The clause takes its name from a decision of the English Court of Appeal in the case of Adler v Dickson (The Himalaya). The claimant, Mrs Adler, was a passenger on a cruise on the P&O Liner, S.S. Himalaya. At the port of Trieste, she was seriously injured when the gangway came adrift and collapsed, throwing her onto the quayside, 18 feet below.

"Passengers and their baggage are carried at the passenger’s entire risk", and "the company will not be responsible for and shall be exempt from all liability respect of any... damage or injury whatsoever of or to the person of any passenger...".

Being unable to sue the steamship company in contract, Mrs Adler instead sued the Master of the ship, Capt. Dickson, 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 held that in the carriage of passengers (as well as in the carriage of goods), 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 expressed 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.

The Court held 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. The Court of Appeal held Capt. Dickson liable and awarded damages to Mrs Adler.

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 sub-contractors 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 sub-contractors (e.g. stevedores) and other independent sub-contractors (such as railroad companies.)

The Hague-Visby Rules [Article 7(2)]

The Hague-Visby regime governs only the "maritime transport" and largely regulates the position of the "carrier" only. Moreover, Hague-Visby Rules do not adequately resolve the position of the "independent sub-contractor" performing part of the carrier’s duties (such as stevedores) and thus protection of such parties is effected only by ensuring that the document of carriage extends "carrier’s" defences to its "sub-contractors" through a carefully worded "Himalaya Clause" which is always open to interpretation by the local courts.

Hamburg Rules (Article 10)

Besides regulating the liability of the actual carrier in Article 10 of the Hamburg Rules, similarly to the Hague-Visby Rules as given in Art 7(2), that servants or agents of the carrier against whom an action is brought, may avail themselves of the defences and limits of liability of the carrier. And since the Hamburg Rules apply also to the period during which the goods are in charge of the carrier in the ports of loading and discharge, it is expected that "sub-contractors" operating in the port areas can avail themselves of the defences and limits of liability as applicable to the carrier.

Rotterdam Rules (Article 19)

When it was considered, whether and to which extent, the "sub-contractors" of the carrier, called "performing parties", should be subject to the Rotterdam Rules and liable to be sued by the "shipper or consignee", it was decided that it would be convenient to do so only in respect of services rendered at sea or in the ports and therefore the notion of "maritime performing party" was created, thereby incorporating in the Rotterdam Rules the principles on which the "Himalaya" clause is based. To facilitate and better regulate the multimodal transport of carriage of goods, the Convention introduces the concept of a ‘maritime performing party’, that is a party other than the "contracting carrier" who performs any part of the sea leg or provides services ancillary to the sea leg in the port area.

The Rotterdam Rules provisions, including carriers’ responsibilities and the limitations of liability and damages which apply to "carriers", are extended to any "maritime performing party" who physically performs any of the carrier’s responsibility under a contract for the carriage, handling, custody or storage of the goods, at the carrier’s request or under the carrier’s supervision or control.

Thus, a sub-carrier such as a feeder operator, ports and terminal operators, freight forwarders, NVOCCs, stevedores, carriers exclusively within a port area, and other maritime agents or other sub-contractors of the shipment of goods from receipt by the "carrier or its agent" until delivery to the consignee shall be ‘maritime performing parties’. Inland carriers are not subject to the Convention’s provisions, and will continue to be governed by any applicable domestic or international law.

"The performing party" would be caught under the rules if it undertakes activity in a "contracting state under an intermodal contract of carriage" as defined by the Rotterdam Rules. Notably, the "carrier" remains liable for the whole of the performance of the contract of carriage vis-à-vis the cargo claimant.

Application of the Rotterdam Rules provision to all persons providing services ancillary to the carriage by sea in the ports of loading and discharge ensures uniformity and thus certainty in an area at present left to national laws, and also to a freedom of contract, the limits of which may however vary from port to port.