Link issue12 Final One - SCLG

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Insurance
Timeliness of filing a claim
The rule of prescription is like the
sword of Damocles hanging over the
head of every lawyer. In any dispute,
one of the first things that lawyers must
do when handling claims or disputes is
to check whether there is still time to
pursue the matter otherwise they run
the risk of the sword falling on their
head. But finding out whether a claim
or dispute is time-barred is not
always easy.
Prescription is the statutory
limitation of time beyond which an
action, debt or crime is no longer valid
or enforceable, in other words, it is the
state whereby the cause to file or
pursue an action is already timebarred.
As used in this article, the term
prescription and time limit are used
interchangeably.
In all jurisdictions throughout the
shipping world, the first question to ask
is what is the national law that has to
be applied in order to decide issues on
prescription or time limit. If a claim
arises under a bill of lading or charter
party which contains a clause on the
choice of law, the situation is simple.
For example, if the clause says that,
“All disputes arising out of or in
connection with this contract shall be
governed by the law of France,” then
everyone knows where to ask. But if
the contract is silent, the lawyer needs
to determine first which court to go in
case the dispute cannot be settled
amicably.
As far as the Hague-Visby Rules are
concerned, the problem arises on the
fact that different jurisdictions have
different rule on prescription. As an
example, if a charterer lodges a claim
against a shipowner because the owner
fails to properly describe the vessel or
did not deliver the vessel to the
charterer as provided for in the charter
party, the general time limit for such a
claim under Dutch, French or German
law is one year. However, in England, it
is six years, and in Spain, the same
claim will not prescribe for fifteen
Author:
Dr. Khalid M. Kadfoor Al Mehairi
Emirates Advocates
years.
Moreover, in some countries, the
situation is different for a claim made
by a shipowner against a charterer. A
claim to pay charter hire, for example,
will prescribed or be time-barred in
Spain within six months, within one
year in France and the Netherlands,
within three years in Germany, and
within six years in England. By this
fact, the statutory time limits between
countries are far from being uniform.
Such is the case for time limits of
conventions connected to transport.
The Hague-Visby Rules apply in 24
different countries, including the UK,
France and Spain, but not in Germany
or Portugal. Germany did not ratify the
Rules, however, the provisions in its
commercial code are fully patterned in
line with the Rules. In all Hague-Visby
countries there is a one-year period
within which a cargo claim has to be
filed. The same period can be found in
COGSA (Contract of Carriage of Goods
by Sea). But this one-year period is
only applicable to claims under bills of
lading. All others, such as those in tort,
are not covered by these conventions
and have a longer time of prescription.
Period of prescription can be set not
only in statutes or conventions but also
in contracts, mostly charter parties or
bills of lading. The three-month time
limit under the Centrocon arbitration
clause is well known, but here are even
shorter ones in existence demonstrating
how different contracts can have
different requirements which again
differ from statutory provisions. Under
Article III Rule 6 of the Hague-Visby
Rules provides for one year period. But
even such a widely known and accepted
convention does not guarantee
uniformity. There are also many more
questions to be answered when applying
the rule on prescription. For instance,
when does the one year period begin?
Article III Rule 6 says the period starts to
run when the cargo is discharged or
should have been delivered. But what
does this mean?
The High Court of England rendered a
decision in June 2002 in the case of
Trafigura vs. Golden Stavraetos. Upon
arrival of the vessel at the original
contractual destination, the receiver
refused to accept delivery of the cargo
because it was damaged. The receiver
subsequently arranged with the
shipowners for the cargo to be carried
to and delivered at another port. It
could have been argued that with the
consent of both parties, they are
able to change the contract at any time
and that the second port finally became
the only port where the goods are
discharged and, therefore, the
decisive one.
But the High Court thought
differently, ruling that prescription
under Article III Rule 6 of the Hague-
Visby Rules began to run from the time
at which the cargo “should have been
delivered” at the original port of
discharge and not from the time that
discharge was completed at the second
port. The claimant’s suit was,
therefore, prescribed or time-barred
and summary judgment was entered in
favor of the defendant shipowners.
It is clear that it is not always easy to
say when the one-year period begins to
run. But this is just one of a whole host
of uncertainties where time limits are
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