Carriage of goods by sea: governing foreign maritime law and package-based liability limit controlled damages assessment

Where a carriage of goods by sea contract originated in Japan and the shipment was destined for India, the Japanese Carriage of Goods by Sea Act, 1992 governed rather than the Indian Carriage of Goods by Sea Act, 1925, because the Indian Act applies to carriage from an Indian port. The carrier's liability was also subject to a package-based limited-liability regime under the governing maritime law and the Hague Rules, so damages could not be calculated by treating all sixteen packages as the basis when the claim was confined to two damaged cases. The computation of liability and damages was therefore required to be reconsidered on the correct statutory footing.

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Issues: (i) whether the Indian Carriage of Goods by Sea Act, 1925 or the Japanese Carriage of Goods by Sea Act, 1992 governed the contract of carriage; (ii) whether the carrier's liability was limited and, if so, how the limitation was to be applied for assessment of damages.

Issue (i): whether the Indian Carriage of Goods by Sea Act, 1925 or the Japanese Carriage of Goods by Sea Act, 1992 governed the contract of carriage

Analysis: Section 2 of the Indian Carriage of Goods by Sea Act, 1925 applies to carriage of goods by sea from a port in India to another port, whether in or outside India. The shipment in question originated from Japan and was destined for Chennai. The Japanese Act, by its own terms, applies where the loading port or discharging port is located outside Japan. The Bill of Lading clauses relied upon below did not alter this statutory position.

Conclusion: The Japanese Carriage of Goods by Sea Act, 1992 applied, and the Indian Carriage of Goods by Sea Act, 1925 did not govern the carriage.

Issue (ii): whether the carrier's liability was limited and, if so, how the limitation was to be applied for assessment of damages

Analysis: Both the Japanese Act and the Hague Rules recognise a regime of limited carrier liability. The liability limit under Article 13 of the Japanese Act, and under Article IV, paragraph 5 of the Schedule to the Indian Carriage of Goods by Sea Act, 1925, operates by reference to the package or unit and the declared nature and value of the goods. The claim had been confined to two damaged cases, and there was no basis to compute liability on the weight of all sixteen packages. The further contention that the invoice value stood incorporated in the Bill of Lading was not accepted.

Conclusion: The carrier's liability was limited, and the damages had to be reconsidered on that basis.

Final Conclusion: The judgments below were set aside to the extent they proceeded on the wrong governing law and on an erroneous computation of liability, and the matter was sent back for fresh consideration in light of the correct limited-liability framework.

Ratio Decidendi: Where the contract of carriage originates outside India, Section 2 of the Indian Carriage of Goods by Sea Act, 1925 does not apply, and carrier liability must be assessed under the governing foreign maritime law and the applicable package-limitation regime, not by treating all packages in the shipment as the basis of computation when the claim is confined to selected damaged cases.

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