Lloyd's Maritime and Commercial Law Quarterly
THE DEMISE CLAUSE
The Jalamohan
In a previous note,1 attention was drawn to two cases, one from Australia and the other from Canada, concerning the demise clause in bills of lading. Without rehearsing the background again, it may be sufficient to say that, by substituting a possible unknown ship operator for the party who appears on the face of the bill, and on the dealings preceding its issue, to be the carrier, it can be a trap for the unwary. Hence, the argument could be put forward that the clause is ineffective, either under general common law principles or under Art. III, r. 8 of the Hague and Hague-Visby Rules, as purporting to lessen the carrier’s liability: and this view has been taken in Canada.2 The English view has been assumed to be that the clause merely identifies the carrier, and so is valid;3 and this approach has recently been adopted in Australia.4 But there did not seem to have been a frontal attack on the clause in England.
It seems, however, that the clause was recently subjected in some measure to such an attack in Ngo Chew Hong Edible Oil Pte. Ltd. v. Scindia S. N. Co. Ltd. (The Jalamohan).5 In this case, Hirst, J., affirmed what has been assumed to be the English view and specifically rejected an argument, based on a quotation from Professor Tetley,6 that “under English law there is anything anomalous about demise clauses”.
A point emerges from the judgment which has not previously been the subject of much, if any, discussion in print. Consideration of the validity of the clause has hitherto focused (as it did in this case) on its possible inconsistency with the negotiations and procedures surrounding shipment. On this basis it was at least arguable that the clause is often inconsistent with the contract made on shipment and can only be valid if the subsequent issue and acceptance of the bill of lading
1. [1987] 3 LMCLQ 259.
2. Carling O’Keefe Breweries of Canada Ltd. v. C.N. Marine Inc. (The Newfoundland Coast). 1987 A.M.C. 954 (Can. F.C.).
3. The Berkshire
[1974] 1 Lloyd’s Rep. 185.
4. Kaleej International Pty. Ltd. v. Gulf Shipping Lines Ltd. (1986) 6 N.S.W.L.R. 569. An argument against the clause based on the cases on signature by an agent actually succeeded in Anderson’s (Pacific) Trading Co. Pty. Ltd. v. Karlander New Guinea Line Ltd. (1980) 2 N.S.W.L.R. 870, but the case seems doubtful: see [1982] J.B.L. 116.
6. Marine Cargo Claims, 2nd edn. (1978), 88.
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