Carriage of goods by sea and bills of lading

International conventions

Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?

Singapore acceded to the relevant 1924 Convention and gave effect to the Hague Rules, without variation.

The current Singapore statute is the Carriage of Goods by Sea Act (1998 edition) enacted to give effect to the Hague-Visby Rules, as scheduled to the act without variation.

The Hamburg Rules are not in force.

Singapore has not ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (the Rotterdam Rules).

For the purpose of the Hague Rules and the Hague-Visby Rules, sea carriage begins with the loading of the goods on, and ends with their discharge from, the carrying ship.

Multimodal carriage

Are there Conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?

A unimodal carriage by any of the respective modes is governed by individual conventions. One of these conventions is the Convention on the International Carriage of Goods by Road, which has not been ratified or adopted in Singapore. The liability of carriers of goods by road in Singapore is governed by the common law principles in contract, tort or bailment.

On the other hand, a carrier in a contract governed by Singaporean law with the goods owner may accept responsibility for the whole transit, even though he or she may actually perform only part of the carriage, or even none at all, and may choose to incorporate in his or her Multimodal Transport Document, for example, the United Nations Convention on International Multimodal Transport of Goods 1980, which does not need, for it to take effect, to include a sea carriage in its prerequisite of a minimum of two different modes of transport.

Title to sue

Who has title to sue on a bill of lading?

As bill of lading holder

Simply, a party who becomes the lawful holder of a transferable bill of lading thereby possesses all rights of suit under the bill of lading as if it had been a party to such bill.

In certain circumstances, the holder has the rights of suit only if it becomes the holder:

  • pursuant to a (sale) agreement affording it a pre-existing right against the carrier to possession of the goods; or
  • upon the rejection by another party of goods or shipping documents pursuant to the (sale) agreement.
For damage suffered

Where a party entitled to the goods covered by the bill of lading sustains loss or damage in consequence of a breach by the carrier but the relevant rights of suit are vested in another party, the latter may exercise those rights to like extent for the benefit of the first-mentioned party.

Charter parties

To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?

Bills of lading issued under a charter party may contain general words of incorporation by which the charter party terms or clauses are incorporated into the bills.

The effect is that a clause in the charter party that is directly germane to the subject matter of the bill of lading (ie, germane to the shipment, carriage and discharge or delivery of goods) can be incorporated into the bill of lading contract by general words in the bill of lading, as only such a clause is reasonably applicable to the bill of lading. But if the clause is one that is not thus directly relevant (eg, an arbitration clause), it would not be incorporated into the bill of lading contract unless it is explicitly so stated in clear words either in the bill of lading or in the charter party. It could not otherwise be said with certainty whether, for example, the dispute between the parties is a dispute under the charter party or the bill of lading. Therefore, the charter party arbitration clause would not be binding on a third-party holder or endorsee of the bill.

Demise and identity of carrier clauses

Is the ‘demise’ clause or identity of carrier clause recognised and binding?

The effect of the demise clause is to notify the bill of lading holder of the possibility of a charter, and therefore that the shipowner is the carrier and the bill of lading is a shipowner’s bill. However, the charterer might not go very far with the demise clause without more. Although the demise clause could be considered inconsistent with basic standards of commercial honesty, nevertheless it is recognised by the court and is binding, but only if none of the prerequisites is missing.

A ‘carrier’, as defined in the bill of lading identity of carrier clause, in order to be subject to the obligations and entitled to the rights and immunities conferred in the Hague-Visby Rules, must be a party to the contract of carriage covered by a bill of lading, or similar document of title relating to the sea carriage.

‘Carrier includes the owner or charterer who enters into a contract of carriage with the shipper’ (article I(a)).

Shipowner liability and defences

Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers?

Under the Hague-Visby Rules, parties other than owners and charterers may be ‘carriers’.

In an appropriate arrangement, such as by means of a Himalaya clause, a shipowner may be an independent (sub)contractor of a charterer. Where a carrier has chartered a vessel to perform the sea carriage that that carrier has contracted with the shipper to perform, the carrier or charterer (in such case a ‘contracting carrier’) has in effect employed the shipowner (‘actual carrier’) to carry out the substantial part of its own contractual obligations. Such a carrier or charterer has therefore employed the shipowner as an independent contractor, just as if it had employed a stevedore to carry out the handling of the goods at the port.

The shipowner is thus enabled to rely on the bill of lading terms, including in the appropriate cases the carrier’s immunities under the Hague-Visby Rules. But having regard to article III, Rule 8 of the Rules, the Himalaya clause is to be read as limiting the protection of the shipowner (as independent contractor) against liability to the cargo owner in tort to the protection available to the carrier upon whom the positive obligations such as in article III, Rules 1 and 2 are laid. In other words, the complete exemption open to the shipowner is equally restricted by article III, Rule 8.

