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Published: Fri, 02 Feb 2018
Hamburg rules for international carriage
General acceptance by the trading nations of the world of the hamburg rules for international carriage by sea would consitute a huge breakthrough in the reform of the law of international carriage.
In a world comprising cargo owning nations, and ship owning nations, and where most nations are both, there is a continual balancing of risk allocation concerning the damage or loss of sea-borne cargo. Therefore, on the fields of international maritime law, the international law community such as United nation has sought uniformity and harmonization on cargo liability that would equitably address the often-conflicting interests of shippers and carriers. Historically, there have been several well known attempts at establishing uniform international law in this field, including: the Hague Rules (1924); the Hague/Visby Rules (1968); the Hamburg Rules (1978); and so forth. However, it is not likely to be resolved with all parties satisfied. During the 1970’s pressure mounted from developing countries and major shipper nations for a full re-examination of cargo liability regimes in Hague-visby Rules.The Hamburg Rules establishes a relative uniform legal regime governing the rights and obligations of shippers, carriers and consignees under a contract of carriage of goods by sea. It was prepared at the request of developing countries, and its adoption by States has been endorsed by such intergovernmental organizations as the United Nations Conference on Trade and Development (UNCTAD), the Organization of American States (OAS) and the Asian-African Legal Consultative Committee (AALCO). A draft of the Convention was prepared by UNCITRAL and finalized and adopted by a diplomatic conference on 31 March 1978. There are many countries incorporating the Hamburg Rules into their national law in search for better protection for the goods owner.However,did it achieve the best balance between the carrier and goods owner? “The most each interested party could hope for is a ‘best possible alternative: a ‘win, win’ situation.’ Is this likely to be achieved under the possible introduction of the Hamburg Rules which came into force internationally on the 1st,November, 1992?”
Afterthe Hamburg Rules entered into force which brought about a system of liability which is significantly different from that of the Hague and Hague-visby.
Therefore, this paper will fisrt discusses the progress of Hamburg Rules as compared with the existing convention relating to carriage by sea in several aspects specially on carrier’s liability, then it will give a glance at the development of the new UN convention-Rotterdam Rules.
Comparing Hague/Visby Rules with Hamburg Conventions
The history of the development
The Hague Rules are the result of the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading. It was signed at Brussels on August 25, 1924. The Convention marked the culmination of negotiations that had been in progress for some years under the auspices of the International Law Association. The rules were designed to bring certainty and legal uniformity to what was then, as it is today, the most important conduit of international trade in corporeal moveable property.
The Hague rules became known as the Hague/Visby rules on the adoption of The Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading. This protocol was adopted to amend the original treaty in Brussels in 1968. It came into force on June 23 1977. These amendments were conducted under the auspices of the Comité Maritime International, and were largely negotiated in a conference in Stockholm in 1963. They do not stand alone as an independent set of rules, but act only to modify the pre-existing Hague structure. The rules are therefore known as the Hague/Visby rules and will be so referred in this paper.
The Hague/Visby rules were further amended by the Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading (August 25, 1924, as Amended by the Protocol of February 23, 1968). The main development of this amendment was to adopt a new basic accounting unit, which had been poincaré gold francs, but would now be Special Drawing Rights of the International Monetary Fund.
The Hamburg Rules are the result of the United Nations Convention on the Carriage of Goods by Sea, which was adopted in Hamburg on March 31, 1978 and came into force on November 1, 1992. They were drafted largely as an answer to the concerns of developing nations that the Hague rules were unfair in some respects. These concerns stemmed mainly from the fact that they were seen to be drawn up by the mainly ‘colonial maritime nations’ and had the purpose of safeguarding and propagating their interests at the expense of other nations. The United Nations responded to this concern by drafting the Hamburg Rules. The Hamburg rules are far more than a simple amending of the Hague/Visby regime and came up with a completely different approach to liability. Under the Hamburg Rules, it is the carrier that is responsible for the loss or damage of all goods unless they can prove that they took all reasonable steps to avoid the loss.
