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Tuesday, February 16, 2016
By Yasser Latif Hamdani
The United Nations
Convention on Contracts for the International Carriage of Goods Wholly or
Partly by Sea (hereinafter the “Rotterdam Rules” or the “Convention” as and
where the context permits) was prepared by the United Nations Commission on
International Trade Law (hereinafter “UNCITRAL”) and was designed to provide an
alternative Hague Rules, Hague-Visby
Rules and the Hamburg Rules on
international carriage of goods by sea.The Rotterdam Rules were adopted by the UN
General Assembly on 11 December 2008 and were signed at ceremony in Rotterdam,
Netherlands, on 23 September 2009 by 16 countries. Till 2015 only a total of
25 countries have signed the Rotterdam Rules and only three countries have
ratified Rotterdam Rules. As a consequence, the Rotterdam Rules are still not
in force.The controversies surrounding
the ratification and adoption of the Rotterdam Rules, however, are not the
topic of this paper as the question pertains to the scope of Rotterdam Rules, in
terms of their application pursuant to the language of the Convention.
The Rotterdam Rules apply
to “Contracts of Carriage” which are defined in Article 1(1) of the Convention.
These are contracts of carriage where the carrier, against payment of freight,
is tasked to take goods from one place to another. It is therefore envisages door to door multimodal transportation
(as opposed to tackle to tackle regime under The Hague-Visby Rules which traditionally from the ship’s tackle is
hooked on the port of loading to the moment it is unhooked at the port of
discharge). It has to mandatorily have one leg at least by sea and can have
more than one kind of transports. The Rotterdam Rules therefore apply to not
only sea leg but land transportation as well and as such is seen as a
replacement for not just the pre-existing The
Hague, The Hague-Visby Rules and Hamburg Rules but also the Multimodal Convention of 1980.
Article 5 of the
Rotterdam Rules makes it clear that it applies to a situation where place of
receipt and place of delivery are in two different states and where – this is
most important- port of loading and port of discharge are also in two different
states. Additionally one of the following has to be in a contracting state: (i)
place of receipt, (ii) port of loading, (iii) place of delivery; or (iv) port
of discharge. Article 5 is subject to
exceptions or exclusions contained in Article 6 of the Rotterdam Rules. Article
6 supra excludes “Charter parties”, contracts for usage of ships for other
reasons and non-liner transportation. Non-liner transportation may also be
covered in the event that there is no Charter party or if there exists no
contract for other use of the ship and where a transport document or an
electronic transport record has been issued. Article 7 further applies the convention not
just to shipper and the carrier party to the contract but to holder or the
controlling party as well.
Here it must be stated
Article 82 of the Rotterdam Rules gives precedence to conventions applicable to
other modes transportation including air transport, rail transport and inland
waterways where there is no transshipment. This means that when read with Article 26 of
the Rotterdam Rules, the application of Rotterdam Rules will be limited to the
sea leg and not to transportation before and after where another international
instrument applies mandatorily.
Article 79 of the
Rotterdam Rules declares any contractual term in a contract of carriage that
clashes with the Convention is automatically void. However an exception is
created for volume contracts under Article 80.Volume contracts are defined in Article 1(2) of the Rotterdam Rules. A
volume contract provides for a series of shipments of specified number of goods
over an agreed period of time.
A carrier is defined as
someone who enters into a contract with the shipper in Article 1(5) of the
Rotterdam Rules. The carrier’s responsibility or liability encompasses the acts
or omissions by performing parties, master and crew of the ship and employees
of the carrier or the performing parties and any other person who assumes and
performs the duties or responsibilities of a carrier. A performing party is
most likely to be a subcontractor of the carrier when we consider the
definition in Article 1(6).
The carrier’s duties are
(i)Transport document: Article
35 of the Rotterdam Rules place the duty to issue a transport document on the
carrier, unless of course the parties have agreed not to use a transport
document or where it is not the usual course of business or trade.Under Article 1(8) these include “Electronic
Transport Documents” thereby paving the way for ecommerce and the use of
electronic means for contract of carriage.
(ii)Duty to protect against loss, delay
or damage (carrier’s fault): Article 17(1) of
Rotterdam Rules makes the carrier liable for any loss, delay or damage arising
out of the period of responsibility which is defined as from receipt to
delivery under Article 13. However Article 17(2) limits the liability to fault
of the carrier or any other person as defined under Article 18. Article 17(3)
is a kind of a force majeure clause which limits the carrier’s liability. Articles
17(4) and 17(5) further crystallize the carrier’s liability if the event that
carrier relies on can be shown to either be attributable to the carrier or a
performing party or if the carrier can’t disprove his fault in any other
circumstance or were caused by unseaworthiness or improper crewing or because
the ship’s hold or deck were not fit for carriage. For matters pertaining to
delay the claimant has to give a notice within 21 days or he loses his right to
compensation under Article 23(4) of the Rotterdam Rules.
of care: There is a duty of care for goods during handling, stowing,
transporting from door to door on the carrier under Article 13(1) of the
(iv)Duty to keep the ship seaworthy and
cargo-worthy:The carrier is required under Article 14 to keep the ship seaworthy and
cargo-worthy both at the start of the voyage and throughout it.
