Bills of Lading and International Maritime Transport Regimes - Coursework Example

Bills of Lading and International maritime transport regimes Student: Student ID: Lecturer: Subject: Maritime Law Course: Date: Word Count: 3552 Table of contents Abstract …………………………………………………………………………………….2 Introduction……………………………………………………………………….…..……3 Historical background of Hague Visby Rules…………………………………………………4 Definition of specific terms…………………………………………………………….…...…4 Clauses………………………………………………………………………………….………6 (a) Paramount clause……………………………………………………………………………6 (b) Liberty clause………………………………………………………………………………..7 (c) Jurisdictional clause……………………………………………………………….…………7 Incorporation of the AHR into certain categories of sea carriage documents…………………..8 Categories of sea carriage documents that the AHR applies……………………………………9 Liability of the carrier as to the carriage of the goods in the sea…………………….………….10 Responsibility and risk for cargo liability……………………………………………………..…13 Conclusions………………………………………………………………………...…………….15 Bibliography………………………………………………………………………………......…16 Abstract This work is a reflection of the Maritime Law as in connection to bill of lading in the carriage of the goods by the sea. Under the consideration are the historical epoch and the subsequent developments of the same over the time. The first part of this essay introduces the substantive history of the maritime law and application as to the same. The prevailing international law on the bill of lading is The Hague’s Visby Rules and their subsequent amendment. These rules introduce an interesting part as to the liability of the carrier concerning the voyage of cargoes. This paper has laid a lot of emphasis on the same historical and the contemporary situation of the bill of lading. Introduction The origin of the contemporary Maritime law can traced from the of Admiralty law. The concern of admiralty law was criminal in nature; its application was restricted to the offences on the sea. Maritime Law changed by the time and started appreciating civil matters arising in the sea, and which were earlier dealt with in accordance to the common law. The admiralty court assumed jurisdiction as to the civil matters through the Admiralty Jurisdiction Act of 1389. As a result of the Admirals and the Superior Common Law Court, it led to the decline of the Admiralty Court and left with a few matters to handle (Sheppard 2007). Later, Admiralty Court Act of 1840 came into force, and it had the effect of abolishing the initial restrictions imposed by the Acts of the Richard II and widened the courts general jurisdiction but never reinstated the preceding jurisdiction as to the matters on contract, freight and charter parties. The broadened jurisdiction was provided for under section 6 of the Admiralty Court Act. Section 35 thereof provided on the proceeding in rem and proceeding in personam either against the ship, the owner or a person who had interest in the ship (Sheppard 2007). The origin of the Hague’s’ Visby Rules mainly draw from the law of United Kingdom as they were the people who had initially started developing the laws on the carriage of the goods in the sea. In 1920 the Imperial Shipping Committee was appointed on its report. The committee concluded that, they needed to come up with uniform legislation applying to all Commonwealth members as to the issue of ship-owner liability and this would be more inclined to the Canadian Water Carriage of Goods Act.1 Later, British took the initiative of launching the maritime committee with the same intention as to the uniform laws in the commonwealth country but also having regard to the International Maritime laws. In 1924 the committee was sought to prepare a report on the bill of lading and to present it before the Hague Conference of International law Association. The negotiations of Hague 1921 to Brussels 1924 made it a requirement of the commercial practice that, a received shipment had to be followed by issuance of bill of lading (Margetson et al. 2008). Currently, the admiralty law can either be found in the statutes, conventions or judicial decisions. Australia is a member of the common wealth and the law that was applicable was common law as it is to all other members. With time, the law kept on changing. The law, which is now applicable concerning sea in Australia, is Carriage of Goods by Sea Act of 1991. Immediately before this, the law applicable was Imperial Bills of Lading Act of 1855. The enactment was due to the technological advancement, commercial development and legal practice (Margetson 2008). Historical background of Hague’ Visby Rules The process of the establishment of the Hague Visby Rules was very relaxed and the amendments to that effect were also less effortless. In 1959 there were published a report in which it was purported that some provisions as to the bill of lading were unsatisfactory and it was consequently decided that amendment to that effect be made. The changes were made and signed in Visby (Visby Protocol). These changes were important as they introduced the concept of the carrier’s liability (Margetson 2008). Definitions of specific terms Bill of lading- this is a document that admits the receipt of the shipment of the goods. The document is issued by the transportation company to the shipper. The document also shows the vessel on which the consignment has been placed, the destination of such goods, the terms and the description of the goods (Baltic and International Maritime Council 2010). Vessels- this includes the barge, towing tug or tugs any alternate vessels, any craft, lighter, towboat and/or other vessels used as referred in the bill of lading. Carrier- must include the company called the carrier, the vessel used, operators, demise charterers, any alternate carrier and any other person as per the provisions of this acting as a carrier or a bailee. In the case of, Jian Sheng Co. Ltd. v The Trans Aspiration, the court ruled that, where the bill is signed for the master, it is ship-owners bill and the ship owner is the prima facie carrier. The court rejected the idea that both the charterer and the owner could be carrier. 