The rules are also updated to take note of new technology, new cargos and new issues that can lead to losses being incurred. The Hamburg Rules have not been an overwhelming success and although the Convention has been in force since 1992, non of the major trading or shipping nations have signed up. According to the OECD , the Hamburg Rules are held to govern less than five per cent of global shipping. This may be due to the concerns held by many in the industry that the Hamburg Rules are unnecessarily hard on ship owners and have over-compensated in their attempt to create a fairer balance between the parties to such contracts.
Therefore it can be seen that there are two main regimes in international law that govern the carriage of goods by sea. They have evolved and grown steadily since 1924 when the first set of rules were signed, and have consistently extended the scope of their application as the needs of the shipping industry demanded. From the original concept of Bills of Lading, it is now possible for myriad contracts of carriage, each with its own characteristics, advantages and disadvantages to be used. While the rules have evolved and grown up in response to the same issues, there are important differences between them.
Some loophole in the Hague/visby system
The Hague/Visby rules, being the older and therefore more traditional regime under which shipping has been carried out, are in force over most of the world. Thus far, the Hamburg Rules have only have only been given effect by twenty-six shipping nations. Many nations will apply different rules in different circumstances depending on the rules applicable at the port of origin. Many European nations, while preferring the terms of the Hague/Visby rules, and applying these rules to outbound shipments, will allow the Hague rules to govern the shipment if the shipment originated in a country that applies the Hague but not Hague/Visby rules. It is accepted in such policies that the benefits of clear governing rules and uniformity outweigh the benefits that the Visby amendments confer. Many nations also apply their own local laws, which can be considerably modified from the international rules, to internal shipments that begin and end within their own jurisdiction.
Such complications in application are aggravated by the fact that different countries adopt the rules in different ways. There are countries such as France, that upon ratification of international conventions, need take no further action to incorporate that convention into national law. Then there are countries such as Canada and Australia that have not signed or ratified the Hague Convention and therefore are not considered contracting states. Yet they have enacted respectively the Marine Liability Act and the Carriage of Goods by Sea Act which are national statutes, which attach the Hague/Visby Rules as a schedule and in that way operate their shipping law. Here, they may comply very closely with the relevant international instrument without making themselves subject to it. Add to this the countries that have never signed or ratified the Hague, Hague/Visby or Hamburg conventions at all, have adopted no equivalent national legislation but nevertheless, are for all practical purposes bound by international provisions through the practice of incorporating the various international instruments, or the law of a contracting state party by reference in the bill of lading.
The Hague rules, before being amended by the Visby protocol were applicable under the principal of ex proprio vigore or by their own force, to contracts of carriage made by way of a bill of lading or similar document. This restriction on application is made clear by Article 1(b) which states:
‘ ‘Contract of carriage’ applies only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charterparty from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same.’
The Hague rules also had another potential restriction on their application. This stemmed from the use of paramount clauses. While Article 10 of the Hague Rules states,
‘The provisions of this Convention shall apply to all bills of lading issued in any of the contracting States’, this was often overruled by national implementing laws, where they were used, that required the bill of lading to contain a paramount clause expressly stipulating that the Hague Rules were to govern the contract. This was initially upheld by the Privy Council in the case of Vita Food Products Inc. v. Unus Shipping Co. Ltd. (The Hurry On) . However, it was soon distinguished and the Hague rules are now generally held to apply even if they do not contain a paramount clause.
The Visby rules made certain that such a possibility could no longer arise and changed the wording of Article 10 to the stronger phrase, ‘Each Contracting State shall apply the provisions…’ Likewise, national implementing legislation uses clearer words to give the Hague/Visby Rules ‘the force of law’. Also, it is now clear that paramount clauses are no longer required under the Hague/Visby rules and national legislation that previously referred to such clauses now no longer do so.
Article 10 of the Hague/Visby Rules lays out the conditions for the rules to be affective. It states that the rules apply if the goods are transported between two different States and:
“(a) a bill of lading is issued in a contracting state(b) the carriage begins in the port of a contracting state (c) the contract of carriage specifically incorporates the rules by reference.”
