Evaluating Rotterdam Rules - Essay Example

Evaluating Rotterdam Rules with respect to the changes it will make in comparison to the old Hague-visby and Hamburg rules. Executive summary In keeping with the intricacies and complexities of modern sea trade in the 21st century, the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea also known as the Rotterdam Rules has been adopted by the UN since December 2008. After its enforcement, the archaic Hague , Hague Visby and even the Hamburg laws have been supplanted by this Rotterdam Rules whose main objective is to lent uniformity and standardization in the burgeoning global sea trade business which accounts for the bulk of all kinds of business done on an international scale. With different countries following their own choicest laws to protect and further their own commercial interests, global sea trade has been thrown into a quagmire of anarchy and gross malpractices which need to be thoroughly cleansed before accountability and responsibility fixtures are made. While the shipper and the ship owners had added responsibilities under the new Rules, it is also envisaged to introduce modern communication and technological innovations including e-commerce documentation, have sound laws for container movements and also bring in new laws and conventions that could fill the gaps left in the previous Shipping rules, especially with regard to Deck Cargo and balancing of risks and responsibility among the various players in the sea trade. It is widely believed that with more and more countries signing up for the Rotterdam Rules, it would fulfil its role as a precursor of robust and rule based transportation of Carriage of Goods Wholly or Partly by Sea. Evaluating Rotterdam Rules with respect to the changes it will make in comparison to the old Hague-visby and Hamburg rules. Introduction: “The Rotterdam Rules are the direct and natural result of the deregulation and reforms that have been a boon to shippers, allowing for the flexibility and customized transportation central to any efficient supply chain.” (Rotterdam Rules, 2009). The Hague rules and the Hague-Visby rules and the Hamburg rules are replaced by “the Rotterdam rules.” (The Rotterdam Rules – How are They Different from the Hague Visby Regime? 2009). The reason for the replacement was that the old versions did not included criteria for the carriage of goods in containers and transferring electronic data. This was the main reason that made the court of law to reinvent the old versions of law. Based on the new convention the Rotterdam rules that are applied for carriage of goods through sea are lined as follows; a. Liability clarifications: The Rotterdam rules clearly states the responsibility and accountability in certain situations where the container are stolen or if any damages happen to the ship. The other parties who are involved in the chain are also liable for the loss that happens while the goods are carried through sea. All these conditions were not included in the Hague rules and the Hague-Visby rules and the Hamburg rules. “The Ordinance of Rotterdam of 1721 declared that the owners should not be answerable for any act of the master done without their order, any further than their part of the ship amounted to; and by other articles of the same ordinance it was provided that each part-owner should be liable for the value of his own share.” (The Main V. Williams, 152 US 122 – Supreme Court 1894, 2010). The liability of the carrier in case of damages to the carrier has been increased as per Rotterdam rules “as well as provide for modern industry needs in terms of door-to-door carriage.” (Rotterdam Rules Signing Event, 2009). The obligation of the shipper in arranging the goods in time for the transport has also been clearly stated in the Rotterdam rules. The goods that are loaded into the containers for the purpose of the shipment must be verified and make sure that they can hold up the sea journey. If any damages happen there will be certain procedures for the claim and all such procedure are made easy in this rule. The time bar for the countries has been increased. The extension is given to those countries who are practicing rules of Hague and Hague-Visby rules and that have more number of states in contract. The extension for the time bar is been provided from one to two year. As per the Rotterdam rules it is said that the transport document must include the name and address of the carrier and the time when the transporting process is done. b. Transportation through land and sea: The transportation of goods through sea involves certain contract. The Rotterdam rules are also applied to the contracts that are involved in the transportation of goods through the sea and their following transportation through land. Here two modes of transportation are carried out with the help of a single contract and it includes the involvement of only one statutory government. “With the advent of carriage of goods in containers, the interest naturally focused on carriage from point-to-point whereby different modes of transport could be integrated in the same contract of carriage.” (Ramberg, n.d). c. E-commerce: A legal infrastructure has been developed by Rotterdam rules for practicing e-commerce in the area of maritime transport. By introducing the electronic documents for transportation, the Rotterdam rules is facilitating in document free transportation of goods. This will be easier in documenting the flow of goods using information technology than using paper. This helps in reducing the processing time and also reduces the chances of errors. This will help in lowering the cost incurred in the documentation process. Bill of lading is used to document the goods that are transported. “This usually arises when a ship owner, or other person