International Trading Conventions

The Need for Regulations
The 2000 BIFA Conditions
The Hague-Visby Rules
CMR Conventions
Warsaw Convention

The Hague-Visby Rules.

Application of the Rules

The Hague Rules as amended by the Visby Protocol of 1968 became effective in the UK on 23 June 1977 under the Carriage of Goods by Sea Act 1971. The Act contains the full text of the Convention which is an essential source for those concerned with deep-sea shipping. The Act may be obtained from HMSO.

Below is set out a table of the states which are currently parties to the Hague-Visby Rules. Most states not shown are parties to the even more restrictive unamended Hague Rules:

Australia Netherlands Belgium New Zealand Denmark Poland Ecuador Singapore Egypt South Africa Finland Spain France Sri Lanka Germany Sweden Greece Switzerland Italy Syria Japan Tonga Luxembourg United Kingdom (inc. Isle of Man, Mexico, Gibraltar, Bermuda and Hong Kong)

The Hague-Visby Rules apply to any bill of lading or similar document of title relating to the carriage of goods between ports in different states (not to the contract itself as in the case of the CMR) if:

1. the bill of lading is issued in a Contracting State; or
2. the carriage is from a port in a Contracting State; or
3. the contract contained in or evidenced by the bill of lading or a non-negotiable receipt expressly provides that the Rules shall govern the contract.

The Rules, therefore, apply to all outward shipments from the UK, but to imports only if carriage is from one of the states shown in the table above, or the bill of lading was issued in one of those states or a clause paramount in the bill of lading expressly applies them. There is a major loophole in the Rules in that if by custom no bill of lading is issued, the carrier is not legally bound to apply them and can, subject to national law, apply his own terms. This situation has indeed arisen on cross-channel routes where ro/ro operators do not issue bills of lading but only issue non-negotiable receipts. Another circumstance in which the Rules do not apply mandatorily is where deck cargo or live animals are carried.

Documentary requirements: the bill of lading: the bill of lading

Subject to what has been said above, the carrier must issue a bill of lading which shows:

1. the leading marks needed to identify the cargo;
2. the apparent order and condition of the goods;
3. either the number of packages or pieces or the quantity or weight of the goods.

Once the goods are on board, the shipper is entitled to a shipped-on-board bill of lading. A clean bill of lading, that is one which is free of endorsements, is prima facie evidence of the condition of the goods on loading and conclusive evidence if transferred to a third party acting in good faith.

Responsibilities of the exporter/importer

The exporter will be responsible for:

1. The accuracy of particulars as to marks, quantity, number or weight furnished by him to the carrier. There is an indemnity in case of failure.
2. The accuracy of any statement as to the nature or value of goods which appears in the bill of lading. If nature or value are knowingly misstated, the carrier is under no responsibility for loss or damage which may occur.
3. Making claims within set time-limits. Notice in writing of apparent loss must be given by the importer or his agent at the time of taking delivery. For non-apparent damage, the time-limit is three days. If notice is not given in time, the onus of proof shifts to the claimant to prove the carrier was responsible for the loss. A legal claim must be made within one year, by issuing and giving notice of a writ.
4. Informing the carrier of the nature of any dangerous goods. Even where the carrier has been made aware of the dangerous nature of the goods and has consented to carrying them, they may still be landed, destroyed or rendered innocuous by the carrier without liability except for General Average, if they become a danger to ship or cargo.

Liabilities of the sea carrier under the Hague-Visby Rules

The sea carrier must properly and carefully load, handle, stow, carry and discharge the goods. The carrier will thus in the first instance be regarded liable if cargo is received in good condition but discharged in bad condition. There are, however, a whole battery of exceptions which the carrier can rely on to deny liability.

He must first establish cause of the loss, and show that the vessel was made seaworthy at the commencement of the voyage. Subsequent unseaworthiness is not material. In order to be seaworthy a vessel must be structurally and mechanically sound, equipped with navigational charts, properly crewed, and its holds must have been made fit and safe to receive cargo. Having shown the cause of the loss and that the vessel was initially seaworthy, the carrier can go on to show that the cause falls within one of the excepted perils set out below:

