Third party rights under shipping contracts in English and South African law

• Jurisdiction: South Africa
• Author: S D Girvin
• Date: 25 May 2019
• Published date: 25 May 2019
• Pages: 97-122

Third Party Rights under Shipping Contracts

in English and South African Law

SD GIRVIN*

University of Nottingham

1 Introduction: The Problem

In the shipping context, contracts for the carriage of goods by sea are

conventionally embodied either in a charterparty or a bill of lading,

1

although other non-negotiable documents, such as waybills, mate's

receipts, and ships delivery orders are these days also in common use.

2

In

the case of a time or a voyage charterparty, where ownership and

possession of the ship remain vested in the shipowner,

3

the parties to the

contract are, fundamentally, the shipowner and the charterer. Very often,

however, the contractual relationships in contracts of carriage are more

complicated than this, both in terms of the persons involved and, more

crucially, in terms of title to or interest in the cargo.

4

Charterers often

contract with others either by way of a sub-charter

s

of the ship or for the

carriage of goods on board the chartered ship. The buyer of goods, to

whom a bill of lading will be issued, not infrequently indorses the bill to a

buyer while the goods are in transit.

The cargo claimant, who may be the shipper, a consignee,

6

or another

party to whom the bill of lading has been indorsed, potentially faces

difficulties in the event of the goods being lost or damaged. He will have

to identify the 'carrier' against whom the cargo claim can be pursued: is it

the owner of the ship or a charterer? He will also have to establish the

precise terms of the contract of carriage.' If the contract is governed by

* BA LLB LLM (Natal) PhD (Aberdeen). Advocate of the Supreme Court of South Africa.

Senior Lecturer in Law, University of Nottingham.

For a useful introductory overview, see Roy Goode

Commercial Law

2 ed (1995) ch 36 and

Robert Grime

Shipping Law

2 ed (1991) ch 5. For a South African perspective, see JP van Niekerk

'An Introduction to the Carriage of Goods by Sea' (1993) 5

SA Merc LJ

78 and FR Malan &

W Faul 'Some Aspects of Bills of Lading' (1989) 1

SA Merc LJ

322.

On the characteristics of such documents and also the bill of lading, see GH Treitel 'Overseas

Sales in General' in: AG Guest (ed)

Benjamin's Sale of Goods

4 ed (1992) ch 18. I shall not

consider the position of non-negotiable documents in this article.

3

This will not be the case where the charterparty is by demise (sometimes known as a 'bareboat'

charter). See Van Niekerk supra note 1 at 84. For a more detailed treatment, see SC Boyd, AS

Burrows & D Foxton

Scrutton on Charterparties

20 ed (1996) 59-65; R Colinveaux

Carver's

Carriage by Sea

13 ed (1982) 582-588; David Yeats (ed)

Contracts for the Carriage of Goods by

Land, Sea and Air

(1993) paras 1.5.1-1.5.3.

4

These themes are explored in William Tetley 'Who May Claim or Sue for Cargo Loss or

Damage?' 1986

J of Maritime Law & Commerce

153 and 407, and Martin Davies 'The Elusive

Carrier: Whom Do I Sue and How?' (1991) 19

Australian Business LR

230.

5

The ability to sub-charter is commonly included in time charter standard forms and certain of

the oil-trade voyage charter forms. See NYPE (1993) cl 18, Beepeetime 2 cl 31, Shelltime 4 cl 18,

Asbatankvoy cl 25, Beepeevoy 3 cl 41 and Shellvoy 5 cl 30.

6

See Chris Cashmore 'Who Are Consignors and Consignees for the Purposes of a Contract of

Carriage?' 1990

J of Business Law

377.

7

See

The Rewia

[1991] 2 Lloyd's Rep 325 (CA).

