The Impact of the Hague-Visby Rules about Duties of a Carrier - Essay Example

Critically assess the impact of the Hague-Visby Rules in relation to duties of a carrier. List of Cases Encyclopaedia Britannica Inc v SS Hong Kong Producer Eridania SpA (formerly Cereol Italia Srl) v Oetker (The Fiord Wind) Gosse Millard v Canadian Government Merchant Marine Island Tug and Barge v Makedonia Maxine Footwear Co Ltd v Canadian Government Merchant Marine President of India v West Coast Steamship Co Pyrene Co Ltd v Scindia Navigation Co Satya Kailash Steel et Al v The State Line Steamship Company Whistler International Ltd v Kawasaki Kisen Kaisha List of Conventions The Hague Rules The Hague-Visby Rules (HvR) Rotterdam Rules The Hamburg Rules List of Statues Carriage of Goods by Sea Act, 1971 Common Law of UK List of Contents S.No Heading Page No 1 Introduction 2 The impact of the Hague-Visby Rules in relation to duties of a carrier 4 2.1 The main objectives of the HvR 5 2.2 The Scope of Application of HvR 5 2.3 Salient Features of HvR 6 2.4 Duties of the Carrier under HvR 7 2.5 Restraint on Liability 9 2.6 Duties and Accountabilities of the Shipper 11 2.7 Accountability of the Carrier for Third Parties 13 2.8 Accountability of the Agents, Servants and Independent Contractors 13 2.9 What are their limitations, problems of HvR 13 3 Conclusion 14 4 Bibliography 15 1. Introduction Before and at the start of 19th century , a bill of lading offered by a ship owner contained wide exclusion clauses due to which a genuine claim cannot be made against the carrier in case if there was a loss or damage to the cargoes. The Hague Rules were consented in an international conference held at Brussels in the year 1924, and it is concerned with the accountability for damage or loss to goods carried by a ship under a bill of lading. The Hague regulations were intended to be applicable to all exports from any country, which acknowledged The Hague regulations. Thus, The Hague Rules are applicable almost globally wherever they were not surpassed by the Hamburg Rules or Hague –Visby Rules either by contractual integration or by application of law into the conditions and the terms of the appropriate bill of lading. The Hague –Visby (HvR) Rules were pursued in the year 1968 and also referred a “the Brussels Protocol.” In UK, the HvR provisions are integrated into the Carriage of Goods by Sea Act, 1971. It is to be observed that 1968 amendment which is known as Hague-Visby Rules (hither after will be referred as HvR) advocated a variety of changes which is intended to be applicable to all bills of lading where (a) the shipment is made from a port of a nation which ratified it, b) if the place of issue of bill of lading is in a ratifying country and c) where the Hague-Visby Rules are applicable to the bill of lading contractually1. 2. The impact of the Hague-Visby Rules in relation to duties of a carrier 2.1 The main objectives of the HvR The main aim of the HvR is to modify The Hague Rules since there were lot critiques especially about the rules on restriction of liability per package or per kilo as the quantum of restriction was too little and less due to technological advancement like usage of pallets, use of containers, etc which demonstrated that the present rules were not adequate and hence, appropriate reforms were introduced through Hague –Visby Rules2. 2.2 Scope of application of HvR HvR is applicable only for contract of carriage where there is a bill of lading or port of loading should be within a contracting State. Thus, HvR is not applicable to a contract of voyage if the port of loading is situated in a non-contracting State to a port of discharge, which is situated in a contracting State. Bill of lading is the essential criteria for the application of HvR. In Pyrene Co Ltd v Scindia Navigation Co3, though, Art 1 (b) demands that contract of carriage is applicable only to contracts of carriage covered by a bill of lading, when an accident happened in the above case, no bill of lading was issued by the career, and it was held by the court that the carriage was yet covered under a bill of lading and hence, Hauge Rules were applicable4. The most poignant characteristic of the scope of application is the safeguard offered to third parties; under the HvR, such safeguard is offered only if a bill of lading is given and is endorsed in favour of third party. According to article 1(e) of the Hague-Visby Rules, the period of accountability and application of a carrier for dry cargo commences from the time of loading of goods on the ship till their discharge from the carrier at the port of discharge. However , in most of the scenarios , the goods are handed over well before the loading of the same in the port of loading, and goods are delivered to the consignee in a warehouse at the port of discharge and such periods which when the goods are in the safekeeping of the carrier for which HvR is not applicable . The main question is that if a loss or damage is caused to the goods during this period, who will be held accountable for such losses? HvR does contain explicit provisions as regards to commitments of the carrier to make the ship seaworthy and to offer good care for the cargo, whereas there are no such clear cut provisions in the Hamburg Rules. 