The Blurring of Lines Between Shipping Contracts

International Congress of Maritime Arbitrators XXII, Dubai

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1 Commerce is nothing if not adaptable. Maritime trade is no exception. The contracts governing the parties’ rights and responsibilities for the international carriage of goods by sea are centrepieces for the conduct of world trade. These contracts and internationally negotiated cargo liability regimes are constantly evolving.

2 When arranging the carriage of cargoes on their vessels, ship and other disponent owners wish to earn as much revenue with as little contractual liability as possible. Conversely, cargo interests and charterers seeking vessels to carry their goods by sea look to negotiate contracts with binding assurances that the cargoes will arrive on time in the same good order and condition as when shipped. Negotiations for contracts for international carriage of cargo by sea can be between ordinary members of the community, as well as freight forwarders and expert brokers in shipping and chartering of vessels.

3 As we know, over many years a variety of standard form contracts have developed that those familiar with particular trades and vessels can use, as it were, off the shelf or as templates for bespoke transactions. In recent years, the means of communication have also changed, from the physical, paper document, to telexes, faxes, electronic emails and now various forms of instant messaging. These forms of communication are essential to the conduct of commercial transactions. But, the process of negotiation often involves persons who are, or think they are, familiar with trade usages adopting short hand methods to record agreements that courts or arbitrators later must examine in order to ascertain, first, what the parties meant in their written communication and secondly, whether that recorded a binding contract.

4 I want to discuss some issues that arise in contractual formation of contracts of affreightment and the legal characterisation and consequences of the contract so formed. In particular, in some situations it is not easy to discern whether a contract between the owners of a cargo and a vessel is one for carriage of goods by sea or for a charterparty. The once ubiquitous use of bills of lading to evidence a contract of carriage of goods by sea is being supplanted by electronic communications and documents like sea waybills or voyage charters. This is resulting in cargo liability regimes such as the Hague and Hague-Visby Rules and national legislation giving them force of law losing their utility and significance in the international cargo trade.

Principal forms of contracts of affreightment

5 The terms of any contract of affreightment obviously will vary depending on the nature and specifications of the goods being carried, the type of voyage and the agreed allocation of risk as between the parties. As will appear, while the contract that the parties make may look like one well known form, their particular adaptations may turn its legal effect into another, whether intentionally or accidentally. Sometimes, the effect of its characterisation can be critical.

6 While most persons in the shipping industry are familiar with traditional standard forms of contract for sea carriage of cargo, I will summarise these and some features of the key international cargo liability regimes before discussing the process of analysing contract formation and characterisation.

7 A contract of affreightment arises when the shipper of a cargo contracts for another to carry goods on a ship, usually by delivering cargo in exchange for a bill of lading, sea waybill or other sea carriage document (collectively, a freight document) or by hiring the vessel or space on it to do so (a charterparty).

Common freight documents

Bills of lading

8 Bills of lading have been used for centuries as, or as evidencing, contracts for the carriage of goods by sea. Aikens’ describes a bill of lading as an “elephant” in the sense that it is easier to recognise than define.^[2]

9 In 1794, Lickbarrow v Mason^[3] established that by the custom of merchants, a shipped bill of lading^[4] of goods to be delivered to order or a named assignee is negotiable and transferable by the shipper or holder at any time before completion of the voyage, by its endorsement and delivery to a third person and that, as a consequence, the property in the goods will pass to the new holder.

10 As Lord Blackburn explained, nearly 100 years later, Lickbarrow^[5] established that a bill of lading is a transferrable document of title.^[6] Soon after, Bowen LJ figuratively said that a bill of lading endorsed to a person rightfully holding it, or in blank, is a symbol which:^[7]

carries with it not only the full ownership of the goods but also all rights created by the contract of carriage between the shipper and shipowner.

