The decision of the Supreme Court of Canada in Falconbridge Nickel Mines Ltd. et al v. Chimo Shipping Ltd. et al [1974] S.C.R. 933 held that the word “unit” in art. IV, rule 5 of the Schedule to the Carriage of Goods by Water Act, R.S.C. 1970, Chapter C-15, is to be interpreted differently than the words “customary freight unit” in art. IV, rule 5 of the United States Carriage of Goods by Sea Act, and therefore cases decided in the U.S. were of no assistance in interpreting the Canadian Act.

The thesis of this paper is that Canadian Courts are indicating that they are also prepared to diverge from the decisions of the U.S. concerning the word “package” in art. IV, rule 5. For the sake of order, the writer is going to consider modern shipping methods in order of increasing size, firstly palletisation, secondly containerisation, and thirdly the usage of LASH (lighter aboard ship) barges.

The first important case concerning the definition of the word “package” in art. IV, rule 5 of The Hague Rules was the decision of the U.S. Court of Appeals, Second Circuit (New York) in Standard Electrica, S.A. v. Hamburg Sudamerikanische Dampfschiffahrts-Gesellschaft [1967] A.M.C. 881; [1967] 2 Lloyd’s Rep. 193. This decision concerned nine pallets, made up by the shipper, with each pallet having six cardboard cartons attached to it and each cardboard carton containing 40 television tuners. In the opinion of the writer, this decision is a classic example of the statement that “Hard cases make bad law”. The facts of this case are very unusual in that all of the documents, including the dock receipt, the bill of lading, the invoice and the claim letters referred to the goods as nine “packages”. The majority decision of Lumbard, Ch.J., and Hay, Ct.J., held that each pallet was a package and the first or primary reason given for that decision was the “characterisation of the parties themselves”.

The majority proceeds to support its primary finding with three other factors, (i) the pallet was made up by the shipper and not the carrier; (ii) the shipper could declare the nature and value of the goods and avoid limitation and, (iii) that the word “package” fairly includes the pallets under consideration in the case and if the $500 per package limitation was inadequate, then it would have to be changed by Congress and not the Courts.

It should be noted that Feinberg, Ct.J., delivered a strong dissenting judgment. He stressed that the purpose of s. 4(5) of the Carriage of Goods by Sea Act