The Rotterdam Rules and modern transport practices: a successful marriage?

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1 The Rotterdam Rules and modern transport practices: a successful marriage? Pieter NEELS, lawyer Copyright Pieter Neels, All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, scanning, recording or by any information storage or retrieval system, without the prior written permission of the author.

2 Aim of this presentation Does the Convention do something about the stated concern as expressed in the preamble and annex: the current legal regime governing the international carriage of goods by sea lacks uniformity and fails to adequately take into account modern transport practices, including containerization Mindful of the technological and commercial developments that have taken place since the adoption of those conventions and of the need to consolidate and modernize them

3 Containerization 1 Care of cargo 2 Containerworthiness 3 Containers carried on deck

4 1 Care of cargo

5 1.1 Obligations of the carrier General duty: carry the goods to place of destination and deliver to the consignee (Art 11) Specific obligation: properly and carefully receive, load, handle, stow, carry, keep, care for, unload and deliver the goods (Art 13)

6 - 'properly and carefully': adopt interpretation under HVR: - 'carefully': reasonable care - 'properly': adopt a system which is sound in light of all the knowledge which the carrier has or ought to have about the nature of the goods (Albacora v Westcott (1966) SLT 253, at 254) BUT: lower standard of care when containers? HOWEVER: articles guaranteeing carrier is informed of contents (Art 28, 29 and 32 ) Thus: stowage of container next to container with declared dangerous goods/apparent detective container/ carrier liable

7 1.2 Obligation of shipper General duty 3 obligations: Unless otherwise agreed in the contract of carriage, the shipper shall (1) deliver the goods ready for carriage. In any event, (2) the shipper shall deliver the goods in such condition that they will withstand the intended carriage, including their loading, handling, stowing, lashing and securing, and unloading, and (3) that they will not cause harm to persons or property. (art 27.1)

8 Specific duty: When a container is packed or a vehicle is loaded by the shipper, the shipper shall properly and carefully stow, lash and secure the contents in or on the container or vehicle, and in such a way that they will not cause harm to persons or property. (art 27.3)

9 Applies only if shipper has packed container, if not eneral duty (art 27.1) applies Art 27.1 different than art 27.3?: withstand intended carriage including loading, andling, stowing, lashing, securing and unloading properly and carefully stow, lash and secure Different wording + overlap: 'withstand intended arriage' 'properly and carefully'? // stow, lash, secure But : no lex specialis, same effect as art 27.3, only larifies the general duty in case of containerised cargo, oth articles applicable to container carriage Otherwise not logic: deliver goods which can not ithstand intended carriage! (WG III Doc A/CN.9/510)

10 Problem: shipper's liability Liability: FAULT LIABILITY The shipper liable for loss or damage sustained by the carrier if the carrier proves that such loss or damage was caused by a breach of the shippers obligations under this Convention (art 30.1) Except in respect of loss or damage caused by a breach by the shipper of its obligations pursuant to articles 31, paragraph 2, and 32, the shipper is relieved of all or part of its liability if the cause or one of the causes of the loss or damage is not attributable to its fault or to the fault of any person referred to in article 34. (art 30.2)

11 Shipper liable for others: The shipper is liable for the breach of its obligations under this Convention caused by the acts or omissions of any person, including employees, agents and subcontractors, to which it has entrusted the performance of any of its obligations, but the shipper is not liable for acts or omissions of the carrier or a performing party acting on behalf of the carrier, to which the shipper has entrusted the performance of its obligations. (art 34) See also article 17.3.h,j and k.

12 Limitation of liability :???? Compare with situation of carrier : QUALIFIED PRESUMED FAULT REGIME (art 17) + LIMITATION OF LIABILITY (art 59)

13 Consider: - obligation to provide to the carrier in a timely manner such information, instructions and documents relating to the goods which are not otherwise reasonable available to the carrier, and that are reasonable necessary (art 29) heavy burden on shipper interpretation difficulties: 'relating to'?, 'timely' (before start period of responsibility?, how much before?), 'reasonable'?, 'available' (information by the press/yearbooks?)

14 Consider also: - average cargo value per TEU between 25, ,000 USD - only minority of cases concern liability of carrier while majority shipper's liability - merchants go bankrupt Possible explanation: Burden has to fall on somebody and seller is in best position to know the goods and its aptness for the concerned method of transport Does not respond to economical reality

15 1.2 Containerworthiness

16 Art 13: Requires the carrier to exercise reasonable care during the whole period of responsibility HOWEVER: particular characteristics of sea transport require an additional provision to guarantee the exercise of reasonable care during sea voyage. THEREFORE: Art 14: The carrier is bound before, at the beginning of, and during the voyage by sea to exercise due diligence [to provide a seaworthy ship]

17 Aspects of 'seaworthiness' under article III.1 HVR: 1 physical state of vessel 2 crew and equipment 3 cargoworthiness The Convention adds a fourth one (article 14.c): any containers supplied by the carrier in or upon which the goods are carried, fiat and safe for their reception, carriage and preservation CONTAINERWORTHINESS Remark: Most containers are owned by or leased to the carrier!

