The International Conventions on Carriage of Goods

With a view to critically analysing the international conventions on carriage of goods by sea, it is necessary for this essay to consider whether the international community has succeeded or failed to harmonise the law of international carriage of goods by sea. There is a need to consider what is involved with the carriage of goods internationally before considering the nature of international conventions that have been enacted in this regard with a view to achieving greater harmonisation. This means it is necessary to evaluate the conventions that have been put in place in this area including the Hague-Visby Rules of 1968.

In seeking to critically analyse the international conventions on carriage of goods by sea, it is necessary for this essay to consider whether the international community has succeeded or failed to harmonise the law of international carriage of goods by sea with a view to then being able to achieve greater certainty in the law for those who are party to contractual agreements in this area. With this in mind, there is a need to first outline what the carriage of goods by sea consists of internationally with a view to putting this discussion into its given context with a view to then more specifically dealing with the central aspects of the question that are to be answered. It is then necessary to consider the nature and scope of the international conventions that have been put into place along with what has been achieved in this regard by these enactments with a view to then providing greater harmony and certainty pertaining to the law as it relates to the international carriage of goods by sea. Finally, this essay will seek to derive the key points from this discussion with a view to summarising them for the purpose of concluding upon this critical analysis of the international conventions on carriage of goods by sea and determining whether the international community has succeeded or failed to harmonise the law of international carriage of goods by sea.

The carriage of goods by sea is arguably one of the longest established methods in the world for the purpose of being able to then effectively trade goods internationally across the water-ways of the world between parties in different countries. By way of illustration, in the event that English law is selected for the purpose of regulating the carriage of goods’ contract then this process will be effectively covered by the law as it stands under the Carriage of Goods by Sea Act 1971 and the Carriage of Goods Act 1992. [1] In addition, the common law also served to provide that the parties in any given case could look to ‘freely’ undertake negotiations with a view to forming whatever terms that they wanted for the purpose of particular contract in keeping with the formation of contracts classical doctrine. [2] It was all too quickly determined, however, that one of the parties that are involved with any given contractual agreement are usually found to be in a position that is stronger than the other with a view to then having terms dictated to them with little or no choice but to look to acquiesce in relation to the strength of the other party’s position. [3] Such an understanding was found to be particularly true of those instances involving the carriage of goods by sea in view of the fact that carriers in such cases were found to be in a bargaining position that was clearly stronger to the extent that they actually blatantly abused the situation through the instigation of exclusions and limitations that were contractually draconian. [4]

As a result, with a view to limiting the impact of the problems that were being caused in this regard the Hague Rules of 1924 (officially the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading) were implemented with a view to providing cargo owners with better protection from those instances of extreme liability that arise from carriers inserting exclusion clauses. [5] On this basis, the Hague Rules of 1924 served to establish standard terms for the purpose of then better determining liability so that any other attempt made for the purpose of restricting liability was found to be both null and void in the circumstances. With this in mind, it is arguably a mark of the success of the Hague Rules of 1924 that they have since been succeeded by the Hague-Visby Rules of 1968 (as amended in 1979) that served to implement mandatory basic rules that serve to leave those parties that are involved in a given case free to provide for the negotiation of a carriage contract’s terms and conditions. This is because the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 along with the Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1968 combined to become the Hague-Visby Rules of 1968. On this basis, it has been recognised that a carrier has far greater bargaining power than the shipper and so, with a view to protecting the shipper/cargo-owner’s interests, the law should impose minimum obligations on the carrier through uniform standards. Therefore, the Hague-Visby Rules of 1968 were implemented into the English legal system under the Carriage of Goods by Sea Act 1971 (as amended) and are still considered to be good law today both as part of the English legal system an in other countries with a traditional maritime heritage – although the Hague-Visby Rules of 1968 could be somewhat superseded over time through the Rotterdam Rules of 2009. [6]

The value of the Hague-Visby Rules of 1968 cannot, however, be understated in view of the fact that it includes numerous provisions of a basic nature that may be effectively reduced down into two separate categories. [7] First, the Hague-Visby Rules of 1968 have served to outline the carrier’s obligations in any given case, whilst secondly limits have been put in place with regard to what a given carrier is allowed to avoid liability for in the circumstances of a particular case. [8] Therefore, one of the key obligations for a carrier involves the provision of a vessel that is seaworthy for the purpose of a carriage of goods by sea contract since a carrier will be bound prior to a voyage in a specific case to look to exercise due diligence with a view to – (a) making the given vessel seaworthy; (b) properly man, equip and supply the vessel; (c) making all parts of the vessel where goods are carried, fit and safe for their reception, carriage and preservation. [9] The carrier is then also duty bound to look to care for and protect the cargo that it is carrying in a carriage of goods by sea contract by recognising that, “Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods delivered”. [10]