1. 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. It should be noted that this much criticised defence requires that the error should be in the management of the ship and that errors in management of the cargo cannot benefit.
2. Fire, unless caused by the actual fault or privity of the carrier. In the case of British ships this amounts to a virtually absolute defence. Note that the defence still applies if there has been fault on the part of the carrier's employees.
3. Perils, dangers and accidents of the sea or other navigable waters. This phrase has been given a narrow judicial interpretation as incidents which would not be expected in the area of the voyage in question at the particular time of year and which could not be reasonably guarded against by the ordinary exertions of human skill or prudence. Winter gales on the Atlantic would therefore definitely not amount to a "peril" in this context.
4. Act of God.
5. Act of war.
6. Act of public enemies, including pirates.
7. Arrest or restraint of princes, rulers or people or seizure under legal process.
8. Quarantine restrictions.
9. Act or omission of the shipper or owner of the goods, his agent or representative.
10. Strikes or Lockouts or stoppage or restraint of labour from whatever cause whether partial or general.
11. Riots and civil commotions.
12. Saving or attempting to save life or property at sea.
13. Wastage in bulk or weight or any other loss or damage arising from inherent defect quality or vice of the goods. Wastage in bulk or weight, sometimes known as "normal" or "ordinary" loss is recoverable neither from the carrier nor from underwriters. It typically occurs with liquids where a minute quantity always remains in the tank. Inherent vice occurs when certain goods such as perishables deteriorate. Other products may have a tendency to rust, or to take in moisture. Even where there is a prima facie case of inherent vice, the shipper can produce evidence that the goods were loaded in good condition and that the damage has some other cause, for example, lack of proper care for the cargo.
14. Insufficient packing. It should be noted that losses from insufficiency of packing are recoverable neither from the carrier nor from the underwriter under any cargo policy. If the carrier fails to clause the bill of lading, this defence cannot be pleaded against a transferee of the bill.
15. Insufficiency of marks.
16. Latent defects not discoverable by due diligence.
17. Any other cause arising without the actual fault or privity of the carrier or without the fault or neglect of the agents or servants of the carrier.

Compensation payable under the Hague-Visby Rules

Unlike the CMR where it is the time and place of collection which counts, under the Hague-Visby Rules compensation is calculated in relation to the value of the goods at the time and place at which the goods are discharged from the ship, or should have been so discharged. The valuation basis is the same as the CMR. This means that if the market price has been falling during transit, the maximum value of the goods for compensation purposes will also fall.

Under the Hague-Visby Rules, the shipper can opt for compensation either on a per-package basis or per-kilo of gross weight. The per-package option is only exercisable if the shipper had enumerated the number of packages in the bill of lading. It is particularly important to do so in the case of an ISO container as otherwise the container itself will be taken to be one package including all the individual packages which may be within it.

In February 1984 an SDR basis of calculating the limit of liability came into force in the UK and in several other European countries. Compensation is fixed at 666.67 SDRs per package (approximately £625 or two SDRs per kilo (approximately £1.90)). It should be noted that as the world value of sterling increases so does the compensation translated from SDRs tend to fall. Where packages are relatively small, the package option is worth taking as it produces higher limits. Above 333.33 kilo package size it is preferable to exercise the per-kilo option.

There is no clear right to compensation for delay under the Hague-Visby Rules, but it is possible to make a declaration of value against which a higher limit of liability than that shown above will apply. The option is almost never used because carriers seek such high freight rates for value-declared cargo.

The carrier loses the benefits of the limits of liability if it can be proved that the loss or damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result.

Aspects of the Hague- Visby Rules of particular concern to freight forwarders

Unlike the CMR and Warsaw Conventions, the Hague-Visby Rules make no provision for contracting carriers and in the ordinary course of events a forwarder is unlikely to become a carrier under the rules. He can, however, find himself taking on the contractual liabilities of a carrier if he issues a FIATA multimodal transport bill of lading and would need to take out the requisite insurance to cover these liabilities. The forwarder who acts as a deep-sea consolidator as a principal needs to take care as to how he declares cargo to the shipping line. If no itemised statement of the contents of a container is given to the line and incorporated in the bill of lading, the forwarder will only be able to claim for loss or damage on a weight basis. He may, however, find that under his conditions his customers will endeavour to recover on a per-package basis if this is more favourable. Again the need to cover these risks by insurance is paramount.

Introduction

The Hamburg Rules constitute a new Convention on maritime transport agreed under the auspices of the United Nations at a conference at Hamburg on 31 March 1978. Their official title is the United Nations Convention on the Carriage of Goods by Sea 1978. The Rules were devised with the intention that they should supersede the 1924 Hague Rules together with the 1968 Visby amendments which are considered in detail above. The Hamburg Rules have been strongly opposed by ship owning interests as it is feared that they would tend to increase carriers’ liability and therefore affect the cost of insurance through the P & I Clubs. They have been equally strongly supported by shipper interests who believe they set a fairer balance between the responsibilities of carrier and shipper, in much the same way as do the 2000 BIFA Conditions. Insurance interests have been moving recently towards a neutral position. Freight forwarders’ interests have moved to a position of broad support, seeing the Hamburg Rules as offering the potential for greater uniformity between the liability regimes for the different transport modes, and also reducing the gaps in liability which can be a source of difficulty at present for the forwarder who acts as a principal. The Hamburg Rules came into force on 1 November 1992 and although there are already 25 parties to the Convention it has so far had no major impact on world trade.

Is the Hague-Visby regime inadequate? Could it be amended?

From the viewpoint of the late twentieth century, the Hague-Visby regime has some serious inadequacies which are considered below. Opponents of the Hamburg Rules claim that these could be remedied by further amendments to the Hague-Visby Rules. This is theoretically possible but the political composition of the United Nations and its specialist organisations make it most unlikely that any further amendments would achieve sufficient support to be implemented.

