The area of law covering international carriage of goods by sea has been regulated by international conventions such as The Hague, the Hague-Visby and the Hamburg Rules, each providing for improvements over the earlier regime. There were several other national, regional and hybrid regimes controlling the international transportation of goods by sea, leading to legal uncertainties with respect to the identification of the applicable regime. Such a multiplicity of international regulations has added to the ambiguity and resulted in fragmentation of international transport laws as they apply to contract of carriage of goods by sea. The need for a comprehensive set of international regulations, which takes into account the requirements of modern transportation practices, was severely felt and this resulted in the adoption of the “Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea” by the United Nations in 2008. Because the signing of the Convention took place in Rotterdam, United Nations decided to refer to this Convention as the “Rotterdam Rules.” The Rotterdam Rules were expected to bring in significant improvements over the earlier regime of the “Hamburg Rules.” This paper compares the Hamburg Rules and the Rotterdam Rules and addresses significant areas of differences.
Definition of Contract of Carriage
Generally, a contract outlines the rights and obligations of the parties connected with it. Although both Hamburg Rules and Rotterdam Rules attempt to define a contract of carriage, both of them differ in describing the obligation of the carrier under the contract of carriage. While the Hamburg Rules include only the transportation of merchandise from one destination to another by sea, the Rotterdam Rules do not limit the transportation by sea only. Thus while the Hamburg Rules specifically exclude the carriage of goods by any mode than the sea, the Rotterdam Rules include the transportation of goods by any mode including by sea, if there is an agreement among the parties to that effect. The improvement in the Rotterdam Rules is that they provide for carriage by other modes of transport in addition to transportation by sea.
Scope of Application
Under both Hamburg and Rotterdam conventions, the contract of carriage must relate to international trade and the contract must possess a link to a particular contracting state. The Hamburg Rules ignore the place from which the bill of lading is issued because the place of issue of a bill of lading may not be of relevance to the voyage. However, there will be mention of both the port of loading and port of discharge. In addition, the Hamburg Rules apply to the transportation from a port, which is located in a state not covered under the contract or carriage to a port of discharge in a state covered under the contract. The Rotterdam Rules on the other hand recognize the place of receipt of good and its delivery as the connecting geographical factors. In addition, the Rotterdam Rules also take into account the port of loading and port of discharge. This distinction arises because the Rotterdam Rules have been made to apply to contracts covering door-to-door delivery, where the place of receipt and place of delivery may not necessarily be ported but might be located inland also. The Rules do not make any reference to the place of issue of a bill of lading, as in the case of the Hamburg Rules. Because of this extension of coverage, the Convention is called “maritime plus or wet unlimited”
“The result in the RR is more sophisticated and has more nuances than what was at one point of the work considered to be enough. Previous versions had in general terms excluded charter parties, contracts of affreightment and volume contracts, but such references caused more confusion than clarification.”
To the extent that the Rotterdam Rules recognize these contracts, it can be considered to have expanded the scope of the application of the Rules covering a wider area of international contracts of carriages by sea. The Rotterdam Rules have a wider geographical scope by including the port of loading and discharge and the places of receipt and delivery. The Rules thus provide a sensible connecting factor to a contracting state.
The Hamburg Rules follow a contractual approach because of their application to the contract of carriage by sea. However, the Rules state that they do not apply to charter parties. By stating the non-application to charter parties, the Hamburg Rules adopt a documentary approach and exclude those contracts for which the basic document is the charter party. In the case of the Rotterdam Rules, although the Rules follow a basic contractual approach, a trade and documentary approach supplements the contractual approach. Article 6 prescribes the liner transportation cases in which the Rules do not apply. These cases are identified by the documents underlying the contract. For example, charter parties and other similar contractual arrangements are excluded from the application of Rules. Article 6 also provides for the application in the case of non-linear transportation. Thus the approach of the Rotterdam Rules differs in that they apply to liner transportation, in respect of which the contract arrangement is supported by a transport document and do not apply to non-linear transportation, such as that evidenced by a charter party.
Under the Hamburg Rules, the protection granted to third parties is available only when a bill of lading is issued and the document is endorsed in favor of a third party.
“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 4issued or not, as well as irrespective of any document being issued or not.”