2 Goods- shall mean the cargo accepted from the shipper. Person- shall include an individual, corporation, partnership and any other entity. The nature, effects and the operation of paramount clause, liberty clause and the jurisdiction clause in the bill of lading concerning international maritime and transport regime in Australia, is important to the understanding of the Maritime Law Regime. Clauses (a)Paramount clause The nature of the paramount clause in the bill of lading is that, the bill is subject to the requirements of the Carriage of Goods by Sea Act. For instance, Hague rules under the International Convention on the unification of the rules concerning the bill of lading as passed in that country of the delivery must apply. Without such laws in the country of the shipment, the corresponding laws in the country of the destination should be applied without consideration as to whether or not those laws only control the out bond consignment. If a both countries; that is, the country of delivery and that of destination have not enacted The Hague Visby Rules, then the Hague’s Visby Rules must apply to the purported contract. In the case of, Allianz Global Risks US Insurance Co. v Moosonee Trans. Ltd, the court sought whether the claim was under the Canadian Maritime Law or Civil code of Quebec, Court held that the claim was solely governed by the Canadian Maritime Law. Another issue that the court had to determine was whether the contract among the plaintiff and the intermediary and the clause contained therein.3 The court also considered the issue of whether the Hague Visby Rules were applicable and it held that the rules were not applicable. This, therefore, suggests that The Hague’s Visby Rules are only applicable where there is issuance of a bill of lading. The bill of lading and the appropriate levies of the carrier must have the effect only if the goods are in the custody of the carrier, his or her agents, servants and autonomous contractors. The lading bill also has the effect that the carriers liability shall be limited to the freight for the carriage covered under the bill of lading or as the provisions of the sub-clause 3(a) of the same. The nature of the liability as to the carrier, his servant and his agents shall not exceed the total loss of the cargo (Commonwealth of Australia 2009). (b) Liberty clause The provisions in bill of lading are such that, the voyage shall not be limited to the direction of the route. The scope of the voyage shall be taken to include any proceeding or going back, halting or slowing down at any of the ports or places for reasonable purpose connected to the transaction of voyage. The carrier, therefore, is absolved of any liability arising out of the route he was intended to use during the voyage or any steps that he makes so long as it is at the time to do so. (c) Jurisdiction clause The clause concern disputes and the manner of handling them, either having or have any nexus as to the bill of lading. Those disputes will only be handled by the courts and the law applicable in the place of business. In William Company v. Chu Kong Agency Co. Ltd. and Guangzhou Ocean Shipping Company, the plaintiff sought damages for loss and damage of its cargo.4 The defendants wanted a stay of the proceeding in favor of arbitration clause in china. The court found that, it was material fact that the parties had decided on negotiation in China. The bill of lading on the other hand contained an arbitration clause; the court determined whether those clauses were void. The court held that the claimant had the choice as either to arbitration or litigation in China. The court issued the stay of the proceedings. Incorporation of the AHR into certain categories of sea carriage documents AHR these initials represent Amended Hague Visby Rules as amended by the Brussels Protocol of 1968 in a conference in 1968. The intention of the amendment was to regulate several exclusion clauses that were introduced in the bills of lading by the carrier. Article 1 (a) of the Amended Hague Rules provide for the Bill of Lading. This document is equivalent to the document of title and applies only to the contracts of carriage of the goods by the sea. The bill of lading has the effect of regulating the relations as among the carrier and the owner of the goods (Bundock 2007). Article 3(7) on loading the goods that the bill of lading, which is in possession of the carrier, master, or its agent of the goods, is to be given to the shipper if he or she so demands. If the shipper had previously taken any document as to the title of the goods, he shall surrender such document to the carrier, master or its agents. This document should have the name of the ship or ships on which the goods are carried, date or dates of shipment and such requirement as laid out in Article III paragraph 3. Categories of sea carriage documents that the AHR applies The rules that are to applied to the bill of lading mentioned in the article and also other bill of lading not expressly provided for in the rules. By implication, therefore, documents in electronic form and non negotiable documents concerning