THE CARRIER S OBLIGATION OF SEAWORTHNESS UNDER COMMON LAW, HAGUE/HAGUE VISBY RULES, HAMBURG RULES AND THE ROTTERDAM RULES.

Transcription

1 THE CARRIER S OBLIGATION OF SEAWORTHNESS UNDER COMMON LAW, HAGUE/HAGUE VISBY RULES, HAMBURG RULES AND THE ROTTERDAM RULES. AUTHOR: Billy Gwini Maritime Law Scholar and International Trade Compliance Consultant. 1.0 INTRODUCTION The rules governing liability of the sea carrier are the central part of international maritime conventions. They regulate the allocation of risks and balance of rights and responsibilities between the carrier and the cargo interests. More specifically, they determine when and to what extent the carrier is liable for economic loss resulting from loss of, or damage to, goods or delay arising while the goods were in the custody of the carrier. In many legal traditions, the carrier was strictly liable for the damage of goods during transportation of cargo by sea. In other words, the fault or negligence of the carrier was not a basis of its liability. The carrier did not seem to have much complaint regarding the strict liability (liability without fault) and

2 did not mind being the guarantor of the safe arrival, as the only available vessels were small sailing ships and cargoes were not usually of a perishable nature. 1 The practice developed through time witnessed an attempt to allocate risks between the carrier and the cargo interest in the bills of lading. Bills of lading were originally issued by carriers only to acknowledge the receipt of goods. Later on, bills of lading assumed the task of allocation of risks between the carrier and the cargo interests. Indeed, carriers started to insert clauses in their bills of lading not only to exempt themselves from liability relating to the common law exceptions but also liability arising from all perils of the sea and navigation of any kind whatsoever. This brought about the complete reversal of the liability without fault widely recognized before. The practical effect of this practice was to exonerate the shipowners from all liability as carriers and reduce the substantially to the condition of irresponsible bailees. Carriers used their superior bargaining power and abused the freedom of contract in their favour. This negatively affected the interests of cargo owners and necessitated the statutory intervention to provide a minimum protection for the cargo interests. The objective of statutory regulations in international maritime conventions is to create a fair balance between carriers and cargo interest by defining the carrier's liability regime. At the core of carrier's liability regime are the basis of carrier s liability and the allocation of burden (onus) of proof. At the common law, the carrier's liability was strict (liability without fault). However, the later statutory developments in Hague rules, Hague-Visby rules, Hamburg rules and Rotterdam rules have introduced and established fault based liability schemes. 2.0 THE CARRIER S OBLIGATION OF SEAWORTHNESS UNDER COMMON LAW, HAGUE/HAGUE VISBY RULES, HAMBURG RULES AND THE ROTTERDAM RULES 2.1 THE CARRIER S OBLIGATIONS AT COMMON LAW The laws which today regulate the carriage of goods by sea including the liability regimes of the international conventions, have firm foundations in the English common law which imposed upon both the carrier and the shipper certain undertakings. These undertakings included an obligation on the carrier to provide a seaworthy ship, fit to meet and undergo the 1 Simon Baughen, Shipping Law. London: Routledge, 2009

3 perils of the sea and other incidental risks to which the necessity she must be exposed in during the course of the voyage What is seaworthiness? The vessel must be in such a state at the start of the voyage that it can perform the contract voyage in safety, both as regards the vessel itself and the particular cargo to be carried on the voyage. Seaworthiness as regards the vessel Vessel unseaworthiness can arise from defects affecting the safety of the vessel or those affecting the safety of the cargo. The former must usually be proved to exist at the time of sailing. Examples of unseaworthiness are: leaky hull, defective propellers, and a crankshaft with a flaw in a weld. A vessel may be unseaworthy in a non-physical sense, if she lacks documentation required by the law of the vessel s flag or by the laws, regulations or lawful administrative practices of governmental or local authorities at the vessel s ports of call. 3 Seaworthiness as regards the cargo carried The vessel must also be able to carry the cargo safely on the contract voyage. Uncargoworthiness will amount to unseaworthiness, even though the vessel itself might well be able to complete the contract voyage in safety. Examples of uncargoworthiness are: defective cargo gears, leaky hatch covers, and a defective bullion room in which to store a cargo of gold sovereigns. Cargoworthiness is relative to the cargo carried. A vessel may be able to carry one cargo safely but not another, depending on the characteristics of the goods carried. Thus uncargoworthiness is relative to the cargo carried. A vessel may be able to carry one cargo safely but not another, depending on the characteristics of the goods carried. Thus in Tattersall v National SS Co, a vessel was unseaworthy for the carriage of livestock because the holds had not been disinfected after discharging a previous cargo of cattle that were infected with foot and mouth disease. The warranty extends beyond the vessel itself to the equipment on board necessary for the safe carriage of the cargo. In the Maori King (Owners) v Hughs, a cargo of frozen mutton was damaged during the voyage due to the breakdown of 2 Ibid 3 Dofossez et al. Seaworthiness: The adequacy of the Rotterdam Rules approach < urnals > [accessed September 25, 2017]