Period of Application and Responsibility of the Carrier
The Hamburg Rules provide for the period during which the Rules apply as well as the period during which the carrier is responsible under the Rules for the goods at the port of loading. The Rules also provide for the responsibility during the period the goods are transported and at the port of discharge. Therefore, the Rules normally apply to contracts covering the transport of goods from port to port and the Rule applies to the entire period during which the carrier is in charge of the merchandise. However, the Rules do not apply to cases of door-to-door contracts. They also do not apply to transport contracts where the terminals of the carrier are outside the port area. This is because different rules apply in these cases. Moreover, the Hamburg Rules do not provide for the assignment of the burden of proof with respect to the conditions of the goods, at the time when they reach the port of loading or when the goods are delivered from the port of discharge.
On the other hand, in the Rotterdam Rules, the period of application and the period of responsibility correspond with the period during which the goods remain in the possession of the carrier. The Rules shall apply irrespective of the place where the goods are received or delivered, except in cases where the goods need to be handed over to an authority at the place where the goods are received or where they are delivered as specified in the contract of carriage
Obligations of the Carrier
The Hamburg Rules provide only for an implied obligation of the carrier to make delivery of the goods to the consignee under Rule 5 (1). However, Article 11 of the Rotterdam Rules provides for the express obligation of the carrier to deliver the goods to the consignee. Similarly, the Hamburg Rules do not expressly provide for the obligation of the carrier to make the ship seaworthy and to care for the goods. Such an express obligation is perhaps not provided in the Hamburg Rules in view of the fact that Article 5 (1) makes the carrier liable unless either he or through his servants or agents ensure that all reasonable measures have been taken for the safe carriage of goods. However, the Rotterdam Rules not only provide for the obligations to maintain the ship seaworthy and to care for the goods but also have made the obligations to maintain the ship seaworthy as a continuous one. The obligation to take care of the goods is already a continuous one under the Rules.
The Hamburg Rules provide for the issue of a bill of lading as well as the circumstances and the nature of documents which the carrier may issue a document other than a bill of lading. The Rotterdam Rules provide for several alternatives in respect of the issue of transport documents including a bill of lading. Under Rule 35 “the carrier is bound to issue, at the shipper’s option, a negotiable or a non-negotiable transport document unless it is the custom, usage or practice of the trade not to use one.” Under Article 47 (2) the carrier may issue a specific negotiable transport document possessing the characters of a bill of lading if required by and with the consent of the shipper.
Liability of the Carrier
Both the Hamburg and the Rotterdam Rules cover the liability for delay by the carrier. However, there are significant differences between the Rules in the matter of exceptions to the general provision that any fault on the part of the carrier will make him liable and he will be allocated the burden of proving that the carrier is not at fault. Under both the regimes, the carrier is subjected to the liability in respect of “loss, damage or delay caused by the fault of the carrier, his servants or agents.” However, a difference exists in the Rules concerning the liability in respect of live animals. While transporting the live animals, under Article 5 (5) of the Hamburg Rules, the carrier cannot be held liable for loss, damage or delay caused by any special risks, which is identified to be inherent with the carriage of such merchandise. The Rotterdam Rules do not provide for any such express exclusion from the liability of the carrier. The Rules however provide for freedom of contract under Article 81 (a). The application of Article 81 (a) is subject to the exception that the carrier shall become liable for any loss, damage, or delay caused recklessly or with the knowledge of the carrier.
In the matter of allocation of the burden of proof, the Hamburg Rules have not made any provision fixing the initial responsibility to prove the fault on the claimant. Article 17 (1) of the Rotterdam Rules fixes the liability on the carrier when the claimant proves the loss, damage or delay took place when the goods were under the carrier’s responsibility. In this case, the burden of proof lies on the carrier. In this instance, the Rotterdam Rules differ from the Hamburg Rules and provide for two alternatives to the carrier. First, the carrier may prove that the loss, damage or delay is not attributable to his fault or the fault of any other person acting under his authority. Second, the loss, damage or delay was caused by an excepted peril and therefore there was no fault on the carrier or his agent’s. The Hamburg Rules provide for the reversal of the burden of proof by the carrier only in cases of loss, damage or delay caused by fire.
