Shipping Contracts And Standard Terms – Know What You Have Signed Up To


Shipping contracts are agreements between a carrier and a shipper setting out the terms of transport for specific goods (cargo). Most shipping contracts today are lengthy documents covering shipping costs, risk allocation, shipment handling, and dispute resolution. Standard terms are usually incorporated into the agreement during an online shipment booking process.

The importance of these standard terms in shipping contracts – and the difficulty of avoiding them – was highlighted in an April 2024 case from the English Commercial Court. The court agreed with shipping giant Maersk that its standard terms and conditions were incorporated into a shipping contract for the delivery of madeira wood from Guinea-Bissau to Huangpu in China, despite the shipper seeking to avoid key terms.

The London court’s decision serves as a warning to those sending cargo with large carriers. They will be held to the standard terms they’ve agreed to – unless there is a lawful reason to refuse to honour their contractual obligations.

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Maersk -v- Almar-Hum Bubacar: The Background

This English Commercial Court case arose from contracts of carriage between Maersk and shipper Almar Hum Bubacar in Guinea-Bissau. The contracts were evidenced by 13 bills of lading agreed in December 2018 through Maersk’s online system. Confusion arose over the issuing of bills of lading due to an uncertain situation in Guinea-Bissau and financial issues between Almar-Hum and the government. At one point, Maersk was pressured into surrendering the bills of lading to the Guinea-Bissau authorities.

In May 2020, Almar-Hum initiated legal proceedings in Guinea-Bissau against Maersk, claiming USD 10,151,000 for the madeira wood cargo and additional sums for moral damages and financial losses. The court in Guinea-Bissau ruled in favour of Almar-Hum, making Maersk liable for the claimed amount.

The English Commercial Proceedings

Maersk rejected the Guinea-Bissau court ruling and initiated proceedings in the English Commercial Court, seeking damages for Almar-Hum’s breach of contract.

Almar-Hum argued that Maersk’s standard terms were onerous and significantly limited his rights. He claimed the terms should have been specifically highlighted at the time of contracting.

The court dismissed these arguments as “bold” and “unsustainable,” noting:

• Almar-Hum had prior business dealings with Maersk.
• He received the rate schedule and draft bills of lading.
• He had access to Maersk’s terms and had clicked to accept them during booking.

The court ruled that Almar-Hum could not challenge Maersk’s terms based on familiarity and explicit acknowledgment.

The EJC Clause and the Himalaya Clause

Maersk relied on two clauses in its standard terms:

• An exclusive jurisdiction clause (EJC) designating English courts for disputes (except for US shipments, which would be heard in New York).
• A Himalaya clause allowing Maersk to subcontract the shipment on any terms.

The court found these clauses standard and not unduly onerous. The EJC was common in well-drafted bills of lading, and the Himalaya clause ensured the agreed terms couldn’t be circumvented.

Comment

This case highlights the risks of attempting to unilaterally avoid key terms in a shipping contract. It underscores the willingness of English courts to assert jurisdiction and enforce standard terms, especially when parties are familiar with the terms through prior dealings.

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