Maritime Regime in the Carriage of Goods by Way of Sea - Research Paper Example

Maritime Law (XXY123) (Assignment) Student: ******* Student ID: ******* Lecturer: ******* Subject: Maritime Law Course: ******* Due Date: ******* Word Count: 3294 (Excluding Title Page, Table of Contents and References) ABSTRACT The concept of having maritime law that covers both national and international obligations are a necessary instrument in ensuring that proper rules are followed during cargo carriage and delivery up. Rules such as the Hague-Visby Rules (HVR), Australia’s Bill of lading (CONLINEBILL 2000), Carriage of Goods by Sea Act, 1992 (COGSA) consists of international rules and municipal laws that try to regulate carriage of goods by sea. Documents that are necessary for transportation of this goods such as the bills of lading, carriage by sea documents, sea way bills are all instruments that are necessary to impute intention to bind the parties. Key to it is the establishment and linking persons to liability in case the goods are lost or destroyed, HVR rules attempts to explain how liability ought to be determined and to what extent the rights of parties subsist. Moreover there are clauses that tend to define jurisdiction, paramount principles and freedom of parties as regards to use, transport and carriage of the goods. All these are explained to provide a proper understanding of maritime regime in the carriage of goods by way of sea. TABLE OF CONTENTS ABSTRACT 2 INTRODUCTION 4 PART A 4 Paramount Clauses 4 Liberty Clause 5 Jurisdiction Clause 6 Part B 7 PART C 9 CONCLUSION 12 LIST OF REFERENCES 12 INTRODUCTION The United Nations has been very instrumental in the creation of Hague rules that usually govern interstate transactions and obligations. In maritime law; international conventions are important in codifying rules necessary for merchant shipping and even loading of goods in ports. Cargo shipping is usually one of the ways in which states transport goods by sea, and therefore there are essential aspects of contract that are necessary to ensure the transaction of this kind are carried in an efficient manner. The cargo regimes that exist are usually governed by different rules that would be highlighted in the paper. Though these regimes exist, there are elements of weaknesses that can be identified with the control of these maritime regimes. The first instance determination of the jurisdiction to sue where a breach of the contract has occurred is significant in dispute resolution especially where a bill of lading fails to provide a dispute resolution clause. It is also essential to provide a liberty clause to ensure that parties transporting goods are not so constrained with how they carry their own business of shipping Integration of International rules into domestic law has usually been a challenge in ensuring that they all co-relate or supplement each other. For instance some countries do not ratify conventions directly such as Australia but they do provide for domestic laws that are a replica of the convention or resolution. PART A Paramount Clauses The main essence of having a paramount class is to decide which legislation is applicable to a bill of lading. A paramount clause need not exist, because where it is non-existent but it invokes another law it is considered that the Hague Rules would still apply however in the case of Vita Food Products Inc v. Unus shipping Co. Ltd[1939] AC 277 (The Hurry on ) it was held that it depends on where the case is tried. In this case it was tried in Newfoundland where the bill was issued. However the correct position of the law is that a paramount clause is no longer an essential requirement because the rules apply by force of law. Statutory law that is the incorporation of the Bill in Australia is the main means of applying the paramount clause. Moreover, in instances where the HVR rules of the 1968 Brussels Convention are not enacted, the legislation that is provided by the ship destination country shall take full legal effect without considering that it covers only shipments that leave the port. It is of great importance for a given contract to consider the wording of the clause. An effective paramount clause must be precise as to its effects and also show the intention of parties. The House of Lords in giving their opinion in the case of Anglo-Saxon Petroleum Co. V. Adamastos Shipping Co [1957] 2 QB 233 emphasized that a carelessly worded paramount clause can be dangerous in trying to incorporate it into a charter party. In cases of ambiguity in the clauses the rule of contra proferentem is deemed to apply as against the carrier who drafted the bill and in favour of cargo interests that are subject to it (Daval Steel Products v. M/V Acadia Forest 683 f.supp.444at p.147). It can be stated that the Bill applies to paramount clauses based on its own force. Liberty Clause This essentially connotes the freedom of voyage activities and the responsibilities accorded to the carrier. Clause 5 of the CONLINEBILL, 2000 provides that a carrier is given liberty, as concerned the voyage he is about to undertake and shall not be limited to a given direct route. However it does include any proceedings or returning to or slowing down at any or off any ports or places as long as it is reasonable to do so. The actions however are to be connected with the carriage including bunkering, loading, discharging or other cargo operations and maintenance of the vessel and crew (Collier 1982). Clause 6 of CONLINEBILL 2000, Moreover denotes the liberty of a