The following case scenario has been created in order to explain the operation of The Hamburg Rules, The Hague-Visby Rules and the Rotterdam Rules. Especially, I focus on the operation of the three legal regimes in terms of:
- Their applicability and period of responsibility of the carrier,
- The carrier’s obligations generally and in relation to the obligation of seaworthiness,
- Limitations on the liability of the carrier generally and in relation to:
- deck cargo
- deviation and delay
- Limitation on financial liability of the carrier
- The time periods for:
- notification of loss, and
- bringing legal proceedings or arbitration proceedings.
Exotica Ltd, a Malaysian Company, shipped a cargo of sarongs and batik shirts from Johor to Felixstowe (UK) on board The Eastern Princess, a container ship owned by Eurasian Fast Ships.
The contract of carriage stated 5 of the pallets of sarongs and batik shirts would be stowed below deck and 2 containers of batik on deck. The bill of lading issued stated English law was the law of contract of carriage and the bill of lading was endorsed to Asian Importers Ltd.
Before sailing from Johor, one of the rear doors seals of the Eastern Princess was inspected and replaced by Shiprights 4U, independent contractors, due to an earlier report of water seeping into the hold on an earlier voyage.
During the voyage, the ship encountered rough seas and deviated slightly from its route to calmer waters. Whilst on the rough seas, seawater seeped into the hold and into 2 of the containers, damaging the sarongs. Later, on route though the Bay of Biscay, further rough seas and high winds were encountered and the container securing fasteners on the deck snapped, and one of the containers of batik shirts was lost overboard and The Eastern Princess collided with the Sardine King, a fishing factory ship, owned by Sardine King Ltd. The cause of the collision was the 2nd Night Officers inability to use the radar system.
The impact of the collision caused some of the oil drums stored below deck to fall onto the pallets and irreparably damage the sarongs and batik shirts in 3 of the pallets.
To assess the level of damage and safety of the ship, The Eastern Princess docked at Southampton for 5 days, arriving in Felixstowe 5 days later.
The bill of lading did not declare the value of the consignment.
Advise the parties as to their rights and liabilities for the damage to the sarongs and batik shirts and damage to the Sardine King.
The Hamburg Rules are not more beneficial for the Owners then the Hague Rules. In addition, they reduce the particularism of the maritime law. The rule from which the new Convention departs as regards the liability of the carrier for the goods which are put into his care, is that the carrier is responsible at the moment he receives the goods from the port of loading; and his liability stands until he delivers them to the receiver at the port of discharge. If damage, loss, delay etc is caused to the goods during this period, the carrier is legally responsible. Under the Hamburg Rules, the fault is presumptive. The carrier is free from his liability if he can establish that no mistake can be put into his part.
According to this problem sea water seeped into the hold and damage 2 containers of sarongs and later on route, further rough sea and high wind encountered and the container securing fasteners on the deck snapped and one of the containers of batik shirts was lost overboard, bill of lading authorises containers on deck here claimant can proves the loss, damage or delay was or was probably caused by —
If there is no proper crewing, equipping and supplying of the ship. And the fact is that, the hold or other parts of the ship in which the goods are carried, is not suitable and safe for the reception, carriage and stowage of the goods. If the goods are carried on the deck the carrier must insert in the bill of lading or other document evidencing the contract of carriage by sea a report to that effect. In the absence of such a statement the carrier has the burden of proving that an agreement for carriage on deck has been entered into, however the carrier is not entitled to invoke such an agreement against the third party or consignee. Where the goods have been carried on deck converse to the provisions of paragraph 1 of this article or the carrier may not under paragraph 2 of this article invoke an agreement for carriage on deck, if the goods are carried on deck in cases other then despite the provision of paragraph 1 of article 5, the carrier is liable for loss or damage to the goods or delay in their delivery that is solely caused by their carriage on deck, and is not allow to the defences provided for in article 17. In addition, the carrier is entitled to take benefit from the limited liability under Article 6, if he not breaches an express responsibility to stow the goods below deck.
On the other hand, if the carriage of goods on deck is different from express agreement for carriage under deck is consider being an act or omission of the carrier inside the meaning of article 8. According to the Hamburg Rule the carrier’s is under contractual condition to provide a seaworthy ship, and to be judged on the same basis as his sense of duty towards the cargo, and both the obligations are to run though out the period of carriage, the carrier’s are liable for the negligence of independent contractors as in the case of The Muncaster castle.
