The Third Parties Protection in Carriage of Goods by Sea

Abstract

The Himalaya clause is a contractual device developed under common law to protect third parties employed by the carriers by extending benefits under the bill of lading to them. Since the invention of the clause, disputes have arisen in terms of their scope,interpretation and validity. These disputes largely impaired the efficiency of the clause.Although the Contracts (Rights of Third Parties) Act 1999 (the “1999 Act”) reforms the common law doctrine of privity of contract, the Act has always been regarded as inapplicable to the enforcement of terms other than the exclusion or limitation of liability clauses under the bill of lading by those third parties. Therefore, the Act does not appear to resolve all the difficulties left by the common law Himalaya clause approach.In response to the difficulties with the application of the Himalaya clauses, a new Himalaya clause revised by the International Group of P & I Clubs and BIMCO was incorporated into BIMCO’s 2016 standard form of bills of lading, replacing the Himalaya clauses used in previous versions. Although the new clause was thought to have been widely used in bills of lading, charter parties and other marine contracts, the whole clause has not been fully incorporated into any shipping companies’ own term sof carriage. Furthermore, the changes made by this new clause and the difficulties resolved by these modifications have not been examined. The aim of this thesis is to evaluate the effectiveness of the new clause under English law from the perspective of both the common law Himalaya clause approach and the 1999 Act and to suggest whether the shipping companies should adopt it or not.This thesis starts with the identification of difficulties regarding the satisfaction of requirements set out under the common law Himalaya clause approach. It then focuses on the conditions for a third party to enforce a term under the 1999 Act. More importantly, it will discuss whether the Act applies to other terms under the bill of lading, beyond just its exclusions and limitations. Subsequently, the thesis specifically discusses how the new clause makes sure that third parties could enforce the promise not to sue clause, arbitration clause and exclusive jurisdiction clause by virtue of both the 1999 Act and the common law Himalaya clause approach. Should the new clause fail in the end, the principle of sub-bailment on terms as an alternative approach will be discussed.

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