The Applicability of the UK Carriage of Goods Act 1992 to Modern Shipping Industry - Assignment Example

The Applicability of the UK Carriage of Goods Act 1992 to Modern Shipping Industry Introduction: The law governing the bills of lading was originally found way back in the 1855 Bill of Lading Act which was held as the frame work of legislation until the new Act 'Carriage of Goods by Sea Act 1992' was framed to remove the basic flaws or problems created by the old Act . Hence in order the study the applicability and effectiveness of the new Act it is necessary to study the issues generated by the old act. Privity of Contract: Until the passing of the Bills of Lading Act 1855, privity of contract - the doctrine of common law was applied to the bills of lading which gave the right to sue only to the original consignee and not to the subsequent transferees or endorsees. Even the applicability of privity of contract to the maritime contracts was established only after the court rulings in Tweddle & Atkinson [1861]1 and Thompson v Dominy [1845]2. Section 1 of the Bill of Lading Act was enacted to provide the right of suit to the consignee as well as the transferee of the Bill of Lading thus providing an exception to the privity of contract. However one major flaw was that the right of suit was made available only in respect of the conditions specifically and expressly mentioned in the Bill of lading. since the essence of Section 1 is to transfer the right of suit 'as if the contract contained in the bill of lading had been made with himself' . Thus made the section inoperative in those cases where the right of suit on reasons otherwise than on consignment or endorsement and this wording was adversely affecting the position of the Banks in whose favour the bills of lading were endorsed not giving them the right to sue. Passing of the Property of the goods: Under the circumstances where the Bills of lading were not able to be received by the consignees within such time the vessel reaches the destination, the buyer became the owner of the goods by producing a 'letter if indemnity'. As was decided in the case of The Delfini [19903] this act of becoming owner by delivery and 'not upon reason of consignment or endorsement' excluded the receiver's right to sue. The rulings in cases like The Aliakmon [1986]; where an endorsement was made in the Bill of Lading for the agent to take delivery on behalf of the consignee held that there was no transfer of property and in the case of The Aramis [1989]; since it was not possible to ascertain the specific goods consigned from a larger bulk, held that the property did not pass as laid down in Section 16 of the Sale of Goods Act 1979, have subsided the effect of the Delfini case. Cessation of Liability of the Ship owner: The decision in the case of Grant v Norway [1851]4 provided for the cessation of liability of the ship owner to the endorsee or transferee of the Bill of lading in cases where the ship owner can prove that the goods were not actually shipped., section 3 of the Bill of Lading Act 1855 was enacted to provide that statements made in the bills of lading with regards to the goods shipped would be conclusive evidence of such shipment "as against the Master or other persons signing the same". However this provision did not provide the necessary remedy for the problem as the ship owners were inclined to take advantage of the courts reading the provisions of Section 3 literally, by applying the principle of estoppel in their favour. Hence section 3 of the Bill of Lading Act proved ineffective in solving the issues created by the case of Grant v Norway [1851]5. Coverage of the Bill of Lading Act 1855: One final issue concerning the Bill of Lading Act was that it generally covered only 'Bills of Lading' and not 'sea way bills' which were the order of the day during the last few decades with the containerization of the goods which was not covered by the old Act. Provisions of the UK Carriage of Goods by Sea Act 1992: Section 2 (1) (a) of the UK Carriage of Goods by Sea Act 1992, empowers the consignee to sue the carrier in contract, where the consignee is the "lawful holder" of a bill of lading regardless of whether or not the consignee becomes owner of the goods upon or by reason of the consignment or endorsement of the bill and regardless of who suffers the loss removing the link between the 'passing of the property' and the 'transfer of contractual rights'. S 5 (2) defines the 'lawful holder of the Bill of Lading'. Such a provision is solve the problems of financing banks that were created by the ruling in Sewel l v Burdick [1883]6 As per section 2 (5) the rights transferred under section 2 (1), removes the rights of all intermediary parties including the shipper. However it is considered inappropriate to remove the rights of the shipper under a document of title to goods like Bill of lading which will be detrimental in the interest of the development of the international trade. The second lacuna of the provisions of section 2 is that although subsection (4) provides the right to sue to the 'lawful holder' even on behalf of a third person who has actually suffered the loss (both the lawful holder and the actual person suffered may be different), the lawful holder is under no legal obligation to proceed with the legal remedy in case of actual loss. While Section 2 (2) (a) allows the endorsee to acquire the contractual rights, section 2 (b) deals with the rights of the seller on circumstances of acquisition of the goods on rejection of the same by the buyer. This provision appears to give a different remedy for the problem envisaged under Dilfini case. as "any attempt to sell the claim after the discharge of the cargo would fail as the contractual arrangements between the buyer and seller of the bill of lading would occur after the bill had ceased to be an effective document of title" Tony Halliwell7 However it has to be noted that under such circumstances the new provisions would not still empower the agents with the right to sue under the contract. This is so because the bills of lading would have been endorsed only to enable the agents to take delivery of goods on behalf of the owner of the goods and there was no intention to pass on the right to sue under the document. Under section 4, where the bill of lading is signed by the Master or any person holding the authority to sign, it creates an automatic statutory estoppel in favour of the holder of the bill of lading and thus appears to have removed the difficulty placed by the case of the Grant v Norway. However the following questions emerge: Whether the Master's or other person's signature on the bill of lading confirms the statements in the bill of lading or Whether the signature merely affirm the contractual liability of the carrier subject to the implied non-admission of any description of goods inserted by the shipper This scenario will make the ship owners insisting the continuance of the usage of the words 'Said to Weigh' or 'Said to be' along with the description of the goods in the Bill of lading. Moreover another main concern in this respect is that this provision is not extended to Sea Way bills and Ship Delivery Orders'. The recent cases after the enactment of the 1992 Act mostly relate to the liabilities under section 3. One of the significant cases is the case of the The Aegean Sea8 where it was held that the letter of indemnity was a mere undertaking to the carrier against any claim and the carrier is under no obligation to deliver the goods against indemnity but to deliver to the lawful holder of the bill of lading. In the most recent The Berge Sisar9 case it was decided that the interim holder of a bill of lading was not deemed to have assumed the liabilities under a bill of lading simply because he drew samples out of the bulk before the clearance of the cargo. As has been decided in the case of The Giannis NK10 it is not the intention of the legislation to make the intermediaries liable under the contract of carriage where they have only limited role to play. Conclusion: Thus though the provisions of the Carriage of Goods by Sea Act 1992 attempts to remove the problems caused to the trade community by the old provisions of the Bill of Lading Act 1855 inapplicable to the modern shipping industry, still there exists some lacunae like the provisions to break the ruling under Grant V Norway have been made to have a limited application to the use of bills of lading only. Similarly the effect of ruling in the Delfini case still lingers on to affect the trade community. Word Count: 1533 Read More