11 Bowen LJ colourfully described the bill as a key, intended to unlock the door to the warehouse, whether floating or fixed, in which the goods may happen to be. That analogy holds true today, including for a straight bill of lading, being a bill that is not to order, but which names the consignee.^[8]

12 The stevedore or other person at the port of destination, to whom the ship or master discharges the goods, cannot deliver them safely unless the person seeking to collect the goods presents one original bill of lading out of the usual set of three. In 1882, Lord Blackburn said that he had never been able to learn why merchants and shipowners continued their practice of making out bills of lading in parts. However, he held that it is sufficient to obtain delivery at the port of discharge if the holder presents one of the parts of the bill, duly endorsed, which has the same legal effect as delivery of all three parts.^[9] That mystery has not been dispelled in the 140 years since. Once one of the parts of a bill of lading is presented and the goods handed over to the holder, the bill is said to be accomplished and the unpresented parts become void.^[10]

13 In addition to its principal historical functions, a bill of lading can also first, serve as a receipt for the goods shipped or received by the carrier and, secondly, contain or evidence the contract of carriage for the goods. The function served by the bill in any particular scenario will depend in whose hands it is used; for example, as between a charterer and disponent owner, the bill of lading often will operate as a mere receipt, but, if negotiable and transferred to a holder it becomes a document of title.^[11]

14 Before electronic commerce transformed all our lives and ways of transacting, the physical presentation of bills of lading had much greater significance than now. In times past, there would be documentary credit arrangements for the international sale of goods that depended on the physicality of a bill of lading serving its function as a document of title. The shipper or seller would negotiate a price and shipping arrangements with its purchaser that included provisions for when property in the goods passed and when the seller was to be paid, typically either at the time the goods passed over the ship’s rail on loading under an FOB (free on board) sale or at the time of discharge under a CIF (cost, insurance and freight) sale. Of course, the parties could and often did adjust these timings to suit their own circumstances. The seller’s and buyer’s banks or trade financiers then would arrange for the documentary logistics, involving the physical movement of the bill of lading, invoices and related documents, from the seller’s bank or financier to the purchaser’s, to coincide with the passing of property in the goods.

15 If no bill is available at the time of delivery, a ship’s master, stevedore or other bailee may agree to take the risk of delivering the cargo under whatever protection a letter of indemnity offers when given on behalf of either the shipper or the person claiming to be the consignee or rightful holder of the bill of lading.^[12] But, letters of indemnity can be risky where a bill of lading has been issued and it is not presented by the person seeking to collect the goods at the port of delivery.^[13]

Sea waybill

16 In modern shipping, sea waybills are often issued electronically, unlike a bill of lading. A sea waybill is not a negotiable instrument, but can be either or both a receipt for the goods or evidence of the contract of carriage. It can only be used when the consignee of the goods is known. Using a sea waybill may avoid inconvenience associated with delays in the consignee’s physical receipt of a bill of lading to collect the goods at the port of discharge.^[14] 

Contracts of carriage

17 While parties are free to negotiate their legal rights and responsibilities in a contract for the carriage of goods by sea, if they agree to use a bill of lading or similar document of title, the terms of their contract may have to yield if inconsistent with any international cargo liability regime compulsorily applicable to it.

18 Thus, a bill of lading that contains or evidences a contract of carriage in the hands of the immediate parties (or perhaps a named consignee) may not be conclusive evidence of the contract and be supplemented or overridden by other evidence.^[15] However, once a negotiable bill of lading evidencing the contract of carriage passes to a third party holder, it will be conclusive evidence of that contract.^[16]

Charterparties

19 A charterparty is a form of contract of carriage whereby the shipowner contracts to place the whole or part of a vessel at the disposal of the charterer.^[17] Historically, there have been three categories of charterparty: demise (or bareboat), time and voyage charters. There are several frequently used industry standard forms for each category.