National law can extend the application of Hague/Visby to circumstances not otherwise covered by Article 10, for example, the UK extends Hague/Visby to non-negotiable receipts if they specifically refer to the rules themselves. National law can also apply the Hague/Visby rules to carriage that remains solely within that nation. This is currently operated by the Denmark, Finland, Norway and Sweden under the Nordic Maritime Code, and Canada also does this.
the progress in Hamburg Rules
The Hamburg Rules represent a clear attempt to avoid the problems of application that have arisen under the Hague/Visby rules. The first major change is found Article 2(1) which states:
“(1) that the rules apply to ‘all contracts of carriage by sea’ and not only to contracts entered by way of bills of lading when:
(a) the port of loading is in a contracting state
(b) the port of discharge is in a contracting state
(c) when any one of an optional group of ports of discharge is in a contracting state
(d) when the bill of lading or other contractual document is issued in a contracting state
(e) when the Hamburg Rules are incorporated by reference in the contract”
The most obvious difference between these rules and the Hague/Visby rules is the extension of application from only bills of lading to all contracts of carriage by sea. This not only extends the application of the rules, but also avoids the potential for disputes regarding what exactly a bill of lading is, and whether the contract in question comes within such a definition. Any rules which avoid potential ambiguity and dispute represent an improvement in the trading environment and thus this innovation in Article 2 of the Hamburg Convention should be welcomed.
There has been significant uncertainty under the Hague/Visby rules as to which contracts are covered by the rules. Articles 1(b) and 2 of Hague/Visby apply the rules to bills of lading and other similar documents of title. However, article 6 states that the use of non-negotiable receipts will only avoid the provisions of the rules under certain limited conditions. There are some other exceptions also mentioned and the fact is that there is some ambiguity regarding the exact range of operation of the Hague/Visby rules in this important area. It seems that while the rules genuinely intended to exclude non-negotiable receipts, they also did not want to allow the evasion of the rules by use of non-negotiable receipts in artificial or illegitimate situations.
Art. 2(1)(a) of the Hamburg Convention is a parallel to art. 10(b) of the Hague/Visby rules. There is however, no corresponding provision in Hague/Visby to art. 2(1)(b) which applies the Hamburg rules to all contracts where the port of origin is in a contracting state. While such a provision is found in the US Carriage of Goods by Sea Act it has not previously been seen in the international conventions and is therefore a novelty in this respect. Art. 2(1)(c) is simply a prudent clause to stop parties taking advantage of a choice of destination ports to avoid the provisions of the rules. The fairness may be called into question in cases where this provision were the only one to apply, it would mean that the Hamburg Rules had not been incorporated by reference, and the ship was travelling from a non-party state to another non-party state but had the option of delivering at a port in a state that is party to the Convention. On what grounds can the Hamburg Rules really claim to be the rightful governing rules of the contract? The answer is probably that certainty and uniformity of application is what is being sought. It is not a matter of which rules take over as the dominant global trading platform, but that the rules always apply in situations where they can be expected to apply. Like art. 10(a) of Hague/Visby, the Hamburg rules provide that where the contract is issued in a contracting state, the rules will apply. Similarly, when the rules are incorporated by reference in the contractual document itself, this will suffice to make the rules applicable. This rules is contained in art. 2(1)(e) and is similar to art 10(c) of the Hague/Visby Rules.
purpose of legislation
To look at the substantive differences between the Hague/Visby rules and the Hamburg Convention, I think it is important to look at the context and placement of the two sets of rules. It is only with respect to the conflicting interests of the parties involved can the rules, and especially the changes in them, be properly understood and appreciated.
The first thing to note is that in the long years since the adoption of the Hague rules, the basic issues of concern in this area are fundamentally the same. The age of the rules has not made them irrelevant to the degree that this would have led for claims for a new legal regime. The issues of who should bare what risk and when can in fact be traced back to the US Harter Act of 1983 and as such, have remained the foremost considerations in this field for over a century. This act became the model for other nations and colonial dominions and eventually formed the basis of the international regime negotiated in The Hague. The issue then, as it is now, was that the colonies and dominions, who were primarily users and not providers of shipping services, were concerned that they could not guarantee for themselves fair contractual terms due to the stronger bargaining position of ship owners.
