Voyage Charters

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Chapter 53

Clause Paramount and Cargo Claims

[Clause 20(b) continued]
(i) CLAUSE PARAMOUNT. This Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Acts of the United States, approved April 16, 1936, except that if this Bill of Lading is issued at a place where any other Act, ordinance or legislation gives statutory effect to the International Convention for the Unification of Certain Rules relating to Bills of Lading at Brussels, August 1924, then this Bill of Lading shall have effect, subject to the provisions of such Act, ordinance or legislation. The applicable Act, ordinance or legislation (hereinafter called the “Act”) shall be deemed to be incorporated herein and nothing herein contained shall be deemed a surrender by the Owner of any of its rights or immunities or an increase of any of its responsibilities or liabilities under the Act. If any term of this Bill of Lading be repugnant to the Act to any extent, such term shall be void to the extent but no further.
[Clause 20(b) is continued in next chapter]

Clause Paramount and the Hague Rules

53.1 For a commentary on the Rules see . Despite the reference to “this Bill of Lading” the Clause Paramount is incorporated into the charter itself as well.1

U.S. Carriage of Goods by Sea Act

53.2 Except for the circumstances where other Hague Rules legislation is incorporated (see below), the version of the Hague Rules to be incorporated into the charter and bills of lading issued under it is that contained in the U.S. Carriage of Goods by Sea Act 1936,2 and that version of the Rules will, therefore, apply in preference to the U.K. version. This is so even though the parties may have chosen London as the place of arbitration and thus, by implication, English law as the proper law of the charter.3 In these circumstances the question arises whether the words of the U.S. Act ought simply to be construed as part of an English law contract, following English decisions on the effect of identical provisions in the Hague Rules, or whether the U.S. decisions on the construction of the U.S. Act should be followed. An example of considerable practical importance is whether “suit” in section 3(6) of the U.S. Act should be interpreted as including arbitration, following The Merak,4 or as excluding arbitration, following the U.S. decisions on section 3(6) of the U.S. Act to the effect that “suit” is

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confined to litigation only not to arbitration. “Suit” in a contract which is governed by English law has been held to include arbitration.

A charter expressly incorporated the U.S.A. clause paramount but provided for London arbitration and English law to apply. A claim arose against the owner for the late delivery of goods due to the unseaworthiness of the vessel, but the charterer omitted to commence arbitration within the section 3(6) one-year time limit. Proceedings were brought5 for a declaration that the claims were not time-barred or an extension of time for commencing arbitration. One issue was whether the section 3(6) time bar applied at all to claims brought in the English arbitration.

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