by Dr. Arun Kasi
What is in this Bulletin?
- Hague/Hague-Visby Rules and Common Law Doctrine of Stages.
- A revisit to The Makedonia  1 Lloyd’s Rep 316.
Arun Kasi & Co
International Maritime Lawyers
Arbitrators/Arbitration Counsel under LMAA/SCMA terms
Bulletin No. MLB 12/2022
03 December 2022 https://arunkasico.com
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Hague/Hague-Visby Rules and Common Law Doctrine of Stages
A revisit to The Makedonia  1 Lloyd’s Rep 316
Dr. Arun Kasi
Is it true that the Hague and the Hague-Visby Rules have abolished the doctrine of stages based on The Makedonia  1 Lloyd’s Rep 316 in cases to which the Rules apply? Can the Rules be interpreted as providing that the common law doctrine of stages is preserved insofar as subsequent sailings from intermediate ports are concerned?
1. Common law doctrine of stages
One of the important obligations of the shipowner, implied at common law in contracts of carriage of goods by sea including bills of lading, is to provide a seaworthy ship. The obligation is not a continuous one but attaches at certain stages of the voyage. The first stage is during loading. The second stage is when the ship sets sail (Cohn v Davidson (1877) 2 QBD 455.), and every time the ship starts to sail again during the voyage, such as when she re-sails from an intermediate port after bunkering or taking more cargo en route. This is called the doctrine of stages. There are stages at which the obligation does not attach such as during the gap between completion of loading to the commencement of the first sailing; such gap is called the lying stage. At every stage, the standard of seaworthiness differs. At the loading stage, the ship need not be seaworthy to sail, but she must be fit to safely receive the cargo. This is because there may be something further that needs to be done before the ship sets sail. At the first sailing stage, she must be fit to sail to the destination port or the next scheduled port such as an intermediate port en route. At the stage of re-sailing from the intermediate port, she must similarly be fit to reach the destination or the next scheduled port. It can be seen that the essence of the obligation, insofar as it relates to sailings, is that a shipowner must not set sail unless the ship is fit to complete the part of the voyage for which she is scheduled at that stage.
In The Vortigen [1895-99] All ER Rep 387, the ship was on a voyage from Cebu to Liverpool. En route, she was to call at Colombo port and then at Suez port for coaling. At Colombo she did not take sufficient coal to reach Suez. The Court of Appeal held that the ship was not seaworthy at the stage of the commencement of sailing from Colombo due to insufficient coal. The same was the case in Northumbrian Shipping Co Ltd v Timm and Son Ltd (1939) 64 Ll L Rep 33, where the ship left the loading port without sufficient bunkers to reach her next port to call.
As Channel J in McFadden v Blue Star Line  1 KB 697 at page 704 encapsulated:
“There is, of course, no warranty at the time the goods are put on board that the ship is then ready to start on her voyage; for while she is still loading there may be many things requiring to be done before she is ready to sail. … When a voyage is in stages the warranty is that the ship on starting on each particular stage is fit for that stage. Thus, if she is going to stop at an intermediate port, she must have sufficient coals to take her to that port, but she is not bound to have sufficient coals to take her the whole voyage.”
2. Hague/Hague-Visby Rules duty of seaworthiness
Under the Hague and the Hague-Visby Rules, the seaworthiness obligation is provided in article III(1), which is identical in both sets of Rules. The duty of seaworthiness is different from that implied at common law in two particular aspects. First, the obligation under the Rules is that carriers must exercise due diligence to render the ship seaworthy and cargoworthy, as opposed to an absolute obligation. Hence, under the Rules, the carrier would not be liable if the ship was unseaworthy at the time of sailing due to a latent defect that could not be discovered by due diligence (The Antigoni  1 Lloyd’s Rep 209). This is different from the position under the common law.
Secondly, although it is settled that the seaworthiness obligation under the Rules attaches from the beginning of loading to the commencement of sailing (Per Lord Somervell in Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd  2 Lloyd’s Rep 105;  AC 589 at page 603) it is questionable whether the words “at the beginning of the voyage” refer only to the first sailing from the loading port. Hewson J in The Makedonia defined “voyage” in article III(1) as “the contractual voyage from the port of loading to the port of discharge as declared in the appropriate bill of lading” (The Makedonia  1 Lloyd’s Rep 316 at page 329 col 2). Hence, the judge limited the seaworthiness obligation under the Rules to the first sailing only, unlike the position with the common law, whereby the obligation is at every sailing from the first and any intermediate ports. Carver endorses the view, stating that: “[The] doctrine is in any case on the face of it not applicable under the Hague and Hague-Visby Rules” (Carver, et al, Carver on Bills of Lading (4th Edition, UK, Sweet & Maxwell, 2017), at paras 9-021 and 9-136).