Major criticisms of the existing Hague-Visby system include:

1. Application is dependent in practice on the issue of a conventional bill of lading. Where no bill of lading is issued, as on most cross-channel ferry routes, it is possible for a carrier to avoid even the modest responsibilities set out in the Hague-Visby Rules.
2. The rules only apply on a "tackle-to-tackle" basis which is out of line with actual practice in containerised shipping where the sea carrier most commonly takes charge of the goods before they are actually lifted aboard the vessel. Goods are, therefore, exposed to the risk of a liability gap within the port area, with potential problems for shippers and freight forwarder principals.
3. The sea carrier has the benefit of the defence of negligent navigation when most domestic carriers, and carriers under other international Conventions, have to accept liability in this area of care and control of the means of conveyance.
4. The Hague-Visby Rules are incompatible with technological developments such as EDI and are also impeding the extended use of sea waybills as an alternative to conventional bills of lading, although some non-statutory ways of overcoming the problems have been developed.

Application of Hamburg Rules

Below is a table of states which are currently party to the Hamburg Rules:

The rules apply to any contract of carriage by sea between two different states if:

1. the port of loading or discharge is situated in a Contracting State; or
2. the bill of lading or transport document is issued in a Contracting State; or
3. the bill of lading or transport document provides that the rules should apply.

It can be seen that the application of the Rules does not depend on issue of bill of lading and like the CMR, that it is equally likely to apply to imports as well as exports.

Documentary requirements

The Rules apply to the contract of carriage and not to the bill of lading, but the Hamburg Rules still envisage that the carrier should issue a bill of lading. Provision is made for facsimile and electronic transmission of bills of lading. The bill of lading must show among other things:

1. the general and particular nature of the goods;
2. their apparent condition;
3. the port of loading and the date the goods were taken in charge by the carrier at the port of loading, and the port of discharge;
4. the place of issue of the bill of lading and number of originals;
5. any freight payable by the consignee.

As with Hague-Visby Rules, the shipper is entitled to a shipped-on-board bill of lading.

Responsibilities of the exporter/importer

The exporter is responsible for:

1. The accuracy of particulars furnished by him for inclusion in the bill of lading.
2. Loss or damage sustained by the carrier as a result of his fault or neglect.
3. Making claims within set time-limits. Notice in writing must be given to the carrier not later than the working day after the goods were handed over to the consignee, where damage is apparent. Where damage is not apparent, the limit is 15 consecutive days after handover to the consignee. If notice is not given in time, the onus of proof shifts to the claimant to prove the carrier was responsible for the loss. Notice of delay must be given to the carrier within 60 days of the consignee taking delivery of the goods. A legal claim must be pursued through the courts within two years, by issuing and giving notice of a writ.
4. Informing the carrier of the nature of any dangerous goods, and the precautions to be taken, and suitably packing and labelling them. They may still be destroyed or landed by the carrier if they become an actual danger to life or property.

Liabilities of the sea carrier under the Hamburg Rules

The carrier is responsible for the goods during the period in which it is in charge of the goods at the port of loading, during the carriage and at the port of discharge. This is more extensive than under the Hague-Visby Rules.

The carrier also remains liable if carriage is subcontracted to another carrier, as happens with many forms of transhipment.

Under the Hamburg Rules the carrier bears greater responsibility for deck cargo. In the absence of a statement in the bill of lading that deck carriage is permitted, the carrier has unlimited liability if it in fact carries on deck, the carrier having the burden of proving permission. Where the carrier is authorised to carry on deck, it has the same liabilities as in the case of underdeck carriage. This differs from the Hague-Visby Rules where there is no mandatory application of those Rules to deck carriage.

The carrier will be held liable under the Hamburg Rules while goods are in its charge unless it proves that it, its employees and agents took all measures that could reasonably be required to avoid loss, damage, or delay and the consequences thereof. This can be regarded as setting a duty of care on the carrier to avoid negligence and is more protective of the carrier than the similar provision in the CMR which leaves out the word "reasonable".

Delay occurs if an agreed time-limit is exceeded or, if there is no agreed time-limit, when the transit has exceeded the time it would be reasonable to require of a diligent carrier.

Compensation payable under the Hamburg Rules

In the case of loss or damage for which the carrier is liable, compensation not exceeding 835 SDRs per package (approximately £7.80) or 2.5 SDRs per kilo (approximately £2.35) must be paid. These limits are 25 per cent above those in the Hague-Visby Rules but, in the case of the weight-based limit, still well below the CMR for example. (NB It remains important under the Hamburg Rules to enumerate packages within a container, otherwise the whole container may be taken as the package.)

Compensation for delay can be up to 2.5 times the freight charges for the part delayed, but not so as to exceed the amount of the total freight for the whole consignment.

In the case of wilful misconduct, the carrier loses the right to limit its liability.

CMI rules on sea waybills and electronic bills of lading

The Comité Maritime International (CMI) has recently formulated some voluntary rules for sea waybills and electronic bills of lading to try to overcome some of the legal problems which have been identified where the shipper does not receive a conventional bill of lading. The rules on sea waybills attempt to confer rights under the contract of carriage upon the consignee in the same way as the Carriage of Goods by Sea Act 1992 on a bill of lading holder or the holder of a sea waybill. The rules on sea waybills provide a suitable framework for development of an EDI-based system for transmission of the information normally contained in a paper bill of lading.

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