20 In a demise charter, in return for the payment of “hire”, the shipowner gives the charterer possession and complete control of the vessel for a term and the charterer assumes the rights, liabilities and responsibilities of the shipowner, including employing the master and crew, paying all costs incurred in running the ship and assuming liability to shippers whose goods are carried on the vessel.^[18] Consequently, a demise charterer is treated effectively as the owner of the vessel.^[19]

21 Lord Diplock described a voyage or time charterparty as:^[20]

an adventure which of its nature has always been exposed to the risk of being prevented, impeded or delayed by a variety of causes beyond the control of either party. If it is known in advance how loss due to delay from any particular cause is to be borne as between charterer and shipowner, account can be taken of the risk in fixing the freight payable. What matters from a commercial point of view is not so much that the risk should be borne by one party rather than by the other, but that it should be known, at the time the charter-party is made, by which of them it will be borne.

(emphasis added)

22 Under a time charter, again in return for the payment of “hire”, the owner places the commercial use of vessel under the charterer’s control for a fixed time period. However, the ship and any cargo remain in the shipowner’s possession who continues to employ the master and crew and pay running costs. During the period of the time charter, the charterer has the right, within limits, to direct the master (including as to navigation and to issue bills of lading) and exploit the vessel’s earning capacity. Usually, a time charterer will contract as the carrier or disponent owner with a shipper under any bills of lading issued and will therefore have liability to the shipper. However, when loaded onboard, the cargo passes into the possession of the shipowner, and even though the time charterer directs the master to sign a bill of lading for the goods, the shipowner also becomes liable either on the bill or as bailee to the shipper and any subsequent owner of those goods for their care and condition during the voyage and until discharge.

23 In a voyage charter, the owner agrees to perform a particular voyage in return for the payment of “freight”, but possession of the ship remains with her owner. The charterer either arranges to carry cargo for itself or charges other shippers freight, but cannot otherwise exploit the vessel’s earning capacity.^[21] Depending on the terms of the charterparty, when the master issues a bill of lading, the voyage charterer, the owner or both may be the carrier in respect of shippers whose goods are carried on the vessel.^[22]

24 More recently, a fourth hybrid category of charterparty has emerged: the slot or space charter.^[23] The Baltic and International Maritime Council has developed a standard form of slot charter, SLOTHIRE. In a slot or space charter only part of the vessel, such as a guaranteed number of container spaces, a deck or identified section of the vessel’s cargo carrying capacity,,^[24] is chartered for either a period of time or a particular voyage. By 1999, slot charters had become common, and in The Tychy Clarke LJ held:^[25]

[T]here is no distinction in principle between a slot charter and a voyage charter of a part of a ship. They are both in a sense charterers of space in a ship. A slot charter is simply an example of a voyage charter of part of a ship.

25 Subsequently, Teare J held that a slot charter can be for the hire of a particular space on a ship over a particular time period, so as to mirror, more closely, a time charter.^[26] However, even where a slot charter is arranged on a time basis, it will not confer on the charterer any right to direct the master regarding navigation. This is because of the nature of a slot or space charter, which assumes that vessel is proceeding on a voyage, or in a trade, in which other cargo is also being carried for persons other than the charterer.

26 Commercially, a slot or space charter gives a person, such as a freight forwarder, a guaranteed amount of cargo carrying capacity on the ship, either for a particular voyage or a particular route or trade. Depending on the underlying contract that the slot or space charterer has with the shipowner and the shipper, the slot or space charterer may or may not act as carrier in respect of the cargo.

27 A slot charterer has the right to limit its liability under legislation giving effect to the Convention on Limitation of Liability for Maritime Claims 1976.^[27]

28 The categories of charterparty are not closed. Stewart J recently said that “parties are free to construct whatever bargains they wish; there is no fixed list of permissible forms of charterparty from which contracting parties are obliged to choose”^[28], and while the courts cannot limit those forms, they can ascribe legal consequences to them.^[29]

International cargo liability regimes

29 Often an international cargo liability regime is overlaid on the particular form of contract of affreightment that the parties have chosen to make. This can be so even where the contractual relationship is that of a charterparty.^[30] Over the last century, there have been several attempts to achieve universal cargo liability regimes for the international carriage of goods by sea.