18 Illustrations - physical state of vessel (art 14.a) : Seaworthiness includes stowage of containers so as to prevent damage to the ship or to other containers. Custom : stowage plan. Carrier need to know contents and weight of each container in order to make or control a stowage plan. Shipper gives this information to carrier (art 29, 31, 32 and 36). Carrier may qualify information in the contract particulars of art 36.1 (art 40) BUT : to which extend must due diligence be exercised Physical verification? Presumably minimum steps but unclear.

19 - Equipment (art 14.b) : Lashing bridge for containers

20 - Wording of article 14 similar to article III.1 HVR. Thus, for meaning 'due diligence': see case-law HVR HOWEVER, there is an important difference, namely the addition of during the voyage and keep. Consequence: CONTINUING OBLIGATION Reason: - Bring in line with ISM Code and safe shipping requirements (WG III Doc A/CN.9/544) - New telecommunication technologies make communication between vessel and offshore operator possible

21 Illustration: Container becomes unfit or unsafe during voyage no breach: if he took all reasonable steps during the voyage and repair of container is not possible until the ship calls a port. Test derived from HVR: would a prudent shipowner, if he had known of the defect, have continued the voyage without effecting any possible repairs?

22 breach: if carrier should have been aware of the problem before or at the beginning of the voyage Transshipment might be necessary because duty to deliver (art 11) and carrier might be liable for delay (art 17.1)

23 Second illustration: A container vessel calls at an intermediate port and container becomes unseaworthy HVR : - not a breach - Possible that a defective container (loaded at initial port so at the beginning of the voyage ) makes the carrier liable while another defective container (loaded at intermediate port) on the same ship does not! RR : - removes unfair situation - new problem : Convention does not clarify when sea voyage is finished while HVR 'tackle to tackle'

24 Possibilities: - ship enters port of loading - discharge of containers finished Presumably last possibility because aim of the drafters of the convention is to extend the obligation under art 14 + more logic as at the beginning of the voyage is interpreted as starting from the loading of vessel

25 1.3 Deck carriage of containers

26 3.1 Importance of deck carriage - 65% of container-carrying capacity is usually on deck - Greater risks: swept or slide overboard, moisture damage, seaworthiness of vessel (trim of vessel) Need for regulation - But: Carrier needs discretion in deciding where to stow the container

27 3.2 Container carriage on deck expressly allowed - Goods may be carried on deck in 3 situation: 1 required by law (art 25.1.a) 2 in accordance with contract of carriage, or customs usages or practices (art 25.1.b) 3 carried in containers that are fit for deck carriage, and the decks are specially fitted to carry such containers (art 25.1.c)

28 - Distinctive categories: Not necessary to comply with art 25.1.b if art 25.1.a or.c applies deck must not be specially fitted to carry containers?! HOWEVER, duty included in: 1) Art 13.1 properly and carefully care for the goods 2) art 14.a make and keep the ship seaworthy

29 3) art 14.c make and keep holds and parts of ship safe Container considered as part of ship when other containers are stowed above or alongside and thus support these container. Modern container ships: deckless, so always stacked

30 Guarantee for obligations Art 79: 1. Unless otherwise provided in this Convention, any term in a contract of carriage is void to the extent that it: (a) Directly or indirectly excludes or limits the obligations of the carrier or a maritime performing party under this Convention; (b) Directly or indirectly excludes or limits the liability of the carrier or a maritime performing party for breach of an obligation under this Convention; or 2. Unless otherwise provided in this Convention, any term in a contract of carriage is void to the extent that it: (a) Directly or indirectly excludes, limits or increases the obligations under this Convention of the shipper, consignee, controlling party, holder or documentary shipper; or (b) Directly or indirectly excludes, limits or increases the liability of the shipper, consignee, controlling party, holder or documentary shipper for breach of any of its obligations under this Convention.

31 Aim achieved? YES: - First convention with express provisions for container transport, uncovered situations now covered BUT: - Still imperfections (eg interpretation problems, strict liability of shipper)

32 Pieter Neels Mechelsesteenweg Antwerp Belgium

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