'The Mahkutai'

Abstract

The Privy Council was faced with the following set of facts: Shipowners chartered their vessel to time charterers. The vessel was subchartered to shippers for the carriage of a cargo from Indonesia to China. The time charterers issued a bill of lading which contained a so-called Himalaya clause, i.e. a clause which purported to confer on subcontractors the benefit of 'all exceptions, limitations, provision, conditions and liberties benefitting the carrier. It also contained a clause conferring exclusive jurisdiction on the Indonesian courts. After discharge of the cargo, the cargo owners issued a writ against the vessel in Hong Kong claiming that the cargo was damaged on delivery. The shipowners sought to rely on the jurisdiction clause, as being a provision within the meaning of the Himalaya clause. In the view of the Hong Kong Court of Appeal, the shipowners were not entitled to rely on the clause because they were not parties to the bill of lading. Nor had there been a bailment on terms which included the jurisdiction clause. The shipowners appealed to the Privy council, which dismissed the appeal (Lord Goff of Chieveley giving the judgment of the Board). It traced the development of Himalaya clauses as a device to accommodate various situations arising in the context of carriage of goods by sea where there was a commercial expectation that the benefit of certain terms of the contract of carriage should be made available to parties involved in the adventure who were not parties to the contract - primarily stevedores, but in some cases also shipowners relying on terms in charterers' bills of lading to exempt them from possible liability to cargo owners and consignees. The theoretical basis for giving effect to such clauses remained problematic (although they were currently construed as bilateral contracts arrived at through the agency of the carrier). It was not apparent that a jurisdiction clause should be included within the list of clauses from which a subcontractor should be allowed to benefit. 'Such a clause can be distinguished from terms such as exceptions and limitations in that it does not benefit only one party, but embodies a mutual agreement under which both parties agree with each other as to the relevant jurisdiction for the resolution of disputes. It is therefore a clause which creates mutual rights and obligations.' While the Himalaya clause in the contract in question referred to subcontractors enjoying the benefit of a 'provision' for the benefit of the carrier, this term must be interpreted eadem generis with exceptions and limitations. The function of a Himalaya clause was 'to prevent cargo owners from avoiding the effect of contractual defences available to the carrier by suing in tort persons who perform the contractual services on the carrier's behalf. To make available to such a person the benefit of an exclusive jurisdiction clause in the bill of lading contract does not contribute to the solution of that problem.' In addition, the purpose of a jurisdiction clause is usually to confer jurisdiction on a court in the place where the carrier carries on business. It is purely fortuitous if that court is also a convenient place for a subcontractor to litigate. Both the terms of the Himalaya clause and the policy it pursued therefore indicated that it was not intended to include the jurisdiction clause. The following case note contrasts the legal reasoning employed in Belgium in similar situations (E. Dirix).