the transportation of goods through the sea will be dealt with under these rules. This is well demonstrated below (Todd 2007). In Australia, the Amended Hague Rules are effected through the Carriage of Goods by Sea Act of 1991. These rules form part of the Act under schedule 1 to the act. Under the Carriage of Goods by Sea Regulations of 1998, which are effected through the virtue of section 22 and section 7 of the COGSA modified the operation of the Amended Hague Rules. They guaranteed the inclusion by the Carriage of Goods by the sea Act of various types of contracts of carriage like the sea waybills and consignment notes, and also include electronic documents of goods carried on the deck and those from terminal to terminal coverage (Todd 1998). The regulation amended section 11(1) of the COGSA. The regulation is to the effect that the applicable law as to the export bills of lading should reflect various export sea carriage documents that the COGSA relates. Article X makes provisions that; AHR shall be relevant to all bill of lading involving transportation of goods between two states. Bill of lading is to be issued in the contracting state, which means the state where the contract was made and also the state from which the carriage is from. The contract contained in the bill of lading is to be governed by rules or laws of either the state in executing the contract. Liability of the carrier as to the carriage of the goods in the sea This part will seek to clarify the responsibility and the risk of cargo liability as provided for under The Hague Visby Rules. Apart from exemption clauses as outlined in The Hague Visby Rules, the carrier is held to be legally responsible for the damage of the goods and will. Where there is a loss or damage as to the goods the carrier has an obligation to compensate fully the owner of the goods. As the transactions involve a lot of money, the carrier mostly tries to limit his liability. Before the coming in force of The Hague Rules the bill of lading contained provisions limiting the carrier’s liability to very low amounts (Margetson 2008). The question as to the responsibility of the carrier is not only handled under the provisions of Hague’s Visby Rules, but the concern extends to other regimes of law. Nevertheless, the concern and the law to guide this part are the provisions of the Hague Visby Rules. Article III of The Hague’s Visby Rules make provisions that seek to answer this question (Singer 2010). The set of the laws concerning the due diligence to be applied for sea worthiness are far much above the ground, difficult and uncompromising. It is only in very special circumstances that the law gives leeway for a defect to be ignored and intend to escape from the liability. The acknowledgment relates to the due diligence of builder of the ship and or the previous owner from whom the ship was acquired (Bennett 2009). The due diligence extends to his or her failure to detect the defect while acquiring the ship, the carrier or the owner of the ship is or was expected to make the discovery of the defect under the principle of the due diligence that incapacitates the ship for sea worthiness. This duty is not delegable and the subsequent fact is that the carrier will be accountable for faults of his servants and/ or agents connected to the exercise of the due diligence to make the ship seaworthy. It is not possible under the law to opt out of the contract with the intention of evading the duty of due diligence (Yiannopoulos 1995). There is no agreement as to whether the duty to properly and carefully pack and stow the cargo can be passed to a third party. In the case of, Jordan II, claimers contended that, the defendants the owners of the ship damaged their cargo through defective loading, stowage and discharge. Their argument was that they were not accountable for the cargo since they had transferred their responsibility to the charterers as to the terms of the charter party and the bills of lading and as per the requirement of a.3 r. 2 of the Hague Visby Rules and farther that, the agreement to transfer responsibility to them was null and void. The House of Lords held that the transfer of the responsibility for loading and stowing was considered acceptable. It therefore, emerges that under the English Common law, the third parties bill of lading holders may be harmed by the existence of the clause between the shipper and the carrier provided they had the knowledge of the same. The American law has a variety of authorities concerning the issue at hand. These various authorities raise the issue of the intendment of the drafters of The Hague’s Visby Rules to come up with the duty that was inconsistent with the prevailing commercial practice.5 The provisions of article III rule 8 of Hague Visby Rules fail to accord to the existing commercial practice. The Common Law decisions as to the issues are more relaxed. In the Jordan II case, the comments by one of the judges were that, though this case does not create a concrete rule on the interpretation of Article III rule 2 of the Hague Visby Rules, depict the market willingness to deviate from a rigid interpretation of the rule in recognition of parties rights to transfer liabilities. There is also an indication that courts themselves are unwilling to alter prior and the prevailing interpretation of the rule and disturb market certainty, unless there is an explicit justification (Aikens, Lord & Bools 2006). Though these provisions are straight forward the consequences may be illogical. An issue may arise concerning the application of HVR where the shipper in accordance with the common