The Legal Regulation of the Multimodal Carriage of Goods
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1 Nadezda Butakova, PhD in Law, Associate Professor Department of Civil and Labour Law, Russian Presidential Academy of National Economy and Public Administration, North-West Institute The Legal Regulation of the Multimodal Carriage of Goods The UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (2008) (the "Rotterdam Rules") is one more necessary step in the development of legal regulations for the international carriage of goods. The Rotterdam Rules provide international regulation for the first time not only for transportation of goods by sea but also by land (i.e., regulation of combined or multimodal carriage of goods). The Rotterdam Rules seek to establish a new liability regime for carriers by changing the network liability system; the rules envision a predictable liability system that will offer a new alternative for parties engaged in multimodal transportation. Multimodal transportation contracts are typically defined as contracts for the carriage of goods by more than one mode of transportation. The United Nations Convention on International Multimodal Transport of Goods (1980) (the "1980 Convention") defines the term multimodal transport as combined transport. Article 1, Paragraph 1 of the 1980 Convention defines international multimodal transport as the carriage of goods by at least two different transport modes under a multimodal transport contract; the goods are picked up in one country by a multimodal transport operator and taken to a designated delivery place in a different country. Under the 1980 Convention, transportation is multimodal when it satisfies the following conditions: a multimodal transportation contract should govern the transaction; there must be more than one mode of transportation; and cargo should be transferred into the custody of a multimodal transportation operator for delivery in a different country. The Convention also stipulates that transportation is not multimodal if the cargo is delivered through different transport modes under separate contracts (i.e., if the cargo is not delivered pursuant to a single contract). The shipper chooses the mode of transport. The concept of multimodal transport is not new; it was acknowledged in the container revolution, which changed the transport world and international trade. As a result of containerisation, multimodal transport for general goods is becoming standard trade practice. Currently, multimodal transportation may be by sea, inland waterways, rail, road and/or air, depending on the routing. Such transport modes can be combined in different ways. The primary advantage of the multimodal transportation of goods is to maximise the advantages of different transport modes and the extra services offered by operators related to transportation formalities, such as executing transport invoices, intraport
2 forwarding of goods, stacking, handling, transhipment, storing and storage of goods during transportation. The longest transportation segment for multimodal routes in cargo transport is typically the sea leg. As a rule, sea transport is relatively inexpensive and competitively priced. However, in certain cases, the railway leg is long, and the primary transportation load is through railway. Multimodal transportation allows the customer or shipper to maintain contact directly through the multimodal operator not through the separate carriers which is the most comfortable and efficient mode of communication. The multimodal operator must have absolute control over each leg of the carriage, which enables a network of separate carriers to be utilised effectively and creates a regulated transportation management framework that, on the one hand, ensures that an operator is free to plan and manage the entire transportation process and, on the other hand, facilitates coordinated cooperation among different carriers. Thus, the primary criteria for multimodal transportation are the quality and efficiency of transportation services and the level of control exercised by the multimodal operator. The primary tasks for multimodal transportation include the following: to avoid transportation failures, to reduce transportation costs and to timely deliver goods to their destination. Traditionally, unimodal transportation was the most widely used system for transportation. In a unimodal transportation system, the cargo is delivered by one mode of transportation. Transportation is considered unimodal even if it includes several unrelated modes of transportation, i.e., when each leg is governed by separate contracts. Unimodal transportation became multimodal in two primary ways. First, forwarding companies expanded their activities by switching from exclusively intermediary activities to wholly or partly carrying goods with their own transportation system. Second, sea carriers expanded their sphere of activity to include not only sea transportation but also logistics services for delivering goods, customs clearance and hiring motor or railway transport. Multimodal transportation should first and foremost minimise transportation loss, red tape and transit time. Multimodal transportation should be as profitable for the operator and as competitive in the transportation market as unimodal transportation, which was traditionally the most profitable mode of transport based on transportation costs. Multimodal transportation is rapidly growing. Thus, in the first half of 2011, the volume of goods carried from the European Union to Russia by multimodal transport increased by 29%. The peculiarity of multimodal transportation is that in the first place it takes into account the cargo and not the mode of transport and ensures the integrative transport process between the shipper and the consignee. Multimodal transportation is utilised to optimise the transportation process. In today's globalised economy, the transportation process is not isolated from other logistics processes, and transportation has become a logical and important segment of world trade. Thus, multimodal transportation is an answer to the growing market demands of economic globalisation, which unites the spheres of production and sales such that they are more mobile, productive and manageable. The notion of multimodal transportation is reflected in such documents as the International Federation of Freight Forwarders Association (FIATA) Combined
