The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea
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¨ zbek Meltem Deniz Gu¨ner-O Editor
The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea An Appraisal of the “Rotterdam Rules”
Editor ¨ zbek Dr. Meltem Deniz Gu¨ner-O Koc¸ University, School of Law Rumeli Feneri Yolu 34450 Sanyer-Istanbul, Turkey
[email protected]
Koc¸ University Faculty of Law Dr. Nu¨sret-Semahat Arsel International Business Law Implementation and Research Center ISBN 978-3-642-19649-2 e-ISBN 978-3-642-19650-8 DOI 10.1007/978-3-642-19650-8 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: 2011930789 # Springer-Verlag Berlin Heidelberg 2011 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)
Foreword
At the beginning of 2010, the Koc¸ University Law School’s Dr. Nu¨sret – Semahat Arsel International Business Law Implementation and Research Center decided to organize an international conference in order to thoroughly discuss the “UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea”, also known as the “Rotterdam Rules”. On 11 December 2008, the United Nations General Assembly adopted the Rotterdam Rules and authorized a signing ceremony for the Convention, which took place in Rotterdam on 23 September 2009. The intention in adopting the Rotterdam Rules was to replace the outdated Hague / Hague-Visby Rules, which were considered inadequate for fulfilling the needs of modern trade, and the Hamburg Rules, which have proved unpopular with maritime nations. Significantly, the Rotterdam Rules embody contemporary and uniform regulations for modern door-to-door container shipping and include innovations that the current international shipping regime lack. However it should also be acknowledged that the Convention has been subject to criticism with regard to certain issues. In this regard, the aforementioned international conference was hosted by the Dr. Nu¨sret – Semahat Arsel International Business Law Implementation and Research Center on 6–7 May 2010. The Research Center has also decided to publish the papers delivered at the Conference as a book, in order to make them available to legal circles. Accordingly, this book primarily consists of the papers presented at the conference. One notable addition is a paper submitted by Prof. Francesco Berlingieri, even though he was unable to attend and present it at the conference. It must be noted that a significant number of the contributors to the book also personally took part in the process of drafting the Rotterdam Rules. Turkish lawyers were also invited to contribute to the drafting process in order to prepare Turkey for the Rotterdam Rules, though the country is not yet a party to the Convention. ¨ zbek for her I would like to express my gratitude to Dr. Meltem Deniz Gu¨ner-O efforts both in organizing the conference and editing this book. Furthermore I am grateful to Springer Verlag, who agreed to publish this book, for their interest in the subject. Prof. Dr. Tankut Centel Dean of Koc¸ University Law School v
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Preface
It is my great pleasure to edit The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, An Appraisal of the Rotterdam Rules with the intent of disseminating both the insider’s and outsider’s evaluations and views on the Rotterdam Rules. The insiders are Prof. Francesco Berlingieri – infamous doyen of maritime law, who was so kind as to send his advance paper even though he was not able to attend the conference; Prof. Michael Sturley – Senior advisor of the U.S. delegation to UNCITRAL Working Group III and Member of the UNCITRAL Secretariats’s Expert Group on Transport Law, who has been involved with the Rotterdam Rules since their earliest stages; Prof. Tomotaka Fujita, – Head of the Japanese Delegation to UNCITRAL Working Group III and Member of the UNCITRAL Secretariats’s Expert Group on Transport Law; Prof. Dr. Gertjan van der Ziel – Head of the Netherland’s Delegation to UNCITRAL Working Group III and Member of the UNCITRAL Secretariats’s Expert Group on Transport Law; and Dr. Anders Moellmann – Delegate and Head of the Danish Delegation to UNCITRAL Working Group III at the 18th through to the 21st Sessions and the 41st Commission Session. In their papers they provide the background ideas of the Rotterdam Rules, as well as their individual evaluations and criticism on both general issues and particular topics. On ¨ nan, myself, Prof. Dr. Fehmi U ¨ lgener, the other hand, local academics Prof. Dr. Samim U Associate Prof. Dr. Kerim Atamer, Associate Prof. Dr. Hakan Karan, and Assistant Prof. Dr. Zeynep Derya Tarman have evaluated the Rotterdam Rules from another perspective taking into account Turkish Law. Discussions at the conference involved interesting arguments as well as undiscovered issues pertaining to the Rotterdam Rules. We do not know if or when the Rotterdam Rules will come into force. What we do know is that the Rotterdam Rules take the basic rules of the Hague-Visby Rules and develops them in light of modern developments. Even if the Rotterdam Rules do not come into force, they will nevertheless influence future developments in this area of maritime law. I am grateful to Koc¸ University Law School Dr. Nu¨sret – Semahat Arsel International Business Law Implementation and Research Center for its generous funding to organize the conference as well as to publish its proceedings. I am also deeply thankful to Prof. Dr. Tankut Centel, Dean of Koc¸ University Law School, for his invaluable support in academic work in general and for believing in me in
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particular. He has supported me and my international academic activities since my early academic life. In addition, I would like to acknowledge my special thanks to my dear colleague Dr. Zeynep Derya Tarman for her inestimable suggestions and observations. I do not know how I would have coped without her valuable assistance in preparing for the conference as well as preparing this book for publication. I also owe thanks to Anthony Richard Townley for his kind and expeditious assistance in proof-reading of some of the papers. Last but not least, I owe gratitude to my family. Sariyer, January 2011
¨ zbek Dr. Meltem Deniz Gu¨ner-O Koc¸ University School of Law
Contents
1
The History of the Rotterdam Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Francesco Berlingieri
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General Principles of Transport Law and the Rotterdam Rules . . . . . . 63 Michael F. Sturley
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The Scope of Application of the Rotterdam Rules and Freedom of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 ¨ nan Samim U
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Extended Scope of the Rotterdam Rules: Maritime Plus and Conflict of the Extension with the Extensions of Other Transport Law Conventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 ¨ zbek Meltem Deniz Gu¨ner-O
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Obligations and Liabilities of the Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 ¨ lgener M. Fehmi U
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Construction Problems in the Rotterdam Rules Regarding the Identity of the Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Kerim Atamer and Cu¨neyt Su¨zel
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Compensation for Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Anders Møllmann
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Obligations and Liabilities of the Shipper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 Tomotaka Fujita
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Transport Documents in the Light of the Rotterdam Rules . . . . . . . . . . 229 Hakan Karan
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Rights of the Controlling Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 Gertjan van der Ziel
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Jurisdiction and Arbitration Under the Rotterdam Rules . . . . . . . . . . 265 Zeynep Derya Tarman
Chapter 1
The History of the Rotterdam Rules Francesco Berlingieri
Abstract There are various ways in which the history of the Rotterdam Rules may be narrated. On another occasion I have chosen the technique of following the evolution of the provisions throughout the debate in the UNCITRAL Working Group, indicating the various changes that had taken place and the debates within the Working Group that had given rise to each change. Since it would not have been possible within the time allowed to that for all the provisions, I had selected some of them, including some important definitions. This time I decided instead to report the global progress of the work, starting from the preparatory work done by the CMI and then following the work during each session of the UNCITRAL Working Group. Therefore the main part of this history is organized on the basis of the successive sessions of the Working Group, providing a summary, based on the reports of each session prepared by the Secretariat, of the most relevant issues discussed in each session and of the decisions made. The numbers and titles of the chapters and articles are those of the draft that at any given time was being considered. I have annexed to my history a list of the States and of the organizations that attended the sessions of the Working Group (Annex I) and the tables of contents of each of the thirteen sessions of the Working Group during which the Draft Instrument was discussed (Annex II).
1.1
The Work of the Comite´ Maritime International
1. When the Comite´ Maritime International (CMI) decided, in 1962, to embark upon the revision of the Hague Rules, it probably did that in a too prudent manner and avoided tackling the most significant issues, such as that relating to the exoneration of the carrier’s liability for errors in the navigation and management of the ship and that relating to the restriction of the carrier’s obligation to exercise due diligence to make the ship seaworthy at the time preceding the
Prof. F. Berlingieri President of Honor of the Comite´ Maritime International e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_1, # Springer-Verlag Berlin Heidelberg 2011
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commencement of the voyage. Nor was anything more done at the CMI 1963 Stockholm Conference and at the Diplomatic Conference of 1968. Quite to the contrary, the proposal made by the CMI to extend the scope of application of the Hague Rules to the shipments bound to Contracting States also was not adopted. And this has possibly contributed to the adoption in 1978 of the Hamburg Rules. In any event, that adversely affected the initial uniformity achieved by the Hague Rules, for several States that were parties to the Hague Rules have not become parties to the 1968 Protocol (the Hague-Visby Rules) or to the 1979 Protocol that replaced the Poincare´ Franc with the Special Drawing Right, and the Hamburg Rules created an alternative system that, in addition to being adopted by an increasing number of countries, almost all being developing States (now 33), gave rise in some countries, such as the Scandinavian countries and China, to a mixed national regime, based partly on the Hague-Visby Rules and partly on the Hamburg Rules. Besides all that, there occurred an unpredictable event, the container revolution, that slowly replaced the traditional contract of carriage by sea from port to port with a contract from the door of the shipper to the door of the consignee. 2. The CMI soon realised that it was necessary to proceed to a more substantial revision of the Hague-Visby Rules and in 1988 decided to place that subject on the agenda of its next Conference, due to take place in Paris in June 1990. An International Sub-Committee (I-SC) was created by the CMI Executive Council with the task of considering what features the uniform maritime law on carriage of goods by sea should possess in the last decade of the second millennium. The I-SC submitted to the Conference a report1 in which the following subjects were considered: – – – – – – – – –
Identity of the carrier Contracts and documents subject to a mandatory regime Deck cargo Period of responsibility Exemptions from liability Limits of liability Deviation Delay Damages
After its discussion at the Conference the report was approved with some amendments2 together with a declaration with which the CMI expressed the hope that the competent intergovernmental organizations would continue offering to the CMI the cooperation it had benefited from in the past, in order to enable the CMI to perform its future work.
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Comite´ Maritime International, Paris I, p. 54. Comite´ Maritime International, Paris II, p. 104.
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3. Four years later, in May 1994, the Executive Council of the CMI appointed a Working Group3 with a mandate to continue the work commenced before the Paris Conference. That Working Group drew up a questionnaire4 for the CMI national associations in which their opinion on the best way to find a remedy to the proliferation of the regimes governing carriage by sea in force in the maritime world5 was requested and, in the alternative on whether such new regime should consist of a modernisation of either the Hague-Visby Rules or the Hamburg Rules or should consist of an entirely new set of uniform rules. Subsequently the Executive Council created a new International Sub-Committee giving it the preparation of a study of the most important questions in the area of carriage of goods by sea and the submission of recommendations on the most convenient manner of handling them with a view to ensuring international uniformity as terms of reference. The I-SC chose 22 subjects6 for its consideration and the study of these subjects was carried out during the five subsequent sessions of the I-SC held in 1995 and 1996.7 4. In 1996 UNCITRAL at its twenty-ninth session considered a proposal to include in its work programme a review of current practices and laws in the area of the international carriage of goods by sea, with a view to establishing the need for uniform rules where no such rules existed and with a view to achieving greater 3
Consisting of Professors Francesco Berlingieri, Rolf Herber, Jan Ramberg and William Tetley. Published in the CMI Yearbook 1995, p. 111. 5 The summary drawn up by the Working Group is published in CMI Yearbook 1995, p. 112. 6 Such subjects were the following: 1. Definitions 2. Scope of application 3. Interpretation 4. Period of application 5. Identity of the carrier 6. Liability of the carrier 7. Liability of the performing carrier 8. Through carriage 9. Deviation 10. Delay 11. Limitation of liability 12. Loss of right to limit 13. Transport document 14. Evidentiary value 15. Liability of the shipper 16. Dangerous cargo 17. Letters of guarantee 18. Notice of loss 19. Time bar 20. Choice of law 21. Jurisdiction 22. Arbitration 7 See the reports of each session, in CMI Yearbook 1996, pp. 343–420 and their summary in CMI Yearbook 1997, p. 291. 4
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uniformity of laws. At that session, the Commission also decided that the Secretariat should gather information, ideas and opinions as to the problems that arose in practice and possible solutions to those problems, so as to be able to present at a later stage a report to the Commission. It was agreed that such information-gathering should be broadly based and should include, in addition to Governments, the international organizations representing the commercial sectors involved in the carriage of goods by sea, such as the CMI, the International Chamber of Commerce (ICC), the International Union of Marine Insurance (IUMI), the International Federation of Freight Forwarders Associations (FIATA), the International Chamber of Shipping (ICS) and the International Association of Ports and Harbors (IAPH). 5. In the following year the President and the Past President of the CMI, having heard about the above decisions, deemed it useful to pay a visit to the Secretary of UNCITRAL, Dr. Herrmann, with a view to exploring the feasibility of a joint initiative for the purpose of creating a new uniform legislation meant to replace both the Hague-Visby Rules and the Hamburg Rules. They tackled the problem in a very frank manner. They said that the Hague-Visby Rules were at least in part obsolete and that the Hamburg Rules also, albeit more modern, had been overtaken by events, such as the container revolution and that it appeared very unlikely that the traditional maritime countries would be willing to replace the Hague-Visby Rules with the Hamburg Rules. The meeting was very successful and marked the peace between the father of the Hague-Visby Rules and the father of the Hamburg Rules. 6. Following that meeting, in May 1988 the CMI Executive Council created a working group under the chairmanship of Stuart Beare with the initial mandate, in consideration of the resolution adopted by UNCITRAL in 1996, of studying the feasibility of widening the area, covered by the existing conventions on carriage of goods by sea, to other aspects of the contract of carriage of goods, taking into account the studies that had already been carried out in the recent years by CMI working groups and international sub-committees. However on the occasion of a round table organized by the CMI to which the representatives of the industry had been invited, great pressure was exerted to include in the study a review of the liability regime of both the carrier and the shipper also. The Working Group, named “W.G. on Issues of Transport Law”, drew up a questionnaire8 and on the basis of the responses received from the National Maritime Law Associations submitted to the CMI Executive Council an initial report in which it indicated that the idea of preparing a new Convention intended to replace both the Hague-Visby Rules and the Hamburg Rules had been widely supported. In view of that, the Executive Council decided to create without delay an ad hoc International SubCommittee and to send delegates to the forthcoming session of UNCITRAL in order to report on the steps already taken with a view to implementing the agreement that had been reached with Dr. Herrmann 2 years before.
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Published in the CMI Yearbook 1999, at p. 132.
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7. In the following session of UNCITRAL, held in New York in July 2000, a colloquium jointly organized by UNCITRAL and CMI took place in New York on 6 July 2000 with a view to gathering information from the industry about the problems that existed in the trade and identifying the issues that required special consideration. Attention was drawn to the various lacunae that existed in the present uniform legislation, amongst other things, in respect of the increasing importance in the carriage of containers of the door-to-door transportation, of the need for rules on electronic equivalents of bills of lading and of the attention that should be paid to the relation between contracts of carriage and contracts of sale of goods. The need for a reform of the existing uniform rules was widely shared by the participants. 8. Meanwhile two sessions of the International Sub-Committee under the chairmanship of Stuart Beare had already taken place9 and a third one followed that month,10 during which the liability regime of the carrier and the extension of the scope of application of the future transport instrument to the land phases of doorto-door transport were discussed. Such extension received very wide support, together with the adoption of rules on the electronic equivalent of paper transport documents, at the subsequent Conference of the CMI, held in Singapore in February 2001, when the preliminary draft of the new instrument, approved by the International Sub-Committee during its fourth session, held in London on 12 and 13 October 2000, was considered.11 A subsequent session of the I-SC was held in London on 16–18 July 2001, when amendments to the Draft Instrument were effected on the basis of the comments and suggestions made during the Singapore Conference. The amended draft was circulated to all national associations for comments, followed by a synopsis of all comments received up to 30 October 2001, whereupon the I-SC held in Madrid on 12 and 13 November 2001 its last session for a final review of the instrument. The Draft Instrument, accompanied by explanatory notes, after its approval by the CMI Executive Council was sent to the UNCITRAL Secretariat on 11 December 2001.
1.2
The Work of the UNCITRAL Working Group on Transport Law
After consideration of a report of the Secretary General on the work of the CMI I-SC, UNCITRAL had decided to create a working group, called “Working Group on Transport Law”, to which the task of reviewing the Draft Instrument now at the 9 The first in London on 27 and 28 January 2000 (CMI Yearbook 2000. Singapore I, p. 176) and the second also in London, on 6 and 7 April 2000 (CMI Yearbook 2000 – Singapore I, p. 202). 10 The third session was held in New York, on 7 and 8 July 2000 (CMI Yearbook 2000 – Singapore I, p. 234). 11 CMI Yearbook 2001 – Singapore II, p. 532.
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almost final stage of preparation by the CMI was to be entrusted. As regards the matters that were supposed to be covered in the Draft Instrument, UNCITRAL decided that the liability regime should also be included, although the period of application, at least initially, should be limited to the maritime leg of the carriage. The Working Group on Transport Law, which was composed of all State members of UNCITRAL, devoted thirteen sessions to the preparation of the Draft Convention (initially called Draft Instrument), during which three readings of the draft have taken place and four subsequent drafts have been prepared. Ninth session, held in New York from 15 to 26 April 2002 The WG started its work on the Draft Instrument prepared by the CMI in April 2002. Prof. Rafael Illescas from Spain was elected Chairman and Mr. Walter de Sa´ Leita˜o was elected Rapporteur. The CMI Draft Instrument on Transport Law,12 sent to the UNCITRAL Secretariat on 11th December 2001, was inserted as an annex to the first UNCITRAL document of the Working Group13 without the introduction and with only some minor language adjustments to the comments following the individual provisions. The title of the draft was changed to “Preliminary Draft Instrument on the Carriage of Goods by Sea”. The Working Group decided to commence its work by a broad exchange of views regarding the general policy reflected in the Draft Instrument, rather than focusing initially on an article-by-article analysis of the Draft Instrument. To assist in structuring the general discussion, it was agreed that seven themes should be examined, with reference to each case of the relevant provisions in the Draft Instrument. These were: sphere of application (draft chapter 3); electronic communication (draft chapters 2, 8 and 12); liability of the carrier (draft chapters 4, 5 and 6); rights and obligations of parties to the contract of carriage (draft chapters 7, 9 and 10); right of control (draft chapter 11); transfer of contractual rights (draft chapter 12) and judicial exercise of those rights emanating from the contract (draft chapters 13 and 14). Upon the suggestion made by one delegation, the Working Group agreed that a further theme should be added regarding the freedom of contract (currently dealt with in draft chapter 17) for examination as part of the thematic analysis of the Draft Instrument. It is worth mentioning that when the last of the above themes was discussed, after a general agreement that the exclusion of charter parties would still be appropriate14 it was stated that the practice of individualized transport agreements (in practice referred to by expressions such as volume contracts or transport service contracts) had developed in different industries that shipped goods internationally and with shippers of different sizes. Such contracts typically resulted from careful negotiations which addressed matters such as the volume of goods to be transported (expressed in absolute or relative terms), the period over which the goods would be
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In CMI Yearbook 2001 – Singapore II, p. 532. Document A/CN.9/WG.III/WP.21. 14 A/CN.9/510, } 62. 13
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transported, various service terms, price, as well as liability issues. Such individually negotiated contracts varied in their focus, for example, in that some specifically dealt with liability issues while others did not pretend to modify the generally applicable liability regime. It was suggested that such contractual arrangements should be considered by the Working Group with a view to treating them differently from other transport contracts. Such contracts would include the following special features: they would be covered by the Draft Instrument but its provisions would not be mandatory with respect to them; the Draft Instrument, including the liability provisions would apply fully except to the extent the parties specifically agreed otherwise; derogations from the otherwise mandatory regime would have to be individually negotiated and could not be established by standard terms; third parties, including the consignee (the holder of the bill of lading or the person entitled to take delivery of the goods on another basis) would be bound by such individually negotiated terms only if, and only to the extent that, they specifically agreed to them (for example, by becoming a party to the individually negotiated contract); such agreement by third persons would have to be specific and could not be expressed in standard terms. There followed a specific consideration of draft chapters 1-Definitions, 5Obligations of the carrier and 7-Obligations of the shipper. In respect of the obligations of the carrier the discussion covered, inter alia, article 5.2.2 pursuant to which the parties may agree that during the period of responsibility of the carrier certain functions may be performed by or on behalf of the shipper. It was noted that that provision was designed to accommodate the practice of FIO and FIOS clauses and the view was expressed that FIO(S) clauses might be appropriate for maritime (port-to-port) carriage but had no place in the global transport service of door-todoor transport contracts where it would be agreed that loading and unloading operations in an intermediary port should be performed by the cargo owner and that the agreement would shift the risk of those operations on the cargo owner in the midst of the service. It was thus suggested that the draft provision should be deleted. That view received considerable support and it was considered that the impact of those clauses on door-to-door operations needed to be evaluated.15 Tenth session, held in Vienna from 16 to 20 September 2002 Chapter 6 – Liability of the carrier The WG devoted most of its time to the whole of chapter 6 that included the provisions now contained in articles 17, 22, 19, 21, 24, 25, 59, 61 and 23. After consideration of article 6.1.1, corresponding to the present article 17.1, the debate centred on article 6.1.2, corresponding to article 4.2 (a) and (b) of the Hague-Visby Rules and the Working Group agreed to delete the exoneration for errors in the navigation and management and to keep that for fire. There followed a discussion on the subsequent excepted perils, now listed in article 6.1.3, and two different approaches were considered, the first being to qualify them as exonerations and the
A/CN.9/510, } 120–127.
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second to qualify them instead as presumptions only, without any decision being reached in that respect.16 In respect of loss or damage due to a combination of causes, for which two alternative versions were included in article 6.1.4, preference was provisionally expressed for the first one, based on article 5.7 of the Hamburg Rules.17 It is also worth mentioning that in respect of the provisions on calculation of compensation in article 6.2 the question whether consequential losses were excluded or not was raised and the only response given was that the intention of the CMI had been to replicate the Hague-Visby Rules and that in respect of the provisions on delay in article 6.4 no agreement could be reached on whether to treat the failure to deliver the goods within the time it would be reasonable to expect of a diligent carrier as delay, mentioned in square brackets in article 6.4.1. Eleventh session, held in New York from 24 March to 4 April 2003 Chapters 8, 10, 11, 12, 14, 16 and 17 The WG considered several chapters of the Draft Instrument, namely chapters 8-Transport documents and electronic records, 10-Delivery to the consignee, 11Right of control,12-Transfer of rights, 14-Time for suit, 16-Other conventions and 17-Limits of contractual freedom. Chapter 8 – Transport documents and electronic records Several comments and suggestions were made in respect of paragraph 3.1 (corresponding to the present article 40) including that of providing that the carrier should be required to give the reasons of its qualification, thereby avoiding the use of general clauses such as “said to be” or “said to contain” and that, as regards the weight of containers, that wording should be added to cover the case where there was no commercially reasonable possibility of weighing the container.18 Comments and suggestions were also made on paragraph 3.3 (corresponding to the present article 41), in particular in respect of the evidentiary effect of the particulars in nonnegotiable documents and it was pointed out that the conclusive evidence rule already existed with respect to sea waybills in article 5 of the CMI Uniform Rules for Sea Waybills.19 Finally the novel provision on the identity of the carrier in paragraph 4.2 (corresponding to the present article 37) was the subject of debate, and opposite views were expressed on it.20 Chapter 10 – Delivery to the consignee (now Chapter 9) The provision in paragraph 1 (corresponding to the present article 43) on the obligation of the consignee to accept delivery where it exercises any of its rights under the contract of carriage met with considerable support, whereas the subsequent part of the paragraph, relating to the rights of the carrier where the consignee
A/CN.9/525, } 41. A/CN.9/525, } 46–56. 18 A/CN.9/526, } 36–37. 19 A/CN.9/526, } 44–48. 20 A/CN.9/526, } 56–60. 16 17
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does not collect the goods, was the subject of differing views and the Secretariat was asked to prepare a revised draft.21 A careful analysis was then made of paragraphs 3 (corresponding to the present articles 45–47) and 4 (corresponding to the present article 48) and the Secretariat was asked to prepare a redraft of both taking into account the views expressed, even though the Working Group had reserved to revert on the text of paragraph 3.22 Chapter 11 – Right of control (now Chapter 10) The adoption on provisions on the right of control was generally felt a welcome addition to the traditional maritime transport instrument. The individual provisions were the subject of an initial debate and, as for other articles, the Secretariat was requested to prepare a revised draft, with possible variants, for the continuation of the discussion. Chapter 12 – Transfer or rights (now Chapter 11) The provisions in that chapter constituted a novel approach, at least with regard to maritime conventions. It was noted that there were two principal reasons for the inclusion of a chapter on transfer of rights: first, to ensure that the provisions of the Draft Instrument were coherent throughout in terms of the issue of liability of the parties, and second, in order to set out the necessary rules to accommodate the electronic communication component of the Draft Instrument. The debate focused in particular on paragraphs 2 and 3 that regulated the liability of the holders of negotiable transport documents as well as of the transferees of the rights under a contract of carriage when no negotiable transport document is issued23 and the Secretariat was asked to prepare a revised draft of such paragraphs placing them in square brackets. Chapter 13 – Rights of suit (deleted) Its paragraph 1, which identifies the parties entitled to assert rights under a contract of carriage, met with considerable objections and its deletion was strongly supported. At that stage, however, the Secretariat was only requested to prepare a revised draft, taking into account the objections that had been raised.24 Chapter 14 – Time for suit (now Chapter 13) In respect of chapter 14, which provided that the carrier is discharged from all liability in case suit is not brought within 1 year, an important question of terminology was raised with respect to article 14.1. It was noted that the commentary to this provision25 stated that the expiration of the time for suit resulted in the extinguishment of the rights of the potential claimant, and as such, suggested that chapter 14.1 concerned a prescription period rather than a limitation period. It was
A/CN.9/526, } 65–72. A/CN.9/526, } 78–99. 23 A/CN.9/526, } 135–148. 24 A/CN.9/526, } 150–159. 25 A/CN.9/WG.III/WP.21, } 208. 21 22
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noted that this distinction was very important, particularly in civil law systems, where the law establishing a time period for the extinction of a right would typically not allow a suspension of the time period. As to whether the lex fori or the lex contractus would govern the issue of the limitation period, it was pointed out that certain existing international instruments such as the Rome Convention on the Law Applicable to Contractual Obligations would lead to the application of the lex contractus as matters of time for suit for claims arising from the contract of carriage would be governed by the proper law of the contract. However, in some jurisdictions, the matter would be regarded as one of civil procedure to be governed by the lex fori. It was suggested that any ambiguity with respect to prescription periods versus limitation periods should be carefully avoided, in order to ensure predictability of the time for suit provisions. A discussion then followed on the period of limitation, indicated in the draft as 1 year, and it was decided to place the period within square brackets.26 Chapter 3 – Scope of application (now Chapter 2) After consideration of chapter 16 (now chapter 17), a general discussion took place on the scope of application of the instrument and, on the assumption that its scope would be door-to-door, five different proposals by Italy,27 Canada,28 Sweden,29 the Netherlands30 and the United States,31 were presented. After discussion wide support was expressed in the Working Group that the scope of application of the Draft Instrument should be door-to-door rather than port-to-port. Support was expressed for a uniform system in the door-to-door instrument, and it was suggested that an effort should be made to achieve such a uniform system. However, there was broad acceptance that a uniform system was likely unattainable, and support was expressed in favour of a limited network system. Various means of adopting a limited network system were discussed, including those suggested in the Italian, the Canadian and the Swedish proposals, but no firm decision was made by the Working Group in this regard. Having provisionally agreed that the scope of the Draft Instrument should cover door-to-door transport, the Working Group proceeded with a more specific discussion of the following five issues: (a) the type of carriage covered by the Draft Instrument; (b) the relationship of the Draft Instrument with other conventions and with domestic legislation; (c) the manner in which performing parties should be dealt with under the Draft Instrument; (d) the limits of liability under the Draft Instrument; and (e) the treatment of non-localized damages under the Draft Instrument.32
A/CN.9/526, } 169. A/CN.9/WG.III/WP.25. 28 A/CN.9/WG.III/WP.23. 29 A/CN.9/WG.III/WP.26. 30 A/CN.9/WG.III/WP.28/Add.1. 31 A/CN.9/526, } 226–227. 32 A/CN.9/526, } 240–267. 26 27
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At the end of such discussions the first reading of the Draft Instrument was completed, whereupon the Secretariat prepared a revised text of the Draft Instrument for consideration of the Working Group, in which the changes to the text previously considered, contained in document A/CN.9/WG.III/WP.21, were indicated by underlining and strikeout. Such revised text was circulated as an annex to a Note by the Secretariat dated 4 September 2003 (document A/CN.9/WG.III/ WP.32). A change was made in the general layout: the provisions were arranged under the 19 chapters listed below: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.
General provisions Electronic communications Period of responsibility Obligations of the carrier Liability of the carrier Additional provisions relating to the carriage by sea Obligations of the shipper Transport documents and electronic records Freight Delivery to the consignee Right of control Transfer of rights Rights of suit Time for suit Jurisdiction Arbitration General average Other conventions Limits of contractual freedom
A progressive numbering of the articles under each chapter was adopted, the draft consisting of a total of 89 articles. Twelfth session, held in Vienna from 6 to 17 October 2003 The Working Group based its discussions on a revised edition of the Draft Instrument prepared by the Secretariat, reference to which will be made as WP.32.33 Title of the instrument The Working Group considered, as a preliminary matter, the title of the instrument and in view of the level of consensus that had been achieved in respect of the scope of application of the Draft Instrument, decided to remove the brackets so that the Draft Instrument would be called “Convention on the carriage of goods wholly or partly by sea”.34
33
A/CN.9/WG.III/WP.32. A/CN.9/544, } 18.
34
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Core issues selected for discussion It was then decided to proceed with discussions by grouping matters into core issues. It was suggested that the first major heading of issues could be “Scope of application” and that the first sub-set of issues under that heading could be “Conflicts with international and national legislation”, pursuant to which the following three groups of issues could be discussed: (1) contract of carriage; (2) performing parties and network liability and (3) localized and non -localized damage. It was proposed that the second sub-set of issues under the heading “Scope of application” could be “Geographical scope of the maritime leg” (article 2 of the Draft Instrument). It was further proposed that a second major group of issues could be discussed under the heading “Freedom of contract”, and could consist of the following topics: the charter party exemption (article 2(3) of the Draft Instrument); treatment of ocean liner service agreements (OLSAs); mixed contracts of carriage and forwarding (article 9); the functional approach (e.g. article 11(2), free in and out, stowed, or FIOS, clauses); one-way or two-way mandatory provisions (article 88 of the Draft Instrument); and period of responsibility (article 7). It was stated that the topics in this group were based on the assumption that the instrument would otherwise be mandatory. It was suggested that a third major group of issues could be discussed under the heading “Carrier obligations and liability”. This group of topics could include exemptions; limits and tacit amendment procedure; delay; and seaworthiness (as a continuing obligation). It was proposed that a discussion of these three major groups of issues could be followed by a discussion of the following four topics: shippers’ obligations; forum selection and arbitration; delivery of goods; and right of control. In preparation of the session the Government of the United States had submitted the text of a proposal regarding ten aspects of the Draft Instrument for consideration by the Working Group35 one of which was its scope of application, the suggestion being made that also certain performing parties, already defined in article 1.17 of the previous draft, should be subject to the convention. In connection with that proposal the delegations of Italy and the Netherlands stated that they would support it, subject to some minor changes. It was proposed that the first change should be that the provisions of the Draft Instrument apply from the time the goods are taken over by the carrier to the time of their delivery to the consignee, subject to the limited network exception contained in article 8 of the Draft Instrument, and that the reference to national law that appeared in square brackets in that draft provision should be deleted. It was suggested that such deletion was necessary to avoid the danger that international law could be superseded by national law. The second change suggested was that in addition to the carrier, the provisions of the Draft Instrument should also apply to those performing parties that operate in the port areas, which were referred to as “maritime performing parties”, for which a definition would be required. The third suggestion was that the provisions of the Draft
35
A/CN.9/WG.III/WP.34.
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Instrument should not apply to performing parties that are not maritime performing parties. The fourth suggestion was that all the provisions of the Draft Instrument that make reference to performing parties should be reviewed so that in those provisions relating to the liability of the carrier for acts or negligence of performing parties (e.g., draft articles 14(2) and 15(3)) reference should continue to be made to performing parties generally, whether maritime or not, while in those provisions that relate to the obligations and the liability of performing parties, reference should only be made to maritime performing parties. Amongst others, it was suggested that draft articles 15(1) and 15(4) should be revised to create a direct cause of action against maritime performing parties only. Similarly, it was suggested that the “Himalaya” protection of article 15(5) should be extended to maritime performing parties only. The Working Group was almost unanimous in support of the exclusion of nonmaritime performing parties from the liability regime of the Draft Instrument as set out in section I of the proposal of the United States. In addition, there was strong support in favour of the second aspect of that proposal in deleting the reference to national law in article 8(b). While a provisional decision was made to retain the reference to national law in article 8(b) in square brackets pending a final decision to be made at a future session, it was strongly felt that deletion of the reference to national law was a necessary component to the overall proposal.36 The Working Group took note of the fact that the proposal in section I of the United States document should be regarded as a single package, including both the exclusion of non-maritime performing parties from the liability regime and the deletion of the reference to national law in article 8(b). In connection with the scope of the application the prevailing view, however, was that the focus of the Draft Instrument on maritime transport should be reflected in the provision establishing its sphere of application. It was pointed out that the acceptability of the Draft Instrument might be greater if its scope made it clearly distinguishable from a purely multimodal transport convention. The initial draft of the instrument had attempted to establish such a distinction simply by stating that the Draft Instrument was intended to cover door-to-door transport involving a sea leg. However, it was agreed by most delegations that a further restriction to the scope should be introduced by establishing that the Draft Instrument would apply to door-to-door carriage of goods, whether unimodal or multimodal, provided that such carriage involved a sea leg and that such sea leg involved cross-border transport.37 Subsequently it was considered whether certain types of contract should be excluded from the scope of the instrument and there was broad agreement in the Working Group that certain types of contracts either should not be covered by the Draft Instrument at all, or should be covered on a non-mandatory, default basis. Such contracts would include those that, in practice, were the subject of extensive
A/CN.9/544, } 21. A/CN.9/544, } 56.
36 37
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negotiation between shippers and carriers, as opposed to transport contracts that did not require (or where commercial practices did not allow for) the same level of variation to meet individual situations. The latter generally took the form of contracts of adhesion, in the context of which parties might need the protection of mandatory law. Diverging views were expressed as to the best legislative technique to be used in excluding those contracts that should not be covered on a mandatory basis by the Draft Instrument. One view was that the traditional exception regarding charterparties should be maintained in the provision dealing with the scope of the Draft Instrument. It was suggested that such a traditional exception should be complemented by a treatment of specifically identified types of contracts in respect of which the provisions of the Draft Instrument should not be mandatory. However, it was also suggested that such contracts should not be dealt with in draft article 2 but in chapter 19 dealing with freedom of contract, in which event the references to “contracts of affreightment, volume contracts, or similar agreements” currently between square brackets should be moved to chapter 19, with the possible addition of a reference to “ocean liner service agreements (OLSAs)”.38 Chapter 4 – Obligations of the carrier Chapter 5 – Liability of the carrier The Working Group devoted the last part of the session to the draft articles on the obligations of the carrier and its liability for loss of or damage to the goods in chapters 4 and 5 of the revised Draft Instrument. In respect of the liability regime it was pointed out that a case for cargo damage was, in practice, a four-step process. In the first step, the cargo claimant was required to establish its prima facie case by showing that the cargo was damaged during the carrier’s period of responsibility, but was not required to prove the cause of the damage, and if no further proof was received, the carrier would be liable for unexplained losses suffered during its period of responsibility. In the second step, the carrier could rebut the claimant’s prima facie case by proving an “excepted peril” under article IV.2 of the Hague and Hague -Visby Rules, and that that peril was the cause of the damage to the cargo. In step three, the cargo claimant had the opportunity to prove that the “excepted peril” was not the sole cause of the damage, and that the carrier caused some of the damage by a breach of its duty to care for the cargo. Once the claimant had shown that there were multiple causes for the damage, the analysis proceeded to step four, in which liability for the damage was apportioned between the different causes. It was suggested that the first three steps of this approach had worked well since their inception in the Hague Rules, and that this general approach should be preserved in the Draft Instrument. As respects the list of the “excepted perils”, the maintenance of which was deemed advisable, inter alia, in order to preserve the body of law that had developed with the widespread use of the Hague and Hague-Visby Rules, the Working Group considered article 14(2) of the second redraft prepared by the informal drafting A/CN.9/544, } 78.
38
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group. The discussion in the Working Group again focused on whether the preferred approach to the list of “excepted perils” should be one of exoneration from liability or one based on presumption of non-liability. There was support for the view that the presumption approach was preferable, while a minority view expressed a preference for the exoneration approach. A widely held view was that there was no specific preference for one approach over the other, particularly if, as expected, the legal outcome would be the same with either approach.39 Finally, as respects the obligations of the carrier, the Working Group agreed, after discussion, that the obligation of due diligence in respect of seaworthiness should be a continuing one.40 Thirteenth session, held in New York from 3 to 14 May 2004 Chapter 5 – Obligations of the carrier Article 18 – Limits of liability After a general discussion on the provisions on liability of the performing parties (article 15), delay (article 16) and calculation of compensation (article 17), the Working Group considered the provisions on the limits of liability in article 18. It was stated that the words “in connection with the goods” were drawn from article IV.5(a) of the Hague-Visby Rules, where the intent was to cover losses caused by a decrease in the market value of goods during a delay, but not to cover economic loss. It was suggested that if the Draft Instrument was to cover pure economic loss, a different formulation should be used, such as “the carrier’s liability for loss of or damage to the goods or for delay in delivery”.41 In respect of the loss of the right to limit, strong support was expressed for maintaining the reference to the personal act or omission of the person claiming a right to limit its liability, to the exclusion of acts or omissions of the servants or agents of that person. With respect to the concern expressed in respect of the “personal” act or omission of a corporate entity, it was pointed out that such a “corporate entity” was normally established in the form of a legal person and that the notion of a “personal act or omission” was well established in maritime law and understood to encompass the managers of such a legal person. To alleviate that concern, it was suggested that the words “personal act or omission of” might be replaced by “act or omission within the privity or knowledge of”. Chapter 9 – Freight It was decided to delete the chapter on freight except its article 44 on the clause “freight prepaid”, to be placed elsewhere (now in chapter 8, article 42).42
A/CN.9/544, } 106. A/CN.9/544, } 153. 41 A/CN.9/552, } 42. 42 A/CN.9/552, } 163–164. 39 40
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Fourteenth session, held in Vienna from 29 November to 10 December 2004 Chapter 5 – Liability of the carrier Article 14 – Basis of liability The Working Group reverted to the provisions on the basis of the liability of the carrier. One of the problems that were discussed was that relating to the allocation of the burden of proof in the event of unseaworthiness, at that time in article 14.2(c) and now in article 17.4. The Working Group considered the two alternatives set out in the proposed text of subparagraph 14(2)(c). It was observed that the first alternative text of subparagraph 14(2)(c) required the claimant to prove only the unseaworthiness of the ship or the failure of the carrier to properly man, equip and supply the vessel or the unfitness of the holds in order to shift the burden of proof back to the carrier, while the second alternative required the claimant to prove that the loss, damage or delay was actually caused by one of those failings on the part of the carrier. Concerns were raised regarding the burden that would be placed on the claimant in having to prove the causation further to the second alternative approach. Concerns were also raised with respect to the burden that the first alternative would place on the carrier, by requiring it to prove both the seaworthiness of the ship and the cause of the loss. Since support was expressed in the Working Group for each of the two alternatives, the proposal was made that a compromise position between the two alternatives being considered in subparagraph 14 (2) (c) could be achieved by reducing the burden on the claimant to prove causation: the claimant should be required to prove both the unseaworthiness and that it caused or could reasonably have caused the loss or damage. Support was expressed in the Working Group for the adoption of such a compromise position.43 After reconsidering the list of the “excepted perils”,44 the Working Group devoted its attention to the draft provision on concurring causes, contained in a Note by the Secretariat.45 The view was expressed that there could be three types of concurring causes, each of which should be subject to an allocation of liability by the court pursuant to paragraph (4): – Those whereby each event could have caused the entire loss, damage or delay, irrespective of the other causes; – Those whereby each event caused only a portion of the damage;
A/CN.9/572, } 23–24. A/CN.9/572, } 34–66. 45 A/CN.9/WG.III/WP.36. The provision was the following: 4. In case the fault of the carrier or of a person mentioned in article 14 bis has contributed to the loss, damage or delay together with concurring causes for which the carrier shall not be liable, the amount for which the carrier shall be liable, without prejudice to its right to limit liability as provided by article 18, shall be determined [by the court] in proportion to the extent to which the loss, damage or delay is attributable to its fault. [The court may only apportion liability on an equal basis if it is unable to determine the actual apportionment or if it determines that the actual apportionment is on an equal basis.] 43 44
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– And those whereby each event was insufficient to have independently caused the damage, but the combined result created the loss, damage or delay. Attention was, however, drawn to the fact that the Working Group had agreed that the guiding principle of paragraph (4) should be that it did not deal with the question of liability as that question was dealt with in paragraphs 14(1) and (2),46 and that paragraph (4) was intended to be confined to the distribution of loss amongst multiple parties, covering all types of concurring causes. Further, it was recalled that in earlier discussions, the Working Group had agreed in principle that when there were multiple causes for loss, damage or delay, it should be left to the court to allocate liability for the loss based upon causation. Fifteenth session, held in New York from 18 to 28 April 2005 Chapter 1 – General provisions Chapter 19 – Limits of contractual freedom The Working Group considered again the matters of the scope of application and freedom of contract and after a general discussion on the methodology for the continuation of the work agreed that consideration of these matters should take place on the basis of the following key issues: (1) Whether OLSAs should be included within the scope of application of the Draft Instrument as volume contracts; (2) Under which conditions should it be possible to derogate from the provisions of the Draft Instrument; (3) Should there be mandatory provisions from which derogation should never be allowed; (4) Should a derogation applicable as between the original contracting parties extend to third parties and if so under what conditions; (5) Whether the present definition of contract of carriage is appropriate or not; (6) Should a documentary or a non-documentary approach be adopted for the protection of third parties; (7) Should a “one way” or a “two way” mandatory approach be adopted. In respect of issue no. 1 it was decided that the answer should be affirmative.47 In respect of issue no. 2 it was decided that the following derogation scheme should form the basis for further discussion48: – The contract should be [mutually negotiated and] agreed to in writing or electronically; – The contract should obligate the carrier to perform a specified transportation service; – A provision in the volume contract that provides for greater or lesser duties, rights, obligations, and liabilities should be set forth in the contract and may not be incorporated by reference from another document; and – The contract should not be [a carrier’s public schedule of prices and services,] a bill of lading, transport document, electronic record, or cargo receipt or similar
A/CN.9/544, } 142. A/CN.9/576, } 14–16. 48 A/CN.9/576, } 17–19. 46 47
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document but the contract may incorporate such documents by reference as elements of the contract. In respect of issue no. 3 it was decided that derogation from the seaworthiness obligation should in no event be permissible.49 In respect of issue no. 4 it was decided that a provision allowing third parties to a volume contract to expressly agree to be bound by derogations agreed to as between the original parties should be included, and the drafting of such provision be entrusted to the informal drafting group.50 In respect of issue no. 5 the discussion focused on whether the international character of the contract should also include the internationality of the maritime leg and it was agreed that that should be the case.51 In respect of issue no. 6 attention was drawn to the fact that in some trades and, in particular, in short shipping trade, commercial practice did not foresee the issuance of any type of document and that consequently the “documentary approach”, pursuant to which protection would be granted to third parties holders of bills of lading issued pursuant to charter parties,52 would deprive third parties involved in such trades of any protection.53 In respect of issue no. 7 it was decided that only the shipper needed protection and that, therefore, the liability of the carrier could be contractually increased. The Working Group subsequently considered the revised version of articles 88 and 89 and draft of the new article 88a that had been prepared by an informal working group following the discussion of issues nos. 1–4 and the ensuing revised version of articles 1–454 and decided that such revised version should be used as a basis for continuation of the discussion at a future session.55 After the end of the fifteenth session, although the second reading of the Draft Instrument had not been completed, the Secretariat prepared a new text of the Draft Instrument containing a consolidation of certain revised provisions that had been agreed upon by the Working Group. Such new text was circulated as Annex I to a Note by the Secretariat dated 8 September 2005. Changes to the previous text56 have been indicated in footnotes to that text by reference to the working paper in which such interim revised text appeared,57 or to the paragraph of the report in which such text appeared.58 Reference to that new edition of the Draft Instrument will be made as “WP.56”.
A/CN.9/576, } 20–23. A/CN.9/576, } 24–28. 51 A/CN.9/576, } 29–34. 52 This is at present the case as under article 1(b) of the Hague-Visby Rules and article 2.3 of the Hamburg Rules. 53 A/CN.9/576, } 36–37. 54 The revised version of such articles may be found in A/CN.9/576, } 52. 55 A/CN.9/576, } 53–109. 56 Contained in A/CN.9/WG.III/WP.32. 57 A/CN.9/WG.III/WP.36, A/CN.9/WG.III/WP.39, A/CN.9/WG.III/WP.44, and A/CN.9/WG.III/ WP.47. 58 A/CN.9/572 and A/CN.9/576. 49 50
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Sixteenth session, held in Vienna from 28 November to 9 December 2005 Chapter 16 – Jurisdiction Chapter 17 – Arbitration The Working Group considered first the chapters on jurisdiction and arbitration in WP.56. As regards jurisdiction one of the provisions that deserved particular attention was that on choice of court agreements in article 76 of WP.56. The discussion, however, was based on subsequent drafting suggestions received from some delegations59 and since various observations were made on such text, the Working Group decided that article 76 should be further revised in the light of the observations that had been made. There followed a short discussion on chapter 17 on arbitration. Chapter 8 – Obligations of the shipper Subsequently the Working Group considered the chapter on the obligations of the shipper (chapter 8 in WP.56). There was general support for including the chapter on shippers’ obligations in the Draft Convention as it reflected the current context in which the contract of carriage required the shipper and carrier to cooperate to prevent loss of or damage to the goods or to the vessel. The view was expressed that obligations in the contract of carriage had evolved over the years beyond mere acceptance to carry goods and payment for such carriage. It was said that this cooperation between the shipper and the carrier should be reflected in the Draft Convention. One of the issues that received particular attention was that relating to the liability of the shipper for loss due to delay. There was support for the view that delay was particularly problematic as a basis for the shipper’s liability, since it could expose the shipper to enormous and potentially uninsurable liability. For example, a shipper who failed to provide a necessary customs document could cause the ship to be delayed, and could be liable not only for the loss payable to the carrier, which could include enormous consequential damages, but also for the losses of all of the other shippers with containers on the ship. As a consequence, the suggestion was made that the shipper’s liability for delay should be deleted from the draft text. It was also observed that if delay was retained in the text, a reasonable limitation should be placed on the liability of the shipper. The suggestion was also made that such a limitation on the liability of the shipper for consequential losses should exist in any event, as, for example, the shipper could be held responsible for broad, but likely insurable, liability for damage to the ship. However, the difficulties associated with arriving at a reasonable means of determining such a limitation on liability were also outlined. There was a general agreement that such a limitation should be at a high enough level so as to provide a strong enough incentive for the shipper to provide accurate information to the carrier, but that it should be foreseeable and low enough so that the potential liability would be insurable.
The amended text may be found in A/CN.9/591, } 20.
59
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Chapter 10 – Delivery to the consignee Finally, the Working Group considered the provisions on delivery of the goods and, in that connection the provisions on the right of the parties to determine the period of responsibility of the carrier, now contained in article 12.3 and those on the FIO clauses now contained in article 13.2. That was done following a document of the Netherlands in the form of a questionnaire on the above provisions, submitted in order to facilitate their consideration during the sixteenth session.60 In this connection it is worth mentioning the discussion that took place in respect of provisions now in articles 12.3 and 13.2, at that time contained in articles 11.6 and 14.2. It was observed that draft paragraph 11(6) was intended to operate in concert with draft paragraph 14(2) in an effort to provide a solution for the treatment of FIO(S) clauses, which, in some States, determined the period of the responsibility of the carrier. There was support for the view that draft paragraph 6 would not be acceptable if draft paragraph 14(2) was deleted, but that read together with draft paragraph 14(2), the two provisions established an acceptable approach to FIO(S) clauses. It was explained that the combined effect of these provisions was to clarify the responsibilities of the shipper and the carrier who agreed that the loading, stowing and discharging of the goods would be carried out by the shipper. In that case, the shipper would be liable for any loss due to its failure to effectively fulfill those obligations, and the carrier would retain responsibility for other matters during loading and discharge, such as a duty of care regarding the goods, since the carrier’s period of responsibility would be governed by the contract of carriage. In addition, it was observed that the current text of draft paragraph 14(2) restricted the obligations that could be contracted out by the carrier to the shipper or other parties to those listed in draft paragraph 14(2). Further, the view was expressed that draft paragraph 11(6) was helpful since it made clear that loading and discharging took place during the period of responsibility of the carrier. It was noted that FIO(S) clauses were most commonly used in non-liner carriage, which fell outside the scope of application of the Draft Convention, but that the Draft Convention could be applicable to contracts of carriage in non-liner transport by way of the operation of draft article 10 (now article 7). Consideration of the chapter on delivery could not, however, be completed during that session. Seventeenth session, held in New York from 3 to 13 April 2006 Chapter 11 – Right of control The Working Group continued the second reading of the Draft Instrument and considered the provisions in chapter 11 on “Right of control” (now chapter 10 on “Rights of the controlling party”). In respect of article 54 (now article 50), which at that time was conceived as a definition (its title in fact clearly indicated that approach, being “Definition of the right of control”) the attention focused on its paragraph (b), the importance of which was explained as a protection of the seller in
60
A/CN.9/WG.III/WP.57.
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case of insolvency of the buyer, as a consequence of which the seller could be compelled to change the destination of the goods,61 and the prevailing view was that that should basically be a right of the controlling party and not merely a variation of the contract subject to agreement with the carrier, but, being such, its exercise should be limited to situations where the instructions may be carried out by the carrier without adversely affecting the schedule of the ship. It was therefore decided that of the two alternative bracketed phrases – “before the arrival at the place of destination” and “at an intermediate port or place en route” – the second should be adopted.62 Equally interesting is the debate in respect of article 56.1 (now article 51.2): the concern was expressed that its original text might not adequately protect the interests of the FOB seller of the goods when the shipper was the controlling party and the FOB seller was only the consignor, and not the shipper and it was consequently decided to adopt a text similar to that that appears in article 51.1(a).63 A lengthy debate then followed in respect of the termination of the right of control and at the end it was decided that it should terminate upon actual delivery of the goods.64 Chapter 10 – Delivery to the consignee There followed the resumption of the discussion on the chapter on delivery of the goods, that could not be completed during the previous session. The first provision that was considered was that in article 49(c), now in article 47.2(b); that, however, has a more limited scope of application since it is conditional to an express statement in the negotiable transport document or negotiable electronic transport record that the goods may be delivered without the surrender of the document or record. The debate is, however, worth mentioning, since it indicates the reason why that exception to the general rules was felt necessary. When concerns were raised since that provision would run counter the long-standing principle of the need for presentation and surrender of the bill of lading, it was pointed out that the regime was intended to prevent abuses of the bill of lading system, for example, those relating to the deliberate non-production of documents of title in order to use them as promissory notes without a maturity date, and that the controlling party’s production of the bill of lading in order to provide the instructions to the carrier did not necessarily entail surrender of the bill of lading to obtain delivery of the goods. In response to a query regarding whether the FOB seller would be adequately protected, it was said that in the case of an FOB sale, the FOB seller would be protected, because it would also be the holder of the negotiable document or electronic transport record, and therefore it would also be the controlling party that would give delivery instructions to the carrier. The subsequent provision considered by the Working Group, that it is worth mentioning in this paper, is that on the liability of the carrier for goods that remain A/CN.9/594, } 15. A/CN.9/594, } 15. 63 A/CN.9/594, } 24. 64 A/CN.9/594, } 32–25 and 68–71. 61 62
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undelivered, at that time in a separate article – draft article 53 – and now in paragraph 5 of article 48. In article 53 of WP.56 the liability of the carrier existed in the same conditions in which the right to limit liability is lost. A large number of delegations expressed dissatisfaction with the low standard of liability of the carrier as set out in draft article 53, which required intentional or reckless behaviour to hold the carrier liable for loss of undeliverable goods. At the same time, it was generally felt that the standard of liability should not be as high as that under draft article 17, on the general liability of the carrier for loss of or damage to the goods during its period of responsibility, since under draft article 53, the carrier was left with the custody of the goods due to the default of the consignee in failing to accept delivery. There was strong support in the Working Group for the view that the standard of liability of the carrier should be somewhere between that of draft article 17 and that of the current text in draft article 53.65 That approach was adopted by the Working Group and the Secretariat was requested to prepare a new draft based in such decision.66 Chapter 3 – Scope of application Chapter 20 – Validity of contractual stipulations The next subject was the scope of application and freedom of contract that had already been debated during the fourteenth and fifteenth sessions, and in respect of which proposals had been made by the delegations of Finland67 and the Netherlands.68 As it had been done previously, an agenda was agreed on the manner in which the debate should be organized, such agenda being the following: (a) Proposed deletion of draft paragraph 8 (1)(c) of the Draft Convention pursuant to which the convention would apply where the parties so agree; (b) New text proposed to clarify draft article 9 (now article 6) which articulated the scope of application of the Draft Convention; (c) New proposed text for draft article 10 (now article 7), on the protection of third parties to contracts of carriage outside of the scope of application of the Draft Convention, and in particular, whether it was acceptable to define them without reference to transport documents or electronic transport records; (d) New proposed draft paragraph 20.4 (now article 4), to further clarify scope of application with respect to maritime performing parties; (e) Further consideration of draft paragraph 94.2 (now deleted) on the mandatory application of certain provisions of the Draft Convention with respect to shippers and other parties; (f) Modified text of draft paragraph 95.1 (now article 80.2), on the conditions for the exercise of freedom of contract in the case of volume contracts;
A/CN.9/594, } 108–109. A/CN.9/594, } 113. 67 A/CN.9/WG.III/WP.61. 68 A/CN.9/WG.III/WP.69. 65 66
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(g) Further consideration of draft paragraph 95.4 (now article 4) mandatory provisions of the Draft Convention from which there could be no derogation; (h) Modified text of draft paragraph 95.5(b) (now article 80.4), on the conditions under which third parties could consent to be bound by the terms of a volume contract; (i) The appropriateness of the text of draft paragraph 95.5(c) (now deleted) which placed the burden of proof on the party claiming the benefit of the volume contract; and (j) Any additional issues regarding the scope of application and freedom of contract that were of concern to the Working Group. On the issues from (a) to (h) above, the following decisions were adopted by the Working Group: – As to (a): to delete article 8.1(c) wherein reference was made as a connecting factor to the agreement of the parties69; – As to (b): to replace the text of article 9 with that contained in the proposal by Finland in A/CN.9/WG.III/WP.61 at para. 2370; – As to (c): to replace the text of article 10 with that contained in the proposal by Finland in A/CN.9/WG.III/WP.61 at para. 3671; – As to (d): to insert in the article on the liability of performing parties the text of paragraph 5 contained to replace the text of article 9 with that contained in the proposal by Finland in A/CN.9/WG.III/WP.61 at para. 4472; – As to (e): to maintain article 94.2 on the mandatory character of the obligations and liability of the shipper73; – As to (f): to accept article 95.1 (now article 80.2) as amended by Finland in A/CN.9/WG.III/WP.61 at para. 4974; – As to (g): to accept article 95.4 (now article 80.4) as amended by Finland in A/CN.9/WG.III/WP.61 at para. 4975; – As to (h): to accept the policies underlying article 95.5(b) as it appeared in A/CN.9/WG.III/WP.61 at para. 49 and to request the Secretariat to prepare a new draft taking into account the views expressed by the Working Group.76 Chapter 8 – Obligations of the shipper There followed a debate on the obligations of the shipper, a subject already considered during the thirteenth and sixteenth sessions. Inter alia, the problem of liability of the shipper for delay, reference to which appeared in square brackets in draft article 31, A/CN.9/594, } 128. A/CN.9/594, } 133. 71 A/CN.9/594, } 140. 72 A/CN.9/594, } 145. 73 A/CN.9/594, } 153. 74 A/CN.9/594, } 157. 75 A/CN.9/594, } 162. 76 A/CN.9/594, } 163–167. 69 70
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was again the subject of an extensive debate. Although there was support for retaining the provisions of the Draft Convention dealing with the shipper liability for delay, there were nevertheless strong objections to the inclusion of consequential damages for delay for both shippers and carriers in the Draft Convention. It was indicated that such inclusion might create enormous, open-ended liability exposure for shippers. For instance, it was explained, a shipper’s failure to provide a document might prevent the unloading of a single container loaded with goods of small value, and this in turn might prevent the entire ship of containers from arriving and unloading at its port of destination. In that case, it was added, while reasons of fairness would suggest that the carrier should be able to recover from that shipper the damages for delay for which the carrier was responsible to other shippers with containers on board, if the shipper was to be held fully liable to the carrier for all damages caused by its delay of the vessel, its liability could not only have a devastating financial impact on it but would also be uninsurable. It was added that the difficulties surrounding the establishment of a reasonable and logical liability limit that could be applied to the shipper’s liability for damages due to delay, as well as of a liability regime that allowed for insurability of the potential risks associated with damages for delay, supported the deletion of liability for delay on the part of the shipper from the Draft Convention. It was further indicated that, in order to ensure fairness and balance in the Draft Convention, liability for consequential damages for delay should likewise be eliminated from the carrier’s liability to shippers, except as the parties to a shipment may expressly agree, since holding carriers liable to shippers for delay exposed them to significant potential liabilities in the same manner as holding shippers liable to carriers would. Furthermore, it was said that in order to maintain a fair balance in the Draft Convention, it was essential to include a mirror provision establishing liability for a shipper who caused the delay and exposed a carrier to losses resulting from delay claims against it by other shippers, and that because carrier liability for delay damages would be limited, such shipper liability should also be subject to a reasonable limitation. However, it was added that efforts to develop an acceptable limitation on shipper liability for damages for delay had proven to be an extremely difficult task, since a limitation based on the freight paid by the offending shipper was deemed to be unreasonably low by carrier interests, while shipper interests found other formulations, such as full responsibility for damages for delay to all other shippers on the vessel, unreasonably high. It was concluded that the only equitable resolution to this dilemma would be to remove the concept of liability for damages for delay from the Draft Convention with regard to shippers and, unless they agreed in a contract of carriage or volume contract on a date certain for delivery of the cargo, for carriers as well. While support was expressed for the concerns about the difficulties in drafting a satisfactory text, it was therefore suggested that the ideal solution to address the liability for delay under the Draft Convention would not consist of limiting such liability for the carrier, but to leave the matter under the domain of national law for all types of loss due to delay. It was further suggested that in order to fully exclude claims for economic loss under the proposal, it might not be sufficient to simply eliminate references to “delay” in the
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Draft Convention, but it might also be necessary to include a provision barring any claim in this regard by the carrier against the shipper. However no decision could be reached by the Working Group and it was therefore agreed that the consideration of the problem should continue at a future session. Eighteenth session, held in Vienna from 6 to 17 November 2006 Chapter 9 – Transport documents and electronic transport records The Working Group continued its consideration of chapter 9 on transport documents (now chapter 8) .The first article to be considered was article 40-Deficiencies in contract particulars (now article 39) and doubts were raised as to whether the expression “shall be considered to be” used in paragraph 2 was appropriate, since it could be construed as creating a conclusive evidence, as it should or merely a rebuttable presumption and in order to clarify this point the suggestion was made to replace it with “shall be deemed to be”.77 That is relevant for the interpretation of that expression throughout the Convention. A thorough analysis was then made of the provision on the identity of the carrier that had been placed in square brackets in article 40 as its paragraph 3 (now article 37). In that connection the drafting proposal made by the Italian delegation78 was considered by the Working Group. By way of introduction, it was explained that the various aspects of that proposal were intended to deal principally with three perceived problems in connection with the identification of the carrier in transport documents and electronic transport records. The first problem was said to be when the face of the transport document or electronic transport record was unclear and contained, for example, only the trade names of the carrier or the name of the carrier’s booking agents, rather than identifying the carrier. It was suggested that, in keeping with the identification of the carrier requirements of articles 23(a)(i) and 26 (a)(i) of the Uniform Customs and Practices for Documentary Credits 500 (UCP 500), draft paragraph 38(1)(e) regarding the necessary contract particulars should be modified to read: “the name and address of a person identified as the carrier”. General support was expressed in the Working Group for this proposal, however it was recalled that the UCP 600 would soon be made public and should be reviewed to ensure the consistency of the Draft Convention in this regard. The second practical problem intended to be addressed was said to be the situation where the information in small print on the reverse side of a transport document in the so-called “identity of carrier” clause conflicted with the information identifying the carrier on the face of the document. In order to solve this ambiguity, it was proposed that a provision be inserted into the Draft Instrument ensuring that the information regarding the identification of the carrier on the face of the transport document or electronic transport record would prevail over contradictory information on the reverse side. Support was expressed for this proposal in
A/CN.9/616, } 16, the existing text of paragraph 3 being maintained. A/CN.9/WG.III/WP.79.
77 78
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the Working Group, with the caveat that care should be taken in the drafting of the provision to ensure that appropriate text was inserted to find an equivalent for the “reverse side” of an electronic transport record. The third practical problem was the situation when, despite existing requirements, the identity of the carrier remained unclear in the transport document or electronic transport record such as, for example, in the case where the document or record was signed by or on behalf of the master, without stating the basis of the master’s authority. In such cases, it was proposed that the fallback position for the identification of the carrier should be that the registered owner be presumed to be the carrier, unless the owner identified the bareboat charterer, or unless the owner or the bareboat charterer defeated the presumption by identifying the carrier. A corollary of the acceptance of this aspect of the proposal was an extension of the limitation period for the commencement of actions by the claimant in such cases. General support was expressed in the Working Group for this effort to find a compromise solution to the persistent problem of the identification of the carrier. Further, support was expressed in principle for the particular approach to the problem that had been taken in the proposal. However, concerns were expressed regarding the presumption that the registered owner of the ship was the carrier. It was thought that such an approach to the identification of the carrier could be particularly troublesome in the context of multimodal transport, where the registered owner of the ship might not have any knowledge regarding the other legs of the transport. Further, it was said to be erroneous to assume that the registered owner could easily have access to the necessary information to rebut the presumption that it was the carrier. At the end of the discussion the Working Group decided that the above drafting proposal, contained in paragraphs 3 and 4 of WP.79 should be adopted into the text of the Convention, the existing text of paragraph 3 being maintained in square brackets and that, in addition, the Secretariat should prepare a revised text of the approach to the identity of the carrier issue in draft paragraph 3 based on the principles enunciated in paragraph 5 of WP.79.79 There followed the consideration of draft article 41-Qualifying the description of the goods in the contract particulars (now article 40), of draft article 42-Reasonable means of checking and good faith, in respect of which it was decided to include its paragraph (a) in a revised version of draft article 41 (it is now included in article 40.3(a)) and to delete its paragraphs (b) and (c),80 and of draft article 43-Prima facie and conclusive evidence (now article 41-Evidentiary effect of contract particulars). Reference is worth being made to the debate that took place in respect of draft article 43 and, more specifically, to variant B of its subparagraph (b)(ii), which extended the conclusive evidence rule to mere receipts in the following terms:
A/CN.9/616, } 28. A/CN.9/616, } 44.
79 80
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(ii) if no negotiable transport document or no negotiable electronic transport record has been issued and the consignee has purchased and paid for the goods in reliance of the description of the goods in the contract particulars.
After consideration of the proposal to include an express reference to nonnegotiable transport documents that indicate that they must be surrendered in order to obtain delivery, the proposal was made to redraft article 43 as follows: Except as otherwise provided in article 44, a transport document or an electronic transport record that evidences receipt of the goods is prima facie evidence of the carrier’s receipt of the goods as described in the contract particulars; and (a) Proof to the contrary by the carrier in respect of any contract particulars relating to the goods shall not be permissible, when such contract particulars are included in: (i) A negotiable transport document or a negotiable electronic transport record that is transferred to a third party acting in good faith, or (ii) A non-negotiable transport document or a non-negotiable electronic transport record that indicates that it must be surrendered in order to obtain delivery of the goods and is transferred to the consignee acting in good faith. (b) Proof to the contrary by the carrier vis-a`-vis the consignee, acting in good faith, shall equally not be permissible in respect of contract particulars relating to the goods included in a non-negotiable transport document or a non-negotiable electronic transport record, when such contract particulars are furnished by the carrier. For the purpose of this paragraph the number and type of containers is deemed to be information furnished by the carrier.
A concern was raised that the definition of a transport document or electronic transport record in sub-paragraph (b) was very broad and could include a mere receipt. The question was raised as to whether it was appropriate that a nonnegotiable transport document that merely evidenced receipt should be covered in draft paragraph (b), given that a mere receipt was issued only as evidence of receipt as between the shipper and carrier and nothing more. A sea waybill, on the other hand, was a different type of non-negotiable document in that it evidenced the contract of carriage, and identified the consignee. However, the view was expressed that mere receipts should sometimes be properly included in draft paragraph (b), depending on their nature. Further, it was noted that most domestic legal regimes contained a general principle preventing parties from presenting evidence contrary to statements made by them. Finally, it was observed that, under its terms, this draft paragraph was unlikely to operate frequently, since mere receipts would not often have a function in the relationship between the carrier and the consignee. After discussion, the Working Group decided that the compromise proposal, as amended with respect to the closing line of paragraph (b), was acceptable in substance and that the Secretariat should prepare a text taking account of the comments made for consideration at a future session. Chapter 8 – Obligations of the shipper (now Chapter 7 – Obligations of the shipper to the carrier) The Working Group then considered again the problem of the shipper’s liability for delay. It was suggested that there were three possible approaches that could be taken in the text of the Draft Convention with respect to the treatment of liability for
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pure economic loss or consequential damages caused by delay on the part of the shipper or the carrier: – Option one: no liability for delay on the part of the shipper or the carrier81; – Option two: retain carrier liability for delay but delete shipper liability for delay82; – Option three: retain carrier and shipper liability for delay and find an appropriate limitation level for shipper liability.83 After considering the possible methods to limit the shipper’s liability for delay84 it was decided that the approach to the treatment of liability for pure economic loss or consequential damages caused by delay on the part of the shipper or the carrier set out as “option three” should be pursued as the optimal approach for the Draft Convention, subject to the Working Group’s ability to identify an appropriate method to limit the liability of the shipper for pure economic loss or consequential damages caused by delay. Chapter 14 – Right of suit The next subject was chapter 14 and the Working Group decided that that chapter should be deleted in its entirety.85 Chapter 15 – Time for suit The Working Group then proceeded to consider chapter 15-Time for suit (now chapter 13) and in respect of draft article 69-Limitations of actions (now article 62- Period of time for suit) decided that the time period should be 2 years and should apply both to claims against the carrier and the shipper, no suspensions or interruptions of the period being allowed except as agreed by the parties.86 After reviewing draft article 70Commencement of limitation period (now moved to paragraph 2 of article 62),87 71Extension of limitation period (now article 63),88 72-Action for indemnity (now article 64) and 73-Counterclaims (subsequently deleted),89 the Working Group considered new draft article 74-Actions against the bareboat charterer (now article 65-Actions against the person identified as the carrier) and decided that the text of that article should be retained in square brackets and be revised in accordance with its decision in relation to draft article 40.3.90
For the discussion of this option see A/CN.9/616, } 88–89. For the discussion of this option see A/CN.9/616, } 90–91. 83 For the discussion of this option see A/CN.9/616, } 92–93. 84 See their analysis in A/CN.9/616, } 94–99. 85 A/CN.9/616, } 114–118. 86 A/CN.9/616, } 119–133. 87 A/CN.9/616, } 134–143. 88 A/CN.9/616, } 144–147. 89 A/CN.9/616, } 148–155. 90 A/CN.9/616, } 156–157. 81 82
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Chapter 13 – Limitation of liability (now Chapter 12 – Limits of liability) The subsequent chapter examined during the eighteenth session was chapter 13Limitation of liability. The limitation level to be indicated in the draft article 64 (now article 59) gave rise to different views, some delegations supporting the maintenance of the Hague-Visby limits, others suggesting the adoption of the Hamburg limits.91 The discussion of the issue of the limits in case of non-localized loss or damage was postponed to a subsequent session.92 After discussion of the limit for loss caused by delay, the Working Group considered draft article 66-Loss of the right to limit liability (now article 61-Loss of the benefit of limitation of liability) and a number of delegations expressed great dissatisfaction with the inclusion of the word “personal” before the phrase “act or omission” in paragraph 1, believing that it made it too difficult for the cargo claimant to prove that the conditions for the provision had been fulfilled and thus for the carrier’s limitation on liability to be exceeded. The Working Group recalled that the issue of whether or not to include this term in the paragraph had been discussed at length during its thirteenth session, and it decided against overturning the decision that it had made at that time.93 The last provision discussed was draft article 104 on the procedure for the amendment of the limitation amounts,94 but no decision was reached.95 Chapter 7 – Additional provisions relating to subsequent stages of carriage (now Chapter 6) There followed a general discussion on the relation of the Draft Instrument with other conventions and on the problem of conflict of conventions at the end of which it was decided to maintain the scheme of draft article 27-Carriage preceding or subsequent to sea carriage (now article 26) and instead to delete draft article 89International instruments governing other modes of transport and draft article 90Prevalence over earlier conventions.96 Chapter 16 – Jurisdiction (now Chapter 14) The last chapter to be considered during that session was chapter 16-Jurisdiction in respect of which the proposal for a reservation or clause to “opt in” the chapter was made. There was support for such a proposal and it was decided that a draft text setting out the various approaches in more detail should be prepared.97 A/CN.9/616, } 162–174. A/CN.9/616, } 175. 93 A/CN.9/552, } 59–60. 94 A proposal for the revision of article 104 had been made by the United States in A/CN.9/WG.III/ WP.77. 95 A/CN.9/616, } 205–215. 96 A/CN.9/616, } 229–235. The text of such articles was the following: Article 90. Prevalence over earlier conventions [As between parties to this Convention, it prevails over those][Subject to article 102, this Convention prevails between its parties over those] of an earlier convention to which they may be parties [that are incompatible with those of this Convention]. 97 A/CN.9/616, } 246–252. 91 92
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The Working Group agreed to complete consideration of any outstanding issues from its second reading, including freedom of contract, and to commence its third reading of the Draft Convention at its nineteenth session.98 Although the second reading had not yet been completed, a revised text of the Draft Convention with the consolidation of the changes agreed was prepared by the Secretariat and circulated as an annex to its Note of 13 February 200799reference to which will be made as “WP.81”. Nineteenth session, held in New York from 16 to 27 April 2007 During that session the Working Group when considering the provisions contained in a given chapter also considered the definitions in article 1 that were relevant to that chapter. Thus in relation to chapter 1, it considered and adopted the definitions of “carrier”, “shipper” and “goods”. Chapter 1 – General provisions A question was raised as to the meaning of the terms “or otherwise” in article 4, that followed the phrase “whether the action is founded in contract, in tort” and it was suggested that those words were helpful to encompass claims other than contractual or tort claims such as claims in restitution or arising out of quasi-contract. It was agreed that the term should be retained to ensure that the draft article was broad enough to cover situations that might arise in different legal systems. Chapter 2 – Scope of application The Working Group then considered the provisions on the scope of application and in respect of the two alternatives that appeared in square brackets in article 6, “contracts” and “contractual arrangements”, and agreed to adopt the latter provided it was established that it consisted of a clarification and did not have any substantive effect on the scope of that article.100 Chapter 5 – Obligations of the carrier (now Chapter 4) After reviewing the provisions in chapter 3-Electronic transport records as well as those in chapters 4-Period of responsibility and 5-Obligations of the carrier (now merged in chapter 4), the Working Group considered in chapter 6-Liability of the carrier for loss, damage or delay draft article 17-Basis of liability and confirmed its previous decision to maintain the list of excepted perils.101 In this respect the discussion focused on draft sub-paragraph (g), wherein after reference to latent defects there followed in square brackets the words “ship” and “means of transport”. It was proposed that both the variants that appeared in square brackets should be deleted along with the words “in the”, thus leaving the text substantially as it appeared in article 4(2)(p) of the Hague-Visby Rules. Concern was expressed that choosing the “ship” variant would unduly restrict the previously broader approach A/CN.9/616, } 280. A/CN.9/WG.III/WP.81. 100 A/CN.9/621, } 21. 101 A/CN.9/621, } 68–71. 98 99
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in the Hague-Visby Rules that included, for example, cranes, but that the alternative “means of transport” was too broad, even though the Draft Convention was intended to be a “maritime plus” convention. While some support was expressed for each of these two variants, the prevailing view was that the best approach was to retain the approach taken in the Hague-Visby Rules and delete both variants. In respect of the liability of the carrier for other persons the Working Group considered whether it would be advisable to retain paragraph 2 of draft article 18, pursuant to which the liability of the carrier would exist only when the performing party’s or other person’s act or omission is within the scope of its contract, employment or agency and strong support was expressed for the deletion of that paragraph in order to leave such matters to national law.102 The Working Group proceeded to consider the proposal103 to clarify, by adding a new paragraph 3 to article 18, that a carrier would not be liable for loss of or damage to the goods to the extent that it was attributable to an act or omission of another shipper. It was noted that the proposal was aimed at addressing the concern expressed at an earlier session that, under the Draft Convention, carriers might nevertheless be found liable to other shippers with goods on board that vessel for a delay caused by only one shipper. The Working Group was, however, of the view that the proposed text was unnecessary as its content was already adequately covered by the liability regime set out in draft article 17. Draft article 20-Liability of maritime performing parties provided in its paragraph 4 the Himalaya protection to them and to other persons that were identified in three different phrases all in square brackets. The Working Group decided to adopt the text that ensured the more extensive protection and to consider which might be the best location for the provision that is now contained in article 4.104 In respect of draft article 24-Notice of loss, damage or delay the legal effect of the notice was again discussed.105 Concern similar to that expressed during the thirteenth session of the Working Group106 was reiterated regarding the operation of draft paragraph 1. There was support for the view that paragraph 1 was unnecessary since the issuance of the notice to the carrier or the performing party, or the failure to provide such a notice, did not affect the respective burdens of proof of the carrier and of the claimant as set out in the general liability regime in draft article 17. Moreover, it was noted that in some jurisdictions, the provision on which this draft article was based, article 3.6 of the Hague Rules, had caused confusion and had led some courts to conclude that failure to provide such a notice resulted in the loss of the right to claim for loss or damage pursuant to the instrument. As such, the Working Group was urged to delete draft paragraph 1, and, failing that, to make it
A/CN.9/621, } 77. Contained in A/CN.9/WG.III/WP.85, } 3. 104 A/CN.9/621, } 89–97. 105 It had previously been discussed during the thirteenth session (A/CN.9/552, } 65). 106 A/CN.9/552, } 65. 102 103
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clear that failure to provide the notice under the draft provision was not intended to have a special legal effect. In response, it was noted that the draft paragraph was not intended to attach a specific legal effect to the failure to provide notice. Nevertheless, the draft provision was intended to have the positive practical effect of requiring notice of the loss or damage as early as possible to the carrier, so as to enable the carrier to conduct an inspection of the goods, assuming there had been no joint inspection. While there was no agreement in the Working Group to reverse its earlier decision to retain the draft paragraph, there was agreement that draft paragraph 1 was not intended to affect the rights of cargo interests to make claims under the Draft Convention, and that it was in particular not intended to affect the liability regime and burdens of proof set out in draft article 17. Definitions of “performing party” and “maritime performing party” in article 1 After consideration of draft chapter 7-Additional provisions relating to particular stages of carriage (now chapter 6), the Working Group reverted to the definitions in article 1 and considered the definitions of “performing party” and “maritime performing party”. In connection with such latter definition a proposal was made that rail carriers, even if performing services within a port, should be excluded from the definition of “maritime performing party.” Concern was expressed that the consequences of a blanket exemption for rail carriers had not been fully considered. One issue raised was the problem that a catalogue of carriers of various types might seek to be similarly exempted from the scope of application of the Draft Convention. Further, it was questioned why such an exemption should be limited to rail carriers. Some support was expressed for the view that the proposed exemption should also extend to road carriers and possibly to inland barges. As a consequence of those remarks that proposal did not receive sufficient support. Revised definitions of “performing party” and “maritime performing party” were subsequently considered and adopted by the Working Group, together with revised articles 18 and 19.107 Chapter 19 – Validity of contractual terms” (now Chapter 16) Draft chapter 16 was the next subject considered by the Working Group and in that chapter draft article 89-Special rules for volume contracts (now article 80) was the subject of particular attention. There was wide support within the Working Group for the notion of freedom of contract and the need to incorporate in the Draft Convention provisions that took into account commercial reality, in particular the growing use of volume contracts. There was support for the view that shippers were not exposed to any significant risk of being deprived of the protection afforded by the Draft Convention since shippers were free to enter into volume contracts and negotiate their terms or, alternatively, to ship goods under a transport document fully covered by the Draft Convention. The choice between one or the other option was within each shipper’s
A/CN.9/621, } 141.
