Liabilities of Carriers of Carriage of Goods by Sea under Hague, Hague-Visby Rules and Common Law - Essay Example

Liabilities of Carriers of Carriage of goods by sea under Hague, Hague- Visby rules and Common law A Comparative Study 1 Introduction The carriage of goods by sea was one of the earliest forms of human commercial endeavors. To this day, the carriage of goods via the sea remains one of the most challenging areas of legal practice, and, of course, it is most money-spinning way also. But it is to be noted that, the carriers had strict liability on the goods they carried for the shippers from the days the means of this lucrative discovered. However, as maritime trade and commerce increased, they increasingly demanded to be exempted from the much-abused term known as “acts of God”, or “Gods”, depending on your religious persuasion, instances of force majeure, inherent vice of the goods and the faults of the shippers. These exceptions were stated in the Acts of Lading, making carriers an almost untouchable lot. Later on their insistence led to a free-for-all in contract negotiation, and to carriers claiming and securing exception from almost all manner and form liability, even negligence. This led to the decision of the maritime stakeholders to have some form of control to prevent widespread abuse of claims arising from this situation. At the International Conference on Maritime Law held at Brussels in October 1922, (1) the delegates at the conference, agreed unanimously to recommend their respective government to adopt as the basis of a convention a draft convention for the unification of certain rules such as responsibilities, liabilities, rights and immunities attaching to carriers under the bills of lading. Bill of lading is a receipt of terms of the contract of carriage, which is generally evidenced by a document. This receipt is issued by the ship owner acknowledging that goods have been delivered to him for the purpose of carriage and the terms of the contract are incorporated in the bill of lading. In Great Britain the Draft Convention of 1923 was given statutory effect by the Carriage of Goods by Sea Act 1924. Subsequently the Draft Convention of 1923 was ------------------------------------------------------------------------------------------------------------ 1. Followed this, International Convention relating to the Unification of Certain Rules relating to Bills of Lading, adopted on 25 August 1924 at Brussels 2 signed at Brussels on the 25th of August, 1924; the Convention for the Unification of Certain Rules relating to bills of lading or The Hague Rules(2) was passed. In its bare essence, the Rules obliged carriers to provide seaworthy vessels at the beginning of the voyage and exercise due care for the goods throughout it(3) Thereafter, the U.K. Carriage of Goods by Sea Act of 1971 was passed to give effect to the protocol. The 1971 Act was brought into force in June 1977 and it repealed the 1924 Act and re-enacted the Hague Rules in their amended Hague Visby form.(4) Carriage contract and parties to the contract "Contract of carriage by sea" means any contract whereby the carrier undertakes against payment of freight to carry goods by sea from one port to another; The Carriage of Goods by Sea essentially deals with the contract of carriage between the shipper (and the consignee) and the carrier of the goods. It relates to contracts evidenced by bill of lading. Carriage of goods by sea contracts are recorded either in charter parties or in bills of lading. In either case, some common steps are involved, namely the fixing or booking of the contract, the provision of the vessel, the shipping of the goods, the issue of documents, the voyage, and the discharge of the goods and remedies.(nkcogmas)(5) Carriage is frequently the final step in a contract for the sale of goods. The shipper is often the vendor of the cargo. The ultimate consignee is often the buyer of the cargo. Risk and title to the goods will often pass during the course of the contract of carriage. The exact point at which risk and title pass, depends on the terms of the contract of sale and the intention of the parties. In Heskell v. Continental Express, (6) Carriage is described as the process which includes the functions of forwarding agents ------------------------------------------------------------------------------------------------------------ 2. ibid 1 3. Chairperson’s Remark, Forum of Carriage of goods by sea, Session 2, Revising COGSA 1950: Issues, Implications and Options, 8 March 2006 4. The Hague rules Amended by Brussals Protocol 1968 5. ibid 3 6. Heskell v. Continental Express [1950] 1 All E.R. 1033 3 and loading brokers. However, a contract which involves carriage by sea and also carriage by some other means is deemed to be a contract of