Revised Himalaya Clause For Bills of Lading

The Shipowners’ Protection Limited St Clare House, 30-33 Minories London EC3N 1BP Managers of The Shipowners’ Mutual Protection and Indemnity Association (Luxembourg) BIMCO and The International Group of P&I Clubs (IG) have completed a review of the Himalaya Clause for use in Bills of Lading and other contracts and as a result have drafted a revised Himalaya clause (the Clause). A Himalaya clause is a contractual provision intended to confer a benefit on an entity that is not a party to that contract. This benefit, in a contract of carriage such as a bill of lading, is to exempt, as far as possible, the servants, agents and independent contractors employed by the contractual carrier (carrier) from liability to other party(s) to the contract, such as the shipper, consignee or holder of a bill of lading or extend the same protection from liability enjoyed by the carrier. Why is it called Himalaya?

The Himalaya clause takes its name from the English case of Adler v Dickson1. Mrs Adler was a passenger on the P&O liner ‘Himalaya’ who was seriously injured when the gangway she was walking down collapsed, throwing her to the dockside below. The passenger ticket contained a non-responsibility clause exempting P&O from liability, so Mrs Adler sued the Master of the ship, Captain Dickson, and the boatswain for compensation. The Court of Appeal held Captain Dickson liable and awarded damages to Mrs Adler. Significantly, the Court decided that it was possible for P&O to incorporate a clause excluding its employees from liability into its ticket conditions – however, it had not done so. A consequence of the ‘Himalaya’ case is that clauses in contracts of carriage (whether for passengers or cargo) developed to ensure, as far as possible, that liability attached only to the carrier – failing which, the carrier’s servants, agents and sub-contractors had the benefit of any limits, exemptions and defences enjoyed by the carrier. Claims would, generally, be brought only against the carrier and not its servants, agents and sub-contractors, (e.g. stevedores) and other independent sub-contractors (such as railroad companies.)

Key Features
Himalaya clauses are by nature rather complex and it is impossible to produce a clause that operates successfully on every occasion and in every jurisdiction. The aim of BIMCO and the IG has been to produce a clause which should be recognised and given effect to in most of the major jurisdictions, including the US and UK. To this end, advice was obtained from leading UK and US counsel during the drafting process.

1 Adler v Dickson (The Himalaya) – 1954
2 Lloyd’s Rep 267, 1955
1 QB 158 Tel: +44 (0)20 7488 0911
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Registered in England No 2067444 at the above address

The Clause is primarily intended for use in bills of lading, although with care it can be adapted for use in charter parties and other marine contracts. Parties using the Clause must take care to ensure that it achieves its purpose when incorporated into different types of contract. For instance, when used in bills of lading or other documents containing or evidencing contracts of carriage, the terms ‘Carrier’ and ‘Merchant’ will need to be defined and the definitions will need to reflect the parties’ intentions, which may vary from contract to contract. Where necessary, the IG/BIMCO recommend that any amendments to the Clause are made subject to obtaining appropriate legal advice. Members are of course free to contact the Managers for assistance in this regard. In summary the Clause is intended where possible to:

  • Wholly exempt a contractual carrier’s or other contracting party’s servants, agents or sub-contractor’s from liability under a contract (subject always to any relevant court construing the Clause in such a way as to grant that total exemption) and/or to confer on such servants, agents and sub-contractors all the rights, limits, defences and exemptions from liability enjoyed by the contractual carrier under that contract.’
  • Impose on the other party to the contract, defined in the Clause as the ‘Merchant’ (which term includes a shipper, consignee or holder of a bill of lading) an obligation not to sue any servant, agent or sub-contractor of the contractual carrier, and to indemnify the contractual carrier in the event that the Merchant makes a claim, whether under the contract or in tort, bailment or otherwise, against the servants, agents or sub-contractors of the contractual carrier employed in performing the contract.
  • Ensure that the Clause operates as effectively as possible for the protection of its intended beneficiaries, by providing that the contractual carrier or other contracting party acts as an agent or trustee for its servants, agents or sub-contractors in relation to the contract, and that such servants, agents or sub-contractors are deemed to be a party to such contract.
    To provide protection in respect of operations related to the carriage of goods but which are not necessarily carried out on board a ship, for example operations which take place before loading or after discharge from a vessel or operations involved in multi-modal carriage. However, depending on the jurisdiction in which liability may arise, the protection of the Clause cannot always be guaranteed. The full text of the IG/BIMCO Clause is set out below. The Clause may also be downloaded free of charge from the BIMCO website at www.bimco.org and is also available as an additional clause to subscribers of BIMCO’s online charter party editing system, idea. It can also be downloaded from the IG website www.igpandi.org.