107
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commercial judgement. However, there was strong support for the proposition that, while generally desirable in the case of parties with equal bargaining power, unlimited freedom of contract might in other cases deprive the weaker party, typically small shippers, of any protection against unreasonable unilateral conditions imposed by carriers. It was further felt that, as presently drafted, draft article 89, when read in conjunction with the definition of volume contracts in draft article 1, paragraph 2, did not afford the desirable level of protection. And the Working Group was urged to consider proposals to remedy that situation. Those proposals108 included the following elements. First, the definition of volume contracts in draft article 1, paragraph 2, should be amended so as to provide for a minimum period and a minimum quantity of shipments, or at least require such shipments to be “significant”. Second, the substantive condition for the validity of a volume contract (that is, that it should be “individually negotiated”), and the formal condition for validity of derogations (that the derogation should be “prominently” specified), as provided in draft article 89, paragraph 1, should be made cumulative, rather than alternative, so as to make it clear that both parties to the contract must expressly consent to the derogations. However, the prevailing view within the Working Group was that the current text of draft article 89 reflected the best possible solution to address those concerns in a manner that preserved a practical and commercially meaningful role for party autonomy in volume contracts. After extensive consideration of the various views expressed, the Working Group rejected the proposal to reopen the previously-agreed compromise and approved the text of draft article 89 that had previously been accepted in April 2006.109 Chapter 6 – Liability of the carrier for loss, damage or delay (now Chapter 5) Article 21 – Delay Liability for delay in delivery was subsequently the subject of further consideration by the Working Group and a compromise solution, consisting of the restriction of the carrier’s liability for delay only where the time for delivery is agreed between the parties and in the deletion of the shipper’s liability due to the failure to find a suitable means to limit its liability, met with the wide support of the Working Group.110 Chapter 7 – Additional provisions relating to particular stages of carriage Article 26 – Carriage preceding or subsequent to sea carriage There followed the consideration by the Working Group of draft article 26-Carriage preceding or subsequent to sea carriage and of draft article 84-International conventions governing the carriage of goods by air (now article 82-International conventions governing the carriage of goods by other modes of transport). In respect of draft article 26 it was agreed to delete the reference to national law and allow Contracting States that wished to apply mandatory national law to inland cases of loss of or damage to goods to do so by means of a declaration made in accordance with draft article 94 (now
108
See A/CN.9/WG.III/WP.88 and A/CN.9/612. See A/CN.9/594, } 154–170. 110 A/CN.9/621, } 180–184. 109
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article 91).111 In respect of draft article 84, although the suggestion had been made to extend its scope of application also to other conventions, such as the CMR, the Working Group decided to approve it as drafted.112 Chapter 8 – Obligations of the shipper to the carrier (now Chapter 7) Finally, draft chapter 8 was again considered by the Working Group and following the decision to delete reference to delay, to avoid any interpretation of implied liability for delay and ensure the preservation of applicable law on shipper’s delay, a proposal was made to add language along the following lines to draft article 30, paragraph 1: “The term ‘loss’ referred to in this article or in article 31 or article 32 does not include the loss caused by delay. Nothing in this Convention prevents the carrier from claiming shipper liability for delay under the applicable law”. It was explained that the first sentence of that proposal was intended to clarify that there was no implied cause of action against the shipper for delay under the Draft Convention, and the second sentence was intended to clarify that any applicable national law relating to the question of shipper’s delay remained unaffected. Although some support was expressed for that clarifying text, the Working Group did not accept it, nor did it definitely approve the gist of the proposal, but decided that “references to delay contained in paragraph 1 be deleted with the possible inclusion of text clarifying that the applicable law relating to shipper’s delay was not intended to be affected”.113 Twentieth session, held in Vienna from 15 to 25 October 2007 In continuation of the second reading of the Draft Convention the Working Group considered chapter 9-Transport documents (now chapter 8) draft article 42(c) that set out the rules on the evidentiary effect of contract particulars included in a nonnegotiable transport documents or electronic transport record in the text prepared by the Secretariat after the previous session,114 wherein the more limited evidentiary effect in respect of such type of documents or records was more clearly set out and such amended draft was approved.115 Chapter 10 – Delivery to the consignee (now Chapter 9 – Delivery of the goods) The Working Group then considered in chapter 10 (now chapter 9) draft article 44Obligation to accept delivery (now article 43) in the amended text prepared by the Secretariat.116 In considering that text the Working Group expressed concern that the reference to a consignee exercising “any” of its rights under the contract of carriage might be too broad and a suggestion was made to delete the word “any”. This was accepted by the Working Group.117 Of the articles regulating delivery the debate
A/CN.9/621, } 185–192. A/CN.9/621, } 204–206. 113 A/CN.9/621, } 237. 114 A/CN.9/WG.III/WP.94, } 1. 115 A/CN.9/642, } 9–14. 116 A/CN.9//WG.III/WP.94, } 3. 117 A/CN.9/642, } 23. 111 112
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focused in particular on draft article 49-Delivery when a negotiable transport document or a negotiable electronic transport record is issued (now article 47) and, in particular, on its sub-paragraphs (d)-(g). It was observed that the scheme set out therein was intended to address the current problem of delivery of the goods without presentation of the negotiable transport document or negotiable electronic transport record. It was noted that, as discussed in previous sessions, the problem was a structural one arising from the requirements of the underlying sales contract and the length of modern voyages, and that it was frequently encountered in certain trades, such as in the oil industry. It was said that the entire scheme of subparagraphs (d), (e), (f) and (g) was based on the modern ability of the carrier to communicate with the holder regardless of its location, and that the onus was thus on the carrier to search for the controlling party or the shipper in order to obtain delivery instructions. There followed a debate between those who supported those provisions and those who instead requested their deletion because they would undermine the bill of lading system.118 Amongst the various proposals that were made it is worth mentioning, because of its subsequent implementation, the suggestion that the operation of subparagraphs (d), (e), (f) and (g) could be limited to those situations where a negotiable transport document or electronic transport record had been issued that stated on the document or electronic record itself that the goods to which it related could be delivered without presentation of the negotiable transport document or electronic transport record. It was thought that such an approach would give sufficient warning to the holder that, in some cases, delivery could be made to another person. A mechanism proposed for the implementation of that suggestion was that a phrase could be inserted prior to subparagraphs (d), (e), (f) and (g) along the following lines: “If a negotiable transport document or electronic transport record that states on its face that the goods may be delivered without presentation of the document or electronic record, the following rules apply:”.119 The decision of the Working Group was at that stage to retain the text of sub-paragraphs (d), (e), (f) and (g) and while some minor changes that had been suggested be implemented into the text, the proposal previously mentioned should appear in a footnote to the text.120 Chapter 11 – Rights of the controlling party (now Chapter 10) The discussion that took place is worth mentioning in respect of the requirements for the transfer of the rights of control when a negotiable transport document is issued, set out in draft article 53.3(b) and (c) (now article 51.3(b) and (c)), such requirements consisting mainly in the transfer and respectively in the production of all originals. It was suggested that the operation of subparagraphs 3(b) and 3(c) of draft article 53, too, should be limited to cases where the negotiable transport document expressly stated that more than one original had been issued. However in response to that suggestion, it was observed that the two provisions in question had different purposes. Under draft article 49, subparagraph (c), if more than one A/CN.9/642, } 53–56. A/CN.9/642, } 63. 120 A/CN.9/642, } 67. See footnote 123 to draft article50(d) of A/CN.9/WG.III/WP.101 at p. 35. 118 119
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original of the negotiable transport document has been issued, the carrier who delivered the goods to the holder of one original transport document would be discharged from liability vis-a`-vis the possible holders of the other transport document. In the context of paragraph 3 of draft article 53 the transfer of the right of control to a third party might instead adversely affect the rights of the holder of the remaining transport documents, as the holders who acquired rights in good faith were generally protected under the Draft Convention. The Working Group was therefore urged to carefully consider the desirability of aligning the entire draft article 49, subparagraph (c), with paragraph 3 of draft article 53 and the Secretariat was requested to consider the desirability of such alignment. When draft article 54-Carrier’s execution of the instructions (now article 52) was considered, the view was expressed that its paragraph 2 exposed the controlling party to a potentially substantial liability. It was, therefore, suggested that the Working Group should consider ways to limit the controlling party’s exposure, for instance by limiting its liability under paragraph 2 of draft article 54 to foreseeable additional expenses or liability. There was general agreement within the Working Group that the controlling party could indeed be protected against exorbitant reimbursement claims by inserting the word “reasonable” before “additional expenses”. However, the Working Group was divided in respect of a possible limitation of the controlling party’s obligation to indemnify the carrier against loss or damage that the carrier might suffer as a result of executing the controlling party’s instructions and one of the suggestions made was to add words such as “reasonably foreseeable” before the words “loss or damage”, or requiring the carrier to give notice or warn the controlling party about the possible magnitude of loss or damage that the carrier might suffer in carrying out the instructions received from the controlling party. Having considered the various views that were expressed, the Working Group agreed that the word “reasonable” should be inserted before or after “additional” in paragraph 2, but that it would be preferable to refrain from introducing a requirement of foreseeability as a condition for the controlling party’s obligation to indemnify the carrier under paragraph 2 of draft article 54. Chapter 12 – Transfer of rights (now Chapter 11) Special attention was paid to paragraph 2 of draft article 60-Liability of the holder (now article 58) and the opinions of the delegations differed as to whether that provision should be maintained or not. In support of its maintenance it was stated that since the draft had achieved harmonization regarding transfer of rights, it was thought to be appropriate that harmonization regarding the transfer of liabilities such as that set out in paragraph 2 should also be sought. However, there was also support in the Working Group for the deletion of paragraph 2 as being too controversial for its content to be agreed upon in a timely fashion for completion of the Draft Convention. In response, it was suggested that paragraph 1 of draft article 60 already indicated that the holder was subject to a certain amount of liability, and that paragraph 2 actually operated to limit that potential liability to the obligations contained in the transport document or electronic transport record and that simple deletion of paragraph 2 would not necessarily remove all liability on the
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holder pursuant to the Draft Convention. The final decision was therefore to adopt the first of the two texts in square brackets.121 Chapter 13 – Limitation of liability (now Chapter 12 – Limits of liability) In respect of the provisions on limits of liability the alternatives considered, and discussed at some length, by the Working Group were (a) adoption of the limits of the Hague-Visby Rules, (b) adoption of the limit of the Hamburg Rules, and (c) limits higher than those of the Hamburg Rules, such higher limits being suggested as either 920 SDR or 1,200 SDR per package and 8.33 SDR per kilogram.122 The provisional conclusions of the Working Group were to insert in draft article 62 the Hamburg Rules limits and to adopt for liability for delay a limit of 2.5 times the freight.123 Chapters 15 – Jurisdiction and 16 – Arbitration (now Chapters 14 and 15) When, after a short review of draft chapter 14-Time for suit (now chapter 13),the Working Group considered chapters 15 and 16 the attention focused on the choice between the reservation approach and the “opt-in” approach already considered at the eighteenth session.124 Attention was drawn to the fact that due to institutional reasons regarding competencies within a regional economic integration organization, it was explained that the reservation approach would have entailed the need for such organization to ratify the Draft Convention on behalf of its member States: possibly a very lengthy procedure that could be subject to potential blockages in approval. The “opt-in” approach, would instead allow the member States of that organization to ratify the Convention independently, thus allowing for greater speed and efficiency in the ratification process, and avoiding the possibility that the chapter on jurisdiction could become an obstacle to broad ratification. After the “partial opt-in” alternative had been considered too complex an approach to retain in the text, the decision was in favour of the total “opt-in” approach. After the twentieth session, at which the second reading of the Draft Convention was completed, a revised draft of the Convention, consisting of a consolidation of the revised provisions, was prepared by the Secretariat125 for consideration by the Working Group prior to submitting the text for consideration by the Commission at its forty-first session in June-July 2008. Twenty-first session, held in Vienna from 14 to 25 January 2008 The Working Group devoted this session to the third reading of the Draft Convention and considered its provisions in their progressive order, save for article 1, the definitions being set out therein being considered in connection with the provisions in which the terms defined appeared for the first time. Reference will be made hereafter only to the chapters and the article in respect of which significant comments and changes were made during that last session of the Working Group. A/CN.9/642, } 129. A/CN.9/642, } 161. 123 A/CN.9/642, } 166. 124 A/CN.9/616, } 246–252. 125 A/CN.9/WG.III/WP.101. 121 122
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Chapter 2 – Scope of application In connection with the review and approval of article 5 the Working Group also approved the definitions of “contract of carriage”, “carrier”, “shipper” and “goods” provided for in paragraphs 1, 5, 8 and 24 of article 1. In connection with the review and approval of article 6 the Working Group also approved the definitions of “liner transportation” and “non-liner transportation”, used in article 6 of article 1. In connection with the review of article 7 it was proposed that the concept of “consignor” used in that article as defined in paragraph 10 of article 1 should be deleted so as to make the Draft Convention less complicated126 and consequently be deleted throughout the Draft Convention, whereas the definitions of “holder” and “consignee” provided for in paragraphs 11 and 12 of article 1 were approved. Chapter 3 – Electronic transport records In connection with the review and approval of chapter 3 the Working Group also approved the definitions of “transport document”, “negotiable transport document”, “non-negotiable transport document”, “electronic transport record”, “negotiable electronic transport record”, “non-negotiable transport record”, and “issuance” and “transfer” of a negotiable transport record provided for in paragraphs 15, 16, 17, 19, 20, 21 and 22 of draft article 1. Chapter 4 – Obligations of the carrier In connection with draft article 12-Period of responsibility of the carrier concerns were raised regarding the interaction of the phrase “and subject to article 14, paragraph 2” in the chapeau of paragraph 3, and the phrase “and without prejudice to the other provisions in chapter 4” in draft article 14, paragraph 2. In particular, it was suggested that the presence of both phrases in the Draft Convention could raise a conflict between the two provisions that would have unintended consequences. In order to ensure that draft articles 12.3 and 14.2 operated as intended, so as not to allow for the period of loading or unloading pursuant to draft article 14.2 to be outside the carrier’s period of responsibility, as is currently the case in some jurisdictions, it was proposed and agreed that the phrase “and subject to article 14, paragraph 2” in the chapeau of paragraph 12.3 be deleted. In connection with draft article 13-Transport beyond the scope of the contract of carriage concerns were raised regarding the clarity of the text, particularly with respect to the phrase in the first sentence “and in respect of which it is therefore not the carrier”, and regarding the whole of the second sentence and the meaning of the phrase “the
126
The rationale for the proposal was the following: (1) the consignor did not have any obligations and had only one right under the Draft Convention, which was the right to obtain a receipt upon its delivery of the goods to the carrier pursuant to subparagraph (a) of draft article 37; (2) there were no practical difficulties reported regarding the issuance of a receipt for the consignor that might require it to be dealt with on a uniform basis in the Draft Convention; (3) confusion with other transport conventions and some national laws could be avoided; and (4) the term “transport document” could also be simplified and be aligned with actual maritime practice. Broad support was expressed for this proposal (A/CN.9/645, } 21).
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period of the contract of carriage”. Although some support was expressed for the provision as drafted, there was strong support for the view that the current text was unclear, and several proposals were made with the goal of addressing those concerns. Chapter 5 – Liability of the carrier for loss, damage or delay In connection with draft article 22-Delay (now article 21) the proposal to delete it and consequently to delete any reference to delay throughout the Convention was reiterated but was not accepted.127 Chapter 6 – Additional provisions relating to particular stages of carriage In connection with draft article 26-Deck cargo on ships (now article 25) the Working Group was reminded that a proposal had been made128 to adjust the definition of “container” by adding to it the term “road cargo vehicle”, and that that change would primarily have an effect on draft articles 26.1 and 2 and 62.3 (now articles 25.1 and 59.2). Road cargo vehicles are in fact often carried overseas in large numbers, usually on specialized trailer carrying vessels designed to carry both such vehicles and containers either on or below deck. It was explained that the current text of the Draft Convention treated road cargo vehicles pursuant to draft article 26(c), rather than grouping them with containers pursuant to draft article 26.1(b), such that the carrier might not be liable for damage to the goods in road cargo vehicles due to the special risk of carrying them on deck as part of the category in paragraph (c). Road cargo vehicles should instead be treated in the same fashion as containers, such that the normal liability rules would apply to them regardless of whether they were carried on or below deck. Adjusting the definition of “container” so as to include road cargo vehicles would ensure that it would not be possible to consider a road cargo vehicle as one unit pursuant to draft article 62.3, but that, as in the case of containers, each package in the road cargo vehicle could be enumerated for the purposes of the per package limitation on liability. That particular problem had been raised by the International Road Transport Union (IRU)129 as being of particular concern. Further, adjusting the definition of “container” as proposed could have the additional benefit of treating containers and road cargo vehicles in an equitable fashion. An additional proposal was made to extend the definition of “container” to include not only “road cargo vehicles”, but to include “railroad cars” as well. While railroad cars were seldom carried on deck, the inclusion of that term in the definition of “container” could have certain advantages, for example, in respect of the shipper’s obligation to properly and carefully stow, lash and secure the contents of containers pursuant to draft article 28. It was pointed out that, regardless of whether or not the definition of “container” in the Draft Convention was to include “road cargo vehicles” and “railroad cars”, they would in any event need to be fit for carriage on deck and this should be reflected in paragraph 1(b) of draft article 26. There was general agreement in the Working Group that the carrier should only be allowed to
A/CN.9/645, } 64–67. See A/CN.9/WG.III/WP.102. 129 See A/CN.9/WG.III/WP.90. 127 128
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carry on deck road cargo vehicles and railroad cars that were fit for such carriage and that the ship’s deck should be specially fitted to carry them. Chapter 7 – Obligations of the shipper to the carrier In connection with the review and approval of articles 32 and 34 the definitions of “contract particulars” and “documentary shipper” in paragraphs 23 and 9 of article 1 were approved. Chapter 1 – General provisions Article 1 – Definitions In connection with the review and approval (save for the deletion of the reference to the “consignor” and the consequential amendments) of draft article 37- Issuance of the transport document or the electronic transport record the following definitions in article 1 were considered and certain amendments, as indicated below, were agreed: – “transport document” (para. 15): the words “by the carrier or a performing party” and “satisfies one or both of the following conditions” were deleted and the conjunction “or” between (a) and (b) was replaced by “and”; – “negotiable transport document” (para. 16): approved; – “non-negotiable transport document” (para. 17): approved; – “electronic communication” (para. 18): approved; – “electronic transport record” (para. 19): approved, subject to its alignment with the amended definition of “transport document”; – “negotiable electronic transport record” (para. 20): approved; – “non-negotiable electronic transport record” (para. 21): approved; – “issuance” and “transfer” (para. 22): it was decided to define the two terms separately as they now appear in paras. 21 and 22. Chapter 8 – Transport documents and electronic transport records Article 42 – Qualifying the information relating to the goods in the contract particulars (now article 40) The view was expressed that article 42 left a possible gap, namely, in situations where the goods were delivered in a closed container but the carrier had actually inspected them. It was thought that the best manner to deal with that problem was to add the phrase “or are delivered in a closed container but the carrier or the performing party has in fact inspected the goods” after the phrase “in a closed container” in the chapeau of paragraph 3. That proposal was accepted. Chapter 9 – Delivery of the goods. Article 45 – Obligation to accept delivery (now article 43) In paragraph 1 it was decided to replace the words “the consignee that exercises its rights under the contract of carriage” with “the consignee that demands delivery of the goods under the contract of carriage”. Very strong reservations were instead made in respect of paragraph 2 that provided that when the parties have made an
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agreement under article 14.1 (now article 13.2) the consignee shall do so properly and carefully,130 and it was decided to delete it. Article 49 – Delivery when the electronic equivalent of a non-negotiable transport document that requires surrender is issued Article 49 was deleted since, unlike the document provided for in draft article 48, there was no existing practice of using the electronic equivalent of a non-negotiable transport document that required surrender that required support in the text of the Draft Convention.131 Article 50 – Delivery when a negotiable transport document or negotiable electronic transport record is issued (now article 47). The initial words of its para. 1 “Without prejudice to article 45” were deleted as unnecessary and potentially misleading.132 Chapter 12 – Limits of liability After further discussions on the limits of liability133 an attempt was made by a large number of delegations for the resolution of the outstanding issues relating, in addition to the limits, to the possible reference to national law in article 27 in respect of the carriage preceding or subsequent to sea carriage (now article 26) and to freedom of contract in respect of volume contracts. The terms of the package were the following134: 1. The limitation amounts to be inserted into paragraph 1 of draft article 62 would be 875 SDR per package and 3 SDR per kilogram and the text of that paragraph would be otherwise unchanged; 2. Draft article 99, that contained provisions on the amendment of the limitation amounts, and paragraph 2 of draft article 62, that aimed at applying the higher limitation amount if the carrier cannot establish whether or not loss, damage or delay occurred during the carriage by sea or during the carriage preceding or subsequent to the sea carriage, would be deleted; 3. No draft article 27 bis would be included in the text providing for a declaration provision to allow a Contracting State to include its mandatory national law in a provision similar to that in draft article 27135; and 4. The definition of “volume contract” in paragraph 2 of article 1 would be accepted. In respect of item (1) of the proposal the levels of limitation suggested were favourably considered by the majority of the delegations but were considered unreasonably high by some delegations and too low by others. However, following
A/CN.9/645, } 145–151. A/CN.9/645, } 157. 132 A/CN.9/645, } 158. 133 A/CN.9/645, } 183–194. 134 A/CN.9/645, } 197. 135 See footnote 56, A/CN.9/WG.III/WP.101. 130 131
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the agreement regarding the compromise package, the proposed new text of draft article 62 (now article 59) was approved. In respect of item (2) of the proposal, the initial debate indicated a support for the first part of the proposal whereas there did not appear to be a sufficient support for the second part,136 although a decision was deferred until final consideration of all the items of the package. At the end of the debate however, the Working Group agreed to delete paragraph 2 of draft article 62 as well as paragraphs 2 and 3 of draft article 27 in which reference was made to article 62.2. In respect of item (3) the deletion of article 27 bis was accepted. In respect of item (4), as will be indicated below in connection with the report of the discussions on chapter 16, although the proposal regarding draft article 83 (now article 80) had not been considered acceptable, a different proposal was ultimately accepted. Chapter 16 – Validity of contractual terms Since the fourth item of the package previously mentioned was considered wholly unsatisfactory by several delegations, in the interest of obtaining a broader consensus in support of the issue of freedom of contract, the following revised text of draft article 83 was proposed by a number of delegations: Article 83. Special rules for volume contracts 1. “Notwithstanding article 82, as between the carrier and the shipper, a volume contract to which this Convention applies may provide for greater or lesser rights, obligations, and liabilities than those imposed by this Convention. 2. A derogation pursuant to paragraph 1 is binding only when: (a) The volume contract contains a prominent statement that it derogates from this Convention; (b) The volume contract is (i) individually negotiated or (ii) prominently specifies the sections of the volume contract containing the derogations; (c) The shipper is given an opportunity and notice of the opportunity to conclude a contract of carriage on terms and conditions that comply with this Convention without any derogation under this article; and (d) The derogation is not (i) incorporated by reference from another document or (ii) included in a contract of adhesion that is not subject to negotiation. 3. A carrier’s public schedule of prices and services, transport document, electronic transport record, or similar document is not a volume contract pursuant to paragraph 1 of this article, but a volume contract may incorporate such documents by reference as terms of the contract. 4. Paragraph 1 of this article does not apply to rights and obligations provided in articles 15, paragraphs (1)(a) and (b), 30 and 33 or to liability arising from the breach thereof, nor does paragraph 1 of this article apply to any liability arising from an act or omission referred to in article 64. 5. The terms of the volume contract that derogate from this Convention, if the volume contract satisfies the requirements of paragraphs 1 and 2 of this article, apply between the carrier and any person other than the shipper provided that: (a) Such person received information that prominently states that the volume contract derogates from this Convention and gives its express consent to be bound by such derogations; and
A/CN.9/645, } 197.
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(b) Such consent is not solely set forth in a carrier’s public schedule of prices and services, transport document, or electronic transport record. 6. The party claiming the benefit of the derogation bears the burden of proof that the conditions for derogation have been fulfilled.
It was stated137 that the proposal provided additional explicit protection to shippers, with the intention that the amended text would address the concerns expressed by some during the previous sessions of the Working Group.138 In light of the many competing interests that were balanced as part of the attempts to clarify the concepts expressed in draft article 83 in WP.101, there was strong support for the view that, at such a late stage of its deliberations, it would be highly unlikely that the Working Group would be in a position to build an equally satisfactory consensus around a different solution. The Working Group was strongly urged not to take that direction and not to revert to proposals that in that past had failed to gain broad support, since that might in turn result in a failure to find sufficient support for the improved text, with its expanded protection for shippers. With respect to the contents of the proposal, the following explanations were provided: – Paragraph 1 had been split into two paragraphs with the chapeau of the former text of draft article 83 constituting paragraph 1 of the proposal; – Paragraph 2 of the proposal enumerated the cumulative preconditions for a derogation from the Draft Convention; – Paragraph 2(c) was new text that provided shippers with the opportunity, and the requirement that they be given notice of that opportunity, to conclude a contract of carriage on the terms and conditions that complied with the Draft Convention without any derogation; – Paragraph 2(d) prohibited the use of a contract of adhesion in setting out such derogations; and – The definition of “volume contracts” in paragraph 2 of draft article 1 would be maintained without amendment. Strong support was expressed for the proposal as containing a number of clarifications of the previous text which were key to establishing an appropriate balance between the rights of shippers and carriers in the negotiation of volume contracts. Further, the clarifications and refinements in the revised text were said to contribute greatly to the understanding of the provision and to the overall protection offered to shippers against possible abuses pursuant to the volume contract provision. In particular, delegations that had most often and consistently expressed concerns regarding the provision of adequate protections for shippers in the volume contract provisions on several previous occasions expressed complete satisfaction with the proposed refinements of the draft article. Others speaking in support of the proposed text emphasized the importance of finding an adequate and flexible means
A/CN.9/645, } 244. See, for example, A/CN.9/642, } 279–280; and A/CN.9/621, } 161–172.
137 138
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for the expression of party autonomy in order to assure the success of a modern transport convention, while at the same time ensuring that any party whose interests could be open to abuse was adequately protected. Following a lengthy discussion on the proposal for refined text for draft article 83, the Working Group approved the substance of the text of draft article 83 set out in paragraph 243 above. The proposal to amend the definition of volume contract instead did not find sufficient support. Finally, the Working Group approved the title of the Draft Convention with the inclusion of the phrase “contracts for the international”, the complete title being, therefore “United Nations Convention on contracts for the international carriage of goods wholly or partly by sea”. Fourty-first session of the Commission, held in New York, 16 June-3 July 2008139 Item 4 of the Agenda was “Finalization and approval of a Draft Convention on contracts for the international carriage of goods wholly or partly by sea.” A full report of the debates may be found in A/63/17 under item III-B, paragraphs 15–305, pages 5–59. A summary of the most significant debates in respect of certain provisions will follow. Special attention will be paid to the changes decided by the session. Chapter 1 – General provisions Article 1 – Definitions As a possible solution to the concerns expressed with respect to the operation of the volume contract provision, it was suggested that the definition of “volume contract” in draft article 1, paragraph 2, could be adjusted in order to narrow the potential breadth of the volume contract provision. In particular, the view was expressed that if a specific number of shipments or containers or a specific amount of tonnage of cargo were to be added to the definition, it could provide additional protection, so that parties actually entering into volume contracts would clearly be of equal bargaining power. Some support was expressed for that suggestion. However, the Commission noted that previous attempts by the Working Group to find a workable solution that would provide greater specificity to the definition of “volume contract” had not met with success, and agreed that the definition of “volume contract” should be retained as drafted, and that the compromise reached by the Working Group140 should therefore be maintained.
139
General Assembly-Official Records, Sixty-third session Supplement No.17 – A/63/17. See A/CN.9/645, } 196–204.
140
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Chapter 4 – Obligations of the carrier Article 12 – Period of responsibility of the carrier Several different interpretations of the provisions of this article were suggested,141 but after extensive efforts to clarify the text “to resolve the apparent ambiguity” the Commission took note that it had not been possible to reconcile the different interpretations of the provisions and the substance of the article was approved.142 That does not seem to have been a very satisfactory result and it is suggested that a thorough study of this article must be made with the view to establishing whether really alternative interpretations are possible or not. Article 13 – Transport beyond the scope of the contract of carriage A debate took place as to whether this provision was really necessary or not and the conclusion was that it should be deleted.143 Chapter 5 – Liability of the carrier for loss, damage or delay Article 18 (now article 17) – Basis of liability Paragraph 3, enumerating the excepted perils, has been the subject of a further debate. The Commission agreed that the paragraph should not be deleted. The Commission was aware of the depth of the discussions and of the careful compromise that had been achieved with the current text and felt that that compromise would be jeopardized by the proposed deletion of paragraph 3 of the draft article, a provision which in the view of many delegations was an essential piece of an equitable liability regime. Furthermore, it was generally felt that the objections raised to paragraph 3 resulted from a misunderstanding of its practical significance. Paragraph 3 was in fact part of a general system of fault liability and the circumstances listed therein were typically situations where a carrier would not be at fault. Even more importantly, the list in paragraph 3 was not a list of instances of absolute exoneration of liability, but merely a list of circumstances that would reverse the burden of proof and would create a rebuttable presumption that the damage was not caused by the carrier’s fault. The shipper still retained the possibility, under paragraphs 4 and 5 of the draft article, to prove that the fault of the carrier caused or contributed to the circumstances invoked by the carrier, or that the damage was or was probably the result of the unseaworthiness of the ship. Even many of those who had originally opposed the list in paragraph 3 in the Working Group were now, as a whole, satisfied of the adequacy of the liability system set forth in draft article 18. Also paragraphs 4, 5 and 6 had given rise to some discussion. It was argued that the shipper would have difficulty proving unseaworthiness, improper crewing, equipping or supplying, or that the holds were not fit for the purpose of carrying goods, as required by paragraph 5. And that the combined effect of paragraphs 4, 5 and 6 was to change the general rule on allocation of liability in a manner that was A/63/17, } 39–41. A/63/17, } 42–43. 143 A/63/17, } 45–53. 141 142
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likely to affect a significant number of cargo claims and disadvantage shippers in cases where there was more than one cause of the loss or damage and a contributing cause was the negligently caused unseaworthiness of the vessel. However, there was ample support for retaining paragraphs 4, 5 and 6 of the draft article as they currently appeared. The burden placed on the shipper, it was noted, was not as great as had been stated. In fact, nothing in the draft article required the shipper to submit conclusive proof of unseaworthiness, as the burden of proof would fall back on the carrier as soon as the shipper had showed that the damage was “probably” caused by or contributed to by unseaworthiness. Paragraph 6, too, had been the subject of extensive debate within the Working Group and the current text reflected a compromise that many delegations regarded as an essential piece of the overall balance of draft article 18. The prevailing and strongly held view was that over the years of extensive negotiations the Working Group had eventually achieved a workable balance between the interests of shippers and carriers and that the draft article represented the best compromise that could be arrived at. It was considered that it would be highly unlikely that a better result could be achieved at such a late stage of the negotiations. Moreover, the draft article was part of an overall balance of interests, and any changes in its substance would necessitate adjustments in other parts of the Draft Convention, some of which were themselves the subject of delicate and carefully negotiated compromises. Chapter 6 – Additional provisions relating to particular stages of carriage Article 27 (now article 26) – Carriage preceding or subsequent to sea carriage A proposal was made in the Commission to reinstate the reference to “national law” in draft article 27, or to include a provision in the Draft Convention allowing a Contracting State to make a declaration including its mandatory national law in draft article 27. In support of the text as drafted, it was observed that the inclusion of “national law” in draft article 27 was quite different from including international legal instruments. In the case of international instruments, the substance of the legislation could be expected to be quite well known, transparent and harmonized, thus not posing too great an obstacle to international trade. In contrast, national law differed dramatically from State to State, it would be much more difficult to discover the legal requirements in a particular domestic regime, and national law was much more likely to change at any time. It was suggested that those factors made the inclusion of national law in draft article 27 much more problematic and would likely result in substantially less harmonization than including international instruments in the provision. Chapter 7 – Obligations of the shipper to the carrier Article 36 – Cessation of the shipper’s liability Questions were raised in the Commission regarding the rationale for the inclusion of draft article 36 in the text, particularly in the light of the generally permissive approach of the Draft Convention to freedom of contract. While it was recalled that certain delegations in the Working Group had requested the inclusion of a provision on the cessation of the shipper’s liability, the Commission was of the general view
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that the provision was not necessary in the text and could be deleted. The Commission agreed to delete article 36 from the text of the Draft Convention. Chapter 8 – Transport documents and electronic transport records Article 38 (now article 36) – Contract particulars In response to the proposal to mention further particulars, that would be required by the consignee, such as the name of the ship, the ports of loading and unloading and the date on which the carrier or a performing party received the goods, or the approximate date of delivery, it was pointed out that the draft article was concerned only with mandatory contract particulars without which the transport could not be carried out and which were needed for the operation of other provisions in the Draft Convention. Nothing prevented the parties from agreeing to include other particulars that were seen as commercially desirable to be mentioned in the transport document. It was further noted, however, that the proposed addition contemplated some factual information, such as the name of the vessel, the port of loading or unloading or the approximate date of delivery, which, at the moment of issuance of the transport documents, the parties might not yet know. One of the primary interests of the shipper, it was said, would usually be to obtain a transport document as soon as possible, so as to be able to tender the transport document to the bank that issued the documentary credit in order to obtain payment in respect of the goods sold. However, the issuance of the transport document would unnecessarily be delayed if all the additional information proposed for inclusion in the draft article were to be made mandatory. It was explained that in the case of multimodal transport, for instance, several days might elapse between the departure of the goods from an inland location and their actual arrival at the initial port of loading. Some more time would again pass before the goods were then carried by another vessel to a hub port, where they would be again unloaded for carriage to a final destination. In such a situation, which was quite common in practice, usually only the name of the first vessel or of the feeder vessel was known at the time when the transport document was issued. In addition to that, the ports of loading and unloading were often not known, as large carriers might allocate cargo among various alternative ports on the basis of financial considerations (such as terminal charges) or operational considerations (such as availability of space on seagoing vessels). The Commission was sensitive to the arguments advanced in favour of keeping the list of requirements in draft article 38 within the limits of commercial reasonableness. Nevertheless, there was wide agreement that some additional requirements might be appropriate in order to place the shipper and the consignee in a better position to meet the demands of banks issuing documentary credit or to make the logistical and other arrangements necessary for collecting the goods at destination. It was pointed out that in view of the relationship between draft articles 38 and 41, an expanded list would not negatively affect trade usage, as the transport document could still be validly issued even without some information not being available before the beginning of the carriage. The Commission also recognized that some elements might necessitate some qualification as regards, for instance, their availability at the time of issuance of the transport document.
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The proposal to insert into the text of draft article 38 the following paragraph was adopted by the Commission: 2 bis. The contract particulars in the transport document or the electronic transport record referred to in article 37 shall furthermore include: (a) (b) (c) (d)
The name and address of the consignee, if named by the shipper; The name of a ship, if specified in the contract of carriage; The place of receipt and, if known to the carrier, the place of delivery; The port of loading and the port of discharge, if specified in the contract of carriage.
Chapter 9 – Delivery of the goods Article 45 – Obligation to accept delivery Concerns in line with the general comment expressed in respect of chapter 9 were also raised with respect to draft article 45. While there was some support for that approach, the focus of concern in respect of the draft provision was the phrase “the consignee that exercises its rights”. It was suggested that that phrase was too vague in terms of setting an appropriate trigger for the assumption of obligations under the Convention. It was suggested that that uncertainty could be remedied by deleting the phrase at issue and substituting for it: “the consignee that demands delivery of the goods”. After discussion, the Commission decided to adopt that amendment. With that amendment, the Commission approved the substance of draft article 45 and referred it to the drafting group. Article 50 (then 49 and now 47) – Delivery when a negotiable transport document or negotiable electronic transport record is issued The concerns that had been expressed during the twentieth session were repeated and it was proposed to adopt the solution that had been suggested, pursuant to which the chapeau of the former article 50 and sub-paragraphs (a) to (c) would become paragraph 1, whereas the subsequent sub-paragraphs (d) to (h) would become part of paragraph 2 and would be made applicable only when the negotiable transport document or negotiable electronic transport record states that the goods may be delivered without the surrender of the negotiable transport document or negotiable electronic transport record.144 There were some suggestions for adjustments to the proposed new text of draft article 49 including that of adding in the chapeau of paragraph 2 the word “expressly” before the word “states”. A concern was also raised with respect to whether the interrelationship between the new paragraph 2 and draft article 50 was sufficiently clear. In order to remedy that concern, the Commission agreed to insert the phrase “without prejudice to article 50, paragraph 1” at the start of paragraph 2. Subject to the insertion of the words “without prejudice to article 50, paragraph 1” in the beginning of paragraph 2 and of the word “expressly” before the word “states” in that same sentence, the Commission approved the substance of the new draft article 49 and referred it to the drafting group.
A/63/17, } 146–152.
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Article 51 (then 50 and now 48) – Goods remaining undelivered Some drafting suggestions were made to improve the provision. With the addition of a requirement in draft article 50, subparagraph 2 (b), along the lines of that of draft article 52, subparagraph 2 (c), that the destruction of the goods by the carrier be carried out in accordance with the law or regulations of the place where the goods were located at the time, the Commission approved the substance of draft article 50. Chapter 12 – Limits of liability Article 62 (then 61 and now 59) – Limits of liability The Commission heard expressions of concern that the proposed levels for the limitation of the carrier’s liability were too high and that there was no commercial need for such high limits, which were said to be unreasonable and unrealistic. There was some support for those concerns, in particular given that a number of delegations felt that the level of limitation of the Hague-Visby Rules was adequate for commercial purposes. It was said that it would have been possible for some delegations to make an effort to persuade their industry and authorities of the desirability of accepting liability limits as high as those set forth in the Hamburg Rules, as an indication of their willingness to achieve consensus. It was also felt, however, that the levels now provided for in the draft article were so high as to be unacceptable and they might become an impediment for ratification of the Convention by some countries, which included large trading economies. The Commission heard a proposal, which received some support, for attempting to broaden the consensus around the draft article by narrowing down the nature of claims to which the liability limits would apply in exchange for flexibility in respect of some matters on which differences of opinion had remained, including the applicability of the Draft Convention to carriage other than sea carriage and the liability limits. The scope of the draft article, it was proposed, should be limited to “loss resulting from loss or damage to the goods, as well as loss resulting from misdelivery of the goods”. It was said that such an amendment would help improve the balance between shipper and carrier interests, in view of the fact that the liability of the shipper was unlimited. The Commission did not agree to the proposed amendment to paragraph 1, which was said to touch upon an essential element of the compromise negotiated at the Working Group. The Commission noted and confirmed the wide and strong support for not altering the elements of that general compromise, as well as the expressions of hope that ways be found to broaden its basis of support even further. Chapter 16 – Validity of contractual terms Article 83 (then 82 and now 80) – Special rules for volume contracts Concern was expressed that, since a large number of contracts for the carriage of goods could fall into the definition of a volume contract, derogation from the obligations of the Draft Convention would be widespread and could negatively affect smaller shippers. It was suggested that possible remedies to reduce the breadth of the provision could be to restrict the definition of “volume contract” and to further protect weaker parties to the contract of carriage by requiring that the requirement in draft article 82 subparagraph 2 (b), that the volume contract be
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individually negotiated or that it prominently specify the sections of the contract containing any derogations, should be amended to be conjunctive rather disjunctive. The proposal was also made to allow States to make a reservation with respect to draft article 82. It was, however, noted, that delegations at the final session of the Working Group had succeeded in amending the text of the draft provision through the addition of draft subparagraphs 2 (c) and (d). In doing so the Working Group had achieved a compromise acceptable to many of the delegations that had previously expressed their concerns regarding the protection of parties with weaker bargaining power.145 The Commission expressed support that the compromise that had been reached should be maintained and it approved the substance of draft article 82 and referred it to the drafting group. Chapter 17 – Matters not governed by this Convention Article 85 (then 84 and now 82) – International Conventions governing the carriage of goods by other modes of transport It was pointed out that draft article 84 preserved only the application of international conventions that governed unimodal carriage of goods on land, on inland waterways or by air that were already in force at the time that the Convention entered into force. That solution was said to be too narrow. Instead, the Draft Convention should expressly give way both to future amendments to existing conventions as well as to new conventions on the carriage of goods on land, on inland waterways and by air. It was noted, in that connection, that an additional protocol to the Convention on the Contract for the Carriage of Goods by Road (the “CMR”) dealing with consignment notes in electronic form had recently been adopted under the auspices of the Economic Commission for Europe and that such amendments were common in the area of international transport. The Convention concerning International Carriage by Rail and Appendix B to that Convention containing the Uniform Rules concerning the Contract for International Carriage of Goods by Rail (the “CIM-COTIF”), for instance, had an amendment procedure as a result of which the 1980 Convention (“COTIF”) had been replaced with the 1999 version. Furthermore, the Draft Convention should also preserve the application of any future convention on multimodal transport contracts. Following informal consultations, it was proposed that the following phrase be inserted into the chapeau of the draft provision, after the phrase “enters into force”: “including any future amendment thereto”. Subject to the inclusion of a phrase along those lines, the Commission approved draft article 84 and referred it to the drafting group. The Convention was adopted by the General Assembly of the United Nations at its 67th plenary meeting on 11 December 2008 with the resolution reproduced below:
See A/CN.9/645, } 196–204.
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Resolution Adopted by the General Assembly United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea The General Assembly, Recalling its resolution 2205 (XXI) of 17 December 1966, by which it established the United Nations Commission on International Trade Law with a mandate to further the progressive harmonization and unification of the law of international trade and in that respect to bear in mind the interests of all peoples, in particular those of developing countries, in the extensive development of international trade, Concerned that the current legal regime governing the international carriage of goods by sea lacks uniformity and fails to adequately take into account modern transport practices, including containerization, door-to-door transport contracts and the use of electronic transport documents, Noting that the development of international trade on the basis of equality and mutual benefit is an important element in promoting friendly relations among States, Convinced that the adoption of uniform rules to modernize and harmonize the rules that govern the international carriage of goods involving a sea leg would enhance legal certainty, improve efficiency and commercial predictability in the international carriage of goods and reduce legal obstacles to the flow of international trade among all States, Believing that the adoption of uniform rules to govern international contracts of carriage wholly or partly by sea will promote legal certainty, improve the efficiency of international carriage of goods and facilitate new access opportunities for previously remote parties and markets, thus playing a fundamental role in promoting trade and economic development, both domestically and internationally, Noting that shippers and carriers do not have the benefit of a binding and balanced universal regime to support the operation of contracts of carriage involving various modes of transport, Recalling that, at its thirty-fourth and thirty-fifth sessions, in 2001 and 2002, the Commission decided to prepare an international legislative instrument governing door-to-door transport operations that involve a sea leg, Recognizing that all States and interested international organizations were invited to participate in the preparation of the Draft Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea and in the forty-first session of the Commission, either as members or as observers, with a full opportunity to speak and make proposals, Noting with satisfaction that the text of the Draft Convention was circulated for comment to all States Members of the United Nations and intergovernmental organizations invited to attend the meetings of the Commission as observers, and that the comments received were before the Commission at its forty-first session,
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Taking note with satisfaction of the decision of the Commission at its fortyfirst session to submit the Draft Convention to the General Assembly for its consideration, Taking note of the Draft Convention approved by the Commission, Expressing its appreciation to the Government of the Netherlands for its offer to host a signing ceremony for the Convention in Rotterdam, 1. Commends the United Nations Commission on International Trade Law for preparing the Draft Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea; 2. Adopts the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, contained in the annex to the present resolution; 3. Authorizes a ceremony for the opening for signature to be held on 23 September 2009 in Rotterdam, the Netherlands, and recommends that the rules embodied in the Convention be known as the “Rotterdam Rules”; 4. Calls upon all Governments to consider becoming party to the Convention. 67th plenary meeting 11 December 2008
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Annex I States (Members and Observers) and International Organizations Attending the Session of the Working Group This document indicates the sessions at which representatives of States members of UNCITRAL and observers from other States as well as observers from international organizations have attended. The document is based on the information contained in the reports of the sessions.
Representatives of States Members of the Working Group and Observers from Other States146 Afghanistan: 15th Algeria: 10th, 12th, 14th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Angola: 9th, 21st, 41st Antigua and Barbuda: 12th, 14th Argentina: 10th, 12th, 13th, 14th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Australia: 9th, 10th, 11th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Austria: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Bahrain: 41st Belarus: 41st Belarus: 9th, 11th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st Belgium: 14th, 41st Benin: 13th, 18th, 19th, 20th, 21st, 41st Bolivia: 12th, 20th, 21st, 41st Brazil: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Brunei Darussalam: 13th Bulgaria: 12th, 18th, 21st Burkina Faso: 9th, 11th, 13th 18th, 19th, 20th, 21st, 41st Burundi: 19th Cameroon: 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 19th, 20th, 21st, 41st Canada: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Chile: 9th, 13th, 15th, 18th, 19th, 20th, 21st, 41st China: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Ciad: 41st Colombia: 9th, 10th, 11th, 12th, 13th, 15th, 16th, 17th, 18th, 19th, 20th, 41st Congo (Democratic Republic of): 14th, 18th, 19th, 20th, 21st, 41st Congo: 18th, 19th, 20th, 21st, 41st 146
The States indicated in italics were non member States throughout the whole period during which the sessions have been held.
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Costa Rica: 12th, 19th Coˆte d’Ivoire: 9th, 19th, 20th, 21st, 41st Croatia: 14th, 15th, 16th, 17th, 18th, 21st, 41st Cuba: 12th, 13th, 14th, 15th, 16th, 17th Cyprus: 9th, 19th, 41st Czech Republic: 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Denmark: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Dominican Republic: 16th, 17th, 18th, 19th, 20th Ecuador: 9th, 13th, 15th, 19th, 41st Egypt: 21st, 41st El Salvador: 19th, 20th, 21st, 41st Ethiopia: 15th, 41st Fiji: 9th, 11th, 13th, 41st Finland: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st France: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Gabon: 11th, 18th, 19th, 20th, 21st, 41st Germany: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Ghana: 10th, 19th, 20th, 21st, 41st Greece: 10th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Guatemala: 15th, 19th, 20th, 41st Guinea: 41st Holy See: 15th, 19th, 41st Honduras: 9th, 41st India: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Indonesia: 14th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Iran (Islamic Republic of): 9th, 10th, 13th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Iraq: 15th, 16th, 17th, 18th Israel: 41st Italy: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Japan: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Jordan: 9th Kenya: 9th, 10th, 11th, 13th, 15th, 19th, 41st Korea (Republic of): 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Kuwait: 10th, 12th, 13th, 14th, 15th, 16th, 17th, 19th, 20th, 41st Latvia: 14th, 16th, 17th, 18th, 19th, 20th, 41st Lebanon: 10th, 11th, 12th, 19th, 20th, 21st Lesotho: 19th Libyan Arab Jamahiriya: 10th, 18th, 41st Lithuania: 9th, 10th, 11th, 12th, 13th, 14th, 15th Macedonia (the former Republic of Yugoslav): 41st Madagascar: 15th, 41st Malaysia: 18th, 19th, 41st Malta: 41st
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Marshall Islands: 11th Mexico: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Moldova (the Republic of): 19th, 41st Mongolia: 13th, 15th Morocco: 11th, 12th, 15th, 16th, 17th, 19th, 41st Myanmar: 41st Namibia: 20th, 21st Netherlands: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st New Zealand: 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 41st Nicaragua: 13th, 20th Niger: 11th, 19th, 20th, 21st, 41st Nigeria: 13th, 14th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Norway: 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Pakistan: 15th, 18th, 19th Panama: 16th, 17th, 19th Paraguay: 41st Paraguay: 9th, 11th Peru: 9th, 10th, 13th, 14th, 16th, 17th, 18th, 19th Philippines: 9th, 10th, 11th, 13th, 15th, 16th, 17th, 18th, 19th, 20th, 41st Poland: 21st, 41st Portugal: 20th, 21st Qatar: 13th, 15th Romania: 10th, 14th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Russian Federation: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Rwanda: 14th Saudi Arabia: 14th, 19th, 20th, 21st, 41st Senegal: 9th, 10th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Serbia and Montenegro: 15th, 41st Sierra Leone, 11th Singapore: 9th, 10th, 12th, 13th, 14th, 15th, 16th, 17th, 19th, 20th, 21st, 41st Slovakia: 10th, 14th, 18th, 20th, 21st, 41st Slovenia: 14th, 20th, 21st, 41st South Africa: 14th, 15th, 19th, 21st, 41st Spain: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Sri Lanka: 12th, 15th Sudan, 10th, 13th Sweden: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Switzerland: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Syrian Arab Republic: 10th Tanzania (United republic of): 20th Thailand: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st
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Tunisia: 9th, 10th, 12th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st Turkey: 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Uganda: 15th, 19th, 41st Ukraine: 10th, 15th, 18th, 19th United Kingdom of Great Britain and Northern Ireland: 9th, 10th, 11th, 13th, 16th, 17th, 18th, 20th, 21st United States of America: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st Uruguay: 12th Venezuela: 9th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st Vietnam: 11th Yemen: 10th, 12th, 14th, 18th, 19th, 20th Zimbabwe: 19th
International Organizations (a) United Nations system: Asian-African Legal Consultative Organization: 13th International Maritime Organization (IMO): 10th Special Representative of the Secretary-General on human rights and transnational corporations and other business enterprises and the World Bank: 41st United Nations Conference on Trade and Development (UNCTAD): 9th, 10th, 11th, 12th, 14th, 16th, 17th, 18th, 20th, 21st United Nations Economic Commission for Europe (UNECE): 9th, 12th, 14th, 16th, 17th, 18th (b) Intergovernmental organizations: African Union: 15th Asian-African Legal Consultative Organization: 19th, 41st Comunidad Andina: 9th Council of the European Union: 15th, 16th, 17th, 18th, 20th European Commission (EC): 10th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st European Community World Customs Organization (WCO): 41st Hague Conference on Private International Law (HCCH): 16th, 17th Intergovernmental Organisation for International Carriage by Rail (OTIF): 10th, 11th, 12th, 13th, 16th, 17th, 18th, 20th, 21st League of Arab States: 21st Organisation for Economic Co-operation and Development (OECD): 10th (c) International non-governmental organizations: Advisory Council of the United Nations Convention on Contracts for the International Sale of Goods: 41st American Arbitration Association: 41st American Bar Association: 41st Asociacio´n Americana de Derecho Internacional Privado: 41st
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Association of American Railroads (AAR): 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Association of the Bar of the City of New York: 41st Baltic and International Maritime Council (BIMCO): 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st Center for International Environment Law: 41st Center for International Legal Studies (CILS): 11th, 12th, 18th, 41st Comite´ International des Transports Ferroviaires (CIT): 10th, 16th, 17th Comite´ Maritime International (CMI): 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st European Law Student’s Association, The (ELSA): 10th, 16th, 17th, 18th, 19th, 21st European Shippers’ Council (ESC): 16th, 17th, 18th, 19th, 20th, 21st, 41st Federacio´n Latinoamericana de Bancos: 41st Ibero-American Institute of Maritime Law (IAIML): 19th Institute of International Banking Law and Pratice: 41st Institute of International Container Lessors (IICL): 11th Instituto Iberoamericano de Derecho Marı´timo: 9th, 10th, 11th, 12th, 13th, 41st International Association of Ports and Harbors: 41st International Bar Association: 41st International Chamber of Commerce (ICC): 13th, 14th, 15th, 16th, 17th, 18th, 19th, 21st International Chamber of Shipping (ICS): 9th, 10th, 11th, 12th, 13th, 14th, 16th, 17th, 18th, 19th, 20th, 21st, 41st International Council for Commercial Arbitration: 41st International Federation of Freight Forwarders Associations (FIATA): 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st International Group of Protection and Indemnity (P & I) Clubs: 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 20th, 21st, 41st International Institute for Sustainable Development: 41st International Multimodal Transport Association (IMMTA): 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 41st International Road Transport Union (IRU): 18th International Swaps and Derivates Association: 41st International Union of Marine Insurance (IUMI): 9th, 11th, 12th, 13th, 14th, 15th, 18th, 19th Kuala Lumpur Regional Centre for Arbitration: 41st London Court of International Arbitration: 41st Maritime Organization of West and Central Africa (MOWCA): 19th, 20th Private International Law Interest Group of the American Society of International Law: 41st Transportation Intermediaries Association (TIA): 13th Transportation Intermediaries Association: 9th, 11th Union internationale des avocats (UIA): 9th, 41st World Association of Former United Nations Interns and Fellows Inc.: 9th World Maritime University, The (WMU): 19th, 20th, 21st, 41st
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Annex II Prospectus of the Reports of the Sessions of the UNCITRAL Working Group and of the Report of the Forty-First Session of the U.N. Commission on International Trade Law NINTH SESSION, New York, 15–16 April 2002 (A.CN.9/510) Preliminary considerations Sphere of application Electronic communications Obligations ad liability of the carrier Obligations and liability of the shipper Freight TENTH SESSION, Vienna, 16–20 September 2002 (A.CN.9/525) Liability of the carrier (article 6) Freight (article 9) ELEVENTH SESSION, New York, 24 March-4 April 2003 (A.CN.9/526) Transport documents and electronic records (article 8) Delivery to the consignee (article 10) Right of control (article 11) Transfer of rights (article 12) Rights of suit (article 13) Time for suit (article 14) General average (article 15 Other conventions (article 16) Limits of contractual freedom (article17 Scope of application of the Draft Instrument NOTE OF THE SECRETARIAT dated 4 September 2003 enclosing a revised Draft Instrument on the carriage of goods [wholly or partly] [by sea] (A/CN.9/WG.III/WP.32)
TWELFTH SESSION, Vienna, 6–17 October 2003 (A.CN.9/544) Title of the Draft Instrument Consideration of the core issues of the Draft Instrument – Scope of application and performing parties – Scope of application and localized or non-localized damage (article 18.2) – Scope of application: definition of contract of carriage and treatment of the maritime leg (article 1a and 2) – Exemptions from liability, nautical fault and burdens of proof (article 14) – Obligations of the carrier in respect of the voyage by sea (article 13) – Liability of performing parties (article 15)
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THIRTEENTH SESSION, New York, 3–14 May 2004 (A.CN.9/552) – – – –
Liability of the carrier (articles 15–21) Additional provisions relating to carriage by sea (articles 22–24) Obligations of the shipper (articles 25–32) Freight
FOURTEENTH SESSION, Vienna, 29 November-10 December 2004 (A/CN.9/572) – Basis of the carrier’s liability (article 14) – Freedom of contract (articles 1, 1, 88 and 89) – Jurisdiction (articles 72–75bis) FIFTEENTH SESSION, New York, 18–18 April 2005 (A/CN.9/576) – – – – – –
Scope of application and freedom of contract ((articles, 1,2, 88, 88a and 89) Jurisdiction (articles 72–75bis) Arbitration Electronic commerce-revised provisions (articles 2–6, 33, 35) Right of control Transfer of rights NOTE OF THE SECRETARIAT dated 4 September 2003 enclosing a revised Draft Instrument on the carriage of goods [wholly or partly] [by sea] in which a number of revisions to the previous draft were consolidated (A/CN.9/WG.III/WP.56) (at that time the second reading was still in progress.
SIXTEENTH SESSION (Vienna, 28 November-9 December 2005 – – – –
Jurisdiction (chapter 16) Arbitration (chapter 17) Obligations of the shipper (chapter 8) Delivery of goods (chapter 10)
SEVENTEENTH SESSION, New York, 3–13 April 2006 – – – –
Right of control (chapter 11) Transfer of rights (chapter 12) Delivery to the consignee (chapter 10) Liability of carrier and shipper for breach of obligations not governed by the instrument – Scope of application, freedom of contract and related provisions (articles 8–10, 20, 94–96, 29–31 and 33) EIGHTEENTH SESSION, Vienna, 6–17 November 2006 (A/CN.9/594) – – – – –
Transport documents and electronic transport records (chapter 9) Obligations of the shipper (chapter 8) Rights of suit (chapter 14) Time for suit (chapter 15) Limitation of carrier’s liability (chapter 13)
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– – – – –
F. Berlingieri
Relation with other conventions (articles 27, 89 and 90) Basis of limitation of liability (article 64) General average (chapter 18) Jurisdiction (chapter 16) Arbitration (chapter 17)
SECOND READING COMPLETED NOTE OF THE SECRETARIAT dated 11 February 2007 enclosing a revised Draft Instrument on the carriage of goods [wholly or partly] [by sea] in which a further revisions to the previous draft were consolidated (A/CN.9/WG.III/WP.81).
NINETEENTH SESSION, New York, 16–27 April 2007 (A/CN.9/621) – – – – – – – – – –
General provisions (chapter 1) Scope of application (chapter 2) Electronic transport records (chapter 3) Period of responsibility (chapter 4) Obligations of the carrier (chapter 5) Liability of the carrier for loss, damage or delay (chapter 6) Additional provisions relating to particular stages of carriage (chapter 7) Validity of contractual terms (chapter 19) Obligations of the shipper to the carrier (chapter 8) Transport documents and electronic transport records (chapter 9)
TWENTIETH SESSION, Vienna, 15–25 October 2007 (A/CN.9/642) – – – – – – – – – – – –
Transports documents and electronic transport records (chapter 9) Delivery of the goods (chapter 10) Rights of the controlling party (chapter 11) Transfer of rights (chapter 12) Limits of liability (chapter 13) Time for suit (chapter 14) Jurisdiction (chapter 15) Arbitration (chapter 16) General average (chapter 17) Other conventions (chapter 18) Final clauses (chapter 20) Volume contracts (article 89) NOTE OF THE SECRETARIAT dated 14 November 2007 enclosing a revised Draft Instrument on the carriage of goods [wholly or partly] [by sea] in which a additional revisions to the previous draft were consolidated (A/CN.9/WG.III/WP.101).
TWENTY-FIRST SESSION, Vienna, 14–25 January 2008 (A/CN.9/645) – General provisions (chapter 1) – Scope of application (chapter 2) – Electronic transport records (chapter 3)
1 The History of the Rotterdam Rules
– – – – – – –
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Obligations of the carrier (chapter 4) Liability of the carrier for loss, damage or delay (chapter 5) Additional provisions relating to particular stages of carriage (chapter 6) Obligations of the shipper to the carrier (chapter 7) Transport documents and electronic transport records (chapter 8) Delivery of the goods (chapter 9) Rights of the controlling party (chapter 10)
REPORT OF THE UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW FORTYFIRST SESSION, New York, 16 June-3 July 2008 (A/63/17) Chapter III. Finalization and approval of a Draft Convention on contracts for the international carriage of goods wholly or partly by sea A. B. C. D.
Introduction Consideration of draft articles Report of the drafting group Decision of the Commission and recommendation to the General Assembly
.
Chapter 2
General Principles of Transport Law and the Rotterdam Rules Michael F. Sturley{
Abstract Now that the United Nations has adopted the Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, popularly known as the Rotterdam Rules, and over twenty nations have signed the Convention, the ratification process is well underway. Several important principles are reflected in the Rotterdam Rules. Foremost among these is the desire to achieve broad uniformity in the law governing the international carriage of goods. The importance of uniformity is well recognized, but the current status is unsatisfactory. The Rotterdam Rules now offer the only realistic possibility for an internationally uniform regime in the foreseeable future. To encourage international uniformity, the Rotterdam Rules were drafted to achieve a broad consensus – both among nations and among commercial interests. Achieving a broad consensus generally required compromise solutions to difficult problems, but when compromise was impossible it was sometimes necessary to omit topics from the Convention. The Rotterdam Rules are also designed to meet the industry’s practical needs. Shippers, carriers, insurers, transportation intermediaries, and others involved in the
This paper represents an updated and revised version of: General Principles of Transport Law and the Rotterdam Rules, 2010 European Journal of Commercial Contract Law 98. Some of the material in this paper is also included in the first chapter of: The Rotterdam Rules: The U.N. Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, Sturley et al. (2010) Sweet & Maxwell, London. { Prof. Sturley served as the Senior Adviser on the United States Delegation to Working Group III (Transport Law) of the United Nations Commission on International Trade Law (UNCITRAL); as a member of the UNCITRAL Secretariat’s Expert Group on Transport Law; and as the Rapporteur for the International Sub-Committee on Issues of Transport Law of the Comite´ Maritime International (CMI) and for the CMI’s associated Working Group. But he writes here solely in his academic capacity and the views expressed are entirely his own. They do not necessarily represent the views of, and they have not been endorsed or approved by, any of the groups or organizations (or any of the individual members) with which (and with whom) he has served. Prof. M.F. Sturley The University of Texas at Austin, TX, USA e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_2, # Springer-Verlag Berlin Heidelberg 2011
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industry actively participated in the negotiation and drafting of the Convention to ensure that it met their needs. Perhaps the most pressing practical need was to update and modernize the law. Existing regimes are out-of-date and fail to cover essential subjects. For example, the new Convention addresses serious gaps in existing law by facilitating electronic commerce and recognizing modern developments in commercial practice. In the final analysis, the Rotterdam Rules make a number of important changes in the law, but they are still evolutionary not revolutionary. The new Convention is directly based on existing models and years of practice under the existing regimes.
2.1
Introduction
It has been a real pleasure to participate in this outstanding conference on the Rotterdam Rules. I thank Koc¸ University, its Faculty of Law, and the Dr N€usretSemahat Arsel International Business Law Implementation and Research Centre for organizing such a successful event. Not only were the substantive portions of the conference of great interest but all the logistical details were executed without a single glitch. The speakers all enjoyed superb hospitality and we are all grateful for such gracious hosts. I also thank those who attended the conference. Distinguished academics, prominent practitioners, and dedicated students were all well-represented in the audience, and they engaged in the discussion at a very high level. The conference offered a learning opportunity for all who participated – speaker and audience alike.
2.2
Background
The long-awaited and much-anticipated “United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea”,1 which will be known as the “Rotterdam Rules”,2 was formally adopted by the U.N. General Assembly on 11th December 2008.3 It has been open for signature since
1 The final text of the Convention [hereinafter Convention or Rotterdam Rules] is annexed to General Assembly Resolution 63/122, U.N. Doc. A/RES/63/122 (11 Dec. 2008). It was also annexed to Report of the United Nations Commission on International Trade Law, 41st Session, U.N. GAOR, 63rd Sess., Supp. No. 17, Annex I, U.N. Doc. A/63/17 (2008) [hereinafter Commission Report]. 2 See General Assembly Resolution 63/122, supra note 1, } 3. 3 See id. } 2.
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23rd September 2009 (when the first sixteen nations4 signed the Convention at the formal signing ceremony in Rotterdam).5 This new convention represents the culmination of 8 years of intensive work by the U.N. Commission on International Trade Law (UNCITRAL) and its Working Group III on Transport Law,6 which followed almost 4 years of preparatory work by the Comite´ Maritime International (CMI).7 It will enter into force after twenty countries have ratified it.8 Several countries are already well advanced in the ratification process, including the United States. As this paper goes to press, however, it appears that Spain is the closest to ratifying the new convention. The Spanish government transmitted the convention to parliament on 6th May 2010.9 The Rotterdam Rules were created to govern the legal relationship between carrier interests and cargo interests10 in the context of international shipments that travel at least in part by sea. If they succeed, the new Rules will supersede not only the prior multilateral conventions – the Hague Rules,11 the Hague-Visby Rules,12
4
The sixteen countries to sign on the opening day were Congo, Denmark, France, Gabon, Ghana, Greece, Guinea, the Netherlands, Nigeria, Norway, Poland, Senegal, Spain, Switzerland, Togo, and the United States. 5 Now that the formal signing ceremony is complete, the Convention remains open for signature at U.N. headquarters in New York. See Rotterdam Rules art. 88(1). The first five countries to sign in New York were Armenia, Cameroon, Madagascar, Mali, and Niger. Other countries have made statements suggesting that they plan to sign the Convention soon. 6 The primary source material for the UNCITRAL Transport Law project can be found on the UNCITRAL web site (www.uncitral.org), which contains – in the six official U.N. languages – not only the final text of the Rotterdam Rules but also each preliminary draft of the Convention as it was negotiated, the reports of each meeting of Working Group III, the reports of the full Commission meetings, the formal proposals made by each delegation, and all of the other documents that were filed with UNCITRAL. 7 See generally Sturley (2003), pp. 65, 68–75 (discussing the background to the UNCITRAL Transport Law project, including the CMI’s preparatory work) [hereinafter Sturley, Interim View]. The CMI is a non-governmental organization founded in the late nineteenth century that was the primary force in developing uniform international approaches to maritime law problems for most of the twentieth century. Cf. Sturley (1991), pp. 1, 9–10 [hereinafter Sturley, History]. 8 See Rotterdam Rules art. 94(1). 9 By coincidence, 6th May 2010 is the very day that this paper was presented at the Koc¸ University conference. 10 In the simplest case, the Rotterdam Rules regulate the relationship between the carrier and the shipper. Other carrier interests include the “performing parties” that fulfill some of the carrier’s obligations under the contract of carriage. Other cargo interests include those who succeed to the shipper’s rights under the contract of carriage. Cf. infra part VI-C. 11 International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Aug. 25, 1924, 120 L.N.T.S. 155 [hereinafter Hague Rules]. 12 The phrase “Hague-Visby Rules” describes the Hague Rules, supra note 11, as amended by the 1968 Visby Amendments, Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Feb. 23, 1968, 1977 Gr. Brit. T.S. No. 83 (Cmnd. 6944) (entered into force June 23, 1977). In many countries, the 1968 Hague-Visby Rules have been further amended by the 1979 Special Drawing Right (SDR) Protocol. Protocol Amending the
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and the Hamburg Rules13 – but also national14 and regional15 alternatives that supplement or partially replace those international regimes in some parts of the world. The Rotterdam Rules contain no formal “Statement of Principles”,16 but it is still possible to discern a number of important principles motivating the Convention. Many of these principles have been evident throughout international transport law regimes dating back to the Hague Rules. Others are more recent innovations, or have been applied less regularly over the years. To help understand the Rotterdam Rules, in this paper I will note a few of these principles, and discuss their impact on the creation of the new Convention.
2.3
Uniformity
Like its predecessors,17 the Rotterdam Rules were motivated in large part by the desire to achieve broad uniformity in the law governing the international carriage of goods. The need for uniformity was implicit or explicit throughout the negotiations, and this importance is reflected both in the opening clauses of the resolution that formally adopted the Convention18 and in article 2 of the text. The first opening clause recalls the General Assembly’s resolution establishing UNCITRAL “with a mandate to further the progressive harmonization and unification of the law of International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Dec. 21, 1979, 1984 Gr. Brit. T.S. No. 28 (Cmnd. 9197) (entered into force Feb. 14, 1984). 13 United Nations Convention on the Carriage of Goods by Sea, Mar. 31, 1978, 1695 U.N.T.S. 3 [hereinafter Hamburg Rules]. 14 China, for example, adopted a Maritime Code, which came into force in 1993, that draws from both the Hague-Visby and Hamburg Rules, along with uniquely Chinese solutions to certain problems. See generally Li (1993). Although China is a particularly prominent example, it is not the only nation to have made significant modifications to the uniform international texts. 15 For example, the four Nordic countries – Denmark, Finland, Norway, and Sweden – revised their maritime codes to incorporate major elements from the Hamburg Rules into their pre-existing Hague-Visby systems. See generally, e.g., Ramberg (1994). 16 Perhaps the closest analogue would be the opening clauses of the resolution that formally adopted the Convention. See General Assembly Resolution 63/122, supra note 1. These opening clauses are mentioned from time to time in this paper. See, e.g., infra text following note 18. Article 2 may also be seen as representing a statement of general principle. It directs those interpreting the Convention to have “regard . . . to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.” Rotterdam Rules art. 2. See infra notes 19–21 and accompanying text. 17 The value of having uniform international rules to allocate liability for the risk of the loss of or damage to goods carried by sea has been recognized at least since the nineteenth century. The International Law Association (the sponsor of the conference at which the original Hague Rules were adopted) first tackled the subject in 1882. See Sturley, History, supra note 7, at pp. 6–8 (discussing nineteenth century efforts to achieve uniformity). 18 See supra note 16 (discussing the opening clauses).
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international trade”; the next clause expresses concern over the current lack of uniformity; and the fourth and fifth clauses explain why the General Assembly is convinced that greater uniformity would be beneficial. Article 2 of the text explicitly directs a court or arbitration panel interpreting the Convention to have “regard . . . to its international character and to the need to promote uniformity in its application . . ..”19 Many factors have contributed to the breakdown in uniformity under prior conventions (such as the Hague and HagueVisby Rules). One contributing factor has undoubtedly been the tendency of national courts to construe those conventions with less concern for achieving international uniformity in the application of the regime and more concern for preserving consistency with other aspects of national law.20 Article 2, following the example of a very similar provision in the Hamburg Rules,21 is intended to counter that trend.
2.3.1
The Importance of Uniformity
The goal of achieving greater international uniformity is so well-known,22 not only for maritime law but for any international private law convention, that it does not require extended discussion here.23 As the US Supreme Court recognized in its last case construing The Hague Rules, “conflicts in the interpretation of the Hague Rules not only destroy aesthetic symmetry in the international legal order but impose real costs on the commercial system the Rules govern.”24
19
Rotterdam Rules art. 2. See generally Sturley (1987). 21 Hamburg Rules art. 3. While the Hamburg Rules expressly refer to the regime’s “international character” and “the need to promote uniformity” – concepts that article 2 of the Rotterdam Rules addresses in very similar terms – the Rotterdam Rules also stress “the observance of good faith in international trade.” Rotterdam Rules art. 2. 22 The importance of international uniformity in the law governing the international carriage of goods has been widely recognized. See, e.g., Riverstone Meat Co. v. Lancashire Shipping Co. (The Muncaster Castle), 1961 A.C. 807, 840 (“I think it is very important in commercial interests that there should be [international] uniformity of construction . . .”) (quoting R.F. Brown & Co. v. Harrison, 137 L.T. 549, 556, 43 L.T.R. 633 (C.A. 1927) (Atkin, L.J.)); Boyd et al. (2008). Indeed, both UNCITRAL and the CMI exist to promote uniformity. See General Assembly Resolution 2205 (XXI) (establishing UNCITRAL with the mandate to further the progressive harmonization and unification of the law of international trade); CMI Constitution art. 1 (declaring CMI’s “object . . . is to contribute by all appropriate means and activities to the unification of maritime law in all its aspects”). 23 For a summary of the arguments and evidence supporting the need for greater uniformity in this field, see, e.g., Sturley (1995), pp. 553, 556–559 [hereinafter Sturley, Uniformity]. 24 Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 537, 1995 AMC 1817, 1824 (1995). 20
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Some portion of the cargo transported in international trade will inevitably be lost or damaged en route. The role of the legal system in this context is to allocate financial responsibility for those losses. In the process, it influences the actions of shippers, carriers, and other participants in a transaction. A carrier’s decision concerning its appropriate level of care25 during carriage will be based at least in part on its potential liability. Shippers will be similarly influenced in deciding how carefully goods should be prepared for shipment and the extent to which they will insure goods. Insurers must decide the terms on which coverage will be offered, potential buyers of the cargo must determine the protection that they require, and bankers financing a transaction must know the extent to which they can depend on a security interest in the goods. And all these decisions will be based in part on the liability regime that allocates the risk of loss. If the law is uniform, all participants will know that their liability (or recovery) will be the same wherever a dispute is resolved. Results will be more predictable, litigation will thus be less necessary, and the parties will be able to make their underlying business decisions in confidence, knowing what law will be applied if loss or damage occurs. The chairman of the International Chamber of Commerce (ICC) Bill of Lading Committee clearly expressed the commercial interest in uniformity when he was advocating for the adoption of the Hague Rules in the 1920s. In testimony favoring the United States’ ratification of the Hague Rules, he explained: [I]n the view of the [ICC,] uniformity is the one important thing. It does not matter so much precisely where you draw the line dividing the responsibilities of the shipper and his underwriter from the responsibility of the carrier and his underwriter. The all-important question is that you draw the line somewhere and that that line be drawn in the same place for all countries and for all importers.26
The practical factors motivating the ICC’s desire for uniformity over 80 years ago are just as strong today. With uniformity and predictability, the law more efficiently allocates the risks of cargo loss or damage. At the very least, greater uniformity tends to keep the law from interfering with the flow of trade.
25
An unsophisticated observer might think that more care is always better than less care, but that is not true at least in this context. To take an obvious example, a carrier would be foolish to spend £1000 in extra precautions to ensure that a package worth only £500 arrived safely at its destination. The legal system should encourage participants to exercise an appropriate level of care, but that will rarely be the maximum care possible. 26 International Convention for the Unification of Certain Rules in Regard to Bills of Lading for the Carriage of Goods by Sea: Hearing on Executive E Before a Subcommittee of the Senate Committee on Foreign Relations, 70th Cong., 1st Sess. 3 (1927) (statement of Charles S. Haight), reprinted in 3 The Legislative History of the Carriage of Goods by Sea Act and the Travaux Pre´paratoires of the Hague Rules 327 (Michael F. Sturley ed. 1990).
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The Current Status of Uniformity
The current situation is widely regarded as unsatisfactory. The Hague-Visby Rules provide the dominant international legal regime today, but some major commercial nations are not parties to that regime. The United States (the nation with the single largest share of world trade) may be the most prominent example, but it is hardly alone.27 China (with about a quarter of the world’s population and a growing proportion of its trade) operates under a Maritime Code that combines selected elements from the Hague-Visby and Hamburg Rules with unique Chinese provisions.28 Recognizing the problems, individual nations have already begun to develop their own, non-uniform, solutions.29 The Hamburg Rules entered into force (for the countries that had ratified them) in 1992. Although over thirty countries are now parties to the Hamburg Rules,30 they represent in the aggregate only a very small proportion of world trade. None of the major commercial or maritime powers has ratified them. Indeed, a third of the parties to the Hamburg Rules are land-locked. More significantly, it does not appear that any major commercial or maritime power is likely to become a party to the Hamburg Rules at this late date. Despite the vocal advocates who continue to press for the Hamburg Rules, they simply do not offer any realistic prospect of becoming the uniform regime that the world needs. If the Rotterdam Rules are not widely adopted, it is likely to be at least a generation before the international community would be prepared to again undertake the effort to reform the law governing sea carriage. In the meantime, national and regional alternatives31 would be likely to supply the pressing need to update and modernize the law.32 It is self-evident that these non-uniform responses could not provide the needed uniformity. Moreover, they could well make the effort to achieve uniformity more difficult the next time the international community did attempt the task.
2.4
Achieving a Broad Consensus
As noted above,33 the primary goal of the Convention is to harmonize the governing law when possible. For the Rotterdam Rules to succeed in this respect, nations that currently adhere to one of the old regimes (such as the Hague, Hague-Visby, or 27
See generally Sturley, Uniformity, supra note 23, at pp. 561–564. See generally Li, supra note 14, at pp. 209–211; Sturley, Uniformity, supra note 23, at pp. 561–562. 29 See, e.g., Sturley, Uniformity, supra note 23, at pp. 560–570. 30 For a list of the countries that are parties to the Hamburg Rules, see, e.g., 2009 CMI Yearbook 546. 31 Cf. supra notes 14–15, 29 and accompanying text. 32 Cf. infra notes 92–126 and accompanying text. 33 See supra notes 17–21 and accompanying text. 28
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Hamburg Rules) – or to a unique national variation of one of the old regimes – will need to replace their existing laws with the single new regime. Uniformity, by its very nature, is more valuable the more broadly it is achieved. The Convention seeks to facilitate this process by proposing compromise solutions that can be accepted by most nations. The results were occasionally complex34 or inelegant,35 but that was often the price that needed to be paid to achieve the more important goal. Achieving a broad consensus sometimes required a delicately balanced compromise on a complex legal issue. Several examples could illustrate this point well, but I will mention only two. The UNCITRAL Working Group was deeply divided on the proper approach to take in defining the Convention’s scope of application.36 Some delegates preferred the familiar “documentary” approach that had been adopted in the Hague Rules and continued in the Hague-Visby Rules.37 Others favored the “contractual” approach that the Hamburg Rules had introduced to maritime law.38 And a third group supported a proposed new “trade” approach.39 Chapter 2 of the Convention40 adopted a delicate compromise that drew on the strengths of each of the three approaches, thus proving acceptable to all three groups.41 The Working Group was even more deeply divided on a host of separate questions that relate to the broad issue of defining the basis of the carrier’s liability.42 To detail just one aspect of the debate, many were convinced that the traditional list of carrier defenses should be treated as exonerations from liability while many others were equally convinced that the carrier defenses should be nothing more than rebuttable presumptions of non-liability.43 Similarly deep
34
Sometimes it was necessary to adopt a complex solution because the demands of a complex industry required such a solution. Cf. infra notes 72–91 and accompanying text. 35 Cf. infra note 86 and accompanying text. 36 For a more detailed discussion of the issues and the Working Group’s resolution of those issues, € see Sturley (2005). Prof. Dr. Samim Unan is addressing “Scope of Application of Rotterdam Rules” as part of the present conference. 37 See, e.g., Report of Working Group III (Transport Law) on the Work of Its Fourteenth Session, } 84, U.N. Doc. A/CN.9/572 (2004) [hereinafter Fourteenth Session Report]. 38 See, e.g., id. } 85. 39 See, e.g., id. } 86. 40 Rotterdam Rules arts. 5–7. 41 See, e.g., Fourteenth Session Report, supra note 37, } 89. 42 € Prof. Dr. Fehmi Ulgener is addressing “Obligations and Liability of Carrier” as part of the present conference. 43 See, e.g., Report of the Working Group on Transport Law on the Work of Its Ninth Session, } 45, U.N. Doc. A/CN.9/510 (2002) [hereinafter Ninth Session Report]; Report of Working Group III (Transport Law) on the Work of Its Tenth Session, U.N. Doc. A/CN.9/525, } 41 (2002) [hereinafter Tenth Session Report]; Report of Working Group III (Transport Law) on the Work of Its Twelfth Session, U.N. Doc. A/CN.9/544, } 87, 90, 92, 97, 102, 106, 119, 129 (2003) [hereinafter Twelfth Session Report]; see generally Sturley, Interim View, supra note 7, at p. 96.
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divisions concerned such issues as the burdens of proof,44 the limits of particular defenses,45 and even whether the traditional “catalogue” of defenses should be retained at all.46 In the end, article 17 resolved the exoneration-presumption debate by focusing on the functional effect of each defense without regard to the label attached to it. That approach became one element of a larger – and again delicately balanced – compromise that was acceptable to the entire Working Group.47 At other times, the legal analysis was entirely straight-forward but the Working Group needed to agree on a compromise about how to implement it. For example, every delegation agreed that the carrier’s liability would be subject to a package or weight-based limitation,48 that claimants would have a limited period in which to bring their actions,49 and that a time limit would apply to the receiver’s obligation to give the carrier notice of non-apparent damage.50 But what would those limits be? The package and weight-based limitation amounts were particularly difficult to negotiate,51 but they were ultimately resolved when the Working Group accepted figures that were much higher than some delegates thought justifiable and much lower than other delegates had advocated. These figures, in turn, were part of a larger compromise proposal that thirty-three delegations jointly introduced at the end of the Working Group’s final session.52 It covered not only the limitation amounts but also a proposed “expedited amendment” procedure,53 a proposal to treat “non-localized” loss or damage as if it had occurred on the leg with the highest limitation amount,54 a proposal to include mandatory national law (along with
44 See, e.g., Tenth Session Report, supra note 43, } 46–56; Fourteenth Session Report, supra note 37, } 23–25, 29–33, 71–73; Report of Working Group III (Transport Law) on the Work of Its Nineteenth Session, } 73, U.N. Doc. A/CN.9/621 (2007) [hereinafter Nineteenth Session Report]. 45 See, e.g., Report of Working Group III (Transport Law) on the Work of Its Thirteenth Session, U.N. Doc. A/CN.9/552, } 94–98 (2004) [hereinafter Thirteenth Session Report]; Fourteenth Session Report, supra note 37, } 36–66; Nineteenth Session Report, supra note 44, } 69–70; Report of Working Group III (Transport Law) on the Work of Its Twenty-first Session, U.N. Doc. A/CN.9/645, } 54 (2008) [hereinafter Twenty-first Session Report]. 46 Cf. infra note 134. 47 See, e.g., Fourteenth Session Report, supra note 37, } 10–80. 48 See Rotterdam Rules art. 59(1). 49 See id. art. 62(1). 50 See id. art. 23(1). 51 For a detailed “interim report” on this negotiation, see Sturley (2007). 52 See Twenty-first Session Report, supra note 45, } 197. 53 See Draft Convention on the Carriage of Goods [Wholly or Partly] [by Sea], U.N. Doc. A/CN.9/ WG.3/WP.101, art. 99 (2007) [hereinafter Draft Convention WP.101]; Draft Convention on the Carriage of Goods [Wholly or Partly] [by Sea], U.N. Doc. A/CN.9/WG.3/WP.81, art. 99 (2007) [hereinafter Draft Convention WP.81]. Cf. Hamburg Rules art. 33. 54 See Draft Convention WP.101, supra note 53, art. 62(2); Draft Convention WP.81, supra note 53, art. 62(2).
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international instruments) within the network provision,55 and the “volume contract” definition.56 Even after the Working Group accepted this compromise package,57 some delegations were still unhappy with the limitation amounts.58 But the Working Group had achieved the broadest consensus possible. On some issues it proved impossible to reach a compromise solution that would attract sufficient support. When that happened, the contentious subject was generally dropped from the agenda. The Working Group usually concluded that it was more important to complete the project and address the core issues than to attempt more than could be accomplished at the risk of becoming so bogged down that the entire project failed. The early drafts considered by the Working Group, for example, had an entire chapter addressing freight.59 During the second reading, however, the Working Group agreed to delete most of that chapter.60 Other subjects were similarly considered and deleted.61 Indeed, the process of deleting contentious proposals continued to the very end of the negotiations. At the 2008 Commission meeting, when UNCITRAL approved what ultimately became the final draft of the Convention, it proved sufficiently difficult to reach a consensus on two
55
At the 2007 spring session in New York, there had been strong support in the Working Group for a compromise proposal to extend the network provision by allowing a country to declare when ratifying the Convention that it would treat its own mandatory national law in the same way as another international instrument when applying the provision that ultimately became article 26 of the Rotterdam Rules. See Nineteenth Session Report, supra note 44, } 189–190. At the 2007 fall session in Vienna, however, the Working Group “reverse[d] its decision.” Report of Working Group III (Transport Law) on the Work of Its Twentieth Session, } 163(e), U.N. Doc. A/CN. 9/642 (2007); see also id. } 166. 56 See Rotterdam Rules art. 1(2). The “volume contract” definition had been highly controversial during the Working Group’s negotiations. See Report of Working Group III (Transport Law) on the Work of Its Seventeenth Session, } 154–170, U.N. Doc. A/CN.9/594 (2006); Nineteenth Session Report, supra note 44, } 161–172. 57 See Twenty-first Session Report, supra note 45, } 196–203. 58 Two delegations complained that the limitation amounts were too high. See id. } 199. Two others argued that they were still too low, and that other aspects of the compromise unduly favored carriers. See id. } 200–201. 59 See Preliminary Draft Instrument on the Carriage of Goods by Sea, U.N. Doc. A/CN.9/WG.III/ WP.21, ch. 9 (arts. 9.1–9.5) (2002) [hereinafter Preliminary Draft Instrument]; Draft Instrument on the Carriage of Goods by Sea, U.N. Doc. A/CN.9/WG.3/WP.32, ch. 9 (arts. 41–45) (2003) [hereinafter Draft Instrument WP.32]. 60 See Thirteenth Session Report, supra note 45, } 164. The only provision that survived to the final text became article 42 of the Convention, which addresses “freight prepaid” clauses. Cf. Draft Instrument WP.32, supra note 59, art. 44 (addressing “freight prepaid” clauses). A provision addressing “cesser” clauses, which had originally been in the freight chapter, see id. art. 43(2), survived almost until the end, but it was finally deleted by the Commission. See infra note 62 and accompanying text. 61 See, e.g., Report of Working Group III (Transport Law) on the Work of Its Fifteenth Session, } 154–155, U.N. Doc. A/CN.9/576 (2005) [hereinafter Fifteenth Session Report] (deciding to delete Draft Instrument WP.32, supra note 59, art. 75, which addressed lis pendens, because “a rule on lis pendens would be extremely difficult to agree upon, given the complexity of the subject matter and the existence of diverse approaches . . . in the various jurisdictions”).