carriage by sea for the purposes of this Convention only in so far as it relates to the carriage by sea. From above, it can be seen that by entering into a contract, the parties bound to act according to the terms of the contract, predominantly, the carrier of the goods. The importance of the liabilities of the carriers is rightly described in Sewell -v- Burdick (7)as a person who had had the bill of lading endorsed to him while the goods were at sea and who then chose to take advantage of his possession of the bill of lading to "take the position of full proprietor upon himself with its corresponding burdens if he thinks fit" "and that he actually does so as between himself and the ship-owner if and when he claims and takes delivery of the goods by virtue of that title. Even though the rights and liabilities of carriers in different legislations like Hague and Hague –Visby Rules and Common Law are same in the matter of seaworthiness, due care of goods etc., there are a number of differences apparent in their provisions. Now we shall scrutinize these differences. Difference in Liabilities of Carrier in various legislations Hague (8) Clause 6(B)(b)(i) of Hague rules states that "where no international convention or national law would apply , the liability of the Carrier for loss of or damage to the goods shall be determined: ------------------------------------------------------------------------------------------------------------ 7. Sewell -v- Burdick (1884) 10 App Cas 74 8. ibid 1 4 i) By the Hague Rules contained in the International Convention for the Unification of Certain Rules relating to Bills of Lading dated 25 August 1924, if the loss or damage is proved to have occurred at sea, for the purpose of this sub-paragraph the limitation of liability under the Hague Rules shall be deemed to be £100 Sterling, lawful money of the United Kingdom per package or unit. “ Moreover, Article III Rule 8, which enumerates that" any clause, 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 and otherwise than as provided in this convention, shall be null and void and of no effect" and article IV, Rule 5, which says that "neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding £100 per package or unit, or the equivalent of that sum in other currency ." In this regard in the Galileo (9) it was held that in the absence of express provision in a through bill of lading, the rule is that the contracting carrier will be liable for loss or damage on any part of the journey. Like this in Crawford v. Allan (10) it was held that Where the through bill of lading limits the carriers liability to the time during which the goods are in his possession, the shipper can only have a claim against the contracting carrier if the latter can prove that the loss or damage has occurred during that part of the transport undertaken by him. In Hague rules an ordinary bill of lading may be a “shipped” or a “received for shipment" bill. It means that the goods have not been shipped but have only been “received “into the carriers charge. When the goods are shipped, the carrier either endorses the “received” bill as “shipped” or gets back the “received” bill and issues a " ----------------------------------------------------------------------------------------------------------- 9. the Galileo I191JI A.C. 199 10. Crawford v. Allan Une S.S. Ltd. [1912] A.C. 130 5 shipped " one.(11) Pyrene Co. y. Sdndla Steam Navigation (12) is one of best example between the ‘shipped’ and the ‘received ‘ bill is that the latter in some countries is not a good tender under a c.i.f. contract of sale. Hague-Visby Rules (13) The Hague Rules as amended by the Visby Protocol of 1968 became effective in the UK on 23 June 1977 under the Carriage of Goods by Sea Act 1971.The Hague-Visby Rules apply to any bill of lading or similar document of title relating to the carriage of goods between ports in different states if: 1. the bill of lading is issued in a Contracting State; or 2. the carriage is from a port in a Contracting State; or 3. the contract contained in or evidenced by the bill of lading or a non-negotiable receipt expressly provides that the Rules shall govern the contract. Article 3 of this law laid down certain liabilities and responsibilities of Carrier. In this rule, first and foremost duty of the carrier is issuing a bill of lading which shows: a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts, provided such marks are stamped or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are contained, in such a manner as should ordinarily remain legible until the end of the voyage b) The apparent order and condition of the goods; c) either the number of packages or pieces or the quantity or weight of the goods, Provided that no carrier, master or agent of the carrier shall be bound to