The Rotterdam Rules provide different alternatives for the subsequent burden of proof by the claimant. In this case, the claimant may prove that carrier or his authorized persons is responsible for the incidence of an excepted peril or the incidence of any other event which resulted in such loss, damage or delay. The Rotterdam Rules provide a further alternative to the claimant under which the claimant may prove that the loss, damage or delay was caused by the un-seaworthiness of the ship, against which the carrier has the option of proving that he had taken proper care in maintaining the ship seaworthy.
In respect of the allocation of the burden of proof, the Rotterdam Rules are more precise than the Hamburg Rules in that the Rotterdam Rules have codified the principles followed by the jurisprudence, which has provided for the qualification of the excepted perils. Article 4 (2) sub-clauses (c) to (p) contain the list of excepted perils as eligible for reversal of the burden of proof. The list of these excepted perils allows the claimant to argue against the presumption of absence of fault by the carrier. The Hamburg Rules are not detailed to this extent in respect of allocation of the burden of proof. Moreover, the burden of proof on the claimant as envisaged by the Rotterdam Rules is much lighter, as Article 17 (5) (a) provides for the claimant to prove that the loss, damage or delay was caused “probably” by the un-seaworthiness of the vessel. The claimant need not be certain about the allegation.
Liability of the Carrier in respect of acts of Other Persons
The number of persons to whom the carrier becomes liable has increased from the Hamburg Rules to the introduction of the Rotterdam Rules. Article 5 (1) of the Hamburg Rules includes the servants or agents of the carrier in the list of persons for whose acts the carrier is liable. Because the liability on account of independent contractors is not excluded by any other provisions of the Rules, the actions of the independent contractors providing services within the port area may bring the carrier within the liability net. Article 10 (1) includes the acts of a sub-carrier contributing to the liability of the carrier. Under the provisions of Article 18 of the Rotterdam Rules, the carrier is made responsible for the acts of both maritime and non-maritime service providers. Maritime service providers include subcarriers providing service in whole or in part of the carriage in respect of the sea leg and independent contractors rendering service within the ports. Non-maritime service providers are the subcarriers providing service during carriage inland. The Rotterdam Rules have also included the master and the crew of the vessel, the employees on a roll of the carrier and any other party performing under the contract.
Liability of Servants, Agents and Independent Contractors
Although the Hamburg Rules do not attempt to regulate the liability of the servants and agents of the carrier arising from the contract, the Rules under Article 7 (2) provide that whenever an action is brought against the servants or agents of the carrier, they become entitled to the same defenses as those available to the carrier. This rule in effect extends the liability to the servants and agents even though not expressly provided under the Rules and under Article 7 the claimant can proceed against the agents of the carrier. However, the position in respect of actions against the actual carrier is different. Article 10 of the Hamburg Rules specifically treats the actual carrier in the same way as that of the carrier and includes the actual carrier as a party liable to the claimant. Under the Rules, the claimant is provided the right of direct action against the actual carrier.
The Rotterdam Rules in respect of the liability of servants, agents and independent contractors are similar to the Hamburg Rules except for the addition that the Rotterdam Rules have adopted the notion of the maritime performing party. The Rules thus have widened the category of persons becoming liable under the contract of carriage. All the persons including agents, servants and independent contractors performing under the contract have been made liable just as the carrier.
Notice of Loss, Damage or Delay
The Hamburg Rules provide for the notice of loss or damage within the working day after the delivery. Notice may be given within 15 days of delivery in cases where the loss or damage was not apparent. Failure to notify within the prescribed days will amount to prima facie delivery of the goods in accordance with the description of the goods as provided in the bill of lading or other transport document issued under the contract of carriage.
The Rotterdam Rules are different in the matter of notifying the loss or damage. Under the Rules, loss or damage needs to be notified before or after the delivery. In case the loss or damage is not apparent, notice must be issued within seven days of delivery. The Rules also attempt to regulate the consequence of the failure to notify within the prescribed period, by specifying that the claimant will still hold, the “right to claim compensation and the allocation of the burden of proof” under Article 17, even if there is failure to notify the loss or damage. However, the wording of the Rules has not been drafted satisfactorily. The intention of the Rules was to make it explicit that the notice does not alter the allocation of the burden of proof. In other words, even though the claimant might have notified the loss or damage within the prescribed period, he still carries the burden to prove that such loss or damage has taken place during the period when the goods were under the care of the carrier.