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relatively minor articles that the Commission decided to delete them entirely rather than take the risk that the controversy on either one of them might undermine the Convention.62 It proved impossible to reach a broadly acceptable compromise on the closely related issues of jurisdiction and arbitration63 because a number of countries held very strong but conflicting views on the proper resolution of the subject. At one extreme, nations and industry groups sympathetic to carrier interests, along with nations that are commonly named in choice-of-court and arbitration agreements, argued that the Convention should include no provision on jurisdiction or arbitration (except, perhaps, one that routinely enforced choice-of-court and arbitration agreements). Not surprisingly, the United Kingdom was a prominent member of this coalition.64 At the other extreme, nations and industry groups sympathetic to cargo interests, along with nations that regulate jurisdiction and arbitration domestically or as parties to the Hamburg Rules,65 insisted that the Convention should follow the example of the Hamburg Rules to protect a cargo claimant’s ability to seek recovery in a reasonable forum of its choice (notwithstanding a choice-ofcourt or arbitration agreement).66 Between those two extremes, a number of nations sought a more balanced compromise between cargo and carrier interests.67 Although a broadly acceptable compromise was impossible, jurisdiction and arbitration were too important to be completely omitted from the Convention.68 The solution was not only to harmonize the law to the extent possible in independent
See Commission Report, supra note 1, } 45–53 (deciding to delete Draft Convention WP.101, supra note 53, art. 13, which addressed transport beyond the scope of the contract of carriage); id. } 109–110 (deciding to delete Draft Convention WP.101, supra note 53, art. 36, which addressed cesser clauses). 63 Asst Prof. Dr. Zeynep Derya Tarman is addressing “Jurisdiction and Arbitration” as part of the present conference. 64 See, e.g., Comments by the United Kingdom of Great Britain and Northern Ireland Regarding Arbitration, U.N. doc. no. A/CN.9/WG.III/WP.59 (2005). 65 See Hamburg Rules arts. 21–22. 66 Some of the discussion in favor of a Hamburg-style approach in the jurisdiction context is summarized at Ninth Session Report, supra note 43, } 61; Fourteenth Session Report, supra note 37, } 132; Fifteenth Session Report, supra note 61, } 158; Report of Working Group III (Transport Law) on the Work of Its Eighteenth Session, } 254, U.N. Doc. A/CN.9/616 (2006) [hereinafter Eighteenth Session Report]. For the arbitration context, see, e.g., Fourteenth Session Report, supra note 37, } 155; Report of Working Group III (Transport Law) on the Work of Its Sixteenth Session, } 89, U.N. Doc. A/CN.9/591 (2006) [hereinafter Sixteenth Session Report]. 67 Some of the discussion in favor of a compromise approach in the jurisdiction context is summarized at Fourteenth Session Report, supra note 37, } 135; Fifteenth Session Report, supra note 61, } 157; Sixteenth Session Report, supra note 66, } 21. For the arbitration context, see, e.g., Fourteenth Session Report, supra note 37, } 156; Sixteenth Session Report, supra note 66, } 85, 90. 68 One might also say that the Working Group could not even agree to omit jurisdiction and arbitration from the Convention because some delegations believed so strongly that it needed to be included. 62
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chapters on jurisdiction69 and arbitration,70 but to accommodate those nations that were not prepared to accept any compromise. Thus the final article in each chapter permits each nation ratifying (or otherwise becoming a party to) the Convention to decide for itself whether it will be bound by that chapter.71 The “opt in” solution proved to be the only acceptable compromise among the three entirely different positions. The solution met the needs of those countries that firmly believed that jurisdiction and arbitration needed to be covered, it harmonized the law to the maximum extent that nations were willing to accept harmonization, and it nevertheless preserved the status quo for those nations that were unwilling to accept any change. Most importantly, it ensured that the inclusion or omission of these subjects would not interfere with any nation’s ability to accept the remainder of the Rotterdam Rules.
2.5
Meeting Industry’s Commercial Needs72
Many have criticized the Hamburg Rules as the product of a political process in which a majority of those negotiating that convention were more concerned about achieving political goals than meeting commercial needs.73 Although political considerations inevitably play a role whenever governments are involved in making important decisions, and political considerations can manifest themselves in many forms, the negotiation and drafting of the Rotterdam Rules were particularly attuned to practical and commercial needs. Indeed the preeminence given to the industry’s commercial needs when the Rules were negotiated forcefully demonstrated that UNCITRAL had learned from the Hamburg experience. By recognizing the importance of meeting industry’s commercial needs, it harkened back to the era of the Hague Rules (and before), largely abandoning the less pragmatic attitude that had arisen more recently. From the beginning, UNCITRAL made a point of reaching out to commercial interests. Indeed, when the Commission first considered the Transport Law project it directed the Secretariat to consult with organizations that act on behalf of various segments of the industry, including the CMI, the ICC, the International Union of Marine Insurance (IUMI), the International Federation of Freight Forwarders Associations (FIATA), the International Chamber of Shipping (ICS), and the
69
Rotterdam Rules arts. 66–74. Id. arts. 75–78. 71 See id. art. 74 (jurisdiction); art. 78 (arbitration). 72 The second opening clause of the General Assembly resolution that formally adopted the Convention, see supra note 16, implicitly recognized the importance of meeting industry’s commercial needs when it expressed concern “that the current legal regime . . . fails to adequately take into account modern transport practices”. 73 See generally Frederick (1991), p. 81. 70
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International Association of Ports and Harbours (IAPH).74 Thereafter, representatives from relevant international organizations attended every meeting of the CMI’s International Sub-Committee,75 and commercial observers were active participants at every session of the UNCITRAL Working Group. Commercial interests not only had a seat at the table so that their views could be heard, but the Working Group listened to those views and took them seriously. Most of the national delegations that were active in the negotiations either included expert industry representatives as members of the delegation76 or consulted regularly with industry representatives between sessions.77 When those experts with practical experience expressed strong views, therefore, the Working Group heard their message and responded accordingly. Among other things, this meant that proposals that might have made perfect sense on a theoretical or logical level were abandoned when it became clear that the affected industries opposed them. Two examples illustrate that influence particularly well. Under article 19, “maritime performing parties” are liable on the Convention’s terms for their own faults on the same basis as carriers (and receive the same benefits as carriers).78 Early in the process, the draft text proposed that inland carriers (non-maritime performing parties) should be subject to the same rule.79 But that proposal was abandoned80 – and the text was amended to clarify that inland carriers do not qualify as maritime performing parties81 – when railroads and road carriers opposed it.82 74 See Report of the United Nations Commission on International Trade Law on the Work of Its Twenty-Ninth Session, U.N. GAOR, 51st Sess., Supp. No. 17, } 215, U.N. Doc. A/51/17 (1996) [hereinafter UNCITRAL Twenty-Ninth Session Report], reprinted in 1996 CMI Yearbook 355. 75 See, e.g., Sturley, Interim View, supra note 7, at pp. 69–72 (describing the work of the CMI’s International Sub-Committee on Issues of Transport Law). Reports of individual meetings of that Sub-Committee are reprinted in the CMI Yearbook. See, e.g., Report of the First Meeting of the International Sub-Committee on Issues of Transport Law, 2000 CMI Yearbook 176. 76 Over the course of the negotiations, the two largest delegations in the Working Group were those from China and the United States. Each of these countries had a large delegation precisely because it included industry experts to advise the government representatives. Even some of the smaller delegations also included industry experts that attended the meetings. Denmark, for example, regularly sent two delegates to the Working Group – one a government representative and one from industry. 77 Although China and the United States included industry experts on their delegations, see supra note 76, each country also prepared for Working Group sessions by meeting with an even broader range of industry experts. Most other countries that were particularly active in the negotiations also consulted regularly with industry experts at home. 78 See Rotterdam Rules art. 19(1). 79 See, e.g., Preliminary Draft Instrument, supra note 59, art. 6.3.1(a); Draft Instrument WP.32, supra note 59, art. 15(1). 80 See Twelfth Session Report, supra note 43, } 23, 161. 81 See Rotterdam Rules art. 1(7). 82 See, e.g., Proposals by the International Road Transport Union (IRU), U.N. Doc. A/CN.9/WG. III/WP.90, at } 1 (2007); Drawing up of a New Convention on the Carriage of Goods by Sea and Extending This Convention to Door-to-Door Transport Operations (Comments on Behalf of
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Under article 80, “volume contracts” are subject to the Convention as a default rule but the parties have the freedom of contract to opt out of most of that coverage if they so choose.83 At a “Round Table” discussion in London (attended by a number of delegates),84 it was informally suggested that the text would be more logical if charterparties were subject to the same rule. That suggestion was also quickly abandoned when several non-governmental organizations representing carrier interests expressed their strong opposition.85 As a result of the pragmatic process and the focus on pragmatic goals, the Rotterdam Rules are very much a pragmatic convention. Some academic observers have criticized them for being inelegant or complex,86 and that may be a fair comment (although not fair criticism). The goal was never to achieve elegance and simplicity. The guiding principle was to improve the law so that it can better do the job that it is supposed to do – facilitate maritime commerce. When considering the industry’s commercial needs, it is important not to take too narrow a view. Advocates for a particular commercial interest might first consider whether the Convention will help or hurt a party in litigation once a loss has occurred. Thus a lawyer who regularly represents P&I clubs defending cargo claims might evaluate whether a carrier’s liability is likely to be higher or lower in a typical case, just as a lawyer who regularly represents cargo insurers in subrogation actions might evaluate whether recoveries are likely to be higher or lower in typical cases.87 The underlying business interests, however, should recognize that reforming the cargo liability regime is not a zero-sum game in which winners must be balanced against losers. Shippers and carriers alike will benefit from a more modern Convention that provides answers to the questions arising in practice, just as shippers and carriers alike will benefit from greater uniformity. That point was made particularly well by Knud Pontoppidan when he discussed the final text of the Rotterdam Rules at the CMI’s most recent conference in October 2008.88 the IRU) in Compilation of Replies to a Questionnaire on Door-to-Door Transport and Additional Comments by States and International Organizations on the Scope of the Draft Instrument, U.N. Doc. A/CN.9/WG.III/WP.28, at p. 43 (2003); Comments on Behalf of the Association of American Railroads (AAR) Relating to the Preliminary Draft Instrument on the Carriage of Goods by Sea in Compilation of Replies, supra, at p. 32. For a good illustration of the influence on this issue that the railroads exerted over an individual delegation, see Proposal of the United States of America on the Definition of “Maritime Performing Party,” U.N. Doc. A/CN.9/WG.III/WP.84, } 1–2 (2007). 83 See Rotterdam Rules art. 80(1). 84 See generally Sturley (2008a) 461, 473 & nn.133–134 (describing the London Round Table) [hereinafter Sturley, Transport Law for the Twenty-First Century]. 85 The traditional charterparty exclusion was accordingly retained. See Rotterdam Rules art. 6. 86 See, e.g., Tetley (2008), p. 625, 626. 87 Alternatively, some lawyers on both sides are likely to consider the impact that the new Convention will have on their own practices, with less regard for their clients’ best interests. 88 See Pontoppidan (2009), p. 282. Mr. Pontoppidan is the Executive Vice-President of AP MollerMaersk AS.
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He expressly acknowledged some of the many ways in which the Rotterdam Rules impose greater responsibility on carriers (as compared to the Hague-Visby regime),89 including the loss of the navigational fault exception90 and the large increase in the package and weight limitation amounts.91 But he nevertheless strongly supported the prompt ratification of the new Convention because the benefits to carriers of greater uniformity under a modern regime outweigh the greater burdens that the Rotterdam Rules place on carriers such as Maersk.
2.6
Updating and Modernizing the Law92
One primary purpose of the Rotterdam Rules is to update and modernize the existing legal regimes that govern the carriage of goods (which includes filling in some of the gaps that have been identified in practice over the years). One of the ways in which the Rotterdam Rules update and modernize the law is to expand the range of issues addressed by the Convention. Even with this broader coverage, however, it is important to recognize that the Rotterdam Rules are still limited in their scope.
2.6.1
Updating the Outdated Regimes
As many observers have recognized, all the existing regimes are significantly in need of modernization. The Visby Protocol, which is over 40 years old, is seriously dated.93 It was negotiated in the early days of the container revolution94 when contracts for door-to-door multimodal transport were not yet the norm. Moreover, it did not overhaul the Hague Rules (which were then already over 40 years old), but instead amended them in limited respects.95 The core of the Hague-Visby regime is not the 1968 Visby Protocol but the 1924 Hague Rules, which were not particularly
89
See 2009 CMI Yearbook at pp. 287–288. Compare Rotterdam Rules art. 17 with Hague-Visby Rules art. 4(2)(a). 91 Compare Rotterdam Rules art. 59(1) with Hague-Visby Rules art. 4(5). 92 The second and fourth opening clauses of the General Assembly resolution that formally adopted the Convention, see supra note 16, recognized the goal of updating and modernizing transport law, including filling the gaps that exist under current law. 93 See, e.g., van der Ziel (2002), p. 265. 94 See generally Levinson (2006) (discussing the impact of the container revolution); Cudahy (2006) (same). 95 See generally Sturley, Transport Law for the Twenty-First Century, supra note 84, at pp. 466–467 (discussing the negotiation of the Hague-Visby Rules). 90
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“modern” even in the 1920s.96 The Hamburg Rules are only 10 years younger, and in any event they did very little to update the Hague-Visby Rules.97 The Hamburg Rules admittedly introduced some innovations that proved influential in the latest negotiations. The most obvious may have been the elimination of the navigational fault exception found in article 4(2)(a) of the Hague and HagueVisby Rules.98 More significant innovations were expanding the scope to cover inbound and outbound shipments,99 and introducing special rules for jurisdiction and arbitration that sought to guarantee a cargo claimant’s right to have claims resolved in a convenient forum.100 On a more technical level, the Hamburg Rules distinguished between the “carrier” (i.e., the person that undertakes to transport the goods) and a person that actually performs the carriage,101 covered contracts of carriage in which no bill of lading had been issued,102 recognized paperless transactions,103 and expressly addressed liability for delay.104 Unfortunately, the Hamburg Rules were also noteworthy for what they failed to do. More than two decades into the container revolution (and the accompanying growth of door-to-door multimodal transport), for example, the Hamburg Rules expanded the Hague and Hague-Visby tackle-to-tackle scope only to port-to-port coverage.105 Although ships increasingly carried dangerous goods that were not even contemplated when the Hague Rules were negotiated, the Hamburg Rules’
96
The Hague Rules were substantially based on a 1910 Canadian statute that was modeled on the 1893 Harter Act, which was passed to address problems that began to arise at the beginning of the steam era. See generally Sturley, History, supra note 7, at pp. 4–17 (discussing situation in the nineteenth and early twentieth centuries). 97 On the two critical issues of facilitating e-commerce and addressing the needs of multimodal transport, the Hamburg Rules did nothing and next to nothing. See generally Sturley, Transport Law for the Twenty-First Century, supra note 84, at pp. 468–469 (discussing some of the limitations of the Hamburg Rules). The Hamburg Rules’ response to the container revolution was little different than Hague-Visby’s. See id. at 468 & nn.80–82 (comparing the Hague-Visby and Hamburg Rules). 98 See Hamburg Rules art. 5(1). 99 See Hamburg Rules art. 2(1). Although the CMI’s draft of the Visby Protocol called for expanding the scope to cover inbound and outbound shipments, the diplomatic conference rejected this proposal. See generally Sturley, Transport Law for the Twenty-First Century, supra note 84, at pp. 466–467 (discussing the negotiation of the Hague-Visby Rules). 100 See Hamburg Rules arts. 21–22. 101 Hamburg Rules art. 1(2) recognizes the “actual carrier.” See also id. art. 10. The concept is expanded in the Rotterdam Rules as the “performing party.” See Rotterdam Rules art. 1(6). Assoc. Prof. Dr. Kerim Atamer is addressing “Identity of Carrier and Performing Party” as part of the present conference. 102 See Hamburg Rules art. 1(6); see also id. art. 18. 103 The Hamburg Rules did not anticipate e-commerce, of course, but they did recognize that telegrams and telexes should be recognized as “writings.” See id. art. 1(8). 104 See id. art. 5(1)-(2). 105 See id. art. 4; see also id. art. 1(6) (effectively excluding inland portion of multimodal contracts from coverage).
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treatment of shippers’ liability is not substantially different from the Hague treatment.106 The Rotterdam Rules address the prior conventions’ failure to keep pace with modern business practices in a number of specific ways. While none of the existing regimes facilitate electronic commerce, for example, the Rotterdam Rules address this modern trend not only with a separate chapter devoted to the subject107 but throughout the text.108 While none of the existing maritime regimes address the rights and responsibilities of the person with the right to control the goods, the Rotterdam Rules include a separate chapter to fill this gap.109 While the existing regimes govern on a tackle-to-tackle110 or port-to-port111 basis, failing to address the modern needs of multimodal contracts, the Rotterdam Rules instead apply on a door-to-door basis if the parties’ contract runs that far.112 Updating and modernizing the law was not simply a guiding principle for UNCITRAL’s Transport Law project, the entire project grew out of the perceived need to update and modernize. The initial seeds were planted in the context of UNCITRAL’s Electronic Data Interchange (EDI) project. In June 1996, as part of the EDI project, the Commission discussed a proposal to review . . . current practices and laws in the area of the international carriage of goods by sea, with a view to establishing the need for uniform rules in the areas where no such rules existed and with a view to achieving greater uniformity of laws than has so far been achieved.113
In conjunction with this discussion, the Commission noted: [E]xisting national laws and international conventions left significant gaps regarding issues such as the functioning of the bills of lading and seaway bills, the relation of those transport documents to the rights and obligations between the seller and the buyer of the goods and to the legal position of the entities that provided financing to a party to the contract of carriage.114
106
See id. arts. 12–13. See Rotterdam Rules arts. 8–10 (chapter 3). 108 See generally, e.g., Alba (2009) (discussing provisions of the Convention that facilitate electronic commerce). 109 See generally, e.g., van der Ziel (2009) (discussing the Convention’s treatment of the right of control and the controlling party). Prof. Dr. van der Ziel is addressing “Right of Control and Controlling Party” as part of the present conference. 110 See Hague-Visby Rules art. 1(e). 111 See Hamburg Rules art. 4; see also id. art. 1(6) (effectively excluding inland portion of multimodal contracts from coverage). 112 See generally, e.g., Fujita (2009), p. 349 (discussing the Convention’s comprehensive treatment of multimodal contracts). 113 UNCITRAL Twenty-Ninth Session Report, supra note 74, } 210, reprinted in 1996 CMI Yearbook 354. 114 Id. 107
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The Commission accordingly authorized the UNCITRAL Secretariat to start gathering information on these matters with a view to deciding “on the nature and scope of any future work that might usefully be undertaken by [UNCITRAL].”115 With this mandate, the Secretariat invited the CMI to begin the preparatory work for a new convention and the project was underway.
2.6.2
Expanding the Range of Issues
Adequately updating transport law requires a much broader convention than the Hague, Hague-Visby, or Hamburg Rules. Many provisions in the final text of the Rotterdam Rules illustrate the extensive need to update current law. Chapters 3,116 9,117 10,118 and 11119 address issues that have been entirely omitted from prior maritime conventions. Chapter 8 resolves issues concerning transport documents and electronic transport records that have created real problems in practice but that prior conventions did not include.120 Even on liability issues, the Rotterdam Rules cover a broader range of issues. Chapter 7 resolves issues of shipper liability more fully than prior maritime conventions,121 and chapter 5 addresses not only the carrier’s liability but also the liability of maritime performing parties.122 The need to update the law to facilitate electronic commerce explains a large share of the new subjects covered by the Rotterdam Rules. Industry is moving in the direction of greater e-commerce, but current law impedes that progress to the extent that the law fails to furnish a framework that provides an adequate basis for e-commerce (however it may develop). Chapter 3 takes an important step by permitting the use of electronic transport records if the parties wish to use them, but that Id. } 215, reprinted in 1996 CMI Yearbook 355. Chapter 3, which consists of articles 8–10, addresses electronic transport records, a subject that was not even contemplated when the prior maritime conventions were negotiated. Assoc. Prof. Dr. Hakan Karan is addressing “Transport Documents and Electronic Transport Records” as part of the present conference. 117 Chapter 9, which consists of articles 43–49, addresses delivery, a key concept that prior maritime conventions left undefined. Article 4(2) of the Hamburg Rules comes closest to providing any useful guidance. 118 Chapter 10, which consists of articles 50–56, addresses the rights of the controlling party, a concept that prior maritime conventions did not recognize. Prof. Dr. van der Ziel is addressing “Right of Control and Controlling Party” as part of the present conference. 119 Chapter 11, which consists of articles 57–58, addresses the transfer of rights, a subject beyond the scope of prior maritime conventions that has generally been governed by national law. 120 Compare Rotterdam Rules arts. 35–42 with Hague Rules arts. 3(3)-(5), 3(7); Hague-Visby Rules arts. 3(3)-(5), 3(7); Hamburg Rules arts. 14–18. 121 Compare Rotterdam Rules arts. 27–34 with Hague Rules arts. 4(3), 4(6); Hague-Visby Rules arts. 4(3), 4(6); Hamburg Rules arts. 12–13. Prof. Tomotaka Fujita is addressing “Obligations and Liability of Shipper” as part of the present conference. 122 See Rotterdam Rules arts. 1(7), pp. 19–20. 115 116
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solves only part of the problem. Before commercial parties will make the investment necessary to rely on e-commerce substitutes for bills of lading, they will need to know that the law provides predictable answers to such issues as the rights of the controlling party and transfer of rights – issues that Chaps. 10 and 11 now address.123 The Rotterdam Rules’ wider period of carrier responsibility – full door-to-door coverage (rather than tackle-to-tackle coverage under the Hague and Hague-Visby Rules or port-to-port coverage under the Hamburg Rules) when the contract of carriage extends that far124 – is similarly a pragmatic innovation that is necessary to modernize the law. Separate legal regimes for each leg of a multimodal journey may have made sense in the days when each leg was performed under a different contract, but the commercial world has long since moved past that business model. It is time for the legal community to catch up with commercial reality. As the Supreme Court of the United States recently observed in the context of a multimodal bill of lading, “[c]onfusion and inefficiency will inevitably result if more than one body of law governs a given contract’s meaning.”125 Thus the Rotterdam Rules provides that its legal regime will govern the relationship between the shipper and the carrier (the two contracting parties) throughout the entire performance of a multimodal contract that includes appropriate carriage by sea.126
2.6.3
Limitations on the Scope of the Rotterdam Rules
Although the Rotterdam Rules are much broader than prior maritime conventions, it is nevertheless important to recognize that the Convention is still limited. Most obviously, the scope is limited to the transportation issues that arise out of the shipper-carrier relationship. The Convention does not address issues of property law, for example. Chapter 10 identifies the party that has the power to give instructions to the carrier,127 but it does not address who has a property interest in the goods. Similarly, the Convention does not address issues of agency law. Article 19 123 Many of the other new provisions in the Rotterdam Rules were also necessary to update the law. Article 80’s treatment of volume contracts was controversial because of the policy choices that UNCITRAL made, but some treatment of volume contracts (and other contractual forms that did not previously exist in common practice) was necessary to bring the law into the twenty-first century. We no longer live in an era when bills of lading and charterparties are the sole contracts of carriage in everyday use. Cf. Rotterdam Rules arts. 1(1) (providing a “contract of carriage” definition that is not limited to bills of lading and similar documents of title), 6(1)(b) (providing for contracts other than charterparties that provide for the use of a ship or any space thereon). 124 Compare Rotterdam Rules art. 12 with Hague Rules art. 1(e); Hague-Visby Rules art. 1(e); Hamburg Rules art. 4(1). 125 Norfolk Southern Railway Co. v. James N. Kirby, Pty Ltd., 543 U.S. 14, 29, 2004 AMC 2705, 2715 (2004). 126 Of course, the contract must otherwise satisfy the scope-of-application requirements. See Rotterdam Rules arts. 5–7. 127 See supra note 118 and accompanying text.
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establishes a cargo claimant’s right to recover from a maritime performing party,128 but nothing in the Convention addresses the relationship between the carrier and its performing parties (except to the extent that their relationship is established by a contract of carriage that itself satisfies the requirements of chapter 2129). Indeed, it would be illogical for the Rotterdam Rules to address issues such as property and agency. The Convention is intended to govern the contractual relationship between carriers (along with some related parties, such as maritime performing parties) and shippers (along with parties that derive their rights from shippers, such as consignees and controlling parties). Like its predecessors, it does not govern relationships between cargo interests, such as the relationship between two shippers or the relationship between a shipper and a consignee. Nor does it govern relationships between two carrier interests. Property issues generally arise in the context of the relationship between a seller (often the shipper in the transport contract) and a buyer (often the consignee) or lender (often the holder of a negotiable transport document). Agency issues generally arise in the context of the relationship between the principal parties and their subcontractors. Although the Rotterdam Rules are strictly limited in their scope to the shippercarrier relationship, they do not govern every aspect of even that relationship. Most obviously, the Convention does not govern the shipper’s obligation to pay freight, which is one of the core obligations under the contract. Even for subjects that are within the Convention’s ambit, a great many specific issues are left to national law. For example, article 17 addresses burdens of proof but it does not address the standard of proof. Thus it is left to otherwise applicable law to determine whether a party must carry its burden with a preponderance of the evidence, clear and convincing evidence, proof beyond a reasonable doubt, or some other standard. Similarly, the application of the Convention turns on the existence of a contract for carriage, but issues of contractual validity are left to otherwise applicable law. In any action to recover damages under the Convention, central issues may include causation, foreseeability, and the plaintiff’s right to sue, but once again the Convention does not address those issues.
2.7
Evolutionary Development of the Law
If we pay attention to the big picture, the changes to existing law are not (and were not intended to be) earth-shaking. The Rotterdam Rules are deliberately evolutionary, not revolutionary. The focus is on updating and modernizing the existing legal 128
Assoc. Prof. Dr. Kerim Atamer is addressing “Identity of Carrier and Performing Party” as part of the present conference. 129 It is very common for an NVOC to contract with a shipper for a multimodal carriage with a sea leg and then sub-contract with an ocean carrier to perform that sea leg. To the extent that the other requirements of chapter 2 are satisfied, both the multimodal contract (in which the NVOC is the carrier) and the sub-contract for the sea leg (in which the NVOC is the shipper) are subject to the Convention.
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regimes that govern the carriage of goods,130 filling in some of the gaps that have been identified in practice over the years,131 and harmonizing the governing law when possible.132 Indeed, the Working Group rejected proposals to address more revolutionary subjects (or at least more controversial subjects on which harmonization would have been difficult).133 The Rotterdam Rules were not negotiated and drafted in a vacuum. Many provisions in the Convention were included either to preserve the jurisprudence that has developed during decades of experience with the Hague and Hague-Visby Rules134 or to avoid any implication that changes may have been intended by the deletion of a well-known provision.135 Even the entirely new provisions were written with an eye on the years of practice under the existing regimes.136 To be sure, particular aspects of the Convention will involve more significant changes for some countries than for others. To the extent that generalization is possible, the Rotterdam Rules draw largely on the Hague-Visby and Hamburg Rules, incorporating significant elements from each. Those countries that have already adopted a national law incorporating major Hague-Visby and Hamburg elements are therefore less likely to see significant changes in their legal systems under the new regime (although from the very nature of a compromise, every country can expect some significant changes to be made). On the other hand,
130
See supra notes 92–126 and accompanying text. See supra text after note 92. 132 See supra notes 17–21 and accompanying text. 133 See supra notes 59–62 and accompanying text. 134 Article 17(3), for example, preserves most of the familiar catalogue of defenses that was originally included in article 4(2) of the Hague Rules – despite frequent debates over whether such a list is necessary. See, e.g., Tenth Session Report, supra note 43, } 39; Twelfth Session Report, supra note 43, } 117–118; Fourteenth Session Report, supra note 37, } 35; Nineteenth Session Report, supra note 44, } 68. The Nordic countries have gone so far as to eliminate most of the catalogue from their domestic Hague-Visby legislation on the ground that it is unnecessary. See generally, e.g., Ramberg, supra note 15, at 1223 (explaining that the elimination was not a substantive change because the general fault provision would preserve the omitted defenses in any event). But UNCITRAL for the most part retained the catalogue on the grounds that it did no harm in countries in which it was unnecessary and provided a real benefit in those countries that had a well-developed jurisprudence under the catalogue. See, e.g., Tenth Session Report, supra note 43, } 39; Twelfth Session Report, supra note 43, } 118; Fourteenth Session Report, supra note 37, } 35. 135 Article 79(1)(c), for example, preserves the ban on benefit-of-insurance clauses that was originally included in article 3(8) of the Hague Rules. See also, e.g., Hamburg Rules art. 23(1). Benefit-of-insurance clauses have not been a problem in practice for over ninety years. See Sturley (2008b), } 165, at pp. 16–28 & n.2 (7th rev. ed.). But UNCITRAL did not wish to risk resurrecting the problem by repealing the well-established prohibition. 136 Article 24, for example, largely abrogates the common-law deviation doctrine. Although no similar provision appears in prior maritime conventions, that article is a direct response to the practice that has developed in some countries under prior law. See, e.g., Thirteenth Session Report, supra note 45, } 100–102. 131
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those countries that still adhere to the Hague Rules are likely to see greater changes. Because the Rotterdam Rules are built on existing foundations, very little about them is completely new. One of the most visible reforms – elimination of the heavily criticized “navigational fault” exception137 – is not even a change in law for those countries that have adopted the Hamburg Rules138 (and it will not represent much of a change in practice in those countries whose courts rarely uphold the defense139). Perhaps the most significant change in the new Convention is extending the period of responsibility (in appropriate cases) to full door-to-door coverage.140 Although that innovation is not currently in force in other transport law conventions, it is still not particularly remarkable. Courts have for decades been upholding contractual clauses that extend the maritime regime inland.141 The Rotterdam Rules simply take this common commercial choice and give effect to it with the force of the Convention. Even the volume contract provision,142 which was long controversial within the Working Group, grows out of the recognition in the Hague, Hague-Visby, and Hamburg Rules that some contracts in which the parties are more likely to have equal bargaining power (i.e., charterparties) need not be subject to the regime on a mandatory basis.143 Even with respect to those issues that have been entirely omitted from prior maritime conventions,144 the Rotterdam Rules were not written on a clean slate. Although no international uniform law governed those issues, they are still subject to legal regimes (generally under domestic law). That patchwork of conflicting laws does a poor job of providing international traders with uniform and predictable laws that can govern their transactions consistently, wherever they do business, but it at least gave the UNCITRAL Working Group some functioning models on which the delegates could base new proposals.
137 See Tenth Session Report, supra note 43, } 35–36; see also Sturley, Interim View, supra note 7, at p. 95 (discussing the Working Group’s early decision to eliminate the navigational fault defense). 138 See Sturley, Interim View, supra note 7, at p. 95 (noting the Hamburg Rules’ elimination of the navigational fault defense). 139 See, e.g., Sturley, Uniformity, supra note 23, at p. 577 (noting that “the navigational fault defense is rarely, if ever, successful in the United States”). 140 Compare Rotterdam Rules art. 12(1) (providing for door-to-door coverage) with Hague-Visby Rules art. 1(e) (establishing tackle-to-tackle coverage); Hamburg Rules art. 4(1) (establishing portto-port coverage). See generally, e.g., Sturley, Interim View, supra note 7, at pp. 76–79 (discussing the Working Group’s early discussion of the choice between port-to-port and door-to-door coverage). 141 See, e.g., Norfolk Southern Railway Co. v. James N. Kirby, Pty Ltd., 543 U.S. 14, 2004 AMC 2705 (2004) (upholding inland extension of U.S. COGSA to govern liability for train derailment on basis of clause paramount in multimodal bill of lading). 142 Rotterdam Rules art. 80. 143 See Hague Rules art. 5; Hague-Visby Rules art. 5; Hamburg Rules art. 2(3). 144 See supra notes 116–122 and accompanying text.
2 General Principles of Transport Law and the Rotterdam Rules
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Conclusion
Looking back at the long process required for the preparation of the Rotterdam Rules and considering the principles that motivate them, it is tempting to view ourselves as being at the conclusion of the story. In truth, however, we have witnessed only the prologue. UNCITRAL has finished drafting the new regime, the United Nations has adopted the formal Convention, and more than twenty nations have formally signed it. The next step is for the world’s governments to decide that their countries should become parties to the Convention. When twenty nations have done so, the Rotterdam Rules finally enter into force. Then it will be possible to start witnessing the principles discussed here in the pragmatic real world in which the Rotterdam Rules were designed to operate.
References Alba M (2009) Electronic commerce provisions in the UNCITRAL convention on contracts for the international carriage of goods wholly or partly by sea. Tex. Int’l. L.J. 44:387 Boyd SC et al (2008) Scrutton on charterparties and bills of lading, vol 376, 21st edn. Sweet & Maxwell Ltd, Andover Cudahy BJ (2006) Box boats: how container ships changed the world. Fordham University Press, New York Frederick DC (1991) Political participation and legal reform in the international maritime rulemaking process: from the Hague rules to the Hamburg rules. JMLC 22:81 Fujita T (2009) The comprehensive coverage of the new convention: performing parties and the multimodal implications. Tex. Int’l. L.J. 44:349 Levinson M (2006) The box: how the shipping container made the world smaller and the world economy bigger. Princeton University Press, Princeton Li L (1993) The maritime code of the People’s Republic of China. LMCLQ 204:209 Pontoppidan K (2009) Shipowners’ view on the UNCITRAL convention on contracts for the international carriage of goods wholly or partly by sea. CMI Yearb:282 Ramberg J (1994) New Scandinavian maritime codes. Dir Maritt:1222 Sturley MF (1987) International uniform laws in national courts: the influence of domestic law in conflicts of interpretation. Va J Int’l L 27:729 Sturley MF (1991) The history of COGSA and the Hague Rules. JMLC 22:1 Sturley MF (1995) Uniformity in the law governing the carriage of goods by sea. JMLC 26:556 Sturley MF (2003) The United Nations Commission on International Trade Law’s Transport Law Project: an interim view of a work in progress. Tex. Int’l. L.J. 39:65 Sturley MF (2005) Solving the scope-of-application puzzle: contracts, trades, and documents in the UNCITRAL transport law project. JIML 11:1:22 Sturley MF (2007) Setting the limitation amounts for the UNCITRAL transport law convention: the fall 2007 session of working group III. Benedict Mar Bull 5:147 Sturley MF (2008a) Transport law for the twenty-first century: an introduction to the preparation, philosophy, and potential impact of the Rotterdam Rules. JIML 14:461 Sturley MF (2008) Benefit of insurance clauses. Benedict on Admiralty 2A:16 (7th rev. ed.) Sturley MF, Fujita T, van der Ziel G (2010) The Rotterdam Rules: the U.N. convention on contracts for the international carriage of goods wholly or partly by sea. Sweet & Maxwell, London
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Tetley W (2008) Some general criticisms of the Rotterdam rules. JIML 14:626 van der Ziel G (2002) The UNCITRAL/CMI draft for a new convention relating to the contract of carriage by sea. Transportrecht 25:265 van der Ziel G (2009) Chapter 10 of the Rotterdam rules: control of goods in transit. Tex. Int’l. L.J. 44:375
Chapter 3
The Scope of Application of the Rotterdam Rules and Freedom of Contract € Samim Unan
Abstract Scope of application of the Rotterdam Rules is one of the most discussed issues. The Rotterdam Rules use maritime-plus approach by extending the period of responsibility of the carrier beyond tackle-to-tackle and port-to-port while still allowing the parties to agree on the otherwise. The Rules are applied both for inbound and outbound traffic while requiring that both the entire transport and sea leg must be international. Most importantly Rotterdam Rules cover not only liability issues but contract of carriage extensively.
3.1
Introduction
The scope of application and the freedom of contract are among the most debated issues concerning the “Rotterdam Rules”. Every approach to a legal problem must commence with establishing the applicable rules. Therefore the first thing to consider in relation to this new Convention is to determine if a particular issue should be subject to the Rotterdam Rules (or under which conditions these Rules should be applied). Once it is established that a specific transportation issue falls within the scope of the Rotterdam Rules, the next task would be to ascertain the extent to which the principle of freedom of contract can enable the parties to derogate for that specific transportation issue from the operation of the Rules. On the other hand, the scope of application of the Rotterdam Rules would also have to be clarified in relation to other international regulations that cover the carriage of goods. The scope of the application of the Rotterdam Rules will be examined below within the framework of the foregoing considerations. Additionally, the compulsory nature
€ Prof. Dr. S. Unan Galatasaray University, Istanbul, Turkey and Istanbul Bilgi University, Turkey e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_3, # Springer-Verlag Berlin Heidelberg 2011
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of these international regulations will also be examined briefly, taking into account the fact that it constitutes an important issue in relation to the scope of application.
3.2
Basic Conditions of Application
The scope of application of the Rotterdam Rules has been set out as a separate section in chapter 2, which consists of three articles (Articles 5, 6 and 7). Whereas Article 5 states the scope of application generally, Article 6 provides some specific exclusions and Article 7 extends the application of the Convention to certain related parties.
3.2.1
General Scope of Application (Rotterdam Rules Art. 5)
Article 5 of the Rotterdam Rules reads as follows: 1. Subject to article 6, this Convention applies to contracts of carriage in which the place of receipt and the place of delivery are in different States, and the port of loading of a sea carriage and the port of discharge of the same sea carriage are in different States, if, according to the contract of carriage, any one of the following places is located in a Contracting State: (a) The place of receipt; (b) The port of loading; (c) The place of delivery; or (d) The port of discharge. 2. This Convention applies without regard to the nationality of the vessel, the carrier, the performing parties, the shipper, the consignee, or any other interested parties.
The Rotterdam Rules have been designed as an instrument covering the transport of goods from “door to door”. Such an approach is much more preferable over the “port to port” solution of the Hamburg Rules and the “tackle to tackle” solution of the Hague Rules, which progressively became insufficient for current practical needs. Moreover, the “door to door” carriage is nowadays the overriding type of transportation. However, as the Rotterdam Rules were not designed to cover all types of international multimodal transport, it should not be considered as a substitute for previous, but not applied, multimodal transport rules (MANKOWSKI, Scope of Application and Freedom of Contract, paper presented at the Conference The Rotterdam Rules Appraised, September 24–25, 2009, Erasmus Universiteit Rotterdam (unpublished), V-1, 2 and 3). Today, it is no longer realistic to divide multimodal transportation, which has always been regarded as a “whole” by the related parties, into maritime and nonmaritime parts. Besides that, containers are opened and inspected these days outside the port area on land. As such, the current regulations are far behind the actual industry practice (MANKOWSKI, V-2). By way of contrast, the Rotterdam Rules regulate the complete relationship between the carrier and the shipper. Not only do they regulate the carrier’s liability, but also set out provisions for the liabilities and responsibilities of the shipper (MANKOWSKI, III-1).
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The Rotterdam Rules reflect a compromise between representatives of those countries that prefer a traditional “port to port” solution, and those, who favour a complete “multimodal” regulation. The answer to the question whether the Rotterdam Rules offer more advantage than inconvenience may vary from person to person in the same way as some people will see a glass half filled with water as either half-full or half-empty. In the course of the drafting process of the Rotterdam Rules, three different approaches regarding their scope of application have been suggested, each based on, respectively, the – Transport document issued – Type of contract – Type of trade However, none of those separate approaches was adopted exclusively, and a mixed regulation has instead been considered as being more appropriate: The Rotterdam Rules are a mixture of contractual and documental approaches (HONKA, United Nations Convention on Contracts for the International Carriage of Goods wholly or partly by Sea, – Scope of Application and Freedom of Contract – Colloquium on the Rotterdam Rules, Rotterdam September 21, 2009, p. 3). The transport document is the primary decisive factor in order to determine the scope of application of the Rules, though the type of the issued document should also be considered under certain conditions. Since the Hague and Hague-Visby Rules contain only provisions regarding carriage under bills of lading, their applicability has decreased over time due to the widespread use of sea waybills and electronic documentation. At the point reached with the Hamburg Rules following on from the Hague and Hague-Visby Rules, the application of international regulations is not bound to the concept of a transport document (especially not a negotiable document), but the transport contract determines the scope of application. From this point of view, it may perhaps even be argued that the Rotterdam Rules represent a step back. The result is that the Rotterdam Rules are applied also to carriages under sea waybills, under documents evidencing only the receipt of the goods by the carrier or under combined transport bills of lading. In order to understand Article 5 of the Rotterdam Rules properly, it is necessary to go back first to the definition of the term “contract of carriage”. According to Article 1 (1) of the Rotterdam Rules: “Contract of carriage” means a contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another. The contract shall provide for carriage by sea and may provide for carriage by other modes of transport in addition to the sea carriage.
The full name officially attached to the Rotterdam Rules has been set as the “United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea” (hereinafter also referred to as “the Convention”). The word “partially” is a reference to transport before or beyond the sea carriage. Under the Rotterdam Rules, the contract of carriage must provide for a section of transport by sea, but other
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modes of transport are not mandatory. Nevertheless, if such additional modes of carriage were agreed to by the parties, the Rotterdam Rules shall still apply to those modes as well. But it should not be thought that the Rotterdam Rules apply in every case of a carriage by sea combined with other segments, to the other transport segment in the same way as they do to transport by sea. For transport by means other than by sea, different rules may apply as stated in Articles 26 and 82(a) Rotterdam Rules. Conversely, transport by sea may also be subject to rules other than the Rotterdam Rules according to Article 82(b), (c) and (d). The reason for the strict requirement of a transport by sea lies in the fact that most of the multimodal transports have a sea (even ocean) leg on their route. In most cases, the significant part of the transportation is performed at sea. Therefore, it is emphasized that the Rotterdam Rules have provisions for “wet multimodal transport”. The correct expression would be “transport transmaritime multimodal” (MANKOWSKI, V-3). To apply the Rotterdam Rules, it is sufficient to agree upon a transport by sea in the contract of carriage. It is not necessary to actually transport the goods by sea. Optional transports by sea are also within the scope of the Convention. On the contrary, if a contract of carriage does not contain a transport by sea but the transport is nevertheless performed by sea (such as a contract where a 200 container has been agreed with a forwarder to be transported from Copenhagen to Geneva and the transport type has been left open and if the forwarder agrees with a ship owner to transport this container by sea – for this example see STURLEY, Scope of Application under the Rotterdam Rules, Illustration 4 – www.ecla.org/documents/scope of application-illustrations/eclawebcast September 23, 2009), the Rotterdam Rules should not be applied (but cases where the parties are deemed to have changed the initial contract to transport by sea should be seen within the scope of application of the Rotterdam Rules). Therefore, the conclusive element is not the actual transport, but the contract (MANKOWSKI, V-3; HONKA, pp. 2–3). If the contract of carriage does not contain any reference to the type of carriage but the freight corresponds only to the customary freight for transport by sea, it can be interpreted that the parties have tacitly agreed upon transport by sea (for a good example of such case see STURLEY, Illustration 2: Ten containers to be carried from New York to Cape Town and that the agreed total freight for such carriage does not cover even one of the containers to be carried by air). Another similar situation is when the parties have not agreed on a transport type, but the carriage unit agreed upon is customary for transport by sea, it can be concluded by way of interpretation that the parties have agreed upon transport by sea. Since the Rotterdam Rules are applied to a contract of carriage, the existence of such a contract within the meaning of the Convention must first be established. Article 1(1) Rotterdam Rules states that a contract of carriage must contain provisions for the payment of freight. Therefore, carriages for advertisement purposes without any payment against carriage are outside the scope of application of the Rotterdam Rules (STURLEY gives the following example in Illustration 1 regarding such a carriage for advertisement: The carriage by sea of works of art of the Vatican Art Collection without payment is only for advertisement).
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In principle, a towage agreement should neither be considered as a contract of carriage within the meaning of the Rotterdam Rules. But in a decision of the Turkish Supreme Court it is stated that provisions pertaining to the contract of carriage had to be applied to an object – in the concrete case, a ship wreck – that had sunk during towage in the Black Sea (Yargıtay 11. Hukuk Dairesi – 11th Civil Chamber of the Turkish Supreme Court – 14.2.2002 E.2001/9499; K. 2002/1223). In that case the related parties disagreed on the question as to whether the contract should be qualified as a contract of towage or as a contract of carriage. This question arose because the insurance taken for the wreck that was being towed towards a Turkish port was “cargo insurance”. The defendant cargo insurers rejected the claim for the loss of the tow on the ground that there was in the insurance contract a total loss clause obliging the insurers to indemnify only if the carrying vessel was also lost. However the tugboat had not suffered any loss. The claimant tow-owners alleged that the clause invoked by the defendant insurers were meaningless in case of towage and therefore should not apply. The Supreme Court held that the clause was valid and dismissed the claim. Also, the so-called “heavy lift contracts” (such as the salvage and taking ashore of a warship which sunk after an explosion) may also cause debates about their regulation by the Rotterdam Rules. If the contract of carriage is totally silent with regard to the type of transport, the Rotterdam Rules must not be applied since in such a case one cannot speak of an agreement for the carriage by sea. However, it is possible to hold by way of interpretation that the parties have an implied intention for the carriage by sea – at least as an option. Cases where the type of the transport is left undetermined in the contract of carriage are very common in Turkish practice. Containers to be transported to Middle Europe are sometimes carried by land, and other times carried by a combination of land+sea+land. For instance, it is not unusual to transport cargo from Bursa to Cesme by land, then from Cesme to Trieste by sea (Ro-Ro) and from Trieste to Germany by land. In such cases the shipper might believe that the transport will be performed exclusively by land, although the land transport vehicle is at least for a part of the voyage carried on a ship. In some cases the trailer of such vehicle is loaded and is received at the end of the sea leg by a trailer truck and the trailer is connected to this truck to be transported to the final destination point. The shipper is in many cases not informed about the sea leg of the carriage and there are no provisions in the contract of carriage in respect of the partial – sea transport. (Regarding the example above, Rotterdam Rules Article 82(b) and CMR Article 2 (1) state that for damages occurring during sea transit, the CMR will be applied. However under the conditions cited in CMR Article 2(1) – if the damage occurred without the fault of the carrier and only due to the nature of the carriage by sea and during sea transport – the Rotterdam Rules may prevail over the CMR). The sea leg of the carriage does not have to be the longest leg of the whole transport. Besides, it is not necessary that the leg(s), other than the sea leg, come before or after the sea transport (MANKOWSKI, V-3). But it is not clear what is exactly meant by this. A transport by land in the “middle” of the transport by sea would be after the first and before the second leg of the sea transport.
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Rotterdam Rules Article 5 adopts the “double internationality” principle. This principle states that: – For the sea carriage the port of loading and port of discharge must be in different states. – In addition, the place of receipt and place of delivery must be in different states. A contract which covers two different carriages by sea between the ports of state A and between the ports of state B (and which has a transport by land beyond the borders in between) will not be subject to the Rotterdam Rules (for example see STURLEY, Illustration 10: Contract of carriage covers [i] carriage by sea from Honolulu to Seattle which are both ports of the United States; [ii] land transport between Seattle and Vancouver and [iii] carriage by sea from Vancouver to Montreal which are both ports of Canada). However, it cannot be considered as an appropriate solution that the Rotterdam Rules are not applied in such cases. Conversely, cargo that is carried [i] from Berlin to Antwerp by land; [ii] from Antwerp to Montreal by sea and [iii] from Montreal to Chicago by rail (STURLEY, Illustration 11) is within the scope of the application of the Rotterdam Rules. The place of receipt by the carrier of the cargo (Berlin) and the place of delivery to the consignee (Chicago) are in two different States and also the sea leg of the carriage is performed between ports of different States (Belgium and Canada). A classic example to explain the double internationality would be as follows: A contract of carriage covers a carriage by truck from Vancouver (Canada) to Seattle (USA) to be loaded onto a ship for Hawaii (USA) where the carriage ends (MANKOWSKI, II-4). Based on the fact that the sea leg of the carriage is not international, the Rotterdam Rules will not be applied. During the preparatory works for the Rotterdam Rules, the tendency was to consider the carriage as a whole in order to determine the internationality. This tendency changed later and the criterion of “double internationality” has since been adopted within the meaning of the Rotterdam Rules. This conceptual change has been based on the assumption that carriage by sea is mainly undertaken on an international level, while carriage by sea between two ports of the same state is considered to be rather seldom (MANKOWSKI, II-4). However, Turkey might be mentioned as but one exception to such assumption, because of the importance of cabotage shipments in that country. It is now proposed to change the example above as follows: The contract of carriage covering the land transport of goods form Seattle to Vancouver and from there by ship to Alaska would not be subject to the Rotterdam Rules (STURLEY, Illustration 8). Because, although the sea leg of this carriage is between two different countries (USA–Canada), the place of receipt by the Carrier (USA) and the place of delivery of the cargo (USA) are in the same State. The double internationality principle does not (by the wording of the Rotterdam Rules) come within the application. (“. . .the place of receipt and the place of delivery are in different States, and the port of loading. . . and the port of discharge . . . are in different States”). Thus a contract for (maritime) carriage only from Vancouver to Alaska would be subject to Rotterdam Rules, but the addition of Seattle-Vancouver leg to such carriage (maritime “plus”) would exclude their application. It seems doubtful whether this would constitute an appropriate solution.
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Conformity with the double internationality condition is not sufficient per se to apply the Rotterdam Rules. It is also compulsory to have a connection to one of the “Signatory States”. The Rotterdam Rules explicitly mention such requirement of connection by providing that the place of receipt for carriage of the cargo (by the carrier or its representatives) or the port of loading or the port of discharge or the place of delivery (to the consignee at the end of the carriage) must be in one of the “Signatory States”. The place of receipt by a carrier for a door-to-door transport is usually a place inland. In the same way, the place of delivery to the consignee is also usually a place inland. Those assumptions led to a simplified solution: the Rotterdam Rules shall apply if the place of receipt of the cargo or the place of delivery to the consignee is in the territory of a Signatory State. The materialization of one of those conditions shall be sufficient. A “Signatory State” is a State which has signed, ratified, accepted, approved the Rotterdam Rules or acceded to the Rotterdam Rules (Rotterdam Rules Art. 88 (2) and (3)) and which has become thereby bound by the international convention (STANILAND in The Rotterdam Rules, A practical Annotation by BAATZ/ DEBATTISTA/LORENZON/SERDY/STANILAND/TSIMPLIS, 2009, 5-05). The Rotterdam Rules are applied to inbound and outbound carriages. There is no difference between goods transported from abroad into the country or from the country abroad. It is sufficient if the loading or discharging ports are within the territory of Signatory States. One of the reforms made to the Hague-Visby Rules is that the discharge port has also become a connection point, which will so extend the scope of application of the Rotterdam Rules (MANKOWSKI, II-1). If the port of discharge is subject to the option of one of the parties to the contract of carriage or is to be chosen among different ports within the same range, it is sufficient that the discharge port selected is situated within the territory of a Signatory State. The Rotterdam Rules do not define the term “port”. Here, the generally accepted meaning of the term should be decisive. As a rule, the “official limits” of a port are relevant, provided that the port in question is used by ocean vessels (MANKOWSKI, II-1). Such a port may also be an inland port, if it complies with this criterion (as the port of Galati in Romania on the Danube River). Since the scope of the Rotterdam Rules is determined on the basis of the contract of carriage between the relevant parties, it would not be the actual port of loading or discharge, but the contractual port, which would prevail in determining the scope of application (MANKOWSKI, II-1). The place of receipt or the place of delivery of the cargo may be within or outside the territory of a State. Oil rigs or terminals in open sea can also comply with the definition of a loading (or discharging) place. Therefore, when an oil search company makes a “heavy lift” contract with a ship owner in order to carry the oil search platform by a specially designed vessel from the far shores of Texas to Nigeria (STURLEY, Illustration 13), this relationship would be subject to the Rotterdam Rules (provided that the contract in question qualifies as a contract of carriage in the sense of Rotterdam Rules 1(1)). The receipt of the cargo by the carrier for transport purposes and the delivery of the cargo to the consignee mean traditionally the transfer of the possession over the goods (in the first case by the shipper and in the second by the carrier). Here, too, the contract and not the current situation shall be relevant. The place of receipt and the place of delivery will be determined according to the provisions of the contract and the
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application of the Rotterdam Rules will be depend on this determination (MANKOWSKI, II-2; DELEBECQUE, DMF 2006, s. 693). However, it is still open to discussion as to whether the operations carried out in container terminals are subject to the Rotterdam Rules or not (MANKOWSKI, II-2, footnote 12 and related text). The application of the Rotterdam Rules does not depend on the nationality of the parties or the ship. The parties to the contract of carriage and the carrying vessel may have the same nationality, which does not prevent the application of the Rotterdam Rules. It may cause confusion that Art. 5(2) Rotterdam Rules mentions the “nationality of the vessel”, which can either mean the State of registration or the flag State of the vessel. The best solution is to accept that for the purposes of this provision, both the State of registration and the flag State are meant so that the Rotterdam Rules will be applied without having regard to the State in which the vessel is registered or to the flag she flies (STANILAND, 5-07). Therefore, where a Chinese shipper contracts with a Chinese carrier, the carriage of goods from Shanghai to Seattle in order to be delivered to Chinese consignees by a vessel flying the Chinese flag (STURLEY, Illustration 17), will be subject to the Rotterdam Rules.
3.2.2
Specific Exclusions from the Application
Art. 6 Rotterdam Rules provides as follows: 1. This Convention does not apply to the following contracts in liner transportation: (a) Charter parties; and (b) Other contracts for the use of a ship or of any space thereon. 2. This Convention does not apply to contracts of carriage in non-liner transportation except when: (a) There is no charter party or other contract between the parties for the use of a ship or of any space thereon; and (b) A transport document or an electronic transport record is issued.
“Liner transportation” has been defined in Art. 1(3) Rotterdam Rules as follows: “Liner transportation” means a transportation service that is offered to the public through publication or similar means and includes transportation by ships operating on a regular schedule between specified ports in accordance with publicly available timetables of sailing dates.”
As a basic principle, the Rotterdam Rules are applicable to “liner transportation” but not to “non-liner transportation”. Transportation that is not falling within the ambit of “liner transportation” has been defined in the Convention (through a rare method though) as “non-liner transportation”, which is not entirely an adequate definition. Yet by considering the components of “liner transportation”, one can define the “non-liner transportation” as a kind of transportation that does not contain the following elements, being: – Offered to the public – Through publication or similar means
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– Transportation by ships operating on a regular schedule between specified ports – With publicly available timetables of sailing dates While all of the elements above need to be absent for a transportation to be defined as non-liner, the Drafters of the Rotterdam Rules initially intended that only the absence of the third component (a service by vessels between specific ports on a scheduled time) would suffice to define non-liner transportation (STANILAND, 6-02). Charter party contracts in relation to liner transportation or slot charter and space charter contracts are not subject to the Rotterdam Rules (MANKOWSKI, IV; HONKA, p. 4). Considering the definitions below, the slot and space charter contracts correspond to the “partial charter” contracts (charter party under which any defined space in the vessel or any specified amount of the vessel’s carrying capacity is left to the use of the charterer) under Turkish Law. Space Charter A voyage charterparty under which the space charterer has the right to use only part of the vessel’s capacity. Slot Charter A time or voyage charter under which the slot charterer has the right to use only a specified amount of the ship’s container carrying capacity. In container liner trades, such charters may be reciprocal (“cross slot charters”) between operators/carriers, in order to share capacity.
If the contract of carriage made with the carrier is within the scope of application of the Rotterdam Rules, such application does not cease if the carrier concludes further contracts with sub-contractors who are not subject to the Rotterdam Rules. Therefore, a “slot charter” contract between a carrier and a sub-carrier does not affect the application of the Rotterdam Rules between the carrier and the shipper. For example: A manufacturer enters into a contract with a carrier in order to have transported ten containers of goods from Shanghai to Rotterdam. The carrier uses a sub-carrier, with whom he has a pre-existing slot charter contract, to perform the initial contract (STURLEY, Illustration 11). The situation is similar for non-liner transportation. However, in order to ensure a parallel application to the Hague and Hague-Visby Rules, it is stipulated that the Rotterdam Rules shall apply in cases where a transport document or electronic transport record is issued provided there is not any charter party relationship between the parties (HONKA, p. 4). Contrary to the Hague and Hague-Visby Rules, the Rotterdam Rules are nevertheless applied even in the absence of any transport document. In other words, the Rotterdam Rules do not provide for the issuance of a transport document as a prerequisite. This is a similarity that the Rotterdam Rules have with the Hamburg Rules. Therefore the following situation (STURLEY, Illustration 16) would be within the scope of application of the Rotterdam Rules: For a voyage from Singapore to Dakar, there is sufficient space on a vessel because one charterer did not fill its capacity. The ship owner concludes a special (“ad hoc”) last minute contract with a
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shipper that the goods will be delivered in such manner as advised 72 h prior to arrival to Dakar. There are no transport documents issued. In this example the conditions set forth in the Art. 5 Rotterdam Rules are met (the carriage is an international carriage) and there is no question about any “special exemptions” mentioned in Art. 6 Rotterdam Rules. Especially, there is not any charter party relationship as mentioned in the Art. 6(1)(a) and 6(2)(b) Rotterdam Rules. Moreover Art.7 (first sentence) states that the Rotterdam Rules apply to the relationship between the third party consignee and carrier. The third party consignee is defined in Rotterdam Rules Article 1(11) as “a person entitled to delivery of the goods under a contract of carriage or a transport document or electronic transport record”. The relationship between the third party consignee, who has the right of taking delivery of the goods pursuant to the “ad hoc” contract of carriage, and the carrier would be subject to the Convention even if the special contract of carriage does not comply with Art. 6. The “on demand” carriage, where a special cargo is carried without any charter party being signed, constitutes the exemption to the rule that carriages made without transport documents are subject to the Rotterdam Rules. The Rotterdam Rules apply in such cases only if a contract of carriage in the sense of Art. 1(1) exists (HONKA, p. 5). For example, a ship owner, who specialises in the carriage of automobiles, is using his vessel between the East coast ports of the USA and the West African ports to carry used automobiles. The voyages only take place if the shippers supply the vessel with sufficient vehicles. The carrier (ship owner) issues a bill of lading to the shipper as evidence of the carriage relationship (STURLEY, Illustration 14). In such a case, the Rotterdam Rules apply because, according to Art. 6(2), although non-liner transportations are outside the scope of application of the Rotterdam Rules, there is an exemption to that rule where there is no charter relationship and a transport document is issued. Therefore the example cited falls within the exemption. Here it is a question of the initial relationship between the parties to the contract of carriage. But Art. 7 (last sentence) would not apply since according to Art. 6(2), the contract of carriage is subject to the Rotterdam Rules.
3.2.3
Extension of the Scope of Application for the Benefit of Certain Parties
The Rotterdam Rules Art. 7 is to the effect that: Notwithstanding article 6, this Convention applies as between the carrier and the consignee, controlling party or holder that is not an original party to the charter party or other contract of carriage excluded from the application of this Convention. However, this Convention does not apply as between the original parties to a contract of carriage excluded pursuant to article 6.
The Rotterdam Rules protect third party consignees in the same way as the Hague-Visby and Hamburg Rules (HONKA, p. 5). As emphasized above, the third party transport document-holder for non-liner transportations is under the protection of the Rotterdam Rules.
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On the other hand, regardless of the existence or absence of a transport document, third parties that are expressively mentioned in the Convention, also benefit from the Rotterdam Rules in cases of non-liner transportations. Art. 7 mentions such protected third parties as “consignee”, “controlling party” or “holder”. Where a carriage is outside the scope of application of the Rotterdam Rules (for example because the dispute arose under a slot charter contract), if the transport document is transferred to a third party, the third party may rely on the Rotterdam Rules. The following example might illustrate the point: A manufacturer concludes a contract with a carrier for a liner ship operating between the USA and European States to use a capacity of 20 containers of that ship for each voyage. For each container a separate bill of lading is issued (STURLEY, Illustration 15). It shall be assumed that some bills of lading are kept by the shipper (manufacturer) to enable his agent to take delivery of the goods in Europe and that some are transferred to third party consignees. The relationship between the carrier and the third party (consignees) is subject to the Rotterdam Rules according to Art. 7. On the contrary, however, bills of lading that are held by the shipper (agent) are not subject to the Rotterdam Rules due to Art. 6(1)(b) and 7 (last sentence).
3.3
Matters Not Governed by the Convention
Chapter 17 of the Rotterdam Rules is entitled “Matters not governed by the Rotterdam Rules” and regulates the issues that are left outside the scope of application of the Rotterdam Rules or that may be governed by other rules than the Convention.
3.3.1
International Conventions Regarding the Carriage of Goods by Other Means of Transportation
The relationship between the Rotterdam Rules and other international conventions will be studied in detail under a separate heading (please see part IV below).
3.3.2
Global Limitation of Liability
According to Art. 83 of the Rotterdam Rules: Nothing in this Convention affects the application of any international convention or national law regulating the global limitation of liability of vessel owners.
3.3.3
General Average
According to Art. 84 of the Rotterdam Rules: Nothing in this Convention affects the application of terms in the contract of carriage or provisions of national law regarding the adjustment of general average.
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3.3.4
Passengers and Luggage
According to Art. 85 of the Rotterdam Rules: This Convention does not apply to a contract of carriage for passengers and their luggage.
3.3.5
Damage Caused by Nuclear Incident
According to Art. 86 of the Rotterdam Rules, the “liability for damage caused by nuclear incident” may not be subject to the Convention under certain circumstances. No liability arises under the Convention for damage caused by a nuclear incident if the operator of a nuclear installation is liable for such damage: (a) Within the frame of the international conventions stated in Art. 86(a) of the Rotterdam Rules (1960 Paris Convention and amendments; 1963 Vienna Convention and amendments or 1997 Supplementary Compensation for Nuclear Damage) or, (b) Under national law applicable to the liability for such damage provided that such law is in all respects as favourable in relation to liability as the Conventions cited above.
3.4
Compulsory Nature of the Convention
3.4.1
Invalid Terms
Chapter 16 of the Rotterdam Rules regulates the “Validity of Contractual Terms” in three articles. As a matter of fact, a negative expression would have been more appropriate as a title, because all three articles actually define the conditions of “invalidity” of the contractual provisions. Art. 79 of the Rotterdam Rules holds void all contracts excluding or limiting the obligations of the carrier or the maritime performing party on the one side, and the parties related to the goods (shipper, consignee, controlling party, holder or documentary shipper) on the other side. According to Art. 79 of the Rotterdam Rules: 1. Unless otherwise provided in this Convention, any term in a contract of carriage is void to the extent that it: (a) Directly or indirectly excludes or limits the obligations of the carrier or a maritime performing party under this Convention; (b) Directly or indirectly excludes or limits the liability of the carrier or a maritime performing party for breach of an obligation under this Convention;
or (c) Assigns a benefit of insurance of the goods in favour of the carrier or a person referred to in article 18.
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2. Unless otherwise provided in this Convention, any term in a contract of carriage is void to the extent that it: (a) Directly or indirectly excludes, limits or increases the obligations under this Convention of the shipper, consignee, controlling party, holder or documentary shipper; or (b) Directly or indirectly excludes, limits or increases the liability of the shipper, consignee, controlling party, holder or documentary shipper for breach of any of its obligations under this Convention.
In the field of maritime law, for the safety of trade, it has always been considered necessary to protect the parties related to the goods through the enactment of compulsory provisions. Further, compulsory provisions are deemed to be useful also for establishing trust in the transport document (bill of lading) representing the goods (HONKA, p. 7). In order to avoid that an issue becomes subject to compulsory provisions, the common method previously used was simply to omit that issue from the international regulation. However, this is not possible under the Rotterdam Rules, which do not merely set out limited rules for transport documents, but rather regulate the contract of carriage in its entirety (MANKOWSKI, VI-1). It is also accepted today that the liability of the carrier should be regulated through provisions applicable compulsorily. However, the approach that the carrier is stronger than the shipper and that the shipper should therefore be protected by compulsory provisions is slowly losing support due to a growing recognition for the opposite perspective. As a result, an exemption has been adopted for the liability of the carrier in relation to “volume contracts”. On the other hand, contrary to the Hague-Visby and Hamburg Rules, not only the liability of the carrier and the maritime performing party, but also the liability of the parties related to the goods (shipper, consignee, controlling party, holder and documentary shipper) has been regulated by way of compulsory provisions. This should be seen as a normal development for a Convention aimed at regulating the carriage relationship as a whole (MANKOWSKI, VI-2). Art. 79(1) of the Rotterdam Rules does not list situations that are excluded from the compulsory provisions and prefers the expression “unless otherwise provided in this Convention”. Art. 13(2) of the Rotterdam Rules must be regarded as the most important provision in order to step outside the regulations of the Convention (MANKOWSKI, VI-3. But this author refers to Art. 14 instead of Art. 13(2) of the Rotterdam Rules). Indeed, Article 13(2) of the Rotterdam Rules is the provision that allows agreeing on the FIO(S) clause and therewith permits to narrow down Art. 12(3) of the Rotterdam Rules stating that the compulsory liability of the carrier comprises the period between the initial loading and completion of the discharge. It is prohibited to exclude or limit wholly or partially the “obligations and liabilities” of the carrier and the maritime performing party, though it is possible to impose higher obligations by changing the obligations regime. In other words, with regard to the responsibility of the carrier and the maritime performing party, there is an unchangeable regulation only against parties related to the goods. This reflects the customary solution in maritime law. There is no compulsory regulation regarding the other performing parties.
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On the other hand, the situation regarding the parties related to the goods is different. Their liability may not be lessened or extended. The fact that the liability of the parties related to goods cannot be extended (a solution different from the liability of the carrier and the maritime performing party) must be seen as a success for them (MANKOWSKI, VI-3). Arts. 79(1)(a),(b) and 79(2)(a),(b) of the Rotterdam Rules contain the wording “directly or indirectly”. The word “indirectly” has been placed in the text in order to prevent the elimination of the compulsory provisions through the insertion of special clauses (for example an “applicable law” clause which may result in the exclusion of the Rotterdam Rules) (HONKA, p. 8). The definitions of the terms used under Art. 79 of the Rotterdam Rules in relation to the parties involved (carrier, maritime performing party, shipper, consignee, controlling party, holder, and documentary shipper) are provided under Art. 1 of the Rotterdam Rules.
3.4.2
Special Rules for Volume Contracts
The Rotterdam Rules contain a special article on “Volume Contracts” (Art. 80): 1. Notwithstanding article 79, as between the carrier and the shipper, a volume contract to which this Convention applies may provide for greater or lesser rights, obligations and liabilities than those imposed by this Convention. 2. A derogation pursuant to paragraph 1 of this article is binding only when: (a) The volume contract contains a prominent statement that it derogates from this Convention; (b) The volume contract is (i) individually negotiated or (ii) prominently specifies the sections of the volume contract containing the derogations; (c) The shipper is given an opportunity and notice of the opportunity to conclude a contract of carriage on terms and conditions that comply with this Convention without any derogation under this article; and (d) The derogation is neither (i) incorporated by reference from another document nor (ii) included in a contract of adhesion that is not subject to negotiation. 3. (. . .) 4. Paragraph 1 of this article does not apply to rights and obligations provided in articles 14, subparagraphs (a) and (b), 29 and 32 or to liability arising from the breach thereof, nor does it apply to any liability arising from an act or omission referred to in article 61. 5. The terms of the volume contract that derogate from this Convention, if the volume contract satisfies the requirements of paragraph 2 of this article, apply between the carrier and any person other than the shipper provided that: (a) Such person received information that prominently states that the volume contract derogates from this Convention and gave its express consent to be bound by such derogations; and (b) Such consent is not solely set forth in a carrier’s public schedule of prices and services, transport document or electronic transport record. The party claiming the benefit of the derogation bears the burden of proof that the conditions for derogation have been fulfilled.
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The volume contract has been defined in Art. 1(2) of the Rotterdam Rules as follows: “Volume contract” means a contract of carriage that provides for the carriage of a specified quantity of goods in a series of shipments during an agreed period of time. The specification of the quantity may include a minimum, a maximum or a certain range.
On the other hand, Art. 80(3) of the Rotterdam Rules provides for a special regulation in respect of its application: A carrier’s public schedule of prices and services, transport document, electronic transport record or similar document is not a volume contract pursuant to paragraph 1 of this article, but a volume contract may incorporate such documents by reference as terms of the contract.
Volume contracts constitute the exemption to the compulsory provisions of the Rotterdam Rules. The parties may decide to increase or lessen the respective obligations that arise under a volume contract, or even cancel these altogether. However the conditions to determine a different contractual regime that would be inconsistent with the Rotterdam Rules are very strict. Here it is important to emphasize the different approaches between the USA and Europe. The Europeans are concerned that the ramifications for small-scale shippers will be severe in cases where such compulsory regulations are abandoned. The Americans, on the contrary, taking into consideration the customary applications in the USA, put forward that, as a rule, the parties of the volume contract (carrier and shipper) are on equal trading bargaining power and that the compulsory provisions may therefore be set aside. The difficulty to conciliate these opinions and evaluations is obvious and understandable. The conclusion is that the volume contract is left out of the compulsory regime, but the preconditions required to deviate from the Rotterdam Rules are held very strict. The system set forward in Art. 80.2(a), (b) and (c) of the Rotterdam Rules in respect of the “validity of contractual rules for volume contracts” can best be described as fulfilling the function of “brace and belt” at the same time (HONKA, p. 12). First, a volume contract is a contract of carriage and a contract of carriage within the meaning of the Rotterdam Rules must contain a sea leg. If there is no sea leg in the transportation, the Rotterdam Rules cannot be applied and therefore the application of the special rules for volume contracts will be also excluded (LORENZON in The Rotterdam Rules, A practical Annotation by BAATZ/ DEBATTISTA/ LORENZON/ SERDY/ STANILAND/ TSIMPLIS, 2009, 80-02). On the other hand, a volume contract not falling within the scope of liner transportation will be subject to the Rotterdam Rules only for protecting third parties. For a volume contract of a mixed nature constituting partially liner transportation, it is necessary to evaluate each shipment and reach a conclusion separately for each case (HONKA, p. 14). The key specifications of the volume contracts are the following (Art. 1(2) of the Rotterdam Rules): – Specified quantity of cargo – Carriage in a series of shipment – An agreed period of time
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If the quantity is not specified, one cannot speak of a volume contract. It is not necessary that the shipments be successive. On the other hand, there is no restriction as to the length of the period of time agreed upon. The components cited in the definition for volume contracts have been widely criticized on the grounds that they may cause uncertainty and may easily be avoided (LORENZON 80-01). As an example on this issue, the following might be mentioned: The parties agree to ship a container on the first day and a second container the next day. This agreement can be regarded as a volume contract (at least literally). Although the judge is free to consider that such a contract is signed only to avoid the Rotterdam Rules and to decide that the contract is void due to the breach of compulsory provisions (HONKA, pp. 13–14), it is not always easy to come to the conclusion that a contract fulfilling the requirements of the definition adopted in the international convention is entered into with the goal to avoid the compulsory rules. A declaration of a minimum number of containers was put forward under the Draft Instrument of the Convention, but it has never been adopted. Finally, not only contracts of carriage for big quantities (for example an important contract of affreightment for crude oil), but also contracts for derisory quantities (for example an individually negotiated shipment of two containers of charcoal bags per month for a quarter) may be excluded from the compulsory provisions of the Rotterdam Rules (LORENZON, 80-01). For the provisions of a volume contract deviating from the Rotterdam Rules to be valid, the conditions of Art. 80(2)(a)-(d) of the Rotterdam Rules must all be met. – First, the volume contract must specify explicitly those sections of the contract, which contain derogations from the Rotterdam Rules. – Second, the volume contract must have been individually negotiated or must specify explicitly the sections of the contract containing the derogations from the Rotterdam Rules. Although it has been suggested that these conditions should have been cumulative and not alternative, such a suggestion has not been seen necessary having regard to the third condition (HONKA, p. 15). The first option (individually negotiated) means that the standard references are not sufficient, and that “all” provisions derogating from the Convention must be negotiated “one by one”. The alternative option is to highlight the relevant different provisions. Art. 80(2)(b) of the Rotterdam Rules is criticized, (and rightly so in our opinion), on the following aspects (see LORENZON, 80-04): l In practice all contracts of carriage contain provisions that were individually negotiated. This is even true for a “booking note” – especially if the carriage is subject to more than one shipment. l The Rotterdam Rules require only a statement in respect of the specific provisions that derogate. It is therefore not necessary to provide any further particulars as to their content. It would be sufficient to mention a note like “the following clauses 34, 36 and 47”. – Third, the shipper must have the opportunity to conclude a contract in complete compliance with the Rotterdam Rules and the shipper must be informed about such opportunity. This condition aims to obtain the unaffected consent of the
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shipper in cases of derogation from the Rotterdam Rules. It can be thought that the third condition is not necessary in relation to the second condition above. However, during the preparatory work, the idea to provide broader protection to the shipper has gained more weight. Therefore, the shipper has been given the complete opportunity to choose between a contract complying with the Rotterdam Rules or a contract that contains differing provisions. In order to provide for this opportunity of choice, it is also ruled that the shipper must be informed about such option. In practice, the carrier may inform a prospective shipper about these options (strict compliance with the Rotterdam Rules or derogations) by offering two different amounts of freight (HONKA, p. 15). – Fourth, provisions that differ from the operation of the Rotterdam Rules must not be incorporated by reference to another document nor included in a contract of adhesion that was not subject to negotiation. It is reported that volume contracts in the USA usually do not contain any separate provision regarding the liability and this issue is regulated by reference to tariffs (MANKOWSKI, VI-4). Art. 80(2)(d) of the Rotterdam Rules prohibits this practice aimed to avoid compulsory rules. The same provision also prohibits differing provisions that may be inserted in a contract of adhesion. Although “contract of adhesion” is not defined in the Rotterdam Rules, this expression can be attributed the meaning given to it in the law of consumer protection or in a more accurate approach in the law of general conditions of business (contracts in which one of the parties did not have any influence on the content or has not participated in the negotiations). The best example for a contract of adhesion is the bill of lading. The clauses relieving the carrier of its liabilities inserted in bills of lading shall not be sufficient to create the intended result. On the other hand, there may well be cases where the contract of adhesion is imposed by the shipper. All provisions lifting the liability of the shipper in such a contract of adhesion shall be equally invalid (MANKOWSKI, VI-4). Even in respect of volume contracts, derogation from certain rules is not permitted. According to Art. 80(4) of the Rotterdam Rules, the obligation of the carrier to make and keep the vessel seaworthy (Rotterdam Rules Art. 14) is one of those provisions. However Art. 80(4) of the Rotterdam Rules does not have any reference to Art. 14(c) regarding the cargoworthiness (LORENZON, 80-08). On the other hand, the shipper’s obligation to provide information, instructions and documents (Rotterdam Rules Art. 29) and to declare, mark and label the dangerous goods cannot be set aside either. These are called the “super compulsory provisions” (MANKOWSKI, VI-4; HONKA, p. 14). The liability deriving from these super compulsory provisions is also super compulsory. The option to derogate from the compulsory provisions for volume contracts is specifically regulated regarding parties other than the carrier and the shipper. It would not be appropriate that these (third) parties are subjected to a contract that has been agreed to beyond their control. Therefore, different rules will apply to parties other than the carrier and the shipper only if: – The party in question has been informed about and such party has explicitly given its consent to those different rules.
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– The said consent is not only expressed in a carrier’s public schedule of prices and services, transport document or electronic transport record, but in another form. In this regard, Art. 3 of the Rotterdam Rules will be applied. According to this provision, such consent must be given in writing or, if the parties so agreed, through an electronic transport record. It is reported that the “explicit consent” condition under English law is not met by a mere acceptance of the transport document or by signing (a copy of) this document as proof of acceptance. Therefore clauses such as “by accepting/receiving this document, the party related to the goods has accepted all rules, which derogate from the Rotterdam Rules” would not comply with the condition set forth in Art. 80(5)(a) of the Rotterdam Rules regarding the explicit consent (LORENZON, 80-10). This conclusion should also be valid for Turkish law. However, according to the Turkish Supreme Court’s consistent decisions, arbitration clauses –which are subject to written form in Turkish law, and must therefore be signed by all the concerned parties to be valid – are binding on third parties to whom the bill of lading containing such clauses is transferred (for example Yargitay 11. Hukuk Dairesi – 11th Civil Chamber of the Turkish Supreme Court- 04.10.2004 E.2004/ 189; K. 2004/9234 – 06.5.2002 E.2002/216; K. 4357 – 01.7.2008 E.2007/1590; K.2008/8780). It remains to be seen whether such an approach will be maintained under the Rotterdam Rules in the future. According to Art. 80(6) of the Rotterdam Rules, the party claiming the benefit of the derogation bears the burden of proof that the conditions for derogation have been fulfilled. This is the repetition of a principle of law (HONKA, p. 18).
3.4.3
Special Rules for Live Animals and Certain Other Goods
According to Art. 81 of the Rotterdam Rules: Notwithstanding article 79 and without prejudice to article 80, the contract of carriage may exclude or limit the obligations or the liability of both the carrier and a maritime performing party if: (a) The goods are live animals (. . .) or (b) The character or condition of the goods or the circumstances and terms and conditions under which the carriage is to be performed are such as reasonably to justify a special agreement (. . .)
3.5
Interaction with Other Conventions
Arts. 26 and 82 must also be taken into consideration in relation to the scope of application of the Rotterdam Rules. Art. 26 sets out under the heading of “Carriage preceding or subsequent to sea carriage” and Art. 82 provides under the heading of “International conventions governing the carriage of goods by other modes of transport” detailed regulations. In some cases the Rotterdam Rules conflict with
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other international conventions, therefore such provisions are considered necessary (MANKOWSKI, V-4). According to Art. 26 of the Rotterdam Rules: When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay: (a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to goods, or an event or circumstance causing delay in their delivery occurred; (b) Specifically provide for the carrier’s liability, limitation of liability, or time for suit; and (c) Cannot be departed from by contract either at all or to the detriment of the shipper under that instrument.
According to Art. 82 of the Rotterdam Rules: Nothing in this Convention affects the application of any of the following international conventions in force at the time this Convention enters into force, including any future amendment to such conventions that regulate the liability of the carrier for loss of or damage to the goods: (a) Any convention governing the carriage of goods by air to the extent that such convention according to its provisions applies to any part of the contract of carriage; (b) Any convention governing the carriage of goods by road to the extent that such convention according to its provisions applies to the carriage of goods that remain loaded on a road cargo vehicle carried on board a ship; (c) Any convention governing the carriage of goods by rail to the extent that such convention according to its provisions applies to carriage of goods by sea as a supplement to the carriage by rail; or (d) Any convention governing the carriage of goods by inland waterways to the extent that such convention according to its provisions applies to a carriage of goods without trans-shipment both by inland waterways and sea.
Art. 26 of the Rotterdam Rules applies to damage or delay incurred while the goods are outside the vessel, whereas Art. 82(b), (c) and (d) cover the sea leg of the carriage. Art. 26 undermines the “maritime plus” principle. For an international convention claiming to regulate not only the sea leg but at the same time the other legs of the carriage as well, it is a weakness to refer to the provisions of other international conventions. Art. 82 seems to adopt the “land plus” (or “minus maritime” or “dry multimodal”) principle. Sea carriages subject to Art. 82 may step outside the ambit of the Rotterdam Rules in certain cases. Especially for Turkey, it is important that, as a rule, according to Art. 2(1) CMR during Ro-Ro carriage, the CMR will be applied even for damages occurring on the sea. In particular, the following points must be mentioned in order to determine the restricted scope of application of the Rotterdam Rules (in favor of other international conventions) in relation to Art. 26:
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– Provisions of other international conventions (provided that the applicable conditions are met) will be applied to the extent that they do not contradict with the operation of the Rotterdam Rules. In other words it is no question of applying the other conventions as a whole instead of the Rotterdam Rules. – To apply Art. 26, damage must occur before or after the sea leg of the carriage. The Rotterdam Rules are applied in cases where damage spreads both to the sea leg and land transportation or where it cannot be determined at which stage the damage had incurred. – In practice, it is usually not possible to determine when the damage was incurred in container carriage. The container is sealed at the beginning of the journey when received by the carrier and only opened at final destination upon delivery to the consignee. Therefore, the Rotterdam Rules may have a wide scope of application in respect of containers. Pursuant to Art. 26, the Rotterdam Rules are excluded in cases falling within the scope of the compulsory provisions of any other international convention. On the contrary however, compulsory provisions of national laws do not hinder the application of the Rotterdam Rules. In the light of the above mentioned explanations, the Rotterdam Rules have the primary provisions to be applied in cases where: – The damages occur in more than one leg of the carriage; – The time of the damage cannot be determined; and – The damage is not within the scope of any other international convention (MANKOWSKI, V-4).