2.3 Salient Features of HvR The main difference between the three conventions, i.e. the Hague-Visby Rules, the Rotterdam Rules and the Hamburg Rules is that only the HvR contains the provisions for the accountability in case of delay whereas the other two conventions do not have such provisions. As far as the recognition of the onus of evidence is concerned, the HvR does not make any reference to the initial onus of evidence placing on the claimant. HvR demands that the evidence of the damage, delay or loss is not due to the error of the ship or fault of any individual for whom the carrier is accountable and there will be an assumption of error or fault if the carrier demonstrates that damage, loss or delay is due to by an exempted damage or disaster. So as to stop the inflexible approach inflicted under the present common law rules in UK, the HvR offer shippers with safeguard from unjustifiable exemption clauses which the mighty contracting party, namely, the ship-owners, might enforce upon the shippers. Thus, HvR offers an analogues sea carriage law which offers fair terms and is taking care of the interests of the both the parties. Under HvR, notice of damage or loss has to be served before or at the time of delivery of the cargo, or if the damage or loss is not visibly seen, in such cases, notice should be served within 3 days of the delivery. HvR permits the freedom of contract liberally in scenarios in which they are not applicable. Article 3(8) of the HvR states that any provisions absolving the carrier from accountability what is otherwise than stated by the Rules is illegal and void. However, article 6 of HvR states that the carrier may sign a contract as regards to its duties and its accountability, if no bill of lading is likely to be issued and the cargo shipped are not of the type of ordinary commercial consignments .Article 7 of HvR further provides that freedom of contract is allowed either prior to loading and after discharge of the cargoes5. 2.4 Duties of the Carrier under HvR A bill of lading should be issued by the carrier to the shipper, and it should contain information as regards to weight, number of packages, description of the goods, and the apparent conditions of the goods. In Island Tug and Barge v Makedonia6 , during the middle of the voyage, the ship was wrecked and the owners of cargoes initiated court proceedings to claim the cost back. It was alleged by the shippers that due to mishandling in bunker operation, the ship became unseaworthy. Nonetheless, it was pleaded that the carrier did not infringe the article III (1) and carried out all the obligations and hence, they were entitled protection from the onus. It was observed by the court that the carrier’s obligation is to carry out due diligence in handling the appropriate bunkers in the port immediately visited after the incident7. 8Under HvR, carriers are prima facie found accountable for all damages or loss to cargoes received in good condition, as corroborated with clean bill of lading as held in Gosse Millard v Canadian Government Merchant Marine9. Under HvR regime, a claimant has to demonstrate that vessel was not seaworthy where as the ship-owner has to demonstrate that adequate due diligence has been shown. The ship-owner must show adequate care for the goods. However, it is to be noted that a carrier is excused from his accountability as regards to seventeen exclusions, which include disregard in the navigation of the ship fire until it was caused by real fault or privity of the ship, act of God, common risks at the sea, etc. 10For shippers , it would be much difficult to demonstrate the onus of negligence on the part of a carrier since all evidences are with carrier hands in general as held in 11Encyclopaedia Britannica Inc v SS Hong Kong Producer12. Nonetheless, shippers may find great help from wide elucidation made by courts as regards to negligence and limited construction of defences made by carriers. In 13Whistler International Ltd v Kawasaki Kisen Kaisha,14 it was held it to be cargo negligence where the carrier argued that it was to be negligence in management or navigation of the ship which fell under secured exemption of accountability for the carrier as offered under article IV (2) of HvR and hence, the court prevented the carrier from claiming exemption. As held in the Satya Kailash15 , proving carrier’s cargo negligence mechanically divests it from basing any of the defences available under article IV (2). 