The Eastern Princess collided with the Sardine King; the cause of the collision was the 2nd Night Officers inability to use radar system and 3 of the pallets damage caused some of the oil drum. The carrier is liable for the damage of the goods because the oil being stored near the pallets under deck, and failed to give more protection from the oil according to the Article 14 the carrier should keep the holds or other parts of the ship where the goods are stowed fit and safe for their preservation.
In current year the result of the law relating to carrier liability which follows the Huge/Visby outline, the outlook of the application of these provisions is expended in line with Hamburg principles. The only difference, which is an important one, appears in the US draft, which abolishes the ‘nautical fault’ exception. The liability of the carrier in case of error in navigation is abolished. But still there is some responsibilities which the carrier can’t dine that the carrier shall bound before and at the beginning of the voyage arrange proper man and equip. So in that case the carrier is liable for the collision.
Eastern Princess docked at Southampton for 5 days, arriving in Felixstowe 5 days later. No compensation shall be payable for loss resulting from delay in delivery unless a notice has been given in writing to the carrier within 60 consecutive days after the day when the goods were handed over to the consignee or 15 working days of delivery if the damage is latent. Moreover the Hamburg Rule has a two year, rather than one year time bar for claims.
Carrier must prove that reasonable steps are taken in order to avoid the loss.
Under the Article 6(1) (a) of the Hamburg Rules:
“The liability of the carrier of loss resulting from loss or damage to goods according to the provisions of Article 5 is limited to an amount equivalent to 835 units of account per package or other shipping unit pr 2.5 units of account per kilograms of gross weight of the goods lost or damaged, whichever is the higher.”
Hague Visby Rule
Carriage of Goods by sea Act 1924 put some restriction on The Hague -Visby Rule, the bill of lading issued in respect of external voyages from the United Kingdom. Art X of the Huge-Visby Rules has a wider scope apply to the contract of carriage which “covered by a bill of lading or a similar document of title.”
The bill of lading provides that the Rules or Regulations of any states which governs the contract, whatever nationality of the ship, the carrier, the shipper, the consignee or any other interested person have an effect on them Pyrene Co. Ltd v Scindia Navigation Co. Ltd.
According to this problem goods are damaged by sea water stowed on and below deck:
In The Hague Visby Rule the cargo / pallet which by the contract of carriage is certain being carried on deck and is so carried under (Art. I(c)) excluded from the Rules.
In this state of affairs, the carrier or the shipper are free to negotiate their own terms and condition of carriage which is the subject to the operation of the common law.
The Rules are only being excluded when both of the requirements stated in the Art. I (c) are satisfied:
- The cargo in actual fact be stowed on deck
- The bill of lading states specifically and undoubtedly that this is indeed the case.
Where the goods are stowed on deck but there is no mention in the bill of lading to that effect, in that case the Rules are applied. Alternatively, the subject being difficult clearly if the bill of lading does not in fact state that the goods are stowed on deck but simply gives the carrier carefulness so to do.
A special care needs to be taken on the part of the carrier when the goods are stowed on deck and have always been treated as a very serious form Stag Line Ltd v Foscolo, Mango & Co.
Furthermore, this will increase a usual right of repudiation of the contract was measured in Kenya Railways v Antares Co Pte Ltd. The carrier is allowed to carry cargo on deck if he fulfilled the requirement of the clause providing in the bill of lading and the shipper doest have any objection, Encyclopaedia Britannica v Hong Kong producer in which the bill authorised the carrier to stow the cargo on deck, ‘unless shipper informs carrier in writing before the delivery of goods to carrier that he requires under deck.’
In the above problem, the goods are damage by sea water when arrived at destination; the carrier will not escape from his liability because Art I (c) is not applicable as it states that the cargo is being carried on deck but the Clause 13 says that , it may be so carried but not the way it being so carried. In view of the fact that, no carrier can tell from the bill that the cargo was being carried below deck or on deck. On the other hand, if the carrier wants to take a benefit from Art I (c) in order to avoid their action, then it will be necessary to contain an express statement in the bill that the goods have been stowed on deck. If the carrier decided to carry cargo or pallet on deck without the consent of the shipper, in that case the carrier was not allowed to take advantage from the defence afforded by The Hague Visby Rules, and in exacting the limitation of liability provision.
