The UN Convention Initiative International Carriage of Goods by Sea - Essay Example

The UN Convention Initiative International Carriage Of Goods By Sea The goal of establishing a unifying set of rules governing international carriage of goods by sea was one of the most important steps taken to harmonize and modernize this area of law hence restore unity between differing jurisdictions. United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea is a title for the UN Convention, the Rotterdam Rules, signed in 2009 in Rotterdam, the Netherlands, by various countries; its main aim was to reform and harmonizes the law that governs carriage of goods by sea according to the Shipping law 2009 As stated in the International trade law 2009 the Rules succeeds the Hague, Hague-Visby and Hamburg Rules, that governed this part of law, in an attempt to bridge the gaps in the international legal framework on the issue of bills, their relation to the rights and duties of a seller, a buyer and the parties providing financial support, and the emergence of electronic solicit views and possible solutions from states and international organizations representing parties with an interest in international carriage of goods by sea. The Rotterdam Rules, though built from the earlier conventions, constitutes changes in both existing rules as well as new fields, including electronic transport documents and a multi-mode of transport. The most important changes included are an increase in regulations of duties of a shipper, the scrapping of carrier-friendly exceptions from liability, and the inclusion, for volume contracts, a limited freedom of contract. While the previous regimes say the Hague and Hague-Visby Rules require traditional bills of lading in order to apply, Rotterdam Rules employs the use of electronic transport documents thus since transport nowadays is quite faster than the earlier days, goods may arrive at their required points before the arrival of the bill of lading, causing increased costs and further delays hence the need for the modern electronic transport documents and the straight bill of lading. In this new technological era where use of computers for everything is the norm, there is the inevitable need for reform in international transports. Transport today is multimodal, employing the use of containers. There are cases where a ship can carry well over 5000 containers hence the need for the Rotterdam Rules to reflect on this fact since there are no multimodal conventions in effect. The Law Quarterly review 2005 indicates that the previous Rules are only useful on a tackle-to-tackle basis as evident by the Hague-Visby Rules, or port-to-port basis as evident by the Hamburg Rules. This is contrary to the door-to-door basis evident in the Rotterdam Rules. In the earlier Rules, steam ships were the means of transportation, and containers were not in use at the time as opposed to the world today. There is also, among industry interests, a high level of dissatisfaction with the legal status quo, hence the need for employment of the convention. The Hague-Visby Rules employs a documentary approach, while the Hamburg Rules a contractual approach, where applicable, to the contract of carriage. However, the Rotterdam Rules creates a hybrid of the two, the ‘trade approach’, to clearly stipulate the scope and attract the contracts falling under the convention. In Article 1 of the Rotterdam Rules, contract of carriage is defined as: “A contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another as stated in the Commercial Law Quarterly 2002 The contract shall provide for carriage by sea and may provide for carriage by other modes of transport in addition to the sea carriage.” Thus it is evident that a sea-leg would be included in the voyage. Also, it may be applicable inland, and provision of other modes of transport may take course. The Rotterdam Rules bear compulsory rules mainly to protect that party in a contract, in liner transportation, who has the lesser power of bargain. This, historically, is the main reason for the intended need of rules to govern international carriage of goods by sea. Hence the convention seeks to exclude charter parties, who are normally of equal or rather close to equal bargaining power, from application. The employment of the volume-contract exception has also helped achieve this objective. The convention also safeguards against the event of a shipment having two domestic legs with respect to the internationality requirement. Under the Rotterdam Rules, parties to a contract may opt out of it, if they so desire, and form contracts separately. As evident in Article 12, responsibility period of the carrier commences on receipt of the goods by the carrier or a performing party and ends at the time of delivery. The article provides for reduction of the period of responsibility by contract. This, however, is only applicable in cases where there really are separate contracts. Thus it becomes impossible where the contract is multimodal and provides for all the stages of the journey or is inclusive of parts other than sea-journey. Article 79 of the convention provides for freedom of contract. It also provides the possibility to increase liabilities and duties owed to the carrier, but unless stipulated by the Rules, do not provide a possibility of decreasing them. The convention includes subcontractors, and takes note of excluding indirectly or limiting duties to prevent the overall application of the Rotterdam Rules by certain arrangements of contract. Lloyd’s maritime and commercial law quarterly 2011 says that uniformity is beneficial in the sense that litigation becomes less necessary and there will be minimized costs of transport since there will be ease in allocation of risks of loss or damage of cargo, and there will be uniformity