A shipper is defined as
someone who enters into contract with the carrier in Article 1(8) of the
Rotterdam Rules. Article 1(9) further introduces the concept of a “documentary
shipper” or a person who accepts to be named as the shipper on the transport
document and/or contract or carriage. The liabilities of both a shipper and
documentary shipper are identical.In
some cases a shipper is subject to strict liability and in others at fault
liability like the carrier.
A shipper’s duties
include the following:
(i)Duty to provide accurate information:
Under Articles 28, 29 and 31 of the Rotterdam Rules a shipper is required to
provide accurate and timely information to the carrier. Article 31 is a strict
liability rule and as such the shipper indemnifies the carrier in this regard.
(ii)Duty to inform carrier of dangerous
nature of goods: Under Article 32 of the Rotterdam Rules,
a shipper has to inform the carrier of the dangerous nature of goods and to
clearly the mark the goods as dangerous. This too is a strict liability rule.
(iii)Duty to perform obligations
shipper must perform obligations dutifully under the contract and is liable for
any loss caused by any act of omission by the shipper, documentary shipper or
the shipper’s employees etc under Article 30 of the Rotterdam Rules. With the
exception of Articles 31 and 32, this is an at-fault liability rule.
Rotterdam Rules limit the
liability of the carrier to 875 units of accounts per package or 3 units of
accounts per kilogram under Article 59 of the Convention. This is where either
the value of goods has been declared by the shipper or where a higher amount
has been agreed between the parties. A unit of account is defined is the
Special Drawing Right (“SDR”) as laid down by the IMF in Article 59(3). This
then is to be converted to a contracting state’s currency in accordance with
IMF procedure. Article 59 as a whole is subject to Article 60 of the Rotterdam
Rules which states that liability for delay would be limited to two and a half
times of the freight paid. The sum total however has been limited to the amount
payable under Article 59(1) i.e. 875 SDR per package or 3 SDR per kilogram.
Article 62 further limits the operation of limitation of liability where a loss
is attributable to a breach of obligation by the carrier or a performing party
and their employees etc. In this case the carrier loses the right to limit
on Electronic Transport Document, Negotiable Transport Documents, and
Negotiable Electronic Transport Document:
A very important and much
needed provision in the Rotterdam Rules is the acceptance of Electronic
Transport Document and delivery on such a document. Rotterdam Rules also govern
those situations where the receiver does not have the transport document.
Similarly it governs the use of negotiable transport documents and negotiable
electronic transport documents under Article 47 of the Rotterdam Rules. An
example of a negotiable transport document is a bill of lading.
Given the multimodal
nature of transport envisaged under the Rotterdam Rules, the Convention is a
big nod towards containerization.The use of intermodal containers have
revolutionized the field of shipping. Given that the same container can be used
across rail truck and sea transport does away with the hassle of there being
separate contracts of carriages. The Rotterdam Rules now
give an overarching legal cover for the operation of intermodal containers.
of limitations/Time Bar:
Under Article 62 of the
Rotterdam Rules, a claim has to be brought within two years of delivery or the time when delivery should have taken
place. For delay the shipper has to notify the carrier of a loss within 21 days under Article 23(4) supra.
Under Article 66 of the
Rotterdam Rules, judicial proceedings (as well as arbitral proceedings) can be
instituted in the following places:
(i)Domicile of the carrier; or
(ii)Place of receipt; or
(iii)Place of delivery; or
(iv)Port of loading; or
(v)Port of discharge; or
(vi)A place agreed by the parties in contract.
Article 68 further introduces following places
of jurisdiction for actions against a maritime performing party (which would be
a sub-carrier or sub-contractor of carrier by sea):
(i)Domicile of the maritime performing party;
(ii)The port where maritime performing party
took charge of the goods; or
(iii)The port where maritime performing party
delivered the goods; or
(iv)The port where maritime performing party
usually performs services related to goods.
The Rotterdam Rules build
upon at times and at times significantly depart from TheHague Rules, The Hague-Visby
and Hamburg Rules. Indeed they go
beyond them by envisaging door to door
multimodal transport as opposed to merely sea transport. The Rotterdam
Rules apply to multimodal contracts of carriage with at least one international
sea leg.In other modes of transport the
Rotterdam Rules usually defer to other conventions if any. It has also
facilitated the growth of containerization by adopting a multimodal approach
and providing a legal framework for door to door transport. Another important
introduction is that of electronic transport documents and records which the
Rotterdam Rules explicitly recognize and set out a framework for.