Chapter 4
Extended Scope of the Rotterdam Rules: Maritime Plus and Conflict of the Extension with the Extensions of Other Transport Law Conventions ¨ zbek Meltem Deniz G€ uner-O Abstract United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea extends the period of responsibility beyond the traditional “tackle-to-tackle” and even relatively modern “port-to-port” period. Increasing containerized transport necessitates such extension; however there are other international conventions governing other modes of transport that also extends their scope beyond their boundaries. As a result of such extensions of the international transport conventions, scope of conventions may overlap. In order to overcome such overlaps United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly By sea devised “conflict preventing” and “conflict resolving” provisions in their articles 26 and 82 respectively.
4.1
Introduction
The container revolution has provided the transport industry with the most efficient method of moving goods over long distances.1 The growth in containerization together with technological developments has resulted in considerable change in world transport. International goods are being increasingly transported on a doorto-door basis as a result of globalization.2 Foreign companies invest in factories and assemble plants located in regions with lower labor costs and good access to trade routes.3 Door-to-door transport involving more than one mode of transportation allows parties, particularly those with cargo interests, to deal with only one party; that is, the multimodal transport operator and thus provide a seamless and efficient method of supply chain management.
1
Schoenbaum (2004), p. 589. Multimodal Transport: The Feasibility of An International Legal Instrument, Report by the UNCTAD Secretariat, UNCTAD/SDTE/TLB/2003/1, p. 4. 3 Id. ¨ zbek Ass’t. Prof. Dr. M.D. G€ uner-O Koc¸ University, School of Law, Istanbul, Turkey e-mail:
[email protected] 2
¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_4, # Springer-Verlag Berlin Heidelberg 2011
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108
¨ zbek M.D. G€uner-O
Door-to-door transport includes transportation mechanisms such as multimodal, intermodal, or combined transport. As this paper will examine multimodal transport in a special context, the focus will be on multimodal transport. The most authoritative definition of multimodal transport can be found in the United Nations Convention on Multimodal Transport of Goods, 1980. Art. 1 (1) of the Convention defines multimodal transport as follows: International multimodal transport means the carriage of goods by at least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country. . . .
Other definitions in relation to multimodal transport can be found in the Terminology on Combined Transport issued by the United Nations Economic Commission for Europe (UNECE).4 Similar to the Multimodal Convention, the glossary defines multimodal transport as the “carriage of goods by two or more modes of transport”. On the other hand, the glossary defines intermodal transport as “the movement of goods in one and the same loading unit or road vehicle, which uses successively two or more modes of transport without handling the goods themselves in changing modes” while defining combined transport as “intermodal transport where the major part of the European journey is by rail, inland waterways or sea and any initial and/or final legs carried out by road are as short as possible”. The glossary is intended for the work of the European Community, the European Conference of Ministers of Transport (ECMT) and the UNECE. Its purpose was to determine the meaning of the terms currently in use, and to make them more easily understandable by the increasing number of people who use them, Definitions in the glossary are not applicable in their strictest sense to the legal and statistical fields, whose relevant documents of reference already exist.5 Therefore this paper will use the term multimodal transport as defined by the Multimodal Convention of 1980 and the glossary of the UNECE. Despite the enormous increase in multimodal transport,6 the current practice of multimodal transport in terms of documentation and liability rules is a patchwork due to various international conventions, national legislations, contractual arrangements and commercial practices. Another patch to this structure may be added in the future: the United Nations Convention on Contracts for the International Carriage of Goods by Sea that was signed on September 23, 2009 in Rotterdam and was named the Rotterdam Rules in accordance with the recommendation of the United Nations General Assembly.7 The Rotterdam Rules have been structured in such a way that they may have multimodal implications under certain circumstances although they have not been directly aimed at regulating multimodal transport. 4 Terminology on Combined Transport, Note by the Secretariat, TRANS/WP.24/2000/1 (1 February 2000), p. 4. 5 Id., p. 1. 6 See reports prepared by the UNCTAD since 1968 at http://www.unctad.org/Templates/Page.asp? intItemID¼2618&lang¼1 (accessed 10 October 2010). 7 A/RES/63/122.
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This paper examines the scope of the Rotterdam Rules and their possible multimodal effects that may arise in relation to the extensions preceding and subsequent to the sea carriage. Furthermore the paper reviews the possible conflicts of the Rotterdam Rules with other transport law conventions arising from such extension.
4.2 4.2.1
State of the Transport Operations Efforts to Regulate Multimodal Transports
Since the early twentieth century, several attempts have been made to achieve uniformity in the area of multimodal transport. The first effort goes back to the 1911 and 1913 conferences of the Comite Maritime International (CMI).8 These pre-Hague Rules9 attempted to regulate an international affreightment code that failed due to British and American resistance to the concept.10 Instead, the Hague Rules were adopted. Later, in 1948, the subject of uniformity in transport was again introduced and picked up by the ICC in 1949 to create an international through bill of lading.11 Signatory States of the CMR Convention12 also desired to have uniformity in international through transport. The Institute of Unification of Private Law (UNIDROIT) produced a draft convention (1957–1963).13 The CMI also prepared a draft convention known as “Tokyo Rules”. The CMI and the UNIDROIT unified two drafts in a single text in 1970 known as the “Rome Draft”. The Rome Draft further refined and developed the drafts, which became the Transport Combine de Merchandise (TCM) Draft in 1972 but did not progress any further. On the other hand the United Nations Conference on Trade and Development (UNCTAD) began to work on the multimodal transport in 1973. After 7 years of extensive deliberations the United Nations Convention on Multimodal Transport of Goods (MT) was adopted in 1980. However, the MT Convention failed to attract wide international support.
4.2.2
International Unimodal Transport Conventions
A multimodal operation is made up of a number of unimodal stages of transport. Each of these stages is either subject to international convention or national law. 8
Nassari (1988), p. 4 fn. 17 and authors cited there. International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading Brussels, 1924. The Convention entered into force in 1931. 10 Id. 11 Id. 12 Convention on the Contract for the International Carriage of Goods by Road, 1956. 13 Mankabady (1983), p. 121. 9
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International conventions which are applicable to unimodal transports are the Hague Rules, Hague/Visby Rules,14 its SDR Protocol15 and the Hamburg Rules16 for transport by sea; CMR for transport by road; COTIF/CIM17 as amended by the Vilnius Protocol for transport by rail and the Warsaw18 and Montreal Conventions19 for transport by air. Although some of these unimodal conventions extend their scope to multimodal transport there is no uniform multimodal liability system. Thus the liability for each stage of transport is determined by the relevant unimodal convention or national law and creates a discrepancy in the multimodal transport operator’s liability.
4.2.3
Period of the Application of the Current Maritime Transport Conventions
The Hague Rules were adopted in 1924, the Hague/Visby Rules in 1968 and the Hamburg Rules in 1978. The Hague and Hague/Visby Rules apply “from the time when the goods are loaded on to the time when they are discharged from the ship”.20 This rule is known as “tackle to tackle” and traditionally means from the moment when the ship’s tackle is hooked on at the loading port until the moment when the ship’s tackle is unhooked at the discharging port.21 Before mechanical cranes were invented heavy cargo was loaded on board vessels using the ship’s “tackle”. Delegates at the 1924 Diplomatic Conference accepted that the Hague Rules should cover only international aspects of maritime transport and not supplant national laws that applied to activities taking place entirely within a single state. On this premise, national laws governed damage occurring prior to loading or after discharge while laws recognized internationally governed damage occurring during the voyage. Accordingly, the Hague Rules govern rights and responsibilities of parties only when goods are on board ship, or, to use the phrase in common use, from “tackle to tackle”.
14
Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Brussels 1968. The Protocol entered into force in 1977. 15 Hague/Visby Rules were further amended by the Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Brussels 1977 that changed the basic unit of account of the Hague/Visby Rules. 16 United Nations Convention on the Carriage of Goods by Sea, Hamburg 1978. The Convention entered into force in 1992. 17 Convention concerning International Carriage by Rail (COTIF) of 9 May 1980 in the version of the Protocol of Modification of 3 June 1999 and Uniform Rules Concerning the Contract of International Carriage of Goods by Rail (CIM – Appendix B to the Convention). 18 Convention for the Unification of Certain Rules Relating to International Carriage by Air, 1929. 19 Convention for the Unification of Certain Rules for International Carriage, 1999. 20 Tetley (2008), p. 25; Hague-Hague/Visby Rules art.1(b), 1(e), and 2. 21 Tetley (2008), p. 25.
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In liner practice, however, the carrier (through its employees, agent, or independent operator) takes custody of the goods to be transported before they can be loaded on the vessel and keeps them in its possession after they are unloaded. In line with this practice, the Hamburg Rules extended the period of responsibility. According to art. 4.1 “The responsibility of the carrier for the goods under this Convention covers the period during which the carrier is in charge of the goods at the port of loading, during the carriage and at the port of discharge.” Despite the fact that the Hamburg Rules failed to attract a large number of countries, they still resulted in an adverse effect on the uniformity achieved previously by the Hague Rules.
4.2.4
The Need for a Change
The Hague Rules were adopted 86 years ago. Commercial practices and the maritime industry have changed remarkably since then. Amendments adopted by the Visby Rules 42 years ago made only a few changes to the Hague Rules. The relatively younger Hamburg Rules, 32 years old, have made some substantial changes; however, they were not attractive to the states. Neither the drafters of the Hague Rules nor the drafters of the Visby and Hamburg Rules could anticipate the container revolution or anticipate the impact of the container revolution on modern commercial practices.22 Because containerized traffic in the liner trade is usually structured as door-to-door operations, technological developments23 could be expected to increase the frequency of such operations in the future. Thus, an update was necessary to harmonize and modernize transport law rules.24
4.3
4.3.1
Drafting History25 of the Rotterdam Rules and the Idea of a Door-to-Door Concept Early Stage
Against the background mentioned above, the CMI started an investigation in 1988 on the question of the uniformity of the law of the carriage of goods by sea. The outcome of the investigation necessitated a substantial revision of the Hague and 22
Sturley (2007–2008), pp. 255–256. Such as electronic commerce and improved logistics facilities. 24 See Michael F. Sturley, General principles of transport law and the Rotterdam Rules in the previous parts of this book. 25 For a review of the history of the Rotterdam Rules see Francesco Berlingieri, History of the Rotterdam Rules, in the previous parts of this book. 23
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the Hague-Visby Rules and the issue was placed on the agenda of the XXXIVth International Conference of the CMI in Paris in 1990.26 In 1994 the CMI Executive Council established a Working Group to consider the problems of the various regimes dealing with the carriage of goods by sea, a questionnaire was prepared for distribution to the National Maritime Law Associations, and a summary of the responses to the questionnaire was published in 1995. Following this an international sub-committee was established. The Sub-Committee prepared five reports that were published in the CMI Yearbooks.27 On the other hand, the twenty-ninth session of the United Nations Commission on International Trade Law (UNCITRAL) in 1996 proposed that the UNCITRAL should include in its work program a review of current practices and laws in the area of international carriage of goods by sea in order to both show the need for uniform rules and to achieve greater uniformity than had so far been accomplished. Authorities of the CMI and the UNCITRAL then met to discuss possible cooperation of both organizations. Subsequently a Working Group on Issues of Transport Law was organized by the CMI Assembly in 1998–1999. The Working Group prepared another questionnaire and sent the new questionnaire to the national maritime law associations in 1999. In the same year a new international Sub-Committee was created to consider the replies to the questionnaire. The International Sub-Committee prepared a draft instrument based upon the analysis of the replies.28
4.3.2
Door-to-Door Concept in the CMI Draft Outline Instrument
The Draft Outline Instrument29 considered door-to-door transport; however it did not define the carrier’s liability, rather it left the issue open for further consideration. Chap. 3 entitled “Period of Responsibility” and Chap. 1 entitled “Definitions” provided the following definition: 3.1. Subject to the provisions of paragraphs 3.2. and 3.3 below the responsibility of the carrier for goods under this instrument covers the period from the time that the carrier has received the goods from the consignor in the place of receipt until the time that the goods are delivered by the carrier to the consignee in the place of delivery. . . . .
26
A Brief History of the Involvement of the CMI From the Initial Stages of The Preparation of The UNCITRAL Draft Convention on Contracts for The International Carriage of Goods Wholly or Partly by Sea, CMI Yearbook, 2007, p. 252; Berlingieri, History of the Rotterdam Rules, earlier in this book. 27 Yearbooks 2000 onwards can be found at http://www.comitemaritime.org/year_news.htm (accessed 19 October 2010). 28 CMI Yearbook 2000, pp. 122–171. 29 Id.
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and 1.1. “Contract of carriage” means a contract under which the contracting carrier, against payment of freight, undertakes to carry the goods wholly or partly by sea from one place to another. . . .
In order to accommodate modern practice in containerized trade, the Draft Outline Instrument was applied from the time of receipt to the time of delivery irrespective of geographical locations of such places. Where the place of receipt and place of delivery were inland and involved movement by inland vehicles or crafts such movements were considered only to the extent that they were subsidiaries to sea carriage.30 However, delegates found it difficult to determine whether the movement on land was a subsidiary to that by sea.31 Therefore many delegates suggested that future instrument should contain provisions applying to the full scope of the carriage whether the inland movement is subsidiary to that by sea or not as long as a carriage by sea was provided at some stage.32 The Draft Outline Instrument was discussed at the CMI Conference in Singapore in 2001.33 This discussion was not in detail; the Conference rather focused on the main issues, one of which was the period of responsibility. The discussions generated considerable support for extending the period of responsibility to inland carriage preceding or subsequent to maritime carriage.34 The formula adopted must permit the period of responsibility to be limited to the “tackle-to-tackle” or the “port-to-port” period for cargo that is carried on a tackleto-tackle or port-to-port basis as is often the case in the bulk trades.35 Moreover, most of the Conference delegates agreed that if the period of responsibility is to be extended beyond the traditional “tackle-to-tackle” period, there must be a sea leg involved.36 Some delegates, on the other hand, supported the alternative view that the period of responsibility should be extended only to the port-to-port period as in the Hamburg Rules.37 Additional discussions focused on uniform liability and network liability.38 Delegates who had supported the idea that uniform liability regime govern the carriage preceding or subsequent to maritime carriage, primarily relied on the reasons proposed in the Door to Door Transport Paper.39 Furthermore they claimed that a uniform liability regime was a desirable long-term objective.40
30
CMI Yearbook, 2000, Door to Door Transport, p. 118. Id. 32 Id. 33 CMI Yearbook 2001, p. 182 ff. 34 Id., p. 183. 35 Id. 36 Id. 37 Id. 38 Infra pp. 120 ff. 39 CMI Yearbook 2000, pp. 118–121. 40 CMI Yearbook 2001, p. 183. 31
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However, the network system has attracted more attention because in the short term it is easily achievable and does not create inconsistencies with existing unimodal law conventions.41 The Assembly of the CMI requested that the International Sub-Committee cover the possibility of its application to other forms of carriage associated with the carriage by sea also.42 Accordingly, the Draft was revised in light of these conclusions and a Revised Draft Outline Instrument,43 together with a Consultation Paper, was circulated to all national associations and a number of international organizations for comment. After responses to and comments on the Draft Instrument were analyzed, a Provisional Draft Instrument was prepared. The Provisional Draft Instrument was circulated to all national associations and the international organization for further consideration. The comments received were evaluated at the International Sub-Committee’s meeting in November 2001 and amendments resulting from the comments were made to the text.44
4.3.3
Delegation of the Draft Instrument to the UNCITRAL
The Draft Instrument was submitted by the CMI to UNCITRAL in December 2001. The UNCITRAL Commission established a working group, i.e. “Working Group on Transport Law” to consider the project.45 The Commission decided that the considerations in the working group should initially cover port-to-port transport operations; however, the working group would be free to study the desirability and feasibility of dealing with door-to-door transport operations also, or certain aspects of those operations, and, depending on the results of those studies, to recommend to the Commission an appropriate extension of the working group’s mandate.46 The Draft Instrument47 was considered at the ninth, tenth and eleventh sessions of the UNCITRAL Working Group III on Transport Law.48 It was then revised by the UNCITRAL secretariat in accordance with the decisions made at these three sessions.49 A number of core issues arising out of WP 3250 were considered by
41
Such as the CMR in European countries and even in Middle Eastern countries. CMI Yearbook 2001, p. 188. 43 Draft Outline Instrument (The May Draft), 31 May 2001, id. p. 357. 44 CMI Draft Instrument on Transport Law, id. p. 532 ff. 45 Report of the United Nations Commission on International Trade Law on its thirty-fourth session 25 June-13 July 2001, General Assembly Official Records Fifty-Sixth Session Supplement No. 17 (A/56/17), } 345. 46 Id. 47 A/CN.9/WG.III/WP.21. 48 For these documents see www.uncitral.org. 49 A/CN.9/WGIII/WP.32. The footnotes to this document to a large extent summarize the salient points made in the discussions at the ninth, tenth and eleventh sessions, and explain the changes made to the CMI Draft. 50 A/CN.9/WGIII/WP.32. 42
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Working Group III at its twelfth session in Vienna in October 2003.51 At the twelfth session delegates had before them a written proposal from the Government of the Netherlands on the door to door application of the Draft Instrument and from the Government of the United States on ten separate aspects of it.52
4.3.4
Consideration of Working Group III of the Period of Responsibility
4.3.4.1
The First Draft of the Instrument
At the ninth session the Working Group undertook a preliminary review of the provisions of the Draft Instrument.53 By placing [4.2.1 Carriage preceding or subsequent to sea carriage. . .] in square brackets the relevant provision with regard to the period of responsibility proposed the following: 4. PERIOD OF RESPONSIBILITY 4.1.1 Subject to the provisions of article 4.3, the responsibility of the carrier for the goods under this instrument covers the period from the time when the carrier or a performing party has received the goods for carriage until the time when the goods are delivered to the consignee. . . .. . . [4.2.1 Carriage preceding or subsequent to sea carriage Where a claim or dispute arises out of loss of or damage to goods or delay occurring solely during either of the following periods: (a) from the time of receipt of the goods by the carrier or a performing party to the time of their loading on to the vessel; (b) from the time of their discharge from the vessel to the time of their delivery to the consignee; and, at the time of such loss, damage or delay, there are provisions of an international convention that (i) according to their terms apply to all or any of the carrier’s activities under the contract of carriage during that period, [irrespective whether the issuance of any particular document is needed in order to make such international convention applicable], and (ii) make specific provisions for carrier’s liability, limitation of liability, or time for suit, and (iii) cannot be departed from by private contract either at all or to the detriment of the shipper, such provisions, to the extent that they are mandatory as indicated in (iii) above, prevail over the provisions of this instrument.] [4.2.2 Article 4.2.1 applies regardless of the national law otherwise applicable to the contract of carriage.]
This article provided for as minimal a network54 system as possible. The draft instrument was only displaced where a convention that constituted mandatory law 51
A/CN.9/544. A/CN.9/WGIII/WP.33 and 34 respectively. 53 Transport Law Preliminary Draft Instrument on the Carriage of Goods by Sea, A/CN.9/WG.III/ WP.21. 54 See infra pp. 120–121. 52
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for inland carriage was applicable to the inland leg of a door-to-door carriage, and was clear that the loss or damage in question occurred solely in the course of the inland carriage. In other words, where the damage occurred during more than one leg of the door-to-door carriage or where it could not be ascertained where the loss or damage occurred, the Draft Instrument would apply to the whole door-to-door transit period. The Draft Instrument would yield only to mandatory provisions of an international convention. The construction of the article assumes that conflicts with mandatory treaties applicable on land will be resolved. The Draft Instrument was not aimed at constituting a fully-fledged multimodal regime but rather a maritime regime that took into account the reality that the maritime carriage of goods was frequently preceded or followed by land carriage.55
4.3.4.2
Review of the Working Group
At the ninth session, the Working Group had before it the comments prepared by UNECE56 and UNCTAD57 and devoted considerable attention to the period of responsibility.58 The Working Group mainly deliberated on whether the carrier’s liability was to be restricted to port-to-port transport operations or whether, if the contract of carriage also included land carriage before or/and after the sea carriage, the carrier’s liability should extend to the entire contract, i.e. the door-to-door concept.59 Although draft art. 4.2.1 was presumed to avoid any conflict with the treaties governing land carriage in cases where sea carriage was complemented by one or more land carriages, the Group found that a more detailed consideration and refinement was necessary.60 On the other hand, it was necessary to consider the dangers of such extension as well as the specific needs of land transport. In order to avoid possible conflicts A/CN.9/510, } 28. United Nations Economic Commission for Europe. The UNECE secretariat welcomed UNCITRAL’s initiative to harmonize and modernize maritime transport law. With regard to the study of the desirability and feasibility of dealing with door-to-door transport operations, The UNECE secretariat recommended that this work should be carried out in close cooperation with all interested parties. Further UNECE found it questionable that the liability rules drafted merely considering maritime transportation extended to other modes of transport. The UNECE also commented that it was necessary to make provisions with regard to relationship between the Draft Instrument and conventions governing inland transport which may have been applicable. Consequently, according to UNECE further study was needed. A/CN.9/WG.III/WP.21/Add.1 Annex I. 57 United Nations Commission on Trade and Development. The UNCTAD stated the concern that Draft Instrument has been drawn up by the representatives of only maritime interests, namely CMI, without broad consultation of parties involved with and experienced in the other modes of transportation. The UNCTAD also found it improper that the Draft Instrument did not provide uniform liability throughout all stages of transport. A/CN.9/WG.III/WP.21/Add.1. 58 A/CN.9/510, } 26–32. 59 Id. 60 Id. } 32. 55 56
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between the Draft Instrument and other multilateral instruments (in particular those instruments that contained mandatory rules applicable to land transport), the Draft Instrument should have provided appropriate mechanisms. At its tenth session, due to insufficient time, the Working Group deferred its consideration of draft art. 4 and the remaining provisions of the Draft Instrument until its next session.61 The eleventh session Working Group resumed its review of the period of responsibility in the Draft Instrument. There was extensive debate on the issue. Italy,62 Canada,63 Sweden,64 the Netherlands,65 the United States,66 the International Federation of Freight Forwarders Associations (FIATA),67 the Association of American Railroads68 (AAR), the Intergovernmental Organization for International Carriage by Rail (OTIF),69 the International Chamber of Shipping (ICS),70 and the International Group of Protection and Indemnity Clubs (P&I Clubs)71 made statements and/or suggestions on the scope of application. The UN Secretariat also submitted a note on the scope of the draft instrument.72 There was broad support for a door-to-door scope and limited network system believing that it suited the needs and demands of the industry’s best.73 However, some corrections to the limited network system in the Draft Instrument were necessary. There was also some support for uniform liability but the Working Group thought it unattainable as it had deviated too much from the practices of commercial parties.74 After having agreed that the scope of the Draft Instrument should have covered door-to-door transport, the Working Group proceeded with the following five issues75: (a) The type of carriage covered by the Draft Instrument; (b) The relationship of the Draft Instrument with other conventions and with domestic legislation;
A/CN.9/525, } 123. A/CN.9/526 } 220. Italy was in favor of uniform system. However, later on it had changed its position and favored of limited network system. UNA/CN.9/544. 63 A/CN.9/526 } 221. 64 Id. } 222. 65 Id. } 224. 66 Id. } 226. 67 Id. } 228. 68 Id. } 229. 69 Id. } 230. 70 Id. } 231. 71 Id. } 232. 72 A/CN.9/WG.III/WP.29. 73 A/CN.9/526 } 239. 74 Id. } 224, 239. 75 Id. } 240. 61 62
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(c) The manner in which performing parties should be dealt with under the Draft Instrument; (d) The limits of liability under the Draft Instrument; and (e) The treatment of non-localized damages under the Draft Instrument. After discussions, the Working Group agreed – on a provisional basis – that the Draft Instrument should cover any type of multimodal carriage involving a sea leg. Internationality of the carriage should be assessed on the basis of the contract.76 The next issue was to correlate the relationship of the Draft Instrument with other transport conventions and with domestic legislation. Paragraph 4.2.1 of the Draft Instrument had not solved the issue of conflict of conventions.77 Accordingly, the text of art. 4.2.1. was retained as a conflict resolving provision, but a separate conflict of convention provision was also prepared.78 With regard to the relationship between the Draft Instrument and national law a conclusion could not be reached. As there had been wide support for reference to a national law, national law in square brackets was inserted.79 With regard to treatment of performing parties, limitation of liability and treatment of non-localized damages further consideration was necessary.80 Particularly, the treatment of performing parties was important because it would shape the entire instrument and could help in the solutions to other problems, one of them having been subparagraph 4.2.1. on carriage preceding or subsequent to sea carriage. At the twelfth session, the Working Group continued to consider the scope of application and performing parties as having been core issues in the Draft Instrument.81 Two articles on the conflict of conventions were drafted at the sixteenth session in accordance with the request of the Working Group at the eleventh session.82 The Working Group could not discuss the issue of relationship between the Draft
Id. } 244. Id. } 246. 78 Id. } 244. 79 Former art. 4.2. became art.8 and art.8.1.(b) read that “. . ..from the time of their discharge from the vessel to the time of their delivery to the consignee; and, at the time of such loss, damage or delay, there are provisions of an international convention [or national law] that . . .” A/CN.9/WG. III/WP.32. 80 A/CN.9/526 } 241–267. 81 A/CN.9/544 } 20 ff. 82 “Article 89. International instruments governing other modes of transport. Subject to article 92, nothing contained in this Convention prevents a Contracting State from applying any other international instrument which is already in force on the date of this Convention and that applies mandatorily to contracts of carriage of goods primarily by a mode of transport other than carriage by sea.” “Article 90. Prevalence over earlier conventions. [As between parties to this Convention, it prevails over those][Subject to article 102, this Convention prevails between its parties over those] of an earlier convention to which they may be parties [that are incompatible with those of this Convention].”A/CN.9/WG.III/WP.56. 76 77
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Convention and other conventions until its eighteenth session. At that session articles on the conflict of conventions were deleted.83 The reason was that art. 27, which was originally art. 4.2.1. on the carriage preceding or subsequent to sea carriage, was sufficient to solve the conflict with other conventions and these articles would confuse and obscure the intended operation of the Draft Instrument.84 Instead, it was decided to introduce clarifications to ensure the proper application of the limited network system and resolve possible conflict between the Draft Convention and the Montreal Convention.85 In accordance with this decision a provision on the conflict with air carriage was drafted.86 Subsequently, this provision was found insufficient and was improved in order to avoid specific conflicts not only with air transport but all unimodal transport conventions.87 A final touch was given to the Draft to narrow its scope.88
4.3.4.3
Comments of the UNCTAD
The UNCTAD Secretariat prepared a study of the implementation of the law and regulations applicable to multimodal transport.89 Following that study, an Ad Hoc Expert Meeting on Multimodal Transport was convened, which reviewed the existing situation in terms of the regulation of multimodal transport. As there are greatly diverse regulations at the international level the meeting delegates suggested that the UNCTAD secretariat study the feasibility of a new international instrument, taking into account the views of all interested parties, both public and private. Accordingly, the UNCTAD Secretariat circulated a questionnaire to all A/CN.9/616 } 235. A/CN.9/616 } 216–235. 85 Id. } 225, 235. 86 Art. 84. “Nothing in this Convention prevents a Contracting State from applying the provisions of any other international convention regarding the carriage of goods by air to the contract of carriage when such international convention according to its provisions applies to any part of the contract of carriage.” A/CN.9/WG.III/WP.81. 87 “Nothing in this Convention prevents a Contracting State from applying the provisions of any of the following conventions in force at the time this Convention enters into force: (a) Any convention regarding the carriage of goods by air to the extent such convention according to its provisions applies to the carriage of goods by different modes of transport; (b) Any convention regarding the carriage of goods by land to the extent such convention according to its provisions applies to the carriage of land transport vehicles by a ship; or (c) Any convention regarding the carriage of goods by inland waterways to the extent such international convention according to its provisions applies to a carriage without trans-shipment both on inland waterways and on sea.” A/CN.9/642 } 232. 88 Art. 85 “. . . (b) Any convention governing the carriage of goods by road to the extent that such convention according to its provisions applies to the carriage of goods that remain loaded on a vehicle carried on board a ship; (c) Any convention governing the carriage of goods by rail to the extent that such convention according to its provisions applies to carriage of goods by sea as a supplement to the carriage by rail; or . . .”. A/CN.9/WG.III/WP.101. 89 UNCTAD/SDTE/TLB/2 and UNCTAD/SDTE/TLB/2 /Add.1. 83 84
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Governments and the industry as well as to all interested intergovernmental and non-governmental organizations and a number of experts on this subject.90 Responses to the questionnaire91 revealed that a large majority considered the present legal framework of multimodal transport unsatisfactory and costly. The vast majority considered an international instrument to govern liability arising from multimodal transport desirable and indicated that they would support any concerted effort. The views were divided on the most suitable approach: two thirds of respondents seemed to prefer a new instrument to govern multimodal transport or a revision of the 1980 Multimodal Convention. A number of respondents favored the UNCTAD/ICC Rules which are used in commercial contracts. While a small number of respondents supported the extension of an international sea carriage regime to all contracts of multimodal transports involving a sea-leg, another small number of respondents suggested an extension of an international road carriage regime to all contracts of multimodal transport involving a road leg to be the most appropriate approach. Except for the maritime transport sector, there was only limited support for the approach adopted in the Draft Instrument. Views were divided among the uniform, network, and modified systems with regard to the system of liability. Support for the uniform liability system and network or modified systems were roughly equal. The UNCTAD presented this study to the Working Group.92
4.3.4.4
Proposal by the Netherlands
In preparation for the twelfth session of Working Group III, the Netherlands submitted a proposal concerning the scope and structure of the Draft Instrument. According to the Netherlands, as the majority of maritime contracts these days cover door-to-door carriage, the extension of the scope of the Draft Instrument to carriage preceding or subsequent to sea carriage fits well in modern practice.93 The practice of door-to-door carriage could be seen in other modes too; thus, the conventions relating to these other modes, particularly the newest ones, reflect a “unimodal plus” approach. The Netherlands, however, stated that the “maritime plus” approach as in the Draft Instrument might create problems if it conflicted with other conventions.94 The scope provisions of the existing non-maritime conventions were generally not sufficiently clear, i.e. whether they were related to certain 90
For the questions of the questionnaire see Multimodal Transport, UNCTAD/SDTE/TLB/2003/1, p. 26. 91 The UNCTAD Secretariat received 109 responses. Of these 69 were from Governments and 49 were from industry representatives Responses of the industry reflect the views of all interested parties, i.e. transport service operators, freight forwarders, logistics services and terminal operators, insurers, shippers, and other users of transport services. Id., p. 3. 92 A/CN.9/WG.III/WP.30. 93 A/CN.9/WG.III/WP.33 } 1. 94 Id. } 2,3.
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types of the contract or certain modes of the carriage. This was particularly problematic with regard to CMR.95 The limited network system as reflected in the Draft Instrument had avoided the possible conflicts to the largest possible extent; however with respect to non-liability matters possible conflicts have remained. The Netherlands recommended that the “unimodal plus” approach deserved further attention and study.96
4.3.4.5
Proposal by the United States
In preparation for the twelfth session of Working Group III, the United States of America also submitted a proposal. The proposal considered ten aspects of the Draft Instrument. Two of these aspects were the scope of application and performing parties. The United States stated its support for a door-to-door regime on a uniform liability system between the contracting parties, subject to limited network exceptions.97 This meant that the contracting carrier’s liability to the cargo interest would have been resolved under the Draft Instrument except that the network principle was applied to supersede these provisions. The United States recommended that in order to have maximum degree of uniformity the network principle must be kept narrow as in the Draft Instrument. The United States further stated that the Draft Instrument should provide substantive liability rules for “maritime performing parties”98 while it should not create new causes for action or have preempted existing causes of action. That is to say liability of an inland carrier should be based on existing law.99
4.4
Liability Systems Governing Multimodal Transport
The type of liability system governing multimodal transport is a key issue and probably the most important. There are principally three systems of liability under multimodal transport contracts.
A/CN.9/WG.III/WP.33 } 1,34. Id. } 28. In the Netherlands view if the outcome of such a study had been in favor of an unimodal plus system, then the art.4.2 of the Draft Instrument should have been replaced by a conflict of convention provision, that took account of the application of other transport conventions at the option of the parties to the contract of carriage. Id. 97 A/CN.9/WG.III/WP.34 } 5. 98 Such as ocean carrier, stevedore working in the port area, and maritime terminal operators. Id. } 6. 99 In some countries this is regional unimodal convention such as CMR while in others it may be mandatory or non-mandatory domestic law governing inland carriage. 95 96
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4.4.1
Uniform System of Liability
Under the uniform liability system the single liability regime applies irrespective of the unimodal stage of transport during which loss, damage, or delay occurs. It is no matter if the loss can or cannot be localized. This type of liability system is simple and transparent because the applicable liability rules are predictable from the outset and do not depend on the identification of the stage where a loss occurs.100 This is particularly advantageous for the cargo interest and consignor/consignee, as carrier’s liability vis-a`-vis a cargo claimant would be uniform throughout a multimodal transaction The uniform system of liability however, is disadvantageous for the carrier as it shifts the risk of unpredictability on the carrier.101 The carrier would not be able to take advantage of potentially less onerous liability rules which may otherwise apply to a particular mode of transport during which loss occurs. The contracting carrier would be liable to the cargo claimant under uniform rules and when he seeks recourse against any responsible unimodal subcontracting carrier, his recourse for action would be subject to applicable unimodal rules, which, sometimes, may be less onerous. Moreover, the problems of location of damage, liability gap, and gradual occurrence of damage would arise in such a recourse action.102 Such a uniform system may also conflict with provisions of existing unimodal conventions in relation to the basis of liability, limitation of liability, time bar and other issues.103
4.4.2
Network System of Liability
Under the network system of liability different rules apply depending on the unimodal stage of transport during which loss, damage or delay occurs. If the loss cannot be localized there is an alternative or a fall-back rule. In practice, standard form contracts provide fall-back rules that are more in favor of the carrier where a loss cannot be localized. This system of liability is advantageous for a carrier whereas it is disadvantageous for the consignor/consignee. Particularly in the container trade, locating the loss or damage and thus the identifying the unimodal leg where it occurred is difficult.104 Moreover, the loss or damage may occur
100
Multimodal Transport: The Feasibility of An International Legal Instrument, Report by the UNCTAD Secretariat, UNCTAD/SDTE/TLB/2003/1, p. 17. 101 Door-to-door Transport, CMI Yearbook 2000, p. 120. 102 Id. p. 121. 103 Id. 104 Door-to-door Transport, CMI Yearbook 2000, p. 119; Hancock (2008), p. 488.
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gradually over more than one leg.105 Consequently, there may be liability gaps between the applications of the various unimodal regimes.106 It is clear that in such a case neither an incidence nor the extent of a carrier liability is predictable. Therefore, a cargo claimant bears extra burden, i.e. increased insurance premiums as well as higher claim costs.
4.4.3
Modified System of Liability
Due to shortcomings of both systems, a modified system has been adopted in practice. In a modified system, some rules apply irrespective of the unimodal stage of transport at which loss, damage or delay occurs, but application of other rules depend on the unimodal stage of transport where loss, damage or delay occurs.107 This system provides a compromise or middle-way between a uniform and a network system and by various arrangements a system may be more uniform or network-like.108 The advantage of the modified system is that it provides a workable consensus, taking into account conflicting views and interests. However the disadvantage of this system is that the application of its provisions may be complex. Both the Multimodal Transport Convention 1980 and UNCTAD/ICC Rules for Combined Transport Documents comprise a modified system.109 Accordingly, the Rules set out the basis for liability, preserve the nautical fault, error in management and fire defenses in respect of goods carried by sea and inland waterways, and state that the limitation of liability provided by the compulsory unimodal regimes would apply if the loss or damage is localized. If the loss, damage or delay is not localized either the Hague-Visby limits or the CMR limits, if there is no sea leg, will apply.110
105
Id.; id. Id.; id. 107 Multimodal Transport: The Feasibility of an International Legal Instrument, Report by the UNCTAD Secretariat, UNCTAD/SDTE/TLB/2003/1, p. 18. 108 Id. 109 UNCTAD/ICC Rules for Combined Transport Documents published by the International Chamber of Commerce in 1992 (ICC Publication number 298). The Rules are based on both the CMI Tokyo Rules and Multimodal Transport Convention, 1980. 110 Its relevant articles state as follows: 4.1. The responsibility of the MTO for the goods under these Rules covers the period from the time the MTO has taken the goods in his charge to the time of delivery. . . . 5.1. Subject to the defenses set forth in rule 5.4. and Rule 6, the MTO shall be liable for loss of or damage to the goods, as well as for delay in delivery, if the occurrence which caused the loss, damage or delay in delivery took place while the goods where in his charge as defined in Rule 4.1., unless the MTO proves that no fault or neglect of his own, his servants or agents or any other person referred to in Rule 4 has caused or contributed to the loss, damage, or delay in delivery. However, the 106
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Although the Multimodal Transport Convention of 1980 did not attract a sufficient number of countries, the UNCTAD/ICC Rules have been successful. The Multidoc 95111 issued by the BIMCO112 and FBL 92113 issued by the
MTO shall not be liable for loss following from delay in delivery unless the consignor has made a declaration of interests in timely delivery which has been accepted by the MTO. . .. 6.1. Unless the nature and value of the goods have been declared by the consignor before the goods have been taken in charge by the MTO and inserted in the MT document, the MTO shall in no event be or become liable for any loss of or damage to the goods in an amount exceeding the equivalent of 666,67 SDR per package or unit or 2 SDR per kilogram me of gross weight of the goods lost or damage, whichever is the higher. . . . 6.3. Notwithstanding the above-mentioned provisions, if the multimodal transport does not, according to the contract, include carriage of goods by sea or by inland waterways, the liability of the MTO shall be limited to an amount not exceeding 8.33 SDR per kilogramme of gross weight of the goods lost or damaged. 6.4. When the loss of or damage to the goods occurred during one particular stage of multimodal transport, in respect of which an applicable international convention or mandatory national law would have provided another limit of liability if a separate contract of carriage had been made for that particular stage of transport, then the limit of the MTO’s liability for such loss or damage shall be determined by reference to the provisions of such convention or mandatory national law. 111 Accordingly it provides that: “10(a) The responsibility of the MTO for the Goods under this Contract covers the period from the time the MTO has taken the Goods into his charge to the time of delivery . . . 12(a) Unless the nature and value of the Goods have been taken in charge by the MTO and inserted in the MT Bill of Lading, the MTO shall in no event be or become liable for any loss of or damage to the Goods in an amount exceeding: (i) when the Carriage of Goods by Sea Act of the United States of America, 1936 (US COGSA) applies USD 500 per package or customary freight unit; or (ii) When any other law applies, the equivalent of 666,67 SDR per package or customary freight unit or two SDR per kilogram of gross weight of the goods lost or damaged, whichever is the higher. 12 (c) Notwithstanding the above-mentioned provisions, if the Multimodal Transport does not, according to the Contract, include carriage of Goods by sea or by inland waterways, the liability of the MTO shall be limited to an amount not exceeding 8.33 SDR per kilogram of gross weight of the Goods lost or damaged. (d) In any case, when the loss of or damage to the goods occurred during one particular stage of the Multimodal Transport, in respect of which an applicable international convention or mandatory national law would have provided another limit of liability if a separate contract of carriage had been made for that particular stage of transport, then the limit of the MTO’s liability for such loss or damage shall be determined by reference to the provisions of such convention or mandatory national law.” 112 The Baltic and International Maritime Council. 113 Standard Conditions (1992) governing the Fiata Multimodal Transport Bill of Lading. The relevant articles provide that: “6.1. The responsibility of the Freight Forwarder for the goods under these conditions covers the period from the time the Freight Forwarder has taken the goods in his charge to the time of their delivery. . . . 8.3. Subject to the provisions of subclauses 8.4. to 8.9. inclusive, the Freight Forwarder shall in no event be or become liable for any loss of or damage to the goods in an amount exceeding the equivalent of 666.67 SDR per package or unit or 2 SDR per kilogramme of gross weight of the goods lost or damaged, whichever is the higher, unless the nature and value of the goods shall have
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FIATA114 have incorporated these Rules. The Combiconbill,115 also issued by BIMCO, set similar rules but is based on the 1973 ICC Rules for Combined Transport Document.116
4.5
4.5.1
Examination of Article 26 and Article 82 in the Rotterdam Rules The Scope of Application of the Rotterdam Rules
The scope of the Rotterdam Rules was one of the most debated issues in the discussions of the Working Group. Art. 5.1 defines the scope: been declared by the Consignor and accepted by the Freight Forwarder before the goods have been taken in his charge, or the ad valorem freight rate paid, and such value is stated in the FBL by him, then such declared value shall be the limit. . . . 8.5. Notwithstanding the above mentioned provisions, if the multimodal transport does not, according to the contract, include carriage of goods by sea or by inland waterways, the liability of the Freight Forwarder shall be limited to an amount not exceeding 8.33 SDR per kilogramme of gross weight of the goods lost or damaged. 8.6. a) When the loss of or damage to the goods occurred during one particular stage of the multimodal transport, in respect of which an applicable international convention or mandatory national law would have provided another limit of liability if a separate contract of carriage had been made for that particular stage of transport, then the limit of the Freight Forwarder’s liability for such loss or damage shall be determined by reference to the provisions of such convention or mandatory national law. b) Unless the nature and value of the goods shall have been declared by the Merchant and inserted in this FBL, and the ad valorem freight rate paid, the liability of the Freight Forwarder under COGSA, where applicable, shall not exceed US$ 500 per package or, in the case of goods not shipped in packages, per customary freight unit.” 114 International Federation of Freight Forwarders Association and it stands for Fe´de´eration Internationale des Associations de Transitaires et Assimile´s in French. 115 Combined Transport Bill of Lading. Its relevant provisions provide that: 9 (1).The Carrier shall be liable for loss of or damage to the goods occurring between the time when he receives the goods into his charge and the time of delivery. . . . 10(3) Compensation shall not, however, exceed two Special Drawing Rights per kilogram of gross weight of the goods lost or damaged. . . . 11 (1) Notwithstanding anything provided for in Clauses 9 and 10 of this Bill of Lading, if it can be proved where the loss or damage occurred, the Carrier and the Merchant shall, as to the liability of the Carrier, be entitled to require such liability to be determined by the provisions contained in any international convention or national law, which provisions: (a) cannot be departed from by private contract, to the detriment of the claimant, and (b) would have applied if the Merchant had made a separate and direct contract with the Carrier in respect of the particular stage of transport where the loss or damage occurred and received as evidence thereof any particular document which must be issued if such international convention or national law shall apply. (2) Insofar as there is no mandatory law applying to carriage by sea by virtue of the provisions of sub-clause 11 (1), the liability of the Carrier in respect of any carriage by sea shall be determined by the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on February 23rd 1968 – The Hague/Visby Rules. 116 Door-to-Door Transport, CMI Yearbook 2000, p. 120.
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Subject to article 6, this Convention applies to contracts of carriage in which the place of receipt and the place of delivery are in different States, and the port of loading of a sea carriage and the port of discharge of the same sea carriage are in different States, if, according to the contract of carriage, any one of the following places is located in a Contracting State:. . .
while art. 1.1. defines a contract of carriage as: Contract of carriage means a contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another. The contract shall provide for carriage by sea and may provide for carriage by other modes of transport in addition to the sea carriage.
Accordingly the two principal elements of the scope of the Rotterdam Rules are that there must be a contract of carriage by sea and this carriage by sea must be an international one. Furthermore, there may be a carriage or carriages by mode or modes other than sea carriage as well as a place of receipt and/or a place of delivery that are different from the port of loading or unloading.
4.5.1.1
Internationality of the Carriage
Art. 5 requires “double internationality” of the carriage.117 Double internationality means both the entire carriage and the sea carriage must be international.118 Thus, for instance, the Rotterdam Rules apply to a carriage from Odessa, Ukraine to Istanbul, Turkey by sea then to Drama, Greece by land but does not apply to a carriage from Bursa, Turkey to Istanbul, Turkey by sea then to Drama, Greece by land.
4.5.1.2
Contractual Approach
The contractual approach119 means that the Rotterdam Rules apply to a certain type of contract with specific economic and operational characteristics. This type of contract involves the carriage of goods wholly or partly by sea, which in current practice frequently calls for door-to-door carriage. This means that the goods may be carried not only by sea, but also by other modes of transport preceding and/or subsequent to the sea carriage. It should be noted that the contractual approach is not unique. Most of the existing international transport conventions, such as Hamburg Rules, CMR, COTIF/CIM 1999, CMNI and Montreal Convention follow the contractual approach, to a greater or lesser degree.120
117
Peter Mankowski, Scope of Application and Freedom of Contract, paper presented at the Conference Rotterdam Rules Appraised, September 24–25, 2009, Erasmus Universiteit Rotterdam (unpublished), p. 3. 118 Id. 119 Other approaches are documentary approach, used in Hague Rules, and trade approach. A/CN. 9/572 } 84–86. 120 Ulfbeck (2009), p. 4.
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Furthermore, as long as the contract of carriage provided that the goods would be carried by sea, the Rotterdam Rules would apply even if the goods were not actually so carried.121 As the contract could identify a port of loading and a port of discharge in different States, the Rotterdam Rules would apply, even if the goods had not actually been loaded or discharged at those named ports.122 Alternatively, if the contract of carriage failed to mention any of the places or ports listed in art. 5, subparagraphs 1 (a)-(d), it would be possible to infer that the Rotterdam Rules would not apply, even though the goods might, in fact, have been carried by sea in a manner that would have complied with the Rules requirements.123 From time to time many contracts, for good commercial reasons, have left the means of transport open, either entirely or between the number of possibilities. In that regard, if the contract did not specify the mode or had left the specification to the carrier’s option, it might be assumed that the Rotterdam Rules would not apply, unless a requirement for carriage by sea could be implied.124
4.5.1.3
Maritime Plus
The Rotterdam Rules apply to door-to-door transports, i.e. they apply to the whole carriage if the carriage includes ancillary modes before or after sea carriage. The scope of application of the Rotterdam Rule to door-to-door contracts of carriage is described as a “maritime plus” approach, since the common factor for the application of the Draft Instrument is a sea leg.125 That is to say if there is no sea leg involved the Rotterdam Rules will not apply. In terms of liability, the Rules have chosen to apply a “limited network liability” system for such a “maritime plus” approach.126
4.5.2
Conditions for the Operation of Article 26
4.5.2.1
The Limited Network Liability System and the Hypothetical Contract
In Europe the network or the limited network system has been the starting point for the regulation of multimodal transport.127 Existing conventions and legislations are based on this system. The contractual approach taken in the European transport A/63/17 } 21. Id. 123 Id. 124 Id. 125 A/CN.9/WG.III/WP.29 } 8 126 A/CN.9/526 } 219–239. 127 Ulfbeck, p. 47 121 122
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conventions has had an impact on the network system.128 The network system in Europe focuses on the liability of the contracting carrier and does not deal with the direct liability of the subcontracting carrier.129 Generally, unimodal conventions do not regulate the direct liability of the subcontracting carrier; therefore the network principle cannot be formulated by reference to any unimodal rules governing the liability of the subcontracting carrier because no such rules exist. Instead, reference is made to the rules that would govern the liability of the subcontracting carrier if the shipper and subcontracting carrier had been directly contracted. Consequently, the contractual approach necessitates the concept of “the hypothetical contract”. This technique was also applied in drafting the Rotterdam Rules. The Rotterdam Rules are intended to adjust maritime transport to modern reality by adopting a door-to-door regime. According to art. 12.1 the period of responsibility of the carrier is as follows: The period of responsibility of the carrier for the goods under this Convention begins when the carrier or a performing party receives the goods for carriage and ends when the goods are delivered.
For the application of the network liability system art. 26 was also included. Accordingly art. 26130 reads that When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay: (a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to goods, or an event or circumstance causing delay in their delivery occurred; (b) Specifically provide for the carrier’s liability, limitation of liability, or time for suit; and (c) Cannot be departed from by contract either at all or to the detriment of the shipper under that instrument.
In other words, the article states that where the damage is localized and there is a relevant transport convention applicable to that stage, the specific rules of that convention will apply.131 Likewise, by reason of that other transport convention, certain issues of the carrier’s liability will be determined in a hypothetical contract
128 Id. p. 48. In fact this is the approach taken by the traditional transport law conventions. Fujita (2009), p. 366. 129 Id. 130 The language used in the earlier version of the art. 26, art. 4.2.1. at that time, see supra p. 113, meant that another transport convention would apply if according to its own terms it had to apply to the inland part of the multimodal carriage. van der Ziel (2009), p. 987; Krijin Haak, Carriage Preceding or Subsequent to Sea Carriage under the Rotterdam Rules, paper presented at the Conference Rotterdam Rules Appraised, September 24–25, 2009, Erasmus Universiteit Rotterdam (unpublished), p. 3. 131 van der Ziel (2009), p. 983.
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between the shipper and the carrier of this other form of transport. Otherwise the Rotterdam Rules will apply throughout the voyage. In that case the liability will be uniform. The following is an example of such a situation: Goods are carried from China to North Iraq through the port of Mersin in Turkey. The goods from China to Turkey are carried by sea, then from Mersin to the North Iraq by road. Damage occurs during the road carriage from Mersin to Iraq. According to the hypothetical contract technique if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of the carriage where loss of or damage to goods or delay in delivery occurred, the liability rules of CMR would have applied to this damage because both Turkey and Iraq are party to the CMR Convention and the damage occurred during the hypothetical CMR contract stage.
4.5.2.2
There Must Be an International Instrument Applicable to the Period Preceding or Subsequent to Sea Carriage
Under the hypothetical contract technique art. 26 applies if another transport instrument applied to the inland part of multimodal transport. The Draft prepared at the sixteenth session at its art. 27132 provided that: 1. When a claim or dispute arises out of loss of or damage to goods or delay occurring solely during the carrier’s period of responsibility but: (a) Before the time of their loading on to the ship; (b) After their discharge from the ship to the time of their delivery to the consignee; and, at the time of such loss, damage or delay, provisions of an international convention [or national law]: . . ..
In order to improve the wording it was redrafted133 and became art. 26: 1. When loss of or damage to goods, or an event or circumstances causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument [or national law] that, at the time of such loss, damage or event or circumstance causing delay: . . .
The difference between these two versions is that the word convention in the former has been changed to instrument in the latter. The reason for this change was to include the mandatory regulations of regional organizations.134 All relevant international instruments in this context were regarded as international conventions, for example, a regulation issued by a regional economic integration organization.135 In other words, both current conventions such as CMR, COTIF/CIM and a future EU regulation would fall under this article. From such wording it is also 132
It was art. 27 at that time. A/CN.9/WG.III/WP.81. 134 A/CN.9/WG.III/WP.81 fn. 88. 135 A/CN.9/645 } 84. 133
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clear that not only the existing instruments but also future possible instruments fall under this provision. In other words, the principle is that relevant provisions of the instrument that are in force at the time the loss, damage or delay occurred will be applicable. For instance, although there is no EU-wide regulation on multimodal transport, the EU has been planning to have one. If the EU makes a regulation in the future, this Instrument will be applicable under art. 26. Furthermore, only applicable instruments are international ones; national law does not apply.136 Art. 26 of the Rotterdam Rules also contained a reference to “national law” in square brackets. After long and extensive discussions, the reference to “national law” was deleted137 because the substance of the international instrument could be quite well known, transparent and harmonized whereas national law varies from state to state. Thus, it would be difficult to discover requirements of particular national law. Furthermore, national law is more likely to change any time. Consequently, the inclusion of national law would have posed a great obstacle to international trade.138
4.5.2.3
The Loss, Damage or Delay Must Occur Solely During the Period Preceding or Subsequent to Sea Carriage
For the limited network system to apply, the damage must have occurred during the period before or after the sea carriage. In this respect there were three choices: the place where the damage was caused, where it occured, or where it was detected.139 The place of occurrence was determined to be the proper choice.140 The place where damage occurs is a factual matter.141 Further, it is usually relatively easy to establish and may produce the fairest results.142 It is clear from the wording that the loss or damage in question must have occurred solely in the course of the carriage preceding or subsequent to sea carriage. This means that where the damage occurred during more than one leg of the carriage or where it cannot be proved where the loss or damage occurred, the Rotterdam Rules will be applicable to the whole door to door transit 136
van der Ziel (2009), p. 984. A/CN.9/621 } 189–192; A/CN.9/642, } 163, 166. 138 A/63/17 } 92–98. 139 A/CN.9/WG.III/WP.21 } 49. 140 Id. 141 Id. 142 Id.; van der Ziel (2009), p. 987. The time of detection has been found to produce an imbalanced result because detection is often after delivery. The place where the damage is caused may be before the voyage begins, e.g. in case of the damage caused by the shipper having the cargo badly stowed in a container. The most serious objection against the place where the damage is caused is that the question of proper causation according to the applicable law has to be resolved before it can be determined whether the provisions of this draft instrument or of another convention are applicable. A/CN.9/WG.III/WP.21 } 53. 137
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period.143 For instance, if frozen meat has begun to defrost prior to loading onto a ship and has defrosted while on the ship the Rotterdam Rules will be applicable to the whole period of carriage.144
4.5.2.4
Applicable Provisions of the International Instrument Must Relate to Liability and Must Be Mandatory
The proposed limited network system in the Rotterdam Rules only applies to provisions directly relating to the liability of the carrier, including limitation and time for suit. Provisions in other instruments that may indirectly affect liability, such as jurisdiction provisions, are not affected.145 Also many other legal provisions mandatorily applicable to inland transport were not intended to be replaced by the Rotterdam Rules because they are directed specifically to inland transport rather than to a contract involving carriage by sea. For instance, consignment note requirements of the CMR may apply between the carrier and sub-carrier, but their application to the main contract of carriage regulated by the Rotterdam Rules are inconsistent with the document (or electronic record) required by the Rules for the whole journey.146 Likewise the provisions of the CMR relating to the right to give instructions to the carrier (articles 12–14) have been applied only to the relation between carrier and sub-carrier (in which relation the carrier is “sender”). Furthermore, as expressly provided in art. 26(c), these provisions on the liability of the carrier’s limitation of liability or time for suit must be mandatory in character.147 Mandatory in character means that otherwise these provisions cannot be agreed to. The mandatory character can be one sided or two sided.148
4.5.3
Is the Inland Carrier Liable Under the Rotterdam Rules?
The treatment of performing parties in the Rotterdam Rules was an important matter that would have shaped the entire instrument. After lengthy discussions land carriers were mainly out of the scope of the Rotterdam Rules. Articles 18 and 19 respectively provide that:
A/CN.9/WG.III/WP.21 } 49. Berlingieri (2009). http://www.rotterdamrules2009.com/cms/uploads/Def.%20tekst%20F.%20Berlingieri%2013% 20OKT29.pdf, pp. 5–6 (accessed 21 October 2010); van der Ziel (2009), pp. 986–987. 145 A/CN.9/WG.III/WP.21 } 52. 146 Id. 147 Berlingieri (2009), p. 6. 148 van der Ziel (2009), p. 986. 143 144
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18. The carrier is liable for the breach of its obligations under this Convention caused by the acts or omissions of: (a) Any performing party; . . . (c) Employees of the carrier or a performing party;
and 19. A maritime performing party is subject to the obligations and liabilities imposed on the carrier under this Convention and is entitled to the carrier’s defenses and limits of liability as provided for in this Convention if:. . .
Taken together, the articles emphasize that it is the contracting carrier who is responsible for performance of the entire carriage.149 Furthermore, art. 1.7 states that “an inland carrier is not a maritime performing party as long as it performs or undertakes to perform its services outside a port area”.150 Thus such an inland carrier neither becomes liable under the Rotterdam Rules nor is listed in art. 4 of the Rules as a person who can enjoy Himalayan protection.151 His liability will continue to be governed by existing law, whichever regional unimodal convention or mandatory or non-mandatory domestic law it would be. The Rotterdam Rules excluded the inland carriers because the industry both in Europe and in North America did not want it.152
4.5.4
Burden of Proof and Possible Favorable Impact of Art. 26 on the Carrier’s Liability
Art. 17 of the Rotterdam Rules in its subsections 1 and 2 provides that: 1. The carrier is liable for loss of or damage to the goods, as well as for delay in delivery, if the claimant proves that the loss, damage, or delay, or the event or circumstance that caused or contributed to it took place during the period of the carrier’s responsibility as defined in chapter 4. 2. The carrier is relieved of all or part of its liability pursuant to paragraph 1of this article if it proves that the cause or one of the causes of the loss, damage, or delay is not attributable to its fault or to the fault of any person referred to in article 18.
Accordingly, the onus is on the carrier to prove the cause of the damage. It is said that art. 26 is an exception to this general rule. Both carrier and shipper or consignee may invoke its application.153 Furthermore, in most cases of inland transport the cause of damage is obvious such as road accidents or theft. In such a case the burden of proof is not an issue as the facts of the case are clear. 149
van der Ziel (2009), p. 991. A/CN.9/526 } 251–256; A/CN.9/544 } 20–27; Proposal by the United States of America A/CN.9/WG.III/WP.34 } 5–9; A/63/17 } 79–80. 151 A/CN.9/616 } 220, 222–233; A/CN.9/621 } 132, 134–135. 152 The industry stated that there was well established practice of inland transport. A/CN.9/WG.III/ WP.84; A/CN.9/WG.III/WP.90; For a criticism of such desire see Sturley (2009), pp. 35 ff. 153 Berlingieri (2009), p. 6. 150
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Additionally limits under the Rotterdam Rules may result in a more favorable outcome than the limits under the inland transport conventions.154 At the outset, the inland liability regime seems to be more favorable to cargo interests. Convention CMR COTIF/CIM Rotterdam Rules
Limitation 8,33 SDR/kg (art. 23) 17 SDR/kg (art. 40) 3 SDR/kg or 875 SDR/unit (whichever is higher) (art. 59)
However, particularly in the multimodal carriage of containerized packed goods the limits of the Rotterdam Rules may be higher than the limits under the road transport convention if the package weighs less than 105 kg. Convention CMR Rotterdam Rules
Limitation 100 kg 8.33 SDR ¼ 833 SDR 100 kg 3 SDR ¼ 300 SDR lower than per package unit 875 SDR; instead of 300 SDR 875 is payable under the Rotterdam Rules
Obviously in such a case the carrier has an interest in proving that the damage occurred during the inland stage.155
4.5.5
Resolving the Conflicts Between the Conventions
Art. 26 was prepared as a conflict resolving provision with a minimal limited network system of liability; however later on it became apparent that there might still be overlap. The reason was that unimodal transport conventions contained certain multimodal dimensions and the Rotterdam Rules, the Draft Instrument at that time, gave preference only to specific provisions of applicable unimodal conventions.156 These specific provisions are carrier’s liability, limitation of liability and time for suit. However, due to the multimodal dimensions of the other transport conventions both the Rotterdam Rules and any other relevant transport convention may be applicable to the same contract of carriage. Art. 82 solves the conflict in such a case.
4.5.5.1
Operation of Article 82
When both art. 26 and 82 are taken together art. 26 serves as a conflict avoiding provision. When art. 26 cannot overcome conflicts then art. 82 comes into play.157 154
Id. p. 5; van der Ziel (2009), p. 990. van der Ziel (2009), p. 990. 156 A/CN.9/526 } 220, 222, 246. For the text of the provision see supra p. 113. 157 For a review of case law in Europe see Haak, p. 8. 155
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This issue is considered one of the most difficult subjects of the Rotterdam Rules.158 Art. 82 reads as follows: Nothing in this Convention affects the application of any of the following international conventions in force at the time this Convention enters into force, including any future amendment to such conventions that regulate the liability of the carrier for loss of or damage to the goods: (a) Any convention governing the carriage of goods by air to the extent that such convention according to its provisions applies to any part of the contract of carriage; (b) Any convention governing the carriage of goods by road to the extent that such convention according to its provisions applies to the carriage of goods that remain loaded on a road cargo vehicle carried on board a ship; (c) Any convention governing the carriage of goods by rail to the extent that such convention according to its provisions applies to carriage of goods by sea as a supplement to the carriage by rail; or (d) Any convention governing the carriage of goods by inland waterways to the extent that such convention according to its provisions applies to a carriage of goods without transshipment both by inland waterways and sea.
Accordingly four categories of conventions have priority over the Rotterdam Rules. In other words if any conflict arises between the Rotterdam Rules and the four categories of conventions, the relevant convention rather than the Rotterdam Rules will apply. Any such conflict can arise because of the scope rules of the conventions.
Applicable Provisions Are Not Restricted to the Provisions on the Liability for Loss of or Damage to Goods Art. 82 states that “Nothing in this Convention affects the application of any of the following international convention . . . that regulate the liability of the carrier for loss of or damage to the goods”. One may think that art. 82 limits the scope to the provisions on the liability of carriers only; other issues such as transport documents, rights of control, shipper’s liability, delivery, transfer of rights, jurisdiction and arbitration remain outside.159 A review of the drafting history of art. 82 does not reveal the intention clearly. Previous versions of art. 82 do not consist of such restrictions. Concerns on the scope provisions of the other transport law conventions was the basis for the drafting of art. 82. However in order to solve all conflicts arising from the overlap of the scope provisions the article should not be confined to liability provisions only. “That regulate the liability of the carrier for loss of or damage to the goods”, probably, reflects the customary construction of the transport law conventions as they primarily regulate issues of carrier’s liability.
158
van der Ziel (2009), p. 993. Erik Rosaeg, Conflicts of the Conventions in the Rotterdam Rules, paper presented at the Conference Rotterdam Rules Appraised, September 24–25, 2009, Erasmus Universiteit Rotterdam (unpublished), pp. 10–11.
159
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Conventions That Have Priority Over the Rotterdam Rules Conventions Governing the Carriage of Goods by Air At the negotiations of the Rotterdam Rules, air and sea combination in the same carriage had been stated as a rare occasion.160 However due to the scope provisions of the Montreal Convention a clarification was found necessary.161 Art. 38 of the Montreal Convention is titled Combined Carriage and provides that 1. In the case of combined carriage performed partly by air and partly by any other mode of carriage, the provisions of this Convention shall, subject to paragraph 4 of Article 18, apply only to the carriage by air, provided that the carriage by air falls within the terms of Article 1.
Furthermore art. 18(4) and art. 1 mentioned in art. 38 state, respectively, that: The period of the carriage by air does not extend to any carriage by land, by sea or by inland waterway performed outside an airport. If, however, such carriage takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or transshipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air. If a carrier, without the consent of the consignor, substitutes carriage by another mode of transport for the whole or part of a carriage intended by the agreement between the parties to be carriage by air, such carriage by another mode of transport is deemed to be within the period of carriage by air.
and This Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward.
Consequently, there may be cases162 where both the Montreal Convention and the Rotterdam Rules apply. In such cases the Montreal Convention rather than the Rotterdam Rules will apply. It is to be noted that although the Drafters of the Rotterdam Rules considered only the Montreal Convention conflicting with the Rotterdam Rules Convention for the Unification of Certain Rules Relating to International Carriage by Air, 1929 the Warsaw Convention is still applicable in some States and will continue to be applicable until all parties to it ratify the Montreal Convention. The Warsaw Convention in its articles 31, 18(3) and 1 contain provisions similar to that of the Montreal Convention mentioned above.
Conventions Governing the Carriage of Goods by Road In Europe international carriage of goods by road is regulated by the CMR. The CMR has been very successful and has expanded over the years.163 The CMR A/CN.9/616 } 234. Id. 220. 162 For the specific instances see Hancock, p. 494. 163 For an evaluation of this success see Bon-Garcin (2006). 160 161
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governs transport operations not only in Europe but also in Asia, Maghreb, and Middle East.164 The CMR in its articles 1 and 2 provides, respectively, that 1.1. This Convention shall apply to every contract for the carriage of goods by road in vehicles for reward, when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a Contracting country, irrespective of the place of residence and the nationality of the parties.
and 2.l. Where the vehicle containing the goods is carried over part of the journey by sea, rail, inland waterways or air, and, except where the provisions of article 14 are applicable, the goods are not unloaded from the vehicle, this Convention shall nevertheless apply to the whole of the carriage. Provided that to the extent it is proved that any loss, damage or delay in delivery of the goods which occurs during the carriage by the other means of transport was not caused by act or omission of the carrier by road, but by some event which could only have occurred in the course of and by reason of the carriage by that other means of transport, the liability of the carrier by road shall be determined not by this Convention but in the manner in which the liability of the carrier by the other means of transport would have been determined if a contract for the carriage of the goods alone had been made by the sender with the carrier by the other means of transport in accordance with the conditions prescribed by law for the carriage of goods by that means of transport. If, however, there are no such prescribed conditions, the liability of the carrier by road shall be determined by this Convention.
Art. 2 speaks mainly about roll-on roll-of (ro-ro) transport. There are several roro lines both serving to and/or from Turkish ports in the Black Sea, Mediterranean and Aegean Sea regions. Here is an example of the conflict of the CMR and the Rotterdam Rules: Cargo loaded on a truck in Kiev, Ukraine, carried to Odessa, Ukraine by road, from Odessa to Zonguldak, Turkey by ferry; and from Zonguldak to Ankara, Turkey by road. Cargo damaged in an accident from Zonguldak to Ankara. Turkey is a party to the CMR; assume that it is also party to the Rotterdam Rules. Both the CMR and the Rotterdam Rules are applicable to such a case as long as the cargo is not unloaded from the truck. Art. 82 (b) gives priority to the CMR in such a case.165
Convention Governing the Carriage of Goods by Rail In Europe transport by rail is regulated by the COTIF/CIM. In art. 1 the CIM contains provisions having multimodal effect. Accordingly they state as follows: } 1 These Uniform Rules shall apply to every contract of carriage of goods by rail for reward when the place of taking over of the goods and the place designated for delivery are situated in two different Member States, irrespective of the place of business and the nationality of the parties to the contract of carriage.
164
See status of the CMR at http://www.unece.org/trans/conventn/legalinst_25_OLIRT_CMR. html (accessed 21 October 2010). 165 It is stated that it is the discretion of the Court. Fujita (2009), p. 365.
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} 3 When international carriage being the subject of a single contract includes carriage by road or inland waterway in internal traffic of a Member State as a supplement to transfrontier carriage by rail, these Uniform Rules shall apply. } 4 When international carriage being the subject of a single contract of carriage includes carriage by sea or transfrontier carriage by inland waterway as a supplement to carriage by rail, these Uniform Rules shall apply if the carriage by sea or inland waterway is performed on services included in the list of services provided for in Article 24 } 1 of the Convention.
Turkey is a party the Convention and the list mentioned in art. 24 includes lines Samsun, Turkey- Constance, Romania and Derince, Turkey- Constance, Romania. If the cargoes are transported by the lines listed, both the Rotterdam Rules and the COTIF/CIM are applicable. Here again the Rotterdam Rules give priority to the CIM. Convention Governing the Carriage of Goods by Inland Waterways Carriage by inland waterway within Europe is governed by the Budapest Convention on the Contract for the Carriage of Goods by Inland Waterway (CMNI).166 The CMNI in its art. 1 and 2 consists of provisions having multimodal effect. Turkey is not a party to the Convention; but it is stated that Turkey considers ratification of the CMNI.167 If both Conventions are applicable to the contract of carriage, again the CMNI prevails over the Rotterdam Rules. Convention Must Be in Force at the Time the Rotterdam Rules Enter into Force Both the language and the scope of art. 82 are different from those of art. 26. The conventions mentioned in art. 82 must be in force when the Rotterdam Rules enter into force. Any future amendments to such conventions also fall under the art. 82. However, a completely new convention is out of the application of art. 82. By contrast art. 26 comprises any instrument that will be regulated in the future. Furthermore, art. 82 consists of only conventions; it does not consist instruments as in art. 26. Therefore, any future “instrument” of the EU does not fall under art. 82.
4.6
Conclusion
The multimodal transport industry is a sophisticated industry. In order to meet the needs of the modern transport operations the Rotterdam Rules extended their scope to other modes of carriages preceding or subsequent to the sea carriage. Parties to the contract of carriage under the Rotterdam Rules are, however, free to restrict its scope to port-to-port or tackle-to-tackle. The extension gives rise to very complex issue of conflicts with other conventions. In order to overcome conflicts the 166
22 June 2001. The Convention entered into force 1 April 2005. Arat (2010).
167
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Rotterdam Rules have a two tier system: conflict avoiding art. 26 and conflict solving art. 82. When the conditions of the art. 26 are met liability rules of the other instrument apply rather than the Rotterdam Rules. When both the Rotterdam Rules and other transport conventions are applicable to the same contract due to the respective scope provisions, other conventions prevail over the Rotterdam Rules. The problem itself is complex one and solving it will be even more complex. Obviously the transport industry needs modernization and uniformity. However, it is often stated that transport industry needs simple legal rules. If this is really what industry desires the best way could be to abolish all unimodal conventions and introduce one that would cover each and all modes of transport in the future.
References Arat E (2010) Tuna Nehri’nde Seyr€ usefer ve T€ urkiye. http://www.mfa.gov.tr/tuna-nehri_ndeseyrusefer-ve-turkiye.tr.mfa. (Accessed 29 Oct 2010) Berlingieri F (2009) Multimodal aspects of the Rotterdam Rules. Paper presented at the colloquium of the Rotterdam Rules 2009, De Doelen, (Accessed 21 September 2009) Bon-Garcin I (2006) The 50th anniversary of the CMR convention – future and perspectives of international road transport. Unif. L. Rev.: 698–714 Fujita T (2009) The comprehensive coverage of the new convention: performing parties and the multimodal implications. Tex. Int’l. L.J. 44:349 Hancock C (2008) Multimodal transport and the new UN convention on the carriage of goods. JIML 14:484 Mankabady S (1983) The multimodal transport of goods convention: a challenge to unimodal transport conventions. ICLQ 32:120 Nassari K (1988) The multimodal convention. JMLC 19:231 Schoenbaum TJ (2004) Admiralty and maritime law, vol 1, 4th edn, Thomson West Sturley MF (2007–2008) The UNCITRAL carriage of goods convention: changes to existing law. CMI Yearb:255 Sturley MF (2009) Maritime cases about train wrecks: applying maritime law to the inland damage of ocean cargo. JMLC 40:1 Tetley W (2008) Marine cargo claims, 4th edn, Thomson Carswell Ulfbeck V (2009) Multimodal transports in the United States and Europe – global or regional liability rules? Tul. Mar. L.J. 34:37 van der Ziel G (2009) Multimodal aspects of the Rotterdam Rules. Unif. L. Rev. 14:981
Chapter 5
Obligations and Liabilities of the Carrier € M. Fehmi Ulgener
Abstract The Rotterdam Rules follow the model of the Hague-Visby Rules by imposing specific obligations on the carrier, such as to load, handle and stow the goods. However, the Rotterdam Rules impose two further obligations resulting from the extended scope of the Rotterdam Rules: they are the obligations to receive and deliver the goods. Furthermore, under the Rotterdam Rules the carrier is bound to exercise due diligence to make and keep the ship seaworthy not only at the commencement of the voyage but also during the entire voyage by sea.
5.1
Introduction
The Rotterdam Rules is an international convention in order to frame new regulations for the carriage of goods including the sea leg. Since these rules provide many new features, this essay will assess, besides the responsibility of the carrier the substance, progress and the main concepts of the Convention.
5.1.1
Substance of the Rotterdam Rules
The main purpose of the Rotterdam Rules which are founded upon the works of the UNCITRAL (“United Nations Commission on International Trade Law”) is set forth as follows: 1. Since the beginning of the twentieth century, many States, including Turkey, have provided rules, within the frame of conventions and principles, for carriage by sea and for the liability of the carrier, one of the most important components € Prof. Dr. M.F. Ulgener Istanbul University, Faculty of Law, Istanbul, Turkey and Legal Counsel for Turkish Chamber of Shipping, Istanbul, Turkey e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_5, # Springer-Verlag Berlin Heidelberg 2011
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2.
3.
4. 5.
of the carriage by sea. However, there is an existing need for the modernization of those rules in harmony with the needs of the current day. Another important aim of the convention is (“regional”) harmonization. Despite the fact that the Hague Rules have provided this harmonization partially, these rules, as previously mentioned, are based on principles that are more than a hundred years old. Therefore, the main purpose of this Convention is to render the Rotterdam Rules, in the form of a modern structure, effective in as many States as possible. Furthermore, the Convention includes all kinds of carriage, including the sea leg, and aims to cover all types of carriage under the roof of a single legislation (“single liability regime”). As a result of the above mentioned purposes, it is also aimed to anticipate any dispute that may arise as also the result of such dispute. Finally, as with all international conventions, the Rotterdam Rules aim to increase the trust in international trade.
The Rotterdam Rules have been framed to provide a modern and combined legal system, which covers the door-to-door carriage of goods by sea; therefore, in common parlance, this convention is also referred to as the “maritime plus” or “wet multi-modal transport” convention. On the basis of the points mentioned above there is every reason to assess the Rotterdam Rules as a general convention concerning carriage which also includes the “door-to-door” carriage, in parallel to the modernised classic principles of maritime law regarding liability.
5.2
Obligations of the Carrier
Chapter 4 article 11 of the Rotterdam Rules states that “the carrier shall, subject to this Convention and in accordance with the terms of the contract of carriage, carry the goods to the place of destination and deliver them to the consignee”. These obligations of the carrier which are more of a general nature compared to those in the Hague and Hague-Visby Rules, are set forth in the following articles of Chapter 4.
5.2.1
Period of Responsibility of the Carrier
Chapter 4 article 12.1 of the convention states that the period of responsibility of the carrier for the goods begins when the carrier (or a performing party) receives the goods for carriage and ends when the goods are delivered. Different from other conventions pertaining to the carriage of goods, the Rotterdam Rules expressly provides the boundaries for the period of responsibility of the carrier. Therefore, the convention has defined the period as one where the carrier is in actual possession of the goods as a compulsory provision; and states expressly that
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the period of responsibility cannot be less than the period of possession, which is an appropriate provision. Chapter 4 article 13.1 of the convention provides the specific obligations of the carrier.1 According to this: The carrier shall, during the period of its responsibility as defined in article 12, and subject to article 26, properly and carefully receive, load, handle, stow, carry, keep, care for, unload and deliver the goods.
Paragraph 2 of the same article (notwithstanding paragraph 1 of this article and without prejudice to the other provisions in Chapter 4 and to Chapters 5–7 and referring to the contract particulars) states that the carrier and the shipper may agree that the loading, handling, stowing or unloading of the goods is to be performed by the shipper, the documentary shipper or the consignee.
It is clearly understood that this article aims to open the door, within the frame of the convention, for the “FIOST” or “Free in – Liner Out” regulations, which are commonly exercised in maritime transportation.
5.2.2
Providing for the Seaworthiness of the Vessel
As is well known, the Hague and Hague-Visby Rules provided a regime where the carrier’s main obligation was to ensure the seaworthiness, roadworthiness and cargoworthiness at the beginning of the voyage. As generally accepted in the doctrine, in cases where the ship becomes unworthy for any of the conditions mentioned therein and for any reason at the beginning of the voyage, it is deemed as that the carrier could not provide the ship in a worthy condition. The same issue has been regulated under the Rotterdam regime in Chapter 4 article 14. According to this article: The carrier is bound before, at the beginning of, and during the voyage by sea to exercise due diligence to: (a) Make and keep the ship seaworthy; (b) Properly crew, equip and supply the ship and keep the ship so crewed, equipped and supplied throughout the voyage; and (c) Make and keep the holds and all other parts of the ship in which the goods are carried, and any containers supplied by the carrier in or upon which the goods are carried, fit and safe for their reception, carriage and preservation.
1 HAGUE-VISBY: III.2. “Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.” ROTTERDAM: Art.12.1. “The period of responsibility of the carrier for the goods under this Convention begins when the carrier or a performing party receives the goods for carriage and ends when the goods are delivered” Art.13.1.: “The carrier shall during the period of its responsibility as defined in article 12, and subject to article 26, properly and carefully receive, load, handle, stow, carry, keep, care for, unload and deliver the goods”.
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The subject provision is expanded by the Rotterdam Rules in favour of the carrier. As grounds for such expansion it is argued that during the period when the Hague regime was created, the carrier had more of control over the ship. However, as of now the carrier is not only liable to maintain the ship seaworthy, cargoworthy and roadworthy before and at the beginning of a voyage, but is also liable to provide such conditions during the voyage. The provision regarding the seaworthiness of the ship is a compulsory provision, such that article 80.4, which lists the exemptions to the compulsory provisions explicitly states that the compulsory attribute of article 14.a and 14.b may not be revoked. On the other hand, article 14.c, which deals with the cargoworthiness of the ship is excluded from the scope of application. If the other conditions are satisfied, the regime of the convention may be changed. Agreeing to the main idea that the responsibility of the carrier over the ship in modern maritime customs extends over the whole voyage, we are of the opinion that the liability to provide seaworthiness of the ship before the commencement of the voyage is more important and, therefore, should be interpreted in a stricter manner against the carrier. On the other hand, the continuation of the seaworthiness of the ship during the voyage may be interpreted in a broader manner, since the carrier will only be liable for those decisions it made or for those which it should have made during the voyage. Considering that the captain has the control over the ship during the voyage, it is understandable that the liability before the voyage is more provable than the liability during the voyage (broad interpretation of liability before the voyage, strict interpretation of liability during the voyage).
5.3
Liability of the Carrier
The Rotterdam Rules, different from the Hague and Hamburg Rules, framed provisions not only for the carriage of goods by sea, but also for the door-to-door carriage; and thus aims (so far as possible) to cover all types of carriage under the roof of a single legislation (“single liability regime”). Different liability regimes within the bills of lading for stages other than the sea leg (damage on land), will have to change with the coming into force of the Rotterdam Rules. An exception to this is set forth under article 26; stating that the Rotterdam Rules will not be applicable when the provisions of another international instrument (such as CMR) is applied. On the other hand, in consideration of the fact that it is not always easy to determine where and when the damage or loss occurred, it seems unavoidable that the parties have to go through long negotiations to determine which international instrument, and therewith which liability regime, is to be applied in their favour.
5 Obligations and Liabilities of the Carrier
5.3.1
Systems Regarding the Liability of the Carrier
5.3.1.1
Generally
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The liability of the carrier for the damage or the loss to the cargo has been a matter of discussion since the end of the nineteenth century when maritime trade started to evolve. As already known, the carriers were more powerful compared to the cargo interests, and they had the opportunity to insert into the contracts ultimate non-liability clauses, so much so that by the end of the nineteenth and the beginning of the twentieth century the carrier had almost no liability. To prevent such practices and to ensure a rightful solution, the liability of the carrier was regulated under the roof of an international convention and therewith some compulsory and binding provisions have become effective in regard to the carrier. 5.3.1.2
Comparison of the Systems
The Hague and Hague-Visby Rules In accordance with the Hague and Hague-Visby Rules (and therefore the Turkish Commercial Code – TCC) l
l
The carrier is liable before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy, cargoworthy and roadworthy. If the damage or loss is caused due to any unseaworthiness, the carrier has to prove that it has exercised due diligence before and at the beginning of the voyage as otherwise the carrier will be liable for such damage or loss. Besides this, the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried (Art. III.2, TCC Art. 1061). The carrier has the right to prove its non-liability under the Hague Rules, and accordingly, the circumstances under Art. IV.2.a-q are listed as grounds for such non-liability. However, the proof is only an indication that one of the circumstances listed in the above mentioned subparagraphs had come about. The only way to reverse this, in other words to prove the liability of the carriers, is for the cargo interests to prove that the damage or loss did not come about due to any of the circumstances mentioned above but had come about due to fault of the carrier or any other person’s actions for which the carrier is liable.
Therefore, the Hague Rules provide a presumption that the carrier is not liable. The burden of proof to show that the above mentioned circumstances had come about is on the carrier. The non-liability conditions expressed therein are conditions where the carrier or any other persons’ actions for which the carrier is liable has no control, with two exceptions:
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1. The first exception is where the damage or loss arises from an act or fault of the crew members in the navigation or the management of the ship. Therefore in which case even if the crew member is at fault for neglect, the carrier may be exempt from liability. 2. The second exception is fire. If the carrier is not personally responsible in regard to the fire, it is not liable for any damages or loss due to fire. Hamburg Rules As mentioned above, the Hamburg Rules provides a regime giving more protection to the cargo interests. The carrier is liable for any damage or loss in the Hamburg regime, if it cannot prove due diligence exercised by itself and any other persons the actions of whom it is liable for (including due diligence to render the ship worthy). Economical damages for delay are included. Therefore, the carrier is liable for damages or loss caused by delay due to negligence or any other fault of the persons’ actions for which the carrier is liable from the beginning upon the receipt of the goods by the carrier at the port of loading (different from the Hague Rules where it would begin from the time of loading on the ship) until the delivery of the goods at the port of discharge to the consignee or port authority (differently from the Hague Rules where it would end at the time of discharge from the ship)(Art. 4): The Hamburg Rules placed the burden of proof on the carrier, who is liable to prove due diligence and care. Therefore, different from the Hague Rules, it is deemed a presumption in the Hamburg Rules that the carrier is liable. Another difference between the two conventions related to the goods is the lack of a list in the Hamburg Rules, which states the non-liability cases of the carrier. Therefore, even in the case when any of the instances in Art. IV. 2 of the Hague Rules come about, the carrier would be liable unless it proves due diligence and care in its actions, as mentioned above. The only exception for the non-liability of the carrier in the Hamburg Rules is the circumstance of fire. Accordingly, the burden of proof in the event of fire rests on the cargo interests to show that the carrier or those persons for whose actions it is liable was at fault or guilty of neglect (Art. 5.4).