in the liability in contract of carriage in cases where a dispute is resolved. A uniform law is easily predictable and provides legal certainty hence lower costs and less-burdened trade. The Rotterdam Rules has therefore been created by the Comité Maritime International (CMI) and United Nations Commission on International Trade Law (UNCITRAL), in conjunction with various organizations, to enhance modernity and uniformity and reform the rules governing carriage of goods by sea to adapt to the conditions of the world today. The Rotterdam rules are a convention named United Nations Convention on Contracts for the International Carriage of Goods wholly or partly by sea. The reforms created by these rules are used to change the law that governs carriage of goods by sea. This was approved by the United Nations Commission on International Trade Law (UNCITRAL) Approved the draft text of United Nations Convention on Contracted for the International Carriage of Goods Wholly or partly by sea. It then adopted by the UN General assembly. This was to be opened in Rotterdam and the convention known as the Rotterdam rules. The assembly also called on all governments to become part of the convention. On 23rd September 2009, the Rotterdam rules were opened for signature in Rotterdam, Netherlands. 16 countries signed to this convention making it a success to the UNCITRA mentioned in the Law Quarterly review 2005. These countries included the developing and the developed countries which engaged in strong seafaring and trading nations as well as traditional and shipper nations. These represented 25% of the world trade volume. To date there are 21 countries that have signed to convention. Currently, it is known that the current legal regime governing the international carriage of goods by sea is characterized by complexity, a lack of uniformity and a failure to take into account modern developments in the industry due to the age of the existing conventions. There are three separate international treaties governing international maritime transport: the Hague Rules, which date from 1924, the Hague-Visby Rules, which date from 1968, and the Hamburg Rules, which date from 1978. However none of these conventions has managed to establish a uniform global regime for the maritime despite the fact that they have achieved a certain level of international acceptance. The Hague Rules for example which are now over 80 years old, have achieved the greatest level of international acceptance, but have not been uniformly implemented or applied, and do not adequately take into account modern transport practices. Attempts have been made to modernize the regime through the negotiation of the 1968 Visby Protocoland, later, the Hamburg Rules. While the Hamburg Rules were appropriate to the era in which they were negotiated, they have not been universally embraced, and have been successful in achieving only a certain level of harmonization amongst the States in which they are in force. Since there is lack of uniformity in the international law, other States have decided to use their national law to either fill the legal gaps of the existing regimes or as a substitute for them altogether. According to Lloyd’s maritime and commercial law quarterly 2011 Other States or groups of States have pursued, or are currently pursuing, regional solutions. This highly fragmented set of rules characterized by competing, and sometimes overlapping, international, regional and domestic regimes, has denied commercial actors the predictability and transparency that they require to do business internationally. The result has been legal and commercial uncertainty, increased commercial transaction costs and an overall loss of efficiency. The current international maritime transport regime as indicated in the Lloyd’s maritime and commercial law quarterly 2011 leave a number of important aspects of international maritime carriage unregulated and therefore leaving it subject to the national laws that have a negative impact to harmonization in the field. These and other concerns convinced industry, and then Governments, that the time had come to take a fresh look at the international regime governing the maritime carriage of goods. Importantly, however, that reassessment has not consisted of rewriting the law applicable to international maritime transport. Conscious of the various applicable legal regimes around the world, and of the need to harmonize them, the Rotterdam Rules build upon the legal pillars established by the existing conventions. Moreover, the Convention aims at enhancing legal certainty by codifying decades of case law and industry practice and by clarifying earlier texts where necessary. The Rotterdam Rules thus represent a comprehensive instrument governing international contracts of carriage that does more than merely expand the existing liability regime to include contracts for door-to-door carriage and electronic transport documents mentioned in European journal of commercial contract law, 2009. The Rotterdam rules has come up with a number of successes that are much better way of dealing with the sea transportation and transactions as compared to The Hague and Hague-Visby rules. These are shown in a number of ways below. The Rotterdam Rules to existing laws expanded its scope of application to include door-to-door transport. Vindobona journal of international commercial law and arbitration is categorical that the Hague and Hague-Visby Rules applied only tackle-to-tackle while the Hamburg Rule, cover port-to-port shipments. Modern container transport, however, typically requires the use of door-to-door contracts of carriage, and it is logical that the underlying legal infrastructure should allow for the same scope of application. Further, the new Convention recognizes that in taking a “maritime