Deviation from route

What is the effect of deviation from a vessel’s route on contractual defences?

Breach by deviation is like any other breach of a fundamental condition (or, a fundamental breach) that constitutes the repudiation of a contract by the party, in this case the carrier; the innocent party may elect not to treat the repudiation as being final, but to treat the contract as subsisting, and to that extent may waive the breach, any right to damages being reserved. If the innocent party with full knowledge of the deviation affirms the contract, then it is bound by its provisions (ie, including the benefit to the carrier of the contract conditions). For example, the shipowner, as against the cargo owners, or, in the appropriate case, the charterers, could rely on the exception of perils of the sea in respect of events occurring after the affirmation, but waiver of the breach does not mean waiver of the right to damages for that breach unless the contractual defences upon their construction are held by the court to be effectual.

It has been remarked that if there is a breach by deviation accepted by the innocent party the contract is at an end; the guilty party cannot rely on any special terms in the contract. If not so accepted the clauses of exception remain in force like all other clauses of the contract and applicable to a casualty occurring before or after the deviation, and the shipowner will be liable only for damages resulting from the deviation itself.


What liens can be exercised?

The types of lien, within the context of contract of affreightment, are as follows.

Liens for freight under bill of lading

On the back of the bill of lading are printed the carrier’s various standard terms and conditions. A lien clause allows the shipowner to retain the cargo until freight and any other charges (eg, general average contributions or for preservation of the goods) and dues are paid. In the Singapore context, the shipowner may notify the wharfinger or warehouseman of its right to lien at the time any goods are landed from the ship: section 127 of the Merchant Shipping Act. These latter parties are entitled by section 132 to exercise certain powers and have a lien on the goods for the rent and expenses.

Liens enumerated in charter party

These liens usually conferred by a lien clause (which may be followed by the cesser clause) are for freight, advance freight, dead freight, demurrage and general average. Some of these exist in common law but are nevertheless included in the charter party to avoid adverse inference. The shipowner’s lien on the cargo can only be enforced against the bill of lading holder if such charter party terms have been incorporated into the bill of lading’s terms.

Liens for sub-freights

The view in the preceding paragraph applies to sub-freights mutatis mutandis where, for example, the shipowner’s lien is contractually extended to cover time-charter hire.

Liens by operation of law on the vessel

Maritime lien; possessory lien; and statutory lien, that is, the claimant’s statutory right of action against the ship if the claim is of the type within one of the paragraphs enumerated in the High Court (Admiralty Jurisdiction) Act (see question 23).

Delivery without bill of lading

What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?

Delivery of cargo otherwise than against a bill of lading would result in a claim by the consignees against the carrier and, if warranted by the circumstances, stevedores, for conversion of the goods or for breach of their duty (negligence), not to deliver goods except in exchange for shipping documents.

Whether the carriers are entitled to limitation is not entirely clear. Such an act has itself been regarded as analogous to ‘deviation’ for which the court (the Privy Council, on an appeal from the Singapore decision in Sze Hai Tong Bank Ltd v Rambler Cycle Company Ltd [1959]) once adopted the ‘fundamental breach’ approach and disallowed limitation.

However, this position needs to be reappraised in light of the subsequent House of Lords approach to the fundamental breach doctrine in its Suisse Atlantique [1966] and Photo Production [1980] decisions. The more sustainable view appears to be that adopted by the Australian court in PS Chellaram & Co Ltd v China Ocean Shipping Co [1989], following the Privy Council’s decision in The New York Star [1980], in which it was held, on the facts, that the misdelivery there without presentation of the bill of lading - the agents wrongly assumed that the shippers’ consent for the release had been obtained - was the result of mere negligence and nothing more, and that the Hague Rules limitation under article IV Rule 5 was applicable.

Shipper responsibilities and liabilities

What are the responsibilities and liabilities of the shipper?

The shipper is liable for all damages and expenses directly and indirectly resulting from the shipment of dangerous goods (Hague-Visby Rules, article IV Rule 6), and this liability does not depend on their knowledge that the goods are dangerous. Goods of a nature that is inflammable, explosive or dangerous to the shipment to which the carrier has not consented with knowledge may be landed at any place or destroyed without compensation, and the shippers will be liable for the damage caused to the vessel or other cargo and expenses incurred by the carrier resulting from such shipment.

By Rule 5(h) the carrier shall not be responsible for loss of or damage to the goods if the nature or value thereof has been knowingly misstated by the shipper on the basis of which the bill of lading is drawn up.