Moreover, it is also necessary to consider the maximum limitations that a particular carrier is able to utilise under the Hague-Visby Rules of 1968 that may be reduced, but not increased in a given case. [11] This is because it has been recognised that it will not be the responsibility of the carrier or the vessel to account for either damage or loss that arises or results from their being – (a) an Act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or the vessel’s management; (b) a Fire unless it is caused by the carrier; (c) perils, dangers and accidents of the sea or other navigable waters; (d) an act of God; (e) an act of war; (f) an act of public enemies; (g) an arrest or restraint of princes, rulers or people, or seizure under legal process; (h) quarantine restrictions; (i) an act or omission of the shipper or owner of the goods, their agent or representative; (j) strikes, lockouts, stoppage or restraint of labour from whatever cause; (k) riots and civil commotions; (l) a saving or attempt to save life or property at sea; (m) wastage in bulk or weight or any other loss or damage arising from inherent defects, quality or vice of the goods; (n) insufficient or inadequate packing; (o) insufficient or inadequate marks; (p) latent defects that cannot be discovered through due diligence; and (q) any other cause arising without the actual fault or privity of the carrier, or their agents or servants – although the burden of proof shall be on whomsoever claims the benefit of this exception to show neither the actual fault or privity of the carrier nor their agents or servants contributed to the loss or damage. [12]

When considering a contract for the carriage of goods by sea, however, it is also necessary to distinguish an express term as to fitness from an implied undertaking in any given instance of international trade by sea. This is because there is a need to understand that the usual form of express term refers to the time at which a given vessel sails for its loading port or otherwise commences its contract of services [13] and is not to be regarded as a condition precedent [14] except regarding freedom from defects that frustrate the object. [15] Nevertheless, the ship in any given case must be ‘seaworthy’. [16] The ship must be reasonably fit to encounter the ordinary ‘perils’ likely to arise during the loading otherwise the owner of the goods may refuse to put them on board for transportation as part of the sale of goods involved. [17] Moreover, ‘perils of the sea’ are commonly considered pertinent to any marine insurance policy that is taken out through the use of a ‘time policy’ where there is no implied warranty any ship is to be ‘seaworthy’. [18]

Therefore, where, with the privity of the assured, a ship is sent to sea in an ‘unseaworthy’ state the insurer is not liable for any loss attributable to ‘unseaworthiness’. However, where a vessel is sent to sea in a state of ‘unseaworthiness’ in more than one respect, and the assured in a given case is not privy to all of the defects, the insurer will be liable unless the assured was privy to what caused the loss. [19] Then, unless the insurance policy otherwise provides for it in the circumstances of a given case, the insurer is not liable for loss nor the consequence of some casualty properly considered a peril of the seas. This understanding also applies to damage to the ship as well as to the goods so if a ship insured under a ‘time policy’ starts on the voyage in an ‘unseaworthy’ condition, and is by reason of that ‘unseaworthiness’ obliged to put into a port for repair, the expenses of doing so cannot be recovered from the insurer – although there is no warranty of ‘seaworthiness’ even if the owner was not aware of the vessel being ‘unseaworthy’. [20] But the general provision that exempts the insurer from liability for loss attributable to that misconduct means there is a special provision to the effect where, a vessel insured under a ‘time policy’ is sent to sea in an ‘unseaworthy’ condition, the insurer is not liable for any loss as a result. [21]

Risk apportionment has also come to be looked upon as being pertinent regarding the level of damage that is brought about by both independent contractors and the agents of a given carrier. With regard to a strict understanding of contract’s doctrine of privity, it is arguable those who are not party to a given contractual agreement are unable to look take advantage of the protection that is provided for by contractual clauses. As a result, it is arguable that this is the area where ‘pure’ contracts doctrines from those that are recognised as being required in commerce so several attempts were put before the courts in an effort to bring about the extension of the coverage already present in this area. [22] To effectively illustrate the point, the ‘Himalaya Clause’ sought to provide for the extension of the protection that is provided for a carrier in keeping with the contract of carriage by sea derived from the case of Adler v. Dickson (The Himalaya). [23] In this case on the facts a ship’s crewman was not able to benefit from the contract in this case’s clauses in the event that they were sued for a passenger’s injury. [24] However, in the later decision in the case of Scruttons v. Midland Silicones [25] the House of Lords refused to accept the remit of the ‘Himalaya Clause’ where stevedores utilised by the carrier could not rely upon the nature and scope of the Hague Rules of 1924 in looking to provide for the contract’s application in the event that the cargo was damaged. [26] Problems in this regard have, however, been at least partially reversed by Article IV, Rule 2 of the Hague-Visby Rules of 1968 that serves to allow a carrier’s servant or agent to take advantage of both the limitations and defences included in the terms of a particular contract – although it should be recognised this aspect of the Hague-Visby Rules of 1968 does not cover independent contractors.