In order to Article III the seaworthiness includes, physical condition of the ship, properly crew and equip and also cargo worthiness of the vessel.
Later on the ship collided with the Sardine King, a fishing factory ship; cause of collision was the 2nd night Officers inability to use radar system. According to the Art 4(2) ‘Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:
“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.”
Therefore, the Huge-Visby Rules introduce an exclusive clause to stay away from the liability, in The Emmanuel C case the ship-owners relay on the exemption clause “error of navigation”. The ship ran aground by reason of negligent navigation, but the clause was applicable because:
“Errors of navigation” is in itself broad enough to take account of negligent errors. It makes an official change to create the distinction between negligent and non negligent errors. Therefore, it was now standard working theory in shipping circles that the legal responsibility for negligent navigation would be excepted. The “errors of navigation” include negligent errors and the reference is short of matter as it was very hard to consider of an error of navigation which was not covered by the “perils of the sea”.
It is not strange to see exemption clauses in the trade world, which is clearly kept out liability for negligence so as a general rule that, there is not any reluctance to use proper language to make it clear that negligence is being excepted. In view of the impartiality of the clause, it must be interpret against the party attempting to relay on it.
The impact of the collision damage two pallets by some of the oil drums stored below deck and The Eastern Princess arrived in Felixstowe 5 days later:
Delay in delivery of the goods may cause various kind of loss for the consignee. It’s deprived not only the use of the goods but also its effects the entire business. The carrier is solely responsible for the damage of two pallets by oil drum he failed to protect the pallet which stowed under the deck. On the other hand, the delay in delivery may effect the quality of the goods and also there might be a major fall of their market value if they were not reach on due date. The law at this situation to the nature of the obligation on the shipper, who is uninformed of the danger and has not been negligent, remain not completely clear in meaning.
In the present problem, The Eastern Princess was inspected by independent contractor due to an earlier report of water seeping into the hold on the earlier voyage. As it in The Athanasia Comninos case decided in 1979 but reported only in 1990, Mustill J. Held that “the absolute nature of the duty should be preferred.” According to the Huge Visby Rule it is now established law subsequent Effort Shipping Co. Ltd v Linden Management SA and Ors (The Giannis NK) The Times, “that liability is strict and the shipper is not permitted to plead ignorance or due diligence”.
Where the delay in delivery take place in a contract of carriage; though the matter appears to have been treated in the past as a subject of isolation, before simply one of assess unless there have been some reasonable situation drown by the defaulter or carrier at the time of contracting. The actions in judicial or arbitral have been instituted by the cargo owner or the carrier is irrespective. These evaluate within the period of 12 month under The Hague Visby Rules, applicable only to the proceeding against the carrier or the ship.
The notice of loss or damages must be given in writing to the carrier or his agent within 3 days .According to The Hague Visby rule an amount of compensation is 2 SDR’s per kg or 666.67 SDR’s per package whichever is higher.
Shipowner must show that the cargo or pallet was delivered to the carrier in good condition, but received at destination in damaged and some of them are missing. A clean bill of lading is a prima facie evidence in this case. Therefore under The English Law the claimant must prove that unseaworthiness requirement or failure on the part of the carrier to carry the goods properly or carefully. The burden of proof shift to the carrier once it established.
The international carriage of goods by sea is failed to take on new transport system, door to door transport contracts and also electronic transport documents. The Uncitral Convention on Contract introduced Rotterdam Rules for International Carriage of Goods Wholly or Partly by sea. The rules came into force after 20 states has ratify the convention.
In the present problem, we need to advice the parties according to their rights and liabilities for the damage. According to the Rotterdam Rules, the carrier and the shipper may impose terms and conditions in a flexible way within their contractual relationship. Article 14 extends responsibility towards exercise with due diligence, to make the ship seaworthy and properly crew, and keeps the ship so crewed and equipped on the part of the carrier for the entire voyage. And also the fact that, the holds or other parts of the ship in which goods are carried is fit and safe for preservation of the goods. The carrier is in charge according to the terms of the contract of carriage to carry the goods to the place of destination and deliver them to the consignee. In addition, if the rules of the place of receipt wants that the goods is to be collect by the carrier from the third party, then the responsibility of the carriers begins at the time when he collects the goods from the authority. And the period of responsibility become ends when the carrier delivers the goods to the authority or the third party according to the requirement of the place of receipt.
