A story on a Maritime Waybill and a Captain with a (Moldy) Wooden Leg

A story on a Maritime Waybill and a Captain with a (Moldy) Wooden Leg

Doron Afik, Esq.
March 27, 2018

A riddle: A maritime waybill states that all claims will be settled only in London, United Kingdom, but the goods are Norwegian wood loaded in Finland on a Singapore owned ship, leased to a Bermuda company, subleasing it to a Danish freighter which issued the waybill to an Israeli purchaser utilizing a Portuguese agent and when the vessel set anchor in Israel it turned out that due to negligence of the Spanish crew (but the captain was Russian, and the cook, naturally, a Swedish chef !) in non-ventilating the ship storage as required when the ship set anchor in a German harbor for two months due to an engine problem, the wood became rotten and moldy and the Israeli purchaser open a claim against the ship in the Israeli Maritime Court. Now, who remembers what was set in the waybill?

So I got a little carried away with the amount of jurisdictions involved but a similar fable was the center of a verdict granted by the Israeli Supreme Court in January, 2018, sitting as a Court of appeals on the decision of the Haifa Maritime Court, acting under the Israeli 1952 Maritime Court Law, granting it the authorities of an Admiralty Court under the British Colonial Courts of Admiralty Act 1890, Admiralty Court Act 1840 and Admiralty Court Act 1861. The special characteristics of the maritime law is due to the requirement to settle exactly such cases of many jurisdictions that are sometimes involved the daily activities of a maritime vessel and the public interest to enable the voyage of ships between harbors.

A waybill is also a special legal creation where instead of a normal agreement it acts as a receipt by the freighter to the sender, attesting the dispatch of the cargo in the quantity, number or weight set in it; evidence of a freight agreement between the freighter and the sender and a certificate attesting the ownership of the cargo. The Hague–Visby Rules are an international treaty (that was actually accepted in Brussel, 1924) meant to create unification of the rights and obligations of maritime freighters and the recipients of their services, including as to waybills. These were adopted in Israel within the Maritime Goods Conveyance Ordinance of 1926. The Supreme Court held that when a waybill sets an exclusive dispute resolution jurisdiction provision, such provision does not nullify the jurisdiction of the Israeli Court, but the Court will usually respect it. In this case, by the time the Maritime Court gave its decision the statute of limitation in the United Kingdom passed and so the Court suggested that the ship owner will waive the right to raise such a defense contention and when refused, held that the case will be heard in Israel despite the exclusive London jurisdiction clause.

The Court indeed did not accept the jurisdiction clause in the waybill but with a dissenting opinion of one of the Justices who noted that a party to an international trade agreement should anticipate that the agreement will set a different limitations period that in the local forum and need to review the potential implications of such on its rights and obligations. This opinion amplifies the importance of proper legal advice both at the time of entry into an international trade agreement (even if it seems like a “simple” waybill) and certainly when a dispute arises.

 Civil Appeal 8205/16 Contrastock Oy against the shipowner Thor Horizon, Supreme Court of Israel, 25.01.2018, the honorable Justices Neil Hendel, Isaac Amit and David Mintz, appeal on decision of the Haifa Maritime Court (Haifa Case 36926-08-15 of 27.08.2016, Judge Ron Sokol)