authorized to act on his behalf employs his vessel as a general ship by advertising that he is willing to accept cargo from people for a particular voyage.” (Joglekar). These documents are handled between the parties instead of moving the goods. This “document may be lost or tampered; a documentary system is prone to fraud; and, importantly, at a certain stage the document must lose its function again.” (Ziel, n.d, p.376). So for avoiding this electronic documentation has been implemented. d. Improving the flow of cargo in ports: There are many options were the cargo can be stored if when the consignee fails to collect it. Providing such options will help in preventing congestion in ports. The port security matters the most. It involve numerous issues that are related to security of port, the issues related to the facilities provided to passengers and the issues related to the shipment of the cargo containers. The Rotterdam rules has been recommended by many big concerns such as the World Shipping Council (carriers that are sailed to and from the United States), European community Ship Owner’s Association (ECSA), the Shipping Organization BIMCO, the Committee Maritime International (CMI), the National Industrial Transportation Leagues (US Shippers), International Chamber of Commerce (ICC) and the International Chamber of Shipping (ICS). Demonstration of skills and methods: There are different types of skills and methods implemented in order to provide smooth flow of shipments that is concerned in the global sea transport. This section explains different skills and methods used in hague-visby and Hamburg rules and changes happen to this skills and methods when Rotterdam rules implemented. In Hague-visby rules these methods and skills are amendment in various articles. An important one is before and beginning of voyage one should make sure of these fixations that is ship should be seaworthy, equipment and proper man should be there in the ship. Besides that “make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.” (The Hague-Visby Rules – The Hague Rules as Amended by the Brussels Protocol 1968 Multilateral, 1968). While loading the carrier handling of the carrier must be very careful and very much care should be given, same is applicable while discharging the goods. Once the goods are received into the charge the person of the carrier it can be called as master or agent will issue a bill to the shipper. Marking or identification or stamping of goods is done afterwards. If goods are uncovered proper precaution for handling the goods are taken until the last part of journey. The shipper will guarantee the timing of the shipment of the product and shipper shall underwrite the carrier in case of any loss or damages occur at the time of travelling for the markings made on the product before beginning of the travel. In case if such issues happens then shipper shall be responsible. The methods also include some rights and immunities. That is ship shall be responsible for any kind of loss happening to products due to unseaworthiness. That is, it is prerequisite that goods need to get all kinds of facility while shipment. But there are some cases loss of goods happens due to act of god which can be any natural calamities, war, public enemies, riots and public commotions in such cases “neither the carrier nor the ship shall be responsible for loss or damage arising or resulting.” http://www.admiraltylaw.com/statutes/hague.html In short shipper may not be responsible for any loss or damage that happen apart from problems arising due to negligence or fault of the shipper. Another issue regarding with this is if any shipper try to save any life or sea property then loss arising from this for goods shipper will not be responsible. In case of Hamburg rules there are certain methods and skills employed. Method covers responsibility of carrier will remain applicable from loading of the goods to discharging of the goods. This is similar to above mentioned rules. The method followed in this rule also involves involvement of third party at the time of loading and unloading the goods. What this method says is at the time of discharge of goods from the ship after the voyage if the person for collecting the goods is not present then third party can collect the goods who is “pursuant to law or regulations applicable at the port of loading, the goods must be handed over for shipment.” http://www.admiraltylaw.com/statutes/hamburg.html If no one is there to collect the goods then there is a method suggested in this rule to put goods into disposal of the party who need to collect the goods. In case of liability method followed here is also some what similar to hague-visby rules. Loss or damage happen to the goods and delay in delivering of goods, for all sorts of these kinds of problems carrier is liable. Delay in delivering means goods not reached on time in port which is mentioned as in the agreement. There is method that if the goods not delivered on time then person who need to receive those goods can go for claim within sixty days. This kind of method is not there in hague-visby rules. In case of fire if goods are lost then inquiry will be done to see whether fire is caused due to negligence of agents or providers then they shall be responsible for loss of goods. In case fire was caught due to any problems happened in board of the ship or any other then detailed survey will take place in order to find out the exact reason for the fire. Another method suggested in this rule while carrying goods is that goods can be put in to the deck only in case there is an agreement carrier and shipper. There are special methods in Hamburg rules to carry dangerous products. It is done by marking on the product that is dangerous. It is done to provide awareness to shipper