2.3 The rules in MC Chapter 14
We have shown above that the rules in MC Chapter 13 entitle the shipper – even when he is not the sender – to request a bill of lading, and that this document will then be binding on the carrier, being the contracting carrier named in the booking note.
However, when we turn to Chapter 14 on the chartering of ships, the rules are different. Regarding voyage charters Section 338 paragraph one says:
“When the goods have been loaded, the voyage carrier [Norwegian: reisebortfrakteren] or the master or the person otherwise authorized by the voyage carrier shall, at the request of the shipper, issue a bill of lading, provided the necessary documents and information have been made available.”
Such a document is binding on the voyage carrier, which is made abundantly clear by the recourse right according to paragraph three: if the voyage carrier has been held liable under the bill of lading because the bill contains stricter rules than those imposed by the charter party, the voyage charterer has to hold him harmless.
Words to the same effect are used for time chartering, see Section 382 paragraph one:
“The time carrier [Norwegian: tidsbortfrakteren] shall issue a bill of lading for the goods loaded for the voyage the ship is to perform, with the conditions usual in the trade in question. If the timer carrier thereby incurs liability to the holder of the bill of lading in excess of the liability according to the chartering agreement, the time charterer shall hold the time carrier harmless.”
These contradictions in Chapters 13 and 14 have a historic explanation. The previous MC 1893 – as amended in 1938 when the Hague Rules were implemented – established, in a joint subchapter on voyage charters and carriage of general cargo, the rule that bills of lading should be signed by the master, with recourse for the owner to the charterer in cases where the bill contained “other terms than in the agreement and this leads to increased liability” (MC 1893 Section 95). In the time charter section of the Code there was a similar regulation: the owner was obliged to issue bills of lading for loaded cargo “with the terms of carriage that are usual for the trade in question”, and again in this case with recourse to the charterer in case of increased liability.
Nowadays, the general rule on the issuance of bills of lading has changed (the previous Section 95 compared with today’s Section 294, cf. Section 295): The obligation rests on the carrier, i.e. the counterparty to the sender. This change should be seen against the background of the extensive discussions after a Norwegian and a Swedish Supreme Court decision. In ND 1955 p. 81 (= Rt. 1955 p. 107) (Lysaker) a time chartered vessel was used in liner service. Since a possible cargo damage claim against the owner of the vessel was time barred, the cargo interests sued the line, arguing that the line was bound by the bill of lading which had been signed by the master. The Norwegian Supreme Court found, however, that the master bound the time charter owner, not the line: “Should the time charterer [the line] be liable under the bills of lading, his behavior, in the specific circumstances, must have been understood as acceptance of bill of lading responsibility” – and that was not the case. The Swedish case – ND 1960 p. 349 (Lulu) – concerned loss of cargo under a liner shipment: the bill of lading was signed on behalf of the master, and consequently the owner of the vessel was held liable, not the line that had the vessel on charter. The first sign of a changed attitude can be found in Ot. prp. no. 28 (1972‑73) p. 9:(1) This is a preparatory work for an act of 8 June 1973, whereby the rules in MC 1893 on carriage of goods were restructured and adapted to the Hague-Visby Rules.
“Questions have been raised as to whether the master can bind not only his owner by issuing bills of lading, or whether he also can bind a contracting carrier [Norwegian: kontraherende bortfrakter] who is not the owner of the vessel [Norwegian: reder]. The latter understanding is the correct one, according to the view of the Department of Justice, and this should also follow from the wording of the section [Section 95 in MC 1893], cf. ‘ … the master or the one the owner [Norwegian: bortfrakteren] o t h e r w i s e authorizes … ‘. “
In other words: the master’s signature on the bill of lading does not necessarily bind his employer; the above preparatory notes suggest that MC 1893 Section 95 ordinarily has the effect of making the contracting carrier bound by the master’s signature. The owner of the vessel could be liable as the actual carrier, according to rules that at that time were not as developed as in today’s Section 286.(2) See Ot.prp. no. 28 (1972‑73) p. 13, cf. NOU 1972: 11 pp. 18‑20.
The statement quoted above was followed up and reinforced in NOU 1993: 36 p. 45 in the commentaries to today’s Section 295 on the master’s bills of lading.
By contrast, in the rules dealing specifically with voyage and time charters, the old regime has been maintained (Sections 338 and 382) – without any indication on how the dividing line between “carriage of general cargo” and “chartering of ships” should be drawn(3) Se NOU 1993: 36 p. 19 and p. 57. regarding our bill of lading problem.
In short: When the line uses chartered tonnage: “Chartering of ship” may be a condition for “carriage of general cargo”, and the bill of lading belongs to the “grey area” between the two regimes.
As between owner and charterer, there is in principle no problem; there is freedom of contract, and the parties may – with varying degrees of clarity – agree that the owner will or will not issue bills of lading which will be binding on him. A typical example of the first is the traditional clause stating that the master shall “sign bills of lading as presented”.
The real problem is the expectations on the cargo side. Sender A has a contract with line B. This contract may be crystal clear: B has the right to use chartered tonnage, and it is stated in the contract that in such a case the cargo liability is the chartered owner’s and his alone. It has not been argued that such an arrangement is contrary to the Hague-Visby Rules.(4) This may be formulated in this way: in real terms, the line has acted on behalf of the actual carrier (the owner of the chartered vessel) and created a contractual link between the cargo and the actual carrier. Accordingly, it might be said that the real issue is the necessity for a clear agreement, and that the starting point is that question marks over construction works against the carrier (the line). Here the legislators have made a contribution in respect of one typical situation: the master’s signature is “regarded” as binding the line (Section 295). However, this doesn’t provide us with any reasonable explanation for Sections 338 and 382. Take the Lysaker case: if we start with Section 295 the line is bound, but if we start with Section 382 the owner of the vessel is bound. It might, however, be argued that the master is not mentioned in Section 382, i.e., the line is bound when the master signs (without qualifications). An argument along such lines is not convincing: Section 338 mentions the master, and above all, Section 295 is a confirmation of what follows from Section 294 on the liability of the line.(5) One possible, but not very tempting, “escape route” is to accept that there are two regimes: one for liner trade (including the situation that chartered tonnage is used) and one for the remainder. The obvious question, difficult to answer, is: how can one decide which of Chapter 13 or Chapter 14 is applicable?