4 the vessel s refrigeration unit. The ship owners were unable to rely on exceptions clause protecting them in the event of failure or breakdown of machinery, insulation and other appliances. Such a clause did not protect them in respect of their breach of the implied obligation to have the refrigeration unit working properly at the start of the voyage so as to make the vessel cargoworthy. 4 Similarly in Stanton v Richardson, the shipowner was held to have breached the implied obligation when its pumps were unable to cover a cargo of wet sugar tendered by the charterer. Although the vessel s pumps could cope with dry sugar, the shipowner had still broke the warranty because the charter gave the charterer an option to load wet sugar, hence the charterer was entitled to assume that the vessel had the equipment necessary to carry the wet sugar safely by reason of the option given to it in the charterparty to carry that specific cargo. At common law the vessel must usually be cargoworthy when the cargo is loaded, rather than when the vessel sails. If the vessel becomes uncargoworthy after this point, this will not necessarily amount to breach of the implied warranty. That will depend on whether the cause of the subsequent uncargoworthiness was latent at the time of loading. This was the case in Ciampa and Ors vs British SN Co, where a cargo of lemons was loaded from Naples for Marseilles. Prior to loading at Naples the vessel had been to Mombasa, where there had been an outbreak of plague. Because of this, the port authorities required the vessel to be fumigated prior to discharge. The lemons were damaged during the fumigation process. The damage was held to result from a breach of the implied warranty because, at the time that the lemons were loaded at Naples, it was inevitable that they would have to be fumigated at Marseilles THE COMMON LAW DOCTRINE OF STAGES AND SEAWORTHINESS At common law the duty of seaworthiness operates at different points in the contract of carriage and is not a continuous obligation throughout the voyage. This is known as the doctrine of stages. The most usual stages are the commencement of loading of cargo and the sailing of the vessel. A deficiency in the ship s condition at the loading stage may not amount to a breach of the duty of seaworthiness provided that it is remedied by the sailing stage. For example a ship may be unable to sail safely without adequate charts, but this deficiency will 4 Simon Baughen, Shipping Law. London: Routledge, Ibid

5 not impair here ability to load cargo. Further stages may exist, depending on the circumstances of the voyage. For long voyages, the vessel will need to bunker at an intermediate port. The provision of proper bunkers is part of the duty of seaworthiness. In these circumstances, it will crystallise not only on sailing, but also on rebunking en route. In the Vortigen, the vessel rebunkered with insufficient coal, and as a consequence, had to have recourse to the plaintiff s cargo of copra as fuel. The contract contained a clause excepting the negligence of the master and crew. However, the shipowners were unable to rely on it because they had broken the absolute warrant of seaworthiness that had reattached as regards the provision of bunkers at the intermediate port THE CONSEQUENCES OF UNSEAWORTHINESS AT COMMON LAW Unlike deviation, unseaworthiness behaves like any other contractual breach. It gives rise to right to damages, but not to any automatic right to terminate the contract. The innocent part will have that right only if the consequences of the breach are so serious as to frustrate the commercial purposes of the contract. The warrant of seaworthiness is therefore strictly speaking, a misnomer. 3.0 THE CARRIER S OBLIGATION OF SEAWORTHINESS UNDER THE HAGUE/HAGUE VISBY RULES 3.1 EVOLUTION OF THE HAGUE AND HAGUE VISBY RULES Unrestricted freedom of contract allows parties with a dominant market position to impose their terms and conditions on parties in a weaker position. Before the 1 st World War, shipowners occupied this position of dominance. They used this position to impose on shippers, bills of lading containing very widely drafted exclusion clauses. After the 1 st World War, the International community recognized the need to redress this imbalance. The result was the Brussels Convention of 1924 which gave birth to The Hague Rules and later on their amendments the Visby rules in The Hague and Hague- Visby rules attempted to impose uniformity into contractual terms relating to the carriage of goods under bills of lading. In doing so, a balance was struck between the interests of maritime nations and of trading nations. 6 Ibid

