Himalaya clause

A Himalaya clause is a contractual provision expressed to be for the benefit of a third party who is not a party to the contract. Although theoretically applicable to any form of contract, most of the jurisprudence relating to Himalaya clauses relate to marine matters, and exclusion clauses in bills of lading for the benefit of stevedores in particular.

Origin of the term

The clause takes its name from a decision of the English Court of Appeal in the case of "Adler v Dickson (The Himalaya)" [1954] 2 Lloyd's Rep 267, [1955] 1 QB 158 [http://www.bailii.org/ew/cases/EWCA/Civ/1954/3.html] . The claimant was a passenger on the "S.S. Himalaya" who had been injured when a gangway fell, throwing her onto the quayside below. The passenger ticket contained a non-responsibility clause exempting the carrier, so the claimant sued the master of the ship and the boatswain. The claimant argued that under the normal rules of privity of contract the defendants could not rely on the terms of a contract that they were not party to. However, the Court of Appeal declared that in the carriage of passengers as well as in the carriage of goods the law permitted a carrier to stipulate not only for himself, but also for those whom he engaged to carry out the contract. It was held as well that the stipulation might be express or implied. Ironically, on the facts before the court, it was held that the passenger ticket did not expressly or by implication benefit servants or agents and thus the defendants could not take advantage of the exception clause. However, after the decision, specially drafted Himalaya clauses benefiting stevedores and others began to be included in bills of lading. [The decision itself has been largely superseded by legislation in the United Kingdom on two fronts. Under the Unfair Contract Terms Act 1977, it is now no longer possible to limit liability for personal injury or death in any event. Under the Contracts (Rights of Third Parties) Act 1999 underscored the ability of contracts to confer benefits upon persons not party to the contract, in a wider form that the judicial decision.]

The decision has subsequently been upheld several times by the Judicial Committee of the Privy Council, and is now accepted as settled law in most common law countries.

Reasoning

Although the decision in "The Himalaya" is clear and unambiguous, the reasoning underpinning the case is still the subject of some debate. The courts at various times have suggested that the exception to the common law rules of privity of contract may be founded upon "public policy" reasoning, the law of agency, trust arrangements or (with respect to goods) by the law of bailment rather than the law of contracts.

The United States

The decision of the English courts has been generally accepted and adopted throughout the Commonwealth. In the United States, which has always had a more circumspect view of the rules of privity of contract, has generally been accommodating to exceptions to the principle, and the decision in "Herd v Krawill" 59 US 297, [1959] Lloyd’s Rep 305 is generally taken to uphold them provided (as in other legal systems) certain criteria are ahered to.

Sample clause

:"It is hereby expressly agreed that no servant or agent of the carrier (including every independent contractor from time to time employed by the carrier) shall in any circumstances whatsoever be under any liability whatsoever to the shipper, consignee or owner of the goods or to any holder of this Bill of Lading for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions of this clause, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to the carrier or to which the carrier is entitled hereunder shall also be available and shall extend to protect every such servant or agent of the carrier acting as aforesaid and for the purpose of all the foregoing provisions of this clause the carrier is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be his servants or agents from time to time (including independent contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to the contract in or evidenced by this Bill of Lading." ["Eisen und Metall AG v Ceres Stevedoring Co Ltd and Canadian Overseas Shipping Ltd (The Cleveland)" [1977] 1 Lloyd's Rep 665]

Footnotes

External links

* [http://www.mcgill.ca/files/maritimelaw/ch36-marine.pdf Longer article on Himalaya clauses]