Legalities of Carriage of Goods by Sea

International economic integration and the multiple politics have a deep impact on the law of international transport of goods by sea. The rapid development of international trade requires the international Carriage of Goods by Sea Act to accelerate the pace of change. With the information age coming, the shipping industry, new technologies and new inventions are constantly emerging, in the past, based on the “Hague Rules” and “The Hague – Visby Rules”, the unification state of the International Carriage of Goods by Sea Act has lagged behind, and requiring new unified growing ever louder. The old liability base subject to a full challenge, the new type of international law – “Hamburg Rules” has emerged. From the “Hague Rules” to the “Hamburg Rules” of international conventions relating to bills of lading in its content has undergone a qualitative change in protecting the interests of the parties that is more reasonable. It also adapted to the continuous development of shipping technology requirements.

1. Comparison of Hague rules, Hague-Visby rules, and Hamburg rules

1.1 The Basis of Liability by Carrier

On the basis of the responsibility of the carrier Hague Rules and the Visby Rules adopt a not entirely exoneration principle. Not entirely exoneration principle meaning refers to under normal circumstances adopting the principle of taking fault, that is, carrier is liable for the loss or damage if they are proved that the goods which are in charge of the carriers have the loss or damage, but there are exceptions to the rule. Hague Rules provides for immunities, that is, “the carrier shall not be responsible for the loss or damage arising or resulting from: (a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship”. [1] This provision is the defect exception of the principle, so as not entirely exoneration principle. Hamburg Rules is taken to a presumption of fault and General exoneration principle. The carrier, his servants or agents have liability for the loss or damage, unless the carrier can prove that they and their employees have no-fault; for the fire to take ordinary negligence, that is, the carrier is at fault and has the liability of the loss of or damage. [2] To sum up, Hague Rules guarantee the interests of shipper, but according to reasonable risk-sharing principle of shipper and carrier, Hamburg Rules appropriate increase the liability of the carrier. This is compatible with the development and changes of international political and economic situation. The case of Midland Silicones Ltd v Scruttons Ltd [3] cargo damage case in UK in 1961, a number of chemical products was damaged due to the negligence of workers handling. According to the circumstances, if the shipper wanted to sue the carrier, then based on the limits of liability to the provisions of the bill of lading, the goods can only compensate for 500 U.S. dollars a barrel, thus the shipper sued stevedoring companies for infringement. Stevedoring companies had insisted in his reply that he is an agent of the carrier the right to invoke the rights of the limitation of liability of carrier. But the House of Lords upholding the principle of privity of contract that the stevedoring companies are not parties of the contract, therefore, it did not be entitled to invoke the provisions of the bill of lading the right of the carrier to limitation of liability. Finally, the owner received full compensation. Hamburg Rules improved Visby Rules and did not like Visby Rules to exclude “independent contractor”.

1.2 Limitation of Liability

Comparing with Hague and Hague – Visby Rules, Hamburg Rules improved the minimum compensation amount of the carrier. The limitation of liability of the carrier is per package or per shipping unit 835 SDR, or 2.5 SDR per kg of the gross weight of the goods, whichever is the higher. [4] However in Hague Rules the limitation of liability was £100 per pack. [5] Hague – Visby Rules used “gold value” measures which provide 10,000 francs per package or unit or 30 francs per kg. [6] Secondly, the measurement of loss or damage of the goods means more and more reasonable. Hague Rules used per package or unit to measure goods. However, with the development of containers and other modes of transport into the group, the drawbacks of this measurement method is gradually emerging. Therefore, both of Hague and Hague – Visby Rules prescribe that if the bill of lading described the number of the packages or units, they used this unit-by-piece for compensation; contrarily if the bill of lading did not describe clearly, they will use one container or the other modes for compensation. A good example being Standard Electrica S/A v Hamburg sudarmericaniche [7] , it was considered that if the bill of lading did not list the content of the container, the container will be treated as a package or unit.

1.3 Different Definitions of the Goods and Deck Cargo

In Hague Rules, the concept of the goods does not include deck cargo or container shipments, as well as live animals. [8] Hamburg Rules expanded the definition of goods to live animals, deck cargo and the cargo areas, even includes the transportation tools of containers and pallets etc. [9] Hamburg Rules do not expressly exclude deck cargo. Carrier can undertake deck carriage if agreed with shipper or in accordance with the usage of a particular trade in which case B/L should so state that goods are carried on deck. However deck cargo excluded from Hague and Hague – Visby Rules if stated to be carried on deck on face of B/L. It is well-known that in Svenska Traktor v Maritime Agencies [10] , the tractors were allowed on deck storage that shipped from Southampton under a bill. One tractor was washed overboard during the voyage of the ship. The defendants wanted to find a clause in the bill of lading to avoid the liabilities for any loss or damage to the deck cargo. Mr. Justice Pilcher had found that “a mere general liberty to carry goods on deck was not a statement in the contract of carriage that the goods would in fact be carried on deck, and to hold otherwise would do violence to the ordinary meaning of the words of Art. I” [11]

