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Re The Mahkutai

[1996] 3 WLR 1

Case summary last updated at 03/01/2020 17:54 by the Oxbridge Notes in-house law team.

Judgement for the case Re The Mahkutai

 A chartered its ship to B who sub-charetered it to C. In A & B’s contract was a clause that extended limitation/exemption clauses to all agents, sub-contractors etc of B. There was also clause 19 which stated that the contract was exclusively to be governed in Indonesian jurisdiction. It was found that there was a leak in the boat damaging the cargo, and the cargo owners made a claim for damages against the ship owners. The ship owners (as sub-contracters: they were being given an additional benefit) sought to use the “exclusive jurisdiction” clause to stay the proceedings started in Hong Kong. Privy Council held that they were not entitled to stay the proceedings since the “exclusive jurisdiction clause” was NOT within the meaning of Himalaya clauses that benefited TPs: in fact it created “mutual rights and obligations”.

Lord Goff: the attitude to TP claimants has swung back and forth: initially they were allowed to claim through “vicarious” rights to sue, while later courts were reluctant to allow TP claimants. Recently TPs have started to be allowed to obtain benefits from the main contracts through exemption clauses that explicitly give them rights for which consideration (TP’s performance) and ratification (inferred from their conduct) is later given i.e. that they become parties to the contract and do NOT simply draw vicarious rights. 

Re The Mahkutai crops up in following areas of law