THE SHIPOWNERS’ PROTECTION LIMITED

Tel: +44 (0)20 7488 0911
Fax: +44 (0)20 7480 5806
info@shipowners.co.uk
www.shipownersclub.com
Registered in England No 2067444 at the above address

INTERNATIONAL GROUP OF P&I CLUBS/BIMCO REVISED HIMALAYA CLAUSE

  • (a) It is hereby expressly agreed that no servant, agent, direct or indirect sub-contractor or other party employed by or on behalf of the carrier, or whose services or equipment have been used in order to perform this contract (such persons so employed, or whose services or equipment have been used, hereinafter termed ‘Servant’) shall in any circumstances whatsoever be under any liability whatsoever to the shipper, consignee, receiver or other party to this contract (hereinafter termed ‘Merchant’) for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on the Servant’s part while acting in the course of or in connection with the performance of this contract.
  • (b) Without prejudice to the generality of the foregoing provisions in this clause, every exemption, limitation, condition and liberty contained herein (other than Art III Rule 8 of the Hague/Hague-Visby Rules if incorporated herein) and 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 or arbitration provision contained herein shall also be available and shall extend to every such Servant, who shall be entitled to enforce the same against the Merchant.
  • (c) (i) The Merchant undertakes that no claim or allegation whether arising in contract, bailment, tort or otherwise shall be made against any Servant which imposes or attempts to impose upon any of them or any vessel owned or chartered by any of them any liability whatsoever in connection with this contract whether or not arising out of negligence on the part of such Servant. The Servant shall also be entitled to enforce the foregoing covenant against the Merchant; and (ii) The Merchant undertakes that if any such claim or allegation should nevertheless be made, he will indemnify the carrier against all consequences thereof.
  • (d) For the purpose of sub-paragraphs (a)-(d) of this clause the carrier is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of the Servant who shall to this extent be or be deemed to be a party to this contract.

BOLTZ’ Proposed Amendment to the Uniform Electronic Transactions Act (UETA)

BOLTZ’ Proposed Amendment to the
Uniform Electronic Transactions Act(UETA)
Texas Business And Commerce Code § 322.001 et seq.

Proposal. Amend the Uniform Electronic Transactions Act (UETA), Texas Business And Commerce Code § 322.003 (b) by adding the following additional exemption to the UETA:

(3) real estate transactions and other matters controlled in the Statute of Frauds, Texas Business And Commerce Code §26.01 are exempt from this Act History. To avoid the catastrophic consequences to an individual of misunderstandings, incompleteness and deception in real estate transactions, on April 16, 1677 the English Parliament enacted Bill 29 Chas. 2 c. 3, authored by Lord Nottingham and entitled An Act for Prevention of Frauds and Perjuries and known to us as the Statute of Frauds. Every state in the United States and every province in Canada have enacted the same or similar language in their Statute of Frauds. For the last 337 years this Act has served and been the mechanism of the real estate industry, controlled every real estate transaction, guided every negotiation and been taught in every real estate school. This all changed on October 31, 2013.

Event. On October 31, 2013, the Corpus Christie Court of Appeals ruled in Dittman v. Cerone (Civ.App.—Corpus Christie Mem. Opinion No. 13-11-00196-CV 2013) that three e-mails discussing a possible future purchase of land created an enforceable option sales contract under the Statute of Frauds. In this case, a real estate broker negotiating the sale of one parcel discussed the possible terms of the sale of a second parcel in two e-mails to the buyer. The owner later sent a third e-mail continuing the discussions of some of the acceptable terms. There was never any contract for the sale of the second parcel, but the Court ruled that a valid option contract had been formed by making the following findings:

  1. The requirement that the seller sign the contract was satisfied under the UETA by the e-mails of the broker and owner because any transmission attributable to a person is treated as a signature and because the owner admitted authorizing the communication;
  2. Although brokers are not authorized to bind their clients because they are special agents, the court found that the agent bound the owner;
  3. Although the e-mails were on-going negotiations and proposals, the Court found they created a contract because the UETA instructs consideration of events and communications outside the e-mails and because the Court found all of the elements of a contract by cobbling together the various e-mails;
  4.  The broker’s name on the e-mails was deemed to be the same as his handwritten signature or his authorized electronic signature, and
  5. Because the Court deemed the e-mails as an enforceable promise, the seller’s refusal to sale supported a finding that the seller committed fraud and awarded civil damages.

Compelling Justifications. The essence of the Statute of Frauds is that it is a mechanism of formal verification of the concurrent intentions of the parties to agree upon specifically enumerated terms. Real estate transactions must be exempted from the UETA because:

  1. Modern technology has availed an ever increasing variety of communication mechanisms and means of storing them. E-mails and the newly emerging technologies are the means of conducting and facilitating routine exchanges and explorations. The inherent danger of elevating these casual exchanges to contract formation is an invitation to perpetrate on the public the catastrophic consequences of the misunderstandings, disputes and deceptions that the English Parliament protected against in 1667;
  2. The UETA creates unreasonable liability to realtors and the parties by creating the likelihood of inadvertent and unintended contracts;
  3. TREC, HAR, TAR, NAR and many others have created many forms that imbed the current laws, the procedures to closing and consumer protections that will be lost and the road to closing will become chaos without the formal promulgated forms;
  4. Litigation will sky rocket over the claims and disputes and courtrooms will become title companies;
  5. With the limited terms of three e-mails, closings will become argumentative and confrontational
  6. The Act is too broad. It states that if you use electronic means: that you have agreed to conduct your business electronically and that you will be bound by the totality and the consequences of your short term or long term communications that may have been changed over the course of dealing; that you signed a document by having your name, voice, attachment, reference to something or logo anywhere in the transmission; if the communication is storable by any means, it can become an enforceable transaction; a communication plus outside circumstances may make one liable; a contract can be formed even if a person did not even know that electronic agents were sending transmissions in their behalf, and
  7. 7. Hundreds of thousands of realtors and millions of people in the real estate business must be immediately retrained