22 September 2010 TO ALL MEMBERS Dear Sirs Revised Himalaya Clause for Bills of Lading and other Contracts The International Group of P&I Clubs (IG) and BIMCO 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 (the carrier) from liability to other parties 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 Dickson 1 . 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 nonresponsibility 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 subcontractors 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 subcontractors (e.g. stevedores) and other independent subcontractors (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. P.T.O. 1 Adler v Dickson (The Himalaya) [1954] 2 Lloyd's Rep 267, [1955] 1 QB 158 - 2 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 servant