Obligation and Liability of the Shipper
The Rotterdam Rules outlining the obligations and liability of the shipper are more extensive than in the Hague-Visby Rules and are set out in Chapter 7. Part III of the Hamburg Rules attempts to regulate the liability of the shipper and Articles 12 and 13 contain the provisions in this respect. Under Article 12 the shipper is excluded from the liability for any loss or damage incurred by the carrier or the vessel. Similarly, the shipper is relieved of any responsibility for loss or damage not resulting from his own, fault or neglect. This provision makes the shipper liable for loss or damage to the goods resulting from his own act, fault or neglect. Article 13 provides that “the shipper is liable for all damages and expenses, directly and indirectly, arising out of or resulting from the shipment of dangerous goods the shipment whereof the carrier has not consented with knowledge of their character.” However, Article 13 expressly provides that the shipper must inform the carrier about the dangerous nature of the goods being shipped. Part IV of the Hamburg Rules, which deals with the transport documents prescribes the liability of the shipper in respect of misdescription of the goods. Article 17 states that the shipper shall be deemed to have affirmed to the carrier, the “correctness of the marks, number, quantity and weight” of the merchandise as furnished by him at the time the shipment was effected.
Chapter 7 of the Rotterdam Rules contains provisions dealing with the obligations and responsibilities of the shipper in a more detailed way than the Hamburg Rules. Article 27 prescribes that the shipper must deliver the goods to the carrier in such a way that they will withstand the stress of the proposed transportation, including “handling, loading, lashing and unloading.” Article 29 provides that it is the responsibility of the shipper to furnish such information, instructions and documents to the carrier, which otherwise could not be obtained by the carrier. It is important that these documents and information must enable the carrier to comply with the regulations governing the transportation of such goods. The shipper has also the obligation under Article 31 to provide the necessary information to the carrier to compile the contract documents. The rules for the carriage of dangerous goods are contained in Article 32. As compared to the Hamburg Rules, the Rotterdam Rules slightly limit the liability of the shipper in respect of transportation of dangerous goods. The Rotterdam Rules provide that the shipper will be liable for the loss or damage caused to the goods, by reason of the shipper not informing the carriers about the dangerous nature of the goods, when the carrier did not have any other means of knowing the dangerous nature of the goods. Under Hamburg Rules, strict liability to the shipper occurs in case of wrong description and transportation of dangerous goods without information to the carrier and fault liability arises when the loss or damage to the goods is as a result of fault or neglect of the shipper. Under the Rotterdam Rules, strict liability for the shipper arises for not providing information for the compilation of contract documents and transportation of dangerous goods without information to the carrier. Fault liability occurs when the goods are not delivered in a fit condition and when the shipper does not provide the necessary information or instructions to the carrier.
Article 29 of the Rotterdam Rules contains provisions regarding the obligation of the shipper to provide “information, instructions and documents” to the carrier. Although the Hamburg Rules do not contain any corresponding provision, it is to be considered that such provision of information, etc is in accordance with the normal practice and therefore the purpose of Article 29 of the Rotterdam Rules is merely to codify an implied obligation underlying any contract of carriage. Article 30 (1) of the Rules prescribes the provisions for allocation of the burden of proof in this respect.
Both the Hamburg Rules and the Rotterdam Rules do not contain any definition of “dangerous goods.” While the Hamburg Rules made a mere reference to goods of dangerous nature, the Rotterdam Rules relate the quality of dangerousness to the “persons, property and the environment.” This way the Rotterdam Rules provide for the identification of situations, under which the goods may be treated as dangerous in character. In the Hamburg Rules, the shipper is under an obligation to inform the carrier about the dangerous nature of the goods and where necessary, the precautions that need to be taken by the carrier for the safe transportation of the goods. The shipper becomes liable for the loss or damage of the goods as a result of transportation of the dangerous goods if the carrier did not have any means of knowing the dangerous character of the goods. Under the Rotterdam Rules, two obligations have been cast on the shipper – first to inform the carrier about the dangerous character of the goods and second to label the goods as per the applicable regulations or in accordance with the rules of public authorities governing the transportation of the dangerous goods. Under both Hamburg and Rotterdam Rules, the first obligation leads to the liability of the shipper only under circumstances where the carrier did not have any means of finding the dangerous character of the goods on his own.