Introduction

30 First, the Hague Rules came in 1924,^[31] then, in 1968, the Visby Protocol^[32] amended them and in 1979 the SDR Protocol^[33] made further amendments. Together these three conventions are known as the Hague-Visby Rules. Some States party have adopted all three, others have left the 1924 Hague Rules in place untouched, and some have not ratified the SDR Protocol. The Hague-Visby Rules have been adopted amongst major trading nations. However, Australia enacted bespoke amendments to the Hague-Visby Rules in 1997.^[34]

31 Two more recent attempts to achieve consensus on a modernised international cargo liability regime for sea carriage, the Hamburg Rules^[35] and the Rotterdam Rules,^[36] have had, so far, desultory results in adoption.

32 The Hague and Hague-Visby Rules have a vital role to play in the shipping trade. (For simplicity I will refer below only to the Hague-Visby Rules). That is because they impose mandatory duties on a carrier, including to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage^[37] and to properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.^[38] The Hague-Visby Rules also provide an irreducible minimum amount to which a carrier can limit its liability.^[39] In any contract of carriage to which the Rules apply, Art 3(8) renders “null and void and of no effect” any “clause, covenant or agreement” lessening the carrier’s or the ship’s liability otherwise than as the Rules provide. The Rules apply compulsorily during the period from when the goods are loaded on board a ship to the time of discharge^[40] (a period which has been termed “tackle to tackle”).^[41]

Application of the Hague-Visby Rules

33 Under Art 10, the Hague-Visby Rules apply to every bill of lading relating to the carriage of goods between ports in different nations if the bill is issued in, or the carriage is from, a port in a Contracting State or the bill contains or evidences a contract of carriage that provides that the Rules or legislation of any State giving effect to them are to govern that contract. While the Rules do not define ‘bill of lading’, Art 1(b) defines a contract of carriage as being “covered by a bill of lading or any similara document of title” relating to carriage of goods by water, including where that bill or document is issued under a charterparty “from the moment at which the bill or document of title” regulates the relations between its holder and the carrier. Importantly, Art 5 provides that the Rules do not apply to charterparties, but that, if a bill of lading issues under a charterparty, it must comply with the Rules.

34 The rationale for the compulsory application of the Hague-Visby Rules by force of law in a State of shipment is that shipping and other cargo interests, ordinarily, have little bargaining power to negotiate terms allocating liability and risk with carriers. In contrast, parties to charterparties generally have a greater measure of equality of bargaining power.^[42]

35 However, as Viscount Simonds noted,^[43] parties to a charterparty often incorporate into their agreement the same standards of obligation, liability, rights and indemnity as provided in the Rules that regulate the relationship between the carrier and the shipper:

in other words, they agree to impose upon the owners, in regard, for instance, to the seaworthiness of the chartered vessel, an obligation to use due diligence in place of the absolute obligation which would otherwise lie upon them.

Principles as to contract formation

36 Often negotiations for both the carriage of goods by sea and the charter of ships take place through experienced industry participants and or intermediaries on one or both sides. Frequently, these persons summarise the result of their negotiations in a recap. A recap, or recapitulation, in the shipping industry, is one party’s attempt to distil the essential agreed terms following negotiation that often uses terms or abbreviations that the individual negotiators know as familiar tools of their trade, for documents that they intend to use as part of the transaction that will be more fulsome, such as a standard form of one of the parties’ contracts, like a ship owner’s standard form bill of lading or booking note, or well-known forms of charterparty. ^[44] 

37 The use of summaries or recaps can sometimes spell trouble when a dispute later emerges and one or both sides seek to assert a position more favourable to their new commercial interest by resorting to what Lord Denning once described as a “battle of forms” in which the latest version wins.^[45]

