Cargo claims under Cyprus law

The Supreme Court of Cyprus, in its admiralty jurisdiction, is vested with the jurisdiction to hear and determine questions or claims, inter alia, for loss of or damage to goods carried in a ship or arising out of any agreement relating to the carriage of goods in a ship.

Cyprus has not ratified the Hamburg Rules. The operation of cargo claims in Cyprus is very much based on the old law and practice that applies in England and the common law or equity principles. In particular, the Carriage of Goods by Sea Law, Chapter 263, which essentially adopts the Hague-Visby Rules, applies only in relation to carriage of goods by sea from a port in Cyprus to any other domestic or foreign port. Also, the Bills of Lading Act 1855 and relevant sections in the UK Merchant Shipping Act of 1894 (both of which apply in the legal system of Cyprus pursuant to Section 29(e) of Law No. 14/1960) may intervene in cargo claims to clarify the legal position and possible liability of owners, carriers, shippers and agents. In addition, Cyprus ratified the Convention on Limitation of Liability for Maritime Claims 1976 (the LLMC Convention 1976) in 2006.

According to Rule 29 of the Rules of the Supreme Court in its admiralty jurisdiction (RSC), stated in the Schedule of the Cyprus Admiralty Jurisdiction Order 1893, any number of persons with interests of the same nature arising out of the same matter may be joined in the same action, whether as plaintiffs or defendants, while Rule 31, which was providently inserted in the Rules, makes it clear that an underwriter or insurer shall be deemed to be a person interested in the action.

In terms of the procedurally recognised right of the underwriter or insurer to be joined in an admiralty action as interested party, the principle enunciated in one of the important admiralty judgments given by the Supreme Court in plenary session highlights matters relating to insurers and underwriters when issuing ‘subrogation receipts’. The Court stressed that subrogation does not, by itself, give rise to a right of insurers or underwriters to bring an action to pursue the subrogated claim in their name but the action should be brought in the name of the assured, unless the claim has been clearly assigned to the insurer or underwriter. In any event, the Supreme Court stressed in a number of judgments that it is desirable that the names of both the insurer and the assured are joined in the action.

Sometimes, contracts for the carriage of goods by sea may pose uncertainty on the locus standi of an innocent party, being a shipper, consignee, endorsee of the bill of lading or other, to initiate an action to the Admiralty Court. In one of its judgments, the Supreme Court shed light on the importance and meaning of the bill of lading. Effectively, it adopted the principles articulated in common law cases and English case law, namely that the bill of lading is issued to the order of the person to whom the goods are destined and serves three purposes: (1) it is evidence that the cargo has been laden on board the ship, (2) it constitutes or may constitute evidence for the contract of carriage and (3) it also constitutes prima facie title of the goods. Nonetheless, the Supreme Court highlighted that whether the bill of lading contains the entirety of the terms and conditions of the carriage agreement is clearly a matter of the circumstances and the factual background embracing the dispute. The intentions of the parties as to the time and manner of passing the property of the goods, as reflected in the contract of carriage, is of decisive importance on the right of the consignee or end receiver of the goods to sue anyone who is responsible in terms of damage to or loss of the ordered goods.

When it comes to the possible liability of forwarding agents that undertake to transport goods from one destination to another on behalf of their clients, the Supreme Court reiterated that the contents of the bill of lading are not conclusive evidence but only an indication of the legal position of each party in the transaction for the carriage of goods. If a forwarding agent is engaged by the client to arrange the transportation of the goods to the destination that the client determines without expressly agreeing to do so only as agent of the client and, on the contrary, it essentially assumes the responsibility to ensure the safe transportation of the goods to the destination that the client will specify, the forwarding agent may be found liable against the client for the loss or damage that the goods may suffer during their delivery to the client.

If an owner, charterer, carrier, forwarding agent or other is found liable for breach of the contract of carriage due to its failure to safely deliver the goods to the prescribed destination and as a result the goods sustained loss or damage, the receiver or owner of the goods will be awarded compensation for the loss or damage suffered and that naturally arose in the usual course of things from such breach or that the parties knew, when the contract was made, to be the likely result from the breach of it. Such compensation shall not be awarded for any remote and indirect loss or damage sustained by reason of the breach. This emanates from the Contract Law, Chapter 149, which reflects the principles of common law and, likewise, the Tort Law, Chapter 148, which includes similar provisions for the award of compensation for negligent or tortious acts. The Admiralty Court has, in some instances, awarded compensation for consequential pecuniary loss in the form of loss of profits where the circumstances of the case so justified.

In relation to demise clauses, even though the Supreme Court (at first instance as Admiralty Court or in its jurisdiction as appellate court) has not specifically interpreted or examined the effect of such a clause in a charter party, if such a question would be brought before it for adjudication, the Supreme Court would, in all likelihood, follow the case law developed in England since The Berkshire case; in other words, the validity of the demise clause will be recognised.