Rotterdam Rules The Rotterdam Rules regulate a broader field in comparison to the above mentioned conventions. Those rules become effective upon receipt of the goods by the carrier and cover the time and the period of voyage until the arrival at the place of delivery (with exception to the circumstances within the scope of any other international convention); and therefore naturally include all other types of carriage.
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The carrier’s obligation to render the ship worthy at the beginning of the voyage in the Hague and Hague-Visby Rules also exists in the Rotterdam Rules. However, the obligation is not limited to the beginning of the voyage but also extends to the continuation of the voyage (Art. 14). The Rotterdam Rules – are in line with the Hamburg Rules since they also include damage for delay. – are on the other hand parallel to the Hague Rules regarding the presumption of liability, as to claim damages the burden of proof is on the claimant in the Rotterdam Rules who should prove the fault or neglect of the carrier or of those persons whose actions the carrier is liable for (Art. 18). Therefore, we observe that the Rotterdam Rules deem the carrier non-liable as a presumption (Parallel to the Hague Rules).
5.3.2
Liability of the Carrier Under the Rotterdam Rules
The liability with respect to the damage or loss to the goods and the damage or loss due to delay in the delivery, under the Rotterdam Rules, is set forth below and the carrier must avoid such liability under the circumstances listed below.
Phase 1: (Regarding the Goods) (Art. 17.1) The carrier is liable for loss of or damage to the goods, as well as for delay in delivery. In order to hold the carrier liable, the claimant must prove that the damage had come about during period of the carrier’s liability. In such cases, the carrier may choose one of the two alternatives to apply:
Phase 2: (Carrier) (Art. 17.2.) Proving the absence of fault: The carrier is relieved of all or a proportionate part of its liability when it proves the absence of its fault for any damages subject to a claim which is raised from its fault or the faults of those persons whose actions the carrier is liable for. OR (Art. 17.3) Circumstances exempt from liability: Art. 17.3 of the Convention enlists the classical circumstances of maritime law which are exempt from liability, in a modernised way.
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Accordingly, the carrier, in respect of the liability mentioned under paragraph 1, may prove its non-liability under paragraph 2 as it may also put forward the fact that the following circumstance or the circumstances enlisted under the article caused the damage, loss or delay or that such circumstances have contributed to such damage, loss or delay: (a) (b) (c) (d)
(e) (f) (g) (h)
(i)
(j) (k) (l) (m) (n) (o)
Act of God; Perils, dangers, and accidents of the sea or other navigable waters; War, hostilities, armed conflict, piracy, terrorism, riots, and civil commotions; Quarantine restrictions; interference by or impediments created by governments, public authorities, rulers, or people including detention, arrest, or seizure not attributable to the carrier or any person referred to in article 18; Strikes, lockouts, stoppages, or restraints of labour; Fire on the ship; Latent defects not discoverable by due diligence; Act or omission of the shipper, the documentary shipper, the controlling party, or any other person for whose acts the shipper or the documentary shipper is liable pursuant to article 33 or 34; Loading, handling, stowing, or unloading of the goods performed pursuant to an agreement in accordance with article 13, paragraph 2, unless the carrier or a performing party performs such activity on behalf of the shipper, the documentary shipper or the consignee; Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods; Insufficiency or defective condition of packing or marking not performed by or on behalf of the carrier; Saving or attempting to save life at sea; Reasonable measures to save or attempt to save property at sea; Reasonable measures to avoid or attempt to avoid damage to the environment; or Acts of the carrier in pursuance of the powers conferred by articles 15 and 16.
Phase 3: (Regarding the Goods) (Art. 17.4; 17.5 and 17.6) Notwithstanding article 17.3, the carrier is liable for all or part of the loss, damage, or delay: (a) (17.4) If the claimant proves that the fault of the carrier or of a person referred to in article 18 caused or contributed to the event or circumstance on which the carrier relies; or (b) (17.4) If the claimant proves that an event or circumstance not listed in paragraph 3 of this article contributed to the loss, damage, or delay, (and the carrier cannot prove that this event or circumstance is not attributable to its fault or to the fault of any person referred to in article 18). (c) (17.5) Unseaworthiness of the ship: The carrier is also liable, notwithstanding paragraph 3 of this article, for all or part of the loss, damage or delay if the claimant proves that the loss, damage or delay was or was probably caused by or contributed to by the unseaworthiness
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of the ship; the improper crewing, equipping, and supplying of the ship; or that the ship is not cargoworthy (and the carrier is liable if the carrier is unable to prove either that: none of the events or circumstances referred under this subparagraph of this article caused the loss, damage, or delay; or it complied with its obligation to exercise due diligence). (If the carrier is partially relieved from its liability according to this article, the carrier will only be liable for the damage, loss or delay attributable to its fault and negligence).
5.3.3
Comparison of the Non-liability in the Hague System and the TCC Art. 1063
Assessing the Rotterdam Rules in the light of the non-liability conditions under the Hague Rules leads us to the following conclusions: 1. NOT MENTIONED IN THE ROTTERDAM RULES: “If the damage is a consequence of a navigational fault or fault in the management the ship. . .” (TCC Art. 1062/2). This non-liability clause regarding the liability of the carrier is not mentioned in the Rotterdam Rules. The non-existence of such a clause, which is of significant importance in the Hague system, in the Rotterdam Rules is considered to have an adverse effect for the carrier. The carrier will not be able to escape from liability, in cases of damage or loss, by claiming that the navigational fault or fault in the management of the ship was caused by the fault or neglect of the crew members. The reason for the existence of such a non-liability clause is on the ground that after the carrier has made the ship seaworthy and roadworthy, it completes its final liability of exercising due diligence by crewing the ship with the required number and class of crew members; and that it does not have control over the acts and decisions of the crew members after this, during the voyage. The reason for omitting the non-liability clause, on the other hand, is on the ground that modern technologies, such as ISM which provide and control navigational safety, allow the carrier to have continuous control over the actions and decisions of the crew members. Although it is sufficient in the Hague Rules for the carrier to provide a seaworthy ship in order to be relieved of liability due to the fault and neglect of the crew members, the Hamburg and Rotterdam Rules do not allow the carrier to be relieved of liability for damage and loss due to faults or neglect of the crew members even when the carrier proves the seaworthiness. The carrier may be relieved from such liability if it is able to prove that the damage and loss, which is the subject of the claim, did not arise from or was not caused by its fault or the faults of those persons whose actions the carrier is liable for. Therefore, within the frame of the Rotterdam Rules, the carrier is never relieved from the liability in cases of damage or loss arising or resulting from fault or neglect in the navigation or the management of the ship. The P&I Clubs are, therefore, forced to raise their premiums, since they are the ones that have to cover the difference in the level of liability between the Hague and the
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Rotterdam Rules. As it is seen here, the Rotterdam Rules will inevitably cause a financial disadvantage to the carrier. On the contrary, it needs to be mentioned that the maritime industry supported these rules with the expectation that it would achieve “unification” and that organisations such as BIMCO and significant ship-owners such as Maersk have expressed their favourable opinions. Also the support of the seafaring nations like Norway, Netherlands and Greece proves the tendency for such support. 2. Fire (TCC Art. 1062/2): The fire-defence regarding the liability of the carrier for damage or loss to the goods exists in all three conventions despite some differences in regard to the carrier’s liability. Especially in the system of the Hague Rules (and therefore the Turkish Commercial Code) it is stated that the carrier is not liable for any damage or loss due to fire, unless such liability is proven to have arisen from the personal fault of the carrier at the beginning of the voyage. The Rotterdam Rules preferred a slightly different system. – Despite the fact that the carrier may claim non-liability for reason of fire according to Art. 17.3 The claimant may still, under Art. 17.4, claim the carrier is liable upon production of proof of the fault of the carrier or any other persons whose actions the carrier is liable for in respect of the fire. In other words, while the carrier is liable in the Hague regime for its personal faults, in the Rotterdam regime the carrier is liable not only for its own, but also for the fault of those persons whose actions it is liable for. 3. Perils, dangers, and accidents of the sea or other navigable waters: (Rotterdam Rules Art. 17.3.b: Perils, dangers, and accidents of the sea or other navigable waters) This non-liability clause is parallel to the Hague Rules and provides an important exception to the liability of the carrier. This and the fact that the following liability provisions hereunder are almost parallel to those of the Hague system give us the strong impression that this similarity provides a milder liability system between the carrier and the shipper. As is already known, such non-liability clauses did not exist in the Hamburg Rules. The Rotterdam Rules also included the “Act of God” clause to the list (Art. 17.3.a) and therewith managed to put perils of sea and the Act of God clauses into one article. 4. War, hostilities, riots and civil commotions, act of public enemies, arrest or seizure under legal process of authorities and quarantines: This non-liability clause should be considered parallel to the definition made in Hague Rules. The Rotterdam Rules also include the terms “piracy” and “terrorism” to this article and thereby allows for adaptation to today’s needs and expands the scope of its application. Therefore, the Rotterdam Rules should not be considered as a one sided convention, but more of a regime that provides harmonization to the needs of today’s transportation. For instance, defence with regard to the technical defects are not included in the Rotterdam Rules under certain grounds, but instead includes the risks of “terrorism” and “piracy” under
5 Obligations and Liabilities of the Carrier
5.
6.
7.
8.
9.
10.
149
other grounds. (Rotterdam Rules Art. 17.3.c.: War, hostilities, armed conflict, piracy, terrorism, riots, and civil commotions) Seizure under legal process: Taking the foregoing article together with this issue, it is seen that the Rotterdam Rules have parallel provisions to the Hague Rules again. (Rotterdam Rules Art. 17.3.d: Quarantine restrictions; interference by or impediments created by governments, public authorities, rulers, or people including detention, arrest, or seizure not attributable to the carrier or any person referred to in article 18). Strikes or lock-outs or stoppage or restraint of labour: (Rotterdam Rules 17.3. e: Strikes, lockouts, stoppages, or restraints of labour) The Rotterdam Rules are parallel to the Hague Rules on this issue. Act or omission of the shipper or owner of the goods, its agent or representative: (Rotterdam Rules 17.3.h: Act or omission of the shipper, the documentary shipper, the controlling party, or any other person for whose acts the shipper or the documentary shipper is liable pursuant to article 33 or 34) The number of the persons causing such condition of non-liability amongst the cargo interests has been increased while the roles of the newly introduced persons (documentary shipper or controlling party) have been harmonized. Saving or attempting to save life or property at sea: (Rotterdam Rules 17.3. l-m: Saving or attempting to save life at sea; Reasonable measures to save or attempt to save property at sea). This is parallel to the Hague Rules. Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods: (Rotterdam Rules 17.3.g: Latent defects not discoverable by due diligence / 17.3.j.: Wastage in bulk or weight or any other loss or damage arising from an inherent defect, quality, or vice of the goods / 17.3.k: Insufficiency or defective condition of packing or marking not performed by or on behalf of the carrier). This is parallel to the Hague Rules. NOT MENTIONED IN THE ROTTERDAM RULES: All other damages arising from causes other than the carrier’s personal fault or the fault of those persons whose actions the carrier is liable for: at first glance it seems like that the nonliability circumstance in the form of the rule of “Ejusdem generis” in the Hague Rules has not been mentioned in the Rotterdam Rules. After a closer look it is seen that this is not exactly the case. The relevant provision under the Hague Rules states that “the burden of proof shall be on the person claiming the benefit of this exception”. Since the carrier is the beneficiary of this provision, the burden of proof is on the carrier to show that neither the personal fault of the carrier nor the fault of those persons the actions of whom the carrier is liable is the cause of the loss or damage. This system has the same mechanism as article 17.2 of the Rotterdam Rules; therefore, the subject circumstance under the Hague Rules has not been removed, but has been placed as an individual provision under the convention.
Besides, the conditions set out under article 17.3 of the Rotterdam Rules do not exits in the Hague Rules and, thus, are newly developed non-liability clauses that
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are included in the Convention parallel to the carrier’s advantage and in keeping with the needs of the maritime industry. 1. Article 17.3.i: Loading, handling, stowing, or unloading of the goods performed pursuant to an agreement in accordance with article 13, paragraph 2, unless the carrier or a performing party performs such activity on behalf of the shipper, the documentary shipper or the consignee. As is known, these activities, as a rule, should be performed by the carrier. However in practice these are transferred in many cases to the interested parties. It is a fact that the cargo interests perform activities such as loading, handling, stowing, unloading (including costs and liability) apart from merely delivering the goods to the ship and receiving the goods at the ship by records such as FIOST, Free-out. The validity of the non-liability clauses related to these phases in the Hague regime could only be made effective by an implied interpretation even in case of the existence of such conditions; in other words, it was only possible to accept the validity of such non-liability clauses on carriage contracts or bills of lading where there was a FIOST clause included therein. However, these caused many disputes and wrong interpretations in practice which led to unfavourable results for the carrier. This issue has been included explicitly in the text of the Rotterdam Rules without leaving any room for mis-interpretation; and if these mentioned activities are not performed by the carrier, then it is not held liable for the damage or loss incurred during these phases. Surely, the limitation of this liability is provided in the same article under paragraphs 4 and 5. These paragraphs have previously been explained herein above. 2. Article 17.3.n: Reasonable measures to avoid or attempt to avoid damage to the environment; this paragraph has been included in the Rotterdam Rules parallel to the increasing environmental consciousness. According to this article, the carrier is not liable for damage or loss to the goods caused by its reasonable measures to avoid or attempt to avoid damage to the environment. 3. Article 17.3.o: Acts of the carrier in pursuance of the powers conferred by articles 15 and 16.: According to article 15, the carrier (or a performing party) may take all reasonable precautions (including rejecting the goods for carriage, returning the goods, unloading or rendering the goods harmless) if the goods are, or reasonably appear likely to become an actual danger to persons, property or the environment during the carrier’s period of responsibility. For such reasons as explained, the carrier is not liable for the damage or loss to the goods during these phases. This provision corresponds closely to IV.6 of the Hague-Visby. It is important to mention article 16 of the Convention here. This article enables the carrier or a performing party, in a way, to have the opportunity to and the right of exercise with respect to the goods within the frame of general average. According to this provision the carrier or a performing party may take all reasonable precautions with respect to the goods at sea where such precaution is reasonably taken for the common safety or for the purpose of preserving from
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peril human life or other property involved in voyage. In such case, the carrier is not liable for any damage or loss caused to the goods. This provision is explicit in the Rotterdam Rules whereas in the Hague Rules, they are impliedly applied.
5.3.4
Limits of Liability
5.3.4.1
Limited Liability
The limits of liability of the carrier are stated in Chapter 12 of the Rotterdam Rules. The first article of this chapter is article 59 under the heading “limits of liability”. 1. Subject to articles 60 and 61.1, the carrier’s liability for breaches of its obligations under the Rotterdam Rules is limited to 875 units of account per package or other shipping unit, or 3 units of account per kilogram of the gross weight of the goods that are the subject of the claim or dispute, whichever amount is the higher, except when the value of the goods has been declared by the shipper and included in the contract particulars, or when a higher amount than the amount of limitation of liability set out in this article has been agreed upon between the carrier and the shipper. 2. When goods are carried in a container, pallet or similar article of transport or on another article of transport used to consolidate goods, the packages or shipping units enumerated in the contract particulars as packed in or on such article of transport or vehicle are deemed packages or shipping units. 3. The unit of account referred to in this article is the “Special Drawing Right” as defined by the International Monetary Fund. The amounts referred to in this article are to be converted into the national currency of a State according to the value of such currency on the date of judgement or award or the date on which the parties amicably settled. The value of a national currency, in terms of the Special Drawing Right, of a Contracting State that is a member of the International Monetary Fund is to be calculated in accordance with the method of valuation applied by the International Monetary Fund in effect on the date in question for its operations and transactions. The value of a national currency, in terms of the Special Drawing Right, of a Contracting State that is not a member of the International Monetary Fund is to be calculated in a manner to be determined by that State. Article 60 provides the “Limits of liability for loss caused by delay”. Subject to article 61, paragraph 2, compensation for loss of or damage to the goods due to delay shall be calculated in accordance with article 22 and liability for economic loss due to delay is limited to an amount equivalent to two and a half times the freight payable on the goods delayed. The total amount payable pursuant to this article and article 59, paragraph 1, may not exceed the limit that would be established pursuant to article 59, paragraph 1, in respect of the total loss of the goods concerned.
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The increased limited liability amount in the Hamburg Rules has been raised even more in the Rotterdam Rules. Here is a summary of comparison: Hague-Visby Rules Package Limitation 666.7 SDR Weight Limitation per Kg 2 SDR Hamburg Rules2 Package Limitation 835 SDR Weight Limitation per 2.5 SDR Rotterdam Rules3 Package Limitation 875 SDR Weight Limitation per 3 SDR
5.3.4.2
Loss of the Benefit of Limitation of Liability and Calculation of Compensation
Article 61, the last article of the chapter, provides the “Loss of the benefit of limitation of liability”. 1. If the claimant proves that the loss resulting from the breach of the carrier’s obligation was attributable to a personal act or omission, neither the carrier nor any of the persons referred to in article 18 is entitled to the benefit of the limitation of liability as provided in article 59 or as provided in the contract of carriage (therefore, the carrier must be personally at fault. The right to limit the liability continues in cases where persons, for whose acts the carrier is liable, have acted with the intent to cause such loss or recklessly and with knowledge that such loss would probably result). 2. The same provision is also mentioned for losses due to delay. According to this article neither the carrier nor any of the persons mentioned in article 18 is entitled to the benefit of the limitation of liability as provided in article 60 if the claimant proves that the delay in delivery resulted from a personal act or omission of the person, claiming a right to limit done with the intent to cause the loss due to delay or recklessly and with knowledge that such loss would probably result. (The carrier must be personally at fault). Article 22 explains the method of calculation of compensation without prejudice to the provisions under article 59 which provides provisions regarding the limits of liability. According to this article, if the carrier or maritime performing party is under threat of losing its rights in article 59 to limit the liability, such compensation must be calculated under the following criteria:
The liability of the carrier for delay, is limited to the freight amount of the delayed goods 2½, which should not exceed the total freight amount as agreed in the contract of carriage. 3 The liability of the carrier for delay in cases of economic loss is limited to the freight amount of the delayed goods 2½. 2
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(22.1.) The compensation payable by the carrier for loss of or damage to the goods is calculated by reference to the value of such goods at the place and time of delivery established in accordance with article 43. (22.2.) The value of the goods is fixed according to the commodity exchange price or, if there is no such price, according to their market price or, if there is no commodity exchange price or market price, by reference to the normal value of the goods of the same kind and quality at the place of delivery. (22.3.) In case of loss of or damage to the goods, the carrier is liable for payment of any compensation when the carrier and the shipper have agreed to calculate compensation in a different manner within the limits of chapter 16.
.
Chapter 6
Construction Problems in the Rotterdam Rules Regarding the Identity of the Carrier Kerim Atamer and C€ uneyt S€ uzel
Abstract This paper addresses Articles 37 and 65 of the Rotterdam Rules regarding the identity of the carrier and the additional time for suit. Firstly, a detailed working example is set out on the basis of current industry practice in order to demonstrate the practical problems. This is followed by a description of the drafting history of these rules. The three alternatives adopted under Art. 37 are distinguished as the “identified carrier”, “presumed carrier” and “proven carrier”. Each alternative is critically scrutinized in the light of the drafting history, their interaction with the remaining definitions and Articles of the Rotterdam Rules, as well as their projected application in practice. The same analysis is then conducted for the additional period. In conclusion, it is established that the final wording of these provisions does not fully reflect the true intention of the Drafters. Therefore, it is submitted that, as the rules stand today, more complications are likely to arise than be solved.
6.1
Introduction
The United Nations (UN) Convention of 11 December 2008 “on Contracts for the International Carriage of Goods Wholly or Partly by Sea”1 was signed on 23
1
As for an excellent summary of the preparatory work see Sturley (2009), pp. 1 et seq.; see also von Ziegler (2009), p. 346. As for general comments see, among others, Tetley (2008a), p. 625.
K. Atamer (*) Director, Dr. N€usret-Semahat Arsel Research Center for International Business Law, Koc University, Istanbul, Turkey and Associate Professor Dr., Maritime, Insurance and Transport Law, Koc University, Istanbul, Turkey e-mail:
[email protected] C. S€uzel Research Assistant for Maritime, Insurance and Transport Law, Istanbul Bilgi University, Istanbul, Turkey e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_6, # Springer-Verlag Berlin Heidelberg 2011
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September 2009 in Rotterdam.2 Therefore, the rules embodied in the Convention have been formally coined as the “Rotterdam Rules”.3 The signing of the Rotterdam Rules has not yet attracted much reaction from the involved States,4 most of which would still appear to be considering whether to ratify the Rotterdam Rules.5 Not surprisingly, however, the floodgates have been opened wide for scholarly review of and comment on the Rotterdam Rules.6 Exclusive attention will be paid in this paper to the provisions of the Rotterdam Rules on the “identity of the carrier”.7 The first author’s views and criticism in respect of the closely related subjects of the “performing party” and the “maritime performing party”8 have already been set out elsewhere,9 and will not be repeated here. All references in this paper to Articles (Art.) without further qualification are to the provisions of the Rotterdam Rules, except where noted otherwise.
6.2 6.2.1
The Problem Working Example
In order to lay out the problem as it arises in real life, it might be helpful to approach the matter on the basis of a working example compiled from contractual arrangements as they currently exist in practice. Assuming that a leasing company (lessor) 2
Pursuant to the General Assembly Resolution A/RES/63/122 sect. 3 (www.un.org/ga/63). As for certified true copies of the Rotterdam Rules in all UN languages see http://treaties.un.org/doc/ Publication/CTC/Ch_XI_D_8.pdf (13 August 2010). 3 As for the first published translation of the Rotterdam Rules into Turkish see Suzel and Damar (2010), p. 149. 4 As at 13 August 2010, the Rotterdam Rules have been signed by 21 States in accordance with Art. 88(1). The first 16 States to sign at the ceremony in Rotterdam were Congo, Denmark, France, Gabon, Ghana, Greece, Guinea, the Netherlands, Nigeria, Norway, Poland, Senegal, Spain, Switzerland, Togo and the United States of America. Since then, Armenia, Cameroon, Madagascar, Mali and Niger have joined as signatories. As such, the signatories so far are, with one exception, all African (11) and European (9) States. As for the status of signatures, see http:// treaties.un.org. 5 As at 13 August 2010, the Rotterdam Rules have not been ratified by any State. 6 An updated and comprehensive bibliography on the Rotterdam Rules is available at http://www. uncitral.org/uncitral/en/publications/bibliography_rotterdam_rules.html (13 August 2010). 7 Generally on this issue see Sturley (2006), pp. 426 et seq.; Zunarelli (2009), at pp. 1013–1020; Lorenzon (2009), at pp. 108–110; Baatz (2009), at pp. 208–210; Thomas (2009), at pp. 71–72; Williams (2009), at pp. 202–203; Diamond (2009), at p. 508. 8 As for studies on the performing and maritime performing parties see Sturley (2003), p. 230; Berlingieri (2009), at pp. 54–55; Fujita (2009), at pp. 368–373; von Ziegler (2009), p. 351; Smeele (2010), p. 72; Thomas (2008), at pp. 498–500; Diamond (2009), pp. 489–491; Delebecque (2003), at p. 215; Ramberg (2009), at p. 279; Zunarelli (2009), pp. 1020–1023. 9 Atamer (2010b), pp. 469 et seq.
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has registered its container ship in Panama,10 this company will become, thereby, the registered owner of the ship. Assume further that the leasing company concludes a financial leasing agreement with a Turkish shipping company and has the agreement registered in Panama, as well. The agreement may be on the BARECON 2001 form11 with Part IV (Hire/Purchase Agreement) in place. In its material part, clause (cl.) 10(b) reads as follows: The Charterers shall at their own expense and by their own procurement man (. . .), the Vessel (. . .). The Master, officers and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners.
Upon delivery of the ship in accordance with cl. 3(c), the bareboat charterer obtains possession of the ship. The Turkish bareboat charterer, in turn, enters into a time charter agreement with a Maltese shipping company that operates a liner service between ports in the Mediterranean Sea and North America. The time charter is on the NYPE 93 form,12 Art. 8(a) of which says that : The Master shall be (. . .) under the orders and directions of the Charterers (. . .) and the Charterers shall perform all cargo handling, including but not limited to loading, stowing, trimming, lashing, securing, dunnaging, unlashing, discharging, and tallying, at their risk and expense, under the supervision of the Master.
Assume further that, in accordance with standard practice, Art. 30(a) has been modified to the effect that the time charterer is given unrestricted right to issue and sign its own bills of lading. The Maltese time charterer will be assumed to have entered into a management agreement with a company seated in England on the basis of the SHIPMAN 98 form,13 Art. 3.3 of which reads: The Managers shall provide the commercial operation of the Vessel, (. . .) which includes (. . .): (i) (. . .) conclusion (. . .) of (. . .) contracts relating to the employment of the Vessel. (. . .) (ii) arranging of the proper payment to Owners (. . .) of all (. . .) freight (. . .).
On the basis of this provision, the English manager concludes in its own name contracts for the carriage of containers in the liner service offered under the
10 As for registration in Panama see, among others, Coles and Watt (2009), pp. 253 et seq. Registration in Panama has become increasingly popular among Turkish leasing companies, who seek to avoid the extensive catalogue of maritime liens, which are admitted under Turkish law. 11 BIMCO Standard Bareboat Charter, issued by The Baltic and International Maritime Council; as for detailed studies see, among others, Davis (2005); Dimigen (2000); Athanassopoulou (2005), pp. 106 et seq. 12 New York Produce Exchange Form, issued by the Association of Ship Brokers and Agents (USA), Inc. (latest amendment 14 September 1993); as for detailed studies see, among others, Coghlin et al. (2008); Stahl (1989); Athanassopoulou (2005), pp. 150 et seq. 13 BIMCO Standard Ship Management Agreement, issued by The Baltic and International Maritime Council; as for detailed discussions see, among others, Willingale (1998); Athanassopoulou (2005), pp. 199 et seq.
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logo of the Maltese time charterer, and issues even freight invoices. Indeed, it has become quite common for a ship manager to enter into contracts without disclosing its principal and collecting the freight in a bank account opened in its own name. On the other hand, it is to be assumed that an importer in the United States of America (USA) concludes a sales contract with an Italian seller on CIF terms. The seller approaches a German freight forwarding company that operates a world-wide network of transportation and logistics. The Italian seller and the German forwarder conclude a contract for the carriage of the goods.14 The forwarding agreement may have been concluded on the basis of the FIATA Model Rules.15 Art. 7.1 reads as follows: The Freight Forwarder is subject to liability as principal not only when he actually performs the carriage himself by his own means of transport (performing Carrier), but also if, by issuing his own transport document or otherwise, he has made an express or implied undertaking to assume Carrier liability (contracting Carrier). However, the Freight Forwarder shall not be deemed liable as Carrier if the Customer has received a transport document issued by a person other than the Freight Forwarder and does not within a reasonable time maintain that the Freight Forwarder is nevertheless liable as Carrier.
These rules appear in similar terms in the FIATA Bill of Lading,16 The German forwarder books space for the container with the English manager, who collects the freight and issues the invoice. A bill of lading is issued and signed by the English manager with the remark “as agents” without further qualification.17 The name of the carrier does not appear on the bill of lading. The bill of lading is endorsed and transferred to the American buyer. On the voyage, the cargo is lost at sea due to negligent stowage. The American buyer is indemnified by its Swiss insurer, who thereby becomes subrogated to the recovery claim of the buyer. The Swiss insurer would now wish to bring legal action. The basis of the recovery claim will be the bill of lading, which was signed “as agents” without identifying any specific party as the carrier. As such, the insurer will have a very hard time to decide as to who ought to be sued in the capacity as carrier. Extensive consideration has been given to this kind of problem and related issues in the Rotterdam Rules.
14
As for a comprehensive survey of several standard conditions see Glass (2004), chapter 2; as for a commentary of the German standard conditions see, among others, Koller (2010), pp. 794 et seq. 15 FIATA (International Federation of Freight Forwarders Associations) Model Rules for Freight Forwarding Services, as for the text see www.fiata.com (13 August 2010). 16 Definition in the FIATA Bill of Lading: “Freight Forwarder” means (. . .) who (. . .) assumes liability for the performance of the (. . .) contract as a carrier.” 17 As for the issuance and signing of bills of lading see, among others, Coghlin et al. (2008), } 21; Cooke et al. (2007), } 18; Aikens et al. (2006), } 3.53 et seq., 3.60 et seq.
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6.2.2
159
Definitions
According to the definition given in Art 1(5), the carrier is18 “a person that enters into a contract of carriage with a shipper”. On the opposite end of the chain, the shipper is defined as “a person that enters into a contract of carriage with a carrier” (Art. 1[8]). It follows that “the Drafters of the Rotterdam Rules” (Drafters) considered the carrier and the shipper as the parties to the “contract of carriage”. This contract is understood to be “a contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another” (first sentence of Art. 1[1]). The mode of transport is further qualified in the second sentence of Art. 1(1), according to which the carrier’s undertaking of carriage must include at least one part by sea19 and may include other modes of transport as well. “Freight” is defined independently in Art. 1(28) as “the remuneration payable to the carrier for the carriage of goods under a contract of carriage”, which is essentially a repetition of the first sentence of Art. 1(1) from the perspective of the payment. On the basis of these definitions, the “contract of carriage” could be described as a contract entered into between the carrier, who undertakes to carry goods from one place to another at least partially by sea, and the shipper, who undertakes to pay the freight as remuneration for the carrier’s undertaking. As for the “carrier”, it appears that the Drafters had in mind the first party to undertake the transport in full, without derogating this undertaking, fully or partly, to third parties under sub-contracts. Thus, the carrier and the shipper are the original two contracting parties, undertaking reciprocally carriage and payment. Against the background of this basic understanding, the functions and definitions of all the other players envisaged by the Rotterdam Rules will have to be identified.20 The obligations of the carrier are set out in chapter 4. According to the primary rule of Art. 11, the carrier shall carry the goods to the place of destination and deliver them to the consignee. This fundamental obligation is further refined and specified in the subsequent provisions of chapter 4, and elsewhere in the Rotterdam Rules. Any and all of these obligations may be freely delegated by the carrier to third parties (Art. 1[6] and [7]).21 Persons involved in any of the carrier’s obligations at any stage of the door-to-door carriage are referred to as “performing parties”. These would include, among many others, land, rail, air and inland waterway carriers to and from the port of loading or discharge. If a specific
18
As for the definition of the carrier under the Rotterdam Rules see Atamer (2010b), pp. 475–476. Art. 6 limits the scope of application of the Rotterdam Rules to certain types of contracts for the carriage of goods wholly or partly by sea. However, those restrictions, and their corresponding definitions in Art. 1, are not relevant to the problems discussed in this paper. 20 This would include, not only the performing and maritime performing parties on the carrier’s side, but also persons on the shipper’s side, such as the “documentary shipper” (Art. 1[9]), the “holder” (Art. 1[10]) and the “controlling party” (Art. 1[13]). 21 Generally on this issue see Atamer (2010b), pp. 475 et seq., as well as the sources listed in supra fn. 8. 19
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performing party further satisfies the requirements of Art. 1(7), it would qualify, additionally, as a maritime performing party. Roughly, these are involved only in the port-to-port phase of the transport, such as the registered owner, operator, bareboat, time and voyage charterer or manager of the ship, stevedores, port authorities or warehouses within the port. It follows that, in a case such as the working example, the freight forwarder as carrier is allowed to delegate any and all obligations under the contract of carriage to other parties. As such, the forwarder may enter into sub-contracts with a rail carrier for the carriage of the goods from the shipper’s premises to the port by rail, with a warehouse operator for the storage of the goods at the port of loading, with a stevedoring company for the loading, lashing and securing the goods on board the ship, with an owner, operator, any charterer or manager of a ship for the carriage to the port of discharge, and then with a road carrier for the transport to and delivery at the premises of the consignee. The carrier remains liable for the breach of obligations of all performing and maritime performing parties (Art. 18). The identity of the carrier as the original contracting party would usually be known to the shipper as the other party to the contract. However, this may not necessarily be so, particularly in cases such as the working example, where the carrier is represented by intermediaries, including agents and managers, who omit to disclose their principal. In such cases, even the shipper may face trouble in identifying properly the carrier as its contracting counterparty. At the port of discharge, the problem becomes only worse. The “consignee” is qualified as “a person entitled to delivery of the goods under a contract of carriage or a transport document or electronic transport record” (Art. 1[11]). According to Art. 1(14), (18) and Art. 35, a “transport document or electronic transport record” (transport document or record) is to be issued by the carrier. Art. 1(23) says that “any information relating to the contract of carriage or to the goods (including terms, notations, signatures and endorsements) that is in a transport document or an electronic transport record” is considered as “contract particulars”, which should include “the name and address of the carrier” (Art. 36[2][b]). Accordingly, if every transport document and record was to name explicitly who the carrier under Art. 1(5) is, the consignee would actually be protected sufficiently. However, it has been held in Art. 39[1] that the absence of such information will not by itself affect the validity of the transport document or record. It follows that the consignee, to whom the goods ought to be delivered, may not be in a position to identify who the carrier actually is. In practice, this does happen frequently if and whenever the consignee is not the party to the contract of carriage.22 Given that the carrier may delegate its obligations freely to third parties, the consignee, who is not a contracting party, might run into trouble in finding the proper carrier, if the transport document or record failed to include the name of the carrier.23
22
This would be the case, in particular, under all CIF, CFR and related contracts of sale and purchase. 23 Sturley has described such carriers as “phantom carriers” see Sturley (2006), p. 426.
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Looking at the working example, the Swiss insurer may have pursued meticulous research into the parties involved on the ship’s side and may even have established all the relevant contractual arrangements: who would have to be sued as carrier? The contract of carriage was concluded with the freight forwarder who had thereby become the carrier under Art. 1(5). However, as the forwarder is not named in the bill of lading, on what basis and against whom can the American consignee and its subrogated Swiss insurer pursue the cargo claim? The bill of lading is signed by the manager “as agents”. However, the manager has not disclosed the time charterer as its principal, but has collected the freight. This might be seen in some jurisdictions as an undertaking by the manager as carrier. If, on the contrary, the principal of the manager was to be identified as the Maltese time charterer, then this charterer might be found liable as carrier for the negligent stowage of the container. Assume, however, that the loss was caused by unseaworthiness; further complications may arise, as seaworthiness is undertaken by the owner as against the bareboat charterer, and by the latter as against the time charterer. In any event, the absence of any name from the bill of lading might also be construed in some jurisdictions to the effect that the owner of the ship is bound thereby. In the working example, this would mean that the financial lessor of the ship as registered in Panama is held liable under a bill of lading, with which it had nothing to do whatsoever. In order to overcome these and similar practical difficulties, the Rotterdam Rules have introduced Art. 37, consisting of three paragraphs. The rules set out in each of these paragraphs attempt to address a different scenario. For the purposes of this paper, these three alternatives will be referred to as the “identified carrier” (Art. 36 [2][b] and Art. 37[1]), the “presumed carrier” (Art. 37[2]) and the “proven carrier” (Art. 37[3]), which will now be considered in more detail.
6.3
Drafting History
The first draft24 of the Rotterdam Rules was finalised and published by the Comite´ Maritime International (CMI) in late 2001 as the “Draft Instrument on Transport Law”25 (CMI Draft). This Draft was transformed by the UN Commission on International Trade Law26 (UNCITRAL) into a “Preliminary Draft Instrument” ([2002] Draft WP.21) with a detailed commentary.27 The Working Group III (WG) of UNCITRAL proceeded on the basis of this Draft. The “failure to identify the 24
Earlier stages of the preparations are summarised by Sturley (2009), pp. 11–14. Text reproduced in (2001) CMI Yearbook 532; [2002] Lloyd Mar Com Law Q 418. 26 All documents and other preparatory materials, which have been produced or circulated within UNCITRAL, will be referred to hereinafter in accordance with their UN Document numbers. The entire material is readily available at www.uncitral.org (Working Group III). 27 As for the text see A/CN.9/WG.III/WP.21. 25
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carrier” had been first addressed in the CMI Draft,28 albeit within square brackets, in the second sub-paragraph of Art. 8.4 on “Deficiencies in the contract particulars”.29 Discussions on this provision commenced at the 11th Session30 of the WG. Since the proposed draft was found unsatisfactory, the WG adjourned detailed discussions in order to consider alternatives to remedy this problem. Therefore, the sub-paragraph was still kept in square brackets.31 Following the WG’s initial meetings, the Secretariat of UNCITRAL (Secretariat) decided to prepare the first revised Draft32 ([2003] Draft WP.32). In this Draft, the provision was then moved to Art. 36(3) within square brackets.33 However, before the matter could be reconsidered, the Secretariat published a new version of the Draft ([2005] Draft WP.56) by way of preparation for the 16th Session; there, the provision appeared as Art. 40(3) still in square brackets.34 The 16th Session also passed by without any discussions on the provision. Then, in preparation for the 17th Session, the USA submitted a Document relating to transport documents and electronic transport records, which summarised, among others, the drafting history of and opposing views on the provision.35 Prior to the same Session, the Italian delegation also submitted a proposal36 ([2006] Proposal WP.70) addressing amendments to be made to Art. 40(3)37 and suggesting that the square brackets be removed. Nevertheless, the matter did not come up for discussion at the 17th Session. Thereafter, the issue was taken up by the Governments of Italy and the Netherlands, who submitted a joint drafting proposal38 ([2006] Proposal WP.79) exclusively in respect of Art. 40(3), which was to be considered at the 18th Session. In this proposal, it was suggested for the first time that Art. 40(3) should become an independent new provision carrying the title “Identity of carrier”.39 This proposal
28
As for the discussions held at the CMI’s International Sub-Committee on Uniformity of the Law of the Carriage of Goods by Sea see (1995) CMI Yearbook, pp. 237–238; (1996) CMI Yearbook, pp. 374–375 and 391–394; (1997) CMI Yearbook, p. 289 and pp. 310–316; (1998) CMI Yearbook, pp. 169–171. See further (2000) CMI Yearbook, p. 186, 214, 257, 283 for the discussions at the CMI’s International Sub-Committee on Issues of Transport Law by Sea and for both see Sturley (2006), at pp. 428 et seq. 29 A/CN.9/WG.III/WP.21 } 156 et seq. 30 A/CN.9/526 } 56 et seq. 31 A/CN.9/526 } 60. 32 A/CN.9/WG.III/WP.32; as for this Draft see Sturley (2009), p. 15 with fn. 113. 33 A/CN.9/WG.III/WP.32 p. 41 with fn. 137. 34 A/CN.9/WG.III/WP.56 pp. 34–35 with fn. 148 and p. 109 with fn. 469. 35 A/CN.9/WG.III/WP.62 } 27–34. 36 A/CN.9/WG.III/WP.70. 37 A/CN.9/WG.III/WP.70 } 3–5. 38 A/CN.9/WG.III/WP.79. 39 See A/CN.9/WG.III/WP.79 } 7.
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substantially influenced the drafting process of what has later become Art. 37(1)40 and the second and third sentences of Art. 37(2).41 At the 18th Session,42 finally, detailed discussions on Art. 40(3) commenced on the basis of the [2005] Draft WP.56 in conjunction with the [2006] Proposal WP.79. At this Session, the WG decided to adopt the fourth paragraph of the [2006] Proposal WP.79.43 However, Art. 40(3) was still maintained in square brackets for the time. On the basis of these discussions, the WG gave instructions to the Secretariat for the preparation of a new draft of Art. 40.44 The updated Draft ([2007] Draft WP.81)45 was prepared for consideration at the 19th Session. In this Draft, the provision finally appeared independently as Art. 38,46 consisting of three paragraphs without square brackets.47 The first paragraph was a modified text of the [2006] Proposal WP.7948 and was accepted by the WG as drafted.49 As for the second paragraph, two alternative wordings were suggested. Variant A was the former Art. 40(3) of the [2005] Draft WP.56,50 whereas Variant B was a new text compiled in accordance with the [2006] Proposal WP.79.51 After discussions, the WG accepted Variant B.52 The last paragraph was new.53 The WG stressed the inconsistency of language in Art. 38(3) as compared to the reasons for drafting this provision,54 and requested the Secretariat to redraft the relevant paragraph.55 By way of preparation for the 21st and final Session of the WG, the Secretariat compiled all agreed issues and incorporated further suggestions into the [2007] Draft WP.101.56 In this latest incarnation, the provision was renumbered as Art. 39
See A/CN.9/WG.III/WP.79 } 4. See A/CN.9/WG.III/WP.79 } 5. 42 See A/CN.9/616 } 17 et seq. 43 A/CN.9/616 } 28. 44 A/CN.9/616 } 28. 45 See A/CN.9/WG.III/WP.81. 46 Art. 38 was placed between the provisions on contract particulars (Art. 37) and on signature (Art. 39), as suggested in the [2006] Proposal WP.79 } 7. 47 See A/CN.9/WG.III/WP.81 p. 31 with fn. 118–122. 48 See A/CN.9/WG.III/WP.81 p. 31 with fn. 119. 49 A/CN.9/621 } 288. 50 A/CN.9/WG.III/WP.81 p. 31 with fn. 120. 51 As indicated in A/CN.9/WG.III/WP.81 p. 31 with fn. 121, [2006] Proposal WP.79 (A/CN.9/WG. III/WP.79 } 5) was taken into consideration in the drafting period. 52 A/CN.9/621 } 288. 53 The purpose of this paragraph was to ensure that cargo interests remained free to advance their claims against the carrier, whom they believe to be responsible, see A/CN.9/WG.III/WP.81 p. 31 with fn. 122. This paragraph was drafted based on the WG discussions in A/CN.9/616 } 23 et seq. 54 See A/CN.9/WG.III/WP.81 p. 31 with fn. 122. 55 A/CN.9/621 } 288. 56 See A/CN.9/WG.III/WP.101. 40 41
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and slightly adjusted by the Secretariat.57 At its 21st Session, the WG approved the substance of Art. 39 and referred it to the Drafting Group.58 The Secretariat prepared the final wording in collaboration with the Drafting Group. The text so prepared was distributed as an attachment to the Report on the 21st Session ([2008] Draft 645).59 At its 41st Session,60 the Commission took note of a statement to the effect that the policy adopted in Art. 39 was unsatisfactory.61 Nevertheless, the provision was approved in substance without any discussions being reported.62 Following the Commission’s decision to delete Art. 1363 and Art. 3664 of the [2008] Draft 645, the provision was renumbered as Art. 37.65 In the final stages of the preparations,66 no further changes were made to Art. 37.
6.4
Identified Carrier (Art. 37[1])
The first alternative under the Rotterdam Rules to “identify the carrier” is set out in Art. 37(1) in the following terms: If a carrier is identified by name in the contract particulars, any other information in the transport document or electronic transport record relating to the identity of the carrier shall have no effect to the extent that it is inconsistent with that identification.
Apparently, for this rule to come into operation, the first requirement is that the “contract particulars” identify “a carrier”. The “contract particulars” are defined in Art. 1(23) as information “in” the transport document or record. The “name and address of the carrier” as a contract particular is listed explicitly in Art. 36(2)(b). It follows that Art. 37(1) is triggered if the transport document or record identified “a carrier” by name. Once this precondition is satisfied, “any other information” in the same transport document or record relating to the identity of the carrier will be disregarded “to the extent that it is inconsistent with that identification.” As such, the information in the transport document or record will be treated as conclusive evidence. These components of the provision will now be analysed in more detail.
57
See A/CN.9/WG.III/WP.101 p. 28 with fn. 85 and 86. A/CN.9/645 } 132. 59 Annex to A/CN.9/645 pp. 60 et seq. 60 A/63/17. 61 A/63/17 } 122. 62 A/63/17 } 123. 63 A/63/17 } 53. 64 A/63/17 } 110. 65 A/63/17 p. 125. 66 Summarised by Sturley (2009), pp. 23–24. 58
6 Construction Problems in the Rotterdam Rules
6.4.1
Contract Particulars (Art. 36[2][b])
6.4.1.1
The Rule
165
According to the general principle set out in Art. 35, the carrier is required to issue a transport document or record upon receipt of the goods (Art. 12[1]). The carrier might be relieved from this obligation by way of an agreement of the parties or by the custom, usage or practice of the particular trade. If a transport document or record was to be issued, its contents are specified in Art. 36. The first paragraph of this provision lists the information to be supplied by the shipper (Art. 36[1]). Then, Art. 36(2) sets out the entries to be made on the basis of the carrier’s own knowledge. The second item in this group reads: “[t]he name and address of the carrier”. Accordingly, it is suggested that the carrier identifies itself in the document or record, which is to be issued upon receipt of the goods. This provision already existed in the CMI Draft.67 Upon the [2006] Proposal WP.79,68 the relevant subparagraph was amended69 to read “the name and address of a person identified as a carrier”.70 At the 19th Session, the former version of the provision was reinstated in order to avoid misinterpretation,71 and to achieve consistency with the Uniform Customs and Practices for Documentary Credits 600 (UCP 600).72 Notwithstanding the fact that the information to be included in the transport document and record was considered mandatory even at the very last stage of the preparations,73 the provision remains a suggestion only, because the absence of this information does not affect the validity of the document (Art. 39[1]). In such cases, the supplementary rules in Art. 37(2) come into operation in respect of the identity of the carrier. It ought to be kept in mind that, because of the door-to-door application of the Rotterdam Rules, Art. 35 may already become applicable at the inland premises of the shipper, when the goods are picked up for, say, the road or rail carriage to the port of shipment.
Art. 8.2.1(e), see A/CN.9/WG.III/WP.21 } 133. A/CN.9/WG.III/WP.79 } 3. 69 A/CN.9/616 } 28. 70 The reason for the proposed amendment was the importance of the identification of the carrier in the transport document, since most transport documents contain only the name of the carriers’ booking agent or trade name, see A/CN.9/WG.III/WP.79 } 3. 71 It was explained that the phrase “name and address of a person identified as a carrier” might be confusing, and pointed out that the intention of the WG had not been to create a new concept, which might be coined as the “documentary carrier”. Therefore, the wording was changed again, see A/CN.9/621 } 276. Zunarelli, relying on Art. 1(9) defined the documentary carrier as “the person, other than the carrier, that accepts to be named as “carrier” in the transport document”, see Zunarelli (2009), p. 1019. 72 A/CN.9/621 } 276. 73 See A/63/17 } 114. 67 68
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“Name”
In order for Art. 37(1) to apply, the contract particulars must identify the carrier by “name”. In the course of the preparatory work, concerns were expressed over the reference to the “name”, as it might be confusing in other official versions of the Rotterdam Rules.74 Nevertheless, it was clarified75 that the term was used on purpose to indicate that the actual name of the carrier is the essential element in this provision. As for a “natural person” (Art. 1[29][b]) acting as carrier, the “name” would be the first and family names as registered and available from the certificates of identification. In many jurisdictions, the contract of carriage would qualify as a commercial contract. As such, the natural person might also be listed in a commercial registry. In respect of “a company or other legal person or association of natural or legal persons” (Art. 1[29][a]), the “name” ought to be the title as registered with a commercial or companies’ registry, or other registry of legal persons. In this connection, trading names such as “A Fishname Lines” or “Transatlantic Whatsoever Services” could not be qualified as the carrier’s “name” unless the trading name is entered with a public registry, which would identify the person operating under that name, in which case the transport document or record must also give information of such registration. In the drafting process, it was also pointed out that a logo or other circumstantial evidence would not be sufficient.76 It is submitted that, should the logo clearly indicate a “name”, Art. 37(1) would still operate.
6.4.1.3
“Address” as Opposed to “Domicile”
Address Another information that might be included under Art. 36(2)(b) is referred to as the “address” of the carrier. This term had been used already in Art. 8.2.1(e) of the CMI Draft and still appears in several provisions of the Rotterdam Rules.77 During the preparatory work, it was proposed to amend Art. 36(2)(b) in accordance with the requirements set forth under the Uniform Customs and Practices for Documentary Credits 500 (UCP 500).78 At that time, the UCP 600 was not yet published,79 and the WG intended to elicit consistency therewith.80 However, neither the UCP 50081 A/CN.9/621 } 280. A/CN.9/621 } 280. 76 A/CN.9/621 } 280. 77 Art. 36(2)(b); Art. 36(3)(a); Art. 37(2); Art. 45(b); Art. 67(1)(a); Art. 75(3). 78 It was indicated that the proposed draft is in compliance with the requirements set out in Art. 23 (a)(i) and 26(a)(i) of the UCP 500, see A/CN.9/WG.III/WP.79 } 3 with fn. 2. 79 A/CN.9/616 } 18. 80 A/CN.9/621 } 277. 81 Art. 23(a)(i) on marine/ocean bill of ladings, 26(a)(i) on multimodal transport documents. 74 75
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nor the UCP 60082 requires that the address of the carrier ought to be indicated in the transport document. Instead, the name of the carrier alone is deemed to be sufficient for the purposes of letters of credits. Nevertheless, the term “address” was maintained in the Rotterdam Rules, without being defined.
Domicile On the other hand, Art. 1(29) has adopted the term “domicile”, which is then used in Art. 66(a)(i), Art. 68(a) and Art. 75(2)(b)(i) to describe the jurisdiction of courts and tribunals, where claims against the carrier and a maritime performing party may be brought. According to Art. 1(29)(a), the domicile of a company or other legal person or association of natural or legal persons is defined as the “(i) statutory seat or place of incorporation or central registered office, whichever is applicable, (ii) central administration or (iii) principal place of business”. As for natural persons, the domicile describes the “habitual residence”, pursuant to Art. 1(29) (b). Nowhere in these definitions has the word “address” been used. As such, there is a substantial discrepancy in the terminology.
Drafting History The reason for this discrepancy is to be found in the drafting process. Whereas the expression “address” had already been used in the CMI Draft, the provisions on jurisdiction and arbitration were prepared at subsequent stages. On the basis of discussions at the 11th Session of the WG, the Secretariat was instructed to draft provisions on this issue.83 The first draft so prepared referred to the “principal place of business or habitual residence” (Art. 72[a] Variants A and B).84 This draft was considered at the 14th Session. At the outset of the discussions, attention was drawn to the discrepancy between the terminology in the new draft and the use of “address” in earlier provisions.85 Then, however, the term “domicile” was brought up as a new alternative, to be considered at subsequent meetings.86 At the 15th Session, general agreement was achieved to prepare the provision on the basis of the terminology used in the “Brussels I” European Regulation.87 Subsequent work 82
Art. 19(a)(i) on transport documents covering at least two different modes of transport, and Art. 20 (a)(i) on bill of lading. 83 A/CN.9/526 } 159 at p. 45. 84 A/CN.9/WG.III/WP.32 at pp. 65 and 66. 85 A/CN.9/572 } 122. 86 A/CN.9/572 } 122–124. 87 Council Regulation (EC) No. 44/2001 (22 December 2000) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Official Journal L 12 of 16 January 2001); see A/CN.9/576 } 115–116.
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proceeded on this basis.88 However, the inconsistency as between the simultaneous use of “address” and “domicile” would not appear to have been revisited.
The Problem As such, whereas the “address” of the carrier is to be indicated in the transport document or record, legal proceedings against the carrier will be commenced at the designated “domicile”. Are these two terms interchangeable? In legal terms, it would appear that “address” is used loosely to describe the location of a person; however, “domicile” is defined in the Rotterdam Rules as the place where a person will be subject to legal proceedings. If so, it is certainly of significant importance to establish whether the transport document or record is to identify the “address” or “domicile” of the carrier, if these were to be different places. As a matter of practice, many shipowners have their domicile, as described in Art. 1(29)(a), in one Country, but maintain several trading posts around the world, which are inserted as “address” into bills of lading. Given that the “address” in the transport document or record is used in the vast majority of the cases as the place to serve legal proceedings on the carrier, the term “address”, as used in Art. 36(2)(b) and elsewhere, would probably have to be construed as “domicile” throughout the Rotterdam Rules. Indeed, an “address” would be of little assistance to the prospective claimant if legal proceedings may not be commenced there because it was found to be different from the domicile. It would have been helpful if the Drafters had clearly set out their intention that the transport document or record ought to indicate the place where proceedings against the carrier may be commenced. Against the background of these comments, wherever reference is made in the following text to the “address”, it will have to be questioned whether this would not have to be understood as the “domicile”.
6.4.2
Conclusive Evidence
6.4.2.1
Drafting History
Art. 37(1) provides that if the carrier is identified by name in the contract particulars, any other information in the transport document or record relating to the identity of the carrier has no effect to the extent that it is inconsistent with that identification. As such, whoever is named on the front page of the document or record will be treated as the carrier under Art. 1(5). Because of the reference to the
A/CN.9/WG.III/WP.56 p. 11 with fn. 25; A/CN.9/591 } 16–17; A/CN.9/WG.III/WP.81 p. 11 with fn. 20; A/CN.9/WG.III/WP. 101 p. 10 with fn. 5.
88
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“contract particulars”, this phrase has to be applied in conjunction with Art. 36(2)(b).89 The CMI Draft did not include a corresponding provision. During the informal consultations, delegates questioned whether the standard “identity of carrier clause” (IOC clause), which usually appears in small print on the reverse side of bills of lading, would be allowed to contradict any other information in the transport document or record.90 In the [2006] Proposal WP.79, a suggestion was made to avoid possible conflicts between the front and back sides of the document.91 Subsequently, the proposal was approved by the WG92 and was accepted as Art. 37(1) in the later stages of the drafting process with minor linguistic changes.93
6.4.2.2
The Rule
Where a person is named explicitly as the carrier in the transport document or record, Art. 37(1) would appear to work in a way that this person will be treated as the party to the contract of carriage, as defined in Art. 1(5), irrespective of whether that person actually concluded the contract with the shipper. If the party named in the document or record had not entered into the contract with the shipper, it will nevertheless be assumed to have done so. As such, the information in the document or record will operate as conclusive evidence against the party so named therein. It ought to be emphasized that the identification in the transport document or record will create an irrefutable presumption only against the party so named therein, whereas the “claimant” would still be entitled to prove under Art. 37(3) who the carrier actually was. This alternative will be discussed later.94
6.4.2.3
Problems
The “name” must be identified in the contract particulars (Art. 37[1]). The contract particulars are the information “in” a transport document or record (Art. 1[23]). As such, Art. 37(1) comes into operation only, if the name is identified in a transport document or record. The transport document and record are both “issued by the 89
As to which see supra 6.4.1. A/CN.9/WG.III/WP.62 } 33. 91 A/CN.9/WG.III/WP.79 } 4. 92 A/CN.9/616 } 28. 93 The [2006] Proposal WP.79 contained the phrase “. . . on the face of the transport document or electronic record. . . any information on the reverse side of the transport document or electronic record. . .”, see A/CN.9/WG.III/WP.79 } 4. This wording was amended as “. . .any other information in the transport document or electronic transport record. . .” in the [2007] Draft WP.81, see A/CN.9/WG.III/WP.81 p. 31. The reason for this amendment was to ensure that the same result is achieved for both transport documents and records, see A/CN.9/WG.III/WP.81 with fn. 119. 94 See infra 6.6. 90
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carrier” (Art. 1[14] and [18]), and shall be signed by the carrier or a person acting on its behalf (Art. 38[1]). Putting all these pieces together, it would appear to follow that the conclusive evidence under Art. 37(1) can actually arise only if it was the carrier itself that has issued the transport document or record, named itself therein and signed it or had it signed on its behalf. Taking the working example, if the freight forwarder did issue the bill of lading upon receipt of the goods, then, and apparently only then, the freight forwarder will be conclusively treated as the carrier. If so, several difficult questions would arise.95 First, if the carrier had not issued any transport document or record, but a performing party did so for its own part of the carriage, would such a document or record be taken into consideration within the scope of Art. 37(1)? Taking the working example, if the forwarder issued no document, but a bill of lading was signed by the time charterer and endorsed by the shipper to the consignee, would the time charterer be treated as the carrier, notwithstanding that the carrier under Art. 1(5) was actually the freight forwarder? Given that the wording of Art. 37(1) is not limited to carriage by sea, the same question might arise also in respect of waybills issued by subcontracted carriers for the road, rail, air or inland waterway legs. On the basis of a literal construction of the provision, a bill of lading or waybill issued by a performing party would not qualify as a “transport document or record” as defined in Art. 1[14] and [18] as well as Art. 38(1), because that party is not “the carrier”. Such an outcome, however, would not appear to have been envisaged by the Drafters. Perhaps a distinction ought to be made as to whether the consignee has lawfully received that document or record, and has applied for delivery of the goods on the basis thereof. Indeed, looking at the definition of the consignee in Art. 1(11) and the provisions on delivery of the goods in chapter 9, the document or record, against presentation of which the consignee applies for receipt of the goods, ought to be decisive. If so, the better view might be that such a document or record would also be covered by Art. 37(1), provided that it was issued by a performing party that identified itself as the carrier. On the other hand, if the document or record issued by any performing party was never lawfully obtained by the consignee, Art. 37(1) would not appear to apply, at all. Second, if the carrier and a maritime performing party have both issued documents or records with conflicting information, which document or record would override? In the working example, if the freight forwarder as carrier had issued a through bill of lading upon receipt of the goods at the inland premises of the shipper, and the time charterer had issued an ocean bill of lading naming itself in bold letters on the front page as carrier, which document will be taken into consideration? Again, going by the definition of the consignee in Art. 1(11) and the provisions on delivery in chapter 9, it will have to be assumed that the document or record, on the basis of which delivery is effected, ought to prevail. Third, whereas Art. 36(2)(b) suggests that the name of “the carrier” is inserted, Art. 37(1) purports to be already applicable if “a carrier” is identified. Turning to
95
See also Zunarelli (2009), p. 1016.
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the working example, if the freight forwarder as carrier under Art. 1(5) issued the bill of lading but named the manager, time or even bareboat charterer as the carrier, would Art. 37(1) still be applicable? Put generally, does Art. 37(1) also operate in cases where the carrier has named “a carrier” other than itself as “the carrier” in the transport document or record? Alternatively, if, in the working example, the time charterer issued the bill of lading but named either incorrectly the manager or correctly the freight forwarder as the carrier, would the conclusive evidence arise thereby? In general terms, would Art. 37(1) apply in cases where the transport document or record issued upon loading of the goods was not issued by or on behalf of the person named therein as the carrier? It is submitted that in all these cases, it will depend ultimately on whether or not the party that issued and signed the transport document or record had authority to create the irrefutable presumption under Art. 37(1) against the party named therein as carrier. If such authority was missing, no presumption can arise under Art. 37(1) at all. The detailed reports about the long drafting process would not appear to contain any references at all to either of these questions.
6.4.2.4
Name Without Address
Against the background of the drafting history, it would appear that, in order for Art. 37(1) to apply, it is sufficient that the contract particulars include only the “name” of the carrier, omitting the “address”. As such, even if the address of the carrier was absent from the contract particulars, the appearance of the name alone would still serve as an identification of the carrier. However, this understanding might be in conflict with the wording of Art. 37(2), which will be considered in its own context further below.96
6.4.3
Validity of IOC Clauses Under Art. 37(1)
Many bills of lading and sea waybills carry on their reverse side an IOC clause,97 according to which the owner of the vessel is deemed to be the carrier. Such clauses are liable to cause substantial ambiguity if and whenever the “name of the carrier” is already printed or inserted on the front page of the document. In recent decisions,
96
See infra 6.5.3.1 “Missing Address”. A typical IOC clause, as considered in Homburg Houtimport B.V. v. Agrosin Private Ltd. And Others (The “Starsin”) [2003] 1 Lloyd’s Law Reports 571 (H.L.), would read as follows: “The contract evidenced by this Bill of Lading is between the merchant and the owner of the vessel (. . .). If the ocean vessel is not owned or chartered by demise to the company or line by whom this Bill of Lading is issued (. . .) this Bill of Lading shall take effect only as a contract of carriage with the owner (. . .)”.
97
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the House of Lords in the United Kingdom98 and the Bundesgerichtshof in the Federal Republic of Germany99 have declined to give effect to such clauses.100 The Drafters of Art. 37(1) have stated repeatedly101 that the purpose of this provision is to overrule such clauses and channel cargo claims against the carrier identified by name in the contract particulars. It follows that, whoever is named explicitly in the transport document or record as the carrier will be so treated, to the exclusion of any inconsistent or conflicting other information therein. Perhaps it has been the Drafters’ exclusive focus on this very issue, which would explain the absence from the reports of any discussion on the questions addressed earlier in this paper.
6.4.4
Cargo Claims Only?
Art. 37(1) has the effect that whoever is named in the transport document or record will be treated as the carrier. It has been identified that this rule was drafted with cargo claimants and IOC clauses in mind. However, the wording is not restricted to this particular scenario, as indeed the provision is set out in chapter 8 of the Rotterdam Rules on documentation, as opposed to chapter 5 on liability. As such, it may well be argued that the scope of application of Art. 37(1) is not limited to cargo claims. If the carrier had in fact issued the document or record naming itself as such, no problems are to arise if Art. 37(1) was to be applied to any and all claims under the Rotterdam Rules by or against the carrier. However, the picture may slightly change, if the cargo was delivered on the basis of a document or record, which was issued by a performing party describing itself as the carrier. In this alternative, treating the performing party as carrier for every dispute under the Rotterdam Rules may, once again, go beyond the limits of what the Drafters had foreseen.
6.5 6.5.1
Presumed Carrier (Art. 37[2]) Wording
As already mentioned, the absence or inaccuracy of the name of the carrier does not of itself render invalid the transport document or record (Art. 39[1]). However, a 98
Homburg Houtimport B.V. v. Agrosin Private Ltd. And Others (The “Starsin”) [2003] 1 Lloyd’s Law Reports 571 (H.L.). 99 BGH (15 February 2007), Transportrecht 2007, 119. 100 As for a comparative law analysis in respect of the IOC clause see Smeele (2010), } 6 and the sources listed there in fn. 16. 101 See, e.g., A/CN.9/526 } 56; A/CN.9/WG.III/WP.62 } 33; A/CN.9/WG.III/WP.79 } 4; A/CN.9/ 616 } 19; A/CN.9/621 } 280.
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supplementary rule is required for such cases as to how to identify the carrier. Such a rule is set out in the second paragraph of Art. 37, as follows: 2. [a] (1st sentence) If no person is identified in the contract particulars as the carrier as required pursuant to article 36, subparagraph 2 (b), [b] but the contract particulars indicate that the goods have been loaded on board a named ship, [c] the registered owner of that ship is presumed to be the carrier, [d] unless it proves that the ship was under a bareboat charter at the time of the carriage and it identifies this bareboat charterer and indicates its address, [e] in which case this bareboat charterer is presumed to be the carrier. [f] (2nd sentence) Alternatively, the registered owner may rebut the presumption of being the carrier by identifying the carrier and indicating its address. [g] (3rd sentence) The bareboat charterer may rebut any presumption of being the carrier in the same manner.102
The wording of this provision is slightly ambiguous. At first sight, it would appear that three rules are set out in three separate sentences. On close scrutiny, however, it is noted that 2[a] and 2[b] are actually applicable as preconditions, not only to the first, but also to the second and third sentences. Thus, the chain of logic followed in these rules might be summarised in the following terms: If both 2[a] and 2[b] are satisfied, the registered owner of the ship is deemed to be the “carrier” according to 2[c]. Once this first presumption is established, two options arise for the registered owner: it may either prove under 2[d] that the ship was bareboat chartered, or it may prove under 2[f] who the carrier actually is. If alternative 2[d] was chosen, the bareboat charterer, instead of the registered owner, will now be deemed to be the “carrier” under 2[e]. If this presumption did arise, the bareboat charterer is provided with only one alternative remedy under 2[g] to the effect that it may “rebut any presumption in the same manner”. It is to be assumed that the phrase “in the same manner” refers back to 2[f], so that the bareboat charterer is given the option to identify the “carrier” and indicate its address. The provision does not say, however, what would happen if either the registered owner under 2[f] or the bareboat charterer under 2[g] did identify a third party wrongfully.
6.5.2
Drafting History
The origins of these rules are to be found in Art. 8.4.2 of the CMI Draft.103 During the preparatory work, this proved to be one of the most controversial provisions,104 which was therefore kept in square brackets for the longer part of the discussions,105 until
102 The sentence numbers and letters in square brackets have been supplied for immediate reference in the following discussion. 103 See A/CN.9/WG.III/WP.21 } 156 et seq. 104 A/CN.9/WG.III/WP.21 } 156; A/CN.9/WG.III/WP.62 } 27, } 31; Sturley (2006), p. 427. 105 The article was in square brackets in A/CN.9/WG.III/WP.21 } 156 et seq.; A/CN.9/WG.III/ WP.32 p. 41; A/CN.9/WG.III/WP.56 p. 109.
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these were finally removed and a separate provision was drafted.106 In the course of the drafting stages, the presumptions created by Art. 37(2)[c] and [e] were hotly debated.107 It was argued that the registered owner may not be involved in the performance of the contract at all.108 By way of example, it was found unfair that a financial institution, having no connection whatsoever with the contract, would be deemed as carrier, just because it would have been registered as the owner due to financing arrangements.109 The better approach was explained as placing responsibility on the shipper, who entered into the contract of carriage, to know the identity of the carrier as its counterparty.110 Objections were also raised against the provision because of the door-to-door application of the Draft Instrument to multimodal transportation.111 The critics pointed out that, as a result of the presumption, the registered owner that physically performs the sea-leg alone would become responsible for all non-maritime stages of the transportation as well.112 Bearing in mind that the registered owner may also be defined as a maritime performing party, such a presumption would collide with Art. 19, because the period of liability of the registered owner as a maritime performing party would be extended from the port-to-port operation to the entire door-to-door stages of the carriage.113 Nevertheless, the presumption found more support, ultimately. In support of the rule, it was explained that, since the article provides a rebuttable presumption, it only shifts the burden of proof in order to maintain an effective remedy for the consignee.114 In response to the concerns raised by the critics, it was explained that the registered owner, even if it was a financial
106
See A/CN.9/WG.III/WP.81 p. 31. As for the objections alleged against Art. 37, see A/CN.9/526 } 57 et seq., A/CN.9/WG.III/ WP.62 } 32 et seq., A/CN.9/616 } 22 et seq., also see Sturley (2006), pp. 434 et seq. 108 A/CN.9/WG.III/WP.62 } 32; A/CN.9/616 } 22. 109 See A/CN.9/WG.III/WP.62 } 28; Sturley (2006), p. 434. 110 See A/CN.9/WG.III/WP.62 } 32; Sturley (2006), pp. 436 et seq. 111 See, e.g., A/CN.9/526 } 59; A/CN.9/616 } 22. By way of example, attention was drawn to a nonvessel operating carrier who failed to identify itself in the contract particulars as such. In this scenario, the registered owner would be presumed to be the carrier and be held responsible for the entire journey. For this reason the presumption was found inappropriate. As for the problem see also Zunarelli (2009), p. 1017. 112 An alternative would have been to restrict the application of the presumption only to the sea-leg of the transportation. As for practical and legal difficulties that could be caused through such a restriction see Sturley (2006), p. 439. 113 During the drafting period several other alternatives were proposed instead of creating such presumptions. The alternatives aimed to put penalty on the carrier that did not identify its name in the contract particulars. It was suggested that the carrier shall lose the benefit of the time bar or that the time bar period to commence only when the carrier was properly identified. The other alternative ought to deprive the carrier of the benefit of the package limitation. As for the alternatives see A/CN.9/WG.III/WP.62 } 29; A/CN.9/WG.III/WP.70 with fn. 2. 114 A/CN.9/616 } 24. 107
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institution, would be in the better position to identify the contracting carrier,115 as it should, at least indirectly, have some connection with the carrier.116 The purpose of the presumption was introduced as to force the registered owner to share key information relating to the identity of the carrier.117 Additionally it was indicated that the principle of the registered owner to assume responsibility has already been accepted under various national legislations and international conventions.118 Against the background of these supporting considerations, the presumptions were finally adopted.
6.5.3
Preconditions
In order for any presumption under Art. 37(2) to arise, two preconditions have to be jointly fulfilled. These two preconditions might be analysed as follows.
6.5.3.1
Breach of Art. 36(2)(b)
Literal Construction According to Art. 37(2)[a], the first requirement for any presumption to operate is that the contract particulars fail to identify the carrier pursuant to Art. 36(2)(b). This latter provision says, as was already considered earlier,119 that the contract particulars shall include “the name and address of the carrier”. It follows that, on a literal reading, Art. 37(2) ought to be triggered if either the name or the address was absent from the transport document or record. Missing Address Such an understanding was already criticised during the preparatory work. It was questioned whether the presumption would still apply if the only missing 115 It was expressed that financial institutions may obtain appropriate guarantees from the operator, see A/CN.9/WG.III/WP.70 } 5. As for the support see also Sturley (2006), p. 437. It was indicated that the provision would enable the banks to put commercial pressure on the bareboat charterers to identify the carrier in the transport document, Diamond (2009), p. 508. 116 It was alleged that the registered owner under any circumstances would be in a position to have knowledge about the party that booked cargo in its ship, see A/CN.9/WG.III/WP.62 } 28, also see Sturley (2006), p. 437. 117 A/CN.9/WG.III/WP.62 } 29. 118 A/CN.9/526 } 58; A/CN.9/WG.III/WP.62 } 28; A/CN.9/616 } 25; A/CN.9/WG.III/WP.70 } 5. International Conventions given as examples were those on Civil Liability for Oil Pollution Damage (1969, 1992), Maritime Liens (1926) and Arrest of Ships (1952). 119 See supra 6.4.1.
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information was the address of the carrier, who was otherwise clearly identified by name in the contract particulars.120 In the further course of discussions, this question would not appear to have been addressed, at all. A literal construction on the basis of the wording alone would not appear to shed much light on this issue. Indeed, the provision reads at its outset: “If no person is identified”. By using the word “person”, the Drafters may perhaps have intended to refer only to the “name” of the carrier. However, this argument may also be used in exactly the opposite direction. It might be argued that the Drafters did choose “person” over “name” so as to include in the reference also the “address”. Such an argument is supported by the explicit reference to Art. 36(2)(b), and might be further supported by the language in Art. 37(1), where reference is made to the identification of the carrier “by name” as opposed to the “name and address” or “person”. As such, an analysis of the wording proves to be inconclusive. It would seem, however, that the rule set out in Art. 37(1) is the key to solving this problem. Indeed, Art. 37(1) considers the identification of the carrier by name in the contract particulars as sufficient for the purposes of that rule to apply. As such, the carrier identified by name in the transport document or record will be treated as the carrier and remain so, even if information on its address was absent. It follows that Art. 37(2) cannot apply if the only missing information was the address, because in this scenario Art. 37(1) would already be applicable. Consequently, Art. 37(2) would come into operation only if the contract particulars failed to identify the name of the carrier. If this was the true meaning of Art. 37(2), then the wording would not appear to be consistent with Art. 37(1). Indeed, a better phrase to open Art. 37(2) might have read “If no carrier is identified by name in the contract particulars, but the contract particulars (. . .)”. The reference to Art. 36(2) (b) ought to be disregarded, as it was not considered necessary in Art. 37(1) and does not add anything other than confusion to Art. 37(2).
6.5.3.2
Name of the Ship
The second prerequisite for the application of the presumption is stated in Art. 37(2) [b] to the effect that “the contract particulars indicate that the goods have been loaded on board a named ship”. Whereas Art. 37(2)[a] refers explicitly back to Art. 36(2)(b), a reference to the corresponding Art. 36(3)(b) is absent from Art. 37 (2)[b]. Indeed, Art. 36(3)(b) provides that the contract particulars should include the “name of the ship, if specified in the contract of carriage”. Neither the CMI Draft nor any other subsequent Draft prepared by the Secretariat included such a recommendation.121 The name of the ship as a contract particular was added only at the A/CN.9/WG.III/WP.62 } 33. A provision corresponding to Art. 36(3) was not available in the [2007] Draft WP.101. The relevant Art. 38 in the [2007] Draft WP.101 was approved by the WG and referred to the Drafting Group, see A/CN.9/645 } 131. During the preparatory work of the WG, a proposal was submitted for the contract particulars to include the information relating to the name of the ship. 120 121
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41st Session of UNCITRAL.122 It appears that, following addition of this recommendation to the catalogue in Art. 36, the Drafters did not come back to Art. 37(2)[b] to include a reference similar to the one in Art. 37(2)[a]. In any event, the validity of the transport document or record will not be affected by the absence of the “name of the ship” (Art. 39[1]).123 The primary objection against the “named-ship-requirement” in Art. 37(2)[b] was that the transport might actually be performed by a ship other than the one named in the contract particulars.124 Especially in liner transportation (Art. 1[3]), to which the Rotterdam Rules apply primarily (Art. 6), the wide-spread use of “substitution clauses”125 would entitle the carrier to change the ship at its own discretion. In such cases, the opposing camp did find it inappropriate that conclusive reliance be placed on the information in the contract particulars. It was questioned whether the registered owner of a ship named in the contract particulars would be presumed to be the carrier although the goods were actually carried on another ship.126 The position would be even worse, one may add for the sake of argument, if the owner was not even aware of the fact that its ship was so named. The problem was thought likely to arise because both the transport document and record may be issued upon receipt of custody of the goods by the carrier, long before they are loaded onto a ship (Art. 1[14][a] and [18][a], Art. 12[1]). It has been pointed out that, on a literal interpretation, Art. 37(2)[b] may well allow such a However, it was expressed that inclusion of a name of the ship is not always possible in multimodal transport. Since the scope of the Draft Instrument was designated as door-to-door, it was thought impossible for a non-vessel operating carrier to include a ship name, see A/CN.9/ 621 } 274. 122 Angola, Benin, Burkina Faso, Cameroon, Congo, Coˆte d’Ivoire, Democratic Republic of the Congo, Equatorial Guinea, Gabon, Ghana, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Nigeria, Senegal, Togo submitted a joint comment on the Draft Convention. Since the name of the ship was held as an essential information, it was suggested that the Draft Convention ought to include the relevant information in the contract particulars, see A/CN.9/658/Add.1 } 13 et seq. At its 41st Session, UNCITRAL considered the [2008] Draft 645. According to the prevailing view, the wording concerning contract particulars was found incomplete. It was expressed that banks often required the shipper to present bills of lading that should include the name of the vessel, on which the goods were loaded, see A/63/17 } 112. In response it was indicated that the relevant provision listed only the mandatory contract particulars and the parties may agree to include other particulars that they see commercially desirable. In addition it was further indicated that in the case of multimodal transport, the name of the vessel may not be final at the time the transport document was issued, see A/63/17 } 114. 123 UNCITRAL, considering the fact that inaccuracy of the information listed in the article did not affect the validity of the transport document, decided that the expanded list would not affect trade usage. Therefore, it was decided to add the proposed list into the third paragraph of the article, see A/63/17 } 118. 124 A/CN.9/WG.III/WP.62 } 32; Sturley (2006), p. 435. 125 Such as cl. 6 in the Conlinebill 2000 (as for the sample copy see www.bimco.org); as for other examples see e.g. Gaskell et al. (2000), chapter 5, pp. 161 et seq. 126 Sturley proposed in his article that was published after the [2006] Proposal WP.70 to redraft Art. 40(3) in the [2005] Draft WP.56 relying on the fact of actual carriage, See Sturley (2006), p. 438.
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conclusion to be drawn.127 However, it is submitted that the clear wording of Art. 37(2)[b] leads to exactly the opposite direction. Indeed, the provision reads that “the contract particulars indicate that the goods have been loaded on board a named ship”. The “contract particulars” are defined in Art. 1(23) as information in a transport document and record. If this definition was inserted in Art. 37(2)[b], the provision would read as follows: “the information in the transport document or record indicates that the goods have been loaded on board a named ship”. Accordingly, Art. 37(2)[b] becomes applicable only if and whenever the goods have been loaded onto a named ship and this state of affairs has been so recorded in the transport document and record. It follows that, contrary to other provisions of the Rotterdam Rules, Art. 37(2)[b] pre-supposes that loading onto a specific ship has already been concluded. If so, the registered owner of that ship would have the connection with the contract as anticipated by the presumption in Art. 37(2)[c]. It ought to be kept in mind that the issuance of a transport document or record certifying loading onto a named ship without this having actually been completed would constitute fraud. As such, the transport document or record would not have any legal effect, which would bar the application of any presumption under Art. 37 (2). As a matter of practice, this would mean that Art. 37(2) is only applicable to bills of lading, sea waybills or other transport documents or records, which are clearly marked “shipped”. Conversely, documents, such as a multimodal transport operator’s or freight forwarder’s through bill of lading issued at the inland premises of the shipper and marked “received for carriage” will not trigger Art. 37(2), unless and until such a document is marked “shipped on board the M/V X”. In conclusion, the second requirement under Art. 37(2)[b] is that a transport document or record has been issued after completion of loading, certifying that loading has been so completed and naming explicitly the name of the ship. Art. 37(2) does not apply at all if loading was not yet completed or was never effected onto the ship named in the transport document or record. If this was the true understanding of the provision, most of the concerns raised by the critics would actually be covered. Once Art. 37(2)[b] is satisfied, subsequent changes in the carrying ship would not affect the position. In particular, if the goods were transhipped after issuance of the transport document or record, the registered owner of the ship so named therein would still be bound by the presumption.128 On the other hand, the prerequisite of Art. 37(2)[b] would not be fulfilled if the transport document or record issued after loading failed to name the ship, or loading onto the ship named in the transport document or record, which was issued at the inland premises of the shipper, was never effected.129
127
Zunarelli (2009), p. 1016. Sturley addressed the problem and indicated that such conclusion should be avoided even by the most formalistic courts and confirmed the possibility of the provision to incur an invitation to fraud, see Sturley (2006), p. 435. 128 See Sturley (2006), p. 438. 129 See Sturley (2006), p. 438. Zunarelli defined this alternative as “shipped” transport document, see Zunarelli (2009), p. 1016.
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179
Registered Owner Presumed as Carrier
If and whenever the preconditions set out in Art. 37(2)[a] and [b] are jointly satisfied, a presumption is created under Art. 37(2)[c], which might be rebutted under Art. 37(2)[d] or Art. 37(2)[f], as discussed further below.
6.5.4.1
Presumption
The Rule in Comparison to German and Turkish Law Once the criteria defined in Art. 37(2)[a] and [b] are jointly met, “the registered owner of that ship is presumed to be the carrier” (Art. 37(2)[c]). It follows that in the working example the leasing company registered in Panama as the owner will be treated as the carrier. This choice may appear novel on an international level. It has, however, been a long-established rule in German and Turkish law. Indeed, in accordance with Art. 1 No. 7 of the German Act130 of 10 August 1937, } 644 of the German Commercial Code131 had been revised to the effect that the registered owner of the ship, onto which the goods were loaded, will be deemed to have been the carrier, provided that the bill of lading did not name the carrier and was signed by the master or another agent of the registered owner.132 This rule was adopted133 into Art. 1099 of the Turkish Commercial Code.134 The additional requirement under the German and Turkish rules, that the bill of lading must have been signed by an authorised representative of the owner, is absent from Art. 37(2). However, this absence is remedied by the options of rebuttal granted to the registered owner, which are not recognised under the German and Turkish rules.
