Eppeal Cases

BEFORE

T H E H O U S E OF LOKDS
(ENGLISH—IRISH—AND SCOTTISH)
AND

THE JUDICIAL COMMITTEE

OF

HIS M A J E S T Y ' S MOST HONOURABLE

PRIVY COUNCIL.

' [HOUSE OF LORDS.]

T. W. THOMAS & CO., LIMITED . . . . APPELLANTS; H. L. CE.)

AND 1911

POETSEA STEAMSHIP COMPANY, LIMITED EESPONDENTS. ^ZU.

Admiralty—Ship—Bill of Lading—Incorporation of Conditions of Charter
Party—Arbitration Clause.
A bill of lading provided that the goods shipped thereunder should be
delivered to the shipper or to his assigns, " he or they paying freight
for the said goods, with other conditions as per charter party," and in
the margin was written, in ink, " Deck load at shipper's risk, and all
other terms and conditions and exceptions of charter to be as per
charter party, including negligence clause." The charter party pro­
vided that " Any dispute or claim arising out of any of the conditions of
this charter shall be adjusted at port where it occurs, and same shall be
settled by arbitration " : —
Held, that the' arbitration clause was not incorporated in the bill of
lading.
Hamilton & Co., v. Mackie & Sons (1889) 5 Times L. R. 677, followed.
Decision of the Court of Appeal [1911] P. 54, affirmed.

APPEAL from a decision of the Court of Appeal in England. (1)

The appellants were timber merchants of Swansea; the
respondents were shipowners of Cardiff and were the owners
of the steamship Portsmouth.
(l) [1911] P. 54.
A. C. 1913. 3 B
2 HOUSE OP LOEDS [1912]

H. L. (E.) By a charter party dated January 14, 1909, and signed by the
19H respective agents of the parties at Liverpool, it was mutually
T.W/THOMAS agreed between the respondents, owners of the steamship Ports-
& Co., mouth, and certain charterers that the said steamship should pro-
«. ceed to certain ports therein named and load a full and complete
STEAMSHIP cargo of timber and proceed therewith to such port on the west
coas
L°M!TED' * °* Gimt Britain as ordered on signing bills of lading. The
charter party contained a cesser clause in the following terms : —
"All responsibility whatsoever of the charterer hereunder
ceases as soon as the cargo is alongside, the vessel holding a lien
upon the cargo for freight and demurrage." It also provided,
inter alia, for the discharge of the cargo by the steamer at the
port of destination, in the usual manner with customary steamer
despatch, according to the custom of the port, " but if through
any fault of the merchant or charterer the steamer is longer
detained, demurrage to be paid at the rate of twenty-five pounds
per day," and it contained the following arbitration c l a u s e : —
" Any dispute or claim arising out of any of the conditions of this
charter party shall be adjusted at port where it occurs, and same
shall be settled by arbitration."
Under this charter party a cargo of timber was carried from
Parrsboro Boads, N.S., to Swansea. The appellants were the con­
signees of the cargo and the holders of the bill of lading relating
thereto. By the bill of lading the goods were to be delivered
to the shipper, W. Malcolm Mackay, or to his assigns, " he or
they paying freight for the said goods, with other conditions as
per charter party with average accustomed." There was also a
marginal clause in writing as follows: " Deck load at shipper's
risk, and all other terms and conditions and exceptions of charter
to be as per charter party, including negligence clause."
The question raised by this appeal was whether the arbitration
clause in the charter party was incorporated by reference in the
bill of lading.
In April, 1910, the respondents commenced an action against
the appellants in the Cardiff County Court for 200?., eight days'
demurrage at the port of discharge. The appellants applied
that all proceedings in the action should be stayed under s. 4 of
the Arbitration Act, 1889. The county court judge granted a
A. C. AND PEIVY COUNCIL. • 3