The additional obligation cast on the shipper to mark the dangerous goods does not arise as a result of the application of Article 32 (2) of the Rotterdam Rules but on the prescription of the applicable regulations or as per the rules of the public authorities. Therefore, it is to be construed that this obligation will exist even where the Hamburg Rules apply. Liability on account of transportation of dangerous goods is strict in both the Rules, although there are no express provisions in this respect contained in the Rules. The shipper has the obligation to prove that the loss or damage resulted from the dangerous character of the goods and that the carrier had no means of knowing the dangerous character of the goods. Therefore it appears that there has been no enhanced liability of the shipper in respect of dangerous goods under the Rotterdam Rules.
Delivery of the Goods
Chapter 10 of the Rotterdam Rules deals with the delivery of goods. As distinct from the Hamburg Rules, this chapter places a new obligation on the consignee to accept the delivery of the merchandise from the carrier (Article 43). The Rules also provide various regulations concerning the delivery of goods consigned under several types of transport documents or electronic records. The new rules governing the delivery of goods are complex and they “effectively shift the risk of the delayed bill of lading from the carrier to consignee.” When the carrier notifies the consignee or holder in due course of the bill of lading or another transport document about the arrival of the cargo at the destination and the consignee makes a delay in requesting delivery from the carrier, the carrier may decide to deliver the good without insisting on the surrender of the bill of lading. The carrier may so take a decision to deliver the goods even where the consignee or the other person is not in the possession of the bill of lading or other transport document. Alternatively, the carrier using the wide-ranging rights under the Rules may decide to dispose of the goods. “The provisions, apparently intended to provide a solution to the practical problem of negotiable bills of lading being delayed in a chain of international transactions involving different buyers and banks, may seriously undermine the document of title function of the negotiable bill of lading, which is key to its use in international trade.”
Article 14 of the Hamburg Rules provides that the carrier as soon as he receives the goods into his care must issue a bill of lading as a contract document to the shipper. The bill of lading must provide the contract particulars in as much detail as possible. This provision is similar to Article 3 (7) of the Hague-Visby Rules. After loading the goods into the vessel, the carrier must issue to the shipper a “shipped bill of lading.” Article 16 contains the regulatory provisions regarding the evidentiary effect of the bill of lading. This article grants the carrier a right to enter a qualified description of the goods instead of refusing to enumerate the particulars, in cases where he had reasons to believe that the particulars are incorrect.
Article 8 included under Chapter 8 of the Rotterdam Rules contain provisions regarding the issuance of a bill of lading or other transportation documents. Although under normal circumstances a bill of lading is issued evidencing the contract for the carriage of certain goods, such issuance is not a condition for the application of the Rotterdam Rules. This is because the question of issuing a bill of lading or other transportation document does not arise under the Rotterdam Rules, if the shipper and carrier make an agreement to that effect or if it is a custom, usage or practice not to issue a transport document. Based on such an exception, the shipper under the Rotterdam Rules is entitled to receive a negotiable or non-negotiable transport document from the carrier in lieu of the bill of lading. A similar provision to obtain this document under Rotterdam Rules does not exist in the Hamburg Rules and to this extent, this is a novelty under the Rotterdam Rules.
The provision in the Rotterdam Rules requiring the carrier to qualify information relating to the goods is different from that of the Hamburg Rules. According to this provision, the carrier is under an obligation to qualify the information supplied by the shipper, when he has actual knowledge or has reasonable grounds to construe that such information is incorrect and misleading. Similarly, the carrier has to qualify the description of the goods which are delivered in a closed container, where the goods were supposed to be delivered in a closed container, as a different set of rules might apply for such goods. The carrier has reason to qualify the description of the goods, as he may not be sure of the marks, numbers or the quantity of the goods when they are delivered in a closed container.
The provision relating to the identity of the carrier is entirely new in the Rotterdam Rules. This provision is of significance from the perspective of a claimant. As per the provisions of Article 47 of the Rotterdam Rules, if the name of the carrier is indicated in the contract particulars, no other information provided in the contract document shall have an effect. In case no name of the carrier is mentioned in the transport document, but the name of the vessel is mentioned, then the registered owner of the ship shall become the carrier under the contract. To rebut this claim, the registered owner of the ship needs to prove that the vessel was under a bareboat contract when the goods were being transported and the bareboat charter indicated the name of the vessel in the transport document. Alternatively, the registered owner may prove that the carrier indicated his name. The bareboat charterer also can prove that the carrier indicated the name of the vessel in the transport document and thus may avoid his liability to the registered owner. Thus the Rotterdam Rules appear to be significantly different from the Hamburg Rules in respect of contract documentation and they are more clear and concise.
