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 maritime matters, and exclusion clauses in bills of lading for the benefit of employees, crew, and agents, stevedores in particular.
The ''Himalaya'' case
The clause takes its name from a decision of the English Court of Appeal in the case of Adler v Dickson . The claimant, Mrs Adler, was a passenger on a voyage on the. At the port of Trieste, she was injured when a gangway came adrift, throwing her onto the quayside, 18 feet below. The passenger ticket contained non-responsibility clauses exempting the carrier, as follows: Being unable to sue the steamship company in contract, Mrs Adler instead sued the master of the ship and the bosun in negligence. The defendants sought to rely on the protection of the exclusion clauses on the passenger's ticket; but Mrs Adler argued that under the doctrine of privity of contract, the defendants could not rely on the terms of a contract to which they were not party. The Court of Appeal declared that in the carriage of passengers the law does permit a carrier to stipulate not only for himself, but also for those whom he engaged to carry out the contract, adding that the stipulation might be express or implied. On the particular facts, the court held that the defendants could not take advantage of the exception clause as the passenger ticket passed no benefit to servants or agents, neither expressly nor by implication. As a consequence of this decision, specially drafted Himalaya clauses benefiting stevedores and others began to be included in bills of lading. As the negligent master and bosun were employees acting in the course and scope of their employment, their employer would have been vicariously liable. Although the case does not specifically discuss vicarious liability, Denning LJ stated, "...the steamship company say that, as good employers, they will stand behind the master and boatswain and meet any damages and costs that may be awarded against them". 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 by the law of bailment rather than the law of contracts.
Under s.2 of the Unfair Contract Terms Act 1977, it is no longer possible to limit liability for personal injury or death caused by negligence;
Under the Contracts Act 1999, section 6, contracts may confer benefits upon third parties, in a wider form than under the decision in the Himalaya.
Although the Contracts Act 1999 does NOT apply to contracts for carriage of goods by sea, the 1999 Act does permit the giving to a third party the benefit of an exclusion or limitation clause in the contract.
The following cases reveal how English common law has progressed since Adler v Dickson:
Scruttons v Midland Silicones AC 446: The House of Lords applied the Privity Rule to prevent a negligent stevedore from relying on a limitation clause in the bill of lading.
N.Z. Shipping v Satterthwaite AC 154: The Privy Council found that enough had been done to allow a negligent stevedore to rely on such a limitation clause.
Port Jackson Stevedoring v Salmond, The New York Star 3 All ER 257 PC developed the law further.
The Mahkutai AC 650, 664–5, where Lord Goff opined that it was "perhaps inevitable" that there should develop "a fully-fledged exception to the doctrine of privity of contract".
Houtimport v Agrosin, The Starsin 1 Lloyd's Rep 571 also developed the law further.
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 359 US 297 , Lloyd’s Rep 305, is generally taken to uphold them provided certain criteria are ahered to.