1.4 A Scope of Application of the Rules: a Comparison

Hamburg Rules the same with Visby Rules, both of them are the products of modifying Hague Rules, however they have different results of the revision. Visby Rules on behalf of the United Kingdom, North Europe and the interests of the ship parties, which only made non-substantive changes of Hague Rules. The Hamburg Rules represents the majority of developing countries and cargo interests and had been completely revised the Hague Rules. Hamburg Rules “will accordingly deal with the following areas: (1) the range of voyages affected; (2) the types of contracts of carriage affected; (3) the period of coverage; and (4) the kinds of cargo affected”. [12]

The Range of Voyages Affected

Geographical application of Hamburg of the Rules is set out in Article 2(1). Hague Rules only apply to bills of lading issued by the State party. However, Hamburg Rules avoid this disadvantage. It provides the convention applies between two different parties that covering all contracts of carriage by sea. There are five locations as following: the location of the defendant; the location of the bill of lading issued; loading port; discharge port and contract of carriage designated location, any one among the five locations in the state parties can apply to the Hamburg Rules. [13]

The Types of Contracts of Carriage Affected

Hague – Visby Rules refers to the bill of lading which issued in a contracting state, it is a kind of document which covers the contract of carriage. [14] Hamburg Rules need not be a bill of lading or document of title. Hamburg Rules apply to all contracts of carriage by sea and excludes charterparties (unless rules are incorporated) [15]

Time Bar and Period of Coverage

Hague – Visby Rules provides one year limitation period, indemnity actions may be brought after the one year. [16] Hamburg Rules provides two years limitation period [17] unless judicial or arbitral proceedings have been instituted. On the other hand, it still retained the 90-day statute of limitations to recover indemnity provisions, which was the same with Visby Rules.

Hague – Visby Rules provides the liability period of the carrier that from the time when the goods are loaded on the ship to the time they are unloaded from the ship, that is, tackle to tackle. [18] Hamburg Rules expanded the liability period from the carrier or his agent in charge of the goods to they delivered the goods to the consignee or the agent of the consignee, which named port to port. It is well-known that in Pyrene Co Ltd. v Scindia Navigation Co Ltd. [19] , the tender was damaged before it was across the ship rail and a bill of lading was not issued, but it did not means exclusion of the rules. The damage did not cause by intention, with knowledge that damage could occur. When the goods were carried on contract, their operation being determined was not by the limits of time. Therefore, the judgement of this case focused on the phrase “loaded on”.

1.5 Delaying in Delivery of the Liability of the Carrier

There is no responsibility requirement of delaying in delivery in Hague Rules. Hague Rules provide that the carrier shall deliver the goods within a reasonable time, [20] so the carrier is responsible for liability because of response delay in the delivery of the goods due to the actual loss or damage and economic loss. Visby Rules provides compensation for the loss of the carrier generally does not include economic losses. [21] Therefore, according to Visby Rules can be assumed that the owner of the economic loss caused by delay in delivery can only claim compensation when they base on an agreement of the bill of lading. Hamburg Rules let a delay in delivery of the goods independent from the lost or damaged of the goods. It classifies the delay in delivery caused by the physical and economic damage as a class and provides specific limitation of liability. Moreover, in the Disclaimer, timeliness, delivery notices of claims and removing misunderstandings and disputes. For example, there is 2.5 times freight payable on goods delayed for carrier, but it cannot beyond the total amount of freight rate. [22]

Significant Improvements of Hamburg Rules

In international transportation of goods by sea bill of lading conventions, Hague Rules and Visby Rules did not make provision for the arbitration clause in the bill of lading until the Hamburg Rules committed to unified dispute settlement provisions of the bill of lading. It is stated that “Subject to the provisions of this article, parties may provide by agreement evidenced in writing that any dispute that may arise relating to carriage of goods under this Convention shall be referred to arbitration”. [23] According to the special nature of the bill of lading arbitration clause, Hamburg Rules also made on how to recognize the right of its availability into the specific provisions. [24] This shows that the Hamburg Rules make an affirmative point of the arbitration clause of the bill of lading.

Conclusion

Comparing with the other two rules, the Hamburg Rules trend to increase the level of the liability of the carrier and strongly supported the interests of the shipper. Carrier must prove that reasonable steps to avoid loss or damages were taken unless damage is caused by fire. Hamburg Rules cancelled the rules which included nautical fault exemption and the exemption right of the carrier that under Hague Rules. Although the effect of Hamburg Rules on the practice and the law of major maritime shipping countries are very small, but it has more or less to the shipping industry and the judiciary sent a signal: exemption liability will complete its glory, and gradually fade out the shipping law.

Word count: 1,989 words