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Think Recoveries: Marine Cargo Recovery Claims – Has the correct time bar been properly protected?

  • Market Insight 15 October 2020 15 October 2020
  • UK & Europe

Ensuring that the time bar of a marine cargo recovery claim has been properly protected is a fundamental aspect of handling such claims. It will normally not be possible for the claim to be further pursued after the time limit has passed.

Think Recoveries: Marine Cargo Recovery Claims – Has the correct time bar been properly protected?

Different time limits may apply to different claims and it is therefore important to work out what is the correct time limit that applies to the claim in question at the earliest possible stage.  Subject to the nature of the claim, different steps may have to be taken to extend or suspend the time limit or otherwise protect the claim.

Correct Time Limit

Under English law, the statutory time limit that will normally apply to claims in tort and contract is 6 years.   However, marine cargo claims are usually subject to much shorter time limits.  This could be by virtue of a time limit in the contract of carriage or by the application of an international convention that provides for specific time limits for certain types of claims. 

For example, claims relating to international road carriage in Europe subject to the CMR Convention are subject to a 1 year time limit, whilst claims relating to cargo carried by air covered by the Montreal Convention are subject to a 2 year time limit.  Similarly, cargo claims relating to sea carriage may be subject to a 1 year time limit under the Hague or Hague-Visby Rules or a 2 year time limit under the Hamburg Rules. 

Determining which international convention applies requires scrutiny of not only the terms of the contract of carriage but also other factors such as the country from which the cargo was shipped and of course the law and the jurisdiction in which the claim is being brought.  Such issues can be particularly complex in cases involving multimodal transport.  Where no such international convention applies, an even shorter time bar may apply under the terms of the contract of carriage.  For example, many bills of lading provide for a time limit of only 9 months.

There may also be a conflict between the time limit clause in the bill of lading and the applicable international convention.  Whether the time limit in the international convention takes precedence will depend on the words used to incorporate that convention into the bill of lading, or indeed if that convention is in any case compulsorily applicable.  For example, where a shipment is made from the UK, under English law the Hague-Visby Rules would be compulsorily applicable.  In this situation, the 1 year time bar in the Hague-Visby Rules would override a shorter time bar (e.g. a 9 month time bar) contained in the bill of lading terms.  However, this would not necessarily be the case where the Hague-Visby Rules were not compulsorily applicable and the bill of lading terms simply incorporated the Hague Rules by contract.  In that case, a shorter time bar in the bill of lading could take precedence over the 1 year time limit in the Hague Rules, subject to the wording of the clause that contractually incorporated the Hague Rules into the bill of lading.

Interpreting the wording of the contract of carriage may therefore be relevant to determining the correct time bar where there are conflicting time limit provisions.  For example, a bill of lading may contain a time limit clause whilst also expressly incorporating the terms of a charterparty containing its own time bar provision.  In that case, the wording of the respective time bar clauses and in particular the wording of the incorporating clause in the bill of lading would have to be considered to determine if one time bar clause would override the other.

Properly Protecting Time Limits

The methods for protecting time bars will vary depending on the type of claim and the law which it is subject to.  The most obvious step that can be taken is to commence proceedings in accordance with the jurisdiction that applies to the claim (e.g. court proceedings or arbitration proceedings before the relevant court or arbitration tribunal).  However, it may also be possible to extend the time limit without the need to commence proceedings.

English law recognises voluntary extensions of the time limit agreed between the parties.  An agreement to extend time need not take a particular form and will often simply be an email exchange between the parties.  However, care should be taken with the wording of such an extension to ensure that the claim is properly protected.  For example, the claim should be sufficiently identified (e.g. identifying the contract of carriage).  Also, if the time extension is granted to be effective from a certain date, cargo claimants should ensure that this is not after the date of the original time limit.

It should be noted that foreign jurisdictions may have different requirements for time extensions, such as requiring the time extension agreement to be a signed document or even notarised.  Some jurisdictions do not recognise voluntary time extensions at all and so different steps may have to be taken in those jurisdictions to protect the claim.  In some jurisdictions the time limit can be extended or even suspended by sending the relevant counterparties a claim letter that complies with certain formal requirements.

Comment

It is important that cargo claimants know both the correct time limit that applies to their claim as well as the steps that can be taken (e.g. legal proceedings, time extension, time limit suspension) to protect the claim before the time limit expires.  Cargo claimants should also be aware that other time limits may apply to different aspects of the claim (e.g. for claim notification).  Determining the correct time limit and the protective steps to be taken may not be straightforward, especially where the claim is subject to a foreign law or jurisdiction.  Seeking early advice where there is uncertainty can therefore be crucial to ensure that cargo claims are adequately protected.

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