2.5 Restraint of Liability The Hague-Visby Rules obliges a limit of 30 Poincare Francs per kilo (previously, 2 SDR (Special Drawing Rights) per kilo) or 10,000 Poincare Francs per package (previously 666.67 SDRs per package) whichever is greater. The restriction on liability can be deviated only if it is demonstrated that the carrier has functioned with an aim of causing harm or damage wantonly. Likewise, a ship owner can restrict his accountability with reference to the ship’s tonnage. It is governed by the international convention as the calculation of owner’s maximum accountability is an intricate process. It is to be noted that UK applies the 1979 Tonnage Convention which obliges a greater limit. HvR prescribes one year time limit for the initiation of filing suit for damages for loss or damage of goods and any suit filed after one year unless time extension is granted, then it will be regarded as time barred. However, now, it is provided that extension of more than one year may be granted provided if there has been a mutual contract between the parties. Now, action for indemnities can be initiated against third parties. Under the HvR, the ship owner is excluded from the accountability a) as regards to damage or loss to the cargo resulting or arising from unseaworthiness until caused by the infringement by the carrier of his due care commitment and , b) the damage or loss to the cargo emanating from default of the pilot ,master , mariner or the employees of the carrier during the voyage or in the administration of the ship during the voyage and for the damage or loss to the cargo due to fire caused due to blunder of the crew. For economic loss due to delay, limit has been set forth under HvR as in the case of the other conventions which also limits the same. The HvR is not explicit as regards to any limit on loss or damages caused due to fault or error of employees or the master of the ship as reference is made only to the omission or acts of the carrier16. Common law and HvR HvR obliges and holds the carrier liable before and at the commencement of the sea voyage and to exhibit due meticulousness to make the ship seaworthy. It is to be noted that both HvR, and the Common law are more analogues and agree that carrier’s duty starts when the sea voyage begins though the duties under Common Law is a customary one. Thus, the carrier is obliged to offer a seaworthy carrier, and the nature of the duty differ only and the personal integrations keep them equivalent both under common law and HvR. The main divergence between the common law and the HvR is that the obligation under common law is unconditional whereas in HvR, there is an obligation to apply due diligence has been imparted. In case, if the HvR is not applicable, then, the ship remains under the absolute duty under the Common Law. Under the common law, a sea worthy vessel is to be engaged for the voyage. Under HvR, this sea-worthy is substituted by a duty to exercise due diligence to make the carrier seaworthy as held in 17Eridania SpA (formerly Cereol Italia Srl) v Oetker (The Fiord Wind)18. However, this duty presents only either at the start or at the termination of the voyage. In President of India v West Coast Steamship Co, it was observed that the ship should be strong enough to bear the perils of the sea taking into account the time of travel and the nature of the water, etc. The argument that the ship was seaworthy during its journey will not be adequate evidence, and the ship should be fit for the cause of sailing19. In Steel et Al v The State Line Steamship Company, it was held that the meaning of the absolute duty is that the carrier should employ a ship that shall be suitable for its voyage20. Under common law, there are wide range of defences are available and any effort to exclude or include any limitation or exclusion clauses in the bill of lading will be held unlawful and unjustifiable. It is to be noted that both HvR Rules and the common law rules can, in reality, is said to offer for different norms. As per common law, there is an absolute obligation on a ship-owner to make sure the seaworthiness of the vessel well before it starts its voyage, and this unqualified obligation ends once the vessel has sailed. Thus, it can be regarded as a wide-ranging obligation, and they inflicts quite an arduous burden on any vessel , which is governed by the common law rules. Under HvR, there should be only a due diligence norm of a vessel as regards to guarantee the seaworthiness of a vessel, and this is regarded as the more rational norm. However, the common law regulations have the benefit of guaranteeing legal confidence as it is ever known who will be held accountable for particular loss or damage irrespective what accident happens, which will end in fewer cases and less related costs21. 2.6 Duties and accountability of the Shipper HvR in three different places deals about the onus and accountability of the shipper. Article 3(5) of the HvR describes that the shipper of cargo is to offer a guarantee to the ship owner about the quantity, marks, weight and number. Article 4(3) of the HvR states that shipper will not held accountable for the damage or loss suffered by the ship or the carrier resulting or emanating from any reason without its fault or act or neglect, thereby connoting with language analogues to that being employed in article 4(2) for the ship owner that the shipper is accountable for damages or loss caused by the ship owner due to the fault, neglect or act of the shipper. Further, article 4(6) of the HvR states that the shipper is accountable for the losses or damages occurred either indirectly or directly emanating out of or because of the shipment of perilous cargo whereof the carrier is unaware of such fact. It should be noted that there would be strict liability for the first and third case as mentioned above and fault liability in the second case mentioned above. Under HvR, the shipper is accountable for the losses or damages caused by perilous cargoes shipped by not giving adequate facts to the ship owner about their perilous nature. From the wording “ shipped without knowledge” , we can know that if it is not known to the carrier in advance about the perilous nature of the cargo , then , carrier would not held be accountable. 