commercial practice, agrees to load and stow, would be able to effectively hold the carrier liable for damage occasioned by the shipper’s failure to perform his part of the contract properly. If the meaning of the word is clear but effect an absurd result then the objective interpretation has failed. The provisions of a.3 r.2 on the other hand provide an important clause on the carrier that, except as provided for under article, was responsible for seeing that everything required for loading, handling, stowage, carriage, custody and unloading was provided for the goods to be carried. The inclusion of every clause permitting the ship-owner, without incurring responsibility, to fail in the essential duty of overseeing the preservation of the goods from the point of view of effective stowage, loading, and unloading was null void. That was the main element of the convention because it was in this way that, in the past, the use of immunity clauses had led to one of the greatest reproach. The contract as between the carrier and a shipper containing a clause that the shipper will load and stow is not immunity but a common commercial practice. Responsibility and risk for cargo liability This article is to the effect that the carrier cannot lawfully lessen its liability beyond that which is provided by HVR. According to this article, the carrier will be wholly to blame for any loss, damage in connection of the goods on voyage arising out of carelessness, mistake, or failure in the duties in this article. The liability will only be absolved by insurance in favor of the carrier or similar clause shall be deemed to be a clause relieving the carrier from liability. As demonstrated earlier, though the intention of this a. r. 8 is clear, the area of contention arise on what would happen when there is an agreement between the carrier and the shipper concerning the loading of the cargo would under the reliance of this Article ,not stand in case of any liability arising, concerning the loading of the goods. To the contrary, this would fail on the basis of the common practice of commercial law. Conclusions It has been seen that the Maritime law borrow heavily from the English statutes, common law decisions and from International Maritime Law on the carriage of the goods by the sea. As such, maritime law is not a contemporary issue and in deciding cases hereunder, necessary regard has to be given to the earlier decisions onto the same issue as the precedents to that effect are important aspect on the carriage of goods by sea laws. The international Maritime Law is commonly based on the Hague Visby Rules and the concerns of the above statement have been addressed in the construction and application of Article III rule 8. The courts followed the common commercial practice in existence and said that if the sub article was to be applied the way, it would result to an absurd outcome. It is, however, clear that in the absence of regard to the HVR, the law of either the countries involved in the transaction of the carriage by the sea could apply. Bibliography Books Aikens, R, Lord, R, Bools, M, 2006, Bills of Lading, Informa Law, London. Bennett, WP, 2009, the History and Present Position of the Bill of Lading as a Document of Title of Goods, Cornell University Library, New York. Bools, M, 1998, The Bills of Lading, a Document of Title to Goods, Informa publishers, London. Bundock, M., 2007, Shipping Law Handbook, 4th edn, Informa, London. Pp 263-304. Margetson S, Hendriske N, & Kluwer Law International, the Netherlands, 2008, The history of The Hague (Visby) Rules in Aspect of Maritime Law: Claims under Bills of Lading eds. Pp 1-14. Sheppard, M., 2007, Modern Maritime Law: and Risk Management 2nd edn, Routledge-Cavendish, London. Singer, JC, 2010, Liner Bills of Lading and the International Law Convention for the Unification of Certain Rules Relating to Bills of Lading:, Making of Modern Law, London. Todd, P, 2007, Bills of Lading and Bankers’ Documentary Credits, 4th edn, Informa Law, London. Yiannopoulos, A, 1995, Ocean Bills Of Lading: Traditional Forms Substitutes, and EDI Systems, 1st edn, Springer, New York. Statutes The Carriage of Goods by Sea Act, 1924 Canadian Water Carriage of Goods Act of 1910 Carriage of Goods by Sea Act of 1991 Imperial Bills of Lading Act of 1855 Admiralty Court Act of 1840 Canadian Water Carriage of Goods Act International law The Hague-Visby Rules - The Hague Rules as Amended by the Brussels Protocol 1968. Cases Allianz Global Risks US Insurance Co. v Moosonee Trans. Ltd., 2009 QCCQ 7569 canlii.org/fr/qc/qccq/doc/2009 accessed at 6th April 13, 2012 William Company v. Chu Kong Agency Co. Ltd. and Guangzhou Ocean Shipping Company [2004] All ER (D) 388 (Nov) Jindal Iron and Steel Co. Ltd. and Others V. Islamic Solidarity Shipping Co. Jordan Inc. [2005] 1 LLOYD'S REP. 57; [2004] UKHL 49 Electronic materials Baltic and International Maritime Council, 2010, BIMCO Liner Bill of Lading - Code name: “CONLINEBILL2000” Baltic and International Maritime Council, https://www.bimco.org/-/media/Document/Document-Samples/Bill-of-ladings/Sample-copy-COLLINEBILL-2000.ashx, accessed 10 January 2010. Commonwealth of Australia 2009, Excerpts from Carriage of Goods by Sea Act 1991, Australian Government Attorney-General’s Department, http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/all/search/6A35287D8BFCC191CA25753F001EE06D , accessed 2 October 2009. Margetson, N, 2008 the Liability of the Carrier under The Hague (Visby) Rules for Cargo Damage caused by the unseaworthiness of its Containers, http://www.pomorci.com/Skole/Pomors, accessed 7th April 13, 2012. Read More