38 There are well known rules for ascertaining whether the parties have made a contract through an exchange of correspondence. In its modern sense, correspondence includes traditional letters, the once ubiquitous telexes, and later faxes and now emails, texts or instant messages. The leading cases are RTS Flexible Systems^[46] and Masters v Cameron.^[47] There are four usual situations: first, the parties have agreed all the terms of their bargain and intend to be bound to immediate performance of them, while simultaneously proposing to restate the terms more fully or precisely but to no different effect in a formal document; secondly, they may have agreed all the terms and do not intend to depart from or add to the express or implied wording, yet have made performance of one or more terms conditional on the execution of a formal document to the creation and performance of which they are bound to cooperate; thirdly, they may make their so-called agreement ‘subject to contract’, meaning that unless and until they execute a formal contract they are not bound; or fourthly, they intend to be bound immediately to the terms that they have agreed while simultaneously contemplating that they will make a further, or varied, contract with additional terms. ^[48]

39 The courts apply the objective theory of contract to determine whether parties have entered into a contract, what its terms are, and what they mean. Lord Wilberforce said:^[49]

No contracts are made in a vacuum: there is always a setting in which they have to be placed. The nature of what is legitimate to have regard to is usually described as “the surrounding circumstances” but this phrase is imprecise: it can be illustrated but hardly defined. In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.

40 It is necessary to evaluate how a reasonable person involved in the shipping business would understand the words and expressions that the parties employed in their agreement in order to ascertain its correct construction.^[50] In addition, commercial life is replete with situations in which the application of classical offer – acceptance analysis would struggle to discern that parties have entered into a contract, yet the law will recognise in a practical, business-like way that they have.^[51] As Bingham J once said:^[52]

The parties are to be regarded as masters of their contractual fate. It is their intentions which matter and to which the Court must strive to give effect.

The contractual classification problem

41 The same classificatory dilemma can arise in characterising whether a contract of affreightment is a bill of lading or other contract of carriage of goods by sea, on the one hand, or a charterparty or contract for the hire of a ship, on the other.^[53]

42 Often documents of either character include a clause paramount that incorporates the whole, or aspects of, the Hague or Hague-Visby Rules, or a similar cargo liability regime, to regulate the parties’ rights and responsibilities in respect of goods or a voyage. However, as Viscount Simonds explained in Adamastos Shipping,^[54] such a clause paramount does not have the consequence that the contract, necessarily, becomes a bill of lading, as opposed to being a charterparty.

43 The facts in The Happy Ranger^[55] illustrate how characterisation issues can arise. There, the owners agreed to carry a deck cargo from Italy to Saudi Arabia under bills of lading claused “shipped on deck without any liability for loss or damage howsoever caused” and in which there were rider clauses and a clause paramount that relevantly provided:

The Hague Rules ... as enacted in the country of shipment shall apply to this contract.

...

In trades where ... the Hague-Visby Rules–apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Lading …

(emphasis added)

44 Freight was to be payable on signing the bills of lading, delivery would be made on presentation of duly endorsed bills, in the case of non-presentation “all time lost in waiting to count as laytime or time for which damages for detention are due”, disputes were to be decided in London, and English law was to apply. Tuckey LJ said that, ordinarily, a voyage charter would contain rider clauses of that kind whereas a straightforward contract of carriage would not.^[56]

45 The Carriage of Goods by Sea Act 1971 (UK) (COGSA) gave the Hague-Visby Rules force of law in the United Kingdom and Italy was a contracting State to those Rules within the meaning of Art 10(b).^[57]

46 Tuckey LJ held, in obiter, that the first paragraph of the clause paramount did not apply because the Hague Rules were not enacted in Italy. This construction is now doubtful given the decisions in The Superior Pescadores,^[58] JCB Sales Ltd v Wallenius Lines^[59] and Poralu.^[60] Those cases held that where a clause paramount provides for the Hague Rules “as enacted in the country of shipment”, it refers to the version of those Rules that is enacted in that country. Thus, in the United Kingdom the schedule to COGSA, giving force of law to the Hague-Visby Rules is entitled “The Hague Rules as amended by the Brussels Protocol 1968”, which Judge Van Graafeiland said in JCB Sales^[61]incorporated the Hague Rules “in the manner that England has enacted them”. In Poralu,^[62] Rares and Sarah C Derrington JJ said:

[C]ommercial common sense requires the Court to construe that expression so as to align the rights and obligations of the parties with the version of the Hague Rules which the law of the country of shipment compulsorily applies.