In The Makedonia, the ship carried timber from west Canadian ports to UK ports under various bills of lading subject to the Canadian Water Carriage of Goods Act 1936 which gives effect to the Hague Rules (applicable through the Canadian Water Carriage of Goods Act 1936). En route, she was to take, and took, fuel at San Pedro and then at Balboa ports. The fuel taken at Balboa was contaminated with sea water. As a result, the ship was completely immobilised in the sea and had to be towed to the port of Ponta Delgada, as the port of refuge, with salvage assistance. Some of the forward deck cargo had to be jettisoned to trim the ship by stern, some timber had to be burned as fuel, and expenses were incurred at the port of refuge. This gave rise to claims for salvage costs, general average and loss of the jettisoned cargo. The cargo interests argued that the duty on the shipowner to exercise due diligence to provide a seaworthy ship under article III(1) recurred at every intermediate port. Hewson J (at page 330 col 1) rejected this argument and held that the duty on the shipowner was only, at the outset of the voyage, to:
“[Have] the vessel adequately bunkered for the first stage to San Pedro, and to arrange for adequate bunkers of a proper kind at the San Pedro and other selected intermediate ports on the voyage so that the contractual voyage might be performed.”
He was of the view that the natural construction of article IV(2)(a) precluded liability for any default, including one rendering the ship unseaworthy, unless the unseaworthiness fell within article III(1). Hence, the judge negated the doctrine of stages in relation to the subsequent sailings. Although the fuel-contamination incident at Balboa, by itself, was held not to constitute a breach of the article III(1) duty, it was held that the shipowner had breached the duty under article III(1) because the engineers, at the outset of the voyage from the loading ports, were not properly instructed or experienced in the use of the oil and the shipowners had failed to exercise due diligence to see that the engineers were properly instructed or experienced.
However, there are some questions as to Hewson J’s view, relying on article IV(2)(a) to reject the doctrine of stages. First, as per the view, the doctrine of stages insofar as the subsequent sailings are concerned is negated only if the cause of unseaworthiness was one covered by article IV(2)(a), ie act, neglect or default of the master, mariner, pilot or the servants of the carrier. A ship may be unseaworthy at a subsequent sailing by a cause other than one provided for in article IV(2)(a); for example, a fortuity or an unknown cause, or an act, neglect or default of someone other than the master/mariner/pilot/servants of the carrier, eg unseaworthiness caused by an independent contractor or an accident that happened by fault of another ship or the port authority. Hence, should article IV(2)(a) be capable of excluding liability for unseaworthiness at subsequent sailings, this arguably does not support a conclusion that article IV(2)(a) is the grounds on which the doctrine of stages in respect of subsequent sailings has been abolished where the Rules are applicable.
Secondly, article IV(2)(a) in effect provides an exception to liability. It is well settled that in the case of implied terms at common law, including the seaworthiness obligation, the liability may only be excluded by a specific exception clause that is intended to exclude liability for the implied terms, eg seaworthiness, but not by a general exception clause which is capable of having effect without necessarily covering the liability for the implied term (Phillips Petroleum Co v Cabaneli Naviera SA (The Theodegmon)  1 Lloyd’s Rep 52 and Owners of Cargo on Maori King v Hughes (The Maori King)  2 QB 550.). The exclusion in article IV(2)(a) does not appear to meet the threshold required to exclude the common law implied obligation in respect of subsequent sailings.
Thirdly, the very essence of the common law principle is that a shipowner should not set sail when the ship is unseaworthy, an obligation fundamental in nature. Article III(1) states the principle but in modified terms in respect of the commencement of the voyage. It is silent as to the obligation insofar as subsequent sailings are concerned. The question arising from this is whether the Rules, by the failure to provide for subsequent sailings, should be construed simply as intending that no such obligation attaches to the subsequent sailings, ie that the common law doctrine of stages insofar as subsequent sailings are concerned is abolished. It is submitted that a mere failure of the Rules to deal with subsequent sailings in article III(1) cannot be said to be intended to impliedly abolish such a fundamental implied term at common law. The intention that can be rightly deduced from article III(1) is that “absoluteness” of the seaworthiness obligation is reduced to an obligation to exercise due diligence only to render the ship seaworthy at the relevant time. Further, there is no apparent reason upon the wording of the Rules to abolish the seaworthiness obligation at subsequent sailings.