These various statutes, and the Hague Rules that came about as a result were fiercely criticised by the carriers. The arguments put forward were that shippers, at the end of the day, had to pay for the costs of freight. If more liabilities, and more of the risks of shipping were passed from shipper or goods owner to carrier, then there would be a corresponding increase in price. This was held to threaten the competitiveness of such trade and would endanger the increasingly global markets and supply chains that had evolved since colonialism.
Shippers however maintained political pressure and offered counter arguments that the increase in freight charges, if they materialised at all, would not be so high as to make the trade routes prohibitively expensive. The resulting Hague rules have become one of the most widely used and important international conventions of all time. The success of the Hague rules, which can be taken for granted today, was in fact very hardly fought for. The ship-owner’s lobby was extremely powerful at the time, and was only defeated by continued political pressure from the shippers and their representatives. The Hague rules brought with them, none of the feared economic repercussions and chaos that they were predicted to bring. The Hague rules however, did not go so far as to enact all of the shippers demands, and various significant exclusions of liability did remain in favour of the shippers. This is most obviously seen in Article IV whereby:
(1) ‘Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy’.
(2) ‘Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:
(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.’
Howcver, the greatest criticism of the Hague and Hague/Visby rules was that the carriers superior bargaining position, which remained unaffected by the rules, was still capable of being used to insert, indiscriminately, wide exclusion of liability clauses against which the shipper would remain without a remedy. This was especially true against shippers from developing countries who have reported over the years, innumerable loopholes and lacunas in the rules that allow carriers to limit their liability. Also, a lack of expertise and weakness of bargaining position can make these shippers particularly lose out to the fact that there is no model bill of lading that can be used by the various parties.
Therefore, following the first UN regional Economic Commission, the United Nations Conference on Trade and Development (UNCTAD) began re-examining the legal regime that was established and propagated by the Hague Rules. It can be seen therefore, that some fifty years after the ex-colonies and dominions succeeded in getting The Hague Rules negotiated despite fierce resistance from carriers and ship-owners, shippers, this time from the developing nations, were again forcing a renegotiation of the rules. What’s more, it was the very same concerns that were behind the complaints. The excessive exemptive privileges of ship owners, exclusion from liability in key carrier operations such as navigation and restrictive jurisdiction clauses in bills of lading were the complaints levelled at carriers’ and ship-owners’ practices.
The frustration at such abuses as the insertion of clauses in bills of lading that are simply invalid according to the Hague/Visby rules yet succeed in halting legal action due to the uncertainty of the shipper of his rights was growing in many shipping circles. The jurisdiction clause was also being abused to the benefit of carriers, the wide exceptions to the rules and low limits of monetary liability were other factors that fed into this feeling of discontent. Such emotions however, were matched by an equally powerful laissez-faire in favour of the status quo by governments in the west that is still seen today in the small support the Hamburg Convention has received from major shipping nations.
Prior to the drafting and negotiation of the Hamburg Convention, the following problems in the existing rules were identified and specifically flagged up by UNCTAD.
“(a) Vague and ambiguous wording in the Hague and Hague/Visby rules which complicate the allocation of liability for loss or damage to cargo. This is a complaint both of carriers and cargo owners who would both benefit from clearer wording of the rules.
(b) The continued use in bills of lading of exemptions and restrictions of liability on the part of the carrier that are invalid, or of doubtful validity according to the Hague and Hague/Visby rules.
(c) Exemptions in the Hague/Visby rules relating to ocean carriage such as the exclusion of liability for losses which are within the carrier’s control and should therefore be borne by the carrier. These include the exemption from liability for the negligence of servants and agents in the navigation and management of the vessel, exemption from losses due to the perils of the sea, etc.