Dual Registration If the ship was under dual registration for flagging purposes, the primary (first) registry is to be taken into consideration, as that registry would be decisive in
Gesetz zur Aenderung von Vorschriften des Handelsgesetzbuchs u€ber das Seefrachtrecht, Reichsgesetzblatt 1937 I, p. 891. As for the official report see Amtliche Begruendung, Deutscher Reichsanzeiger und Preussischer Staatsanzeiger 1937, Nr. 186, p. 1; as for detailed information on this Act see Gramm (1938), pp. 72 et seq.; Gramm (1937), p. 1281. 131 Handelsgesetzbuch (10 May 1897), Reichsgesetzblatt 1897, p. 219. 132 Detailed commentary on this provision is available from Rabe (2000), } 644, pp. 714 et seq. 133 As for detailed information regarding the reception of German Maritime law in Turkey see Atamer (2011), } 5.1 through to } 5.3; Atamer (2009a), at pp. 92 et seq.; Atamer (2010a), at pp. 51 with fn. 17 et seq. 134 Turk Ticaret Kanunu no. 6762 (29 June 1956), Resmi Gazete no. 9353 (9 July 1956). 130
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respect of ownership, mortgages and other real rights on the ship.135 Accordingly, if in the case of the working example, the ship was flagged-out from Panama and registered on a temporary basis in Turkey for flagging purposes,136 it will still be the entry at the Panamanian Registry, which decides who the owner is. Unregistered Ships The Drafters would appear to have assumed that the respective ship would always be entered with a registry; as such, no rule is provided for the alternative that the ship was not registered at all. Given that the Rotterdam Rules are meant to apply to international transports (Art. 5), the possibility of an unregistered ship may not arise in practice. In the unlikely event that it did, the “registered owner” would have to be construed, by way of analogy to recent international legislation,137 as “the person or persons owning the ship at the time of” issuance of the transport document or record. 6.5.4.2
Rebuttal
The presumption created according to Art. 37(2)[c] is of a prima facie nature only.138 Indeed, any registered owner, who is deemed to be the carrier under this rule, is provided with two alternative remedies to destroy such a presumption. It ought to be noted, however, that the registered owner, who set aside the presumption of being the carrier, may still be considered as a maritime performing party pursuant to Art. 1(7). This will be the case, particularly, if the ship was used by the carrier on the basis of a time or voyage charter agreement, under which possession of the ship would be maintained by the owner. If so, the owner’s liability may still arise under Art. 19. Proof of the Bareboat Charterer or Other “Operator” The Rule The first option granted to the registered owner under Art. 37(2)[d] is proof of a bareboat charter agreement. In order to discharge this onus of proof, the registered owner is required to (1) prove that the ship was under a bareboat charter at the time 135 The same solution is adopted in Art. 16(b) of the Geneva International Convention on Maritime Liens and Mortgages, 1993, in respect of mortgages, “hypothe`ques” and charges. 136 So as to acquire the all-important right of cabotage. 137 See, e.g., Art. 1(8) of the Nairobi International Convention on the Removal of Wrecks, 2007. 138 During the preparatory work, it was proposed that the relevant provision ought to create an irrebuttable presumption. However, this suggestion did not receive support, see A/CN.9/526 } 58.
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of the carriage, (2) identify the bareboat charterer and (3) indicate its address. If all these three requirements are met, the presumption, which had arisen under Art. 37 (2)[c], will give way to a new presumption, according to which the bareboat charterer will then be presumed to be the carrier.139 Such an opportunity had been provided already in the second sentence of Art. 8.4.2 of the CMI Draft.140 The wording was amended141 in conformity with the [2006] WP.79 Proposal142 and accepted by the WG at the 19th Session.143
Admissible Evidence Art. 37(2)[d] explicitly refers to a “bareboat charter”. However, a definition is not supplied, as indeed Art. 37(2) and the supplementary Art. 65 are the only two provisions, where this expression is used. As a matter of practice, the submission as evidence of an agreement concluded on the BARECON 2001 or any other standard form ought to suffice for these purposes. Indeed, the information provided in BARECON 2001 Boxes 4,144 5145 and 21146 in conjunction with cl. 10(b)147 would meet the requirements set forth in Art. 37(2)[d]. In some jurisdictions148 such as Germany149 and Turkey,150 as well as under recent international instruments,151 ships registered in one Country are allowed to fly the flag of another Country temporarily, if certain preconditions are met and a registration to this effect 139 It has been suggested that Art. 37(2) provides a solution to the problem relating to the unavailability of public registers for bareboat charters, see Williams (2009), p. 202. 140 The second sentence of Art. 8.4.2 of the CMI Draft reads “. . .[t]he registered owner can defeat this presumption if it proves that the ship was under a bareboat charter at the time of the carriage which transfers contractual responsibility for the carriage of the goods to an identified bareboat charterer. . .], see A/CN.9/WG.III/WP.21 } 156 et seq. 141 As for the amended text see A/CN.9/WG.III/WP.81 p. 31. 142 See A/CN.9/WG.III/WP.79 } 5. 143 A/CN.9/621 } 288. 144 The name of the bareboat charterer and its place of business should be indicated in Box 4. 145 The name of the ship, its call sign and flag are the relevant information to be indicated in Box 5. 146 The charter period is to be mentioned in Box 21. 147 As for the wording of this provision see the working example supra 6.2.1. 148 As for further examples see, among others, Coles and Watt (2009), chapter 4 and also under each Country entry; Davis (2005), chapter 34. 149 Art. 11 Gesetz €uber das Flaggenrecht der Seeschiffe und die Flaggenf€uhrung der Binnenschiffe (Flaggenrechtsgesetz) (8 February 1951), Bundesgesetzblatt 1951 I, p. 79 (¼ II, p. 6) in conjunction with Bekanntmachung (26 October 1994), Bundesgesetzblatt I, p. 3140; as for a detailed discussion of this provision, see Dimigen (2000), pp. 71 et seq. 150 Art. 824 of the Turkish Commercial Code as amended by Art. 3 of the Act no. 5136 (20 April 2004), Resmi Gazete no. 25446 (28 April 2004). 151 Art. 16 of the Geneva International Convention on Maritime Liens and Mortgages, 1993. As for the drafting history of Art. 16 see Berlingieri (1996), at p. 285 et seq.; as for detailed information on this provision see Berlingieri (1995), at p. 74; Wersel (1996), pp. 122 et seq.; Suzel (2008), pp. 605 et seq.
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is obtained from the relevant authorities. These provisional flag-out/flag-in procedures are usually conducted on the basis of bareboat charter agreements.152 In the context of Art. 37(2)[d], certificates issued by the authority of the provisional flag State may also serve as evidence, provided that the certificate proves the existence of a bareboat charter and the identity with address of the charterer.
Financial Leasing, Usufruct and Other Agreements for the Transfer of Possession The Drafters appear to have focused from the outset on “bareboat charters”. However, there are quite a number of other legal arrangements, under which possession of the ship is transferred by the registered owner onto another party, with the latter then employing the master and crew and maintaining the seaworthiness of the ship. Financial leasing agreements immediately come to mind, as these agreements are generally qualified as siblings to the bareboat charters. Whereas the former provides for the financial letting, the latter is the operational variant.153 Another example would be the case where a registered owner grants a usufruct on the ship to another party.154 In this alternative, the party receiving the right of use would become possessor of the ship as well as employer of the master and crew. In all such cases, the possessor of the ship would qualify as the “operator”. Indeed, it would have to be held that the term “operator” as used without definition in International Conventions155 describes a person or entity that has lawfully obtained possession of the ship from the owner or other previous possessor.156 It might be questioned whether in these cases the registered owner would still be entitled to the option granted in Art. 37(2)[d]. On a strict literal reading of this provision, its application appears to be limited to what it says, namely to bareboat charters. In support of this assumption, one may continue to argue that the Drafters would have
152
See the designated Part V attached to the BARECON 2001 form. See Davis (2005), } 1.7 and 1.8; Dimigen (2000), p. 30; Athanassopoulou (2005), pp. 112 et seq.; as from an economical point of view see also Stopford (1997), } 6.7. 154 This option is currently limited under German (Art. 9 Gesetz €uber Rechte an eingetragenen Schiffen und Schiffsbauwerken (15 November 1940), Reichsgesetzblatt 1940 I, p. 1499: Bundesgesetzblatt III, Gliederungsnummer 403–4) and Turkish (Art. 878 of the Turkish Commercial Code) law. However, other jurisdictions may not carry similar restrictions, as indeed Art. 1059(1) of the Draft Turkish Commercial Code has granted complete freedom in this respect. 155 Art. 1(2) of the International Convention on Limitation of Liability for Maritime Claims, 1976; Art. III(4)(c) of the International Convention on Civil Liability for Oil Pollution Damage, 1992; Art. 4(1) of the International Convention on Maritime Liens and Mortgages, 1993; Art. 3(1)(e) of the International Convention on Arrest of Ships, 1999; Art. 1(1)(b) of the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 2002. 156 See, e.g., the definition provided in Art. 2 of the United Nations Convention on Conditions for Registration of Ships, 1986: “Operator” means the owner or bareboat charterer, or any other natural or juridical person to whom the responsibilities of the owner or bareboat charterer have been formally assigned. As for detailed reasons see Atamer (2006), pp. 158–159. 153
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used appropriate terminology, if they intended to create similar options for all types of agreements where possession of the ship is transferred. However, it is submitted that such a narrow construction would be in conflict with the true intention behind Art. 37(2)[d]. This provision purports to remedy any injustice, which may arise because of the presumption created in Art. 37(2)[c] to the effect that the registered owner of the ship is deemed to be the carrier for the door-to-door performance of the entire contract. On the basis of the bareboat charter, the owner will have transferred possession of the ship onto the charterer, who would thereby have become responsible for seaworthiness and manning. As such, the registered owner would no longer have any involvement whatsoever in the performance of the carriage. Therefore, the right is granted to the registered owner to identify the bareboat charterer as the proper counterparty for any cargo claim. If this was the true reason behind the provision, then it would follow that the same remedy ought to be made available to the owner in every case where possession of the ship, together with the responsibility for seaworthiness and manning, is transferred to an operator, albeit the underlying agreement is not literally referred to as a bareboat charter but as financial leasing, usufruct or the like. Indeed, it would be an absurd result to decline in the working example the leasing company the right under Art. 37 (2)[d] because that agreement was in effect together with Part IV, whereas an owner who had lent the ship on the basis of a BARECON without Part IV would be entitled to the same right. Against this background, it might be assumed that the Drafters157 may well have used the expression “bareboat charter” widely so as to encompass any sort of operational and financial leasing of the ship.158 If so, it would certainly have been useful to include a definition in Art. 1 for clarification. In any event, if it was to be assumed that “bareboat charter” did include financial leasing agreements, then the translation into many languages may prove to be difficult, as separate terminology exists in some languages regarding the operational159 and financial160 leasing of ships.
157 At the third meeting of the Transport Law Sub-Committee in July 2000 (as to which meeting see Sturley (2006), p. 431), the Spanish delegate Mr. Jose´ Alca´ntara suggested that the term “bareboat” ought to be preferred over “demise”, see (2000) CMI Yearbook, at p. 283. If this was the final impetus, then perhaps the delegates present at that meeting ought to clarify what was meant. 158 This may have been based on, say, Art. 2 of the United Nations Convention on Conditions for Registration of Ships, 1986, which defines the bareboat charter as “a contract for the lease of a ship, for a stipulated period of time, by virtue of which the lessee has complete possession and control of the ship, including the right to appoint the master and crew of the ship, for the duration of the lease”. Alternatively, reliance may have been placed on the definition adopted in The “Guiseppe di Vittorio” [1998] Lloyd’s Law Reports 136 (C.A.), at p. 156 col. 2 per Evans, L.J. 159 “Bareboat charter” in German, “ciplak gemi kirasi” in Turkish. Suzel and Damar (2010), p. 171 have used this phrase in their translation. 160 “Schiffsleasing” in German, “finansal gemi kirasi” in Turkish.
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Duration It is required under Art. 37(2)[d] that the bareboat charter was in force “at the time of the carriage”. Given that the transport over longer distances may take quite a long time, the question may arise as to whether the charter would have to be in place for the whole duration of the carriage from door-to-door. As has been identified earlier, by virtue of Art. 37(2)[b], the presumptions in this provision do come into operation only if the goods were actually loaded on board a named ship. It follows that the earliest point, at which the bareboat charter must have been concluded, would appear to be the date, on which loading commenced. By way of an argumentation exercise, it might be further discussed as to what would happen if the charter was discontinued and the ship repossessed by the owner before delivery of the goods. As a matter of practice,161 repossession may proceed on the basis of a Court order or by way of the parties’ mutual consent. It may or may not happen at a specific port, and may or may not involve a change of the crew. In any event, it might be suggested that the registered owner who has repossessed the ship, ought not to be entitled to the remedy in Art. 37(2)[d] to the extent that the claimant is able to prove in accordance with Art. 17(1) that the loss, damage or delay, or the event or circumstance that caused or contributed to it took place after the owner’s repossession. However, even in such a case, the owner would still be entitled to the second rebuttal option in Art. 37(2)[f].
Address or Domicile? Whether the term “address” in Art. 37(2)[d] would have to be construed as “domicile” has already been considered earlier.162 It is submitted that the considerations set out there apply here, as well.
Bareboat Charterer Not Carrier On the basis of the wording of this provision, it would appear to be sufficient for the registered owner to formally prove the existence of a bareboat charter. Should the owner discharge this onus of proof, the presumption in Art. 37(2)[e] will be triggered, it seems, automatically. According to the unconditional wording of this rule, the bareboat charterer need not be the carrier described in Art. 1(5). Even if the registered owner knew or ought to have known that the bareboat charterer was not the carrier, it would still be discharged from the presumption under Art. 37(2)[c] by merely proving the bareboat charter. This conclusion is further supported by the use of the word “[a]lternatively” at the commencement of Art. 37(2)[f], which will now be considered.
161
See cl. 29 BARECON 2001. See supra 6.4.1.3.
162
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“Identifying” the Carrier Drafting History The registered owner, who is deemed to be the carrier under Art. 37(2)[c], is given a second alternative to destroy this presumption. Art. 37(2)[f] provides the registered owner with the right to prove who the carrier is and indicating its address. The CMI Draft did not include a corresponding opportunity. Art. 8.4.2 of the CMI Draft offered the registered owner only the option of proving a bareboat charter.163 However, such a limitation received objections.164 It was expressed that the opportunity of the registered owner to defeat the presumption should not be restricted.165 It was further questioned whether the registered owner may rebut the presumption by proving that the time charterer was the carrier.166 The option granted in Art. 37(2) [f] was first proposed by the Italian delegation prior to the 17th Session in the [2006] Proposal WP.70.167 The suggested provision read, in its material part, as follows: (. . .) The registered owner can defeat this presumption if it identifies the carrier who issued the transport document in which its name and address should have been indicated (. . .)
This proposal was creating the presumption only against the registered owner. On the other hand, the only option granted to the registered owner was to prove who the carrier actually was.168 It is submitted that this proposal, rather than operating with vague presumptions, did consider correctly the legal tie between the carrier and the transport document. Subsequently, however, the [2006] Proposal WP.79 was submitted in preparation for the 18th Session. Although Italy was one of the co-drafters of the [2006] Proposal WP.79, the policy adopted in the [2006] Proposal WP.70 had been changed, and the registered owner was now provided with both alternatives to rebut the presumption. In support of this new proposal, specific reference was made to bills of lading signed by or on behalf of the master.169 It was pointed out that in such cases: it is rarely stated whether the master has signed pursuant to the authority of the owner of the vessel or the authority of somebody else, such as a time-or voyage charterer. (. . .). To address this issue
A/CN.9/WG.III/WP.21 } 156 et seq. As for the objections see A/CN.9/526 } 59; A/CN.9/WG.III/WP.62 } 33. The provision was also criticized by Sturley who defines the bareboat charter as the first step in a chain of contracts, wherefore the opportunity of the registered owner should not be limited in the context of bareboat charters, see Sturley (2006), p. 438. 165 A/CN.9/526 } 59. 166 It was found unclear whether it was the only way to rebut the presumption, see A/CN.9/WG.III/ WP.62 } 33. 167 See A/CN.9/WG.III/WP.70 } 3. 168 According to Sturley (2006), p. 438, the [2006] Proposal WP.70 was a significant improvement, as it did no longer send the claimant on a journey to discover the carrier. 169 See A/CN.9/WG.III/WP.79 } 5. 163 164
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says the Proposal, the alternative solution is introduced in Art. 37(2)[f], together with the same solution in Art. 37(2)[g] for the bareboat charterer. At the 19th Session, it was suggested that the draft provision be amended in a way giving each person in the chain of sub-contracts an opportunity to rebut the presumption.170 Another proposal was made to delete the word “bareboat” from the second paragraph.171 However, this proposal was opposed on the grounds that a single reference to a “charter” would also encompass a time and voyage charter.172 Ultimately, the suggestions in the [2006] Proposal WP.79 have made their way into the final text with only minor alterations in terminology. The “Carrier” to Be Identified Against the background of this drafting history, it appears that the ultimate understanding of the Drafters has been to the effect that the presumption may only be defeated by identification of the carrier as defined in Art. 1(5). As from the owner’s perspective, the last circle in the chain, which is the first circle as against the shipper, ought to be identified. Should the registered owner succeed to identify the original party, which concluded the contract of carriage with the shipper, then the presumption under Art. 37(2)[c] will be set aside. If this was the correct understanding of the provision, it would follow that the identification of, say, a time or voyage charterer or ship manager would not be sufficient for these purposes, when it was, such as in the working example, actually a freight forwarder, who entered into the contract with the shipper. “Identifying” the Carrier According to Art. 37(2)[d] the registered owner is required to “prove” the bareboat charter. Equally, Art. 37(3) provides a claimant with the right of “proving” who the carrier really is. However, under Art. 37(2)[f], the owner may rebut the presumption by “identifying” the carrier. The use of different terminology within the same provision and the same context must give rise to the question as to what exactly was meant by each of these terms. On a literal reading, “identifying” might be understood as a more loose exercise in comparison to “proving”. Perhaps the Drafters considered sufficient that the registered owner would supply the Court with some sort of evidence, which would give an indication who the carrier might be. Assuming that the ship was on time charter, this would already indicate by itself that the carrier ought to have been some person other than the owner, presumably the time charterer. However, the time charterer may well have concluded, such as in See A/CN.9/616 } 24. See A/CN.9/621 } 285. 172 It was expressed that in practice the bareboat charterer is treated in the same way as the shipowner, and should therefore have the same opportunities to rebut the presumption, whereas the position is different in respect of the voyage and time charterer, see A/CN.9/621 } 286 et seq. 170 171
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the working example, an agreement with a freight forwarder, who had contracted with the shipper. In such a case, would it still be sufficient for Art. 37(2)[f] to apply that the registered owner identifies the time charterer as a possible carrier, or would the owner have to prove with whom the shipper has concluded the contract of carriage? Notwithstanding the ambiguous wording, it is submitted that the reasons given by the Drafters for inclusion of this provision would validate the latter solution. As such, Art. 37(2)[f] ought to have been drafted and should in any event be construed as follows: Alternatively, the registered owner may rebut the presumption of being the carrier by proving who the carrier under the contract of carriage is and indicating its address [domicile].
Proof or “identification” of any other contract would not rebut any presumption under Art. 37(2)[c]. Carrier Known to Registered Owner The question might be raised whether the registered owner would be entitled to rebut the presumption of being the carrier (Art. 37(2)[c]) by proving the bareboat charter (Art. 37(2)[d]), even if the carrier was actually known or ought to have been known to the owner. As a matter of practice, such a dispute is unlikely to arise as the operation of the ship will have been transferred to the bareboat charterer, so that there would be little possibility, if at all, for the registered owner to become aware of the carrier in a specific case. Nevertheless, if such a dispute did occur, the use of the term “alternatively” at the commencement of Art. 37(2)[f] would suggest that the registered owner may freely choose as between Art. 37(2)[d] and Art. 37(2)[f]. This would be a strange result if the owner knew or ought to have known the identity of the carrier. Nevertheless, under the explicit wording of the provision, the owner may simply walk out of the case by submitting evidence of the bareboat charter. In such cases, the bareboat charterer would still be protected under Art. 37(2)[g], which will be considered below. Who will really suffer from this bouquet of options is the consignee and its insurer, as will be seen later in the text.
6.5.4.3
Validity of IOC Clauses Under Art. 37(2)
The Problem A difficult problem is likely to arise if the transport document or record did not identify the carrier by name, but did contain an IOC clause to the effect that the document or record is to take effect as a contract concluded with the registered owner.173 In this scenario, on a first sight, Art. 37(1) cannot apply because the 173
As for a typical wording see supra fn. 97.
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name of the carrier is missing. As such, under the chain of logic in Art. 37, the second paragraph ought to come into operation. If so, and assuming that Art. 37(2) [b] is also satisfied, the first presumption under Art. 37(2)[c] will arise, according to which the registered owner will be treated as the carrier. This outcome may appear to be identical with the function of the IOC clause. However, if the IOC clause was to be held valid for lack of any conflict with Art. 37(1), then the carrier will actually have been identified in the contract particulars as the “registered owner of the ship”. If so, the first criterion set out in Art. 37(2)[a] (“no person is identified”) would no longer be met. Therefore, it may well be argued that Art. 37 (1) ought to apply in respect of the registered owner, who is deemed to be the carrier by virtue of the IOC clause. Accordingly, the question would be whether the registered owner would still be entitled to the options under Art. 37(2)[d] and [f]. Turning to the working example, the question would be whether the ship leasing company could be held liable under Art. 37(1) on the basis of a bill of lading containing an IOC clause and signed “as agents”. Put differently, could an IOC clause be treated as a waiver of the registered owner to exercise its rights under Art. 37(2)[d] and [f]?
Literal Construction By way of literal construction the following might perhaps be argued: as for the identification of the carrier, Art. 37(2)[a] refers back to Art. 36(2)(b). This may be construed to the effect that an explicit identification of name is required, as opposed to some IOC clause in small print on the reverse side of the transport document. If so, it might be said that an IOC clause would not serve as an identification within the scope of Art. 37(1) and Art. 37(2)[a]. Consequently, the registered owner might be held entitled to the rebuttal options of Art. 37(2)[d] and [f]. In order to see whether the reference in Art. 37(2)[a] to Art. 36(2)(b) could be attributed such an understanding, the drafting history has to be consulted again. The reference to Art. 36(2)(b) first appeared at a later stage of the proceedings in Variant B of the [2007] Draft WP.81 as prepared by the secretariat.174 However, no reasons have been given for this inclusion, as indeed the alternative Variant A did not provide for any reference at all.175 It would follow that the drafting history is of no assistance.
Alternatives In order to solve this problem, it is submitted that a distinction ought to be made as to in whose name the transport document or record has been issued. 174
[2007] Draft WP.81 p. 31 with fn. 121; see A/CN.9/WG.III/WP.81. [2007] Draft WP.81 p. 31 with fn. 120; see A/CN.9/WG.III/WP.81.
175
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Transport Document or Record Issued by the Registered Owner As a general principle, both the transport document and record are to be issued by the carrier (Art. 1[14] and [18]). Accordingly, if the document or record contained an IOC clause, this would have to be understood as having been included by or on behalf of the carrier. Consequently, if the registered owner issued a transport document or record, which contained an IOC clause, the registered owner would thereby have identified itself as the carrier, as described in Art. 37(1). Consequently, in this scenario, it would not be open to the registered owner as carrier to use the options of Art. 37(2)[d] or [f]. By way of example, a freight forwarder might have actually concluded the door-to-door transport contract with the registered owner acting only as a maritime performing party (Art. 1[7]) for the port-to-port stage. Nevertheless, if the bill of lading was issued by the registered owner without naming the freight forwarder as carrier, then the registered owner will be deemed to be the carrier for the entire door-to-door performance according to Art. 37(2)[c], because the consignee will be receiving the goods in return for this bill of lading. The owner would then be entitled under Art. 37(2)[f] to prove that it was actually the freight forwarder, who concluded the contract with the shipper as carrier. However, if the same bill of lading had an IOC clause on the reverse side, this would identify the registered owner as the carrier pursuant to Art. 37(1). As such, the owner would now be deprived of any rebuttal options under Art. 37(2)[f].
Transport Document or Record Not Issued by the Registered Owner On the other hand, if the transport document or record was not issued by or on behalf of the registered owner, it is submitted that the IOC clause could not operate as a waiver of the rights granted in Art. 37(2)[d] or [f]. In this scenario, the time or voyage charterer, or the freight forwarder would have issued the transport document or record. Accordingly, the IOC clause would have been included without the knowledge or interference of the registered owner. If, even in such cases, it was held that the IOC clause would still operate against the registered owner within the scope of Art. 37(1), then the owner would have effectively lost the rights under Art. 37(2)[d] or [f] with the result that a conclusive presumption is created. Such presumption would not be limited to the port-to-port phase, but would extend to the entire door-to-door performance of the contract. It is submitted that the creation of such a conclusive presumption without the consent or involvement of the registered owner would run against the principles adopted in the drafting process of Art. 37. Indeed, it will be recalled that one of the solutions offered for the problem of the “unidentified carrier” was to hold the registered owner liable in any event. However, massive opposition was raised against this idea for several reasons. Therefore, the Drafters had explicitly abandoned this idea, and adopted instead the mechanism in Art. 37(2) whereby presumptions are created, all of which may be rebutted by proving, ultimately, who the carrier actually was. Against the background of this drafting principle, an IOC clause in a transport document or record, which was
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not issued by or on behalf of the registered owner, cannot take away the rights granted in Art. 37(2)[d] or [f]. If held otherwise, a person other than the registered owner would be waiving those rights and creating a conclusive presumption. Such a construction cannot be supported by the general principles of representation and agency.
6.5.5
Bareboat Charterer or Other Operator Presumed as Carrier
6.5.5.1
Presumption
If the criteria set out in Art. 37(2)[a] and [b] together with Art. 37(2)[d] are all satisfied, the presumption against the registered owner is replaced by the presumption that the bareboat charterer is the carrier (Art. 37(2)[e]). As was established earlier,176 the registered owner is entitled under Art. 37(2)[d] to prove the existence of any other type of agreement whereby the possession of the ship has been transferred to an operator, such as a financial leasing or usufruct agreement. It follows that the bareboat charterer or other operator of the ship will be presumed to be the carrier, provided that the registered owner can discharge the onus of proof under Art. 37(2)[d].
6.5.5.2
Rebuttal
The presumption created under Art. 37(2)[e] is also of a prima facie nature. According to Art. 37(2)[g], the bareboat charterer or, for that matter, the other operator of the ship is entitled to set aside the presumption. The CMI Draft included a similar opportunity,177 according to which the only way for the bareboat charterer to rebut the presumption was to prove that the ship was sub-bareboat-chartered.178 A new course was taken on the basis of the [2006] Proposal WP.79.179 In retrospect, however, it would appear to be ambiguous as to what exactly was meant by this Proposal. Indeed, it was proposed to add after what has ultimately become the first sentence of Art. 37(2), a new paragraph in the following terms: 176
See supra 6.5.4.2 “Proof”/“Financial Leasing”. The opportunity of the bareboat charterer to rebut the resumption was drafted in double square brackets as follows, “. . . [i]f the registered owner defeats the presumption that it is the carrier under this article, then the bareboat charterer at the time of the carriage is presumed to be the carrier in the same manner as that in which the registered owner was presumed to be the carrier.”, see A/CN.9/WG.III/WP.21 } 156 et seq. 178 According to Art. 22(a) of BARECON 2001, the sub-charter of the ship is subject to the prior written consent of the registered owner. 179 A/CN.9/WG.III/WP.79 } 5. 177
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Alternatively, the owner may defeat the presumption of being the carrier by identifying the carrier and indicating its address. The bareboat charterer may defeat any presumption of being the carrier in the same manner.
Given that these two sentences were part of a separate new second paragraph, one would have to assume that the option offered in the second sentence to the bareboat charterer is related exclusively to the first sentence of the same paragraph. If so, under this new alternative, the bareboat charterer would have been entitled to discharge the presumption only by proving who the carrier is. In other words, this Proposal would not appear to have granted the bareboat charterer the right to avoid the presumption by proving a sub-bareboat-charter. However, no clarification is provided in the Proposal as to whether this was the intention. At later stages of the preparations, the second paragraph was merged with the first so that Art. 37(2) became one paragraph consisting of three sentences. As such, in its latest incarnation, it would appear that the bareboat charterer is supplied under Art. 37(2)[g] with two alternative options “in the same manner” as the registered owner. The first alternative would be proof of a sub-bareboat-charter180 and the second alternative proof of the carrier under the contract of carriage.181 The earlier discussion in respect of these two alternatives is applicable here as well.
6.5.6
Time for Suit
6.5.6.1
The Rule
According to Art. 62(1), the time for suit182 based on a breach of any obligation under the Rotterdam Rules is 2 years. This period starts running as of the first day after delivery of the goods has been or ought to have been effected (Art. 62[2]). Since Art. 37(2) provides for several refutable presumptions, the limitation period indicated in Art. 62 may expire prior to the identification of the carrier. Such a danger is remedied in Art. 65 by providing the claimant with two additional periods. According to the opening words of this provision, “an action”183 is to be 180
As to which see in detail supra 6.5.4.2 “Proof”. As to which see in detail supra 6.5.4.2 “Identifying”. 182 As for the time for suit in the Rotterdam Rules see, Baatz (2009), pp. 195 et seq.; Thomas (2009), pp. 76–77; Berlingieri (2009), pp. 58–59. 183 In the [2003] Draft WP.32, Art. 71 did not carry a heading yet, and the provision read as follows, “[i]f the registered owner of a vessel defeats the presumption that it is the carrier under the article. . .”, see A/CN.9/WG.III/WP.32 p. 64. Subsequently, the corresponding provision of Art. 74 in the [2005] Draft WP.56 received the title “Actions against the bareboat charterer”, however the opening words of the relevant provision remained the same. No reasons were given for the choice of “actions”, see A/CN.9/WG.III/WP.56 p. 136. Thereafter, the heading of Art. 68 of the [2007] Draft WP.81 was altered as “Actions against the person identified as the carrier” and the relevant article was then drafted as follows “[a]n action against the bareboat charterer or the person 181
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commenced within either of these additional periods. However, the description in the principle provision of Art. 62(1) reads “judicial or arbitral proceedings”. It is submitted that the term “action”, which appears to have been lifted from Art. 64, is meant to have the same effect. Accordingly, “judicial or arbitral proceedings” against the persons identified under Art. 37(2)[e], [f] and [g] may be commenced even after the expiry of 2 years: (a) within the time allowed by the applicable law in the jurisdiction where proceedings are instituted or (b) within 90 days commencing from the day that either the carrier has been identified or the registered owner or the bareboat charterer rebut the presumption of being the carrier. If both alternatives collided in a specific case, the longer period is to prevail (Art. 65: “within the later of”). Now, these two alternatives ought to be considered separately.
6.5.6.2
Time Allowed Under Applicable Law
Art. 65(a) provides that if the limitation period determined according to the applicable law184 in the jurisdiction where proceedings are commenced is longer than 2 years (Art. 62[1]), the action against any person identified as carrier pursuant to Art. 37(2) may also be instituted within that period. Accordingly, this rule admits the possibility that the law applied by the Court may have available a supplementary provision to the effect that in Art. 37(2)-cases, any action against the parties so identified may be commenced within a specified period even after the expiry of the two-years period. This alternative has been criticised on the grounds that any applicable national law may thereby undermine the principal in Art. 62(1).185 The reference to the law applied by the court or tribunal hearing the case implies that a conflict-of-laws analysis has to be conducted in the first place. The question then is which law would govern this particular issue. The Court may find186 generally that the law of the carrier’s principal place of business is applicable on matters, which are not governed by the Rotterdam Rules. However, it is not clear whether the law governing claims against the carrier would also govern any additional limitation period for a claim identified as the carrier pursuant to article. . .”. The Secretariat explained that drafting clarifications and corrections were made to the text of the corresponding article in the [2005] Draft WP.56, see A/CN.9/WG.III/WP.81 p. 48 with fn. 198. 184 Reference to the national law was always considered as one of the alternatives during the preparatory work, see Art. 14.5(a) in A/CN.9/WG.III/WP.21 } 212 and A/CN.9/526 } 164 et seq.; Art. 71(a) in A/CN.9/WG.III/WP.32 p. 64; Art. 74(a) in A/CN.9/WG.III/WP.56 p. 136; Art. 68(a) in A/CN.9/WG.III/WP.81 p. 48 and A/CN.9/WG.III/WP.101 p. 47. 185 William Tetley et al., ‘Particular concerns with regard to the Rotterdam Rules’, http://www. iidmaritimo.org, pp. 5 et seq. (13 August 2010) 186 On the basis of, e.g., Art. 4 } 4 of the Convention on the Law Applicable to Contractual Obligations (Rome, 19 June 1980) (1980) Official Journal Law 266, p. 1, Consolidated version, 11/ 3/1999. As for the preparatory work on and construction of this provision see Giuliano and Lagarde (1980), p. 282, Art. 4 } 5. The Official Journal is available at http://eur-lex.europa.eu (13 August 2010).
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against a party other than the carrier, which is only deemed to be so pursuant to Art. 37(2). The solution to the problem may also vary depending on whether the State, whose law was found to be applicable, was a party to the Rotterdam Rules. It is submitted that the provision is likely to cause difficulties in practice.
6.5.6.3
Ninety Days
The other alternative is set out in Art. 65(b) in the following terms: Ninety days commencing from the day when the carrier has been identified, or the registered owner or bareboat charterer has rebutted the presumption that it is the carrier, pursuant to article 37, paragraph 2.
The provision has been lifted from the [2005] Draft WP.56187 to the [2007] Draft WP.81188 with consequential drafting changes. In the latter text, it has already appeared in its final version. Given that a comma separates from the previous parts the reference “to article 37, paragraph 2” at the end of the provision, it is to be assumed that this reference covers both of the preceding alternatives mentioned in Art. 65(b). If so, however, the phrasing would not appear to be fully consistent with Art. 37(2). Indeed, under that provision, the registered owner, bareboat charterer and other operator have the right to rebut the presumption by proving either who the (sub-)bareboat charterer or who the carrier is. As such, the phrase “when the carrier has been identified” as appearing in Art. 65(b) is already included in the phrase that appears immediately thereafter in the same provision (“the registered owner or bareboat charterer has rebutted the presumption”). Therefore, Art. 65(b) would have been more consistent with the rules in Art. 37(2) if the provision read as follows: Ninety days commencing from the day when the registered owner or bareboat charterer has rebutted the presumption that it is the carrier, pursuant to article 37, paragraph 2.
According to Art. 65(b), the extra time of 90 days189 starts running “from the day” of rebuttal. This has to be contrasted with Art. 62(2), which lets the limitation period commence “on the day” of delivery or assumed delivery, but does exclude 187 Art. 74[b] of the [2005] Draft WP.56 read as follows: “[. . .(b) 90 days commencing from the day when the registered owner [both [i] proves that the ship was under a bareboat charter at the time of the carriage; and] [ii] adequately identifies the bareboat charterer.]”. The [2005] Draft WP. 56 [ii] was added for the reason that the ninety day period would not be of assistance if the cargo claimant experienced difficulties in identifying the carrier, see A/CN.9/WG.III/WP.56 p. 137 with fn. 577. 188 A/CN.9/WG.III/WP.81 p. 48 with fn. 199. 189 The extension of the limitation period was always ninety days in the Draft Instrument see, Art. 14.5(b) in A/CN.9/WG.III/WP.21 } 212 and A/CN.9/526 } 164 et seq.; Art. 71(b) in A/CN.9/ WG.III/WP.32 p. 64; Art. 74(b) in A/CN.9/WG.III/WP.56 p. 136; Art. 68(b) in A/CN.9/WG.III/ WP.81 p. 48 and A/CN.9/WG.III/WP.101 p. 47.
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that first day from counting. How, then, is the extra time to be computed? Does the day, on which either option under Art. 37(2) has been satisfied, count as the first day of the period, or is that day to be excluded by way of analogy to the second sentence of Art. 62(2)? If consistency was thought to be an overriding virtue of an International Convention, the ninety-days-period under Art. 65(b) ought to be subject to the same computation principles under the Rotterdam Rules as this extra time is essentially an appendix to the limitation period in Art. 62, granted only to avoid any injustice that would be done to the claimant because of Art. 37(2). Therefore, the rule in the second sentence of Art. 62(2) ought to apply also to those extra periods.190 By way of academic argumentation, it might be discussed whether Art. 63 is also applicable to the extra time of Art. 65(b). Assuming, however, that a claimant, who is defeated under Art. 37(2), will already be under a great rush to commence new proceedings so as to finally obtain indemnity from the carrier, the problem is unlikely to arise in practice. If it did, a literal argument may say that Art. 63 explicitly refers only to the period in Art. 62, which might be construed to the effect that it does not apply to Art. 65(b). Alternatively, and for the sake of consistency, Art. 63 may also be applied to Art. 65(b), as discussed in the previous paragraph.
6.5.7
Procedural Evaluation
There can be no doubt that Art. 37(2) in conjunction with Art. 65 have been drafted with the best intentions to remedy a problem, which has caused uncertainty in practice to cargo claimants. The Drafters have apparently attempted to find a balance between the conflicting interests of the cargo claimants and the various parties involved in the operation of the ship. Looking at the final product, however, one cannot avoid the impression that the only parties to benefit from this new system will be the maritime lawyers. Indeed, the working example, which arises in this or similar form each day around the globe, may serve to illustrate this proposition. The Swiss insurer, who has become subrogated to the rights of the consignee under the bill of lading, seeks to commence recovery proceedings against whoever is liable. Assuming that the Rotterdam Rules have had a successful start and are applicable in all jurisdictions to be considered in the following, the first step to be taken by the claimant insurer would be to review the bill of lading. It will note that Art. 37(1) is not satisfied because no person is identified as carrier. As such, the insurer will move on to Art. 37(2). It will further note that the bill of lading indicates the ship, on board of which the container had been loaded (Art. 37(2)[b]). A quick 190 Generally on the subject of computation of time in Maritime law on the basis of the Roman law principles of tempus continuum, tempus utile, computatio naturalis and computatio a momento ad momentum see Atamer (2000), } 3 III 3 c, pp. 49 et seq.
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search on the internet will reveal that the ship is registered in Panama in the name of the financial leasing company. Accordingly, under Art. 37(2)[c] the insurer will assume that the lessor is the carrier, and will instruct lawyers in one of the competent courts listed in Art. 66(a), assuming that this provision applies to the “presumed carrier” scenario.191 In these proceedings, the lessor will rebut the presumption by proving, what would be the easiest way out, namely the existence of the bareboat charter. In practice, most legal proceedings would commence with an exchange of pleadings, followed by hearings, witness hearings, expert hearings and other interim measures. As such, even in the fastest litigation, it is unlikely that any legal procedure will be finalised in less than a year. This may be followed by appeals to at least one higher instance, perhaps two or more. Therefore, it may take at least 2–5 years for the Swiss insurer to obtain a final and binding judgement to the effect that the lessor has rebutted the presumption by proving that the Turkish lessee is the bareboat charterer (Art. 37(2)[d]). Taking advantage of the 90 days extra time (Art. 65[b]), the insurer may now commence fresh proceedings against the lessee. In those proceedings, however, it will now be the lessee who will take advantage of the rebuttal options. As there is no sub-bareboat-charter, the lessee will have to come forward with evidence in respect of the contract of carriage concluded as between the German freight forwarder as carrier and the Italian shipper. If the lessee discharged this onus of proof, this case will also be dismissed. The outcome might also be subject to appeals and then come to a final conclusion within another 2–5 years. The insurer, not getting tired of the battle, may then commence a third set of proceedings against the German freight forwarder. Thereby, the insurer will again benefit from the additional period of 90 days (Art. 65[b]). It would follow that, as the Rotterdam Rules stand, legal proceedings to “identify the carrier” may take as long as 10 or more years. It is submitted that such an outcome would not necessarily be in the best interest of cargo claimants, and would also entirely defeat the purpose of the limitation period in Art. 62. In respect of the corresponding extinction period set out in Art. III(6) subparagraph 4 of the Hague(–Visby) Rules,192 the House of Lords193 had concluded that an “obvious commercial need” is met by way of this provision, “namely, to allow shipowners, after that period, to clear their books”. The protection of shipowners
191 Given that Art. 37(2)[d] and [f] require explicitly that the “address” is proven, it may be assumed that legal proceedings against the parties described in Art. 37(2) including the registered owner may only be commenced at their domicile (Art. 1[29]). 192 Generally on the purpose and operation of this provision see Tetley (2008b), pp. 1623 et seq.; Berlingieri (1993); Boyd et al (2008), p. 394; Treitel et al. (2005), } 9–178; Gramm (1938), } 612, pp. 140 et seq.; Rabe (2000), } 612, pp. 614 et seq.; Atamer (1996), pp. 117 et seq.; Atamer (2009b), pp. 218 et seq. 193 Aries Tanker Transportation v. Total Transportation Limited (The “Aries”) [1977] 1 Lloyd’s Law Reports 334 (H.L.), at p. 336 col. 2 per Lord Wilberforce.
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“from stale claims” was held to be another object of the time limit.194 It need no further emphasis that all these purposes of the time limit would have gone astray entirely, if and whenever Art. 37 and Art. 65 are applied as they have been adopted in the Rotterdam Rules.
6.6
Proven Carrier (Art. 37[3])
Art. 37(3) supplies the “claimant” with yet another opportunity. According to this provision, the claimant is entitled to prove that even if the preconditions of either Art. 37(1) (identified carrier) or Art. 37(2) (presumed carrier) were satisfied, some other party was actually the carrier as defined in Art. 1(5). This provision came up at a later stage of the preparations. It was first suggested at the 18th Session195 so as to avoid that cargo interests are prevented “from advancing their claims against the party they believed to be most responsible”. The wording was reformulated in Art. 38(3) of the updated [2007] Draft WP.81.196 The WG insisted that this version ought to be the basis of drafting.197 Accordingly, a new version was circulated in the [2007] Draft WP.101,198 which was ultimately adopted as Art. 37(3) in the final text. Going back to the working example, it was seen that the registered owner and bareboat charterer might be “identified” or “presumed” as carrier under Art. 37(1) or (2). However, the contract of carriage may have been concluded by the shipper with the freight forwarder as carrier. On this basis, it would be the forwarder, who is the carrier under Art. 1(5). This would be consistent with Art. 7.1 of the FIATA Model Rules or the definitions in the FIATA Bill of Lading. As such, the shipper, consignee and subrogated cargo insurer may all be aware of the true identity of the carrier. If so, they may wish to commence proceedings directly against the forwarder as the carrier. It is submitted that, after having read the earlier discussions, these claimants will be all the more inclined to do so.199 In such a case, the forwarder will not be entitled to try and shift liability onto any party that otherwise might have been deemed to be the carrier under Art. 37(1) or (2). For instance, if a bill of lading was issued at the port of loading clearly identifying on the front page the time charterer as the carrier for the sea leg alone, or if the bill of lading so issued did not name any person at all, the forwarder would not be entitled to escape 194 Continental Fertilizer Co. Ltd. v. Pionier Shipping CV (The “Pionier”) [1995] 1 Lloyd’s Law Reports 223 (Q.B.), at p. 227 per Phillips, J. 195 See A/CN.9/616 } 23: “Nothing in this article prevents the claimant from proving that any person other than the registered owner is the carrier.” 196 See A/CN.9/WG.III/WP.81 at p. 31 with fn. 122. 197 See A/CN.9/621 } 287 et seq. 198 See A/CN.9/WG.III/WP.101 at p. 28 with fn. 86. 199 See in particular supra 6.5.
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liability as carrier on the grounds that the time charterer under Art. 37(1) or the registered owner under Art. 37(2) was the carrier, even if the loss occurred during the sea voyage. Clearly, this provision rectifies the extreme disadvantages, which might have been caused, if Art. 37(1) and (2) stood alone. In this alternative, the time limit in Art. 62(1) would have to be taken into consideration, as Art. 65 does not govern actions under Art. 37(3). Therefore, if the claimant was to prove who the carrier is, this would have to be in a legal action commenced within the period of two years. Looking at the wording of Art. 37(3), there might actually be the potential for a completely different practical function. The provision says that: “[n]othing in this article prevents the claimant from proving that any person other than a person identified in the contract particulars or pursuant to paragraph 2 of this article is the carrier.” According to the drafting history, this provision, as indeed the entire Art. 37, was designed so as to assist cargo claimants, who seek indemnity for cargo loss, damage or delay. However, the wording by itself may not necessarily be limited to such cases. Assuming that in the working example the bareboat or time charterer went into bankruptcy, the registered owner and, respectively, the bareboat charterer may be left with unpaid hire claims. If so, they may wish to proceed against the shipper or consignee for any outstanding freight there may remain under the contract of carriage, or may wish to set-off such a claim under Art. 62(3) against a cargo claim brought against them pursuant to Art. 37(2). Would such an attempt be upheld? The use of terminology in Art. 37(3) might be considered as neutral. Indeed, the expression “claimant” is certainly wide enough to encompass cargo claimants as well as any registered owner, operator or any charterer, who may be coined altogether as “ship claimants”. Had Art. 37 been placed in chapter 5 on the “carrier”s liability”, its scope of application would thereby have been narrowed down to claims brought by cargo claimants. However, Art. 37 stands in chapter 8 on “Documents and Records”, which would not constitute a prejudice against applying the provision also to ship claimants. Nevertheless, in applying Art. 37(3) to this type of a scenario, attention would have to be paid to the expression “carrier”, which is technically used in accordance with Art. 1(5). As such, a registered owner, bareboat charterer or other ship claimant may rely on Art. 37(3) only if and whenever that person had actually concluded the contract of carriage (Art. 1[1]) with the shipper. Going back to the working example, if the freight forwarder was not paid the freight, and the cargo insurer had brought proceedings against the bareboat charterer under Art. 37(2)[e], the forwarder may still commence action for unpaid freight against the shipper or consignee, as the case maybe. In those proceedings, the debtor would not be entitled to argue that the bareboat charterer is presumed to be the carrier under Art. 37(2)[e] so that the forwarder can no longer claim the freight in its own name. In conclusion, the scope of application of Art. 37(3) may not necessarily be limited to claimants pursuing recovery claims for cargo loss, damage or delay. The provision may well apply also in the opposite direction, provided that the ship claimant is able to prove to be the carrier as defined in Art. 1(5).
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Conclusion
On the basis of the foregoing analysis, it is submitted that Art. 37 and Art. 65 are likely to cause more problems in practice than they purport to solve. The first major problem would appear to arise from the discrepancy between the true intention of the Drafters and the final wording of the provisions. Second, the inconsistent use of terminology within these and related provisions might cause difficulties in practice. More to the point, however, is the danger under Art. 37(2) for cargo claimants being tossed around in legal proceedings from one defendant to the other. As each of these proceedings would have to be concluded by way of final judgements, it may well take a decade and longer until the claimant finally gets hold of the true carrier. Such an outcome would hardly serve the interests of the cargo claimants, who were meant to be protected under those provisions in the first place. However, neither would the registered owner, bareboat charterer or other operator of the ship or indeed the carrier be protected, as Art. 65 would open up the possibility of legal proceedings being brought almost indefinitely. On another note, the costs involved in all these proceedings may defeat the purpose of these provisions altogether. It remains to be seen how the involved parties, particularly cargo and P&I insurers will react to this mechanism, as indeed to the Rotterdam Rules in general.
References Aikens R et al (2006) Bills of lading. Informa, London Atamer K (1996) Tasiyanin, Yukun Zararindan Dogan Sorumlulugunda Hak Dusurucu Sure (TTK m.1067). In: XIII. Ticaret Hukuku ve Yargitay Kararlari Sempozyumu. Ankara, p. 117 Atamer K (2000) Liegezeit und Liegegeld im Seerecht – Einordnung in das System des deutschen Privatrechts mit rechtsvergleichenden Hinweisen auf das englische und t€urkische Recht. LIT Verlag, Hamburg Atamer K (2006) Turk Ticaret Kanunu Tasarisina Gore Deniz Hukukunda Cebri Icra. Arikan, Istanbul Atamer K (2009a) Reform des Seehandelsrechts im Entwurf des Tuerkischen Handelsgesetzbuchs, In: Max-Planck-Institut f€ ur ausl€andisches und Internationales Privatrecht (ed), Kompatibilitaet des tuerkischen und europaeischen Wirtschaftsrechts – Der neue tuerkische HGB-Entwurf und benachbarte Rechtsgebiete. Mohr Siebeck, T€ ubingen, p. 91 Atamer K (2009b) Yargitay Kararlari Isiginda Deniz Ticareti ve Deniz Sigortasi Hukukunda Guncel Sorunlar ve Gelismeler. In: XXIII. Ticaret Hukuku ve Yargitay Kararlari Sempozyumu. Ankara, p. 165 Atamer K (2010a) Reform des tuerkischen Transport- und Seefrachtrechts. Transportrecht:50 Atamer K (2010b) Construction problems in the Rotterdam Rules regarding the performing and maritime performing parties. JMLC: 41(4):469 Atamer K (2011) The Enactment of the “Hague Rules” in Turkey. In: Liber Amicorum for Prof. Dr. Marc Huybrechts (to be published within 2011 by Intersentia in Belgium) Athanassopoulou V (2005) Schiffsunternehmen und Schiffs€uberlassungsvertr€age. Mohr Siebeck, T€ubingen Baatz Y (2009) Time for suit. In: The Rotterdam rules – a practical annotation. Informa, London, p. 195 Berlingieri F (ed) (1993) Time-barred actions, 2nd edn. LLP, London Berlingieri F (1995) The 1993 convention on maritime liens and mortgages. LMCLQ:57
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Berlingieri F (1996) The convention on maritime liens and mortgages, 1993: an analysis of its provisions in the light of the previous conventions and of the travaux pre´paratories. CMI Yearb:225 Berlingieri F (2009) The Rotterdam Rules: ‘the maritime plus’ approach to uniformity. EJCCL:49 Boyd SC et al (2008) Scrutton on charterparties, 21st edn. Sweet & Maxwell, London Coghlin T et al (2008) Time charters, 6th edn. Informa, London Coles R, Watt E (2009) Ship registration: law and practice, 2nd edn. Informa, London Cooke J et al (2007) Voyage charters, 3rd edn. Informa, London Davis M (2005) Bareboat charters, 2nd edn. LLP, London Delebecque P (2003) The Uncitral draft instrument on the carriage of goods by sea. CMI Yearb:208 Diamond A (2009) The Rotterdam Rules. LMCLQ:445 Dimigen K (2000) Bareboatcharter und bareboatregistrierung. LIT, Hamburg Fujita T (2009) The comprehensive coverage of the new convention: performing parties and the multimodal implications. Tex ILJ 44:349 Gaskell N et al (2000) Bills of lading: law and contracts, LLP, London Giuliano M, Lagarde P (1980) Report on the convention. Official J C:282 Glass DA (2004) Freight forwarding and multimodal transport contracts, LLP, London Gramm H (1937) Das Konnossement nach dem Gesetz vom 10 August 1937. Deutsche Justiz:1281 Gramm H (1938) Das neue Deutsche Seefrachtrecht. Mittler, Berlin Koller I (2010) Transportrecht, 7th edn, C.H. Beck, M€ unchen Lorenzon F (2009) Transport documents and electronic transport records. In: The Rotterdam Rules – a practical annotation. Informa, London Rabe D (2000) Seehandelsrecht, 4th edn. CH Beck, M€ unchen Ramberg J (2009) UN convention on contracts for international carriage of goods wholly or partly by sea. CMI Yearb:277 Smeele F (2010) The maritime performing party in the Rotterdam Rules 2009. EJCCL:72 Stahl U (1989) Die Zeitcharter nach englischem Recht. NP Engel Verlag, Kehl am Rhein Stopford M (1997) Maritime economics, 2nd edn. Routledge, London Sturley MF (2003) The treatment of performing parties. CMI Yearb:230 Sturley MF (2006) Phantom carriers and UNCITRAL’s proposed transport law convention. LMCLQ:426 Sturley MF (2009) Transport law for the twenty-first century: an introduction to the preparation, philosophy, and potential impact of the Rotterdam Rules. In: Thomas DR (ed) A new convention for the carriage of goods by sea – the Rotterdam Rules, Chap. 1. Lawtext, Oxon Suzel C (2008) 1993 Cenevre Sozlesmesinin Turk Ticaret Kanunu Tasarisina Yansimasi. In: Inceoglu MM (ed) Ugur Alacakaptan’a Armagan (Liber Amicorum for Ugur Alacakaptan), Vol 2. Istanbul Bilgi Universitesi Yayinlari, Istanbul:597 Suzel C, Damar D (2010) Rotterdam Kurallari. Banka ve Ticaret Hukuku Dergisi XXVI(2):149 Tetley W (2008a) Some general criticism of the Rotterdam Rules. JIML 14:625 Tetley W (2008b) Marine cargo claims, 4th edn, vol 2. Thomson & Carswell, Quebec Thomas DR (2008) An appraisal of the liability regime established under the new UN Convention. JIML 14:496 Thomas DR (2009) An analysis of the liability regime of carriers and maritime performing parties. In: Thomas DR (ed) A new convention for the carriage of goods by sea – the Rotterdam Rules. Lawtext, Oxon Treitel GH et al (2005) Carver on bills of lading, 2nd edn. Sweet & Maxwell, London von Ziegler A (2009) Main concepts of the new convention: its aims, structure and essentials. Transportrecht:346 € € Wersel C (1996) Das Ubereinkommen uber Schiffsgl€aubigerrechte und Schiffshypotheken vom 6. Mai 1993, LIT, Hamburg Williams R (2009) Transport documentation – the new approach. In: Thomas DR (ed) A new convention for the carriage of goods by sea – the Rotterdam Rules. Lawtext, Oxon, p 190 Willingale M (1998) Ship management, 3rd edn. LLP, London Zunarelli S (2009) The carrier and the maritime performing party in the Rotterdam Rules. Unif. L. Rev.:1011
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Chapter 7
Compensation for Damage Anders Møllmann
Abstract The article examines the Rotterdam Rules’ regulation of compensation for damage other than the rules on the basis of liability. It covers the types of damage recoverable under the Rules, the burden of proof, the calculation of compensation, the limits of liability, and loss of the benefit of limitation of liability. It is concluded that the Rotterdam Rules clarify certain issues which are currently unclear under the conventions in force and national law, but does so without substantially departing from current practice, and that the Rotterdam Rules’ regulation of compensation for damage may, thus, as the rest of the convention, best be described as “an evolution rather than a revolution”.
7.1
Introduction
Most shippers, consignees and other cargo interests are likely to really deal with the details of the Rotterdam Rules only in the event that they suffer damage for which they feel they should be compensated by the carrier. Of central importance in this connection is, of course, the basis for the liability of the carrier, but a number of related issues are also of utmost importance. This article will examine some of these related issues, namely the types of damage recoverable under the Rotterdam Rules, the burden of proof, the calculation of compensation, the limits of liability and loss of the benefit of limitation of liability.1
1
The paper will not deal with the liability of the carrier, regarding which issue, see the article by € Professor, Dr. Fehmi Ulgener; or with compensation by the shipper for damage suffered by the carrier, regarding which issue, see the article by Professor Tomotaka Fujita. Dr. A. Møllmann University of Copenhagen, Denmark e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_7, # Springer-Verlag Berlin Heidelberg 2011
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Types of Damage Recoverable Under the Rotterdam Rules
When looking at compensation for damage under the Rotterdam Rules it is necessary to find out to what extent the Rotterdam Rules regulate various types of damage. In doing so a distinction between three types of damage may be drawn. The first is the damage resulting from loss of, damage to, or delay in delivery of the goods. The second is the damage resulting from the carrier’s breach of other obligations in the Rotterdam Rules and third, the damage resulting from the carrier’s breach of obligations not regulated in the Rotterdam Rules. As for the first group, i.e., damage resulting from loss of, damage to or delay in delivery of the goods, the liability of the carrier is extensively regulated in chapter 5 of the Rotterdam Rules. As for the second group, i.e., damage resulting from the carrier’s breach of other obligations in the Rotterdam Rules, the liability of the carrier is generally not regulated in the Rotterdam Rules itself.2 Thus, the liability is subject to the applicable national law. However, the liability is subject to limitation pursuant to chapter 12 of the Rotterdam Rules, cf. below in Sect. 7.5. An example of damage falling into this category would be loss suffered as a result of misdelivery of the goods. The carrier’s obligations regarding delivery of the goods are regulated in chapter 9, but there is no regulation of the carrier’s liability for the breach of these obligations. Finally as for the third group, i.e., damage resulting from the carrier’s breach of obligations not regulated in the Rotterdam Rules, liability for such damages falls wholly outside the Rotterdam Rules and is thus completely subject to the applicable national law.
7.3
Burden of Proof
The Rotterdam Rules generally do not deal with the law of evidence except for the classical issue of the evidentiary effect of contract particulars in transport documents.3 However, the Rotterdam Rules regulate in detail the allocation of the burden of proof in relation to establishing the liability of the carrier for loss of, damage to or delay in delivery of the goods, cf. article 17.4 Article 17 sets out a traditional fault-based liability with a reversed burden of proof for the carrier, i.e., with presumed fault on the part of the carrier. In this connection, it must be noted that for the presumption of liability to arise, the claimant must prove that the loss of, damage to or delay in delivery of the goods 2 One exception, though, may be found in article 52(4) which sets out that the carrier’s liability for failure to comply with instructions from the controlling party which has lead to loss of, damage to, or delay in delivery of the goods is subject to article 17. 3 Cf. article 41. 4 € See the article by Professor, Dr. Fehmi Ulgener.
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occurred during the carrier’s period of responsibility, cf. article 17(1). Thus, the burden of proving the damage and the extent thereof is on the claimant, i.e., the cargo side, but the claimant does not have to prove that the damage was the result of the carrier’s fault. The specific requirements of the proof which must be produced are not regulated in the Rotterdam Rules and the proof is therefore subject to the applicable procedural law. One more aspect, which may be said to relate to the burden of proof, is regulated in article 23, namely notice in case of loss, damage or delay. Pursuant to article 23, notice must be given in case of loss of or damage to the goods indicating the general nature of the loss or damage, cf. article 23(1). Notice must also be given in case of delay of the goods, cf. article 23(4). However, the procedure for giving and the consequences of not giving notice differ. For loss of or damage to the goods, the notice must be given before or at the time of delivery if the loss or damage is apparent and within seven working days at the place of delivery if it is not apparent.5 The notice may be given to the carrier6 or the performing party who delivered the goods and it has the same effect whether it is given to the former or the latter, cf. article 23(5). The consequence of not giving notice is that the carrier is presumed, in absence of proof to the contrary, to have delivered the goods according to their description in the contract particulars, cf. article 23(1). However, it is expressly stated that failure to give notice shall not affect the right to claim compensation nor change the allocation of the burden of proof under article 17, cf. article 23(2). As the burden of proving that relevant damage has occurred is already on the claimant, see above, and article 23(1) only creates a presumption which is subject to proof to the contrary then the legal effect of not giving notice is very limited, if any. In practice, it is, of course, of utmost importance to secure evidence of the damage as soon as possible and giving notice may be an important step in initiating that process. Also, under the applicable procedural law the notice may itself be considered proof of damage. For delay in delivery, notice must be given within 21 consecutive days of delivery of the goods, cf. article 23(4). The consequence of not giving notice is much more dire than with loss of or damage to the goods. Thus, failure to give notice precludes liability for delay, cf. article 23(4). It is not completely clear whether notice regarding delay in delivery must be given to the carrier or may instead be given to the performing party delivering the goods as with notice for loss or damage. Whereas article 23(1) regarding loss or damage states that notice must be given to the carrier or the performing party delivering the goods, article 23(4) only states that notice must be given to the carrier. However, article 23(5) sets out that a notice “referred to in this article” given to the performing party delivering the goods has the same effect as a notice given to the carrier and vice versa. It is unclear
5
No notice is required if the loss or damage is ascertained in a joint inspection by the person receiving the goods and the carrier, cf. article 23(3). 6 As defined in article 1(5), i.e., the person entering into a contract of carriage with the shipper.
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whether this paragraph simply sets out the legal effect of a notice given under paragraph 1 regarding loss or damage or it also pertains to paragraph 4 regarding delay. The cited reference to “this article” (emphasis added) and the placement of the rule in paragraph 5 after paragraph 4 on delay would seem to support the latter suggestion whilst the wording of paragraph 4 itself seems to support the former suggestion.7 However, with the dire consequence of not giving notice in mind, a claimant would be wise to give the notice to the carrier.8 One final aspect of interest in relation to the burden of proof is to be found in article 23(6). Pursuant to this paragraph, the parties to a dispute regarding actual or apprehended loss or damage shall give all reasonable facilities to each other for inspecting and tallying the goods and shall provide access to relevant records and documents. The consequences of not fulfilling this obligation are not set out in the Rotterdam Rules. It is therefore subject to the applicable national law which may include giving the breach of obligation some sort of evidentiary effect.9 Thus, this rule may turn out in practice to be of significant use to a claimant.
7.4
Calculation of Compensation
The next question is how the compensation shall be calculated. As with the liability of the carrier, this question is only regulated for certain types of damages in the Rotterdam Rules. For compensation for loss of or damage to the goods the question is answered in article 22. The main rule is to be found in paragraph 1, but the more interesting aspects are in paragraphs 2 and 3. The main rule states that the compensation is calculated by reference to the value of the goods at the place and time of delivery. In paragraph 2, it is then regulated how the value of the goods shall be ascertained. This is set out in three stages. If there is a commodity exchange price then this price is considered to be the value. If there is no commodity exchange price, but a market price, then this price is considered to be the value. And, if there 7 The reports of the negotiations do not give clear support for either of the suggestions. At the 13th session of the Working Group, it was decided to change the clause so that notice should be given to “the carrier” rather to “the person against whom liability is being asserted” as the previous draft had set out, cf. A/CN.9/552, } 78. However, the report does not indicate why “the performing party that delivered the goods” was not included. The report of the 19th session of the Working Group shows that it was observed that the “same effect” refers to the notice referred to in paragraph 1, i.e., the notice for loss of or damage to the goods, cf. A/CN.9/621, } 116. However, an observation made by one delegation, at a stage when the deliberation of what would become article 23(4) was simply deferred until after the general negotiation of delay liability, cf. id. at } 115, does not seem conclusive. 8 For the same view see Michael Tsimplis in Baatz et al. (2009), } [23-04]. 9 For example, under Danish procedural law the court might as a consequence assume that the documents which are not produced would in fact prove what the claimant claims they would if they had been produced, cf. the principle of adverse inference which is a principle known in some form or another in many jurisdictions.
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is neither a commodity exchange price nor a market price then the “normal value of the goods of the same kind and quality at the place of delivery” is considered to be the value. This formula is well known from the Hague-Visby Rules10 and case laws regarding this rule may therefore still be of relevance. However, the formula in the Hague-Visby Rules has given rise to a doubt as to whether damages other than the value of the goods are recoverable from the carrier or not.11 This lack of clarity has been addressed in paragraph 3 which sets out that the carrier is not liable for payment of any compensation beyond the value of the goods.12 Thus, the carrier is not liable for consequential damages of the loss of or damage to the goods such as loss of market share or lost profits as a result of a stop in a manufacturing line. When it comes to delay in delivery, the situation is a little more complex. If the delay in delivery has lead to damage to or even loss of the goods, e.g. if a cargo of fruit has become spoiled due to the delay, then the compensation must be calculated according to article 22, cf. article 60, i.e., in the same manner as if the loss or damage was caused by some other reason for which the carrier is liable. If the delay in delivery leads to economic loss then the calculation of compensation for such loss is not regulated in the Rotterdam Rules and is thus subject to the applicable national law. The compensation payable is, however, subject to limitation under article 60, cf. below in Sect. 7.5. Consequently, in situations where the delay in delivery leads both to loss of or damage to the goods and consequential economic loss then the compensation for the loss or damage must be calculated pursuant to article 22 and the compensation for the consequential economic loss must be calculated pursuant to the applicable national law, but both subject to limitation of liability under the Rotterdam Rules and with a specific rule for setting the limit of liability in these situations, cf. below in Sect. 7.5.13 10
Article 4 rule 5(b). Cf. e.g. Boyd et al. (2008), p. 408 et seq. and Treitel and Reynolds (2005), } 9-251. 12 The parties may agree on raising the liability of the carrier, cf. article 79(1)(b) e.c., and this may also be done by agreeing on a different calculation of the compensation than as set out in article 22, e.g. by including consequential loss. 13 The treatment of situations with both damage to the goods and economic loss is, however, not completely clear. The uncertainty stems from the reference in article 60 to article 22 as a whole. The reference is, thus, also to article 22(3) which would exclude compensation for economic loss. However, this would seem to leave the second sentence of article 60 without meaning because this concerns “[t]he total amount payable pursuant to this article and article 59, paragraph 1”. Further, in the original draft, the draft article that eventually became article 22(3) provided that it applied “save as provided for in [the article dealing with delay liability and limitation thereof]”, cf. A/CN.9/WG.III/WP.21, } 6.2.3. The phrase was, however, deleted in the next consolidated draft because it was seen as unnecessary as the draft article referred to only dealt with economic loss, cf. A/CN.9/WG.III/WP.32 footnote 89. In hindsight, the deletion seems less fortunate, but this legislative history supports the fact that economic loss is compensable also in situations where the delay has led to loss of or damage to the goods as well as economic loss. Cf. also Diamond (2009), pp. 445, 482, who notes that article 22 also applies to loss or damage caused by delay, but then simply states that “[i]t does not apply to claims for financial loss unconnected with the loss of or damage to goods”. Michael Tsimplis also seems to presuppose that this is the case, cf. Baatz et al. (2009), } [60-02]. 11
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Finally, it must be remembered that for damages as a result of the carrier’s breach of other obligations set out in the Rotterdam Rules the calculation of compensation is not regulated in the Rotterdam Rules as the liability for such breaches is generally not regulated in the Rotterdam Rules. The calculation of compensation – like the liability for the breach – is thus subject to the applicable national law, but subject to limitation under the Rotterdam Rules, chapter 12.
7.5
Limits of Liability
The Rotterdam Rules continue the traditional approach taken in the maritime transport conventions that the carrier has a strict liability in the form of a presumed liability, but at the same time enjoys the benefit of limitation of liability thus avoiding the risk of surprisingly high damages. It is important to remember, though, that limitation of liability is only relevant in situations where the compensable loss suffered by the claimant is in fact higher than the limitation amount. Although no comprehensive statistical information seems to be available, it is safe to say that only a very small percentage of all claims are not fully compensated under the limits of the Hague-Visby Rules and even fewer under the Hamburg Rules. Although the idea of having only a per kilo limitation was briefly entertained during the negotiations, the Rotterdam Rules have maintained a combined per kilo and per package limitation due to the practical importance of the latter to the cargo interests.14 After intense negotiations the limits of liability were finally – as part of a larger compromise – set at 3 SDR per kilo or 875 SDR per package, whichever amount is the higher in the specific situation, cf. article 59.15,16 These limits are well above those of the Hamburg Rules,17 very well above those of the Hague-Visby Rules,18 and extremely well above the limit of the Hague Rules.19 The limits should lead to the result that only very few claims will not be compensated in full. The practical value of the per package limitation is largely due to the rule set out in article 59(2) whereby the packages enumerated in the contract particulars are considered packages in relation to the per package limitation if the goods are carried in a container. Thus, for example if the contract particulars describe the goods as “one container said to contain 80 bicycles” then the limit of liability is 80 875 Cf. A/CN.9/616, } 173. See particularly the negotiations at the 18th, 20th and 21st sessions of the Working Group in A/CN.9/616, } 162–174, A/CN.9/642, } 133–166, and A/CN.9/645, } 183–203. 16 A claim may also be subject to limitation under the rules of global limitation of liability of vessel owners, cf. article 83 which sets out that the Rotterdam Rules do not affect the application of any international convention or national law regulating global limitation of liability. 17 2,5 SDR per kilo or 835 SDR per package, cf. article 6(1). 18 2 SDR per kilo or 666,67 SDR per package, cf. article 4 rule 5(a) (as amended by article II of the SDR Protocol, 1979). 19 100 pounds sterling per package, cf. article 4 rule 5. 14 15
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SDR which is bound to be much higher than the per kilo limitation – of both the Rotterdam Rules and any of the unimodal transport conventions. The limits of liability may be raised, but not lowered, either by agreement between the parties, cf. articles 59(1) and 79(1)(b), or by the shipper declaring the value of the goods and the said value being included in the contract particulars, cf. article 59(1). Although the principle of limitation of liability is a continuation of the Hague, Hague-Visby and Hamburg Rules, the wording of the rule has been modified. Thus, the limitation is of “the carrier’s liability for breaches of its obligations under this convention”, cf. article 59(1). By contrast, the Hague and Hague-Visby Rules speak of liability for “any loss or damage to or in connection with the goods”, cf. article 4 rule 5, whilst the Hamburg Rules speak of liability “for loss resulting from loss or damage of goods”, cf. article 6(1)(a). In the first drafts of the convention, the wording of what would become article 59 (1) followed the wording of the Hague-Visby Rules.20 With the consolidated draft convention contained in A/CN.9/WG.III/WP.56, the wording was changed to the final wording cited above. The background for the change in wording was the fact that the wording in the Hague and Hague-Visby Rules has caused different interpretations as to the applicability of the limitation, particularly to liability for misdelivery of the goods and misinformation.21 The question has been whether such damage must be considered to be “in connection with the goods”.22 The Rotterdam Rules have avoided this ambiguity and make it clear that the limitation of liability applies to liability for breach of all the obligations in the Rotterdam Rules, including e.g. for misdelivery. The decisive point is whether the obligation is regulated in the Rotterdam Rules. As described above, the liability will generally be subject to the applicable national law, but the liability thus incurred is subject to limitation under the Rotterdam Rules. As further described above, the carrier may in some circumstances become liable for breach of obligations which are not regulated in the Rotterdam Rules. Such liability falls fully outside the Rotterdam Rules and is thus not subject to limitation under the Rotterdam Rules. As in the Hamburg Rules, the Rotterdam Rules have a separate limitation of liability for loss due to delay, cf. article 60. The Hague and Hague-Visby Rules obviously do not contain such rules as they do not expressly regulate liability for delay. If the delay leads to loss of or damage to the goods then the compensation must be calculated according to article 22, cf. article 60,23 which for limitation of See A/CN.9/WG.III/WP.21, } 6.7.1., and WP.32, article 18(1). See A/CN.9/552, } 41–42, A/CN.9/642, } 152–153 and 165, and especially A/CN.9/645, } 189–190. See also A/CN.9/WG.III/WP.101, footnote 169, and A/CN.9/WG.III/WP.72, } 14–15. 22 For the discussion in English law, see Treitel and Reynolds (2005), } 9-249 and the further reference to } 9-130, and Michael Tsimplis in Baatz et al. (2009), } [59-09] et seq. See also Stephen Girvin in Thomas (2009), p. 130. Under Scandinavian law, misdelivery is not considered to be subject to the per kilo and per package limitations set out in the Maritime Code (based on the Hague-Visby Rules), cf. e.g. Falkanger and Bull (2010), p. 315. 23 See above, } 7.4. 20 21
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liability refers back to article 59, i.e., the general rule on limitation of liability. For economic loss resulting from the delay, the limit of liability is set at an amount equivalent to 2½ times the freight payable on the goods delayed, cf. article 60. However, the total amount payable may not exceed the limit that would be established pursuant to article 59(1), cf. the second sentence of article 60. Consequently, if the delay has led to both damage to the goods and consequential economic loss then the total amount payable may not exceed the limit that would have applied in case of the total loss of the goods. Thus, the limitation of liability for delay functions as an extra limitation in respect of economic loss as a result of delay.24 Finally, it must be noted that if loss, damage or delay occurs solely during a transport leg other than the carriage by sea then the potential liability of the carrier may be subject to the limited network principle established in article 26. This may lead to the result that the rules on limitation of liability of another convention is applicable to the liability for loss, damage or delay, e.g. the limits of liability in the CMR Convention if the damage occurs during an international road carriage leg. However, this situation falls outside the scope of this paper.25
7.6
Loss of the Benefit of Limitation of Liability
In the Hague-Visby and the Hamburg Rules, the benefit of limitation of liability is balanced with the possibility of “breaking” the limitation, that is, the possibility that the carrier may loose the right to limit its liability in certain qualified situations. The Rotterdam Rules have continued this approach. Thus, if the loss resulting from the breach of the carrier’s obligation “was attributable to a personal act or omission of the person claiming a right to limit done with the intent to cause such loss or recklessly and with knowledge that such loss would probably result” then the right to limit the liability pursuant to article 59 is lost, cf. article 61(1).26 This formula is virtually the same as those in the HagueVisby and Hamburg Rules. Consequently, existing case laws regarding the types of conduct that may lead to the loss of the benefit of limitation remain relevant under the Rotterdam Rules. It is not only the right of limitation of liability set out in articles 59 and 60 that may be lost. Also, a benefit of limitation of liability set out in the contract of carriage may be lost under the same conditions, cf. article 61. The parties can, thus, not agree to raise the carrier’s limit of liability, but make it “unbreakable”. The term in the contract of carriage making the limit of liability “unbreakable” would be void pursuant to article 79(1)(b). Article 61 clearly states that it is for the claimant to prove that the conditions for breaking the limitation of liability are fulfilled. The wording of article 61, thus, Cf. Michael Tsimplis in Baatz et al. (2009), } [60-02]. ¨ zbek. See instead the paper by Asst. Prof. Dr. M. Deniz G€ uner-O 26 Similarly, if the delay in delivery “resulted from a personal act or omission [. . .]” then the right to limit liability pursuant to article 60 is lost, cf. article 61(2). 24 25
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more clearly than the wording of the Hague-Visby and the Hamburg Rules places the burden of proof on the claimant. The rule not only applies to the carrier, but also to any of the persons referred to in article 18 when such person claims the right to limit its liability. Article 18 sets out the persons for whom the carrier has a vicarious liability. In practice, it must be expected that the most relevant person in this connection will be a maritime performing party because the maritime performing party may be held directly liable on the basis of the Rotterdam Rules, cf. article 19. The reference to the persons enumerated in article 18 is, however, necessary because these persons may, against a claim founded on a basis other than the Rotterdam Rules, enjoy the benefit of the limitation of liability offered by the Rotterdam Rules as a consequence of the “Himalayan rule” in article 4. It is worth noting that the possibility of loosing the benefit of limitation of liability may rise in importance with the Rotterdam Rules due to the wider applicability of the limitation of liability, cf. above in Sect. 7.5. Thus, in jurisdictions that currently do not apply the limitation of liability in the Hague-Visby Rules e.g. to liability for misdelivery, it seems likely that it will be tested to what degree the right to limitation afforded by the Rotterdam Rules may be lost in such circumstances.
7.7
Conclusion
The Rotterdam Rules contain detailed regulation of compensation for certain types of damages, especially for loss of or damage to the goods, and less for others. The Rotterdam Rules clarify certain issues which are currently unclear under the conventions in force and under national law, but does so without substantially departing from current practice. The Rotterdam Rules raise the limits of liability substantially, but at the same time widens the types of liability that may be limited. In essence, the Rotterdam Rules’ regulation of compensation for damage may, as the rest of the convention, best be described as “an evolution rather than a revolution”.27
References Baatz Y et al (2009) The Rotterdam Rules – a practical annotation. Informa, London Boyd SC et al (eds) (2008) Scrutton on charterparties, 21st edn. Sweet & Maxwell, London Diamond A (2009) The Rotterdam Rules. LMCLQ:482 Falkanger T, Bull HJ (2010) Sjørett [maritime law], 7th edn. Sjørettsfondet Akademisk, Oslo Thomas DR (ed) (2009) A new convention for the carriage of goods by sea – the Rotterdam Rules. Lawtext Publishing Limited, Witney Treitel G, Reynolds FMB (2005) Carver on bills of lading, 2nd edn. Sweet & Maxwell, London
27
See the paper by Professor Michael Sturley who explains the role of this general approach in the negotiations of the Rules. See also the same author in Thomas (2009), p. 30 et seq.
.
Chapter 8
Obligations and Liabilities of the Shipper Tomotaka Fujita
Abstract Unlike previous maritime transport law conventions, the Rotterdam Rules contain considerable number of detailed provisions on the shipper’s obligations and liabilities. They include the obligations to deliver the goods ready for carriage and to provide proper information, fault based liability as the general rule and special rules with regard to dangerous goods and information for the contract particulars. Although it was sometimes observed that they impose onerous liabilities on the shipper, this paper raises a basic question: whether and to what extent are shipper’s obligations and liabilities are substantially affected under the Rotterdam Rules compared with the current regime? After close examination of the relevant provisions in Chapter 7 of the Rotterdam Rules, it concludes that the shipper’s obligations and liability are not substantially increased under the Rotterdam Rules.
8.1
Introduction
This paper examines the shipper’s obligations and liabilities under Chapter 7 of the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (the “Rotterdam Rules”). Previous maritime transport conventions did not pay much attention to the shipper’s obligations or liabilities. The Hague Rules1 and the Hague-Visby Rules2 include fragmentary
A part of this paper is included in: The Rotterdam Rules: The U.N. Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, Sturley et al. (2010) Sweet & Maxwell, London. 1 International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1924. 2 The Hague Rules as amended by the Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1968 (Visby Protocol) and Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1979 (SDR Protocol). Prof. T. Fujita University of Tokyo, Japan e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_8, # Springer-Verlag Berlin Heidelberg 2011
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regulations.3 The Hamburg Rules4 has an independent chapter on the liability of the shipper but it contains only two articles.5 In contrast, Chapter 7 of the Rotterdam Rules consists of a considerable number of detailed rules on the shipper’s obligations and liabilities. Given this expanded chapter of shipper’s obligations, the natural question will that comes to mind is: Are shipper’s obligations and liabilities substantially increased under the Rotterdam Rules? In fact, criticisms against the Rotterdam Rules are sometimes heard based on the assumption that they impose onerous liabilities on the shipper.6 However, a more careful examination is necessary to decide if this is the case. First, more provisions, in themselves, do not imply more obligations or liabilities. Second, as is pointed out by careful observers,7 the shipper has never been free from obligations and liabilities even in such areas where previous conventions have been silent. Shippers have long been responsible for a wide range of obligations under applicable national law.8 Therefore, one should examine whether the shipper’s obligations and liabilities under the Rotterdam Rules are expanded compared with those under the law of each country or under ordinary contractual terms rather than comparing the texts of conventions themselves. It should also be noted that parties cannot increase the shipper’s obligations and liabilities through a contract under the Rotterdam Rules (article 79(2)). In this sense, the shipper is more protected under Rotterdam Rules than under previous conventions. The conclusion of such examinations should be deferred until the end of the paper. At this stage, it would be suffice to point out that the often-heard assertion that the Rotterdam Rules substantially increased the level of shipper’s obligations and liabilities is not self-evident. The rest of this paper continues in the following order. Section 8.2 explains what is covered and what is not covered under Chapter 7. Section 8.3 examines the structure of the liability system under Chapter 7. The specific obligations of the shipper will be discussed in Sect. 8.4 (obligations the breach of which triggers faultbased liability) and Sect. 8.5 (obligations the breach of which triggers strict 3
The shipper’s guarantee on the accuracy of the information with respect to the goods (article III (5)), shipper’s exoneration for loss or damage sustained by the carrier resulting from any cause that was not the shipper’s fault (article IV(3)) and the shipper’s liability resulting from dangerous goods (article IV(6)). 4 United Nations Convention on the Carriage of Goods by Sea, 1978. 5 The basis of the shipper’s liability (article 12) and special rules for dangerous cargo (article 13). 6 For instance, European Shipper’s Council states "Shipper obligations are far more onerous than previous conventions. See, “View of the European Shippers’ Council on the Convention on Contracts for the International Carrying of Goods Wholly or Partly by Sea also known as the ‘Rotterdam Rules’” (April 23, 2009) [hereafter “European Shipper’s Council Position Paper”] (http://www.europeanshippers.com/docs/esc-position-paper-rotterdam-rules-march09.doc). 7 See, for example, Olebakken (2007–2008), p. 305. 8 The nature of the shipper’s possible liability might differ among jurisdictions. Some legal systems might analyze it as liability in torts, for example, while others might analyze it as a kind of implicit and auxiliary contractual obligation.
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liability). Section 8.6 refers to the liability of documentary shipper. Based on these examinations, the practical impact of shipper’s liability under the Rotterdam Rules is assessed in the Conclusion (Sect. 8.7).
8.2
Scope of Chapter 7
Let us see what is and what is not covered by Chapter 7 of the Rotterdam Rules. First, the Rotterdam Rules cover only the relationship between the carrier and the shipper. It does not address the shipper’s liability to the other parties. For instance, let us assume that the goods exploded during the carriage. The potential liability of the shipper for the loss or damage sustained by the carrier’s ship is governed by the Rotterdam Rules. But the shipper’s liability for the damage to other shippers’ cargo is not. Similarly, the Rotterdam Rules also do not give any cause of action to the employee against the shipper, although article 27 (1) and (3) refers to the shipper’s obligation not to cause harm to “persons”. The Rotterdam Rules only address the shipper’s liability for the loss or damage incurred by the carrier due to the injury of the employee. Second, they only cover the shipper’s obligations and liabilities in connection with the goods for carriage. Thus the shipper’s obligation to pay the freight, for instance, is outside the scope of the Rotterdam Rules and is left to applicable national law. Third, even with respect to the shipper’s liability in connection with the goods, certain controversial issues are kept outside the Chapter’s scope. The shipper’s liability for loss or damage caused by delay is a notable example (see Sect. 8.3.1.1). Finally, Chapter 7 of the Rotterdam Rules provides for the liability of a person other than the shipper: “documentary shipper” (See Sect. 8.6).