It is submitted that article IV(2)(a) should be interpreted as not interfering with the common law doctrine of stages insofar as it relates to the subsequent sailings. Equally, article III(1) should not be interpreted as impliedly abrogating the doctrine in relation to subsequent sailings. It is unlikely that the Rules, by articles III(1) and IV(2)(a), intended to modify the common law position so as to allow the shipowner to set sail from an intermediate port without exercising due diligence to ensure seaworthiness (an obligation fundamental in nature). However, it will be a fair interpretation of article III(1) to say that the seaworthiness obligation, whenever applicable, is one to exercise due diligence only, and to this much the common law doctrine applicable to subsequent sailings is modified.
More broadly, the Rules are not intended to displace or replace the common law position, save in the areas dealt with by the Rules expressly or by necessary implication. Rather, the Rules co-exist with the common law and in the event of a conflict, of course, the Rules will prevail.
Lord Sumption, delivering the judgment of the Supreme Court, in Volcafe v Compania Sud Americana de Vapores SA  1 Lloyd’s Rep 21 noted that the Rules “are not exhaustive of all matters relating to the legal responsibility of carriers for the cargo” (paragraph 15). In this case, a cargo of coffee beans was damaged in transit. The cargo interest made a claim for breach of bailment duties and of the article III(2) duty to properly and carefully handle and carry (Hague/Hague-Visby Rules, article III(2): “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”). The carrier relied on the article IV(2)(m) exception (damage due to inherent vice of the goods) (Hague/Hague-Visby Rules, article IV(2)(m): “Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods”). A question arose as to who bears the legal burden of proof. At common law, the burden of proving that a bailee was not negligent for damage that happened to the bailed goods was on the bailee. Lord Sumption observed that “[nothing] in the Hague Rules alters the status of a contract of carriage by sea as a species of bailment for reward on terms”. With that observation, the court held that the burden of proving discharge of the article III(2) duty, ie that the carrier was not negligent, was on the carrier, before the carrier could rely on the article IV(2)(m) exception.
Another example of the Rules and the common law working together is in relation to deviation. At common law, it is an implied term that the shipowner will not voluntarily deviate from the proper route without lawful justification (Davis v Garrett (1830) 6 Bing 716). There is no corresponding obligation in the Rules. But the Rules provide a defence to deviation in article IV(4) (Hague/Hague-Visby Rules, article IV(4): “Any deviation in saving or attempting to save life or property at sea or any reasonable
deviation shall not be deemed to be an infringement or breach of this Convention or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom”). The defence will only be relevant if the common law implied obligation not to deviate is applicable under the Rules regime.
Accordingly, the preferred position is that the doctrine of stages, insofar as it relates to subsequent sailings, should not be displaced by the Rules save that the applicable standard will be one to exercise due diligence.
Neither article IV(2)(a), upon a proper construction, nor article III(1) of the Hague-Visby Rules should displace the common law implied term as to seaworthiness insofar as subsequent sailings are concerned. It is submitted that the doctrine of stages, insofar as subsequent sailings are concerned, should survive under the Rules regime (Raymond E Negus, “Hague Rules 1921”, Law Quarterly Review, volume 38, no 3 (1922), pages 317 to 338 says, by reference to Harter Act 1839, “[a]lthough no provision is made for a voyage by stages, it must be presumed that the doctrine of stages is applicable”). with the modification that the duty is not an absolute one but one to exercise due diligence. The net result is that the obligation at the outset of the voyage under the Rules and subsequent sailings under the common law are in effect similar in nature.
Arun Kasi, The Law of Carriage of Goods by Sea, Singapore, Springer, 2021
© Author: Dr. Arun Kasi LLB (Hons), LLM, CLP, Barrister (Lincoln’s Inn), FCIArb, PhD; Advocate & Solicitor in Malaysia; Member of LMAA and SCMA; Arbitrator/Arbitration Counsel under the terms of LMAA/SCMA.
Thanks to Ms. Karthika Arunachalam for reviewing a draft of this paper.