and carrier. Providing of bill of lading is done at the time transferring goods. Signature can be done by handwriting, by printing or putting stamp etc. Method following at the time of loss is same method followed in hague-visby rules. Rotterdam rules come into existences by replacing hague-visby rules and Hamburg rules. In Rotterdam rules some changes have been made and it is benefit to shippers. This “rules permit a rebalancing of the juridical relationship between carrier and shippers.” http://www.autf.fr/web/lister-page-detail_article-idArticle-63.html. The method followed in this rule is secure carrier. This has been achieved by having marine insurance, volume contracts and liability insurance. The use of marine insurance is it “normally insures the goods from the beginning of the transport until the delivery.” http://www.transportrecht.org/html/IntSymUNConv09e.pdf Chances of occurrence of events are common in between journey. The kind’s events are same as events mentioned in the Hague Visby rules. Events are act of God or natural calamities, terrorism, defective packing etc. In case of Hague Visby rules it is favourable to carriers if any problem happens in course of action. Here with this Shippers will be having more advantage. For any problems happened compensation will get from insurer. By volume contract what it means is there may be some special condition where shippers and carriers can have special service contracts regarding service and price. In case of liability of insurance it mentions about product insurance. There may be case that when dangerous product unlabeled it has dangerous then if any problems arise then that product won’t get any insurance. Such methods are there within this rule. Another issue within this is with this set of rules insurer as to bear some sort of costs if any problems arise. “Adopted by United Nations General Assembly in December 2008, the new Convention has a very broad scope, which applies to all door-to-door cargo movements provided there is an international sea leg.” http://www.tc.gc.ca/policy/report/acf/hamburg/menu.htm One of the main reasons why the need for Rotterdam rules has emanated is to lend conformity and uniformity in Carriage of goods by multimodal transport including Sea and land. Over the years, it is seen that the archaic and painfully outdated Visby rules, Hague Visby rules and even the Hamburg laws have failed to adequately address the myriad problems and issues that plague international trade. For instance, these laws even do not address the question of bank finance in trade, which is a major aspect in global business and also the need for a more constructive and solution centric approach to modern developments in the global shipping trade including containerization and increased used of modern technology and ecommerce benefits. The existing rules do not address issues connected with these modern facets of international shipping and thus there became a need for new laws to supplant and supersede these laws in order to lend credibility, uniformity and consistency in global trade business. “The critics of the Rotterdam Rules (their case will be presented in a later report) contend that the rules are weighted in favour of carriers and are biased against the cargo owners.” http://www.rotterdamrules.com/pdf/Questions-of-balance-in-the-Rotterdam-Rules-Lloyds-List-27-08-2009.pdf However, the main aspect of Rotterdam rules is to address solutions to various issues that may confront carriage of goods by sea and land or other modes of transport. Some of the major changes that is sought to institute over conventional treaties are as follows: 1. It seeks to pinpoint accountability and responsibility of losses or damages to goods more accurately and judiciously as compared to conventional laws 2. Stevedores would not play a larger role in the shipments which were not available during realer regimes 3. The carrier also assumes a greater degree of risk bearing capacity and major responsibility for goods. “The Rotterdam Rules significantly change the order and onus of proof for making a cargo claim against a carrier.” http://www.laa.asn.au/pdf/ldaarticles/AP1.pdf 4. In case of containerized movement of cargo it stipulates the modus operandi under which these are carried out safety and efficiently compared to earlier methods, which perhaps are silent on the aspect of container traffic movements 5. Claim procedures under Rotterdam rules are more flexible and in line with current applications. The processing of claims are also less complex when compared to earlier regimes 6. It advocates a high degree of use of e-commerce including electronic documents which are less burdensome and more effective, as compared to manual documents and obviates a great deal of paper documentation work . Thus, it saves time, efforts and encourages efficiency in documentation of sea transactions. 7. Perhaps one of the main advantages of the Rotterdam rules is that it sets forth the 8. principles under which either before, or after the transportation over land, the single point contract policy could be used that could cover the length of the entire voyage from loading to unloading at final destination, also including multimodal transport carriage like land, air , sea and surface transport – all these could be covered by a single contract. 9. Yet another major advantage could be in terms of the fact that it facilitates a closer legal environment and greater use of e-commerce in maritime transport. The entire documentation of the voyage could be carried out through the advanced use of ecommerce which would render it comparatively error free and efficient and speedy as compared to conventional methods. Thus, it is believed that a greater degree of autonomy and hassle free voyage for the goods could be predicted, especially when these are long voyages, replete with major risks of accidents, losses damages and spoilage of cargo due to inherent or manmade causes. 