(d) The use of undefined and uncertain terms in the Hague/Visby rules such as ‘reasonable deviation’, ‘due diligence’, ‘properly and carefully’, ‘in any event’, ‘loaded on’ and ‘discharge’.
(e) The uncertainty of the requirements of sea seaworthiness of the vessel.
(f) The low limit of monetary liability for loss of the Hague rules, which has admittedly been addressed and improved in the current set of Hague/Visby rules.
(h) The unfairness of the jurisdiction and arbitration clauses in how they operate between carriers and shippers in week bargaining positions.
(i) The lack of clarity and protection for cargoes that require special towage, adequate ventilation, or deck shipment etc.
(j) Clauses that purport to allow carriers to divert cargos and tranship or land them at alternative ports at the risk and expense of the shipper.”.
As a result of these concerns, the developing states were able to persuade the other members of UCTAD to review and improve the adequacy of the current Hague/Visby rules and it was this review and examination that led to the drafting of the Hamburg text. The main concerns that the Hamburg Convention was assembled to address were:
(a) That a fair balance of allocation of risk be struck between carriers and shippers in the formulation of rules on liability.
(b) The loopholes, uncertainties and other ambiguities exposed in the Hague/Visby rules be rectified.
(c) That the burden of proof be provided for with certainty.
(d) That the following areas be revised and expanded:
“1) Liability for loss or damage to cargo for the entire period that it is in the control of the carrier.
2) The ‘Scheme of responsibilities, liabilities, rights and immunities’ in the Hague/Visby rules and their exclusion be completely reviewed.
3) Jurisdiction and its choice.
4) Responsibilities for deck cargoes, live animals and transhipments.
5) Extensions of the period of limitation.
7) Elimination of invalid clauses in bills of lading
8) Deviation, Seaworthiness and unit limitation of liability.”
UNCITRAL and UNCTAD therefore were highly concerned with the above issues when the Hamburg Convention was first being prepared. What came out of this process was a new set of rules that sought to clarify their own scope and application, something that was a big problem with the Hague/Visby rules up to that point. They also wished to distribute the risks and liabilities for the shipment fairly between the parties, both in terms of who bares most absolute liability, and that the party in whose control certain losses are, should bare the risk for those losses unless exceptional circumstances dictate otherwise. They also wanted shippers to be allowed to pursue their legal claims at the destination port, as this is the place where the vast majority of disputes arise and where evidence and costs can be kept practical. That transhipment and through shipment no longer act to exclude carrier’s liability and to raise the unit liability rates to more realistic levels.
Let’s now look Analyze some specific diffrence between the Hamburg Convention and the Hague/Visby Rules
Period of Responsibility
Situation in Hague/Visby system
The Hague/Visby rules rightfully placed great importance on the question of liability and it was decided as a fundamental rule, that the liability of the carrier would begin with loading of the ship, and end with discharge from the ship. After discharge, the local law at that place would govern liability. Article I(e) therefore provides,
‘Carriage of goods covers the period from the time when the goods are loaded on to the time when they are discharged from the ship.’
Complete freedom of contract is maintained for the regulation of liability before loading and after discharge. This is logical as the risks at sea are far greater than on land and it is this aspect of carriage that the rules are attempting to regulate. Also, the rules and procedures for loading and discharging are different in different countries for various reasons and it would be unwise to ignore these. It can be argued that the carrier has very little control over the goods while they are not aboard his ship and therefore it is fairer to allow the parties to provide for this themselves.
Unsurprisingly in rules of this age, they have been subject to litigation. In Pyrene v. Scindia Navigation Co. there was a dispute as to the purpose of the words with the court ruling that they were intended only to ‘identify the first operation in the series which constituted the carriage of goods by sea’. In Goodwin, Ferreira v Lamport and Holt it was held that discharge occurred when all the goods had been discharged so that goods discharged in fact, were not discharged in law until the entire cargo joined them on solid ground.