47 Importantly, The Happy Ranger decided that the expression “trades to which the ... Hague-Visby Rules apply compulsorily” in the second paragraph of the clause paramount included voyages or carriages of cargo within the scope of Art 10 if the contract of carriage was covered by or evidenced in a bill of lading or similar document of title (within Art 1(b)).^[63] Tuckey LJ said that if a bill of lading is, or is to be issued, “the contract is ‘covered by it’ or ‘provides for its issue’ within the definitions” in Art 1(b) and s 1(4) of COGSA. He said that because the shipment was from Italy and it was a signatory State, the trade was one in which the Hague-Visby Rules applied.^[64] His Lordship held that the clause paramount, read with Art 5, did not make the contract a charterparty, saying:^[65]

It was obviously a carefully drawn document and although it does contain terms which are to be found in voyage charter-parties, it emphatically calls itself a contract of carriage and that is what I think it is. The fact that the goods to be carried were a part cargo supports this conclusion, although I accept that this factor is not conclusive.

48 In Poralu,^[66] a ship and chartering broker acting on behalf of the shipper, Poralu, arranged with the Dutch fleet operator, Spliethoff, for the carriage of 23 pontoons from Ireland to Australia. Following negotiations, they settled a recap by email which provided, among other things, “Otherwise as per Carrier’s [standard form booking note] including rider clauses / [bill of lading] including English law and London Arbitration => to be provided”. Later on the same day, Spliethoff sent the broker its standard forms of bill of lading and sea waybill, suggesting that, if the consignee were known, it would be easier if they used the sea waybill. On the next day, Spliethoff sent the broker its standard form booking note.

49 Each of the three standard form documents had clauses paramount. The booking note provided that its terms prevailed over any previous arrangements and the terms of any bill of lading or sea waybill issued under it. In the booking note, first, the clause paramount expressly incorporated only Arts 1 to 8 of the Hague Rules and limited the carrier’s liability to GBP100, and secondly, there was a Netherlands law and Court of Rotterdam exclusive jurisdiction clause. The standard form bill of lading had similar clausing except that its clause paramount relevantly provided:

the Hague Rules … as enacted in the country of shipment, shall apply to this Bill of Lading. …If the Hague Rules are applicable otherwise than by national law, in determining the liability of the Carrier, the liability shall in no event exceed £100 (GBP) sterling lawful money of the United Kingdom per package or unit.

50 In the event, no bill of lading was issued for the cargo. On arrival in Geelong, some of the pontoons were found to be damaged. Poralu commenced an in rem claim against the ship and an in personam claim against the contractual and actual carriers. The parties disagreed about what documents and terms constituted their contract. That raised the questions of whether the contract was a charterparty and, if so, this affected the ship’s and carriers’ ability to limit their liability, first, under the booking note to GBP100, or, secondly, if the Hague Rules applied, to the gold value of GBP100 or, thirdly, if English law applied, to 667.67 units of account per pontoon or 2 units of account per kilogram under Art 4(5) of the Hague-Visby Rules as amended by the SDR Protocol.

51 At trial, Stewart J found that the booking note constituted the contract of carriage and that it was a charterparty, so that the Hague-Visby Rules did not apply. That was because the parties had negotiated the booking note at arms-length, with no apparent inequality of bargaining power, identified the performing vessel, dealt with her specialist capabilities, sometimes referred to themselves as “owners” and “charterers” and at other times as “carrier” and “merchant”, made detailed provisions allocating the costs of loading, discharge and detention, specified a laycan and the maximum transit time for the voyage, and provided for and contemplated the issue of other shipping documents. Even though the pontoons were only a part cargo on the ship, these features pointed to a contract for the use of a ship and did not meet the requirements of Art 3(3) of the Hague-Visby Rules because they did not evidence the ship’s receipt of the goods on board or into the carrier’s or its agent’s charge.^[67]

