Sub‐Bailments and Consent

Abstract

Of the two major strands existing in the increasingly important topic of subbailment on terms, one has become well settled, the other has been shrouded in ambiguity for close to two decades. The recent Hong Kong Privy Council decision of The Pioneer Container' reaffirms the first strand and, more importantly, delivers a definitive pronouncement on the second. Briefly stated, the facts of The Pioneer Container were as follows. The plaintiffs shipped goods on board the defendants' vessel, which goods were lost when the vessel sank after a collision. The plaintiffs commenced the present action, issuing a writ in rem against the defendants' sister ship, claiming damages for loss of the said goods. The defendants applied for a stay of proceedings on two grounds: first, that by virtue of an exclusive jurisdiction clause in the relevant bills of lading, the plaintiffs had agreed that any dispute would be governed by Chinese law and determined at Taipei in Taiwan; secondly, that taking the circumstances as a whole, Taipei was the natural and appropriate forum for the trial of the action. The Board held in favour of the defendants, holding that the exclusive jurisdiction clause was binding on the plaintiffs and that, on the facts, a stay of proceedings ought to be granted. The present comment, focusing as it does on the bailment context, will only consider the Board's reasoning on the first issue. Problems arose with regard to the first issue (viz, that centring on the effect of the exclusive jurisdiction clause) because two groups of plaintiffs did not in fact have a direct contractual relationship with the defendant shipowners; each group had initially shipped the goods concerned on board vessels owned by different companies which then (in effect) subcontracted the carriage of the goods to the defendants. This raised the question as to whether the clause could in fact bind these plaintiffs in the absence of a contractual nexus. It should be noted at this juncture that although the instant case concerned the issue as to whether or not the burden of an exclusive jurisdiction clause could be placed on a third party (here, the plaintiffs), the reasoning of the Board would undoubtedly apply equally to the effect of exception clauses in similar circumstances.2 Another (more specific) point should also be noted: in so far as each group of plaintiffs was concerned, the bills of lading issued by the initial carriers each contained a similar clause as follows: 'The Carrier shall be entitled to sub-contract on any terms the whole or any part of [the carriage].'3