Writing for LC VIEWS, Neal Millard says The
Starsin case is interesting because it seems to go back into time when
when court cases were decided upon the most esoteric of points. Law has
progressed today to where the dotting of i's and the crossing of t's are
not as important as the intent of the parties and the public policies
applicable to the issues. The Starsin case, despite having been
decided in 2001, is almost a throwback to those earlier days.
The fact of the matter is that a shipment of
timber and plywood was damaged. The courts vacillated in trying to
determine whether liability attached to the charterer or to the
ship-owners with whom the contract of carriage was entered.
The courts had all kinds of trouble with this
and there were split decisions at each level of appeal. The trial judge
went so far as to divide the bills of lading into three groups based upon
wording contained in the bills of lading. This then launches the bankers to
look into the issue of what appears on the face of a bill of lading
compared to what appears on the reverse of a bill of lading. This harkens
back to the days when the doctrine of strict compliance governed the
interpretation of letters of credit. These days, courts tend to interpret
letters of credit in the context of substantial compliance which is more
in keeping with common sense and a concept of justice.
While it makes sense that an issuer of a
letter of credit should have minimal duties when examining a bill of
lading (and that would exclude the duty of reading the reverse of the bill
of lading for its terms and conditions), it does not make sense that a
court, in looking for liability for goods that were shipped, should get
caught up in the argument. If this was a negligence case, the court's
inquiry should be, if the goods were clearly damaged in transit due to
negligence, who was in control of the goods at the time they were damaged. The
case seems to say it was the charterer and once that is established, then
the court simply needs to ask, where there any other parties legally
liable as well, either by contributory negligence or by contract. I might
add, it matters not who was deemed the carrier on the bill of ladings if
the issue is negligence, but only who was the actually control of the
goods at the time of damage. Of course, if this is a contractual case or
one that is to be interpreted based on a law, then each contract must be
reviewed as must applicable law. But here, my reading of the case seems
to indicate that the courts got caught up in making a determination based
upon imprecise documents which could have been avoided by making a factual
determination as to whom the carrier really was. It is generally not
difficult to determine whether a vessel was under charter and documents,
if inconsistent with the actual facts, are usually disregarded.
Thus, what is needed to determine liability
for damaged goods in transit is not at all related to the issues needed to
determine whether a entity is a carrier for purposes of a bill of lading
submitted as part of the documentation needed to draw on a letter of
credit. But note, while different, they do have one thing in common: the determination
of carrier in both cases is mostly irrelevant. In the case of determining
liability for negligence, the issue is to figure out the party guilty of
the negligence. The carrier only becomes relevant if there is contractual
liability as well. Then it is important, as the case points out, to
determine who is the charterer and who is the ship-owner since, under
maritime law, these parties may also have liability. But the threshold
inquiry is based on fact, not interpretations of contract. Similarly, in
letter of credit law, the issue is not so much who is the carrier but what
the bill of lading must show to comply with the documentary requirements
of the letter of credit. It does not matter if the bill of lading
correctly names the carrier, just so long as the carrier named is the one
that is supposed to be named the carrier under the terms of the letter of
credit.
In the Judgment of
Canada-based Law Professor William Tetley The Starsin a disputable way of dispute handling
Commenting on the judgment of the
House of Lords in The Journal of Maritime Law and Commerce, Vol. 35; 2004
(pp 121-139), William Tetley, Canada-based law professor, says: "The
Starsin raises two matters that have been troubling me most for years: I)
the failure of counsel and the courts, in this case and in many others, to
consider foreign law, and ii) the emerging trend of interpreting
international law in a national manner." However, he hopes that in the
next demise clause/identity of carrier clause case the House of Lords will
recognize whether the shipowner and the charterer are together the carrier,
will recognize the international character of the Hague/Visby Rules and
decisions of the courts of other nations on the question, and will apply
international rules, as well as English common law rules, of
interpretation of bills of lading.
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Earlier published in LC
VIEWS newsletter No. 47, May 2006