Article IV of the Hamburg Rules
Article IV of the Hamburg abandons this ‘tackle to tackle’ rule and states
“(1) The responsibility of the carrier for the goods under this Convention covers the period during which the carrier is in charge of the goods at the port of loading, during the carriage and at the port of discharge.
(2) For the purpose of paragraph 1 of this article, the carrier is deemed to be in charge of the goods
from the time he has taken over the goods…”
.It is clear from this article that the carrier’s liability has been extended to all time under which he has taken over the goods from the sender until such times as they are regarded by the destination port as out of port and in storage, warehouse or onward transit etc. ”
Read in conjunction with Article 23 which states that, “Any stipulation… is null and void to the extent that it derogates, directly or indirectly, from the provisions of this Convention.” It is clear that the carrier’s ability to contract out of this clause has been removed completely.
Basis of Liability
unneccesary exceptionn and absence of stipulation on loss caused by delay in Hague/Visby Rules
There are three main ways of breaching a contract for the carriage of goods by sea, these are by losing or damaging the goods, delivering the goods short of their destination, or there has been a delay in carriage. Under Article 4(5) of the Hague/Visby rules, the carrier is liable for ‘any loss or damage’ to the goods. It is unclear if this includes loss caused by a reduction in the value of the goods due to delay. The House of Lords, in The Heron II, Koufas v. C. Csarnikow Ltd. stated that damages would be assessed at the difference between the market value at the time of contracted delivery and the time of actual delivery. Article 3(1)(a) provides that the carrier must exercise due diligence in ensuring that the ship is seaworthy and according to Article 3(2) must also exercise due care of the cargo. However, it is Article 4(2) and its list of seventeen exceptions that has been at the route of calls for an amended set of rules. In fact it is probably because of Article 4(2) that we have a Hamburg Convention at all. Under these seventeen circumstances, the carrier can contract out of his liability which you can be assured is overwhelmingly the norm. In the case of The Marine Sulphur Queen they were termed the ‘uncontrollable causes’ and as such, the carrier will not be liable for them.
Article 4(2)(a) is commonly termed the negligence clause and excludes liability from the carrier for ‘act, neglect, or default of the master, mariner, pilot or servants of the carrier in the navigation or in the management of the ship’. While the practical use, to the shipping industry as a whole, of this clearly unfair clause is open to question, marine insurers maintain that it is vital. The fear of course is that it is not necessary to the majority of conscientious carriers and is therefore merely relied on by a minority of negligent carriers to the expense both of the shipper in the particular case, and to their more careful competitors.
Article 5 of the Hamburg Convention makes serious modifications to this provision stating
Under Article 5(1), The carrier is liable for the loss resulting from loss of or damage to the goods, as well as from delay in delivery, if the occurrence which caused the loss, damage or delay took place while the goods were in his charge as defined in Article 4, unless the carrier proves that he, his servants and agents took all measures that could reasonably be required to avoid the occurrence and its consequences.
This puts the liability for all loss, damage or delay clearly on the carrier unless he can show that he took all reasonable actions to avoid the loss. At first sight this seems a far more logical distribution of risk than what occurs under the Hague/Visby rules. Whatever the danger and unpredictability of life at sea, the carrier is in far more control over such situations than the shipper is. While the shipper can pass on the costs of insurance to shippers, the possibility now exists for careful carriers to reduce insurance costs by making less claims than their competitors. Likewise, negligent carriers will soon be unable to secure insurance and will rightfully be excluded from operating. Surely this is a more rational and economically efficient way of operating the market.
Article 5(2) as occurring when,
‘the goods have not been delivered at the port of discharge provided for in the contract of carriage by sea within the time expressly agreed upon or, in the absence of such agreement, within the time which it would be reasonable to require of a diligent carrier, having regard to the circumstances of the case.’
Article 5(3) gives the consignee a right after 60 days of non-delivery to recover for the loss of the goods without having to wait for conclusive evidence of the loss.
Article 5 does allow the carrier to exclude liability in certain situations and these are,
1. where he proves that he, his servants or agents took all reasonable measures to avoid the occurrence and its
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