carrier to carry goods or part of the goods directly or indirectly to the port of discharge, either by the said vessel or any other given vessel or those vessels that belong to him or by any other means of shipment. However, the liability of the carrier is only limited to the carriage of the goods as between the ports of loading and port of discharge. The activities that are carried out do not therefore necessarily give rise to liability It can be stated that the liberty clause has a legal and binding force in instances where it applies to commercial shipments that would justify the creation of a special agreement Contrary to the HVR rules at Article III (8) the bill at Article 7 states that the bill cannot at any time inhibit a carrier or a shipper from forming any contract, a specification or a provision as to liability of the damage to a cargo or loss or in correlation to the custody of the goods. Jurisdiction Clause This basically relates to the judicial proceedings that are carried out through the provision of Hague rules. It has been long consented that where parties contract under Private International Law as per Martin & Davies (2010), and they have chosen either by express or by implication to the law of the foreign country. Moreover in identifying jurisdiction the law that is closest and has the real connection or is the most significant is usually chosen or the forum of the contract (Morris 2005). The issues that are to be considered would first relate to the; (1) Domicile of the parties and their residence in relation to the contract (2) The place in which the contract was entered into (3) The loading and discharge of the goods to determine the liability of carriers and shippers as per the law of that state. (4) The contract of carriage by sea can at times stipulate where the jurisdiction would lie. The bill at Article 21 (1) gives parties the discretionary power to institute any proceedings in any court of any given port in which the ship would have been apprehended. Jurisdiction of parties is only limited to the places mentioned in the bill The doctrine of sub judice should apply that is a party cannot initiate proceedings in a different court knowing that another court of competent jurisdiction is sitting to determine the same matter. However this can be done where the judgment that has been accorded in the previous court cannot be in itself enforceable in the country in which the current proceedings are being conducted. It is of great importance to note that the Hague Rules 1924 do not provide any notions on jurisdiction and even the CONLINEBILL does not give a definite place of suing. However it is material to state that where a jurisdiction clause is placed in a bill of lading then jurisdiction would be determined from there. Part B Australia basically adopts The Hague-Visby- Rules as was discussed and agreed upon in the 1968 Brussels protocol. Australia as compared to other countries did not cede or ratify the 1924 Convention that led to the adoption of the Hague Rules but it has enacted its local statute to incorporate the Hague-Visby Rules as a schedule to it. It can therefore be positively stated that Australia does not exist as a contracting state. The main documents that were agreed upon and incorporated by Australia included; the bill of lading, waybills, delivery orders that all comprise the carriage by sea documents (Section 1 of the Carriage of Goods by Sea Act 1992). A contract of carriage essentially does not require a bill of lading because is an evidentiary document. It has been accepted (Pyrene Co. V. Scindia Steam Navigation Co [1954 ] 2QB. 402 at pp. 419-420) that whenever a contract of carriage is concluded, and that there is a contemplation that a bill of lading will be issued in due course, Devlin, J, stated that it would be treated to contain the bill of lading and hence a contract of carriage. It can be noted in the first instance that a bill of lading needs to be inspected to be familiar with the clauses such as the mode of dispute resolution, as was considered in Singapore logistics association (2009). A Bills of lading used mainly as evidence that the shipped goods were received, it is a legal title to the goods and also can be used to infer the terms of the contract of carriage. The Carriage of Goods by Sea Act (1991) COGSA identifies the fact that a bill of lading should not include documents that are incapable of transfer of property and it can be an endorsement, by a by a bearer bill .A bill of lading generally is a conclusive document that shows evidence of goods delivery, and it rectifies the anomaly created in common law (Grant v. Norway (1851) 10 CB 665) that the master of a vessel has no authority to sign goods not shipped and that the masters signature does not apply. Generally once a bill of lading has been transferred a shipper cannot retain any rights under it, but does not affect his liabilities under it (Section 2(2) (a) of COGSA). However where a charter party is contemplated and no bill of lading is issued then the rule in Pyrene case would not apply (Canada Steamship Lines Ltd. V. Desgagne [1967] 2 Ex. C.R 234 at p.243), that where no bill of landing was issued but a charter party is contemplated, then the Hague Rules do not apply. A consignment note was adopted in Australia through the Carriage of Goods by Sea Act (1991), and it does not require the existence of a bill of lading because by nature it is a non-negotiable instrument and therefore does not provide for liability clause. A sea way bill are more precisely