what was referred to as the '20-day Provision' provided:

'Any claim against the Carrier for any adjustment, refund of or with respect to freight, charges or expenses or any claim other than for loss or damage to Goods must be submitted fully documented to the Carrier or its agent in writing within 20 days from the day when the Goods were or should have been delivered, failing which such claim will be time-barred.'

And in the final sentence, referred to as the 'Service Provision':

'Suit shall not be considered to have been brought within time specified unless process shall have been actually served and/or jurisdiction obtained over the Vessel or Carrier within such time.'

Judgment 

Mr Justice Bright considered there were three questions:

1. is the incorporation of the Hague Rules in clause 2 made subject to clause 18, such that clause 18 prevails insofar as there may be any inconsistency? – answer: no;
2. if clause 18 prevails, does the '20-day Provision' apply? – answer (obiter): no;
3. in any event, is the 'Service Provision' compatible with art III rule 6 and rule 8? – answer: no.

On the first issue, it was confirmed that the starting point was that where the Hague Rules apply only as a matter of contract, the parties are able to modify them by agreement - albeit if limiting liability clear words must be used. Further, there is a presumption that where provisions are incorporated from a text outside the contract by a mere incorporation clause, an express provision in the body of the main contractual text may be intended to take precedence in the event of inconsistency between the two, although this will depend on the circumstances. In the present case, it was held that the provisions of the Hague Rules took precedence over clause 18 for a number of reasons: 

• The 'clause paramount' is well known within the shipping industry as a clause by which one of the Hague/Hague-Visby/Hamburg Rules are incorporated into the contract of carriage and which 'overrides any express exemption... inconsistent with it'.
• The clause paramount did not simply incorporate the Hague Rules; it notably omitted art IX and set out specific circumstances where art III rule 8, otherwise known as 'the policeman of the rules' would not apply eg in relation to package limitation. The implication was that, outside the specifically identified circumstance above, the Hague Rules would apply and art III rule 8 would have its usual effect as an incorporated repugnancy clause ie a clause that states in terms that it is to have priority over anything inconsistent or repugnant.
• Clause 18 did not contain any indication that it was intended to prevail over the clause paramount.

The answer to question 1 was therefore, 'no'.

Given the answer to question 1, it was not necessary to answer question 2. But, with his observations being strictly obiter, Mr Justice Bright confirmed that 'loss or damage to goods' should be construed widely to 'undoubtedly include economic damage' and goods physically unaltered in themselves, but whose value has been adversely affected. The claim for salvors' charges should not be characterised as one for 'freight, charges or expenses' but rather as a claim for loss or damage to goods. The '20-day Provision' would therefore not apply.

On question 3, it was noted that different jurisdictions take differing approaches to what constitutes 'the bringing of suit' (art III rule 6): in many common law countries, suit is brought when the claim form is issued; whereas in many civil law countries, suit is brought upon service. As the defendant’s argument went, art III rule 6 was neutral on what was meant by the bringing of a suit, meaning there was nothing offensive in providing that service of a claim form was necessary to interrupt time in the present case. 

Rejecting this argument, Mr Justice Bright observed that it was inconsistent with the express provision for English law and jurisdiction, in which, as a common law country, 'suit is brought when the claim form is issued'. Moreover, he found that if it were open to the parties to stipulate in what circumstances suit had been brought, this could be open to abuse and circumstances could be stipulated to provide that suit would only be brought contingent on 'other events that are unlikely to occur within a year, or at all'. The examples given to emphasise this point being: 'unless pigs fly, or England win the World Cup.'

Conclusion

This is a helpful decision which makes clear that a clause paramount is in the usual course to be treated as paramount, including the incorporation and effect of art III rule 6. If parties intend to contract out of any part of the Hague Rules as incorporated by a clause paramount, or give priority to any other clause, they must be expressly clear in their drafting that the relevant parts of the rules, including art III rule 6, do not apply.

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