97

(1997) 9 SA Merc LJ 97

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98



(1997) 9 SA Merc LJ

the Hague Rules, or the Hague-Visby Rules,

8

either mandatorily or by

means of a 'clause paramount',

9

then the claim will be time-barred unless

it is brought within the prescribed 12-month period.

10

What then is the

position of third parties, such as servants, agents and sub-contractors

(especially stevedores) who are not technically parties to the contract of

carriage but who nevertheless wish to rely on the defences and immunities

in that contract? May the carrier rely on exemptions contained in a bill of

lading issued by a charterer, the disponent owner, to the shipper?

Determining the answers to these questions is necessary if the matter is

settled in an English court of law because of the doctrine of privity of

contract. But South African law recognizes contracts for the benefit of a

third party, a stipulatio alteri. Would a South African or foreign litigant

before a South African court be able to avoid some of the difficulties of

the English law? In this article my aim is to address these complex

questions, first by an analysis of the relevant principles of English law,

and second by an analysis of the South African law.

2 English Law

One of the fundamental tenets of the English law of contract is that a

third party cannot acquire rights under a contract to which he has not

been privy.

11

The origins of the doctrine of privity of contract,

12

though

disputed,

13

are conventionally thought to begin in 1861 with the locus

classicus of

Tweddle v Atkinson.

14

However, Denning LJ (as he then was)

was one of the first to argue, in

Drive Yourself Hire Co (London) Ltd v

Strutt,

15

that originally the common law knew no such restriction,

The Hague-Visby Rules were introduced in South Africa by the Carriage of Goods by Sea Act

1986, 1 of 1986, and in the United Kingdom by the Carriage of Goods by Sea Act 1971, c 19. In

both jurisdictions the Rules will be mandatorily applicable

(a)

if the bill of lading is issued in a

contracting State, or

(b)

if the carriage is from a port in a contracting State, or

(c)

if the contract

contained in or evidenced by the bill of lading provides that those Rules or the legislation of any

State giving effect to them are to govern the contract (art X). The South African Act (s 1(1)(a))

and the English Act (s 1(3)) each extends the ambit of the Rules also to coastal shipments. For

commentary on the South African Act, see Hilton Staniland 'The New Carriage of Goods by Sea

Act in South Africa' 1987

Lloyd's Maritime & Commercial Law Quarterly

305. For the UK

statute, see JHC Morris 'The Scope of the Carriage of Goods by Sea Act 1971' (1979) 95

Law

Quarterly Review

59 and Antony Diamond 'The Hague-Visby Rules' 1978

Lloyd's Maritime &

Commercial Law Quarterly

225.

9

See Michael Wilford 'Paramount Clauses in Charterparties' (1992) 94

II Diritto Marittimo

1134.

10

Article III, r 6. An action for indemnity against a third person may be brought even after the

expiration of a year: see art III, r

6bis.

(Cf art 20(1) of the Hamburg Rules.) The Hague-Visby

Rules define 'carrier' as including the owner or charterer who enters into a contract of carriage

with a shipper (art I(e)), while the Hamburg Rules defines 'carrier' as 'any person by whom or in

whose name a contract of carriage of goods by sea has been concluded with a shipper' (art 1(2)).

11

Subject to the English Law Commission's recent Report,

Privity of Contract: Contracts for

the Benefit of Third Parties,

Law Com No 242, Cmnd 3329 (1996).

12

For a detailed analysis, see GH Treitel

The Law of Contract

9 ed (1995) ch 15. See also John

Adams & Roger Brownsword

Key Issues in Contract

(1995) ch 5.

13

Often aligned with a further fundamental concept, consideration. For a discussion, see Treitel

supra note 12 ch 3. The South African Appellate Division ruled in

Conradie v Roussouw

1919 AD

279 that the English consideration doctrine had not been received into South African law. See also

Reinhard Zimmermann

The Law of Obligations

(1990) 556-559.

14

(1861) 1 B & S 393, 121 ER 762.

15

[1954] 1 QB 250 (CA) at 272.

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