8.3
The Structure of the Liability System Under Chapter 7
Before entering into an examination of the specific obligations of the shipper, it would be helpful to give an overview of the liability system under Chapter 7 of the Rotterdam Rules.
8.3.1
Common Conditions for Shipper’s Liabilities
To make the shipper liable, the carrier should, in all cases, prove that (1) the loss or damage which it suffers, (2) the breach of obligation under the Rotterdam Rules and (3) the causation between the breach and the loss or damage.
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“Loss or Damage” and Shipper’s Liability for Delay
The first condition is the “loss or damage” suffered by the carrier. Please note that, unlike article 17 on the basis of the carrier’s liability, there is no reference to “delay” in article 30 or any other place in Chapter 7, although it is possible that the carrier might suffer from loss or damage caused by such delay if, for instance, the goods explode and the ship needs repair. The lack of the reference is not a result of careless oversight. Rather, there is a clear intention of the UNCITRAL Working Group to exclude shipper’s liability for loss due to delay from the Convention, thus leaving the issue to applicable national law. The treatment of the shipper’s liability for loss or damage caused by delay was one of the most controversial issues during the entire negotiation. It will accordingly be useful to review the drafting history to provide a better understanding of the Rotterdam Rules’ position on the issue. The first draft of the Convention did not include any reference to “delay”.9 The term “delay” was introduced in square brackets (to indicate the unresolved nature of the issue) in the Draft prepared after the 13th Session of the UNCITRAL Working Group (October 2004)10 and maintained in the subsequent draft.11 Whether the shipper should be liable for loss or damage caused by delay was strenuously debated at the 16th Session of the Working Group (November–December 2005).12 The issue continued to be discussed at the next two meetings, along with the carrier’s liability for delay.13 Delegates were concerned that treating delay as a basis for the shipper’s liability could impose too onerous a burden. Some feared that
9 See “Transport Law: Preliminary draft instrument on the carriage of goods by sea”, U.N. doc. no. A/CN.9/WG.III/WP.21 [hereafter “Draft WP.21”], art. 7.6. 10 See “Provisional redraft of the articles of the draft instrument considered in the report of Working Group III on the work of its thirteenth session (A/CN.9/552)”, U.N. doc. no. A/CN.9/ WG.III/WP.39, } 18. The reason of the insertion was explained that “‘Delay’ arises by virtue of creating a mirror provision of draft article 14 [article 17 in the final text]” (ibid, footnote 78) Please note that article 17 refers to “loss of the goods”, “damage to the goods” and “delay in delivery”, while article 30 “loss or damage”. The term “loss or damage” in article 30 is used in a quite different manner than in article 17. It is a general concept which can include “loss or damage caused by delay”. Therefore, it was not logical to add “delay” to “loss or damage” in order to create a mirror provision of carrier’s basis of liability. 11 See “Transport Law: Draft convention on the carriage of goods [wholly or partly] [by sea]”, U.N. doc. no. A/CN.9/WG.III/WP.81, as corrected by Transport Law: Draft convention on the carriage of goods [wholly or partly] [by sea], Corrigendum, U.N. doc. no. A/CN.9/WG.III/WP.81/Corr.1 art. 31. 12 See Report of Working Group III (Transport Law) on the work of its sixteenth session (Vienna, 28 November – 9 December 2005), U.N. doc. no. A/CN.9/591 (2006), as corrected by Report of Working Group III (Transport Law) on the work of its sixteenth session: Corrigendum, U.N. doc. no. A/CN.9/591/Corr.1 (2006) [hereafter “16th Session Report”], } 143–146. 13 See Report of Working Group III (Transport Law) on the work of its seventeenth session (New York, 3–13 April 2006), U.N. doc. no. A/CN.9/594 (2006) [hereafter “17th Session Report”], } 199–207; Report of Working Group III (Transport Law) on the work of its eighteenth session (Vienna, 6–17 November 2006), U.N. doc. no. A/CN.9/616 (2006) [hereafter “18th Session Report”], } 83–113; Report of Working Group III (Transport Law) on the work of its nineteenth
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if the shipper failed to provide a necessary custom document, for example, and prevented the ship’s timely departure as a result, it could lead to enormous consequential damages if the delivery of all the other cargo on the vessel were delayed as a result.14 While the UNCITRAL Working Group debated the shipper’s potential exposure to risk with great enthusiasm, the risk in practice would likely have been very small.15 First, the carrier would often be exonerated from liability when a shipper’s breach of its obligations causes the delay because it would not be attributable to the carrier’s fault. When the carrier is not liable for delay, there can be no recourse action against the shipper. Therefore, even if a shipper causes a ship’s delay, the risk to the shipper of being exposed to a recourse claim from the carrier is still relatively small. Second, the scope of the recoverable damage could be limited by the rules in each jurisdiction (e.g., under a “foreseeability test” in common-law countries). Those limitations on the scope of recoverable damages would also apply under the Rotterdam Rules. Finally, even in the absence of any liability under the Convention, the shipper owes unlimited liability in a tort action under national law in most legal systems. If a shipper’s breach of its obligations causes a serious delay and the carrier is required to compensate other shippers for the late delivery of their cargo, for example, the shipper at fault is likely to be liable under national law for the carrier’s payments to the other shippers. Therefore, how the Convention covers the shipper’s liability for delay affects the ultimate risk allocation much less than it first looks. Although the shipper’s potential risk may have been a little exaggerated, many delegates were nervous about the scenario of the shipper being held liable for the loss (especially economic loss) caused by delay. Several attempts were made to meet the concerns. For instance, it was suggested to set a limit on the shipper’s liability for delay.16 However, it was found impossible to find any specific amount or a sensible indicator to decide the limit. Finally, all reference to delay was deleted as a part of a package of compromise.17 Although the intention of the UNCITRAL Working Group was clear,18 one might contend that final text language is not clear enough to exclude loss due to
session (New York, 16–27 April 2007), U.N. doc. no. A/CN.9/621 (2007) [hereafter “19th Session Report”], } 233–243. 14 See, e.g., 16th Session Report, supra note 12, } 143; 17th Session Report, supra note 13, } 201–207. 15 The possible risk scenarios for the shipper’s liability for delay are carefully examined in the report submitted by Swedish delegation. “Shipper’s liability for delay: Document presented for the information of the Working Group by the Government of Sweden”, U.N. doc. no. A/CN.9/WG.III/ WP.74, } 17–19. 16 See 18th Session Report, supra note 13, } 105–106, 113. During the negotiation in 19th Session, a limitation amount of 500,000 SDR per incident was proposed. See “Shipper’s Obligations: Drafting proposal by the Swedish delegation”, U.N. doc. no. A/CN.9/WG.III/WP.85, } 7. 17 19th Session Report, supra note 13, } 180. 18 See 19th Session Report, supra note 13, } 237.
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delay from the scope of the Rotterdam Rules.19 Even if there is no reference to delay, the term “loss or damage” in article 30 could be interpreted as including loss or damage caused by delay.20 But the drafting history of chapter 7 plainly suggests that the Rotterdam Rules do not regulate a shipper’s liability caused by delay and instead leaves the issue to applicable national law.21
8.3.1.2
Shipper’s Breach of Obligation as the Prerequisite of the Liability
The carrier should prove the breach of the shipper’s obligations under this Convention. This is an important difference compared with the carrier’s liability. The cargo claimant does not have to prove any breach of obligation by the carrier under article 17(1). It should only prove the loss of the goods, damage to the goods or the delay in delivery (or the event or circumstances that caused the loss, damage or delay) occurred during the carrier’s period of responsibility. In contrast, the breach of obligation is always a prerequisite for the shipper’s liability. This structure also differs from the treatment of shipper’s liability in previous conventions.22
8.3.1.3
Causation Between the Breach of Obligation and Loss or Damage
Finally, the causation between the breach of shipper’s obligation and the loss or damage should be proved. The subtle difference with the previous conventions will be analyzed later (see Sect. 8.5.2.5 below). Please note that the issue of causation (not only in connection with shipper’s liability but also with carrier’s) is not covered by the Rotterdam Rules and is left 19
See, Baughen (2009), pp. 184–185. “Shipper’s Obligations: United States Proposal on Chapter 8, U.N. doc. no. A/CN.9/WG.III/ WP.69”, } 14 proposed the following text to address the concern: “Damages recoverable from the shipper by the carrier under this chapter for any loss or damage, for a breach of any obligation established hereunder, or under an indemnity or guarantee provided for in this chapter, shall not include damages for delay of a vessel or in delivery of goods loaded on a vessel other than physical damage caused by delay.” The possible inclusion of such text is discussed in the 19th session when the reference to “delay” was deleted from article 30. However, the Working Group rejected the text. 19th Session Report, supra note 13, } 235–237. It seems that the delegations assumed that the deletion of the term “delay” was sufficient to exclude any liability for loss caused by delay under the Convention. In this author’s judgment, the UNCITRAL Working Group made mistakes twice. First, it included the term “delay” to article 30 for the wrong reason (See, supra note 10). Second, it failed to understand the implication of the deletion of the term “delay”. These mistakes caused different interpretations of article 30. Infra note 707 and the accompanying text. 21 Baughen (2009), supra note 19, p. 185 makes some reservation for this interpretation. Diamond (2009), p. 493, strongly argues that "loss or damage" includes liability for financial loss, including loss due to delay. 22 Prior conventions require only proof of the shipper’s fault, not any specific breach of an obligation under the convention. See Hague-Visby Rules article IV(3); Hamburg Rules article 12. 20
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to national courts. In addition, the issue of the scope of recoverable loss or damage which is closely related to causation is also left to applicable national law. Every jurisdiction has its own concept to define the scope of compensation (“reasonable causation”, “foreseeability test” etc.) and such a rule is left untouched by the Rotterdam Rules.23
8.3.2
Fault Based and Strict Liability
If the carrier can establish the loss or damage, the shipper’s breach of obligation and the causation, Chapter 7 provides for two different classes of liability depending on the nature of the breach of obligation: (a) fault-based liability for the breach of obligation under articles 27, 28, 29, and 31(1) and (b) strict liability for the breach of obligation under articles 31(2) and 32. The shipper can escape from liability in the absence of its fault or the fault of the person referred to in article 34 in the former case, but not in the latter. The burden of proof on fault is not explicitly dealt with under article 30(2).24 The burden of proof on fault was discussed in great detail in the 19th session of the UNCITRAL Working Group.25 Some argued that, just as in the case under the Hamburg Rules,26 the shipper should not bear the burden of proof for establishing its own fault.27 Others responded that since the carrier first has to prove the shipper’s breach of its obligation under the Rotterdam Rules, it is simply natural that the shipper, in turn, be required to prove it is not at fault for the breach. The Working Group, as a compromise, agreed on the current formulation which declares the faultbased liability without explicitly specifying the burden of proof on the fault.28 In this particular context, the burden of proof on fault may not make much practical difference. As just explained, the Rotterdam Rules require the carrier to prove the shipper’s breach of its obligation.29 Once the shipper’s breach is proved, without regard to the formal allocation of the burden of proof, the court would seem likely to 23
It was once discussed whether the Convention should include an explicit provision to clarify the point. See, 18th Session Report, supra note 13, } 107–108, 113 although the final text does not contain it. See also, Baughen (2009), supra note 19, p. 185. 24 The burden of proof is also not sufficiently clear under Article IV(3) of the Hague-Visby Rules. 25 See 19th Session Report, supra note 13, } 222–230, 239–242. 26 The Hamburg Rules Article 12 which provides “The shipper is not liable for loss sustained by the carrier or the actual carrier, or for damage sustained by the ship, unless such loss or damage was caused by the fault or neglect of the shipper, his servants or agents.” imposes the burden of proof on the carrier. 27 See, 19th Session Report, supra note 13, } 225, 227. 28 See, 19th Session Report, supra note 13, } 230, 239–243. Therefore, the burden of proof is left to the courts. Some interpret that the carrier bears the burden under article 30(2) [Hooper (2009), p. 888]. Others have a contrary view [Diamond (2009), supra note 21, p. 494]. 29 As is noted in } 8.3.1.2, this is an important difference compared with the previous conventions and with the carrier’s liability under the Rotterdam Rules.
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find that the shipper is “at fault” unless there is reasonable explanation for the cause of the breach. In short, many courts seem likely in practice to equate a shipper’s breach with “fault” unless the shipper can provide a good explanation for the breach.
8.4
Obligations (1): The Breach of Which Triggers Fault-Based Liability
Let us examine the specific obligations of the shipper provided in Chapter 7 of the Rotterdam Rules.
8.4.1
Shipper’s Obligation to Deliver the Goods for Carriage
8.4.1.1
General Obligation to Deliver the Goods
Article 27 imposes the shipper’s obligation regarding the delivery of goods for carriage to the carrier. The first sentence provides for the obligation to deliver the goods ready for carriage and the second requires that the goods should be in safe condition with regard to persons or property. The former obligation can be modified by the contract of carriage (as indicated by the opening phrase “[u] nless otherwise agreed”), but the latter cannot (as indicated by the opening phrase “[i]n any event”). The contractual freedom under the first sentence of article 27(1) allows the commercial flexibility necessary for the parties to make appropriate arrangements for the “readiness” of the goods. The mandatory rule of the second sentence protects the safety of everyone involved in the enterprise. The shipper shall deliver the goods in such condition that they will withstand the intended carriage. The term “intended carriage” clarifies that the obligation is defined by reference to the carriage that is expected at the time that the shipper delivers the goods to the carrier.
8.4.1.2
Containerized Cargo
Article 27(3) provides for a special rule regarding containerized cargo. When the goods are delivered in a container packed by or in a vehicle loaded by the shipper, the shipper should properly and carefully stow, lash and secure the contents in or on the container or vehicle, and in such a way that they will not cause harm to persons or property. Although during the discussion in the UNCITRAL Working Group a question was raised whether article 27(3) adds anything not covered by article 27 (1), it was thought that the paragraph has at least practical value in reminding the
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shipper of the importance of stowing and securing the goods in the container to withstand the voyage.30 The focus of article 27(3) is the proper stowage of the goods, while article 27(1) concerns the condition of the goods themselves and their packaging. Like the second sentence of article 27(1) which focuses on safety concern, there is no contractual freedom for the obligation under this paragraph.
8.4.1.3
Activities Under FIO Clause
Parties sometimes agree on a clause known as FIO (“free in and out”). Typical example of the FIO clause is as follows: “The cargo shall be brought into the holds, loaded, stowed and/or trimmed, tallied, lashed and/or secured and taken from the holds and discharged by the shipper or the consignee, free of any risk, liability and expense whatsoever to the carrier.” Article 28(2) provides that the shipper should perform its obligation under the FIO clause carefully and properly. If the stowage by the shipper was incomplete, it is a breach of obligation under this article and may result in the shipper’s liability if the carrier incurred loss or damage. Not all activities under the FIO clause are performed by the shipper. For instance, unloading of the goods from the ship may be performed by the consignee. Please note that the paragraph does not regulate such activities performed by a person other than the shipper. Let us assume that the consignee damaged the ship during the unloading process as agreed in the FIO clause contained in a nonnegotiable transport document.31 The shipper has not breached the obligation under article 27(2) because it did not perform the discharge under FIO clause unless the consignee is not the person referred to in article 34. The consignee might be liable under applicable national law but not under the Rotterdam Rules.32 Chapter 7 of the Rotterdam Rules provides only for the shipper’s obligation and liability. See 16th Session Report, supra note 12, } 111–112. Please note that the holder of a negotiable transport document may be subject to the same liabilities as the shipper pursuant to article 58(2). 32 During the deliberation in the UNCITRAL Working Group, it was discussed whether the Convention should address the obligation of the consignee in connection with the activities under FIO clause. Proposed article 45(2) of Draft Convention prepared for the 21st Session of the Working Group (January 2008) required the consignee to act “properly and carefully” when unloading the goods under a FIO clause (“Transport Law: Draft convention on the carriage of goods [wholly or partly] [by sea]”, U.N. doc. no. A/CN.9/WG.III/WP.101). That draft provision, however, caused serious debate. On the one hand, it was argued that this obligation should not be imposed without the consignee’s consent because the FIO clause between the shipper and the carrier cannot automatically bind the consignee. On the other hand, there was opposition to requiring the consignee’s consent because it could contradict both the theory of a contract for the benefit of a third party and also the current practice under FIO clauses. See Report of Working Group III (Transport Law) on the work of its twenty-first session (Vienna, 14–25 January 2008), U.N. doc. no. A/CN.9/645 (2008) [hereafter “21st Session Report”], } 145–147. Ultimately UNCITRAL decided to delete the proposed article 45(2) to leave the consignee’s obligations to be decided under national law. See 21st Session Report, } 150. 30 31
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8.4.2
Shipper’s Obligation to Provide Information, Instructions and Documents
8.4.2.1
The Obligation to Provide Information for Proper Handling and Carriage of the Goods and to Comply with the Law and Regulations
Article 29 of the Rotterdam Rules requires that the shipper provide necessary information. Although previous conventions are generally silent on the shipper’s obligation to inform the carrier (except for information regarding dangerous goods), the contract of carriage often requires the shipper to provide necessary information for the carriage. The Rotterdam Rules which explicitly refer to the obligation should be seen as codifying the existing practice rather than creating a novel obligation. Article 29(1) refers to two different types of information, instructions and documents: (1) for the proper handling and carriage of the goods (including precautions to be taken by the carrier and a performing party) and (2) for the carrier to comply with the law, regulations or other requirements of public authorities in connection with the intended carriage. The information, instructions and documents for the proper handling and carriage of the goods should be provided only to the extent that they are reasonably necessary and not otherwise reasonably available to the carrier. As for the information, instructions and documents for the carrier to comply with the law, regulations, etc., should be provided only when the carrier, in a timely manner, has notified the shipper of the information, instructions and documents it requires. The shipper does not always know what information, instructions or documents the carrier needs.
8.4.2.2
Obligation to Cooperate with Each Other
Article 28 of the Rotterdam Rules provides for the obligation of mutual cooperation in providing information and instructions. Performing the contract of carriage effectively requires that the parties communicate properly. In practice, many things may go wrong due to lack of communication. Mutual communication is therefore essential for the proper implementation of the contract on both sides. Article 28 underpins that cooperation by providing the obligation to respond to requests from the other party for the information and instructions necessary for the proper handling and carriage of the goods. The parties should provide the information that they possess and the instructions that they can reasonably give. The reasonability requirement ensures that the obligation – by definition – does not impose an unreasonable burden on the parties. The shipper, for instance, need not conduct a costly investigation to obtain information that the carrier has requested if that would be unreasonable. Moreover, even if the parties have information or can reasonably give instructions, they need not do so if the information is already reasonably available to the requesting party.
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221
Obligations (2): The Breach of Which Triggers Strict Liability
The Rotterdam Rules provide for two kinds of obligations which trigger the shipper’s strict liability.
8.5.1
Obligation to Provide Information Necessary for Compilation of Contract Particulars
8.5.1.1
Obligations Under Article 31(1)
The shipper should provide to the carrier the information necessary for the compilation of the contract particulars and issuance of the transport documents or electronic transport record. Article 31(1) provides a non-exhaustive list of information that the shipper must provide. First, the information regarding the goods, including (1) a description of the goods as appropriate for the transport (article 36 (1)(a)), (2) the leading marks necessary for identification of the goods (article 36(1) (b)), (3) the number of packages or pieces, or the quantity of goods (article 36(1) (c)), and (4) the weight of the goods if the shipper wishes to incorporate it in contract particulars (article 36(1)(d)), should be provided. While the name of the consignee or name of the person to whose order the transport document or electronic transport record is to be issued are not items of information always necessary for the compilation of the contract particulars,33 as far as they are necessary, the shipper should provide them. It should be noted that this is not an exhaustive list of the information which the shipper should provide; any other information, as far as it is necessary either for the compilation of the contract particulars or the issuance of the transport documents or electronic transport record, should also be provided.
8.5.1.2
Guarantee of the Accuracy of Information
The shipper is deemed to have guaranteed the accuracy of the information that is provided according to article 31(1) and shall indemnify the carrier against loss or damage resulting from the inaccuracy of such information (article 31(2)). 33
The contract particulars in the transport document or electronic transport record referred should include the name and address of the consignee only if it is named by the shipper (article 36(3)(a)). The name of the person to whose order the transport document or electronic transport record is to be issued is irrelevant for a non-negotiable transport document or a non-negotiable electronic transport record or a “bearer document” or a “bearer electronic transport record.”
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The provision is essentially the same as article 3(5) of the Hague and the HagueVisby Rules and article 17(1) of the Hamburg Rules. Please note that the strict liability under article 31(2) is not always triggered even when the carrier breaches obligation under article 31(1). For instance, the shipper breaches obligation under article 31(1) if it does not provide required information or provides information in an untimely manner. However this breach does not trigger a shipper’s strict liability under article 31(2). The shipper’s guarantee covers only the accuracy of information which is actually provided according to article 31(1). There are different types of claims which the shipper should expect under article 31(2). The first type of claim comes from the evidentiary effect of a transport document or an electronic transport record with inaccurate information in its contract particulars. For instance, the shipper informed the carrier that 40 machines were contained in a container, and the carrier issued a bill of lading which stated “contents: 40 machines” without any qualifying clause. When the container was delivered to the consignee, only 30 machines were found in the container. The carrier is liable for the loss of 10 machines (see, article 41(b)). The carrier, in turn, has a recourse claim against the shipper for loss caused by the inaccurate information provided by the shipper. The carrier might also suffer from loss due to the inaccurate information provided by the shipper which is not related to the evidentiary effect of contract particulars. The shipper informed the carrier that the weight of the container was 5 tons, while the actual weight was 25. The carrier included 5 tons as the weight of the container in the contract particulars. In order to load the container the carrier used a crane to which was designed to carry up to 20 tonnes at maximum while it had another crane for the cargo heavier than 20 tonnes. The crane corrupted and the ship was damaged. In this case, the shipper might be liable for the breach of duty under article 29(1). However, to the extent that the information in question is provided for the compilation of the document, the shipper might also be liable under article 31(2).
8.5.2
Obligation in Connection with Dangerous Goods
8.5.2.1
Introduction
Article 32 of the Rotterdam Rules provides for special rules on dangerous goods. Such rules do not constitute a novel idea. The Hague and Hague-Visby Rules regulate dangerous goods in article 4(6), which confers certain rights on the carrier and imposes certain liabilities on the shipper. For “goods of an inflammable, explosive, or dangerous nature,” the carrier is entitled to land the goods “at any place,” destroy them, or render them innocuous – either when they “become a danger to the ship or cargo” (if the carrier has properly consented to their carriage) or “at any time” (if the carrier has not properly consented to their carriage). The shipper is “liable for all damages and expenses directly or indirectly arising out of or resulting from [the] shipment” if the carrier did not properly consent to the
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carriage of the goods. The basis of liability under this provision is not completely clear and the interpretation differs among jurisdictions.34 The Hamburg Rules has slightly more detailed regulations, including the shipper’s obligation to inform the carrier of the dangerous nature of the cargo (Article 13(2)) and to mark and label the dangerous goods (Article 13(1)), and the shipper’s strict liability for the loss resulting from the shipment of dangerous goods when the carrier is not aware of their dangerous character (Article 13(2)). The first draft of the Convention quite deliberately did not contain special regulations on the shipper’s liability for dangerous goods. The draft instead rejected the concept of “dangerous goods” as a distinct category: [T]he distinction between ordinary goods and dangerous or polluting goods is out of date. Whether certain goods are dangerous depends on the circumstances. Harmless goods may become dangerous under certain circumstances and dangerous goods (in the sense of poisonous or explosive) may be harmless when they are properly packed, handled and carried in an appropriate vessel. The notion “dangerous” is relative.35
Rather than regulating the shipper’s liability for dangerous goods, the first draft provided for strict liability for inaccurate information, which would cover most situations in which the shipper did not properly disclose the dangerous nature of the goods or did not properly mark or label them.36 The UNCITRAL Working Group, at its 13th Session (May 2004), abandoned the proposed strict liability for incomplete or inaccurate information in general and instead reintroduced regulation along the lines of article 4(6) of the Hague-Visby Rules and article 13 of the Hamburg Rules.37
8.5.2.2
“Dangerous Goods”
Everything can be dangerous under certain circumstances. Indeed, some courts have very broadly interpreted the concept of dangerous goods under the HagueVisby Rules.38 To avoid such unreasonably broad interpretations – which could 34
The issue is whether the shipper’s liability under article 4(6) of the Hague-Visby Rules is qualified by article 4(3), which declares fault-based liability for the shipper. The British courts, answering in the negative, have interpreted article 4(6) as imposing strict liability (Effort Shipping Co. v. Linden Management S.A. (The “Giannis NK”), [1998] 1 Lloyd’s Rep. 337). One of the U.S. courts also reached the same conclusion (Senator Linie GmbH & Co. KG v. Sunway Line, 291 F.3d 145 (2d Cir. 2002)). 35 Draft WP.21, supra note 9, } 116; see also “Report of the Working Group on Transport Law on the work of its ninth session (New York, 15–26 April 2002)”, U.N. doc. no. A/CN.9/510 (2002), } 163. 36 See Draft WP.21, supra note 9, arts. 7.3, 7.5. 37 See “Report of Working Group III (Transport Law) on the work of its thirteenth session (New York, 3–14 May 2004)”, U.N. doc. no. A/CN.9/552 (2004), } 146–148. 38 See, e.g., Effort Shipping Co. v. Linden Management S.A. (The “Giannis NK”), [1998] 1 Lloyd’s Rep. 337 (holding a cargo of ground-nut extraction meal pellets to be “dangerous” under article 4(6) of the Hague Rules).
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lead to an unlimited expansion in the scope of article 32 and undermine the principle that a shipper’s liability should generally be fault-based – UNCITRAL included the “nature or character” qualification. Ordinarily harmless goods may cause harm under certain circumstances, but they are not “by their nature or character” dangerous. For instance, let us assume a cargo of ground-nut extraction meal pellets was infested with insects that posed a threat to other cargo on the vessel. As a result of the infestation, the vessel was quarantined and the carrier suffered substantial losses, which the carrier seeks to recover from the shipper. In this case, the shipper is not liable under article 32 because the infested goods were not “by their nature or character” dangerous (However, the shipper may be liable under article 27 if the shipper was at fault).
8.5.2.3
Situation Covered by Article 32
Article 32 covers the situation “when goods by their nature or character are, or reasonably appear likely to become, a danger to persons, property or the environment”. This article addresses several different situations like the following: 1. The first situation is where the goods actually become dangerous and cause physical damage to the carrier. A shipper must inform the carrier when it ships such goods so that the carrier can take necessary precautions. If the shipper fails to do so, the shipper is liable for damage caused by such breach of obligation whether it is at fault or not. 2. The goods actually become dangerous and the carrier is able to render the dangerous goods harmless, thus avoiding any actual physical damage, but incurring additional costs. The carrier’s necessary and reasonable expenses constitute a “loss” under article 32. 3. Even when the goods were not actually dangerous, they sometimes “reasonably appear likely to become dangerous”. Article 32 applies to such a case. The carrier can claim the cost which it incurred from reasonable measures to avoid such apparent danger to persons, property or the environment to the extent that it could have saved such measures if it had been properly informed.39
8.5.2.4
Obligations Under Article 32
Article 32 imposes two obligations on the shipper: (1) to inform the carrier of the dangerous nature or character of the goods in a timely manner before they are delivered to the carrier or a performing party (article 32(1)) and (2) to mark or label 39
The Hague and the Hague-Visby Rules regulate the shipment of “goods of an inflammable, explosive or dangerous nature to the shipment” (Article IV(6)) and the Hamburg Rules the shipment of “dangerous goods” (Article 13). It is not clear whether these conventions cover the situation where the goods look reasonably dangerous but in fact are not.
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dangerous goods in accordance with any law, regulation or other requirements of public authorities that apply during any stage of the intended carriage of the goods (article 32(2)). The shipper should inform the carrier of the dangerous nature or character of the goods. Although this obligation is essentially identical to that of article 13(2) of the Hamburg Rules, there are minor differences. While the Hamburg Rules requires the shipper to inform the carrier “if necessary, of the precautions to be taken,” the Rotterdam Rules do not. The shipper might be required to inform the carrier of necessary precautions to be taken under article 29 although the breach of the obligation does not trigger strict liability. The shipper should provide the information in a timely manner before the goods are delivered to the carrier or a performing party. However, even the information submitted after the delivery could affect the shipper’s liability to the extent it could contribute to the prevention of the incidents. See Sect. 8.5.2.5 below. Article 32(2) imposes a similar obligation as article 13(1) of the Hamburg Rules. The difference is that article 32(2) explicitly requires that the marking and labeling of the dangerous goods be in accordance with the applicable law, regulations or other requirements of public authorities. The regulation of dangerous goods has recently become more and more rigorous and complex and the carrier is often liable for the non-compliance on strict liability basis. Article 32(2) makes it possible for the carrier to have recourse against the shipper who is primarily responsible for the non-compliance. One should note that the notification by the carrier is, unlike article 29(1)(b), not a prerequisite for this obligation. Regardless of whether the carrier required or instructed the necessary action to comply with the law, regulations or other requirements of the public authorities, the shipper should properly mark or label dangerous goods accordingly.
8.5.2.5
Causation Between the Breach of Obligation and the Loss or Damage
The shipper is liable for loss or damage resulting from the breach of these obligations. One would notice a slightly different wording in connection with the causation compared with the previous conventions which provide that the shipper is liable for the loss resulting “from the shipment.”40 The wording was carefully examined in the Working Group.41 Under the previous conventions, if the dangerous goods explodes and damages the carrier and if there is an insufficient marking or labelling, the shipper is automatically held liable. Under the Rotterdam Rules, the court should examine whether the loss could have been saved if the shipper had 40
The Hague and the Hague-Visby Rules provide that the shipper is liable “for all damages and expenses directly or indirectly arising out of or resulting from such shipment” (Article IV(6)) and the Hamburg Rules “for the loss resulting from the shipment of such goods” (Article 13(2)(a)). 41 See 16th Session Report, supra note 12, } 168, 19th Session Report, supra note 13, } 252.
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properly marked or labelled the dangerous goods. Only if the answer is affirmative, the causation between the breach of obligation and the loss or damage exists and the shipper is liable to that extent. The shipper’s liability is, to that extent, limited under the Rotterdam Rules.
8.6
The Liability of Documentary Shipper
A person other than the shipper is sometimes included in contract particulars as “shipper.” For instance, a FOB (Free on Board) FOB seller is not a shipper because the buyer must contract at its own expense for the carriage of goods from the named port of shipment under the terms of FOB sales.42 Although an FOB seller sometimes arranges the contract of carriage, it does so on behalf of the shipper, rather than as one of the contract parties. Nevertheless, the name of the FOB seller sometimes appears on the transport document as a “shipper.” The legal status of such persons has been unclear under the Hague and the Hague-Visby Rules. The Hamburg Rules adopts a broad definition of “shipper” which includes not only the person who concluded a contract of carriage with a carrier but also “any person by whom or in whose name or on whose behalf the goods are actually delivered to the carrier in relation to the contract of carriage by sea” (article 1(3)). Therefore, if an FOB seller actually delivered the goods to the carrier, the Hamburg Rules regulates it as a shipper. The Rotterdam Rules adopted a different approach. Instead of regulating a person who actually delivered the goods to the carrier, it introduces the notion of “documentary shipper.” A “documentary shipper” is defined in article 1(9) as “a person, other than the shipper, that accepts to be named as ‘shipper’ in the transport document or electronic transport record.” The Rotterdam Rules are based on the person’s “assumption” of the status rather than on its actual delivery of the goods. If a person other than the shipper is identified as the shipper in the contract particulars43 and it accepts to be named as shipper, it becomes a documentary shipper. A documentary shipper is only subject to the obligation and liability imposed on the shipper pursuant to Chapter 7 and to article 55, and is entitled to the shipper’s rights and defences provided by Chapters 7 and 13. Therefore, for instance, the 42
See INCOTERMS 2000, FOB, The buyer’s obligation B3. The current text was created from the first sentence of article 34 of draft text prepared for 16th session of the UNCITRAL Working Group (November–December 2005) (“Transport Law: Draft convention on the carriage of goods [wholly or partly] [by sea]”, U.N. doc. no. A/CN.9/WG.III/ WP.56) which reads as follows:
43
If a person identified as “shipper” in the contract particulars, although not the shipper as defined in paragraph 1(h), [accepts] [receives] [becomes a holder of] the transport document or electronic transport record, then such person is (a) [subject to the responsibilities and liabilities] imposed on the shipper under this chapter and under article 59, and (b) entitled to the shipper’s rights and immunities provided by this chapter and by chapter 14. No change in substance was intended. See 19th Session Report, supra note 13, } 255–256.
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carrier cannot make a claim for the payment of the freight against the documentary shipper. The obligation and liability of a documentary shipper is not a substitute for those of the shipper. A shipper is not exonerated when a documentary shipper is liable. Although the carrier cannot be paid twice, it is free to make a claim against the shipper rather than the documentary shipper.
8.7
Conclusion
We have examined the basic liability structure and specific obligations under Chapter 7 of the Rotterdam Rules. Let us to return to the question which was raised in the beginning of this paper: Are shipper’s obligations and liabilities substantially increased under the Rotterdam Rules? First, the shipper’s general liability is fault-based under the Rotterdam Rules as well as under the Hague, the Hague-Visby and the Hamburg Rules. While the Rotterdam Rules explicitly provide for the specific obligations of the shipper in a detailed manner, the effect is subtle. On one hand, a breach of such obligations would usually give a cause of action against the shipper under applicable national law44 or under the contract of carriage in many cases. On the other hand, the “breach of obligation” under the Rotterdam Rules is the prerequisite of a shipper’s liability (article 30(1)) and explicit references to specific obligations in Chapter 7 may be understood as a safeguard for the shipper. The shipper bears strict liabilities under the Rotterdam Rules in two situations: damage caused by inaccurate information provided by the shipper for the compilation of transport documents and by dangerous goods. These rules do not increase, at least substantially, the shipper’s liability compared with previous conventions. The shipper has been deemed to guarantee the accuracy of information which it provided to the carrier for the transport with regard to the goods under the Hague, the Hague-Visby and the Hamburg Rules. Liabilities on dangerous goods have already been strict under the Hamburg Rules and, in many jurisdictions, under the Hague and the Hague-Visby Rules. In addition, the Rotterdam Rules require more rigid causation than the previous conventions.45 It should also be noted that the Rotterdam Rules give safeguard for the shipper compared with previous conventions. First, unlike the previous conventions, the Rotterdam Rules prohibit parties from increasing the obligation of the shipper (article 79(2)). Second, a 2-year time-bar in article 62 is also applicable to shipper’s liability while the previous conventions leave the issue to applicable law and national law which usually provide for longer time-bar period.
See } 8.3.2. For example, improper packaging by the shipper (breach under article 27(1)) might constitute “fault” in the context of torts. 45 See } 8.5.2.5. 44
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It is sometimes claimed that it is unfair that the shipper owes unlimited liability while the carrier enjoys limitation under the Rotterdam Rules.46 Although this accusation is simple and sounds appealing to the innocent readers of the Rotterdam Rules, it cannot withstand a scrutiny. First, it should be stressed that this not a problem caused by the Rotterdam Rules. The shipper has already been unlimitedly liable under the Hague, the Hague-Visby, and the Hamburg Rules. Second, it is very difficult to find a sensible indicator or figure for shipper’s liability limitation. This is why most national laws do not provide limitation of liability for the shipper.47 The overall assessment is that the shipper’s obligations and liability are not substantially increased under the Rotterdam Rules.
References Baughen S (2009) Obligations owed by the shipper to the carrier. In: Thomas DR (ed) A new convention for the carriage of goods by sea: the Rotterdam Rules. Lawtext Publishing, Oxford, pp 169–189 Diamond A (2009) The Rotterdam Rules. LMCLQ 445 Hooper CD (2009) Obligations of the shipper to the carrier under the Rotterdam Rules, Chap 7. Unif. L. Rev:885 Olebakken IH (2007–2008) Background paper on shipper’s obligations and liabilities. CMI Yearb:300
46
See, the European Shipper’s Council Position Paper, supra note 6, Diamond (2009), supra note 21, p. 491. 47 Olebakken, supra note 7, suggests that although shipper’s unlimited liability under national law does not seem to have caused serious problems, the pure that shipper’s liability is regulated in an international convention may give rise to more claims against the shipper. She continues that this may in turn make current the need for limitation of shipper’s liability, preferably on international level. The author, however, is quite skeptical if there is any significant difference in claimant’s behavior depending on whether the cause of action is given by the international or domestic.
Chapter 9
Transport Documents in the Light of the Rotterdam Rules Hakan Karan
Abstract This paper studies “Transport Documents in the light of the Rotterdam Rules”. It explains the meaning and types of the transport documents under the Rotterdam Rules comparing with those under the Hague, Hague-Visby and Hamburg Rules. The question of the extent to which the provisions of the Rotterdam Rules regarding the transport documents covers the practical needs is addressed herein. This paper concludes that the Rotterdam Rules create its own law with respect to the transport documents and generalises all types of documents used in practice for carriage under the name of transport documents. The Rotterdam Rules have some advantages such as the coverage of the electronic transport document and the document for multimodal transport with a sea leg and some disadvantages such as the lack of direct connection with the practice. Ultimately, the Rules can be evaluated as good or bad only in the future after they have been in use, and the question whether the Rotterdam Rules is the only alternative for the unification of transport laws of the Hague and Hamburg regimes will then be answered. Do we all have time for that?
9.1
Introduction
The title of this paper is “Transport Documents in the light of the Rotterdam Rules”. The Rotterdam Rules were adopted on 11 December 2008 in New York, USA, and opened for signature on 23 September 2009 in Rotterdam, the Netherlands. The aim of drafting the Rules was to establish uniform rules for the international carriage by sea including multimodal transportation with a sea leg. As a consequence of the unification of transportation laws, the relevant parties to the carriage contract are able to foresee the legal risks related to the carriage and to insure those with a lower cost; the freight and insurance costs included in the purchase price
Assoc. Prof. Dr. H. Karan Maritime Law Department, Ankara University, Faculty of Law, Turkey and Delegate of the ICC Transport Commission e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_9, # Springer-Verlag Berlin Heidelberg 2011
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decrease for the goods subject to international trade, which leads to trading conditions with lower expenses. There is, therefore, a global public interest in the unification of transportation rules. This paper does not, however, address the following question: “How much do the Rotterdam Rules from a general perspective, meet such purpose?” Instead, it explains the related provisions on the transport documents therein, compares them with others in international and national laws and questions their applicability. Within this scope, the paper seeks to answer the following questions: (a) What is the meaning of the transport documents in the Rotterdam Rules? How are they regulated? (b) What are the advantages and disadvantages of the transport document provisions of the Rotterdam Rules in comparison to other international or national laws? (c) To what extent do the provisions of the Rotterdam Rules with regard to the transport documents, meet the needs in practice? In answering these questions, the provisions of the transport documents in the Rotterdam Rules, complying with Article 2, have been interpreted by taking into consideration their international character, which has been used to promote uniformity in international trade within the frame of good faith.
9.2
Definition
Transport documents have been defined in Article 1(14) of the Rotterdam Rules. Accordingly, “transport document” means a document issued under a contract of carriage by the carrier that: (a) evidences the carrier’s or a performing party’s receipt of goods under a contract of carriage; and (b) evidences or contains a contract of carriage. In order to determine which transport documents in practice come under this definition, each element of the transport document should be examined individually.
9.3
Elements
9.3.1
Document
9.3.1.1
(Traditional) Transport Document
The most important outcome of Article 1(14) of the Rotterdam Rules is that a traditional transport document must be a document. There is no provision in the Rotterdam Rules that define the meaning of the document.
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A document means a durable and tangible object on which the intention of a person is formed. However, the meaning given to the document and consequently to the transport document may vary depending on the object and the form of the intention therein. A traditional transport document is a paper recording in writing the carrier’s intention to undertake an obligation. This is written in everyday language.1 Therefore, to define a document this way, it needs: 1. The carrier’s declaration of intention to undertake an obligation (to carry goods), 2. (a) A paper which contains such declaration of intention, and (b) A written text composed in everyday language as the form of such declaration.2
9.3.1.2
Electronic Transport Record (Electronic Transport Document)
General Developments in technology and the use of the Electronic Data Interchange (EDI) in commerce have extended the scope of the traditional meaning of document and raises the question whether a declaration in “electronic record medium”, where electronic data is created, transferred and stored is a document, and if a message stored in this medium is sufficient to be considered a written declaration of the intention. Evaluation of the matter whether an electronic record medium is a document depends on an examination of each element of the traditional document and whether this electronic medium corresponds to the fundamental functions of the traditional document (functional equivalent approach). As a result of the studies, it has been found that the electronic record medium is a durable tangible object like the paper in a traditional document used to safely store, transfer and declare the intention. Consequently, from the view point of functionality, the electronic record medium is nothing less than a document.3 In so far as there is a lack of a legal rule regarding the concept of a document, the acceptance of the electronic record medium as a document is obstructed, and therefore, electronic trade is interrupted. In order to provide more clarity, the Rotterdam Rules place the electronic transport document under the name of “electronic transport record”. This regulation is an innovation on the Hague Rules 1924, the Hague-Visby Rules 1968, and even the Hamburg Rules 1978. Considering the electronic transport record terminology, it is seen that the Rotterdam Rules abstain from using the term “document”, using “record” instead. Despite the fact that this approach seems to be a positive one for the application of the Rotterdam Rules, it makes the direct application of the Rules to other branches of the law impossible. For example, under procedural law, the documentary evidence 1
Yiannopoulos AN (ed) Ocean bills of lading, s. 13. Karan (2004), s. 39. 3 In general see Karan (2004). 2
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under the documentary evidence rule may be unnecessarily disputed. From this point of view, it can be concluded that the Rotterdam Rules were designed to stay within its own perspective and failed to respond to the needs of the commercial practice and to give general direction to the law. Another weakness of the Rotterdam Rules lies in the terminology of the text; instead of using the terms in current usage, they are replaced by new one and their meaning is shaped by the practice. The electronic transport record is not defined as a declaration of the intention contained in the electronic record medium, but defined as the declaration itself, which is not a correct definition. According to Article 1(18) of the Rotterdam Rules; “electronic transport record” means information in one or more messages issued by an electronic communication under a contract of carriage, including information logically associated with the electronic transport record by attachments, or otherwise linked to the electronic transport record contemporaneously with or subsequent to its issue by the carrier, so as to become a part of the electronic transport record. Electronic Communication To be defined as an electronic transport record, the messages of declaration of intention ought to be issued by electronic communication. “Electronic communication” has been defined in Article 1(17) of the Rotterdam Rules as information generated, sent, received or stored by electronic, optical, digital or similar means with the result that the information communicated is accessible so as to be usable for subsequent reference. Actually, electronic communication is the EDI within the meaning of Article 2 (1) of the UNCITRAL Model Law on Electronic Commerce 1996 and in practice. The Rotterdam Rules preferred once again to create its own terms. To define the electronic transport document and electronic communication in the same way as “information” obstructs to reach a definition from another. Use in Practice and Validity By taking into consideration the functional equivalence approach, Article 8 of the Rotterdam Rules considers the electronic transport records as equal to transport documents. Anything in a transport document under this Convention may be recorded in the electronic transport record, provided that the issuance and subsequent use of an electronic transport record is with the consent of the carrier and the shipper. Such consent and use of an electronic transport document creates an EDI agreement between the parties. It is also emphasized that the issuance, exclusive control or transfer of an electronic transport record has the same effect as the issuance, possession, or transfer of a transport document. Consequently, an electronic transport record is nothing less than a transport document. Since there is no functional difference between the two, it was considered as necessary to provide some exceptional
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special provisions for the use of electronic transport records. The electronic transport record is therefore discussed in this paper with reference to the transport document.
Procedures for Use According to Article 9 of the Rotterdam Rules, the use of a “negotiable” electronic transport record is subject to the procedures which ensure functional equivalence. The electronic transport record shall provide and contain: (a) The method for the issuance and the transfer of that record to an intended holder; (b) An assurance that the negotiable electronic transport record retains its integrity; (c) The manner in which the holder has to demonstrate that he is indeed the holder; and (d) The manner of providing confirmation that delivery to the holder or to the authorised consignee has been effected, or that, the electronic transport record has ceased to have any effect or validity. The agreed procedures should be referred to in the contract particulars and be readily ascertainable. The procedure referred to here is nothing but the EDI standards.
9.3.2
Dual Evidence Function
Considering Articles 1(14) and (18) of the Rotterdam Rules, it can be concluded that the transport document has two main compulsory functions. First, both a transport document and an electronic transport record are evidence of a contract of carriage because they contain and record information. Besides, they provide evidence of the carrier’s or performing party’s receipt of goods under the contract of carriage. A document cannot be a transport document without these two functions. However, there is no need for the transport document to be documentary intangible to have a function.4 Nor does the right to claim for delivery or transfer of goods depend on the surrender of the document. In practice, both the waybill and bill of lading are conclusively accepted as transport documents. It could be said that the Rotterdam Rules, therefore, have responded much more to the needs of transport than the Hague and Hague-Visby Rules, which were actually designed for transport under the bills of lading. However, in response to the Hamburg Rules, the Rotterdam Rules do not provide any further reforms. In Turkish “kıymetli evrak”, in German “Wertpapier”.
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9.4 9.4.1
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Types of Transport Documents In General
The Rotterdam Rules use the terms negotiable/non-negotiable transport documents, which are applied and used under Anglo-Saxon Law, but are not known to Turkish Law and do not have any equivalent in Turkish law. Therefore it is necessary to examine the meaning of the term within the context of Anglo-Saxon Law and commercial practice. Since in practice, a negotiable document is a documentary intangible to be issued to order or bearer, which limits the debtor’s right to provide personal defence against the third party holder, it is used with a meaning similar to the “public trusted documentsary intangible” under Turkish law. On the other hand, a non-negotiable document refers to a named document whether documentary intangible or not, where the document debtor has the right to provide personal defence against third party creditors and is used within the meaning of the Turkish “public non-trusted document/documentary intangible”. For the sake of clarity, this paper prefers the commonly used terms ciro edilebilir (capable of being endorsed)/ciro edilemez (non-capable of being endorsed) transport documents in place of the terms negotiable/non-negotiable transport documents. Furthermore, it prefers not to use the “transferable/ non-transferable” terminology, because all documents are transferable, but not negotiable. Unfortunately, to explain the transport document types of the Rotterdam Rules without any reference to bills of lading and waybills in practice does not help much to understand the Rotterdam Rules. Essentially, it is possible to form a clear understanding of transport documents and the operation of such documents only through a detailed analysis of the Rotterdam Rules.5
9.4.2
Negotiable Transport Document
Articles 1(15) and (19) of the Rotterdam Rules define the negotiable transport document as one that indicates, by using words such as “to order” or “negotiable” or other appropriate words recognized as having the same effect by the law applicable to the document, that the goods have been consigned to the order of the shipper, to the order of the consignee, or to bearer, and is not explicitly stated as being “non-negotiable” or “not negotiable”. As explained above, unless a transport document is issued as non-negotiable, the negotiable transport document means “order or bearer transport document”.
5
Tetley (2008), s. 3.
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The procedures and integrity of Article 9(1)(b) of the Rotterdam Rules must be ensured in order to mention the negotiable electronic transport record. This integrity ensures that the electronic transport record has the same integrity with the traditional transport document.
9.4.3
Non-negotiable Transport Document
Articles 1(16) and (20) of the Rotterdam Rules define the non-negotiable transport document as a transport document that is not negotiable. On this basis, any transport document which is not issued explictly to the order of the shipper or the consignee, or the bearer, or even if issued with these remarks, are also explicitly issued as nonnegotiable, are non-negotiable transport documents. There is only one example for such a transport document, “the named transport document”. By Article 9(1)(b) of the Rotterdam Rules, the non-negotiable electronic records differ from the negotiable electronic transport records in the sense that they are not subject to the procedures that require an assurance that the negotiable electronic transport record retains its integrity. Nevertheless, as explained further below, an electronic transport record document which is non-negotiable, but requires its surrender is also a documentary intangible and should be subject to such a compulsory provision.
9.5
Replacement
Article 10 of the Rotterdam Rules explains the procedure for the replacement of a negotiable transport document with a negotiable electronic transport record. According to this article, if a negotiable transport document has been issued, and the carrier and the holder agree to replace that document with a negotiable electronic transport record, the orginial document ceases to have any effect or validity; the carrier and holder have to make an agreement; the holder surrenders the negotiable transport document, or all of them if more than one has been issued, to the carrier and the carrier issues to the holder a negotiable electronic transport record that includes a statement that it replaces the negotiable transport document. Where, on the other hand, a negotiable electronic transport record has been issued and the carrier and the holder agree to replace that electronic transport record by a negotiable transport document, the original electronic document ceases to have any effect or validity; the carrier issues to the holder, in place of the electronic transport record, a negotiable transport document that includes a statement that it replaces the negotiable electronic transport record. In such a case, the electronic transport document should cease to have any effect or validity in compliance with the procedures set out in Article 9 of the Rotterdam Rules.
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Issuance
Article 35 of the Rotterdam Rules entitles the (contracting) “shipper”, a person that enters into a contract of carriage with a carrier, to obtain the issuance of the transport document or electronic transport record. However, in order to obtain such a right for issuance, the carrier and (contracting) shipper must come to an agreement on the use of electronic transport records in accordance with Article 8(a) of the Rotterdam Rules. A significant criticism of Article 35 of the Rotterdam Rules is that under the Hague and Hamburg regimes, the (contracting) shipper had the direct right to obtain a bill of lading as a documentary intangible from the carrier, and that the Rotterdam Rules have generalized such a right with the transport document whether a documentary intangible or not. Nevertheless, the carrier may, even if the (contracting) shipper demands the bill of lading (negotiable transport document), issue a waybill (non-negotiable transport document) instead and may fulfill his obligation under the Rotterdam Rules.6 This right to request of the “(contracting) shipper” instead of the “actual shipper” is also a difference compared to Article 1097 of the Turkish Commercial Code. The reason for this change lies in Article 3 of the Hague and Hague-Visby Rules, where the “shipper”, who has been granted such right, is not defined. Even under the Turkish commercial law, the main opinion tends to be that the actual shipper can request for such a right using a rightist position as the legal representative of the (contracting) shipper, and therefore the importance of this a difference ceases. Although such a right is mentioned as given to the “consignor” in the Hamburg Rules, the “shipper” in the Rotterdam Rules and the “consignor” in the Hamburg Rules may mean the same. One significant difference of the Rotterdam Rules is that the “documentary shipper” accepting to be named as a third party “shipper” in the transport document has the right to request the issuance of such a transport document or electronic transport record. Conversely, the documentary shipper is, in practice, the actual shipper mentioned under the Turkish commercial law. The right of the actual shipper to obtain a bill of lading according to the Turkish commercial law has been deemed to be based on the legal representation authority of the (contracting) shipper; the Rotterdam Rules though have left such a right to the consent of the (contracting) shipper. Surely, such consent may be made explicitly or tacitly. According to Article 35, for the (contracting) shipper to exercise the right to obtain the transport document or electronic transport record, the goods have to be delivered to the carrier or performing party. The (contracting) shipper and the carrier may agree not to use a transport document or it may be the custom, usage, or trade practice not to use one. In such a case, the (contracting) shipper is not entitled to claim the right of issuance of a transport document. The (contracting) shipper or documentary shipper is entitled to obtain from the carrier at the shipper’s option: (a) A non-negotiable transport document or (b) An appropriate negotiable transport document 6
European Shipper’s Council (2007), s. 7.
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The carrier and the (contracting) shipper may agree not to use a negotiable transport document, or it may be custom, usage, or trade practice not to use one. Article 1(21) of the Rotterdam Rules defines the “issuance” of a negotiable electronic transport record as the issuance of the record in accordance with procedures that ensure that the record is subject to exclusive control from its creation until it ceases to have any effect or validity.
9.7
Content
9.7.1
Contract Particulars
9.7.1.1
General
The particulars of a transport document have been defined in Article 36 of the Rotterdam Rules under “contract particulars” in three sections as follows: The first section enumerates the contract particulars to be included in the transport document by the carrier as declared by the shipper and at the same time the particulars to be furnished by the shipper and submitted to the carrier for inclusion in the transport document, such as: (a) (b) (c) (d)
A description of the goods as appropriate for the transport; The leading marks necessary for the identification of the goods; The number of packages or pieces, or the quantity of goods; and The weight of the goods, if furnished by the shipper.
To the best of its knowledge, the carrier is obliged to include the following into the transport document: (a) A statement of the apparent order and condition of the goods at the time the carrier or a performing party receives them for carriage (with reasonable external control at the time of receipt by the carrier from the shipper or by additional control at any time before the issuance of the transport document/ electronic transport record); (b) The name and address of the carrier; (c) The date on which the carrier or a performing party received the goods, or on which the goods were loaded on board ship, or on which the transport document or electronic transport record was issued; and (d) If the transport document is negotiable, the number of originals of the negotiable transport document, when more than one original is issued. The carrier shall further include the following particulars to the transport document: (a) The name and address of the consignee, if named by the shipper; (b) The name of the ship, if specified in the contract of carriage;
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(c) The place of receipt and, if known to the carrier, the place of delivery; and (d) The port of loading and the port of discharge, if specified in the contract of carriage.
9.7.1.2
Deficiency in the Contract Particulars
Article 39 of the Rotterdam Rules states that the absence or inaccuracy of one or more particulars of the contract does not by itself affect the legal character or validity of the transport document or the electronic transport record. Notwithstanding this, even if it is not explicitly expressed in the Rotterdam Rules, the transport document should include the minimum conditions set forth in Articles 1(14) and (18) and especially have a dual function. Otherwise, such a document is not a transport document, but merely evidence in its current state. If the contract particulars include the date, but fail to indicate its significance, the date is deemed to be the date on which all of the goods indicated in the transport document or electronic transport record were loaded on board ship. On the other hand, if the contract particulars fail to include the list of goods that were loaded on board ship, the date is deemed to be the date on which the carrier or a performing party received the goods.
9.7.2
Signature
Article 38 of the Rotterdam Rules provides that the transport document must be signed by the carrier or a person acting on his behalf. The existence of a signature is compulsory for the transport document. Without a signature, since the carrier’s intention to undertake the carriage is not declared, it cannot bespeak the existence of any document. It may be used only as a commencement of written proof allowing the use of proof other than the document. According to Article 14 of the Turkish Code of Obligations, the signature shall be signed “by hand”. Unfortunately, the Rotterdam Rules do not mention any other way to sign, and, under the Turkish Law, any other signature in place of a handwritten one can only be accepted where it may be custom, especially where a great number of documentary intangibles are issued as transport documents, this signature may be sufficient to override the requirement for the handwritten signature. It is also set forth under the Rotterdam Rules that an electronic transport record shall include the electronic signature of the carrier or a person acting on his behalf. Such an electronic signature must identify the signatory in relation to the electronic transport record and indicate the carrier’s authorization of the electronic transport record. Since there is no difference between a secure electronic signature and an unsecure electronic signature in the Rotterdam Rules, if the two minimum conditions are present, it is possible to issue an electronic transport record with an unsecure electronic signature. Therefore, the laws of the Contracting States
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regarding secure electronic signatures are not applied for transport records. Otherwise, this would be a huge obstacle for the use of electronic transport records, which do not comply with the needs of commercial practice.
9.8
Functions
9.8.1
Compulsory Function: Evidence
9.8.1.1
Evidence of the Contract of Carriage
General According to Articles 1(14) and (18) of the Rotterdam Rules, one of the functions of a transport document is to evidence the contract of carriage. As a result of this feature of the transport document, it proves or contains as a document the contract of carriage. This leads to the natural result that anything to the contrary that is included in the transport document, can only be evidenced by another document in accordance with the procedural rule of “documentary proof against document”. The contract of carriage may have been created at the time of issuance of the transport document or at any time before the issuance of the transport document. In the latter case, the contract particulars on the transport document may differ from the previous content of the contract of carriage. In such a case, it is accepted that the parties changed the contract of carriage with the contract particulars in the subsequent transport document. On the other hand, it cannot be expected that a transport document includes all particulars of the contract of carriage because the transport document is a document which only records the carrier’s intention to undertake the carriage and is signed only by the carrier. It is not necessary to include the obligations of the shipper on this document. The contract of carriage, which is evidenced by the transport document, is defined in Article 1(1) of the Rotterdam Rules. According to this definition: “Contract of carriage” means a contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another. The contract provides for carriage by sea and may provide for carriage by other modes of transport in addition to the sea carriage by the carrier. In the former, there is a “contract of carriage by sea” and in the latter a “multimodal transport contract”. Considering this wording, the Rotterdam Rules are the first international instrument to regulate the multimodal transport contracts and “multimodal transport documents”, even if they have to contain a compulsory sea leg. Besides the compulsory function of evidencing the contract of carriage, the transport document must also include two other essential contract particulars – the parties of the carriage and the explicit intention to undertake to carry goods with the signature of the carrier.
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“Freight Prepaid” Although the transport document or the electronic transport record evidences the carrier’s obligation to carry, the Rotterdam Rules have provided a provision regarding the freight in Article 42. It aims, if the contract particulars contain the statement “freight prepaid” or a statement of a similar nature, to prevent the carrier from asserting against a third party, holder or consignee the fact that the freight has not been paid. Nevertheless, if the holder or consignee is also the shipper, the carrier may refuse to deliver the goods to the shipper with whom the carrier has direct relationship and when there is an assertion that the freight has not been paid, provided that the carrier can establish a defense that the freight has not been paid.
Identity of the Carrier Article 37 of the Rotterdam Rules provides, as in Article 1099 of the Turkish Commercial Code, that if no person is identified in the contract particulars as the carrier, but the contract particulars indicate that the goods have been loaded on board a named ship, the registered owner of that ship is presumed to be the carrier, unless he proves that the ship was under a bareboat charter at the time of the carriage and he identifies this bareboat charterer and his address. In such a case the bareboat charterer is the carrier. Alternatively, the registered owner may rebut the presumption of carrier by identifying the carrier and indicating his address. Nothing in Article 37 prevents the claimant from proving that any person other than a person identified in the contract particulars or indicated by the shipowner or bareboat charter is the carrier. It would be more correct to impose a joint liability on the shipowner and bareboat charterer in the case where the carrier’s identity cannot be defined by the shipowner, instead of indicating the bareboat charterer as the carrier because it is obvious that the shipowner is more economically viable and represents a much more secured guaranty for the cargo interests. Since the shipowner and bareboat charterer may be protected from liability if they indicate the real identity of the carrier, and the shipowner has also the right to claim from the bareboat charterer, this joint liability would not establish a heavier liability on them.
9.8.1.2
Evidence of the Receipt of Goods Under a Contract of Carriage
General The transport document evidences the carrier’s or a performing party’s receipt of goods under a contract of carriage, including the individual details of the goods to be carried in the contract particulars. As indicated in Articles 1(14), (18) and 41 of the Rotterdam Rules, a transport document is prima facie evidence of the carrier’s receipt of the goods as stated in the contract particulars.
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In accordance with the rule of documentary proof against a document, proof to the contrary by the carrier in respect of any contract particulars shall not be admissible, when such contract particulars are included in: 1. A negotiable transport document or a negotiable electronic transport record that is transferred to a third party acting in good faith; or 2. A non-negotiable transport document that indicates that it must be surrendered in order to obtain delivery of the goods and is transferred to the consignee acting in good faith; 3. A consignee that in good faith has acted in reliance on any of the following contract particulars included in a non-negotiable transport document: (a) The contract particulars declared by the shipper and referred to in Article 36(1), when such contract particulars are furnished by the carrier himself on the carrier’s own initiative (b) The number, type and identifying numbers of the containers, but not the identifying numbers of the container seals (c) The contract particulars referred to in Article 36(2)
Qualifying Information Article 40 of the Rotterdam Rules provides that the most important, and actually only conceivable way to include qualifying information referred to Article 36(1) of the Rotterdam Rules is to indicate that the carrier does not assume responsibility for the accuracy of the information furnished by the shipper. The carrier may qualify the information to indicate that the carrier does not hold responsibility for the accuracy of the information furnished by the shipper if: (a) The carrier has actual knowledge that any material statement in the transport document or electronic transport record is false or misleading; or (b) The carrier has reasonable grounds to believe that a material statement in the transport document or electronic transport record is false or misleading. It is a significant deficiency of the Rotterdam Rules that this article does not provide reasonable grounds for the qualifying information. When the goods are not delivered for carriage to the carrier or a performing party in a closed container or vehicle, or when they are delivered in a closed container or vehicle and the carrier or a performing party actually inspects them, the carrier may qualify the information referred to in Article 36(1), if: (a) The carrier had no physically practicable or commercially reasonable means of checking the information furnished by the shipper, (in which case it may indicate the information it was unable to check and include this as qualifying information to the transport document); or (b) The carrier has reasonable grounds to believe the information furnished by the shipper to be inaccurate (in which case it may include a clause to the transport
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document as qualifying information, providing what it reasonably considers accurate information). When the goods are delivered for carriage to the carrier or a performing party in a closed container or vehicle, the carrier may qualify the information referred to in Article 36(1)(a), (b), or (c), if: (a) The goods inside the container or vehicle have not actually been inspected by the carrier or a performing party; and (b) Neither the carrier nor a performing party otherwise has actual knowledge of its contents before issuing the transport document. The carrier may qualify the information referred to in Article 36(1)(d), if: (a) Neither the carrier nor a performing party weighed the container or vehicle, and the shipper and the carrier had not agreed prior to the shipment that the container or vehicle would be weighed and the weight would be included in the contract particulars; or (b) There was no physically practicable or commercially reasonable means of checking the weight of the container or vehicle. The carrier may qualify the information under circumstances which indicate that the carrier does not assume responsibility for the accuracy of the information furnished by the shipper.
Apparent Order and Conditions of the Goods Article 39(3) of the Rotterdam Rules provides that if the contract particulars fail to state the apparent order and condition of the goods at the time the carrier or a performing party receives them, the contract particulars are deemed to have stated that the goods were in apparent good order and condition at the time the carrier or a performing party received them.
9.8.2
Optional Function: Documentary Intangible
9.8.2.1
General
Another important specification of the transport document is its documentary intangible nature. The transport document has been defined in Articles 1(14) and (18) of the Rotterdam Rules without mentioning this specification. However, considering Articles 45 and 47 regulating the right to claim delivery, and Article 51 regulating the right of control, it is a natural conclusion that a transport document or an electronic transport record is issued under the meaning of a documentary intangible.
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The fundamental reason for the absence of the term “documentary intangible” in the definition of the transport document is the absence of such wording and application under the Anglo-Saxon Law. Instead of using this term, the Rotterdam Rules set forth the transport document or the electronic transport record as having the same function as a documentary intangible. Article 557 of the Turkish Commercial Code defines the documentary intangible as a document without which no right can be claimed or transferred. In other words, to claim the right mentioned in the document against the debtor, such document has to be surrendered to the debtor, or to transfer this document to any person, the possession of the document has to be transferred too. This strong connection between the right and the document creates a new relationship other than the background relationship that is the contract of carriage in the transport document. Such attachment forms the documentary intangible, and the debtor is able to perform the obligation only upon surrender of such document to the obliged party by the legitimate holder. If the transport document becomes a documentary intangible, the natural result of such transformation is that the holder has the right to claim delivery and right to the control of the goods, and that the carrier is obliged to deliver the goods upon surrender of the transport document or fulfill the obligation by performing the instructions under the right of control granted to the legitimate holder. Each of the transport documents set forth in the Rotterdam Rules should be examined individually in order to determine whether these are of documentary intangible nature.
9.8.2.2
Right to Claim Delivery
General Despite the fact that the transport document contains obligations requiring continuous performance from when the goods are received until they are delivered by the carrier, the expected benefit of a contract lies in the timely delivery of the goods, which are carried under the transport document or electronic transport record, by the carrier to the consignee. Hence, regarding a contract of carriage, the most important and final obligation of the carrier is to deliver the goods, and for the holder, the right to claim delivery. The right to claim delivery may arise from a contractual relationship under the contract of carriage as a right in personam, or may arise in relation to the same goods as the result of possession or ownership as a right in rem. The Rotterdam Rules set down only the personal right of claiming delivery, but do not provide any rights of possession or ownership in the same way as other conventions have avoided such discussion. Therefore, another function of the transport document to represent the goods as in the “document of title” has not been regulated in the Rotterdam Rules.
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The Right to Claim Delivery as a Right in Personam For Non-negotiable Transport Documents The right to claim delivery for non-negotiable transport documents is set forth under Article 45 of the Rotterdam Rules, which states that the carrier is obliged to deliver the goods under the transport document to the consignee who is indicated on the transport document. The carrier may refuse delivery if the person claiming to be the consignee does not properly identify himself as the consignee on the request of the carrier. This provision allows the carrier to deliver the goods without any positive identification of the consignee and to deliver the goods to any consignee to fulfil the obligation, which is very favourable for the carrier. However this may cause the delivery of the goods to a wrong consignee due to the negligence of the carrier.7 If the name and address of the consignee are not referred to in the contract particulars, the controlling party advises the carrier of such name and address. If the carrier is unable to locate the controlling party, the shipper indicated on the transport document is deemed the party holding the right to control. Even if this issue is not explicitly emphasized in the Rotterdam Rules, the successors of the persons with the right to claim the delivery of the goods, such as cargo insurers, may exercise such right. Since for non-negotiable transport documents it is not necessary to surrender the document, these are not of documentary intangible nature and are simple evidentiary documents.
For Non-negotiable Transport Documents That Require Surrender The Rotterdam Rules recognised the fact that, contrary to the Anglo-Saxon Law, the Continental-European Law also accepts non-negotiable transport documents as documentary intangibles and provided provisions regarding this matter. Article 46 of the Rotterdam Rules contains a provision regarding non-negotiable transport documents that require surrender. Such documents are referred to as “straight bill requiring surrender” under US legal terminology. It is sufficient to classify a document as a negotiable transport document if the right to claim delivery of goods is subject to the condition of the surrender of the document. That is to say, for a document of such a nature, there must be a clause (negotiable transport document clause) in the contract of carriage requiring the surrender of the document to claim delivery of the goods. Therefore, the Rotterdam Rules do not seem to accept the documents as a negotiable transport document, where the right to obtain the delivery is subject to the surrender of the document by statutory or customary rules. This approach obstructs the implementation of Article 46 of the Rotterdam Rules in relation to the straight bill of lading which is accepted under Turkish Law as a documentary intangible and to the named bill of lading which does not contain the negotiable document clause.
7
Debattista (2009), s. 3.
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According to Article 46 of the Rotterdam Rules, when a non-negotiable transport document requires the surrender of the document for the delivery of the goods, the carrier shall deliver the goods to the consignee upon the consignee properly identifying himself on the request of the carrier and surrendering the non-negotiable document. If more than one original of the non-negotiable document has been issued, the surrender of one original shall suffice and the other originals cease to have effect or validity. Surely, the successors of the consignee should be deemed to have the right to claim delivery of the goods upon surrender of the negotiable transport document. However, the Rotterdam Rules do not contain any explicit provision in respect thereof. If the goods are not deliverable because the consignee does not claim delivery of the goods from the carrier or the carrier is unable to locate the consignee, the shipper may claim delivery without the condition of surrender the document. The sole objection to the application of this rule may be because the carrier may be under the obligation to indemnify the holder, which may appear at a later point. Therefore, the carrier should be allowed to claim a recourse right and its guarantee at the time of delivery against the shipper. For Negotiable Transport Documents Article 47(1) of the Rotterdam Rules provides, in line with the international practice, that the negotiable transport document, in its function as a documentary intangible, allows the right to claim delivery of the goods only after the surrender of the document and positive identification by reasonable means. Article 47 states that when a negotiable transport document has been issued, the holder of the negotiable transport document or negotiable electronic transport record is entitled to claim delivery of the goods from the carrier after they have arrived at the place of destination. If more than one original of the negotiable transport document has been issued, the surrender of one original will suffice for the right to claim delivery and the other originals cease to have any effect or validity. Since the transport document also includes the multimodal transport document, negotiable multimodal transport documents are also documentary intangibles within the meaning of the Rotterdam Rules. Consequently the previous confusion about whether such documents are documentary intangibles under the British and German Law has been resolved. The holder of the bill of lading is defined in Article 1(10) of the Rotterdam Rules. According to this Article, “holder” means either a person that is in possession of a negotiable transport document and if the document is an order document, he is identified in it as the shipper or the consignee; or is the person to which the document is duly endorsed; or if the document is a blank endorsed order document or bearer document, the holder is the bearer thereof. On the contrary, the holder of the electronic transport record is the person to which a negotiable electronic transport record has been issued or transferred in accordance with the procedures referred to in article 9(1). The issuance and transfer of electronic transport records are defined in Articles 1(21) and (22) of the
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Rotterdam Rules. The “issuance” of a negotiable electronic transport record means the issuance of the record in accordance with procedures that ensure that the record is subject to exclusive control from its creation until it ceases to have any effect or validity. However, the “transfer” of a negotiable electronic transport record means the transfer of exclusive control over the record. This person may claim the delivery by identifying the right to control in accordance with the procedures referred to in article 9(1). The electronic transport record ceases to have effect and validity upon the delivery of the goods. Delivery Without the Surrender of the Negotiable Transport Document Article 47(2) of the Rotterdam Rules provides another seldomly used transport document clause with regard to delivery without the surrender of the negotiable transport document. Accordingly the goods may be delivered without surrendering the negotiable transport document. This clause causes the negotiable transport document to lose its function as a documentary intangible. The holder of such document may claim delivery without the surrender of the negotiable transport document, provided that the holder identifies himself as the holder of such document. Moreover, if the carrier is unable to locate the shipper, the carrier may so advise the documentary shipper and request instructions in respect of the delivery of the goods. In the latter case, in the case of a document holder, the carrier may demand from the shipper or documentary shipper an indemnification or a guaranty for any possible claims during the delivery and may refuse to deliver without such guarantees.
9.8.2.3
Right to Control the Goods
Another right pursuant to the document or the function of the document to evidence the transport document is the right to control the goods, which has been provided in Article 50 and the following articles of the Rotterdam Rules. The right to control is based on the contract of carriage, which requires continuous performance and is a unilateral right under the contract of carriage to give the carrier instructions in respect of the goods. The scope of the application of such right has been limited in Article 50 of the Rotterdam Rules as follows: (a) The right to give or modify instructions in respect of the goods that do not constitute a variation of the contract of carriage; (b) The right to obtain delivery of the goods at a scheduled port of call or, in respect of inland carriage, any place en route; and (c) The right to replace the consignee by any other person including the controlling party. Article 51 of the Rotterdam Rules states that the (contracting) shipper is the controlling party unless the shipper, when the contract of carriage is concluded, designates the consignee, the documentary shipper or another person as the
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controlling party. The controlling party is entitled to transfer the right of control to another person. However, the controlling party must properly identify itself when it exercises the right of control under any circumstances. On the contrary, the right of control is logically given to the holder of transport documents of documentary intangible nature. However, when a non-negotiable transport document has been issued that indicates that it shall be surrendered to obtain the delivery of the goods and negotiable transport documents, the holder of the original document or, if more than one original of the negotiable transport document is issued, the holder of all the originals is the controlling party.
9.9
Conclusion
The Rotterdam Rules prefer to use the deduction methodology of Continental Law for legislation and, instead of explaining the bill of lading or consignment note as it is in practice, generalises them under the collective name of “transport documents”. The Rotterdam Rules have created laws for themself. The drafters of the Rotterdam Rules have undertaken the considerably difficult task of putting all national and international regulations regarding bills of lading under one roof in providing a simple definition for transport documents. This is nothing but the “consignment note” under the CMR of 1956. Through an opportunity to issue the transport document as negotiable or non-negotiable requiring the surrender to claim the delivery of the goods, the issuance of the documentary intangible, in other words the bill of lading, is also permitted. The provisions regarding electronic transport records and multimodal transport documents are very appropriate for fulfilling an important deficiency of transportation law. The only disadvantage of these provisions is the avoidance of using a definition to identify the electronic transport record as a document. Since the Rotterdam Rules are drafted in the Continental legislation style to set the rules for transport documents, the convenience of these rules can only be measured by the rising significance of meaning under the Anglo-Saxon Law. The Rotterdam Rules must, however, first come into effect. Moreover, an international convention is not expected to aim to promote international unification, but merely to meet such aim. The worst case scenario is that the Rotterdam Rules classify themselves as an alternative to the Hague and Hamburg Regimes; whereas the Rotterdam Rules should actually be perceived as the “only alternative”. The best solution for such an outcome is to be left to the future.
References Debattista C (2009) The goods carried – who gets them and who controls them. In: Uncitral colloquium on Rotterdam Rules, 21 September 2009, Rotterdam. http://www.rotterdamrules2009.com/cms/ uploads/Def%20%20tekst%20Charles%20Debattista%2031%20OKT29.pdf
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European Shipper’s Council (2007) Position paper on the draft maritime instrument of the United Nations Commission on International Trade Law, April 2007. http://www.mcgill.ca/files/ maritimelaw/European_Shippers_Council_Position_Paper.pdf Karan H (2004) Elektronik konis¸mento (Electronic bill of lading). Turhan Kitabevi, Ankara Tetley W (2008) A summary of general criticisms of the UNCITRAL Convention (the Rotterdam Rules), 20 December 2008. http://www.mcgill.ca/files/maritimelaw/Tetley_Criticism_of_ Rotterdam_Rules.pdf Yiannopoulos AN (1995) Ocean bills of lading. Kluwer, The Hague
Chapter 10
Rights of the Controlling Party Gertjan van der Ziel
Abstract Chapter 10 addresses in detail the cargo side’s control of the goods during a maritime carriage. Because the rules on control of the goods under the law of carriage may have an impact on other fields of law such as the law of sale and the law of property, these rules are of utmost importance for the international trade generally. The exercise of the right of control may be linked to the possession of a transport document, but not necessarily so. As a matter of principle, the right of control is a self sustained right and, therefore, may serve as the legal basis for documentless maritime carriage. As such, it will constitute an essential element of the legal infrastructure for future e-commerce systems in overseas trade and transport.
10.1
Introduction
Chapter 10 of the Rotterdam Rules deals with situations in which the goods are in transit and in the carrier’s custody. These goods have an owner, which may be their buyer, or, when the title has been retained upon shipment, the seller. Generally, this owner may wish to protect its interest and must, therefore, be able to give instructions to a carrier in respect of the goods. Sometimes, another party may be interested in the goods, for instance a bank that has financed the goods and has acquired a security interest in them. Also such other interested party may wish to instruct a carrier in order to protect its interest.
This paper represents an updated and revised version of a paper delivered on 28th March 2008 at the international symposium “Transportation Law for the 21st Century: the New UNCITRAL Convention” held at The University of Texas School of Law in Austin, USA. Some of the material in this paper has been published in Texas International Law Journal 44-3 and in The Journal of International Maritime Law 14 (2008). Most of the material is also included in Chapter IX of: The Rotterdam Rules: The U.N. Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, Sturley et al. (2010) Sweet & Maxwell, London. Prof. Dr. G. van der Ziel (Emeritus) Erasmus University, Rotterdam, The Netherlands e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_10, # Springer-Verlag Berlin Heidelberg 2011
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Unlike non-maritime conventions, which usually contain specific provisions on the right of control and the controlling party,1 neither the Hague-Visby Rules nor the Hamburg Rules include such provisions.2 In maritime transport, the legal basis of the right of control must be sought in national law and in the terms and conditions of the contract of carriage. Often, the exercise of the right of control is tied to the possession of a certain transport document and the contents of the right of control are, to a large extent, laid down in case law and trade practices. This lack of uniformity of law is not only detrimental to the clarity of the legal position of the parties to the contract of carriage, but also has much wider implications beyond the confines of transportation. Under most legal systems, ownership of goods requires their possession and possession assumes a certain level of control of the goods. A transfer of control of the goods may be essential for a transfer of their ownership. In international trade, legal certainty about transfer of ownership is of crucial importance.3 Equally, under many national laws it is a requirement for the validity of some types of a bank’s security interest in the goods that the bank has a certain level of control of these goods. The validity of security rights in the goods similarly demands legal certainty, because these rights are often the basis for a bank’s willingness to finance goods that are the subject of an overseas sale. Because of the significance of the above issues for the international trade,4 the Rotterdam Rules contain a full chapter on the right of control and the controlling party. The chapter includes seven provisions,5 of which the first three are the most important ones.
10.2
Relationship Between Chapter 10 and the Law of Sale and the Law of Property
Although the right of control may have an important function under the law of sale and the law of property, it must be emphasized that the Rotterdam Rules do not address either body of law per se. The right of control under Chapter 10 is clearly to be distinguished from the right of disposal under property law (ius disponendi). Reserving the right of disposal, often used in the context of sale of goods, means preventing ownership from passing to the purchaser notwithstanding that the seller has parted with the possession of the goods. In some jurisdictions, whenever a seller 1 See Montreal Convention, art. 12; CMR, arts. 12, 14–16; CIM-COTIF, arts. 18–22 and CMNI, arts. 14–15. 2 In the maritime field only art. 6 of the CMI Uniform Rules for Sea Waybills deals with the right of control. These rules may be made contractually applicable. 3 For an overview of the legal rules on transfer of ownership in various jurisdictions, see Von Ziegler et al. (1999). 4 Both for the current trade and transport practices and the future development of e-commerce systems in international trade and transport. See also below sec. 10.11. 5 Articles 50–56.
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ships the goods under a negotiable transport document made out to its order, that seller is assumed to have reserved under the contract of sale the right to dispose of the goods as it wishes. Also the right of stoppage in transitu has to be distinguished from the right of control under the Rotterdam Rules. The right of stoppage is related to the sale of goods and is the right of an unpaid seller, which has transferred the ownership of the goods to a purchaser, to resume possession of these goods during their transit. This right is typically restricted to specific circumstances, such as insolvency of the buyer. It is generally lost if the goods have been resold for a value consideration to a third party acting in good faith. In many jurisdictions, the seller still has the right of stoppage in transitu after transfer of the negotiable transport document to the buyer, but before the goods are delivered by the carrier.6 Although the right of control under transport law is distinct from the rights in the goods under the law of sales and the law of property, the concepts are nevertheless related. In particular, transport law’s right of control may assist in exercising rights in the goods under the law of sale or property.7 For instance, an unpaid seller who wishes to exercise the right of stoppage and has parted with the negotiable transport document (giving control of the goods under the contract of carriage) must first seek to regain control of the goods. Reservation of the right of disposal under a contract of sale without retaining the right of control of the goods under the contract of carriage is unlikely to be of much use. In other words, if a person, on whatever legal basis, has a certain right in the goods while they are carried under a contract of carriage (to which that person might not be a party), without having the right of control under the contract of carriage, that person will generally find it difficult to exercise its right in the goods. In addition, a transfer of the right of control of the goods under a contract of carriage, for instance by the shipper to the consignee, may express the intention between the parties to transfer the rights in the goods. Furthermore, when for the validity of security rights in the goods a certain level of possession is required, the possession of the right of control of the goods under the contract of carriage may fulfil this requirement.
10.3
Exercise and Extent of the Right of Control
10.3.1 Core Elements Article 50 starts with a chapeau intended to make it clear that the controlling party is the exclusive person entitled to exercise a right of control. The further subparagraphs (a), (b) and (c) indicate the contents of the right of control. 6
See also art. 71(2) of the UN Convention on Contracts for the International Sale of Goods, 1980 (CISG). 7 In the same vein: Zunarelli and Alvisi (2010), p. 222.
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Subparagraph (a) refers to ‘the right of giving or modifying instructions in respect of the goods that do not constitute a variation of the contract of carriage.’ This refers to the types of instructions that are inherent to any transportation contract. Often, these instructions are of an operational nature, for example: (1) “please keep the goods at a temperature of minus 6 degrees” (in case of refrigerated goods) or (2) “please deliver the goods between 6 and 8 am”. However, it is also possible that these instructions have a commercial nature. Quite a common instruction to a carrier is: “please, make contact before you actually deliver”. Such an instruction may be given by a shipper/seller when, upon shipment, there is no certainty that the purchase price of the goods will be paid in time and the shipper/ seller wishes to ensure that the goods will not be delivered prior to receipt of the purchase price. When under such instruction the carrier makes contact with the shipper, he may be either advised about the details of the actual delivery or may receive a further instruction such as one of those referred to in subparagraph (b) or (c). Unlike the instructions of subparagraph (a), those under subparagraphs (b) and (c), are usually a variation of the contract of carriage. Subparagraph (b) provides for ‘the right to obtain delivery of the goods at a scheduled port of call or, in respect of inland carriage, any place en route’. Subparagraph (c) refers to ‘the right to replace the consignee by any other person including the controlling party’. The possibility of obtaining a delivery en route may be important when there is a reason to avoid that the goods arrive in the jurisdiction of the consignee. If the consignee has become insolvent (and is thus unable to pay for the goods), for example, the unpaid seller may wish to keep the goods out of the hands of the consignee’s receiver. Replacing the consignee may be relevant when the goods are resold to another person. Similarly, when the original buyer defaults the shipper/seller may wish to nominate itself as the new consignee in order to reclaim possession of the goods. Replacing the consignee may also be crucial for a bank that wishes to enforce its security interest in the goods.