Limitation of Liability
The Rotterdam Rules have extended the limits of liability as compared to the provisions of the Hamburg Rules. While under the Hamburg Rules, the limits of liability are restricted to the loss or damage to the goods, the Rotterdam Rules cover the breach of obligations by the carrier (Article 59). The obligations of the carrier under the Rotterdam Rules include (i) deliver the goods in time of the same quantity and description that existed at the time of receipt of the goods for carriage, (ii) issue of a transport document containing the particulars as required by Article 36 (Article 35), (iii) qualify the information relating to the goods provided by the shipper, where the carrier had knowledge of or reason to believe that such information is inaccurate or misleading (Article 40), (iv) deliver the goods (Article 45 – 47) and (v) execute the instructions of the controlling party (Article 52). In any case, the obligation arises only when the breach by the carrier is in relation to goods because Article 59 (2) specifically states that the limits prescribed under the clause are in respect of goods “that are the subject of the claim or dispute.” The Hamburg Rules do not contain provisions relating to the application of limits of liability in these instances. Under both the Hamburg Rules and the Rotterdam Rules, the limit for economic loss arising on account of delay is fixed at two and a half times of the freight payable for transportation of goods that are subject to delay.
Time for Legal Action
Under both the Hamburg Rules and the Rotterdam Rules, the time for bringing in a suit is considered from the purview of the claimant instead of from that of the defendant. The scope of looking at the time factor from the purview of the claimant is wider because it covers all actions that would be initiated under the Rules. “Therefore under the Rotterdam Rules, it applies both to any action of the shipper or consignee against the carrier or any maritime performing party as well as to any action of the carrier or any maritime performing party against the shipper, documentary shipper controlling party or consignee.” The limitation period is fixed the same at both the Rules at two years.
While the Hamburg Rules and the Rotterdam Rules contain the same provisions in respect of the commencement and the limitations period covering the actions for indemnity, the Hamburg Rules are silent on the question of suspension or interruption of the period. Thereby, the Hamburg Rules allow the operation of national law with regard to suspension or interruption of the limitation period. However, the Rotterdam Rules have made specific provisions governing the suspension or interruption of the limitation period.
It should be noted that the Rotterdam Rules are particularly in favor of the claimants when it comes to the question of the limitation period. For instance, the Rotterdam Rules contain a special provision governing the action against a person identified as the carrier pursuant to Article 37 (2). Article 65 specifically allows a claimant to institute action against the person identified as the carrier even after the expiration of the limitation period of two years. The suit may be initiated within the period allowed by the lex fori in this respect or within 90 days from the date when the carrier has been identified whichever is later.
Freedom of Contract
Freedom of contract is an important element in relation to the contracts of carriage, as with this freedom, the parties to the contract are allowed to incorporate conditions peculiar to their respective contracts governing the rights and obligations of the parties under those contracts. The Hamburg Rules by virtue of the provisions of Article 23 clearly bar the application of any stipulation as null and void in so far those stipulations are derogatory to the provisions of the Rules. However, the Rules provide that the carrier is under liberty to enhance his obligations and responsibilities under the Convention. The Hamburg Rules also provide for increased protection of the shipper or consignee. Under the Rules, if the shipper or consignee has incurred a loss or damage because of a stipulation that is null and void, the carrier is made duty bound to compensate the shipper or the consignee as the case may be in respect of the loss suffered by him.
“The Rotterdam Rules generally provide in article 79 that the rules on the obligations and liability of both the carrier and the maritime performing parties as well as of the shipper, consignee, and controlling party are mandatory, but then allow, under certain conditions, freedom of contract for volume contracts, defined in article 1 as the contracts that provide for the carriage of a specified quantity of goods in a series of shipments during an agreed period of time.”