plus” approach, the possibility of conflict with the existing UN modal inland conventions could be raised. In order to avoid that possibility, the Rotterdam Rules adopt the same practice as the contractual approach, a “limited network principle” such that where the damage to or delay of the goods can be localized as having occurred during an inland leg of the transport, the Rotterdam Rules provisions that govern the carrier’s liability, limitation of liability and time for suit will give way to those provisions of an international unimal convention that would have applied if a separate contract of carriage had been concluded for that leg of the transport.1 In order to ensure clarity in respect of the interaction between the Rotterdam Rules and uni-modal inland conventions, the Convention also includes a provision that prevents it from affecting the application of inland conventions in respect of the carriage of goods by air, road, rail, or inland waterway that regulate the liability of the carrier for loss of or damage to the goods, and that could apply to a contract of carriage subject to the Rotterdam Rules according to Vindobona journal of international commercial law and arbitration. Of course, as noted above, the CMC does take into account multimodal contracts of carriage, using a type of “maritime plus” approach as well. The multimodal provisions of the CMC apply when two or more legs of transport are used in a single contract, one of which involves maritime carriage. Further, the approach of the Rotterdam Rules that non-localized damage will be subject to the general “maritime plus” regime is the same approach to that taken in the CMC. The CMC approach in respect of localized damage is also similar to that of the Rotterdam Rules, in that the CMC states that where damage is localized to a particular leg of the transport, the law or regulation that applies to that mode of transport will be applicable in respect of the liability, and limitation on the liability, of the multimodal transport operator. However, the Rotterdam Rules provision takes into account only mandatory international instruments that would have applied to that leg of the carriage, and not mandatory national law.2 As such, although the mechanics of the approaches in the CMC and the Rotterdam Rules are similar, the result will not be the same. The Rotterdam Rules will also cover both inbound and outbound international shipments to or from a Contracting State, unlike the Hague and Hague-Visby systems which covered only shipments outbound from a Contracting State. Historically the Hague, Hague-Visby and Hamburg Rules, they fail to contain provisions regulating electronic commerce. In fact, the use of electronic commerce in maritime transport is not yet widespread, due mainly to the lack of a legal framework on which to base technological innovation. The Rotterdam Rules embrace the use of electronic transport records in lieu of paper transport documents, and to provide an effective legal framework on which to base the development of electronic commerce in maritime transport. The rules are consistent with the approach that UNCITRAL has taken in its previous instruments on electronic commerce, including the key principles of functional equivalence and technological neutrality, and are expected to lay the appropriate legal groundwork for electronic developments in this field. The Rotterdam rules have included the concept of the controlling party and the right to control together with the transfer of rights. The combination of these concepts have enabled the new Convention to provide for the dematerialization of all transport documents, including negotiable documents, and thus to provide an effective legal framework for electronic commerce as put in the Lloyd’s maritime and commercial law quarterly 2011. However, the concept of containerization is integral to the Rotterdam Rules, and recognition of it is woven throughout the text in to a number of important provisions contrary to the other rules which have just included the container clause in the limitation on carrier liability. It has for example included the door to door scope of application, the due diligence obligation of the carrier now extends to containers that are provided by the carrier, the provision allowing for The qualification of information on goods in the contract particulars now takes into account that the carrier often does not have the opportunity to inspect the goods in the container and a shipper that packs its own container must stow, lash and secure the contents properly and carefully so as to avoid causing harm. The Rotterdam Rules have made a number of changes in terms of the liability of the carrier compared with that of previous regimes. The Law Quarterly review 2005 mention how important, the carrier’s obligation to exercise due diligence in respect of the seaworthiness and the cargo-worthiness of the ship has been expanded from one that is owed prior to and at the beginning of a voyage in the Hague and Hague-Visby Rules and the CMC, to one that extends for the entire duration of the voyage by sea. Of course, the Hamburg Rules are silent on the topics of seaworthiness and cargo-worthiness, as they fall within the general provisions of the presumed fault liability scheme. There are protections for a person other than the carrier is known as ‘Himalaya protection’. Article 4 provides a list of persons who are entitled to a defense and limitation of liability under the Rotterdam Rules whether the action is founded in contract, tort, or otherwise. The Rotterdam Rules provide automatic protection to the carriers’ employees, agents and independent contractors provided that they are subject to suit under the new Convention. In practice, this provision simply codifies the result that has been reached by the