52 His Honour pointed to the general acceptance of slot / space charters as a species of charterparty, saying: “if a slot charter is a charterparty for various analogous purposes, then the booking note contract in this case would surely also qualify as a charterparty”. He said that it was a “space charterparty ... or in any event a species of voyage charter”, so that the Hague-Visby Rules did not apply, and the carriers could limit their liability to GBP100 per pontoon.

53 On appeal, the Full Court found that the contract was contained in the recap, not in the later booking note. Rares and Sarah C Derrington JJ rejected the carriers’ argument was that the recap was still a charterparty, so that the Hague-Visby Rules would not apply, saying:

[Even] if the contract of carriage were to be characterised as a charterparty, there would be nothing inconsistent about it incorporating a convention-regulated cargo liability regime such as that in the Hague Rules or the Hague-Visby Rules. Those Rules do not apply to charterparties directly, but Art 5 requires that bills of lading “issued in the case of a ship under a charterparty …shall comply with the terms of this convention”.

54 The Full Court held that because the recap provided expressly that the carrier would provide a bill of lading with English law and London arbitration clauses, the contract of carriage was “covered” by Spliethoff’s standard form bill of lading so claused, within the meaning of Art 1(b) of the Hague-Visby Rules.^[68] At the time of the recap, the consignee’s identity was not apparent or known to Spliethoff. In that situation, it did not matter that as a matter of commercial convenience the parties eventually used a sea waybill and no bill of lading ever issued. This followed from Devlin J’s explanation in Pyrene^[69] that it is sufficient that the contract contemplates that a bill of lading will issue even if none ever does. 

55 The Full Court held that the Hague-Visby Rules applied because, first, English law was the governing law, secondly, the clause paramount in the bill of lading provided that the Hague Rules “as enacted in the country of shipment” (Ireland) applied to the contract of carriage, and thirdly, Ireland had given force of law to the Hague-Visby Rules as amended by the SDR Protocol, so that “on any ordinary and sensible view” that version of the Hague Rules was the one “as enacted” in Ireland.^[70]

56 Thus, even if the relationship between the parties might otherwise have been characterised as a charterparty, they had expressly agreed that the contract of carriage would be contained in or evidenced by the bill of lading, that the carrier was to provide, claused with the agreed wording, and Art 3(8) ensured that this contract could not incorporate provisions inconsistent with its operation as a bill of lading.^[71]

57 Obviously the lesson in this is that one needs to pay close attention to the facts even when parties use, perhaps formulaically or carelessly, standard forms, in order to characterise objectively the true nature of their relationship. But, as Lord Diplock once explained,^[72] this is an age old problem with which the English common law has worked for centuries.

Sea waybills v bills of lading

58 Another example where characterisation of the relationship may matter is in identifying, when the consignee is known, whether a document is a straight bill of lading or a sea waybill. Both may seem to be functionally equivalent but have substantively different legal effects. As Lord Steyn held^[73] in distinguishing a straight bill from a sea waybill:

The carrier tried to equate the function of a straight bill of lading with that of a sea waybill ... The suggested comparison is plainly unrealistic. In the hands of the named consignee the straight bill of lading is his document of title. On the other hand, a sea waybill is never a document of title. No trader, insurer or banker would assimilate the two. ...

59 Some jurisdictions such as Australia have tried to ameliorate the distinction between sea waybills and bills of lading by legislation.^[74]

Conclusion

60 The need for the parties to pay attention in their contractual negotiations to the correct characterisation of their relationship may not always be apparent to them. The result will not necessarily mirror Shakespeare’s Juliet’s characterisation of Romeo as “a rose by any other name would smell as sweet”.^[75] The language of shipping documentation is not so romantic, but its use can still have dramatic and unintended consequences for the parties.