stay, and his order was affirmed by the Divisional Court (the H.L. (E.)
President and Bargrave Deane J.). (1) The Court of Appeal, 1911
following Hamilton & Co. v. Mackie & Sons (2), held that the T.W^THOMAS
arbitration clause did not apply to a dispute between the ship- & Co.,
. . . LIMITED
owner and the holder of the bill of lading and set aside the orders r.
of the Divisional Court and the county court. STEAMSHIP
COMPANY,
LIMITED.
June 15, 16. Leslie Scott, K.C., and Holman Gregory, K.C., for
the appellants. The question is whether upon the construction of
the charter party and the bill of lading the arbitration clause in the
charter party is incorporated in the bill of lading, and, conse­
quently, whether the claim of the shipowner against the bill of
lading holder for demurrage at the port of discharge should be
referred to arbitration. The1 words in the marginal clause in the
bill of lading are sufficiently wide and explicit for this purpose, and
those words were inserted in writing in the margin to exclude the
operation of the cases which, on the principle of ejusdem generis,
have limited the effect of the incorporation arising from the use
of similar words in the body of the bill of lading following a provi­
sion for payment of freight. The cesser clause has a material
bearing on this question. This is one of those charter parties
in which the liability of the charterer ceases as soon as he has
provided a cargo; it was not contemplated that the charterer
would have any interest at all in the group of clauses relating to
the discharge of the cargo, but the intention was that the charter
party should control the bill of lading holder; and the marginal
addition in the bill of lading was inserted for the protection of
the shipowner. But then it was said on behalf of the shipowner
— a n d this argument prevailed in the Court of Appeal—that
because the arbitration clause was in the charter party it was
only binding on the parties there mentioned, and that inasmuch
as the parties to the bill of lading were not identical this clause
was not incorporated. Weir & Co. v. Pirie dt Co. (8) affords a
complete answer to that argument and shews that when the
clause is incorporated in the bill of lading it applies to disputes
between the shipowner and the bill of lading holder. Putting
(1) [1910] P. 293. (2) 5 Times L. E. 677.
(3) (1898) 3 Com. Cas. 263.
3 B2
4 HOUSE OP LOEDS [1912]

H. L. (E.) aside the doctrine of ejusdem generis, the rule is that under
ion general words of incorporation all such terms and conditions are
T. w. THOMAS incorporated as are not inconsistent with the document in which
& Co., fcjjgy a r e j 0 b e incorporated and are not insensible as applied
v. thereto. Hamilton & Co. v. Mackie d Sons (1) was thought by
STEAMSHIP the Court of Appeal to be binding upon them, but, so far as
a ears
LIMITED' PP > there was not in that case any cesser clause such as
is to be found here, and the case is distinguishable on that ground.
[They also referred to East Yorkshire Steamship Co. v. Hancock (2)
and Gullischen v. Steivart Brothers. (3)]
Bailhache, K.C., and Albert Parsons, for the respondents.
Although the words in the bill of lading are in themselves wide
enough to cover the arbitration clause, upon the authorities they
have not that effect. It would He dangerous to hold that a
general reference in a bill of lading to the charter party incor­
porates the whole of the charter party, because a great deal of
money passes on bills of lading, which are negotiable instru­
ments, and the purchaser of a bill of lading never sees the
charter party. Accordingly the Courts have taken care not to
put upon the purchaser of a bill of lading peculiar, clauses in the
charter party which he has had no opportunity of seeing. By
general words of incorporation only those clauses are incorporated
which relate to the carriage and delivery of the goods, including
the duty of the bill of lading holder to take delivery and the
terms upon which he is entitled to demand delivery : Manchester
Trust v. Furness (4) and the authorities there cited. The key to
these cases is to be found by remembering what is the office and
function of bills of lading and the manner in which they pass
from hand to hand: Gullischen v. Steivart Brothers. (3) In
determining what passes under a general clause of this kind
the bill of lading is the primary document to be looked at,
and the question of the scope of the cesser clause is not relevant
to that question. Hamilton d Co. v. Mackie & Sons (1) was
rightly decided and governs this case. There was there no
essential difference in the terms of incorporation, and it has been
treated by text-writers as an authority for the proposition that
(1) 5 Times L. K. 677. (3) (1884) 13 Q. B. D. 317.
(2) (1900) 5 Com. Cas. 266. (4) [1895] 2 Q. B. 539.
A. C. ANJD PBIVY COUNCIL. 5

under a general reference in the bill of lading to the charter party H. L, (E.)
the arbitration clause will not be incorporated: Scrutton on 1911
Charter Parties and Bills of Lading, 6th. ed. p. 52. T.W."THOMAS
Further, the fact that the parties are different in the two L * M ^ D
documents and the language of this arbitration clause shew that «•
POHTSEA.