state or show ------------------------------------------------------------------------------------------------------------ 11. Carriage of Goods by Sea Act 1992 12. Pyrene Co. y. Sdndla Steam Navigation [1954] 2 Q.B. 402 13.1bid 4 6 in the bill of lading any marks, number, quantity or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking. The sea carrier must properly and carefully load, handle, stow, carry and discharge the goods. So a carrier considered to be regarded liable if cargo is received in good condition but discharged in bad condition. There is, however, a whole battery of exceptions which the carrier can rely on to deny liability. He must first establish cause of the loss, and show that the vessel was made seaworthy at the commencement of the voyage. Subsequent un seaworthiness is not material. In order to be seaworthy a vessel must be structurally and mechanically sound, equipped with navigational charts, properly crewed, and its holds must have been made fit and safe to receive cargo. But Article IV excludes the carrier in the following cases which are settled within excepted perils. (14) a) Act, neglect or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship. (b) Fire, unless caused by the actual fault or privity of the carrier. (c) Perils, dangers and accidents of the sea or other navigable waters. (d) Act of God. (e) Act of war. (f) Act of public enemies. (g) Arrest or restraint of princes, rulers or people, or seizure under legal process. (h) Quarantine restrictions. (i) Act or omission of the shipper or owner of the goods, his agent or representative. (j) Strikes or lockouts or stoppage or restraint of labour from whatever cause, whether ---------------------------------------------------------------------------------------------------------- 14. Aricle 4 of Hague Visby rules 7 partial or general. (k) Riots and civil commotions. (l) Saving or attempting to save life or property at sea. (m) Wastage in bulk of weight or any other loss or damage arising from inherent defect, quality or vice of the goods. (n) Insufficiency of packing. (o) Insufficiency or inadequacy of marks. (p) Latent defects not discoverable by due diligence. Hague-Visby rules lay down that any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. It is to be remembered that the carrier loses the benefits of the limits of liability if it can be proved that the loss or damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result. In Trafigura Beheer BV and Another v Mediterranean Shipping Co (SA) (The MSC Amsterdam) (15) the court agreed that an act of misdelivery is a particularly grave breach of a bill of lading contract and it is well established that an exclusion clause will protect a carrier only if it is drafted in such clear and unambiguous words as to make it plain that it applies to liability arising ------------------------------------------------------------------------------------------------------------ 15. Trafigura Beheer BV and Another v Mediterranean Shipping Co (SA) (The MSC Amsterdam) English Court of Appeal [2007] EWCA 8 from misdelivery of the cargo. The same has been followed in cases like, Glyn, Mills Currie & Co v East and West India Dock Co,(16) and Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd (17) etc. Common law (18) The international sale of goods involving carriage by sea involves difficulty at common law if the goods are lost or damaged by the carrier. The consignee or receiver is not a party to the contract of carriage and so cannot take action against the carrier for his loss. The transfer of the bill of lading transfers property in the goods but does not transfer the contract. The consignee or endorsee will have transferred to him the rights to claim against the carrier for loss or damage to the goods as though he had been an original contracting party. These rights are transferred irrespective of the time when he acquires title to the goods and even where the bill of lading comes into his hands after delivery of the goods to him. The receiver in whom rights under the contract of carriage are vested will become liable to the carrier under the contract of carriage as though he were an original party to the contract of carriage. (19).The problem is that there may be no contract between the carrier and the receiver, and the common law refused to take the view that the contract was transferred along with the bill of lading. In Thompson v. Dominy (20)this concept has been well described. ------------------------------------------------------------------------------------------------------------ 16. Glyn, Mills Currie & Co v East and West India Dock Co (1882) 7 App Cas 591, 17. Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959 AC 576 18. Indira Carr, Richard Kidner, Statutes and Conventions on International Trade 19. D.M. Day, Bernadette Griffin the Law of International Trade3Rev Ed edition 2003 20. Thompson v. Dominy – 1845 14 M & W 403 9 Under Common law carriers by water are the masters and owners of ships and steamboats engaged in the transportation of goods for persons generally for hire and lighter men, hoymen, barge-owners, ferrymen, canal boatmen and others employed in like manner are so considered. By the common law a common carrier is generally liable for all losses which may occur to property entrusted to his charge in the course of business, unless he can prove the loss happened in consequence of the act of God, or of the enemies of the United States, or by the act of the owner of the property. A common carrier of goods is in all cases entitled to demand the price of carriage before he receives the goods, and if not paid he may refuse to take charge of them; if, however, he take charge of them without the hire being paid he may afterwards recover it. The compensation which becomes due for the carriage of goods by sea is commonly called freight. The carrier is also entitled to a lien on the goods for his hire, which, however, he may waive; but if once waived, the right cannot be resumed. The consignor or shipper is commonly bound to the carrier for the hire or freight of goods. But whenever the consignee engages to pay it, he also becomes responsible. It is usual in bills of lading to state that the goods are to be delivered to the consignee or to his assigns, he or they paying freight, in which case the consignee and his assigns by accepting the goods impliedly become bound to pay the freight, and the fact that the consignor is also liable to pay it will not, in such case, make any difference. (21) Bamfield v Goole [1910] 2 KB 94 (22) is a good example of describing the carrier’s liability under common law in which it was held that it is a normal part of a carrier’s ------------------------------------------------------------------------------------------------------------ 21.ibid 18 22. Bamfield v Goole [1910] 2 KB 94 10 duties to take appropriate measures to avoid loss resulting from risks of which he is or should be aware. He assumes all risks of accidents attributable to a failure to carry in that manner. Common law undertakes the view regarding the provision of ‘shipped ‘and’’ received’, by enumerating where the contract of sale specifies a date for shipment, the seller does not fulfill his obligation by producing a document which shows, that the goods were “received for shipment" on the contract date. This view rightly lays down in Diamond Alkali Export Corp. v. Fl. Bourgeois (23) and in Chllds & Brothtn V. Adoiph Hirsch (24). From above we can evaluate that there are considerable differences in the provision of carriers’ liabilities under Hague, Hague-Visby Rules and Common Law, even though there has some coincidences, like exceptions under natural perils etc..The Hague Rules establish a mandatory legal regime governing the liability of a carrier for loss of or damage to goods carried under a bill of lading. In the Hague-Visby Rules and Common Law this binding nature of liabilities can be found. Conclusion The modern era has witness’s new amendments and new legislations’ regarding the carriage of goods by sea. Following the dissatisfaction of the overall allocation of responsibilities and risks achieved by the Hague Rules, which heavily favored carriers at the expense of shippers, Hague rules and its amendments Visby rules 1969 and the additional Protocol 1979 the United Nations Convention on the Carriage of Goods by Sea, 1978 (Hamburg),"Hamburg Rules" was adopted on 31 March 1978 by a diplomatic conference convened by the General Assembly of the United Nations at Hamburg, Federal Republic of ---------------------------------------------------------------------------------------------------------------- 23. Diamond Alkali Export Corp. v. Fl. Bourgeois [1921] 3 K.B. 443 24. Chllds & Brothtn V. Adoiph Hirsch (1923) 202 N.Y.S. 226(24). Germany. The Convention is based upon a draft prepared by the United Nations Commission on International Trade Law (UNCITRAL). The Hamburg Rules govern the rights and obligations of the parties to a contract of carriage regardless of whether or not a bill of lading has been issued. This is becoming increasingly important as more and more goods are carried under non-negotiable transport documents, rather than under bills of lading.