incorporated in documents provided by CMI Uniform Rules for Sea Waybills adopted by the CMI in 1990. It essentially refers to a document that is not a bill of lading (Section 3 of COGSA) but essentially it seeks to identify the person to whom delivery of the goods is made by the carrier in accordance with the given agreement. A sea way bill acts as proofs of delivery of goods and the contract of carriage of goods by sea. Any Ships delivery order is neither a bill of lading nor a delivery order (section 2 (3) of COGSA) but essentially it contains an undertaking which is given for purposes of a contract for the carriage of goods by sea of goods to which the document relates. Moreover, it can also infer an undertaking of delivery of the goods to the person and his relation. The rights that can accrue to him are to be determined by the order, and where the goods subject to the order relate to that of the carriage then he will only be liable to the goods the order relates to as was considered in. It is important to highlight that shipping documents give rise to liability. The person in whom the legal rights are usually vested when he demands them subject to section 3 (1) of COGSA then he would be considered liable for all the liabilities subject to the contract. Section 3 (3) of COGSA however applies a no prejudice clause that is it does not exclude the original parties to the contract. PART C The creators of The Hague Rules had failed in their prior convention to properly define the maritime regime that was to govern the shipment of cargo under maritime law. The Hague Rules (1924), as amended by the “Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading”, adopted at Brussels, in 1968 by “Hague-Visby Rules, 1968” Bundock (2007) was perceived to be of great aid to the development of maritime law. As stated earlier, Australia has never incorporated it into law but it has adopted it through domestic legislation. In its construction, the various players whose role in the cargo shipment were to be considered were the carriers, the shippers, the underwriters and banks ho acted as financial institutions were considered key players of merchant and cargo shipping (Margetson). Moreover, national interest was of great importance in trying to link the individual states with the different opinions being raised during its making (Margetson 2008). It can be stated that liability of carriers before the creation of HVR was governed by the use of exoneration clauses that provided limited liability to carriers. Moreover as per Mandraka-Sheppard (2007), highlights that liability of carriers can be incorporated into the bills of lading or other documents. In the old regime a shipper’s liability was specifically transferred to insurance underwriters and not to themselves (Todd 2007). It can be stated positively that the bill of lading was an instrument that provided for the division of liability among the major players in shipping of cargo. This regime therefore laid emphasis on the existence of exemption clauses and on the bill of lading to provide for liability. For instance an early case of Smith V. Shepherd (1976) the exoneration clause was not included and it was considered that the carrier was liable for the damage occasioned to the ship. This was the main factor that fuelled alarms in ship owners to try and figure out how to limit their liability under common law. Hague-Visby Rules essentially establishes a maritime regime that revolves on carriage of goods as per Article 10 (1) a- c, which contains contracts that involve common carriage, sea transportation of goods, the bills of lading and way bills. Article 1 of the HVR, provides that “the carriage of goods covers the period from the time when the goods are loaded until the day they are discharged from the ship”. This for all intents and purposes means that it is during this set period that a carrier is responsible for the good and these raise the questions of uncertainty on when exactly is he responsible if it does not fall within the definition. The HVR however makes provides that a carrier is responsible in making the ship sea worthy and care for the cargo (Shephard 2007). This therefore means responsibility is limited to the acts of a carrier during the voyage of shipping and once delivery is made then he is discharged from obligations of the goods. Article 2, of the HVR, highlights the limits and actions that can make a carrier responsible in actions such as loading, stowage, custody, care and discharge. The HVR rules however tends to provide for exceptions when a carrier cannot be liable for the goods that is where the loss or damage has been occasioned by unseaworthiness unless it is caused by the breach of the carrier failing to observe due diligence obligations. The second limb is when it is caused by the mariner, pilot or servants of carrier during navigation or in the management of the ship or those caused by fire. Article 4(1) of HVR provides that the burden of proof is on the claimant that the damage was caused by unseaworthiness. Article 4 (2) provides for instances where neither the carrier nor the ship shall be responsible for loss or damage. The division of responsibility and cargo liability is a great mode giving the carrier limit to the extent of his liability as to the cargo. Immunity is an element that is essential in necessitating the division because he is exempted from liability if the loss or damage is occasioned by the agents or servants. The responsibilities and liability are to be isolated because not all