it is not applicable to disputes between the shipowner and the bill STEAMSHIP
of lading holder. LIMITED.'
Leslie Scott, K.C., in reply. The fallacy of the respondents'
argument lies in the fact that the authorities relied on in
support of it relate to the usual form of words " paying freight
and all other conditions as per charter." Those cases do not
touch this marginal clause, which must have been inserted for a
different purpose, namely, for the purpose of getting over the
rule of ejusdem generis. If the words of incorporation appeared
in the body of the bill of lading apart from any connection with
payment of freight, that would be sufficient to exclude the
ejusdem generis doctrine, but the case is stronger where a
marginal clause is added in writing. It is a mere question of
construction in each case : Russell v. Niemann (1), quoted by
Lord Esher in Serraino dt Sons v. Campbell (2); Larsen v. Sylvester
d Co. (3) [He also referred to Restitution Steamship Co. v.
Sir John Pirie dt Co. (4) and Glynn v. Margetson. (5)]
June 16. LORD LOREBURN L.C. My Lords, the question in this
case seems to me to be whether an arbitration clause found in the
charter party is applicable to the contract evidenced by the bill
of lading, and to disputes arising between the shipowners and
the holders of the bill of lading under that document.
The bill of lading itself is the primary document to be con­
sidered. It acknowledges the shipment of the goods in the
usual way and the terms upon which the goods are to be
delivered. There are two paragraphs in it which refer to the
charter party: One of them is in the body of the bill of lading
and provides for the goods to be delivered to " William Malcolm
Mackay or to his assigns, he or they paying freight for the said

(1) (1864) 17 C. B. (N.S.) 163, at (3) [1908] A. C. 295.

p. 177. (4) (1889) 7 Asp. M. L. C. 11, n.
(2) [1891] 1 Q. B. 283. (5) [1893] A. C. 351.
6 HOUSE OF LORDS [1912]

H. L. (E.) goods, with other conditions as per charter party with average
1911 accustomed." Now it is well settled that under words of that
T w THOMAS kind ^ c o u ^ n 0 * be said that the arbitration clause in the
& Co., charter party is incorporated or made applicable.
r. Then there is another paragraph in the bill of lading relating
STEAMSHIP t° the charter party. It is as follows : " Deck load at shipper's
anc
'LIMITED' ™ k ' * a ' l other terms and conditions and exceptions of
charter to be as per charter party, including negligence clause."
r
Lord Loreburn v J> e> b o
LC
- I do not think that this paragraph brings into the bill of
lading the arbitration clause any more than the other. The
arbitration clause is not one that governs shipment or carriage
or delivery or the terms upon which delivery is to be made or
taken; it only governs the way of settling disputes between
the parties to the charter party and disputes arising out of
the conditions of the charter party, not disputes arising out of
the bill of lading.
I am of opinion that the Court of Appeal rightly relied upon
the decision in Hamilton d Co. v. Mackie & Sons (1), and that, if it
is desired to put upon the holders of a bill of lading an obligation
to arbitrate because that obligation is stated in the charter party,
it must be done explicitly.
LOBD ATKINSON. My Lords, I concur in the judgment of my
noble and learned friend on the woolsack.
I think it would be a sound rule of construction to adopt that
when it is sought to introduce into a document like a bill of
lading—a negotiable instrument—a clause such as this arbitra­
tion clause, not germane to the receipt, carriage, or delivery of
the cargo or the payment of freight,—the proper subject-matters
with which the bill of lading is conversant,—this should be done
by distinct and specific words, and not by such general words
as those written in the margin of the bill of lading in this case.
I concur in regard to the other point mentioned by my noble
and learned friend.

LOED GORBLL. My Lords, I concur in the judgment which

has been pronounced by my noble and learned friend on the
(1) 5 Times L. E. 677.
A. C. AND PfiIVY COUNCIL. 7