(25)We can see in common law also, the subject matter of liabilities rose in many ways. To remedy the defect in the current law the Carriage of Goods by Sea Act 1992 has now been enacted. The previous regime embodied in the Bills of Lading Act 1855 is repealed. The new Act will apply to all bills of lading and waybills issued on or after the 16th September 1992. ********************************** ---------------------------------------------------------------------------------------------------------------- 25. UNCITRAL Secretariat Vienna International Centre, United Convention on Carriage of goods by sea (1978) ,Hamburg rules. Bibliography Books and Authors 1. Astle, W. E., Hague Rules law digest: a practical digest and comprehensive, cross-referenced index to leading British cases governing the interpretation of the Hague Rules, London: Fairplay Publications, c1981. 2. D.M. Day, Bernadette Griffin the Law of International Trade Publisher: LexisNexis UK; 3Rev Ed edition (11 Feb 2003) ISBN-10: 0406921830 3. Gaskell, N. J. J., Regina Asariotis and Yvonne Baatz, Bills of lading: law and contracts, London; Hong Kong: LLP, 2000. 4. Girvin, Stephen. Carriage of goods by sea, Oxford; New York: Oxford University Press, 2007. 5. Indira Carr, Richard Kidner, Statutes and Conventions on International Trade Publisher: Rout ledge Cavendish; 4Rev Ed edition (20 Oct 2003) ISBN-13: 978-1859418291 6. John Edward Robert Stephens, The law relating to bills of lading, London: The Syren & Shipping, 1908. 7. John F Wilson,., and Carriage of Goods by Sea (6th Revised edition) ISBN-13: 9781405846691 Publisher: Pearson Education Limited,Pub. Date: 15 Aug 2007 8. Karan Hakan, the Carriers Liability under International Maritime Conventions: The Hague, Hague-Visby and Hamburg Rules, by Publisher: Edwin Mellen Press Ltd (Mar 2005), ISBN-13: 978-0773461741 9. Milnes Holden, Payne, Payne’s Carriage by Sea , Butterworth Publications, London, 1954 xxvi, 179 & pp.15 10. Raoul P. Colinvaux, Carver on the Carriage of Goods by Sea, the Modern Law Review, Vol. 16, No. 2 (Apr., 1953), pp. 252-254, Blackwell Publishing 11. Richard Price, The Responsibility of a Carrier of Goods by Sea under the Laws of the Arabian Gulf States: "The Exceptions and the Rule”, ,Arab Law Quarterly, Vol. 2, No. 1 (Feb., 1987), pp. 29-33,doi:10.2307/3381905 12. Robert Goff, Unit Limitation of Carriers Liability by Erling Selvig, the International and Comparative Law Quarterly, Vol. 13, No. 2 (Apr., 1964), pp. 739-740 13. Stephen D. Girvin, Carriage of Goods by Sea, ISBN-13: 978-0-19-876458-8 Publication date: 25 January 2007, Oxford University Press, 2008 14. Wheeler, Everett Pepperrell, , The modern law of carriers; or, The limitation of the common-law liability of common carriers under the law merchant, statutes and special contracts. By Everett P. Wheeler, publ. New York, Baker, Voorhis & co., 1890. 15. W. P. E., Jr The Carriage of Goods by Sea Act,., Virginia Law Review, Vol. 23, No. 5 (Mar., 1937), pp. 590-600, doi:10.2307/1067823 Statutes 16. Carriage of Goods by Sea Act 1971 17. Carriage of Goods by Sea ACT 1 OF 1986 18. Carriage of Goods by Sea Act 1992 19. Carriage of Goods by Sea Amendment Bill 1997, Bills Digest No. 15 1997-98, 20. International Convention relating to the Unification of Certain Rules relating to Bills of Lading, adopted on 25 August 1924 at Brussels 21. The Hague-Visby Rules, The Hague Rules as Amended by the Brussels Protocol 1968 Journals and publications 22. A Guide to the Hague & Hague-Visby rules, London; New York: Lloyds of London Press Ltd., 1985. 23. Carriage of goods act 1992 Walton and Morse LLP, London August 1992 24. Chairperson’s Remark, Forum of Carriage of goods by sea, Session 2, Revising COGSA 1950: Issues, Implications and Options, 8 March 2006 25. Joseph E. Edwards, , What Constitutes “Package” or “Customary Freight Unit” Within Limitation of Liability Provision of COGSA, 27 A.L.R. Fed 661 (2005) 26. Percy Pallet International Trading Conventions, , PSL group 27. United Convention on Carriage of goods by sea (1978) ,Hamburg rules, UNCITRAL Secretariat Vienna International Centre Websites 28. www.fedcourt.gov.au Report on CGA, Hon. Justice James Allsop, and Federal Court of Australia 29. www.lawandsea.net If fundamental breach of the contract still exists. 30. www.lawlink.nsw.gov.au Report 25 (1976) - Frustrated Contracts, Part 8 - Excluded Contracts, Law Reform Commission, New South Wales. Table of Cases 1. Bamfield v Goole [1910] 2 KB 94 2. Chllds & Brothtn V Adoiph Hirsch (1923) 202 N.Y.S. 226(24) 3. Crawford v. Allan Une S.S. Ltd. [1912] A.C. 130 4. Diamond Alkali Export Corp. v. Fl. Bourgeois [1921] 3 K.B. 443 5. Heskell v. Continental Express [1950] 1 All E.R. 1033 6. Glyn, Mills Currie & Co v East and West India Dock Co (1882) 7 App Cas 591, 7. Pyrene Co. y. Sdndla Steam Navigation [1954] 2 Q.B. 402 8. Sewell -v- Burdick (1884) 10 App Cas 74 9. Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959 AC 576 10. the Galileo I191JI A.C. 199 11. Trafigura Beheer BV and Another v Mediterranean Shipping Co (SA) (The MSC Amsterdam) English Court of Appeal [2007] EWCA 12. Thompson v. Dominy – 1845 14 M & W 403 Read More