3 Transport Bill of Lading, the Baltic and International Maritime Council Combidoc, and the combined bill of lading or Combibill. Such documents are primarily based on the Tokyo Rules, which were adopted at the Tokyo Conference of the Comité Maritime International in In 1973, the International Chamber of Commerce promulgated international rules that regulated document execution for multimodal transportation that were primarily based on the Tokyo Rules. Nevertheless, the United Nations Conference on Trade and Development (UNCTAD) considered such regulations unsatisfactory and designed a new document to regulate multimodal transport, which was the 1980 Convention. The provisions of the 1980 Convention required that 30 countries must join to make it effective, but this number was never reached. The next step for UNCTAD, which was dissatisfied with the delay in the 1980 Convention becoming effective, was to elaborate and adopt the Rules for Multimodal Transport Documents. The new Rules became effective 1 January, Currently, the latest edition of the Rules, the UNCTAD/ICC-95 Rules, is in force. Based on the Tokyo Rules, the multimodal transport operator is defined as the party legally responsible for multimodal transportation. Thus, there are several types of operators. Operators that operate sea vessels. These consist of the following: 1) companies that operate sea vessels and also contractually organise further transportation of goods to the destination by hiring other companies; and 2) container terminal operators that also engage in sea, motor and railway transport. MAERSK, for instance, is one of the most notable sea vessel operators. Operators that do not operate sea vessels. These are carriers that operate through motor or rail or air transport. Operators that do not operate transportation vessels. These are classic middlemen that are more often referred to as freight forwarders. The operator enters into a multimodal transport contract with the shipper or client as a principle in its name regardless of whether it is a carrier or a middleman. Typically, one of the transport modes is the leading mode. Multimodal transportation is executed through a door-to-door transportation contract, and each transportation leg with a definite transport mode is executed by issuing an invoice or a bill of lading. Thus, the network liability norm is applied when it is possible to establish when, where and the type of transport cargo damaged or lost. Thus, an operator is liable as though it had formed a separate contract for a definite leg using a definite transportation mode. The operator can apply for redress from the party that caused the damage to the cargo, i.e., from the actual carrier. However, if it is impossible to identify the exact time and place of damage, the operator is liable for the carriage of goods and cargo loss, damage or delay in delivery throughout the multimodal transportation, based on the multimodal transport contract. Such operator liability is referred to as the uniform liability system. Article 19 of the 1980 Convention confirms the aforementioned propositions. When the loss or damage to the goods occurred during the particular of the multimodal transport, in respect of which an applicable international convention or mandatory national law provides a higher limit of liability than the limit that would follow from application of the Convention, then the limit of the multimodal transport operator s
4 liability for such loss or damage shall be determined by reference to the provisions of such convention or mandatory national law. Thus, the 1980 Convention retains the operator s network liability only to the extent that it is greater than the uniform liability. The 1980 Convention proposed cancelling the network norm, which is why many countries refused to support it; for these countries, renouncing network liability meant renouncing the established rules regulating transportation by different modes that benefit the shipper s state. In the compromise, there is a tendency to limit carrier liability and to enhance operator liability, which burdens the interests of carriers, charterers and forwarding agents (i.e., the parties that render transportation services, rolling stock and other transport services). Many researchers have expressed the wellfounded opinion that network system renunciation accompanied by increased limits for operator liability is excessive protection for cargo-owner interests. The opponents of network liability note that the network liability system creates more problems than it solves and that multimodal transportation is segmented. Preserving network liability allows the operator to use mandatory national laws that restrict liability to limits that are much lower than the operator liability limits stipulated by the 1980 Convention. The procedure for defining an operator s liability in multimodal transportation is also reflected in the Rotterdam Rules. According to Article 26 of the Rotterdam Rules, a carrier is only liable for those goods that are lost, damaged or delayed during the sea leg. If the cargo is damaged (delayed) when the carrier is responsible but before the goods are loaded onto the ship or after they are discharged from the ship, the Rotterdam Rules do not prevail over the provisions of other international documents. Such provisions apply when the shipper forms a separate and direct contract with the carrier for a definite transportation stage and the goods are lost, damaged or delayed. Thus, although the Rotterdam Rules address matters related to regulating multimodal transportation, they do not solve the primary problem, which is identifying a carrier s liability throughout the full multimodal transportation route. In his article about the Rotterdam Rules, Professor B. Tetley arrived at the same conclusion: he believes that the Rotterdam Rules should be adapted to the 1980 Convention 1. Thus, the primary obstacles to forming a unified multimodal transportation chain are the controversies and side effects connected to the vague legal position of multimodal operators, particularly in defining operator liability. This issue has been discussed internationally for many decades. Clearly, the main problem is that participants in the transportation process and transport business generally should react to the newly proposed legal documents (the 1980 Convention and the Rotterdam Rules). Although a clear and predictable legal position is required, operators and shipping companies do not wish to increase their liability beyond that already defined in the existing network system. However, the liability system is ripe for strict unification. Rendering the Rotterdam Rules effective worldwide is a strong argument for modifying the multimodal network system. 1 Tetley William. Some General Criticisms of the Rotterdam Rules. 20 December 2008 г./ No_1.pdf
5 References: Lebedev V.P., Remeslo A.Yu. Multimodal transportation as a kind of international carriage of goods and international law / Levikov G.A., Tarabanko V.V. Multimodal transportation (condition, problems, tendencies). M., Translit, Tetley William. Some General Criticisms of the Rotterdam Rules. 20 December 2008 г./ cism_of_uncitral No_1.pdf
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