SHIPPING LAW, INTERNATIONAL TRADE CARRIAGE OF GOODS BY SEA

Legal Updates from YHA Law Firm

Q: What are the changes in the Hague-Visby Rules in Malaysia.

A: The Hague-Visby Rules were recently on 15.7.2021 incorporated to replace the Hague Rules used in Malaysia since independence in our Carriage of Goods by Sea Act 1950 (“the Amended COGSA”). However, not all the provisions in Hague-Visby Rules apply. The following table will set out the changes in Amended COGSA.

Subject	Hague Rules (1924) That Apply Before Amendment	Hague-Visby Rules (1968) That Apply After the Amendment
Preliminary	· Drafted in 1924 in Brussels.	o Amendment to the Hague Rules by Brussels Amendments in 1968.
Scope of Application	· Applies to contract of carriage covered by a bill of lading (“BL”).	o Article X of the Hague-Visby Rules is NOT applicable in Malaysia. The Amended COGSA has inserted Article 1A instead. o The new rules apply to sea carriage document (“SCD”) either in electronic or printed form. o Sea carriage document (“SCD”) means: i. BL; ii. Negotiable document of title similar to BL that contains evidence of contract of carriage of goods by sea; iii. Non-negotiable BL; iv. Non-negotiable documents including consignment note and sea waybill or ship’s delivery order which contains evidence of contract of carriage of goods by sea.
Types of Cargo	“Goods” includes goods, wares, merchandises, and articles of every kind whatsoever, except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried.	“Goods” includes goods, wares, merchandises, and articles of every kind whatsoever, except live animals. The Hague-Visby Rules in the Amended COGSA apply to goods carried on deck; although the original Hague-Visby Rules do not.

Proof of Condition of Cargo

· BL is prima facie evidence of receipt by the carrier of the condition of the goods. However, this prima facie evidence can be challenged by evidence stating to the contrary.

o The Amended COGSA uses the term sea carriage document (SCD) rather than BL. SCD covers a wider range of document other than BL.

o SCD is prima facie evidence of receipt by the carrier of the condition of the goods. No evidence to the contrary shall be admissible to challenge the prima facie evidence when the SCD is transferred to a third party in good faith.

Obligations of Carrier

· The carrier has no further liability or responsibility in respect of cargo loss or damage after one (1) year. Beginning from the date of delivery.

o The 1-year time bar may be extended if both parties agree.

o An action for indemnity against a third party may be brought even after one (1) year.

Limitation of Liability

· If the value of the cargo is not declared before shipment and inserted in the BL, the carrier or the ship is NOT liable for any loss or damage of the goods exceeding 100 sterling pounds per package or unit.

o If the value of the cargo is not declared before shipment and inserted in the SCD, the, the carrier or the ship is NOT liable for any loss or damage of the goods exceeding 666.67 units of account per package OR unit or units of account per kilo of gross weight of the goods lost or damaged, whichever higher.

o The total amount recoverable shall be calculated by reference to the value of the goods at the place the goods are discharged.

o The value of the goods shall be fixed according to the commodity exchange price, or current market price, or value of the goods of the same kind and quality.

o Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units used in the SCD as packed in such article of transport shall be deemed the number of packages or units.

o The unit of account mentioned is as defined by International Monetary Fund (“IMF”).

o However, the carrier or the ship is not entitled to the benefit of limitation of liability if it is proved that the damage is caused by willful negligence of the owner.

shall be deemed the number of packages or units.

o The unit of account mentioned is as defined by International Monetary Fund (“IMF”).

o However, the carrier or the ship is not entitled to the benefit of limitation of liability if it is proved that the damage is caused by willful negligence of the owner.

Q: Why Malaysia only applies the Hague-Visby Rules now?

A: Generally, it is a common knowledge that limitation of liability clause in the Hague Rules favours the carrier or the ship. Malaysia has not applied the Hague-Visby Rules until the year 2020 as we are a maritime nation that favours the right of the shipowner. However, as time passes by, Malaysia has gradually progressed to diversify its economy to place more emphasis on equalizing the rights and liability of both cargo owners and shipowners. This is why the Hague Rules were replaced with a more balanced and up-to-date Hague-Visby Rules. Our Amended COGSA has improvised the Hague-Visby Rules to include Sea Carriage Documents transmitted electronically.

ADMIRALTY IN REM – WRONGFUL ARREST – POSSESORY RIGHT – ARREST GONE WRONG: WHEN A SHIP ARREST BACKFIRES WITH DAMAGES

In Eletson Holdings Inc & Ors v The Vessel “Paros” [2026] 8 MLJ 80, the High Court set aside an arrest after finding that the plaintiffs had no proprietary or possessory right to the vessel at the time of the writ, as the bareboat charter had already been terminated. The Court held that the claim was in substance a corporate control dispute dressed up as an admiralty action, and emphasised that such disputes do not fall within admiralty jurisdiction. Critically, the plaintiffs’ failure to disclose the termination of the charter when obtaining the arrest warrant amounted to a serious breach, leading the Court to find mala fides or gross negligence and order damages for wrongful arrest. The decision reinforces that ship arrest is a powerful remedy that must be exercised with full disclosure and a proper maritime foundation.