industry through contractual terms, and importantly, means that the maritime performing party is jointly and severally liable along with the carrier. Previous maritime transport conventions have not dealt with the concepts of the controlling party, the right of control and the transfer of rights. As noted above, these ideas are the key to solving the problem of how to provide for negotiable electronic transport records. Further, the establishment of rules in these areas will enhance certainty in respect of the validity of the security interest that financial institutions may have in the goods. For example, the right to provide instructions to the carrier in respect of the goods during the carriage allows an owner to dispose of the goods during the transport, or allows a financing institution to maintain control over the goods in which it has a security interest. Since the existing law in respect of these matters is largely domestic, changes brought about by the Rotterdam Rules will vary from State to State, although the broad principles adopted are fairly standard. Further, achieving uniformity in this area of the law should establish a welcome and predictable legal basis for what has previously been left to industry practice and local law. Despite the obvious fact that delivery is one of the main obligations of the carrier – or perhaps, because it is so obvious – the current conventions do not specifically include the obligation. The CMC does not contain a specific provision on the obligation of the carrier to deliver, either, but it does contain a separate section with general rules on delivery.3 In order to avoid the current practical problems that can result from a lack of such rules, the Rotterdam Rules contain quite extensive rules on delivery.4 While the rules are not exhaustive, they should provide a substantial improvement in terms of the legal certainty surrounding delivery. The previous maritime transport conventions have focused mainly on the obligations of the carrier to the shipper. The Hague and Hague-Visby Rules deal with shippers’ obligations in only two cases: they ensure that the shipper and its agents and servants are liable for any negligence, and they impose strict liability on the shipper for damage or expenses arising from the shipment of dangerous goods. The Hamburg Rules reflect a similar approach to the obligations of the shipper. The CMC contains slightly more expansive rules in a stand-alone section devoted to the Shipper’s Responsibilities. Although not representing a sea change in terms of the obligations of the shipper, the Rotterdam Rules contain clear and readily-identifiable provisions on the obligations of the shipper. The shipper continues to be subject to strict liability for loss or damage caused as a result of its failure to properly label or inform the carrier of the nature of dangerous goods. As in the case of the Hamburg Rules, the shipper is deemed under the Rotterdam Rules to have guaranteed to the carrier the accuracy of certain information provided to it for the compilation of the contract particulars. This has enhanced legal and commercial certainty. Due to the strong interest shown by industry and Governments in taking a fresh look at the needs and problems of the international maritime transport industry, discussions and negotiations concerning a possible new regime spanned many years. The result of those years of effort is a Convention that deals with a broad range of issues, some of which are novel for a uniform transport law instrument, but many of which are codifications of principles found in the existing maritime transport conventions and the body of accompanying case law, as well as long-standing industry practice. The Rotterdam Rules offer a comprehensive instrument governing international contracts of carriage from “door-to-door” that will modernize the law, making it much better-suited for the needs of today’s commerce. Importantly, European journal of commercial contract law 2009 notes that this is accomplished while preserving the existing international regimes in respect of unimodal transportation, such as carriage by air, road, rail or inland waterway. The new Convention represents an industry-driven approach that saw many competing interests reach a consensus on practical and workable common solutions to replace the current unwieldy and outdated regime for the international maritime carriage of goods. The Rotterdam Rules will give commercial actors and those involved in the international carriage of goods the opportunity to benefit from commercial and legal predictability and transparency, thus improving conditions for international trade, enhancing efficiency for commercial transactions, and reducing the overall cost of doing business internationally. Works Cited Baughen, Simon. Shipping Law. 4. Routledge-Cavendish, 2009. Carr, Inira. International Trade Law. 4. 2009. Sturley, et al. The Rotterdam Rules. n.d.1996 Alcantara Gonalez, J.M. The new regime and multimodal transport. Lloyd’s maritime and commercial law quarterly (London) 3; 399-404, 2002. _. The Rotterdam Rules: brief overview of some of their key features. European journal of commercial contract law (Zutphen, The Netherlands) 3:111-125, 2009. Baatz, Y. forum selection in contracts for the carriage of goods by sea: the European dimension. Lloyd’s maritime and commercial law quarterly (London) 2: 208-226, 2011. Bergami, R. Rotterdam Rules: volume contracts, delivery terms, transport documents and letters of credit.Vindobona journal of international commercial law and arbitration (Vienna) 14:1:9-32 -.Basis of liability and exclusions of liability.Llyod’s maritime and commercial law quarterly (London) 3:336-349, 2002. Derrington, S. The Hague Rules: a lost opportunity. Law Quarterly review (London) 121:209-213, 2005. Read More