Under Hamburg Rules deck cargo is allowed in three situations. They are when the carriage of goods on deck is (i) as per the usage followed in the particular trade, (ii) mandated by statutory regulations and (iii) under an express agreement with the shipper. Under Rotterdam Rules a fourth situation under which deck cargo is permitted has been included, which is an important addition considering the present international trade scenario. This situation is when the goods are transported in or on containers or vehicles. However, the Rules require that such containers or vehicles used for carriage on deck must meet the physical standards to make them fit for such deck carriage and the decks must be specially prepared to carry them. This provision in the Rotterdam Rules is intended to regulate the transport of containerized goods in modern vessels and also the carriage of vehicles on modern roll-in and roll-off vessels. Both the Rules require an endorsement of the deck carriage on the transport document and this has been made a condition under both Rules for invoking an agreement against a third party.
The consequences of unauthorized deck carriage and that of a deck carriage without an express agreement are the same under both regimes. In the case of an unauthorized deck carriage, the carrier is subjected to the responsibility for loss, damage or delay caused exclusively by the unauthorized deck carriage. In the case of a deck carriage without an express agreement, the carrier loses the right to limit his liability.
While the Rotterdam Rules provide for the consequences of loss, damage or delay resulting from a legitimate carriage of goods on deck, the Hamburg Rules do not contain any provision in this respect. In the case of loss, damage or delay resulting from legitimate deck carriage, the Rotterdam Rules provide for the application of the rules relating to the liability of the carrier as in the general transportation. Secondly, when the deck carriage was undertaken in pursuant of any law or is in accordance with the usage or custom no liability of the carrier arises in respect of such loss, damage or delay if they were caused by the inherent risks resulting from deck carriage of such goods. From this discussion, it appears that the provisions of the Rotterdam Rules are more comprehensive and are in line with the requirements of the present day’s trade and commerce.
Obligations and Liability of the Actual Carrier/Maritime Performing Parties
The Hamburg Rules brought within its ambit the regulation of the performance of sub-contractors in connection with the whole or in part of any contract of carriage. According to Article 10 (2), the provisions of the Convention which regulate the performance of the carrier have been extended to cover the actions and deeds under the contract of carriage, of the actual carrier, who might be a sub-contractor to the carrier. The actual carrier is held liable for all his actions in the same way the carrier is responsible. The Rotterdam Rules have extended the scope of the obligations and liability of other persons performing under the contract of carriage by replacing the reference to the actual carrier with a mention of the “maritime performing party.” The Rules contain the definition of the term “maritime performing party.” Article 1.7 defines maritime performing party as:
“A performing party that performs or undertakes to perform any of the carrier’s obligations during the period between the arrival of the goods at the port of loading of a ship and their departure from the port of discharge of a ship. The performing party, of which the maritime performing party is a sub-species, is in turn defined by article 1.6 as a person that performs or undertakes to perform any of the carrier’s obligations with respect to the receipt, loading, handling, storage, carriage, care, unloading or delivery of the goods.”
The competence of the Commission and of the Council of Europe governs the application of the provisions of both the Hamburg Rules and the Rotterdam Rules within the jurisdiction of the European Union. Therefore, the individual member states have not been empowered to become the parties to the Rules in their individual capacity. The Rotterdam Rules have removed this difficulty by providing for the jurisdictional provisions. The Rules have made the chapter on jurisdiction applicable only when the individual State opts to be bound by the provisions of chapter 14. This provision is contained in Article 74. The difference between the Hamburg Rules and the Rotterdam Rules is that the Rotterdam Rules have exclusive provisions defining the jurisdiction covering the volume contracts.
In both the Hamburg and the Rotterdam Rules the general rules governing the arbitration are parallel to those for jurisdiction. A person claiming under the Rules against a carrier may choose as a place of arbitration any of the places being the same as mentioned for jurisdiction. However, there is a difference in the Rotterdam Rules in that the place designated for arbitration in the case of volume contract is binding on the persons different from the parties to the volume contract. This stipulation is subject to the same conditions as they apply to jurisdiction, with a reference to the applicable law. The applicable law shall be the national law of the land where the person claiming under the Rules initiates the arbitration proceedings against the carrier.