responsibilities can necessarily give rise to liability, for instance loading is a responsibility but failure to load does not occasion damage but an omission to act (Wiswall 2008). Article III rule 8 of the HVR provides that; “Any clause or covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or failure in the duties and obligations provided in this article or lessening such liability otherwise than provided in these Rule, shall be null and void and of no effect. A benefit of insurance in favour of the carrier similar clause shall be deemed to be a clause relieving the carrier from liability” This provision that contractual agreements that limit the carrier’s liability are to be considered null and void, are to ensure that only acts provided for are not included in the agreement. The HVR rule is considered a binding rule under International law and if parties are to make their own provisions as regards their conditions to status of liability then the use of HVR would be an exercise in futility. Agreements moreover can inhibit the immunity granted to shippers as regards the provisions of Article IV that is it can widen or reduce the scope of liability. According to the Foreign and Commonwealth office (2009), some immunity is granted to shippers as provided for under the Tribunal of the law of the sea. It mainly seeks to determine the liability of parties as regards liability of the parties. The regime of liability in cargo shipping needs a proper guiding mechanisms and left in hands of parties who can manipulate the system to establish their own agreements. I would contend that making this rule played a part in stating that no person can contract on the basis of liability as this would bring us back to the rule established in Smith v. Shepherd that where no clause is found or agreement then full responsibility would be accorded to the ship owner (Cain 2011). There is however a limit on when a suit can be brought on liability in cases involving the Bill of lading, in instances where it has exceeded the one year limit (Sayer 2012) then liability issues would be considered to have been waived as against the carrier. CONCLUSION It can be generally inferred from the discussions that establishing a maritime regime that encompasses all the aspects required for carriage of goods has proved to be a daunting task for all parties involved, that is carries, agents, masters, underwriters, bankers and even states generally (Farthing & Brownrigg 1997). The complexity of adopting International rules into local laws essentially creates an environment where the local rules supersede international rules for instance paramountcy clauses are not required in the HVR rules but are enforceable under the local laws (Force & Davies 2008). LIST OF REFERENCES LIST OF BOOKS Baughen, S., 2009. Shipping Law, 4th edn. Abington: Routledge-Candevish. Bundock, M., 2007. Shipping Law Handbook, 4th edn. London: Informa Law. Cain, P., 2011. Maritime Law Study Guide: Maritime Cargo Claims legal sequence. Launceston: Australia Maritime College. Commonwealth of Australia. 2009. Excerpts from the carriage of goods by sea act 1991. Australian government attorney general’s department. Davies, M., & Dickey, A., 2004. Shipping Law, 3rd edn, Sydney: Law Book Company. Farthing, B., & Brownrigg, M., 1997. Farthing on International Shipping, 3rd edn. London: Lloyd’s of London Press. Force,R., & Davies, M., 2008. Jurisdiction and Forum Selection in International Maritime Law: Essays in Jurisdiction. London: Kluwer Law International. Foreign and Commonwealth Office. .2009. Agreement on the privileges and immunities of the international Tribunal for The Law of The Sea: 1 July 1997. New York Mandraka-Sheppard, A., 2007, Modern Maritime Law: and Risk Management, 2nd edn. London: Routledge-Candevish. Margetson, S.W., 2008. The History of the Hague-Visby Rules in Apects of Maritime law: claims under bills of lading. Netherlands: Kluwer Law International. Morris, J.H.C., 2005. The Conflict of Laws, 6th edn. London: Sweet & Maxwell. Sheppard, M., 2007. Modern Maritime Law and Risk Management, 2nd edn. London: Routledge-Candevish. Singapore Logistics Association. 2006. The Practitioner’s Definitive Guide: Multimodal Transport. Singapore: Singapore Logistics Association. Todd, P., 2007. Bills of Lading and Bankers’ Documentary Credits, 4th edn. Informa Law, London. Department of Maritime and Logistics Management – Maritime Law JNB253 10 Wiswall, F.L., 2008. The Development of Admiralty Jurisdiction and Practice since 1800. London: Cambridge University press. JOURNALS Collier, J.G., 1982. Conflict of Laws; Carriage of Goods by Sea-Hague-Visby-rules contracting out, The Cambridge Law Journal, 41 (2). Soyer, B., 2012. A New International Regime for Carriage of Goods at Sea, Berkeley journal of international law. Rhidian, T., 2010. The Position of Shippers Under the Rottedam Rules, Journal of Commercial Contract, 2, p. 22-27. LEGISLATION Baltic and International Maritime Council, 2010 BIMCO Liner Bill of Lading (CONLINBILL 2000) Carriage of Sea by Goods Act, 1992, (AHR) Carriage of Goods by Sea Amendment Act, 1997, (Cth) Carriage of Goods by Sea Regulations, 1998, (Cth) Protocol of Signature, Australian Government Attorney-General's Department, INTERNATIONAL CONVENTIONS International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, (Hague Rules), 1924, Brussels The Hague Rules 1924, as amended by the “Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading”, adopted at Brussels, February 23, 1968” by “Hague-Visby Rules, 1968” Read More