According to this problem, goods are damage by sea water on and below deck:
Article 25 states that the goods are carried on deck, if it’s necessary by the law. And also the deck is fit for the carriage of container or pallets. Moreover, the decks are in particular shape to carry the container or pallet.
According to the provisions of this Convention the carrier’s liability towards the loss, damage or delay in delivery of the goods carried on deck is pursuant to the paragraph 1 of this Article. The carrier is not liable for loss, damage or delay in the delivery of the goods, if there is any particular hazard involve in their carriage on deck and when the goods are carried within the subparagraph 1 (a) or (c) of this article.
Afterwards, goods are carried on deck according to the provision of the paragraph 1 of this article; the carrier is liable for loss or damage to the goods or delay in delivery which is solely caused by their carriage on deck, in that case the carrier is not allowed to apply the defence provided by the article 17.
If the carrier and shipper both are clearly agree to carry goods under deck, the carrier is not permitted to take any advantage of the limitation of liability for any loss or damage or delay in delivery of the goods, to the amount that such loss, damage, or delay is resulted from their carriage on deck. The Rotterdam Rules restricts the possibilities for the carrier to carry goods on deck. The Rule is that, if the goods are loaded on deck without stated in the bill of lading, the holder of such bill of lading may treat that the goods were carried under deck and refuse the carrier to excess their rights to limits liability, in case where he agree to carry goods under deck but on the occasion they were carried on deck. And for this reason damage take place to the goods.
The provision of the Rotterdam Rules improved to a great extant regarding on deck cargo, which permits the exclusion of the liability of the carrier for damage to the goods loaded on deck.
Later on, The Eastern Princess collided with Sardine king, because of the 2nd night Officer’s inability to use radar system, and oil drums damage two pallets:
The Rotterdam Rules removes the “navigational fault” exception. The Rules allows the carrier to avoid responsibility for the cargo damage if the loss was the result of navigational fault or error in navigation. The limits of liability are higher under the Rotterdam Rule.
Notice of loss, damage, is to be given at the time of the delivery of the goods or within 7 working days. Failure to give so the claimant loss the right to claim for compensation.
The limitation amounts have been increased to 835 Special Drawing right, or 3 SDR’s per kg shipping unit. Liability delay which cause loss or damage is limited to an amount equivalent to 2.5 times the freight payable on the goods delayed.
The carrier is relived from liability if he can prove that the loss, damage or delay in not his fault or fault by his agent or employees. Or in addition the carrier can prove that the damage was caused by one of the exceptions from the list of defences.
As we all know, that different international treaties and national laws apply to carriage of goods by sea. In this circumtances, it is not interested twards carrier and also the cargo owners.
The Rotterdam Rules impose different way to change the laws inorder to make it suitable for international transport of goods. This will make world trade more organized in three ways:
“The Rotterdam Rules remove legal borders that up until now existed between transport by sea and transport over land. By being applicable from door-to-door the Rotterdam Rules follow today’s practice of container trade. The same international treaty being applicable through the whole chain of transport will decrease transaction costs.
Furthermore, the Rotterdam Rules introduce electronic transport documents. This should speed up the transfer of goods.
Finally, the Rotterdam Rules will put an end to the long-lasting legal disputes that the old treaties gave rise to, for example on the liability of third parties. This again will lower transaction costs.”
See comments handout.
- Use INTRODUCTION (document)
- Go through each Rule – apply the law logically using the structure – I use in COMMENTS HANDOUT
- State the law – apply to the facts – conclusion
- Each conclusion should include –
- The breaches committed by the carrier
- any liability for the ship being unseaworthy due to water leaking
- any liability for the ship being unseaworthy for container cable snapping
- any liability for the oil being stores next to the pallets under the deck – the carrier should have given more protection from the oil
- any liability for the bad navigation of the 2nd officer
- Whether the carrier can rely on an exclusion or defence
- The maximum liability of the carrier
- The breaches committed by the carrier