woolsack, but I should like to say a few words about this case H. L. (E.)
because it is one of a class of cases that constantly occur, and 1911
these questions as between consignees and shipowners are of T.W/THOMAS
very great commercial importance. LIMITED
The charter party in this case was made between certain ship- «.
POUTSEA
owners and certain charterers for the loading of a large cargo of STEAMSHIP
wood goods (I am taking it quite shortly) at, I think, the port of L°"rriro'
Halifax, or some other port, for a port in this country; there Loi.J^'reU
was a clause for cesser of liability, and there were provisions as
to freight and the time for loading and the time for discharge ;
and there was also an arbitration clause in these terms: " Any
dispute or claim arising out of any of the conditions of this
charter party shall be adjusted at port where it occurs, and same
shall be settled by arbitration."
My Lords, under that charter party a cargo was provided, but
it was not shipped by the charterers; it appears to have been
shipped by a certain Mr. W. Malcolm Mackay, with whom no
doubt the charterers had arranged for a cargo. The whole cargo
appears to have been dealt with in one bill of lading, which,
after providing for usual exceptions, winds up by saying that the
cargo is to be delivered " unto W. Malcolm Mackay or to his
assigns, he or they paying freight for the said goods, with other
conditions as per charter party with average accustomed." The
bill of lading also has a marginal clause written in ink : " Deck
load at shipper's risk, and all other terms and conditions and
exceptions of charter to be as per charter party, including
negligence clause."
I think it has hardly been seriously argued that the clause as
to " paying freight with other conditions as per charter party " in
the body of the bill of lading would incorporate the arbitration
clause in this case. There is ample authority against any such
view, and I pass from that point. But it is said that the special
clause in the margin has in fact had the effect of bringing into
the bill of lading the arbitration clause which is to be found in
the charter party.
To my mind the question is one of construction, and when one
turns to the marginal clause in question I have very serious doubt
whether it carries the question one bit further than the clause
8 HOUSE OF LOBDS [1912

H. L. (K.) which is found in the body of the bill of lading, except, of course,
1911 so far as it brings in the exceptions in the charter party, and
T.W/THOMAS those exceptions are to include the negligence clause; because it
& Co., adds, in words, nothing more than that all other terms and condi-
LlMITED _ °
v-tions are to be those of the charter party, to the words in the
STEAMSHIP body "with other conditions as per charter party."
LIMITED ' ^ o w ®*e c a s e °* Hamttton <& Go. v. Mackie & Sons (1) has already
T decided that the words " all other terms and conditions as per
A
Lord Gorell. _
charter party " have not the effect of bringing the arbitration clause
into the bill of lading. We have not had a full report of that
case so as to enable us to judge whether there was a cesser clause
in that case or not; but I cannot help thinking myself, having
regard to the date of the decision and the fact that there was a
full cargo, as I understand the report, that it is extremely pro­
bable that there was in that case a cesser clause, which had become
quite common at the date when that decision was given ; and the
conclusion to which I come is that that case was rightly decided
and that it governs the present case. But, whether it does so or
not, it seems to me that the marginal clause does not contain
words in it which incorporate the arbitration clause in the present
case. I think the true view to take of such a clause is that the
" terms and conditions " do not really include more than refers
to those matters which have to be dealt with by both the ship­
owner and the consignee in relation to the carriage, discharge, and
delivery of the cargo. To what extent they include what refers
to those matters I do not pause to consider, but I do not see that
they expressly in any way deal with the arbitration clause; and,
of course, it is sufficient for present purposes to say that they do
not; but my view is that what they deal with is no more than
what I have already stated.
That being so, if one considers this case a little more broadly, the
shipper is not likely, I think, to have been desirous of consenting to
an arbitration clause which places upon him possibly the obliga­
tion of deciding by arbitration at any port where a dispute
occurs a question on which there is any dispute. Certainly
no consignee would ever naturally be likely to assent to such
a proposition, because he might find himself landed in the
(1) 5 Times L. E. 677.
A. C. AND PRIVY COUNCIL. 9

difficulty of having to go to arbitration at a port of shipment H. L. (E.)

with which he had no further connection than the mercantile 1911
one of correspondence. T.w.THOMAS
It therefore seems to me, when one looks at the matter L * M ^ D
broadly, that the true construction to place upon this clause is ■»•
P O R T S is* A

