RAQUEL S: ‘”well-drafted” Himalaya Clause Reinforces Sub-Contractors’ Rights

In Maersk Guinea-Bissau and Maersk A/S v Almar-Hum [2024] EWHC 993 (Comm) the Court held that a well-drafted Himalaya clause could give the sub-contractor a positive right to claim damages against a bill of lading shipper. In breach of that clause, the shipper had commenced proceedings and obtained judgment against the sub-contractor in a jurisdiction other than that specified in the exclusive jurisdiction clause in the bill of lading and, by incorporation, the contracts of carriage.

Factual Background:

The dispute arose in relation to contracts of carriage for the shipment of containerised cargo of timber from Guinea-Bissau to Huangpu between the Second Claimant ("Maersk A/S") and the Defendant ("Almar-Hum"). The contracts were made in December 2018 through Maersk A/S online booking system and -eventually- evidenced by 13 bills of lading which were issued, on behalf of Maersk A/S, by the First Claimant, Maersk Guinea-Bissau ("Maersk GB").

The bills of lading were not finalised before the cargo’s arrival in Huangpu due to Almar-Hum’s failure to send final approval instructions to Maersk A/S, in line with Maersk A/S booking procedures. Maersk GB was ordered to issue and hand over the bills of lading to a Guinea-Bissau court due to debts of Almar-Hum owed to various authorities of Guinea-Bissau. The authorities retained the bills of lading until a third party discharged Almar-Hum’s debt in exchange for the bills of lading being released to allow the consignees to take delivery of the cargo.

A series of legal proceedings were initiated by Almar-Hum against Maersk GB (but not Maersk A/S), among others, before the courts of Guinea-Bissau which resulted in a series of injunctions and other orders against Maersk GB, including orders for seizure of its bank accounts and physical assets and a judgment in the sum of USD 10,151,000.

The Claimants commenced English court proceedings seeking damages or an indemnity to be assessed on the basis that the proceeding initiated by Alma-Hum in Guinea-Bissau were in breach of an exclusive jurisdiction clause (or "EJC") in favour of the English courts, and a "Himalaya" clause which formed part of Maersk A/S's standard terms and conditions, and which were incorporated into the contracts of carriage. In addition, the Claimants also sought declarations that they had no liability to Almar-Hum in respect of those contracts of carriage and the disputes which have arisen in relation to them.

The Claimants succeeded on all issues.

Legal Issues:

The principal issues considered here were:

1. whether Maersk A/S’s standard terms and conditions were incorporated into the contracts of carriage between Maersk A/S and Almar-Hum;
2. whether both Claimants were entitled to judgment on liability (with damages to be assessed later) for breach of the exclusive jurisdiction clause and the Himalaya clause;
3. whether the Guinea-Bissau judgment gave rise to res judicata estoppel; and
4. whether the Claimants were entitled to a declaration of non-liability.

This article discusses issues (1) and (2).

Incorporation of Maersk A/S’s standard terms and conditions

Almar- Hum’s position was that there was no incorporation because the bills of lading were provided after the contracts of carriage were concluded. However: 

1. Maersk A/S had gone beyond simply giving notice of its standard bill of lading terms which Almar-Hum had accepted by ticking boxes during the online booking process (Ebury Partners Belgium SA/NV v Technical Touch BV [2022] EWHC 2027 (Comm) applied).
2. Draft bills of lading had been supplied in advance, containing the same terms, so that the bills of lading were on the Maersk standard terms.
3. Almar-Hum’s argument that Maersk A/S's standard terms were onerous or unusual in their entirety, requiring specific attention, was “bold and unsustainable”².
4. Likewise, the Himalaya clause and the exclusive jurisdiction clause were far from unusual and were not onerous to a shipper in the business of international trade. In fact, Jacobs J. commented that any well-drafted bill of lading will include such clauses.

For the above reasons, Jacobs J determined that the contracts of carriage were on the Maersk standard terms (i.e., the standard bill of lading terms of Maersk A/S). As such, the Himalaya clause and the exclusive jurisdiction clause were incorporated into the contracts of carriage. In addition, under those standard terms, the carrier was Maersk A/S and the contracts of carriage were between Maersk A/S and Almar-Hum.

Enforcement of the Himalaya clause and the EJC by Maersk AB

Since Maersk A/S, not Maersk GB, was the contracting party in relation to the contracts of carriage, Jacobs J. followed a different legal analysis in relation to the question of enforcement by Maersk GB of the Himalaya clause and the EJC commenting that Maersk GB's claim to enforce the Himalaya clause is based upon both (i) the common law concerning the enforcement of such clauses, and (ii) the Contracts (Rights of Third Parties) Act 1999 whilst its claim in relation to the EJC is based only upon the former.

The Himalaya Clause³:

“A Himalaya clause in a contract of carriage is designed to create contractual relations between the shipper and any third parties whom the carrier may employ to discharge its obligations”⁴ and purports to provide such third parties with the same protection afforded to the carrier by the contract of carriage. Traditionally, the term “third parties” included servants, agents and subcontractors of a carrier but Members will recall that in 2014 a revised BIMCO Himalaya clause wording was produced extending the protection afforded under the clause to managers as well⁵.  

Jacobs J. referred Scrutton on Charterparties and Bills of Lading 25th edition for a summary of the nature and effect of Himalaya clauses and the mechanism by which the clause provides “the genesis of a potential contract by”: 

1. evidencing an intention to extend the relevant defences;
2. expressing an agency of the carrier to contract on behalf of the third party, in addition to contracting on its own behalf in respect of the main contract; and 
3. that the contract is perfected by the existence of authority, if necessary, created retrospectively by ratification by the third party and;
4. the provision of consideration by the third party, normally through the performance by the third party of its contractual obligations owed to the carrier.

Applied to the present case, the Jacobs J was satisfied that all four requirements were fulfilled and as such, Maersk GB could enforce the terms of the Himalaya clause.

The exclusive jurisdiction clause:

Maersk GB contended that it could also enforce the EJC at common law.

In The Mahkutai [1996] AC 650 it was held that rights of enforcement under a Himalaya clause do not extend to the enforcement of EJCs. However, The Mahkutai is distinguishable because the wording of the relevant clause in that case was much narrower and contained no reference to the relevant exclusive jurisdiction clause.

In contrast Maersk’s clause provided the subcontractor with "every right, exemption from liability, defence and immunity of whatsoever nature applicable to the Carrier or to which the Carrier is entitled hereunder including the right to enforce any jurisdiction provision contained herein (clause 26)"

Accordingly, the effect of a Himalaya clause is ultimately a matter of contractual analysis and whether a separate or collateral contract with the third party is created. In that respect, enforcement of the Himalaya clause is not necessarily confined to its use as a defence but could extend to a claim for damages based on breach of the clause.

Comment:

The decision indicates, inter alia, that a Himalaya clause should expressly refer to an exclusive jurisdiction clause if it is intended that a third party should be able to rely on it, and that there can be repercussions for a party acting in breach of the clause. 

 1 MAERSK GUINÉ-BISSAU SARL AND ANOTHER V ALMAR-HUM BUBACAR BALDÉ SARL, [2024] EWHC 993 (Comm)
 2 Ibid
 3 The nature of Himalaya clause has been previously discussed in the context of Whitesea Shipping v. El Paso Himalaya Clauses - are Third Parties Hague Rules Carriers? 
 4 Lord Hoffmann in Homburg Houtimport BV and others v Agrosin Private Ltd and others, The Starsin [2003] UKHL 12
 5 L.241-Revised Himalaya Clause for bills of lading and other contracts. new