22Thus, under HvR, a carrier will not be held liable if it is unaware about the dangerous nature of the cargo. 23In the case of damage or loss of cargo, the shipper has to bear the burden to demonstrate that vessel was unseaworthiness as held in 24Maxine Footwear Co Ltd v Canadian Government Merchant Marine25. 2.7 Accountability of the Carrier for Third Parties As per the HvR, apart from the exemption stated in article 4(1) (a) & (b) , the carrier will be held accountable for the error or faults of his employees or agents as held in Maxine Footwear Co Ltd v Canadian Government Merchant Marine26 ; an accountability that emanates by implicit from article 4(2) (q). Under HvR, the types of agents seem to be rather restricted, since article 4bis (2) offers that independent contractors are not included and since the ambit of application of the HvR is restricted to the period between the starting point of the loading and completion of delivery of the cargo from the carrier at the discharge port. However, it is implied that agents possibly include crew and the master of the ship, even if they are not employees of the carrier, as in the case of chartering arrangement27. 2.8 Accountability of the Agents, Servants and Independent Contractors HvR does not control the accountability of the agents or employees, but article 4bis (1) states that if any legal action is initiated against them, they are authorised to the restriction of liability and for defending their interest. The above article also states that the total of the sum recoverable from the ship owner and such employees and agents, shall, in no event, surpass the limit expressed in these Rules. 2.9 What are their limitations, problems of HvR? HvR is to be integrated into the national law of a State, but this integration creates poignant hardship and heterogeneity as national laws may accord their consent to them with lot of alterations and variations. As per article 1(b) of HvR, HvR is applicable only to contracts of a sea voyage under a bill of lading or analogues’ document of title and hence, they implicitly exempt charter party contracts. This clause gives rise to some ambiguity, as for article 3(3) offers that the ship must offer a bill of lading on demand of the sender of the cargoes and article 6 offers freedom of contract to the carrier when there is no bill of lading is documented. Hence, the HvR will be applicable also before a bill of lading is given. Critics are of the view that Article IV of the HvR offers a wide range of exemption and hence, fostering more opportunities to get immunity from accountability28. 3. Conclusion Though, HvR Rules have many advantages, it is not immune from many inherent defects. HvR is applicable to all bills of lading arising from one contracting state to another. However, it is silent, what would happen if the inflow or outflow of cargoes through sea with the non-contracting states. Thus, HvR is silent which law will be applicable in such cases. HvR is more concerned with the ship owner or the ship, and it is silent about the chartering arrangement. HvR has not come out who will be held responsible in case where there is a loss either the ship owner or the charterer. However , in most of the scenarios , the goods are handed over well before the loading of the same in the port of loading, and goods are delivered to the consignee in a warehouse at the port of discharge and such periods which when the goods are in the safekeeping of the carrier for which HvR is not applicable . The main question is that if a loss or damage is caused to the goods during this period, who will be held accountable for such losses? Thus, there is an immediate need to revamp the HvR mainly to plug the above-mentioned loopholes. Bibliography Books Baughen S, Shipping Law (Routledge 2012) Branch A E, Elements of Shipping (Routledge 2007) Branch, A E, International Purchasing Management (Cengage Learning 2001) Carr, I, International Trade Law, (4th edition, Taylor & Francis 2010) Chan F W H, Jimmy J M Ng, Wong B K Y, Shipping and Logistics Law. (Hong Kong University Press 2002) Dockray M & Thomas K R, Cases and Materials on the Carriage of Goods by Sea (Psychology Press, 2004) Edwards A & Henley H P, Lloyd’s List Law Reports (Lloyds 1965) Hill C J S, Maritime Law (University of Virginia 2003) Merkin R, Privity of Contracts (CRC Press 2013) Wilson J F, Carriage of Goods by Sea (Pitman Publication 1998) Web Sites Dorjan Tozaj, ‘Hamburg Rules v Hague Visby Rules: An English Perspective ‘accessed 3December 2013 NJ Margetson, ‘Liability of the Carrier under the Hague Visby ‘< http://www.pomorci.com/Skole/Pomorsko%20pravo/Liability%20of%20the%20carrier%20under%20the%20Hague%20 (Visby) %20rules.pdf> accessed 4 December 2013 Word count 3500 (excluding table of contents , list of cases , bibiliogrpahy) Read More