6 3.2 THE CARRIER S DUTIES UNDER ART III The carrier's main duties under the Hague and Hague-Visby rules are to issue a bill of lading, to exercise due diligence to keep the ship seaworthy, not to deviate from the agreed route and care for the goods. The starting provision governing the duties of a carrier under Hague- Visby rules are Art-III (1 and 2) which specifically state: 1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to a) make the ship seaworthy; b) properly man, equip and supply the ship; c) make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation. Due diligence to make the ship seaworthy At the common law, the duty of the carrier to provide a seaworthy vessel is an absolute duty. This shows there is no exonerations from liability for loss or damage are available if the ship is unseaworthy. However, the burden of proving unseaworthiness was on the party asserting it. Besides, there was no governing legislation and parties were at liberty to contract in such terms as they may please, subject of course to such agreements not being contrary to public policy. The carriers had the contractual freedom to escape liability for unseaworthiness by expressly negotiating and contracting out the terms concerning the responsibility. It is submitted that the freedom of the carriers to contract out the liability for unseaworthiness had been detrimental to cargo interests. 7 The Hague and Hague-Visby rules made three significant changes to the undertaking of carriers in relation to unseaworthiness. First, it reduced an absolute and/implied warranty of the seaworthiness under common law to a duty to exercise due diligence to provide a seaworthy vessel. Article III of Hague-Visby rules modified the traditional Anglo-American rule of absolute liability for damage caused by unseaworthiness of a ship to negligence liability. Under this rules of law unseaworthiness which is latent and undetectable by due diligence before the voyage commences or unseaworthiness that arises after the voyage is commenced does not make the carrier liable. Still carriers are at liberty to assume a more onerous obligation by expressly warranting the seaworthiness of a vessel in the contract for 7 UNCITRAL: A comparative analysis of the rules. < > [Accessed on September ]

7 the carriage of goods.secondly, the contractual freedom to do away with responsibility in relation to seaworthiness was abolished. Lastly, the burden of showing unseaworthiness, which was previously upon the party asserting it, is changed. Under Hague and Hague-Visby rules the burden of showing that a carrier or his servants and agents had exercised due diligence to keep the ship seaworthy is upon a carrier. The carrier is liable for cargo damage caused by unseaworthiness of its vessel only when it cannot prove that before and at the commencement of a voyage it exercised due diligence to discover and correct all the unseaworthy conditions. Is a duty of seaworthiness a delegable duty? As a matter of necessity shipping involves many people other than the carrier such as agents, servants, ship repair yards, surveyors, etc. Faults committed by these people could render a ship unseaworthy. Is a carrier then liable? This legal question was decided in one English case. The decision of a court in this particular case has shown that faults of these persons does not exonerate the carrier of its duty to exercise due diligence to make the ship seaworthy and by its nature this duty is nondelegable. The cargo was damaged in the course of a voyage by the failure of a fitter of the ship repairers to secure the inspection cover to on storm valve. The cargo owner sued the ship-owner in the contract and recovered. It was held that the fact that the repairs had been carried out by a reputable independent contractor is no defence. The obligation to make a ship seaworthy under art-iii (1) is the fundamental obligation that the owner cannot transfer to another. The rules impose an inescapable and non-delegable personal obligation. It is immaterial whether the ship-owner has entrusted the task of keeping the ship seaworthy to an independent contractor as well. 8 Is the duty of a carrier to provide a seaworthy vessel under Hague-Visby rules a continuous obligation? The literal reading of Hague-Visby rules shows that the duty of seaworthiness is restricted to exercising due diligence before and at the beginning of the voyage. This literally means before loading of cargo has commenced and until the vessel weights anchor or slips her lines to sail. The duty does not seem continuous and ends after the voyage commences. The carrier is duty bound to provide a cargoworthy ship starting from pre-loading and during the time of loading. The provision of the Hague-Visby rules are unclear if the carrier is duty 8 University of Oslo. Basis of Carrier s Liability < [accessed 24 September 2017]

8 bound to provide a fully staffed, equipped and supplied vessel while the loading is in progress. It is illogical to demand a carrier to provide a fully staffed, equipped and supplied vessel at the stage of loading so long as the vessel is ready to receive the agreed cargo. Hence, it should be sufficient for fulfilling the duty under this provision to have a fully manned, equipped and supplied ship immediately before the commencement of a voyage. Normally the obligation under the Hague-Visby rules concerning the seaworthiness terminates at the commencement of voyage. As discussed above, the literal reading of the relevant Hague-Visby rules reveals that the period of obligation is before and at the beginning of the voyage. A ship, which is not fit to receive the cargo, is unseaworthy from the very beginning. The undertaking practically however, applies throughout the voyage, given that the concept of seaworthiness extends to cargoworthiness and includes the duties listed out in sub-paragraphs (b) and (c) of Art-III (1). 4.0 CARRIER S OBLIGATION OF SEAWORTHINESS UNDER THE HAMBURG RULES The Hague and Hague-Visby rules embody a compromise between the interests of shipowners and those of cargo owners. By and large, this compromise has succeeded in imposing a clear and uniform regime for dealing with cargo claims arising out of sea carriage. However, changing transport patterns have meant that the rules are now starting to show their age. For example, the emergence of the sea waybill after the 1968 Visby amendments to the Hague rules means that this document falls outside the Hague and Hague-Visby rules, which are focused exclusively on the bill of lading. Neither version can deal with multimodal carriage. Indeed the tackle to tackle focus of the rules, means that they do not cover the whole of the sea carrier s period of responsibility under port to port carriage. Furthermore cargo interests have for a long time felt that, the balance achieved in the Rules, unduly favoured sea carriers. 9 9 Ibid

