Pioneer Container Case

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Last modified: 07/03/18 Author: In-house law team

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Pioneer Container Case [1994] 2 AC 324

Established the validity of ‘Himalaya clauses’ in relation to the law of carriage of goods and considered occasions where a party may be bound by a contractual clause they were not originally privy to.

Facts

The claimant was a cargo owner who contracted with a carrier to ship the cargo. Per the bills of lading, the claimant granted the carrier authority to sub-contract their duties ‘on any terms’, in part or in whole. Subsequently, the carrier sub-contracted a third party, the defendant, using a secondary bills of lading which stipulated that the legal jurisdiction in the event of dispute would be Taiwan. During the chartered voyage from Taiwan to Hong Kong, the ship carrying the cargo sank, and the goods were lost. The claimants initially attempted to bring an action via the Hong Kong judicial system, whilst the ship owners asserted that the case ought be considered in Taiwan, as per the terms of the exclusive jurisdiction clause of the secondary bills of lading.

Issue

Whether in the law of international carriage and transport of goods, a party could be bound by the jurisdiction clause of a contract they were not privy to, but made between their entrusted agent and a third party.

Held

The Judicial Committee of the Privy Committee upheld the first instance decision and found that the clause regarding Taiwanese jurisdiction in the secondary bills of lading operated to bind both the carrier and the cargo owner as the cargo owner had granted the carrier complete discretion to sub-bail the goods, thus making it irrelevant that the cargo owner had been unaware of the clause’s existence.

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