As has already been recognised it is arguable that the Hague-Visby Rules of 1968 may have been somewhat superseded by the United Nations Convention on the Carriage of Goods by Sea (Hamburg Rules) of 1978 with regard to the regulation of the carriage of goods by sea. [27] In this regard, the Hamburg Rules of 1978 were recognised as being somewhat more favourable to interests in cargo than the Hague-Visby Rules of 1968 that were considered to be too favourable to traditional shipping countries and carrier interests. [28] Despite this recognition of the value of the Hamburg Rules of 1978 over the Hague-Visby Rules of 1968, it is still to be appreciated that the Hamburg Rules of 1978 have only actually been effectively ratified by around thirty-four countries to date and none of them are significant maritime powers reflected in the fact that they only account for around 5% of all international carriage by sea. The Hamburg Rules of 1978 were not the extent of the efforts made at harmonisation in this regard. A little over a year ago the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (Rotterdam Rules) were implemented near the end of 2009 with a view to both modernising and harmonising the law as it relates to the international carriage of goods by sea through the replacement of Conventions relating to liability that were already in existence. [29]

However, whilst one of the key differences between the Rotterdam Rules of 2009 and the Hamburg Rules of 1978 are that the Rotterdam Rules of 2009 are supported by certain major developed countries including the US, it will be interesting to see whether the Rotterdam Rules of 2009 will be adopted on a major scale to replace the currently fragmented position with a uniform system. [30] That the Rotterdam Rules of 2009 are considered to be so significant is marked out by the fact that the fault basis of the Hague-Visby Rules of 1968 has been maintained with reference to the carrier’s obligation to exercise due diligence over a particular vessel’s seaworthiness although this is extended over time throughout a voyage. [31] Moreover, the defence of act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the vessel is abolished and the limitation of liability is raised beyond that contained in both the Hague-Visby Rules of 1968 and the Hamburg Rules of 1978 to 3 Special Drawing Rights (SDRs) per kilo or 875 per package whichever is greater. [32] Finally, there is a need to recognise that, with regard to the repetition of contractual agreements for carriage of goods by sea, there is a significant possibility subject to their conditions and safeguards, of derogating from the Hague-Visby Rules of 1968 and the Hamburg Rules of 1978 by further exclusions and limitations. [33]

In conclusion, it is clear the first efforts at achieving harmonisation with regard to the law as it relates to the international carriage of goods through the Hague Rules of 1924 were implemented with a view to providing cargo owners with better protection from those instances of extreme liability that arise from carriers inserting exclusion clauses. [34] The Hague Rules of 1924 served to establish standard terms for the purpose of then better determining liability so any other attempt made for the purpose of restricting liability was found to be both null and void in the circumstances. It is arguably a mark of the success of the Hague Rules of 1924 that they have since been succeeded by the Hague-Visby Rules of 1968 that implemented mandatory basic rules that leave those parties involved in a given case free to provide for the negotiation of a carriage contract. The value of the Hague-Visby Rules of 1968 cannot, however, be understated in view of the fact that it includes numerous provisions of a basic nature that may be effectively reduced down into two separate categories. [35] First, the Hague-Visby Rules of 1968 have served to outline the carrier’s obligations in any given case, whilst secondly limits have been put in place with regard to what a given carrier is allowed to avoid liability for in the circumstances of a particular case. [36] The Hamburg Rules of 1978 were then recognised as being somewhat more favourable to interests in cargo than the Hague-Visby Rules of 1968 that were considered too favourable to traditional shipping countries and carrier interests. [37] However, the Hamburg Rules of 1978 have only actually been ratified by a few countries to date and none of them are significant maritime powers reflected in the fact that they only account for around 5% of all international carriage by sea so the Rotterdam Rules of 2009 were put in place to modernise and harmonise the law related to the international carriage of goods by sea through the replacement of Conventions relating to liability. [38]