9 The Hamburg rules are an updated and more cargo friendly version of The Hague and Hague Visby rules. 4.1 Changes to duties /obligations, liabilities and immunities of the carrier under Hamburg rules Provisions are made in the Hague-Visby Rules regarding the obligations of the carrier to make the ship seaworthy and to care for the cargo, while no reference to them is made in the Hamburg Rules. One of the basic obligations of the sea carrier under Hague-Visby rules as discussed above is the undertaking as to the seaworthiness. The Hague-Visby rules under its art-iii impose the express obligation of the seaworthiness upon the carrier. Unlike Hague- Visby rules, the Hamburg rules do not impose the express responsibility to make their vessel seaworthy on vessel owners. The only express obligation imposed on a carrier under Hamburg rules is not to negligently damage the cargo. The omission of express provision in Hamburg rules is based on the ground that it is sufficient for the purpose of establishing the liability of the carrier to adopt the principle of the presumed fault and place on the carrier the burden of proving that it acted with due diligence. 10 Does lack of express duty make any practical difference as to the undertaking of the carrier in relation to seaworthiness? Despite the absence of the express duty of seaworthiness, the carrier assumes extensive responsibility equivalent to obligations under art-iii of the Hague- Visby rules. Contrast to the position under the Hague-Visby, which requires seaworthiness before and at the beginning of the voyage, the obligation of the carrier in relation to seaworthiness is continuous in the Hamburg rules through its art 5(1). The broad wording of the article makes it possible for the courts to extend the obligation of seaworthiness to new developments. The Hamburg rules further increases the shipowner s liability as well as expanding the period of responsibility. The Hamburg rules apply during the period when the goods are under the carrier s custody as well as throughout the voyage and at the ports of loading and discharge. This undertaking literally is broader than the corresponding duty under Hague-Visby rules. Art III of the Hague-Visby rules restricts carrier s duty of exercising due diligence to keep the ship seaworthy before or at the commencement of the voyage Phillipe Delebecque, supra note no 49, pp Defossez, Delphine Aurelie Laurence, Seaworthiness: The Adequacy of the Rotterdam Rules Approach< ollection=journals> [accessed on23/ 09/2017]

10 5.0 CARRIER S OBLIGATION OF SEAWORTHINESS UNDER THE ROTTERDAM RULES The Rotterdam rules substantially modifies the period of obligation of the carrier. Seaworthiness is drafted as a continuous duty, under art 14 carriers have a duty to make and maintain their vessel seaworthy condition. On deck carriage is covered under the Rotterdam rules, which is not the case with the Hague/Hague- Visby Rules. The period of responsibility is extended to door to door. Article 18(1) provides the basis of liability. Carriers are liable for loss or damage which happened during their period of responsibility. The convention has not adopted the simple presumed fault model of the Hamburg rules, but has based on the obligations of the carrier on a modified version of the Hague/Hague-Visby rules. Article 13 is an equivalent provision to Art III (2), but includes a reference to delivery. Article 14 is an equivalent provision to Art III (1), but the carrier s due diligence obligation of seaworthiness now continues throughout the voyage. The obligation of seaworthiness is also expressly extended to containers that are supplied by the carrier 12. There are also two provisions dealing with seaworthiness indirectly. These provisions gives the carrier right to decline to load cargo or to dispose of cargo already loaded. Article 15, in wording similar to that found in Art IV (6) of the Hague and Hague-Visby rules, entitles the carrier or a performing party to decline to receive or to load, and to take such other measures as are reasonable, including unloading, destroying or rendering goods harmless if the goods are or appear likely to become during the carrier s period of responsibility an actual danger to persons or to render the vessel unseaworthy. Art 16 permits the parties to sacrifice goods at sea for preserving seaworthiness and saving human life. 12 Article 1 (26) defines a container as ant type of container, transportable tank or flat, swap body, or any similar unit load used to consolidate goods, and any equipment ancillary to such unit load.

11