10. The tracking of the cargo is also a major factor that needs to be accounted through Rotterdam. This is done through use of modern technology through which it is possible to keep track of the contents in a container all along its movements along international seas and determine its eventual outcome. Sophisticated tracking devices using RFID technology are also useful in these tracking techniques, and are recommended by Rotterdam rules, in order to facilitate a greater use of technology for sea trade. Third Party protection: Under the Hague-Visby and the Hamburg Rules protection is granted only if a bill of lading is in favour of third party; “However, under the Rotterdam Rules instead in all situations excluded from their scope of application the Rules nevertheless apply in respect of parties other than the original contracting party, irrespective of a negotiable transport document (such as a bill of lading) or a negotiable electronic transport record being issued or not, as well as irrespective of any document being issued or not. “http://www.comitemaritime.org/draft/pdf/Comparative_analysis.pdf It is expected to be of substantial benefit for shippers, particularly those in developing and least-developed countries, which are consumers of transportation services. It is expected that harmonization and modernization of the legal regime in this area, which in many countries dates back to the 1920s or earlier, will lead to an overall reduction in transaction costs, increased predictability when problems are encountered, and greater commercial confidence when doing business internationally. “ http://www.unis.unvienna.org/unis/pressrels/2008/unisl121.html It is believed that the Rotterdam Rules would definitely usher in a climate of uniformity and consistency in international sea trade involving multimodal transportations. Again from a ship owner’s perspective, there would be a marked increase in extended increase for cargo liability claims because of: 1. the redundancy in the right of excuse of nautical miles 2. The need to exercise due diligence by carrier in making the ship fit to take sea voyages. “Unless the contract of carriage contains an exclusive choice of court agreement that complies with article 67 or 72, the plaintiff has the right to institute judicial proceedings under this Convention against the carrier.” (P. 30 : http://www.mcgill.ca/files/maritimelaw/Rotterdam_Rules.pdf 3. Extension in the limits to liability While these are the main additional responsibilities that has to be faced by the Ship-owners, the following rights also accrue : 1. The modernization of the liability regime, especially with regard to carriage of goods by sea addressed the lacuna in terms of “multimodal carriage”. http://www.uncitral.org/pdf/english/texts/transport/rotterdam_rules/ICS_PositionPaper.pdf 2. This extended to both upstream and downstream carriage of goods 3. Through greater use of e-commerce and paper less technology it is possible to greater efficiencies to be achieved, not only in terms of electron bill of lading etc, but also the obviation of postal services for sending documents, since this would be done through electronic mail systems. Thus an era where large part of the sea trade could be carried out without documentation hassles is being envisaged for the future. Conclusion: It is seen that the Rotterdam Rules would definitely set new milestones in carriage of goods through sea and multimodal transport systems, given its innumerable advantages and benefits over other conventional rules that have long become archaic and out of date, in the 21st century. Lack of a standardized approach to sea trade has always been a thorn in its flesh, and the Rotterdam rule is suggestive of improving and enhancing overall efficiencies in this direction. However, it needs to be well supported and endorsed by major sea faring countries including the US, UK, Japan and other major sea trading countries. Reference List Rotterdam Rules, 2009. The Journal of Commerce Magazine – News Story. [online]. Available at: http://www.joc.com/node/412276 [Accessed 4 December 2009]. The Rotterdam Rules – How are They Different from the Hague Visby Regime? 2009. Encyclopedia.com. [online]. Available at: http://www.encyclopedia.com/doc/1G1-201558152.html [Accessed 4 December 2009]. The Main V. Williams, 152 US 122 – Supreme Court 1894, 2010. Google. [online]. Available at: http://scholar.google.co.in/scholar_case?case=4784991318819244206&q=%E2%80%98ROTTERDAM+RULES%E2%80%99+IN+MARITIME+TRANSPORT+OF+GOODS&hl=en&as_sdt=2002 [Accessed 4 December 2009]. Rotterdam Rules Signing Event, 2009. Port of Rotterdam. [online]. Available at: http://www.portofrotterdam.com/en/news/pressreleases/2009/20090401_02.jsp [Accessed 4 December 2009]. Ramberg, J., n.d. Global Unification of Transport Law: A Hopeless Task? HeinOnline. [online]. Available at: http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/psilr27&div=39&id=&page= [Accessed 4 December 2009]. Joglekar, P., n.d. 5th Year Law Student of I.L.S. Law College, Pune. Legal Service India.com. [online]. Available at: http://www.legalserviceindia.com/articles/billoflad.htm [Accessed 4 December 2009]. Ziel, G.V.D., n.d. Chapter 10 of the Rotterdam Rules: Control of Goods in Transit. Texas International Law Journal, [online]. 44 (375). Available at: http://tilj.org/docs/Van_Der_Ziel,_44_Tex._Intl_L.J._375.pdf [Accessed 4 December 2009]. The Hague-Visby Rules – The Hague Rules as Amended by the Brussels Protocol 1968 Multilateral, 1968. Lex Mercatoria. [online]. Available at: http://www.jus.uio.no/lm/sea.carriage.hague.visby.rules.1968/doc.html [Accessed 4 December 2009]. Read More