Application of the Rotterdam Rules
Overall from the above analysis, it can be stated that the Rotterdam Rules appear to be more favorable to the carriers than the other international conventions covering the international carriage of goods by sea. For instance, the rules relating to burden of proof seem to be more in favor of the carriers and to this extent, the Rotterdam Rules differ from those of the Hamburg-Visby or the Hamburg Rules regimes, with significant changes of a potential legal battle between the carriers and other parties in the contract of carriage. The obligations and liabilities of the shipper have been made extensive and detailed as compared to the Hamburg Rules and they have been mandatory. Under the Rotterdam Rules, the liability of the shipper does not have any monetary limitations, whereas the liability of the carrier is subjected to monetary limitations.
The Rotterdam Rules as a deviation from the Hamburg Rules provide for the delivery of the goods by the carrier without surrendering a negotiable bill of lading or another transport document. This provision is new and may turn out to be problematic because such delivery undermines the character of document of title to goods of the bill of lading, which is a basic tenet of international trade and commerce.
The Rotterdam Rules provide for the regulation of volume contracts, which is a new area yet to be tested. The Rules in this respect might lead to a state of affairs where the freedom of contract becomes predominant. In such a situation, the bargaining power will become significantly powerful, which is not the situation since the introduction of the Hague Rules in 1924. This might become problematic for small shippers and consignees, as they may be pressurized to abide by the contractual terms unilaterally dictated by a few large global liner-carrying organizations.
Large shippers must also consider the potential and extensive liability that might result from the carriage of dangerous goods because the loss arising from the transportation of dangerous goods cannot be negotiated even where the shippers have entered into a volume contract. “More generally, extensive use of volume contracts in future commercial contracting practice could mean effectively less rather than more uniformity of liability rules at the international level.”
The approach adopted by the Rotterdam Rules for regulating the liability arising in multimodal carriage transactions, which include an international sea leg appears to be complex. This approach may pose difficulties in actual practice. Variations may occur in ascribing substantive liability rules with respect to a non-sea leg of a multimodal carriage transaction. It also depends on the fact whether different positions would have evolved, when the existing international conventions regulating international carriage had been applied to the non-sea leg of the contract.
Because of the complexity and substantial scope for interpreting the clauses differently, which characterize the Rotterdam Rules, there may arise the need for extensive litigation for gaining a comprehensive understanding of the Rotterdam Rules. This is because the courts in various jurisdictions are more likely to offer different interpretations of the provisions of the Rules and pass judgments with respect to their application. The optional nature of the chapters on jurisdiction and arbitration may potentially compound the complexity of the different interpretations by the courts. The potentially different interpretations and conflicting judgments combined with the fact that the clauses of jurisdiction and arbitration may be made applicable to only a few Contracting States compounds the complexity. Thus, it may become necessary that the parties have to involve themselves in considerable litigation before a sufficient level of legal certainty could be established. Even though the Rotterdam Rules have attempted to increase the scope of the application of international maritime regulations to a considerable extent, the prospect of the Rules being subjected to potentially different interpretations appears to diffuse the benefits of uniformity in the Rules as they apply to a variety of jurisdictions. The application of the Rotterdam Rules may be of concern to different parties under an international multimodal contract, in case a dispute arises among them.
From the foregoing discussion and comparison with the provisions of the Hamburg Rules, it is observed that the scope of the Rotterdam Rules covers the contracts of carriage entered into in liner transportation in which the place at which the goods are received and at which the delivery is made are different. The Rules will apply to contracts in which the port of loading and port of discharge are situated in different states and one of the states has been recognized by the Convention. The Rules do not extend to charter parties or the contracts for using space on a vessel. The Rotterdam Rules provide for derogation from the Convention of “volume contracts” entered in the jurisdiction of the United States, subject to the service of notice as laid down in the Convention. As outlined above, in a number of areas the Rotterdam Rules have been found to provide for enhanced scope of the international maritime contract regulations. As has been observed in the paper, with the wider scope of application and freedom of contract provided for, the Rotterdam Rules have settled many controversial issues that existed. The other areas dealt with by the Rotterdam Rules have shown significant improvements and it can reasonably be concluded that a compromising solution in mitigating the issues in international carriage of goods by sea has been reached by introducing the Rotterdam Rules. Because of the possibility for different interpretations with respect to various provisions and incorporation of the provisions relating to optional jurisdiction and arbitration to the different Contracting States, the Rotterdam Rules appear to diminish the intended clarity and adaptability of a uniform set of rules for regulating the international contracts of carriage by sea.
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