10.3.2 Duration The second paragraph of article 50 links the period during which the right of control can be exercised to the period of responsibility of the carrier under the contract of carriage.8 This period does not always coincide with the period that a carrier has actual custody of the goods. For instance, under article 48 the carrier may still have actual custody of the goods although under article 50 the period of the carrier’s responsibility has ended. Therefore, actual custody of the goods by the carrier is not 8
See article 12.
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always the decisive factor of whether the right of control can still be exercised. As a consequence, if a carrier receives any request or instruction beyond its period of responsibility, while the goods are still in its actual custody, the request or instruction must be based on legal grounds other than the right of control.9 UNCITRAL discussed two alternatives at length concerning the status of the right of control after the consignee demands delivery of the goods from the carrier. Under the first alternative, the right of control would either terminate or automatically transfer to the consignee at the moment that the consignee demands delivery of the goods. Under the second alternative, the right of control would neither terminate nor transfer but would continue to exist with the controlling party during the entire period of the carrier’s responsibility.10 In support of the early termination or automatic transfer alternative, delegations argued that the approach was in line with national law in a substantial number of civil law countries and consistent with several other transport conventions dealing with the right of control.11 In addition, it might cause practical problems, from an operational perspective, if a carrier that had already started delivery procedures is required to carry out instructions from a person other than the consignee.12 But other delegations, in support of the second alternative, countered that an early termination or automatic transfer would create a fundamental loophole in the certainty that the right of control system aims to provide to its holders. Merely by claiming delivery of the goods when they have arrived at their destination, an insolvent buyer that had not paid for them could secure control of the goods to the detriment of an unpaid seller or a bank holding a security interest in the goods. Consensus was achieved on the following solution: (1) To retain the integrity of the right of control system, the text of the Convention does not refer to an “automatic” transfer. (2) Article 50(2) links the right of control to the period of the carrier’s responsibility.13 (3) The parties to the contract may shorten the period during which the right of control may be exercised with the result that it ends before the carrier’s period of responsibility ends.14 (4) The potential operational problems are addressed in article 52.15 Accordingly, the moment that the consignee demands delivery of the goods at the place of destination is legally relevant for terminating the right of control only if the parties to the contract of carriage have so agreed.
9
For example, arts. 45 (c), 46(b) and 47(2)(a) authorises certain persons to instruct the carrier on delivery. Under art. 48 any request or instruction to the carrier may be based on e.g. ownership or holding security rights in the goods. 10 See 17th Session Report (A/CN.9/594) } 32–36, 68–71. 11 Montreal Convention art. 12(4); CMR art. 12(2); CIM-COTIF art. 18(2); CMNI art. 14(2). 12 See 17th Session Report (A/CN.9/594) } 34. 13 See supra note 9. 14 Article 56, first sentence, makes the early termination alternative possible on a contractual basis. See infra } 10.10. 15 See article 52(1)(c); infra sec. 10.6.
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Identity of the Controlling Party
Article 51 sets out in detail who may be the controlling party in different situations. The applicable rules depend on the type of transport document or electronic transport record (if any) that the carrier issues for the carriage. The first paragraph of this article applies when a non-negotiable transport document, such as a sea waybill, is issued. It also applies when no document at all is used, as may be the case in the short-haul ferry trade, or, more importantly, in e-commerce business models when the electronic data relating to the carriage does not qualify as an electronic transport record as defined in article 1(18). The principal rule is that the shipper, being the contractual counterpart of the carrier, is the controlling party under the contract of carriage. However, the relation between the seller and the buyer of goods may be of such a nature that another person needs the right of control of the goods. Therefore, subparagraph (a) provides that, already at the moment of conclusion of the contract of carriage, the shipper may designate another person, such as the consignee or a documentary shipper, as the controlling party. In order to avoid that the carrier accepts an instruction from a person that is not entitled to do so, subparagraph (c) provides that a controlling party must properly identify itself when it exercises its right of control. Unlike in article 45(a), in this subparagraph the words “on request of the carrier” are omitted. Since the intention of the two provisions is similar, also in respect of the identity of the controlling party the carrier has a right (and not a duty) to request this person to identify itself. And when the carrier makes the request, the controlling party has a duty to comply. The consequence of a non-compliance with the request is that the carrier will not accept the instruction. The second paragraph of article 51 applies when the carrier issues a non-negotiable transport document that indicates that it shall be surrendered in order to obtain delivery of the goods.16 Under this document, only the shipper or the consignee as named in the document may be the controlling party, depending on which of these two is able to produce the document to the carrier and, on request of the carrier, to identify itself either as the named shipper or the named consignee. In the event that more than one original of this document is issued by the carrier, only the possession of all originals entitles the holder to exercise the right of control. If in such a case the holder cannot produce all originals, it is not entitled to exercise the right of control. The third paragraph deals with the situation that a negotiable transport document has been issued. It codifies the current practice, namely that the right of control is tied to the possession of such document. As a consequence, the following rules apply: 1. Similar to what is provided in article 47 with regard to the person entitled to claim delivery of the goods from the carrier at the end of the carriage, it is the holder of the negotiable transport document that has the right of control of the goods during the carriage.
16
For the characteristics of this document see also the articles 46 and 41(b).
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2. However, when more than one original has been issued the situation is different from article 47. While for claiming delivery the possession and production to the carrier of one original suffices, for the exercise of the right of control during the carriage the possession and production of the full set of originals is needed. If the controlling party were not required to produce the full set of originals (under either article 51(2) or 51(3)), more than one person would be in control of the goods – which would effectively result in a situation in which nobody would be in control because the carrier might be required to follow conflicting or adverse instructions. Two different persons in control of the goods at the same time would create legal uncertainty, not only in transport law but also in other legal fields (such as sales or property).17 The practical result would be unworkable not only for the carrier but also for the other parties to the transaction. It should be noted that the fact that nobody is entitled to exercise the right of control under the contract of carriage does not automatically mean that nobody is in control of the goods. It only means that the person in control of the goods is not able to evidence this control towards a carrier with the use of a transport document and, consequently, does not avail of this convenient and practical manner of demonstrating to the carrier that it is in possession of control of the goods. The fourth paragraph applies when the parties make use of a negotiable electronic transport document. This paragraph follows the same basic rules as the third paragraph with the adjustments as required by the use of the electronic equivalent of the negotiable transport document. These adjustments are: 1. Because it is unthinkable that electronic transport documents could be issued in more than one original, no provision relating to the situation that more than one original has been issued, is included.18 2. Because under an electronic negotiable transport document the holder does not possess a paper instrument in order to demonstrate that it is the holder, the fourth paragraph includes a reference to the procedures of article 9(1) that must provide for such demonstration.
10.5
Transfer of the Right of Control
Article 51 expressly provides that the right of control is a transferable right.19 The right of control may be transferred at any time that it exists. Moreover, the Rotterdam Rules do not generally include any restriction as to the number of transfers or the identity of the persons to which the right of control may be 17
See supra sec. 10.2. Art. 10(2) adopts the same approach. 19 See art. 51(1)(b), (2)(a), (3)(b) and (4)(b). Transferability under article 51(1)(b) may be contractually excluded or restricted. See article 56 (second sentence); infra sec. 10.10. 18
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transferred. Unlike in some other international instruments, it may be any number and any person.20 In the cases to which the first paragraph of article 51 applies, the manner in which a transfer under this must be effected (such as by assignment or otherwise), is not dealt with in the article. Consequently, that issue remains subject to transfer of rights provisions of the applicable law. Subparagraph (b) of article 51 merely provides that towards the carrier a transfer is only effective if and when it has been notified to the carrier by the transferor.21 It is paramount that, at all times, the carrier knows the identity of the controlling party. Since the transferability of the right of control may play a key role in ecommerce systems,22 it should be noted that, pursuant to article 3, the transfer notification to the carrier may be made electronically. The practical effect of the provisions of article 50 and 51(1) is that, from a security point of view, the sale of goods to an overseas buyer can be effected under a non-negotiable transport document23 in a similar manner as with the use of a negotiable transport document. For negotiable transport documents and similar electronic records as well as for non-negotiable transport documents that indicate that they shall be surrendered to obtain the goods, the following rules apply to a transfer of the right of control. When a negotiable transport document has been issued, a transfer of the right of control can be done only by a transfer of the negotiable transport document. In the event that more than one original has been issued, only a transfer of the full set of originals achieves a transfer of the right of control. For the manner in which a negotiable transport document must be transferred to ensure that another person acquires the right of control, article 51(3) refers to article 57. When a negotiable electronic transport record has been issued, it also applies that a transfer of the right of control can only be effected by a transfer of the record. The manner, in which the transfer of a negotiable electronic transport record is accomplished, is dealt with in the procedures referred to in article 9(1). Article 51 (4)(b) therefore refers to article 9(1).24 When a non-negotiable transport document has been issued that indicates that it shall be surrendered to obtain delivery of the goods, transfer of the right of control can be made only between the shipper and the consignee and vice versa, be effected by transfer of the document itself without endorsement and, in case of more than one original being issued, by transfer of the full set. 20
But see infra the final paragraph of this section. In many jurisdictions, a transfer of rights in the goods that are in the hands of a third party, requires a notification of this transfer to the third party for the transfer to be fully effective. In case this third party is a carrier under the Rotterdam Rules, a notification of transfer of rights in the goods required under the applicable property law may coincide with a notification of a transfer of the right of control as required in art. 51(1)(b). 22 See infra sec. 10.11. 23 See in this connection also art. 41(c). 24 See also art. 57(2). 21
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Carrier’s Execution of Instructions
Article 52 establishes the principle that the right of control may be unilaterally exercised by the controlling party, even in the case of an early delivery or change of consignee that must be regarded as a variation to the contract of carriage. The principle that the carrier has to obey the instructions of the controlling party, follows from the essential legal function of the right of control. It provides the legal basis for exercising rights in the goods that the controlling party may have under the law of sales or property. From an operational point of view, it is however not always reasonably possible for a carrier to obey the instruction given by the controlling party. Therefore, paragraph 1 of article 52 provides for two circumstances under which a carrier is entitled to refuse to execute the instructions. The first is that “the instructions can be reasonably executed according to their terms at the moment that they reach the carrier”. For example, if the controlling party instructs the carrier to discharge the goods in an intermediate port where there is insufficient storage space, the carrier may decline to execute this instruction. The words “at the moment that they reach the carrier” must not be taken too literally. They mean that the instruction must be given on time. They do not mean that at the very moment of receipt by the carrier the instructions must immediately be capable of execution. For instance, any instruction relating to delivery given during the carriage can only be executed after the vessel has reached a port. The second circumstance under which a carrier is entitled to refuse to carry out an instruction is that “the instructions will not interfere with the normal operations of the carrier, including its delivery practices”. What in a given case means an interference with a carrier‘s normal operations will depend on the circumstances of this case. In our view, the emphasis should be on the matter of ‘normal operations’. If a carrier is instructed to deliver a container en route and, as a consequence, some other containers have to be shifted to unload that container, this shifting is part of the normal (unloading) operations of a carrier and, therefore, may not induce a carrier to decline to carry out the instruction.25 If however a carrier would be instructed not to send a notice of arrival to the consignee, this instruction may be refused by the carrier because sending notices of arrival belongs to the normal (delivery) operations of a carrier. The second and third paragraphs of article 52 deal with the costs involved in the execution of an instruction. The main rule is that any expenses, loss, or damage reasonably incurred by the carrier have to be reimbursed by the controlling party. Further, the carrier has a statutory indemnity from the controlling party for the amount of the expenses, loss or damage that is reasonably incurred or suffered by it. Since, for example, the controlling party may be a person with whom the carrier has no relation otherwise, the carrier may request security for the amount of expenses, loss or damage that the carrier reasonably expects will arise in connection with 25
But see the next paragraph.
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the execution of the controlling party’s instructions. If the controlling party does not furnish security, the carrier may refuse to carry out the instruction. Article 52 addresses liability of the carrier only to a limited extent. The fourth paragraph of this article deals only with liability for loss or damage to the goods or for delay in their delivery resulting from a carrier’s failure to comply with the controlling party’s proper instructions. In such a case, it is provided that the liability is subject to the general provisions of the convention on carrier’s liability.26 This rule is not surprising, because also without this explicit provision the liability of the carrier in that context would have been subject to these general rules. In our view, the liability provision of article 52(4) would have been more meaningful if it had dealt with any liability of the carrier for loss or damage other than loss or damage of the goods resulting from non-compliance with a proper instruction. But the Rotterdam Rules intentionally leave that matter to the otherwise applicable law.27 When, in the given case, such law would establish the liability of the carrier, this liability will be subject to the limits of article 59 because the latter article applies to any liability that results from a breach of a carrier’s obligation under the Convention.
10.7
Deemed Delivery
One of the key consequences of the exercise of the right of control is that the goods may be delivered by the carrier at another place or to another person as originally agreed in the contract of carriage. Article 53 ensures that a delivery of the goods following an instruction by the controlling party has the same validity and effect as a delivery of the goods at the originally agreed place of destination. Therefore, such delivery terminates the period of responsibility of the carrier,28 ends the period of time for the suit to commence,29 and discharges the carrier of its obligation to deliver.30 The procedural and substantial provisions of the specific chapter on delivery31 also apply to a delivery made on the basis of a specific instruction by the controlling party.
26
More specifically, the arts. 17–23 dealing with the basis of the carrier’s liability, and the arts. 59–61 providing for the limitation of the carrier’s liability. 27 See 17th Session Report (A/CN.9/594) } 56. 28 Art. 12. 29 Art. 62. 30 Art. 11. 31 Arts. 43–47.
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10.8
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Variations to the Contract of Carriage
Article 50 provides that the controlling party is the exclusive person entitled to exercise the right of control, even when the exercise of that right results in one of the variations to the contract of carriage described in article 50(1)(b) and (c).32 Article 54(1) goes one step further. The controlling party is also the exclusive person entitled to agree with the carrier on variations to the contract of carriage other than those described in article 50(1)(b) and (c). Of course, any variation other than those described requires the carrier’s agreement. The second paragraph of article 54 establishes rules for recording any variation to the contract on the transport document or electronic transport record that is issued in respect of the goods. The provision makes a distinction between (1) a negotiable transport document, a negotiable electronic transport record, or a non-negotiable transport document that requires surrender and (2) an ordinary non-negotiable transport document or non-negotiable electronic transport record. As to the first type of documents, the variation must always be stated in the document, while for the second category this must be done ‘upon request of the controlling party’. This distinction has both a legal reason and a practical one. The legal reason is that the documents and records in the first category may be conclusive evidence.33 Furthermore, negotiable transport documents and records incorporate rights for holders/transferees,34 meaning that these persons must be able to ascertain from the document what their rights are.35 The second type of document normally constitutes prima facie evidence. Only in limited situations and in respect of a limited number of contract particulars it is conclusive evidence.36 Therefore, it might well be that a controlling party has no interest in the statement of variation in a transport document of the second type. The practical reason is that a transport document of the first type always has to be presented to the carrier when a controlling party wishes to vary the contract of carriage. In other words, such a document is always available to the parties to make a statement on it. This may not be the case for the second type of document, because the controlling party is not necessarily in possession of the non-negotiable transport document. It is obvious that, when a non-negotiable transport document has been issued, a controlling party cannot request for the variation statement to be made on the document in case it is not available to the carrier37 or to the controlling party. Also, the controlling party will not request for such a statement to be made in case it has no interest in this being done. 32
See supra sec. 10.3. Art. 41(b). 34 Art. 57(1). 35 Art. 58(2). 36 Art. 41(c). 37 In such a case, if the carrier agrees, a new non-negotiable transport document may be issued that includes the variation. 33
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Variations to the contract of carriage that are stated on a transport document or electronic transport record must be signed.38 Under current practice, the carrier initials any amendment to the contract of carriage that is included in the document after it has been issued and signed. Because initialling has the same validity and effect as signing, the requirement that the carrier must sign the variation follows current practice.
10.9
Providing Additional Information, Instructions or Documents to the Carrier
Article 50 provides that the controlling party is the exclusive person that is entitled to (unilaterally) instruct the carrier during the voyage.39 Article 54 makes the following step by providing that this exclusivity also applies to any other variation of the contract of carriage to be agreed with the carrier.40 Article 55 does the final step by providing that when the carrier takes the initiative and is in need of further information, instructions or documents in respect of the goods, it is the controlling party to whom the carrier must apply. Consequently, at all times during the carriage, the controlling party and the carrier are, for all practical purposes, each other’s contractual counterparts, irrespective of whether the controlling party is a party to the contract of carriage. Only at the end of the carriage the carrier may have to deal with a person other than the controlling party, because when the goods have arrived at the destination the consignee is entitled to claim delivery of the goods from the carrier, even if the consignee is not the controlling party. Article 55 is drafted in the form of an obligation of the controlling party. When during the carriage the carrier is in need of further information, instructions or documents in respect of the goods, the controlling party must furnish these. In case of a contingency, for example, the carrier may need additional information on how to deal with the goods under the specific circumstances. Of course, the controlling party is also generally the person with the greatest interest in the goods, and thus the person with the greatest incentive to furnish the information, instructions, or documents that will most likely serve to protect its interest in the goods. Therefore, the obligation under article 55 is, at the same time, also an entitlement. The first paragraph of article 55 qualifies the obligation on several ways. First, the information, instructions or documents must be given on time. When they arrive too late, they are generally useless. Second, the information, etc. must not already be provided by the shipper or otherwise reasonably available to the carrier. The carrier should not request the same things twice and the carrier should first explore 38
See article 54(2) (second sentence). See supra sec. 10.3. 40 See supra sec. 10.8. 39
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its own professional skills before it troubles the controlling party with its requests. Third and finally, there must be a reasonable need for the carrier to avail of the information etc. to perform its obligations under the contract of carriage. In practice, the carrier might be unable to contact the controlling party. In particular, in case a negotiable transport document is blank endorsed, its holder may be untraceable for the carrier.41 Also, it may be that the controlling party is not in a reasonable position to provide the requested information. The controlling party may be, for example, a bank holding a transport document under a Letter of Credit, without any practical involvement with the goods themselves. In these circumstances the carrier may address itself to the shipper in order to obtain the information. The name and address of the shipper are often stated on the transport document, so the carrier can usually locate the shipper. In many cases the shipper will be in a better position to provide the information. It may also be that, in case the carrier is unable to locate the controlling party, the shipper may be able to help identify and locate the controlling party. Sometimes, instead of the shipper, the documentary shipper is in a better position to provide the information etc, and in such a case it may be contacted. Article 55(2) establishes a prioritized list of those from whom the carrier should seek the information that it requires.
10.10
Variation by Agreement
Article 79 provides that the convention is mandatory law “unless otherwise provided in this Convention”. Article 56 is one of the few instances in which there is a provision allowing the parties to vary the otherwise mandatory law by agreement. The provisions on the right of control do not involve matters of public order but are typically of a trade law nature. Therefore, article 56 allows the parties to the contract of carriage to agree to: 1. Limit or exclude the rights of the controlling party to obtain delivery en route and to replace the consignee;42 2. Limit or extend the period that the right of control may be exercised;43 3. Restrict or exclude the transferability of the right of control, but only if the carrier (a) did not issue a transport document or electronic transport record or (b) issued either an ordinary non-negotiable transport document, such as a sea
41
In this age of instant communication to and from every place in the world there is no reason why a controlling party that wishes to be effectively in control of the goods should not make itself known to the carrier. The importance of proper communication within the scope of the implementation of a contract of carriage is also one of the main reasons that article 36 obliges the carrier to state its name and address on the transport document. 42 Art. 50(1)(b) and (c), see sec. 10.3.1. 43 Art. 50(2), see sec. 10.3.2.
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waybill (as opposed to a non-negotiable transport document requiring surrender for delivery) or a non-negotiable electronic transport record44; and 4. Vary, upwards or downwards, the conditions, referred to in article 52, under which a carrier is obliged to carry out the instructions given by the controlling party. Article 56, when referring to article 52, makes no explicit exception for article 52(4), which establishes the liability of the carrier for loss or damage to the goods or delay in their delivery due to its failure to comply with instructions of the controlling party. But in view of the mandatory nature of the articles 17 to 23 and 59 to 61, the carrier’s liability may be varied only upwards (except as provided under article 80).45
10.11
Relationship Between the Right of Control and E-commerce
On the basis of the foregoing in this chapter it may be concluded that the right of control provisions of the Rotterdam Rules, taken together, provide a level of control of the goods to the controlling party that is at least equal to, if not better than, that of the holder of a negotiable transport document. The difference is that the law applicable to negotiable documents, almost universally, attaches property law functions to the negotiable transport document: transfer of the document means transfer of rights in the goods themselves. Since the right of control provisions of the Rotterdam Rules are new, no established law exists yet that links the transfer of the right of control of goods carried at sea under the Rotterdam Rules with a transfer of rights in the goods themselves. In view of the above conclusion, however, it may be expected that when the parties have the intention to, simultaneously with a transfer of control, transfer rights in the goods themselves, the law applicable to the transfer of the right of control will recognize a transfer of rights in the goods in such a case. Taking into account that the right of control is a self-sustained right that can be transferred without the use of a document,46 the provisions of chapter 10 of the Rotterdam Rules may provide the legal basis for e-commerce business models in which (negotiable) transport documents (and even negotiable transport records) do not play a role anymore.47 44
See article 51(1)(b); see sec. 10.5. See article 79(1). 46 See art. 51(1)(b), } 10.5. 47 This future role also carries with it that Chapter 10 includes detailed provisions. As long as the right of control remains linked with an established documentary practice, this detailedness might not be needed so much. But when in the future the right of control would function without the benefit of a documentary practice (anymore), its description must be sufficiently clear. 45
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Then, a seller may sell its goods on the basis of ‘cash against transfer of control’ (‘CATOC’) instead of ‘cash against documents’ (‘CAD’), while the right of control itself may be transferred electronically by the seller to the buyer. Also, when the goods are financed by the buyer under a Letter of Credit, the bank and the buyer may agree that the bank accepts an electronic transfer of control instead of a negotiable transport document or a negotiable electronic transport record. In conclusion, Chapter 10 of the Rotterdam Rules is an essential part of the legal infrastructure that enables overseas buyers and sellers to trade without traditional transport documents and even without a possible electronic equivalent of these documents.
References Sturley M, Fujita T, van der Ziel G (2010) The Rotterdam Rules: the UN convention on contracts for the international carriage of goods wholly or partly by sea. Sweet & Maxwell, London Von Ziegler A et al (eds) (1999) Transfer of ownership in international trade. Kluwer Law International, ICC Publication No. 546 Zunarelli S, Alvisi C (2010) Rights of the controlling party. In: von Ziegler A et al (eds) The Rotterdam Rules 2008. Kluwer Law International
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Chapter 11
Jurisdiction and Arbitration Under the Rotterdam Rules Zeynep Derya Tarman
Abstract This article analyses the jurisdiction and arbitration chapters of the The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (Rotterdam Rules). The chapters on jurisdiction and arbitration are based on a generally accepted compromise to encourage international harmonization. Chapters 14 and 15 refer only to those states that, according to Art. 91, agree to be bound by these regulations. This article examines the chapters on jurisdiction and arbitration and presents the principles outlined in these chapters.
11.1
Introduction
The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (Rotterdam Rules),1 was signed on 23 September 2009 in Rotterdam, Netherlands. The rising traffic of containers due to globalization and outdated regulations pursuant to the carriage of goods made it necessary to review the Hague Rules of 1924, the Amendment Protocol in 1968 of the Hague Rules of 1924 (The Hague-Visby Rules) and the Hamburg Rules of 1978, which are actually less favourable to maritime nations. The Rotterdam Rules provide many regulations regarding the principles of the carriage contract between the carrier and shipper. These provisions distribute the risk of damage in international transport between the carrier and the shipper. Chapters 14 and 15 on the contrary, explain indirectly the shared risks involved. These chapters provide provisions regarding the procedure. Chapter 14 introduces 1
English text of the Rotterdam Rules: http://www.uncitral.org/pdf/english/texts/transport/rotterdam_ rules/09-85608_Ebook.pdf. UNCITRAL (United Nations Commission on International Trade Law) (Report of Working Group III). See http://www.uncitral.org/uncitral/en/uncitral_texts/transport_goods/rotterdam_ travaux.html.
Ass’t. Prof. Dr. Z.D. Tarman Koc¸ University, School of Law, Istanbul, Turkey e-mail:
[email protected] ¨ zbek (ed.), The United Nations Convention on Contracts for the M.D. G€uner-O International Carriage of Goods Wholly or Partly by Sea, DOI 10.1007/978-3-642-19650-8_11, # Springer-Verlag Berlin Heidelberg 2011
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provisions to the jurisdiction and choice of court in case of a conflict. Chapter 15 proposes provisions regarding arbitration. Although jurisdiction and arbitration are issues of procedural law, this should not mean that they are unimportant, because the choice of court is an important criterion that today influences the possibility of filing an action. Parties try to file an action at the courthouse most favourable, close and convenient to their interests. Therefore, the parties have the choice of filing actions at the court which may be more favourable for them (forum shopping). However, the plaintiff and carrier act differently when deciding on the choice of court. The plaintiff usually decides at the time of action where to file the action. On the contrary, the carrier adds an exclusive choice of court agreement to the bill of lading or any transport document in order to choose the court. For carriage contracts, such as charterparty or volume contracts, where the parties are on the same level of negotiation, the parties agree on an appropriate court in favour of both. The draft of the Rotterdam Rules did not contain any chapters regarding jurisdiction and arbitration due to the fact that the states failed to agree on such provisions. The Reports of the Transport Law Working Group of the UN Commission on International Trade Law provided a wide range of opinions regarding the acceptance of exclusive jurisdiction clauses; if such could be binding on third parties, and, if these are binding, under which conditions. Not only the content of the provisions regarding jurisdiction and arbitration, but also their application was hotly debated.2 In their 20th session in October 2007, Working Group III finally agreed3 that the application of the provisions regarding jurisdiction and arbitration will be left to the choice of the states and that the states can always make their choice. It was also considered an encouraging factor for the states to accept the Rotterdam Rules by providing this solution. The provisions of Chapters 14 and 15 bind only contracting states that declare in accordance with Article 91 of the Rotterdam Rules that they will be bound by them. Therefore, it is possible to accept the Rotterdam Rules without these chapters. Contrary to the previous conventions, the acceptance of such a fine compromise made it compulsory to compose a more detailed version of these issues. This article examines the chapters on jurisdiction and arbitration and presents the principles of these chapters.
11.2
From the Hague and Visby to Hamburg: From National Law to International Regulations
Before the Hague Rules of 1924, many states regulated the liability pursuant to the goods in their national laws. However, some of these states, including the USA, did not regulate the issues of jurisdiction and arbitration in the relevant laws and left the 2
Yvonne et al. 2009, p. 233. Report of Working Group III, 20th Session Report (15–25 October 2007, Vienna), A/CN.9/642 (2007) [20th Session Report ], } 202–205, 216–218. 3
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solutions of such issues to the applicable national laws.4 On the contrary, other states such as Australia, Canada and New Zealand preferred to limit the application of the choice of court agreements and arbitration clauses. For example, the Canadian Water Carriage of Goods Act of 19105 contains a provision stating that any choice of court agreement which excludes or limits the jurisdiction of Canadian courts is invalid. Although such internal regulations existed, the drafters of the Hague Rules intentionally left out this issue. During the meetings of the Comite´ Maritime International (CMI), the delegate from Argentina suggested accepting the jurisdiction of the discharge port. The CMI chairman decided that this suggestion could not be accepted on the grounds that the jurisdiction issues are not related only to damaged goods and therefore such an issue should not be mentioned in the Hague Rules.6 Although the Hague Rules did not make explicit provisions regarding jurisdiction, some national courts decided that the limitation of the carrier’s liability by contract in accordance to Article 3 paragraph 8 can also be applied to the choice of court agreements.7 Some courts have interpreted this provision as a prohibition of all choices of court agreements,8 because the carrier may limit liability by setting particular obstacles to the demands of the plaintiff. Some courts, on the contrary, preferred a milder approach. They decided that Article 3 paragraph 8 not only permits a choice of court agreements, but also that the choice of court agreements, which causes the application of law systems limiting the liability of the plaintiff, are invalid.9 During the negotiations of the Hague/Visby Rules, the jurisdiction issue was raised again and discussed. The sub-commission did not accept this suggestion and decided that the regime regarding the liability must focus on the principles regulating the liability of the parties. Finally, the Hague-Visby Rules left the jurisdiction and arbitration issues to the applicable national laws. The Hamburg Rules was the first international regime that regulated the jurisdiction and arbitration issues regarding the carriage of goods by sea. It allowed the plaintiff related to the goods to file the action, or in case of arbitration to request
4
Sturley (2000). Water Carriage of Goods Act 1910, 9–10 Edw. 7, ch. 61, paragraph 5 (Canada). Although this provision is not in effect anymore, many national laws still provide the provision for an optional jurisdiction even with the existence of an exclusive jurisdiction agreement. See Maritime Liability Act 2001, ch. 6, paragraph 46 (Canada). 6 Comite´ Maritime International, London Conference October 1992, pp. 405–407 (Bulletin no. 57). Sturley (1990), p. 421. 7 Visby Protocal did not change Art. 3 (8) of the Lahey Rules. 8 Belgian courts and first instance courts of the USA have adopted this interpretation. See Sturley, Jurisdiction and Arbitration, p. 948, fn. 12. 9 Sample court decrees See High Court of Britain and U.S. High Court : Hollandia, [1983] A.C. 565, 574–575 (1982); Vimar Sequros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U. p. 528, 540–541 (1995). See Sturley, Jurisdiction and Arbitration, p. 948, fn. 13; Sturley, Jurisdiction under the Rotterdam Rules, p. 3. 5
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arbitration, at a place favourable for the plaintiff (Article 2110 and 22 of the Hamburg Rules). The plaintiff may choose to file an action in a court that is significantly related to the carrier or the carriage contract. This list includes the primary place of business of the carrier, loading and discharging ports and any other court indicated in the carriage contract. Although the provisions to the jurisdiction of the Rotterdam Rules are influenced by the Hamburg Rules, there are significant differences between these two regulations. For example, the Rotterdam Rules allow under certain conditions a choice (exclusive) of court agreement. Therefore, the Rotterdam Rules hold the intention of the parties more important than the Hamburg Rules, but even this is limited.11
11.3
Discussions of the Jurisdiction and Arbitration Chapters During the Negotiations of the Rotterdam Rules
The draft of the Rotterdam Rules did not contain any chapters regarding jurisdiction and arbitration, due to the failure to agree on such provisions. When UNCITRAL (United Nations Commission on International Trade Law) first discussed this issue, the delegates felt that a provision regarding jurisdiction and arbitration would be very beneficial, and, for some, even unavoidable.12 But there were also groups that held the opinion that the Rotterdam Rules should not include these matters. After one year, when UNICITRAL reviewed this matter, the majority decided that the Rotterdam Rules should include this issue and adopt the method of the Hamburg Rules.13 The Office of the General Secretary was authorised to draw up provisions based on the Hamburg Rules and other rules to decide the issues of jurisdiction and arbitration.14 During the negotiations, many states expressed the opinion that this issue must be regulated appropriately, but the opinions conflicted. On one side were states, 10 Hamburg Rules Art. 21 paragraph 1: In judicial proceedings relating to carriage of goods under this Convention the plaintiff, at his option, may institute an action in a court which, according to the law of the State where the court is situated, is competent and within the jurisdiction of which is situated one of the following places: (a) The principal place of business or, in the absence thereof, the habitual residence of the defendant; or (b) The place where the contract was made provided that the defendant has there a place of business, branch or agency through which the contract was made; or (c) The port of loading or the port of discharge; or (d) Any additional place designated for that purpose in the contract of carriage by sea. 11 Comparative analysis of the Hague/Visby, Hamburg and Rotterdam Rules. See Francesco Berlingieri, A Comparative Analysis of the Hague-Visby Rules, The Hamburg Rules and The Rotterdam Rules (http://www.uncitral.org/pdf/english/workinggroups/wg_3/Berlingieri_ paper_comparing_Rotterdam Rules_Hamb_HVR.pdf). 12 Report of Working Group III, 9th Session Report (15–26 April 2002, New York), U.N. Doc. A/CN.9/510 (2002) [9th Session Report ], } 61. 13 Report of Working Group III, 11th Session Report (24 March-4 April 2003, New York), U.N. Doc. A/CN.9/526 (2003), [11th Session Report ], } 158. 14 See U.N. Doc. A/CN.9/WG.III/WP.32 (6–17 October 2003, Vienna).
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including Britain,15 that were protecting the interests of the carrier and industry groups; on the other side were states protecting the interests of the party related to the goods and industry groups. These two groups also had different expectations from the provisions of jurisdiction and arbitration. The group on the carrier’s side, even looking mildly at provisions allowing jurisdiction and arbitration agreements, considered the existence of such provisions as incorrect. On the contrary, the group on the party related to the goods side suggested that the Rotterdam Rules should follow the Hamburg Rules, Articles 21 and 22, allowing the plaintiff related to the goods to choose the court, and therefore protect this side. There were also groups adopting milder approaches towards both the carrier and shipper.16 Since the European Union regulated the issue of jurisdiction between the member states,17 the discussions became even more complex while considering the legal circumstances of Europe. The member states are not authorised to negotiate an international convention regarding the jurisdiction matter. The European Commission is the sole authorised body for such matters. Therefore, some active participants of the negotiations of the Rotterdam Rules could only participate in the internal meetings of the European Union to participate in the discussions of jurisdiction. On the contrary, the European Commission, which did not participate in the discussions of the other chapters, became the main player during the negotiations of the jurisdiction provisions. Since the European Commission does not have any legal authorisation on arbitration, each member state participated freely in the arbitration negotiations. Due to the different authorisations of the European Commission, the jurisdiction and arbitration issues could not be negotiated as a single issue during the negotiations. The solution to the jurisdiction and arbitration issues was to accept that it is impossible to come to a consensus for every matter and thereby to harmonize the law as much as possible. UNCITRAL decided to leave out matters such as pending actions and adopted a solution embracing states which could not compromise on the jurisdiction and arbitration issues.
11.4
Optional Chapters Regarding Jurisdiction and Arbitration
The most important Article of Chapter 14 is Article 74, according to which the signatory states of the Rotterdam Rules are free to choose whether to comply or not to comply with the provisions pertaining to jurisdiction. Article 78 also gives the 15
For the opinions of the United Kingdom and Northern Ireland to arbitration see U.N. Doc. A/CN.9/WG.III/WP.59 (28 November 9 December 2005, Vienna). 16 Suggestion of USA See U.N. Doc. A/CN.9/WG.III/WP.34 (6–17 October 2003, Vienna), } 30–35. 17 Regulation No. 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I Regulation).
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same option to the signatory states of the Rotterdam Rules to be bound by the rules for arbitration or not. This application is called the opt-in application18 and was found as a compromise for states with different opinions. A state that wishes to be bound by the jurisdiction and arbitration chapters must make a declaration in accordance with Article 91 of the Rotterdam Rules. Many states will most probably make declarations in this matter at the stage of ratification of the Rotterdam Rules. However, Article 91 paragraph 1 of the Rotterdam Rules states that such a declaration may be made at any time and Article 91 paragraph 5 states that such a declaration may be withdrawn at any time. Therefore, a state may ratify the Rotterdam Rules, but may postpone the decision regarding the chapters on jurisdiction and arbitration. In addition, a state can also always review such a declaration and may accept the chapters which the state refused to accept earlier or may withdraw from the declaration of acceptance. A state is not automatically bound by Chapter 14 or 15 of the Rotterdam Rules by ratifying the Rules. A court of a state which is not bound by these Chapters has the freedom to decide jurisdiction and arbitration issues in accordance with the relevant national laws, contracts or any other international statutes. The contracting states of the Rotterdam Rules may accept the provisions in Chapter 14 or 15 either by making a declaration or may not give any declaration regarding these chapters. But nowhere in the Rotterdam Rules is a provision that indicates that a contracting state must accept both jurisdiction and arbitration provisions in the same way; in other words, accept both or refuse both. Therefore, theoretically, a state may declare the acceptance only for one chapter. One suggestion was that the declaration of the states must include both chapters, but this suggestion was not accepted, because such a declaration, including both jurisdiction and arbitration, could not be applied to the European Union member states.19 The European Commission had the sole authority to represent the member states in matters of jurisdiction but the member states were free to decide on matters of arbitration.
18
The opt-out application as an alternative to the opt-in, which has been accepted in Article 74 and 78 has also been considered by UNICITRAL. If the opt-out is accepted, the State which does not wish to be bound by such option must declare such wish. See U.N. Doc. A/CN.9/WG.III/WP.81 (16–27 April, New York, 2007), } 77, 81. See 20th Session Report, paragraph 203. There is not any difference between declaring and not declaring regarding the Arbitration Chapter in order to be bound by these provisions. However the opt-out application for European Union States may cause some difficulties because the European Commission has the exclusive authority on jurisdiction. If the representatives of the commission accept the opt-out application, each member state of the Rotterdam Rules must obtain prior to accepting the rules, even if they later choose the optout option, permission from the European Commission. On the contrary, if they accept the optin application, they don’t need the permission from the European Commission. It has been decided to make it as easy as possible for European Union member states and accept the opt-in application as in Article 74 and 78 of the Rotterdam Rules. See 20th Session Report, } 202–205, 216–218. 19 Report of Working Group III, 18th Session Report, (6–7 November 2006, Vienna), U.N. Doc. A/CN.9/616 (2006), [18th Session Report ], } 278; 20th Session Report, } 217.
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Jurisdiction and Arbitration Under the Rotterdam Rules
11.5
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Jurisdiction (Chapter 14)
11.5.1 General Rule: Actions Against the Carrier Article 66 of the Rotterdam Rules accepts the general rule that the plaintiff has the right to institute judicial proceedings against the carrier at a competent court of his choice. This approach is parallel to Article 21 of the Hamburg Rules.20 The plaintiff may choose the competent court among the relevant courts, which are selected to be within the frame of reasonable relevance to the transaction. On the contrary, the carrier is protected against any actions filed at any other courts. This provides a balance of interests between the carrier and the plaintiff. Article 66 of the Rotterdam Rules lists the courts where the plaintiff may institute judicial proceedings against the carrier. It is also explicitly stated that this article is not applied in the case of an exclusive choice of court agreement between the parties as in Article 67 and 72 of the Rotterdam Rules. Article 67 of the Rotterdam Rules provides regulations pursuant to volume contracts and Article 72 provides regulations pursuant to agreements after a dispute has arisen or jurisdiction when the defendant has entered an appearance; in other words, does not object to jurisdiction. Furthermore, Article 66 is not applicable in case of arbitration under Chapter 15. Unless the contract of carriage contains an exclusive choice of court agreement or an arbitration agreement, the plaintiff has the right to institute judicial proceedings under the Rotterdam Rules against the carrier at the places set forth in Article 66.
11.5.1.1
Competent Court
According to Article 1 paragraph 30 of the Rotterdam Rules, a “competent court” means a court in a contracting state that, according to the rules on the internal allocation of jurisdiction among the courts of that state, may exercise jurisdiction over the dispute. Such internal allocation may lead to more than one court as competent. In a federal system the internal allocation may give competence to the federal and regional courts. In the same way, the internal allocation of jurisdiction may give the plaintiff the option to choose between a general competent and a special competent court. The Rotterdam Rules leave such solutions completely to national laws.
20
Different from the Rotterdam Rules, Article 21 paragraph (b) of the Hamburg Rules indicates the court at the place of signing as an authorised court for jurisdiction. The Rotterdam Rules do not mention this court, because the place of signing may be a completely irrelevant place regarding the performance of the contract and also due to difficulties to locate the place of signing with electronic transport records. See Report of Working Group III, 14th Session Report, (29 November-10 December 2004, Vienna), U.N. Doc. A/CN.9/572 (2004), [14th Session Report ], } 125.
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The definition of a competent court is very important in connection with Article 66, because this Article gives the plaintiff the only option to choose a court in one of the contracting states.21 The definition prevents the plaintiff from carrying the action under Article 66 to any other court outside the contracting states of the Rotterdam Rules. This definition explains that a court of a state which is not a contracting state of the Rotterdam Rules is not a competent court. This very narrow definition of a competent court, which is that it is only to be a contracting state, is an important difference between the Rotterdam Rules and the Hamburg Rules.22
11.5.1.2
Competent Courts Listed in Article 66 of the Rotterdam Rules
For any certain dispute, the list of competent courts depends on the transaction itself. In some cases this list is very short. If the transaction is connected to only one of the contracting states of the Rotterdam Rules, the plaintiff may institute judicial proceedings only at one competent court. In some cases the number of courts may be more. The courts instituting judicial proceedings are dependent on the transaction. Article 66 lists the courts as follows: 1. 2. 3. 4.
The domicile of the carrier; The place of receipt agreed in the contract of carriage; The place of delivery agreed in the contract of carriage; or The port where the goods are initially loaded on a ship or the port where the goods are finally discharged from a ship; or 5. In a competent court or courts designated by an agreement between the shipper and the carrier for the purpose of deciding claims against the carrier that may arise under the Rotterdam Rules.
Domicile of the Carrier Article 66 (a) (i) of the Rotterdam Rules states that the plaintiff has the right to institute judicial proceedings against the carrier at the domicile of the carrier. Article 1 paragraph 29 of the Rotterdam Rules defines the domicile for all given circumstances. A natural person’s domicile is the habitual residence, irrespective of the nationality of this person. Therefore, the domicile of a Greek person living in London, for example, would be London. The domicile for a company or other legal person is the place where this legal person has its (1) statutory seat or place of incorporation or central registered office, whichever is applicable, (2) central administration or (3) principal place of business. The existence of the “whichever is applicable” option in the definition of the domicile for legal persons relies on the determination of the nationality for the legal person by different law systems. See 14th Session Report, } 114–115. Sturley, Jurisdiction, p. 10.
21 22
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Today it is rather seldom that the owner of a commercial liner is a natural person. This definition is especially important in practice to determine the domicile of legal persons. The statutory seat or place of incorporation or central registered office may be alternatives. According to Article 1 paragraph 29, the carrier may have more than one domicile. The place of incorporation is often different from that of the central registered office or the principal place of business. In cases of more than one domicile of the carrier, the plaintiff has the right to institute the judicial proceedings at any court of the domiciles. In many cases, the domicile of the carrier may not have any connection to the transaction. For instance, for a carriage from Australia to America, it would be a coincidence if the domicile of the carrier would be in Europe. Nevertheless, it is a correct decision to implement the domicile of the carrier to Article 66 as a general rule for jurisdiction, because it provides a foreseeable place for the carrier to expect judicial proceedings. The transaction causing the proceedings may not have strong connections to that particular place, though it is appropriate to give the carrier the opportunity for a defence at its own domicile. In addition, the domicile of the carrier would be beneficial at the stage of enforcement for the plaintiff, because in many cases the defendant has to enforce the court decision at the domicile of the carrier.
Place of Receipt Article 66 (a) (ii) states that the plaintiff has the right to institute judicial proceedings against the carrier at the place of receipt as agreed in the contract of carriage. The Hamburg Rules did not include the place of receipt as a place of jurisdiction (Hamburg Rules Article 21). This difference lies in the scope of application of the Rotterdam Rules covering also the multimodal carriages. The Hamburg Rules regulate the “port-to-port carriage”, therefore there is no place of receipt on land because the port of loading would also be the place of the receipt of goods. Since the Rotterdam Rules are applied to the whole carriage contract, a place of receipt for a multimodal carriage contract may be a different place from the port of loading. Therefore this place of jurisdiction has also been added to Article 66.23 It must be pointed out that the place of receipt is not the actual place of receipt. It is the place of receipt agreed upon in the carriage contract. The Rotterdam Rules take the carriage contract itself into account, not the performance of the contract. In practice, the place of receipt agreed upon in the carriage contract and the actual place of receipt of the goods is inevitably the same place. The shipper may want to receive the goods at a different place from that agreed upon earlier in the contract. In such a case, the shipper usually tries to agree with the carrier on a different place of receipt. The contract can be amended and the agreed place of receipt and the actual place of receipt will be the same place according to the amended contract of carriage. 23
Sturley, Jurisdiction, p. 14.
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Place of Delivery Article 66 (a) (iii) of the Rotterdam Rules states that the plaintiff has the right to institute judicial proceedings against the carrier at the place of delivery agreed upon in the contract of carriage. The Hamburg Rules did not include the place of delivery as a place of jurisdiction. As in the place of receipt, this difference lies in the scope of application of the Rotterdam Rules covering also multimodal carriages.24 Since the Rotterdam Rules are applied to the whole carriage, a place of delivery for a multimodal carriage contract may be at a different place from the port of discharge. Therefore this place of jurisdiction has also been added to Article 66. The place of delivery is not the actual place of delivery; it is the place of delivery agreed upon in the carriage contract. This is another example of the Rotterdam Rules which takes the carriage contract into account and not the performance of the contract. This difference is important in cases where the carrier delivers the goods at a different place of delivery as agreed on in the carriage contract. If the parties have not amended the contract to change the place of delivery, the plaintiff may, according to Article 66 (a) (iii), file an action only at the place of delivery agreed on in the carriage contract and not at the courts of the place of actual delivery.
Port of Loading and Discharge Article 66 (a) (iv) of the Rotterdam Rules states that the plaintiff has the right to institute judicial proceedings against the carrier at the port where the goods are initially loaded on a ship or the port where the goods are finally discharged from a ship. Although the Hamburg Rules have accepted the jurisdiction of the competent courts at the port of loading and discharge, UNCITRAL discussed whether to exclude the port of loading and discharge from Article 66 or not.25 Some delegates argued that for a door-to-door carriage contract, the whole carriage contract has to be taken into consideration and that it would not be appropriate to provide additional courts.26 According to this opinion, the ports are only significant in cases of port-to-port carriages; in other words, if the ports are the place of receipt and delivery. But UNCITRAL decided after extended negotiations27 to include the port of loading and port of discharge to the list for practical reasons. Loss and damage usually occur during handling at ports. Another reason for the appropriateness of the ports as a place of jurisdiction is that all related parties, witnesses and 24
Sturley, Jurisdiction, p. 17. See U.N. Doc. A/CN.9/WG.III/WP.56 (28 November-9 December 2005, Vienna), Article 75(c); U.N. Doc. A/CN.9/WG.III/WP.32 (3–14 May 2004, New York), } 72. 26 Report of Working Group III, 15th Session Report (18–28 April 2005, New York), U.N. Doc. A/CN.9/576 (2005) [15th Session Report ], } 121. 27 14th Session Report, } 120, 128; 15th Session Report, } 121; Report of Working Group III, 16th Session Report (28 November-9 December 2005 Vienna), U.N. Doc. A/CN.9/591 (2005), [16th Session Report], } 10–13, 17. 25
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other means of evidence are at this specific place. On the other hand, the port is usually the only place where the plaintiff can institute judicial proceedings against the carrier and the maritime performing party together with a single action.28 Article 66 (a) (iv) accepts the actual ports of loading and discharge although the place of receipt and delivery of Article 66 (a) (ii)-(iii) is the place of receipt and delivery agreed to in the carriage contract and the scope of application stated in Article 5 paragraph 1 (b) and (d) are the ports agreed on in the carriage contract. The actual port of loading and discharge is usually the agreed port of loading and discharge in the contract, but in case of any difference, the actual port of loading and discharge are considered more appropriate for jurisdiction. This appropriateness is supported by the fact that many incidents mainly occur at the port. Finally, Article 66 (a) (iv) designates only the port where the goods are initially loaded on a ship or the port where the goods are finally discharged from a ship. Therefore, if the carriage of sea includes also transhipping during carriage, the port where the goods are transferred to any other ship would not be evaluated within the scope of application of Article 66 (a) (iv) .29
Designated Court Article 66 (b) states that the plaintiff has the right to institute judicial proceedings against the carrier at a competent court or courts designated by an agreement between the shipper and the carrier. A choice of court agreement that is included in the transport document but not specified as exclusive in accordance with the provisions of Chapter 14, and even when it includes the phrase that it is exclusive, gives the plaintiff only an additional place to institute judicial proceedings. The designated court is different from the courts listed in Article 66 (a) in one aspect. The courts indicated in Article 66 (a) are linked to physical places i.e., the courts at these places are competent. In many cases, there may be more than one competent court at such a place. The court designated in Article 66 (b) on the other hand, is the court itself. During negotiations of carriage contracts, parties usually agree on a certain court rather than the courts of a certain area. However, the parties are free to decide how they would like to form their contract. Therefore, there is nothing that may prevent the parties from designating all the courts at a certain place as the competent courts. Nevertheless, the text of this Article indicates that it is possible to designate more than one competent court by an agreement. As in the domicile of the carrier, the designated court by an agreement may not have strong connections to the transaction. For instance, for a carriage from Australia to America it would be a coincidence to designate a competent court in Europe. However it is appropriate to include the designated court to this list.
28
See Section V/C. See 16th Session Report, } 15.
29
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In practice, it is usually the carrier’s choice to designate a court in the transport document. Therefore it is understandable that the carrier defends itself at a place of its choice. In addition, since this is a place indicated on the contract by the carrier with its consent, it would be a foreseeable place for the carrier.
11.5.2 Application of the Exclusive Choice of Court Agreements Article 66, providing a general rule for the competent courts, will not be applied in cases of exclusive choice of court agreements under the rules of Chapter 14. Consequently, it is crucial to determine under which conditions a choice of court agreement is exclusive. The Hamburg Rules accept choice of court agreements as exclusive only if these are agreed to after a dispute has arisen. The Rotterdam Rules have extended the application area and allow exclusive choice of court agreements under certain conditions.
11.5.2.1
Volume Contracts
Article 67 of the Rotterdam Rules allows parties to agree on an exclusive choice of court agreement in the presence of certain conditions. First, the parties have to agree that the designated court is an exclusive competent court (Article 67 paragraph 1). Therefore, it would not be possible to designate a court as exclusive without including a prominent statement that there is an exclusive choice of court agreement. In addition to the prominent statement that there is an exclusive choice of court agreement, four other conditions must be present to avoid the right of the plaintiff in Article 66. (1) The choice of court agreement is contained in a volume contract [Article 67 paragraph 1 (a)]. (2) The volume contract clearly states the names and addresses of the parties [Article 67 paragraph 1 (a)]. (3) The volume contract is either individually negotiated [Article 67 paragraph 1 (a) (i)] or contains a prominent statement that there is an exclusive choice of court agreement and specifies the sections of the volume contract containing that agreement [Article 67 paragraph 1 (a) (ii)]. (4) The agreement clearly designates the courts of one contracting state or one or more specific courts of one contracting state [Article 67 paragraph 1 (b)]. The first and the third additional conditions are the same as the conditions of Article 80 regulating the deviation from the Rotterdam Rules. Since deviation from the Rotterdam Rules is only possible for volume contracts, the exclusive choice of court agreement must be included in the volume contract. In the same way, as Article 80 includes the provision of individually negotiated or a prominent statement
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for volume contracts,30 Article 67 also demands the performance of the same conditions for an exclusive choice of court agreement to become effective. The choice of court agreement must be individually negotiated between the parties or must include a prominent statement that there is an exclusive choice of court agreement and must specify the sections of the volume contract including that agreement. The second and fourth additional conditions are not required by Article 80. These are specific conditions for jurisdiction and arbitration. The reason that the volume contract must clearly state the names and addresses of the parties is obviously to prevent difficulties in identifying the parties. This issue becomes significant for judicial procedures to direct such claims within the time limit of two years.31 The choice of court agreement must clearly designate one or more than one court of a contracting state of the Rotterdam Rules [Article 67 paragraph 1 (b)]. The designation of the competent courts should be studied from three points of view: (1) Only a court of a contracting state of the Rotterdam Rules can be designated according to Article 67 as a competent court, because this provision can only be applied for the “competent” courts limited in Article 66 (b) of the Rotterdam Rules. According to the definition, a competent court must be a court in a contracting state of the Rotterdam Rules.32 Also, Article 67 paragraph 1 (b) repeats that the designated court is limited to be in a contracting state of the Rotterdam Rules. The plaintiff would not be able to rely on either Articles 66 or 67 to locate judicial proceedings to a court in a state where the Rotterdam Rules is not applicable. (2) The choice of court agreement may designate a certain court, list two or more courts or may designate generally the courts of a certain state. (3) Even though it is possible to designate more than one court, for the presence of an exclusive court agreement, all courts must be located in only one state. A choice of court agreement, which leaves the option to the parties to file an action in contracting state A or contracting state B of the Rotterdam Rules, does not comply with Article 67.33 The exclusive choice of court agreement is applicable between the parties of a volume contract, if all conditions are met. Therefore, the right of the plaintiff to choose the court in accordance with Article 66 ceases. 11.5.2.2
Third Parties
It is necessary to clarify a definition of the third parties, who are not a party to the volume contract but are bound by the choice of court agreements. A third party 30
For example, if a volume contract accepts shorter periods or limits the responsibilities, this matter must be negotiated by the parties or the particular provisions of the Rotterdam Rules subject to derogation must be explicitly indicated. 31 Yvonne et al. 2009, p. 217. 32 For definition see Rotterdam Rules Article 1 } 30. 33 Yvonne et al. 2009, p. 218.
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includes parties to whom the bill of lading is transferred and insurers which cover the insurance claims. On the other hand, a maritime performing party, such as discharging personnel for the goods, terminal operators or truck drivers at the port, is not included in this definition.34 Article 67 paragraph 2 accepted four conditions in addition to Article 67 paragraph 1 to bind a person, who is not a party of a volume contract, to exclusive choice of court agreements. These four conditions significantly limit the scope of application. The first condition, Article 67 paragraph 2 (a), demands that the court is in one of the places as designated in Article 66 subparagraph (a). The place of the designated court must be either the domicile of the carrier, the place of receipt agreed to in the contract of carriage, the place of delivery agreed to in the contract of carriage or the port where the goods are initially loaded on a ship or the port where the goods are finally discharged from a ship. In practice, a court which meets these conditions is usually the court at the carrier’s domicile. Volume contracts, by their nature, contain carriages on many routes which are connected to each other. There will be different places of receipt, different ports of loading and discharge and different places of delivery under the scope of a single volume contract. Therefore, it is impossible to designate a certain place of jurisdiction apart from the court at the place of the carrier’s domicile for all carriages. Only the carrier’s domicile would be at the same place for each transaction. The second condition, Article 67 paragraph 2 (b), states that the choice of court agreement is included in the transport document or electronic transport record. It is not sufficient to refer to the choice of court agreement.35 The third condition, to bind a person who is not a party to the volume contract to an exclusive choice of court agreement, is to give a timely and adequate notice of (1) the court where the action shall be brought and (2) verification that the jurisdiction of that court is exclusive [Article 67 paragraph 2 (c)]. An interesting departure from Article 80, paragraph 5 is that it is sufficient to give notice of this condition. Article 80 paragraph 5 explicitly states the requirement of the consent of the third party for derogation of volume contracts, but Article 67 does not seek the consent of the third party.36 UNCITRAL decided that it is necessary to provide a higher standard of protection within the scope of Article 80. Although it is an important issue, the choice of court is a procedural matter and the notice condition is considered sufficient.37 The content of such notice should not be a problem, because the volume contract includes the information concerning the court where the action shall be brought to and an explicit statement regarding the exclusiveness of the court. One point may cause confusion whether the notice has been given in a timely 34
Yvonne et al. 2009, p. 220. Sturley, Jurisdiction, p. 25. 36 Article 80 } 5 of the Rotterdam Rules states that, the terms of the volume contract that derogate from the Convention, apply between the carrier and any person other than the shipper provided that such person received information that prominently states that the volume contract derogates from this Convention and gave its express consent to be bound by such derogations. 37 See 16th Session Report, } 32. 35
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manner or if such notice is sufficient. The content of the notice will be subject to the case. The notice must be given in time, before the third party is bound by a legal transaction, to give him the opportunity to object to the transaction. Finally, the law of the chosen court must accept that the third party is bound by the exclusive choice of court agreement [Article 67 paragraph 2 (d)]. Therefore, it is the internal national law of the court that will decide if the choice of agreement is applicable to the third party which has not given consent to the choice of court agreement.38 This issue will mainly arise in cases where the third party consignee chooses to institute judicial proceedings against the carrier according to Article 66. If the carrier, in its position of the defendant, objects to the jurisdiction of the court claiming that the exclusive choice of court agreement binds third parties according to Article 67 paragraph 2, such court chosen by the plaintiff will find the solution to its jurisdiction within the internal national law.39 According to Article 67 paragraph 2 subparagraph (d), this particular court has to apply its internal national law to decide whether the third party, which has not given its consent to the choice of court agreement, is bound by the exclusive choice of court agreement.40 For states which accept that third parties are bound by choice of court agreements, the court must also determine if the other conditions of Article 67 are fulfilled. For states that prohibit such proceedings towards third parties without consent do not need to make any investigation to determine the compliance with the other conditions of Article 67.41 States which do not accept in their internal law that a third party is bound by choice of court agreements are bound by the other provisions of Chapter 14 but, in relation to these states, the application of Article 67 is limited to the parties of the volume contract.
11.5.2.3
Agreement After a Dispute Has Arisen
One of the less frequently discussed articles regarding jurisdiction in Chapter 14 is Article 72, which allows the exclusive choice of court agreements in two cases. According to Article 72 paragraph 1, after a dispute has arisen, the parties in the dispute may agree to resolve it in any competent court. The same provision can be found in the Hamburg Rules as well (Article 21 paragraph 5). Such agreement is not subject to any written form. Article 3 dealing with the written form requirement does not refer to Article 72; it refers to Articles 66, 67 and 80. Article 72 paragraph 1 of the Rotterdam Rules accepts explicit agreements of jurisdiction concluded after a dispute has arisen, but the parties may implicitly agree on a court of choice agreement. Even in the case of an absence of a written agreement of jurisdiction, if the defendant appears and does not contest the jurisdiction of the court in 38
Sturley, Jurisdiction, p. 27. Sturley, Jurisdiction, p. 27. 40 See 16th Session Report, } 30. 41 See 16th Session Report, } 31. 39
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accordance with the rules of that court, it is deemed that the defendant is party to the implicit agreement of jurisdiction. Article 72 paragraph 2 was added for implicit agreements of jurisdiction in cases after a dispute has arisen.42 If the defendant appears without contesting the jurisdiction, the court has jurisdiction.
11.5.3 Maritime Performing Party The explanations clarified above all regard judicial proceedings against the carrier with whom the shipper has a contractual relation. But in many carriage contracts, the carrier is not the performer of the contract, but instead makes sub-contracts with other persons, at least to allow performance of some parts of the contract. Article 19 of the Rotterdam Rules allows the plaintiff in relation to the goods to directly address the liable maritime performing party to claim the loss and damage directly from the person responsible for such damage and loss. Consequently, Chapter 14 includes provisions regarding jurisdiction also for such proceedings.
11.5.3.1
Actions Against the Maritime Performing Party
A court with strong connections to the whole carriage contract may not have any connection to the maritime performing party. For example, in a case of a multimodal transport from Berlin to Chicago, the place of receipt of goods (Berlin) has nothing to do with the performance of a loading-discharging worker at the port of discharge. Therefore, it would be inappropriate to accept the list of competent courts in Article 66 for actions against the maritime performing party. Article 68 of the Rotterdam Rules provides the solution with a similar list of the competent courts of jurisdiction for actions against the maritime performing party. The competent courts for action against the maritime performing party are listed under only two paragraphs: (1) It is considered appropriate in the same way, where the carrier is expected to defend itself against actions at the courts of its domicile, that the maritime performing party is also expected to defend itself at the courts of its domicile (Article 68 subparagraph a). (2) It is also considered appropriate in the same way, where the carrier is expected to defend itself against actions at the courts of the place where the carriage contract is executed (place of receipt, place of delivery, port of loading and discharging), the maritime performing party is expected to defend itself at the courts of the place where the carriage contract is executed. For the party which performs the land part of the sea carriage (e.g., harbour worker for loading, terminal operator), this place would be the place where the work is performed, See 16th Session Report, } 62, 65–69; Sturley, Jurisdiction, p. 29.
42
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in such a case this would be the port. For the party which performs the sea part of the sea carriage, this place would be the port of receipt and port of delivery (Article 68 subparagraph b). The list of competent courts of jurisdiction for the maritime performing party is respectively shorter than the list for the carrier in Article 66, because some courts in the carrier’s list are unnecessary for the maritime performing party. Since the maritime performing party receives the goods at the port of loading, the place of receipt and port of loading will coincide. In the same way, the place of delivery for the maritime performing party is the port of discharge and therefore the same place. Finally, the designated court by agreement (Article 66 subparagraph b) would not be applicable, because the maritime performing party is a sub-contractor of the carrier and does not have any direct contractual relationship with the shipper and therefore is not in a position to make any choice of court agreements in order to designate a court.43 Assuming that the maritime performing party has its domicile outside the territory of the contracting states of the Rotterdam Rules and is performing there, this leads to the conclusion that no court will have jurisdiction.44 Article 68 does not provide any competent court of jurisdiction in such a case to the plaintiff in relation to the goods. In practice, the plaintiff in relation to the goods institutes judicial proceedings against the maritime performing party in a state which is not a contracting state of the Rotterdam Rules. Here, it would not be possible to apply the Rotterdam Rules. However, such a result would only lead to that direction in the case where the maritime performing party has no connection to any of the contracting states of the Rotterdam Rules. Maritime performing parties such as the handling personnel at the port, terminal operators or warehouse workers are not bound by the exclusive choice of court clauses in carriage contracts. Thus, Article 69 of the Rotterdam Rules states that judicial proceedings against the maritime performing party cannot be instituted in another court.
11.5.3.2
Consolidation and Removal of Actions
Although Articles 66 and 68 of the Rotterdam Rules have accepted different lists of competent courts against the carrier and maritime performing parties, the plaintiff usually prefers to institute judicial proceedings against the potential defendants in one action. The plaintiff must choose a competent court which is common to both lists (Article 71 paragraph 1). If the maritime performing party is acting in one of the loading or discharging ports, such port, provided it is designated as a contracting state in the Rotterdam Rules, would be common to both lists. But in some cases it is impossible to find a court that is listed in both Articles 66 and 68. Then the plaintiff must start proceedings against the carrier and the maritime performing parties 43
Sturley, Jurisdiction, p. 30. See 16th Session Report, } 43.
44
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according to Article 68 subparagraph (b) at the competent courts of the port where the maritime performing party has performed the work. In practice, such a port is other than the loading or discharging port; it is usually the transhipping port. Article 71 paragraph 1 will not be applicable in cases of exclusive choice of court agreements. An exclusive choice of court agreement would not bind the maritime performing party unless the parties agree on jurisdiction after a dispute has arisen. A splitting situation may occur in cases of an exclusive choice of court agreement between the consignee and carrier in accordance with Article 67 paragraphs 1 and 2: One action proceeds in state A against the carrier according to the choice of court agreement and one action proceeds in state B, where the goods have been discharged, against the maritime performing party.45 The carrier may institute judicial proceedings according to the exclusive choice of court agreement between the parties in compliance with Article 67 to institute an action seeking a declaration of non-liability. In addition, the maritime performing party may institute judicial proceedings according to the exclusive choice of court agreement in compliance with Article 72 after a dispute has arisen. In the absence of such exclusive choice of court agreements the Rotterdam Rules provide a regulation to protect the plaintiff’s right to select the forum, which may institute judicial proceedings against the carrier or the maritime performing party pursuant to Article 66 or 68. According to this provision, in cases where the carrier or maritime performing party institutes an action seeking a declaration of non-liability or any other action that would deprive a person of the right to select the forum pursuant to Article 66 or 68 shall, at the request of the defendant, withdraw that action once the defendant has chosen a court designated pursuant to Article 66 or 68, whichever is applicable, where the action may be recommenced (Article 71 paragraph 2).
11.5.4 Recognition and Enforcement Different from Article 21 of the Hamburg Rules, the Rotterdam Rules include a provision regarding recognition and enforcement. However, this Article does not make recognition and enforcement easier to apply and, therefore, it is actually meaningless. According to Article 73 paragraph 1 of the Rotterdam Rules, when both states have made a declaration that they are bound by Chapter 14, a decision made in one contracting state by a court having jurisdiction under the Rotterdam Rules must be recognized and enforced in the other contracting state in accordance with the law of the latter contracting state. A court may refuse recognition and enforcement based on the grounds for the refusal of recognition and enforcement available pursuant to its law (Article 73 paragraph 2).46 Article 73 paragraph 3
45
Yvonne et al. 2009, p. 227. 16th Session Report, } 71; 20th Session Report, } 199.
46
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states that Chapter 14, shall not affect the application of the rules of a regional economic integration organization that is a party to the Rotterdam Rules, as concerns the recognition or enforcement of judgements as between member states of the regional economic integration organization. In case the European Union declares that it is bound by Chapter 14 of the Rotterdam Rules, the provisions of recognition and enforcement in Chapter 14 can only be applied to the member states of the European Union, if such provisions do not contradict the European Union Regulation.47
11.6
Arbitration (Chapter 15)
Chapter 15, pertaining to rules of arbitration, includes parallel provisions to Chapter 14, pertaining to the rules of jurisdiction.48 To apply Chapter 15, the contracting states of the Rotterdam Rules must declare in accordance with Article 91 that they are bound by that Chapter. All contradicting arbitration clauses to Chapter 15 will be invalid when such a declaration has been stated. Although the provisions of Chapter 15 reflect the related provisions of Chapter 14, each chapter has a different aim and other grounds of acceptance.49 Linertransportations, which constitute the most significant part of the Rotterdam Rules, usually have choice of court agreements than arbitration clauses. During the negotiations of the Rotterdam Rules, many states represented the opinion that the issue of jurisdiction must definitely be regulated, to provide the plaintiff in relation to the goods a competent court to put forward his action. On the other hand, arbitration is always accepted for non-liner transportations where charterparty is applied. Charterparties are usually issued in cases where both parties of the carriage have approximately the same negotiating power. Therefore, there is no need to provide the protection of Article 66 to the party in relation to the goods regarding arbitration.50 However, the absence of any regulation on arbitration in the Rotterdam Rules may bear the risk that arbitration could be used to overcome the provisions of jurisdiction. After the carriers become aware of the fact that they cannot make any exclusive choice of court agreements for liner transportations other than in cases of volume contracts, they may use arbitration as an instrument to avoid the right of the plaintiff in relation to the goods to select the forum according to Article 66. By setting the rules for jurisdiction, UNCITRAL has also decided to set the rules for arbitration to avoid a situation in which parties may evade the provisions of jurisdiction.51 In the light of this information and the provisions 47
Regulation No. 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I Regulation). 48 Compare Article 66 and Article 75 } 2. 49 Sturley, Jurisdiction and Arbitration, p. 972. 50 Sturley, Jurisdiction and Arbitration, p. 972. 51 Sturley, Jurisdiction and Arbitration, p. 973.
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detailed in Chapter 15, it appears that the aim of the drafters was not to transfer the rules for jurisdiction to arbitration. The reason why the rules of arbitration reflect the jurisdiction rules is to protect the rights previously set for jurisdiction. The arbitration has been set by a minimum of rules to provide a broad function of Chapter 14, which enables the plaintiff in relation to the goods to institute judicial proceedings in an appropriate court.52 The objective of Chapter 15, in cases where the plaintiff has the right to select the forum in accordance with Article 66, is to prevent the obstruction of such right by an arbitration clause. But Chapter 15 does not need to protect the plaintiff from arbitration in cases where the plaintiff does not have the right to select the forum.53 The negotiation stage of arbitration differs significantly from the negotiation stage of jurisdiction. First, the participants in negotiation are different. The European Commission, as the sole authorised body to negotiate in relation to jurisdiction,54 does not have the same authority in the negotiations of the arbitration. The states, which had to watch the negotiations silently during discussions for jurisdiction, had a significant role during the negotiations for arbitration.55 The Secretariat of UNCITRAL was also more active during these negotiations because of its broad experience in arbitration.56 Second, the legal framework of jurisdiction and arbitration are different. Although none of the previous international conventions, apart from European Brussels I Regulation, formed the regulations on jurisdiction on an international basis, the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958, which has at the moment a huge number of participants, provides the basic legal arbitration instrument.
11.6.1 General Rule Article 75 paragraph 1 of the Rotterdam Rules includes the provision that the parties may agree to solve any dispute that may arise in relation to the carriage of goods under the Rotterdam Rules by arbitration. The general rule regarding arbitration contains a parallel regulation to the general rule of jurisdiction. Article 66 provides the right to select the forum in the same way as Article 21 of the Hamburg Rules.57 Article 75 paragraph 2 of the Rotterdam Rules follows Article 22 of the
See 14th Session Report, } 156; 16th Session Report, } 85, 96; 18th Session Report, } 268. See 16th Session Report, } 99. 54 Sturley, Jurisdiction, p. 6. 55 For opinions of Britain and Netherlands See U.N. Doc. A/CN.9/WG.III/WP.54 (28 November-9 December 2005, Vienna). 56 See U.N. Doc. A/CN.9/WG.III/WP.45 (18–28 April 2005, New York). 57 See fn. 10. 52 53
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Hamburg Rules58 in providing the plaintiff the same rights within the frame of arbitration. In cases where the dispute is subject to arbitration, the plaintiff may select the place of arbitration as stated in the agreement [Article 75 paragraph 2 subparagraph (a)] or may choose any place as in Article 75 paragraph 2 [Article 75 paragraph 2 subparagraph (b)]. If the parties decide to refer their dispute to arbitration, the key issue is determining the place of the arbitration. Chapter 15, pertaining to arbitration, separates volume contracts containing particular conditions from the other contracts. Article 75 paragraph 2 states that for contracts other than volume contracts and for volume contracts that do not fulfil the conditions set in Article 75 paragraph 3 or, if applicable, Article 75 paragraph 4, the plaintiff may choose the following places as the place for arbitration: 1. Any place designated for that purpose in the arbitration agreement; 2. Any other place situated in a state where any of the following places is located: (a) The domicile of the carrier; (b) The place of receipt agreed in the contract of carriage; (c) The place of delivery agreed in the contract of carriage; (d) The port where the goods are initially loaded on a ship or; (e) The port where the goods are finally discharged from a ship. Compared to the relevant provision in the jurisdiction chapter, one main difference is evident. In case of litigation, the competent courts are limited to the courts of the contracting states of the Rotterdam Rules. On the contrary, Article 75 paragraph 2 does not provide the condition that the place of arbitration must be in a contracting state. The place of arbitration may be in any state. It is not appropriate to provide a plaintiff a wide selection of places to apply for arbitration. The Hamburg Rules have been much criticised for this reason.59 Different from litigation, the constituent component of arbitration is its optional nature. Deciding at a particular place for arbitration under the procedural rules of that place is not the same as giving consent to arbitration in any other place. Working Group III decided that allowing more than one place for arbitration does not comply with the trustworthiness in trade.60 On the other hand, this may also be considered beneficial. Allowing arbitration at more than one place may contribute to the development of arbitration in different regions.61 Critics of the Hamburg
58 Hamburg Rules Art. 22 paragraph 3: The arbitration proceedings shall, at the option of the claimant, be instituted at one of the following places:(a) A place in a State within whose territory is situated: (i) The principal place of business of the defendant or, in the absence thereof, the habitual residence of the defendant; or (ii) The place where the contract was made, provided that the defendant has there a place of business, branch or agency through which the contract was made; or(iii) The port of loading or the port of discharge; or (b) Any place designated for that purpose in the arbitration clause or agreement. 59 Yvonne et al. 2009, p. 237. 60 See 16th Session Report, } 89. 61 Yvonne et al. 2009, p. 237.
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Rules argue that the provision of arbitration is not functional and that the carriers will tend not to insert any arbitration clauses into their bills of lading. Since the carriers usually prefer not to put any arbitration clauses into their bills of lading and there are only a small number of bills of lading complying with the Hamburg Rules, it is not possible to observe whether the Hamburg Rules have such an outcome. But if Chapter 15 of the Rotterdam Rules has an effect like this, it will be possible to say that they are successful.62 Therefore, the objective is not to open the gate for a solution, which is not used in practice for liner transportations. It is to provide minimum rules to prevent the carriers from misusing the arbitration option to avoid the jurisdiction clauses. If the carrier intends to avoid the jurisdiction clauses by selecting the arbitration option, the arbitration will be considered but, in such a case, the plaintiff will have the right to select the place of dispute resolution.63
11.6.2 Special Rules The generally accepted rule for arbitration has exemptions similar to those in the jurisdiction chapter. In some limited situations, to protect the rights of the plaintiff and customs of the trade, the choice of place for arbitration in the agreement binds the parties. The plaintiff is not able to choose the place of arbitration.
11.6.2.1
Volume Contracts
As explained previously, the exclusive choice of court agreements are valid under the conditions of Article 67. The designation of the place of arbitration in the agreement binds the parties of a volume contract under the same conditions (Article 75 paragraph 3). The arbitration agreement must be a part of a volume contract that contains the names and addresses of the parties (Article 75 paragraph 3) and must be individually negotiated [Article 75 paragraph 3 subparagraph (a)] or must contain a prominent statement that there is an arbitration agreement and specify the sections of the volume contract containing the arbitration agreement [Article 75 paragraph 3 subparagraph (b)]. These conditions are the same conditions set out in Article 67 paragraph 1 subparagraph (a) for exclusive choice of court agreements. But Article 67 paragraph 1 subparagraph (a) states that the designated competent court in the agreement must be a court of a contracting state of the Rotterdam Rules. The arbitration agreement does not have to designate a place of arbitration in a contracting state of the Rotterdam Rules.
See 15th Session Report, } 271. Sturley, Jurisdiction and Arbitration, p. 976.
62 63
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Third Parties
As an exclusive choice of court agreement binds third parties under four conditions defined in Article 67 paragraph 2, in the same way an arbitration clause in a volume contract also binds third parties under the same conditions (Article 75 paragraph 4). These conditions are: 1. The place of arbitration designated in the agreement is situated in one of the places referred to in subparagraph 2 (b) of this Article [Article 75 paragraph 4 (a)]. As in the jurisdiction chapter, the place that meets this condition is usually the carrier’s domicile. 2. The arbitration agreement is included in the transport document or electronic transport record [Article 75 paragraph 4 (b)]. 3. The person who is not a party to the volume contract must be given timely and adequate notice of the place of arbitration [Article 75 paragraph 4 (c)]. 4. The applicable law must permit that person to be bound by the arbitration agreement [Article 75 paragraph 4 (d)]. The issue of whether it is possible to apply the arbitration agreement to a third party without its consent is left to the internal national laws of the relevant state. The difference lies in the stage where this law is determined. The jurisdiction chapter states that the law of the court is applicable. Therefore, it is the internal national law of the court that will decide if the choice of agreement is applicable to the third party which has not given consent to the choice of court agreement. Arbitration, on the other hand, leaves the solution to the applicable law. The court will determine the applicable law according to the rules of private international law. In other words, the internal law of the court or, in case of reference to a foreign law, the rules of the foreign law will be applicable.64
11.6.2.3
Non-liner Transportation
The arbitration rules are also different from the rules for jurisdiction in relation to the scope of application. All carriage contracts within the scope of application of the Rotterdam Rules are subject to the jurisdiction rules. The arbitration chapter, on the contrary, does not set rules for most non-liner transportation. Since most non-liner transportation is left out of the scope of application of the Rotterdam Rules (Article 6 paragraph 2), Article 76 sets exemptions for two special situations of non-liner transportation. Arbitration has not been regulated for cases where the rights of the shipper are transferred by a charterparty or other similar contract to third parties or where the parties agree to establish a contract subject to the Rotterdam Rules that was initially not subject to the Rotterdam Rules. In these situations, the industry relied for a long time on arbitration and since there was never a significant problem, UNCITRAL
64
Sturley, Jurisdiction and Arbitration, page 978.
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decided to continue the customs in law practice in relation to these situations.65 Many law systems accept that third parties are bound by the designated place of arbitration in the arbitration agreement. But this is not always compulsory. Article 76 paragraph 1 of the Rotterdam Rules states that nothing in the Rotterdam Rules affects the enforceability of an arbitration agreement in a carriage contract in non-liner transportation to which the Rotterdam Rules or the provisions of the Rotterdam Rules apply. If an internal national law system restricts the application of arbitration agreements against third parties, the Rotterdam Rules will not interfere with such a law. UNCITRAL decided not to discuss the application of arbitration provisions to carriage contracts, which had become subject to the Rotterdam Rules due to the agreement of the parties. The absence of provisions for legal transactions outside the scope of application of the Rotterdam Rules was not considered a cause for apprehension.66 On the contrary, in relation to charterparty bills of lading and related legal transactions, Article 76 paragraph 2 accepted some precautions in order to protect the rights of third parties. The transport document must identify the parties and the date of the charterparty [Article 76 paragraph 2 subparagraph (a)] and incorporate by specific reference the clause in the charter party or other contract that contains the terms of the arbitration agreement [Article 76 paragraph 2 subparagraph (b)]. Under these conditions, a third party is bound by the provisions of an agreement negotiated among the parties of a carriage contract.
11.6.2.4
Agreement After a Dispute Has Arisen
The parties may agree to resolve a dispute by arbitration at any place after such a dispute has arisen (Article 77). This agreement substitutes a jurisdiction or arbitration agreement which had been agreed to prior to the dispute.67 As explained in the jurisdiction chapter,68 after a dispute has arisen the court designated in the choice of court agreement must be a court of a contracting state of the Rotterdam Rules. On the contrary, the place of arbitration to be designated in the arbitration agreement may be in any state.
11.7
Conclusion
The chapters for jurisdiction and arbitration are based on generally accepted compromise, as are all the Rotterdam Rules, to encourage international harmonization. The chapters were prepared with a pragmatic approach by considering the 65
Yvonne et al. 2009, p. 237; Sturley, Jurisdiction and Arbitration, p. 978. Also see 15th Session Report } 176–179; 16th Session Report, } 88. 66 Sturley, Jurisdiction and Arbitration, p. 979. 67 Yvonne et al. 2009, p. 242. 68 See 11.5.2.3.
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needs of the industry and are practice oriented. Chapters 14 and 15 bind only those contracting states that declare that they are bound by these chapters in accordance with Article 91. These declarations may be given at any time and may be withdrawn at any time. At the stage of ratifying the Rotterdam Rules, a state may decline both chapters or may accept to be bound by only one of the two chapters. The main problem of this optional right is the possibility of obstructing the harmonization of the Rotterdam Rules on an international basis. The opt-in application, which is not a part of the Hamburg Rules, may be widely criticized. But it is necessary to emphasize a general but significant principle which was defined during the preparation of the Rotterdam Rules: the principle of establishing a broad compromising foundation. One of the best examples of this principle is, without doubt, the chapters of jurisdiction and arbitration. During the preparation stages some states suggested leaving out both chapters; another group maintained that it is necessary to integrate the chapters. The opposing groups compromised with the acceptance of the opt-in application. No other solution of the Working Group would establish such a widely accepted compromise. Without the option to decide to be bound by the jurisdiction and arbitration chapters, the birth of the Rotterdam Rules would have been in danger. Even if some states do not give any declaration to the jurisdiction and arbitration chapters, the ratification itself will still be a very important step toward the success of the Rotterdam Rules. In this way, the Rotterdam Rules will be an important international legal document in maritime law to harmonize the rules of carriage of goods by sea.
References Berlingieri F, A Comparative Analysis of the Hague-Visby Rules, The Hamburg Rules and The Rotterdam Rules (http://www.uncitral.org/pdf/english/workinggroups/wg-3/Berlingieri-papercomparing-Rotterdam Rules-Hamburg-HVR.pdf) Sturley MF (ed) (1990) The Legislative History of the Carriage of Goods by Sea Act and the Travaux pre´paratoires of the Hague Rules. Littleton, Co:Fred B. Rothman Sturley MF (2000) Forum Selection and Arbitration Clauses Under Section 3 (8) of the U.S. Carriage of Goods by Sea Act: Statutory Intent and Judicial Interpretation. In: Ship’s Operation and Freedom of Contract: Second International Conference on Maritime Law, vol 141. Piraeus Bar Association, Piraeus Sturley MF (2009) Jurisdiction and Arbitration under The Rotterdam Rules, Unif L Rev, Vol. XIV, pp. 945–981 Sturley MF (2009) Jurisdiction under The Rotterdam Rules (http://www.rotterdamrules2009.com/ cms/index.php?page=text-speakers-rotterdam-rules-2009) Yvonne B, Charles D, Filippo L, Andrew S, Hilton S, Michael T (2009) The Rotterdam Rules: A Practical Annotation. Informa Law, London
