Times up: Navigating the Legal Maze of Limitation Period
From the Desk of the INTERNATIONAL MARITIME AND COMMERCIAL LAWYER: SUKUMAR MAHESH TIRTHANI
Indian law, amidst a maze of legislation, sets a specific period within which any claimant can approach the court and file a claim. This period, commonly known as the ‘Limitation Period’, is a crucial concept in the legal landscape, and understanding it is one of the keys to navigating the complexities of legal disputes.
The Hon’ble Supreme Court of India has observed in a recent judgment that the law of limitation is founded on public policy. This means that it is for the general welfare that a limitation period be prescribed so that every legal remedy has a fixed period of life, and a dispute/litigation is not kept pending indefinitely.
This article attempts to highlight and simplify the understanding regarding limitation periods in reference to shipping disputes.
While more than one legislation will be considered to determine the limitation period for shipping disputes, the starting point will be the Limitation Act 1963 (Limitation Act). The Limitation Act, a procedural law, among other things, prescribes the limitation period within which every suit, appeal or application must be instituted before the appropriate court of law. Further, the Limitation Act also prescribes when the limitation period will commence, how the same is to be calculated, the exclusions to be accounted for while calculating the limitation period, the circumstances in which the limitation clock will reset, etc.
For almost all suits arising from contracts, the Limitation Act prescribes a limitation period of three (3) years. The said period commences from the occurrence of an event that entitles a claimant to file the suit before the court of law. For example, the non-payment of wages or outstanding sums past the due date is an occurrence that entitles a claimant to file a suit for recovery of outstanding wages/sums. Further, some examples of suits arising from shipping contracts can include suits for unpaid seamen wages, suits for compensation for lost/damaged cargo, suits for compensation due to non-delivery or delay in delivery of cargo, suits for unpaid freight or demurrage or detention, suit for damages due to breach of contract, suit for recovery of outstanding amounts, etc. However, Section 29 of the Limitation Act provides that if a special law prescribes a limitation period, the Limitation Act, to the extent the special law does not exclude its application, shall apply as if the limitation period contained in the special law was the limitation period prescribed by the Limitation Act.
This brings us to the special laws that govern shipping/maritime disputes in India. These special laws include The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017, The Indian Carriage of Goods by Sea 1925, and The Multimodal Transportation of Goods Act 1993.
While The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (Admiralty Act) does not prescribe a period within which suits invoking the admiralty jurisdiction ought to be filed, it provides that all maritime liens, except crew wages and contributions, shall exist on a vessel for one (1) year, irrespective of any change of ownership. Claims towards crew wages and contributions shall continue as a maritime lien for two (2) years. Accordingly, when the Limitation Act and the Admiralty Act are read together, the limitation period for filing any suit invoking the admiralty jurisdiction must be filed within three (3) years from the occurrence of an event that gives rise to a maritime claim as defined at Section 4 of the Admiralty Act. However, this is further subject to the provisions of The Indian Carriage of Goods by Sea Act 1925 and The Multimodal Transportation of Goods Act 1993. Additionally, suppose a maritime claim is also a maritime lien, it is advisable to file the suit within one (1) or two (2) years (depending on the type of claim) to take benefit of the provisions giving priority to maritime liens. Section 9 of the Admiralty Act provides for which maritime claims a claimant can exercise maritime lien.
The Indian Carriage of Goods by Sea1925 (COGSA 1925) provides that a carrier and the ship shall be discharged from all liability in respect of loss or damage to cargo unless the suit is brought within one (1) year after the delivery of the cargo or the date when the cargo should have been delivered. It is worth noting here that COGSA 1925 only applies to suits arising from a contract of carriage of cargo from any Indian port to another Indian or foreign port. Further, to the best of the author’s knowledge, whether COGSA 1925 will apply to a contract of carriage without a specific statement giving effect to COGSA 1925 in the contract of carriage is a controversy that remains at large. However, to err on the side of caution, it is always advisable that any cargo-related claims against the carrier are brought before the expiry of one (1) year from the date of the delivery of the cargo.
The Multimodal Transportation of Goods Act 1993 (MMT Act), inter alia, governs the registration of multimodal operators and the multimodal transportation of cargo from India to a destination outside India. Multimodal transportation means transporting cargo using two (2) or more modes. For the provisions of the MMT Act to be applicable, the transport should be undertaken by a registered multimodal operator, the transport should be through two or more modes of transport, and the transport should be from India to a destination outside India. In case the MMT Act applies to a particular transport, then per the provisions of Section 24 of the MMT Act, the multimodal operator is liable for any claim only up to nine (9) months from a) the date of delivery of the cargo or b) the date when the cargo should have been delivered or c) the date on and from which the party entitled to receive delivery of the goods has the right to treat the cargo as lost under sub-section (2) of section 13. Section 13(2) of the MMT Act provides that the cargo may be treated as lost if it is not delivered within ninety (90) consecutive days following the expressly agreed delivery date and if no delivery date is agreed upon then within a reasonable time.
In conclusion, although the details of calculating the limitation period can seem confusing, it is generally advisable that, as a thumb rule, for any claims pertaining to ocean transport of cargo (loss, damage, delayed delivery, misdelivery, etc.), the suit is brought before the expiry of one (1) year, and in cases of multimodal transport the suit is brought before the expiry of nine (9) months.
For any other claims found in contracts, the suit should be brought before the expiry of three (3) years as prescribed in the Limitation Act. As a parting note, in certain specific scenarios, the Limitation Act permits resetting the limitation clock or excluding time from the limitation period. However, in the author’s opinion, not all reset and/or exclusion provisions apply to claims covered by COGSA 1925 and the MMT Act. Hence, claims arising from shipping disputes warrant a specialized and case specific approach.
For further information or clarifications, the author, a commercial lawyer specializing in maritime laws, can be reached at sukumar@tirthanilegal.com.
The views expressed are only intended for general information purposes and not for solicitation of any work. Under no circumstances should the views be regarded as legal advice, and no legal or business decision should be made based on the views expressed.