what I have already suggested; and that the point may be STEAMSHIP
made still plainer by trying to see what would be the effect L ^ M I T ^ '
produced if this clause of arbitration were actually written into T — - „
r J
Lord Govell.
the bill of lading. If it were written in, it would at once be
seen that it is not a clause which in its terms is consistent
with the bill of lading — it is consistent with disputes
arising under a charter party; and that again leads to the
conclusion that it was never intended to be inserted as part of
a bill of lading which was to pass from hand to hand as bills of
lading, being negotiable instruments, usually do.
But there is a wide consideration which I think it is important
to bear in mind in dealing with this class of case. The effect
of deciding to stay this action would be that the bill of lading
holder or shipowner (in this case it would be the shipowner,
but it might just as well occur where a bill of lading holder is
concerned who does not wish for an arbitration,)—that either
party is ousted from the jurisdiction of the Courts and compelled
to decide all questions by means of arbitration. Now I think,
broadly speaking, that very clear language should be introduced
into any contract which is to have that effect, and I am by no
means prepared to say that this contract, when studied
with care, was ever intended to exclude, or does carry
out any intention of excluding, the jurisdiction of the Courts
in cases between the shipowner and the bill of lading holder. It
seems to me that the clause of arbitration ought properly to be
confined, as drawn, to disputes arising between the shipowner ■
and the charterer; and therefore I concur in the motion which
my noble and learned friend on the woolsack has made, that this
appeal should be dismissed.
LOKD EOBSON. My Lords, the question here is whether the
appellants, who are consignees of the goods, can compel the ship­
owners to submit to arbitration on a claim for demurrage instead
10 HOUSE OF LOEDS [1912]
H. L. (E.) of bringing an action. For this purpose they must shew that
1911 the bill of lading constituting the contract between the ship-
o w n e r s an
T w "THOMAS d themselves contains a clear stipulation to that effect.
& Co.. There is an arbitration clause in the charter applicable to " any
LIMITED . .
•». dispute or claim arising out of the conditions of this charter
ar
STEAMSHIP P ty," and providing that it " shall be adjusted at the port
LIMITED" where it occurs and settled by arbitration." The appellants
contend that this clause is incorporated in the bill of lading by
r J
LordRobson. °
— reference.
There ai*e two references in the bill of lading which purport
to incorporate all or some of the terms of the charter. With
regard to the clause in the body of the document which expresses
the obligation of the shipowner to deliver the goods to the
consignee, " he or they paying freight, with other conditions
as per charter," very little need be said. These words have
been the subject of a series of decisions which establish that
such a reference does not incorporate every clause or term of
the charter, but only those terms which are ejusdem generis
with that for the payment of freight.
There is written, however, in the margin of this bill of
lading a clause which deals with the incorporation of the pro­
visions of the charter in somewhat wider terms. It says
" Deck load at shipper's risk, and all other terms and conditions
and exceptions of the charter are to be as per charter party,
including negligence clause." In these words we have no
specific reference to the payment of freight so as to import a
limitation on their generality, but I do not think they differ
in effect from the clause in the body of the bill of lading so far
as the question in the present case is concerned. Both clauses
are subject to the rule that the terms of the charter party when
incorporated or written into the bill of lading shall not be
insensible or inapplicable to the document in which they are
inserted, and it is not absolutely clear that, when thus tested,
this arbitration clause is applicable to a dispute between persons
other than the parties to the charter. It expressly relates only
to disputes " arising out of the conditions of this charter party "
and would stand in the bill of lading with that limitation. In
one sense it is perhaps difficult to imagine any dispute relating
A. C. AND PRIVY COUNCIL. 11

to the chartered voyage which might not be said to arise out of H. L. (E.)
the conditions of the charter, but we are here dealing with 1911
obligations founded primarily on the bill of lading, which is a T W ^ 0 l l A S
different contract and is made between different parties, though T & C o '
it relates in part to the same subject-matter as the charter. The v.
limitation of the clause to the conditions of " this charter party " STEAMSHIP
is therefore, to say the least, embarrassing and ambiguous when DIMMED'
it comes to be written into the bill of lading. It requires, indeed,
some modification to make it read even intelligibly in its new
connection.
It is to be remembered that the bill of lading is a negotiable
instrument, and if the obligations of those who are parties to
such a contract are to be enlarged beyond the matters which
ordinarily concern them, or if it is sought to deprive either party
of his ordinary legal remedies, the contract cannot be too
explicit and precise. I t is difficult to hold that words which
require modification to read as part of the bill of lading and
then purport to deal only with disputes arising under a document
made between different persons are quite sufficiently explicit for
the appellants' purpose.
On the whole, therefore, I think their contention fails.

Order of the Court of Appeal affirmed and appeal

dismissed with costs.

Lords' Journals, June 16, 1911.

Solicitors for appellants : Botterell & Roche, for J. D.

Rawlings, Sivansea.
Solicitors for respondents: Doivning, Handcock, Middleton &
Lewis, for Downing & Handcock, Cardiff.