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GUARANTEE – PERSONAL GUARANTEE ≠ PAY ON DEMAND: COURT DRAWS THE LINE BETWEEN SURETYSHIP AND DEMAND GUARANTEES

In CE Energy DMCC v Bashar [2026] Lloyds’s Rep 267, the Commercial Court clarified that not all guarantees labelled “on demand” will be treated as demand guarantees. On a proper construction, the court held that the personal guarantee in question was a contract of suretyship, requiring proof of the principal debtor’s liability rather than automatic payment upon demand. Crucially, the court found that the debtor’s “irrevocable” admissions of debt in a payment agreement created a binding contractual estoppel, which the guarantor could not challenge. The decision also confirms that, where payment is due on a “day certain”, a seller may still claim the price notwithstanding retention of title. The case underscores the importance of precise drafting and the risks of entering into settlement agreements that conclusively fix liability.

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MARITIME NEGLIGENCE – PLAINTIFF CLAIMED FOR DAMAGES CAUSED DURING ANCHOR DEPLOYMENT OPERATION – CALDERBANK OFFERS

In Tom Eastwind 365 Sdn Bhd v The Owners of the Vessel “Icon Sophia” [2025] 9 MLJ 397, the High Court held that the doctrine of res ipsa loquitur applied in a maritime collision during an anchor deployment operation, allowing an inference of negligence against the tug owner. The Court clarified that the doctrine is not defeated merely because the defendant adduces evidence explaining the accident – such evidence goes to rebutting the inference, not preventing it. While liability was established due to the tug master’s error of judgment in manoeuvring too close to a stationary barge, the plaintiff failed to properly prove its damages and was awarded only RM50,000. Notably, despite succeeding on liability, the plaintiff was ordered to pay costs after rejecting reasonable Calderbank offers, underscoring the risks of pursuing litigation without properly substantiated claims.

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JURISDICTION – BILLS OF LADING – BREACH OF HIMALAYA CLAUSE – BREACH OF EXCLUSIVE JURISDICTION CLAUSE – ONEROUS OR UNUSUAL TERMS

In Maersk Guinéa-Bissau SARL v Almar-Hum Bubacar Baldé SARL [2026] 1 Lloyd’s Rep 215, the English Commercial Court held that a shipper was liable for breach of an exclusive jurisdiction clause and a Himalaya clause after commencing proceedings in Guinea-Bissau instead of England. The Court confirmed that such clauses are standard and enforceable, and that commencing foreign proceedings in breach of them can give rise to a claim for damages. Notably, the Court also recognised that Himalaya clauses may be used offensively, allowing subcontractors to recover losses caused by wrongful litigation. The foreign judgment was not recognised due to lack of jurisdiction and denial of natural justice.

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DELIVERY WITHOUT PRESENTATION OF BILL OF LADING – LOI WON’T SAVE YOU: SHIPOWNER LIABLE FOR MISDELIVERY DESPITE INDEMNITY

In United Overseas Bank Ltd v The “Maersk Katalin” [2026] 1 Lloyd’s Rep 18, the Singapore High Court reaffirmed that delivery of cargo without presentation of original bills of lading remains a fundamental breach, even where carried out against letters of indemnity. The Court held that LOIs merely shift commercial risk but do not authorise misdelivery, and rejected arguments of consent, ratification and causation. Significantly, the Court emphasised that the burden lies on the carrier to prove that the loss would have occurred in any event – a burden not easily discharged. The decision underscores the continued strict liability regime in misdelivery cases, particularly where banks as bill holders are involved.

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CONTRACT LAW – ‘UK COURTS’ MEANS ENGLAND: COURT UPHOLDS JURISDICTION DESPITE VAGUE CLAUSE

In SMT Global Logistics Ltd v Georgian Airlines LLC [2025] Lloyd’s Rep. Plus 89, the Commercial Court held that a clause referring disputes to “the court in accordance with current legislation of the United Kingdom” was a valid jurisdiction clause in favour of the High Court of England and Wales. The Court also confirmed that the Montreal Convention does not apply to pure contractual claims for non-performance, such as repayment and loss of profits. Emphasising a broad and commercially sensible interpretation, the Court enforced the parties’ choice of forum and refused to stay proceedings, reaffirming that jurisdiction clauses will be upheld unless there are overwhelming reasons to depart.

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