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International Commercial LawMLL 336 TOPIC 3 Part 1 of 2 International Carriage of Goods Lecturer: Troy Keily …getting the goods from A to B…
An International Commercial Transaction 1. Contract Oz Chop Stick Exports Pty Ltd Japan Chop Stick Imports Ltd 2. Delivery 3. Payment 4. Trade barriers 5. Dispute 6. Foreign investment
Sea-Carriage Documents & Parties Contract of sale for goods between Seller and Buyer governed by CISG Seller / Shipper Carrier Buyer / Consignee Contract of carriage by sea governed by HVR Contract between Carrier and either Seller/Shipper or Buyer/Shipper – depending on agreed INCOTERM (C & D terms generally require Seller to arrange transport) On receipt of goods, Carrier issues a Bill of Lading to the Shipper
(A) Geographical sphere of application Article X The provisions of these Rules shall apply to every bill of lading relating to the carriage of goods between ports in two different States if: (a) the bill of lading is issued in a contracting State, or (b) the carriage is from a port in a contracting State, or (c) the contract contained in or evidenced by the bill of lading provides that these Rules or legislation of any State giving effect to them are to govern the contract; whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person.
Carriage of Goods by Sea Act 1991 (Cth) • COGSA gives effect to HVR • Art X HVR amended by COGSA Regs so HVR applies more extensively where Australian law governs • Amended Art X provides the HVR apply to sea carriage documents (not just Bills of Lading) regarding: • Carriage of goods from ports in Australia to ports outside Australia, regardless of the form of the sea carriage document; and • Carriage from ports outside Australia to inside Australia (subject to some exceptions); and • Interstate carriage where cargo is international
(B) Temporal sphere of application: ‘Carriage of goods’ Article 1(e) covers the period from the time when the goods are loaded on to the time they are discharged from the ship • Freedom to contract outside carriage of goods • Remember the carrier may also have a contractual liability (determined by the bill of lading or contract of carriage) to the goods during the time which is outside the ‘carriage of goods’
(C) Material sphere of application: ‘Goods’ Article 1(c) includes goods, wares, merchandise, and articles of every kind whatsoever except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried
(A) General duty of due diligence Article III(1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to: • Make the ship seaworthy; • Properly man, equip and supply the ship; • 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.
Great China Meat Industries Co Ltd v Malaysian International Shipping Corp [1998] (HC) “Several things may be noted about the obligation imposed upon the carrier by Art III r 1 to make the ship seaworthy. First, it fixes the time at which the obligation operates as "before and at the beginning of the voyage". It therefore resolves the dispute that had been litigated in relation to time policies and voyage policies of marine insurance about whether a warranty of seaworthiness implied in such a policy was a warranty about the condition of the vessel at the time of sailing, or at the commencement of each of several distinct and different parts of a voyage, or was a warranty extending to the whole of the period of the policy. Secondly, it is not an absolute warranty; the obligation is to exercise due diligence. In cases where loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence is on the carrier (Art IV r 1). Thirdly, however, seaworthiness is to be assessed according to the voyage under consideration; there is no single standard of fitness which a vessel must meet. Thus, seaworthiness is judged having regard to the conditions the vessel will encounter. The vessel may be seaworthy for a coastal voyage in a season of light weather but not for a voyage in the North Atlantic in mid winter.”
Great China Meat Industries Co Ltd v Malaysian International Shipping Corp [1998] (HC) “Thus, definitions of seaworthiness found in the cases (albeit cases arising in different contexts) all emphasise that the state of fitness required "must depend on the whole nature of the adventure”. The vessel must be "fit to encounter the ordinary perils of the voyage"; it must be "in a fit state as to repairs, equipment, and crew, and in all other respects, to encounter the ordinary perils of the voyage insured". Further, if the question of seaworthiness is to be judged at the time that the vessel sails, it will be important to consider how it is loaded and stowed. If the vessel is overladen it may be unseaworthy. If it is loaded or stowed badly so, for example, as to make it unduly stiff or tender it may be unseaworthy. Nor is the standard of fitness unchanging. The standard can and does rise with improved knowledge of shipbuilding and navigation. Fitness for the voyage may also encompass other considerations as, for example, the fitness of the vessel to carry the particular kind of goods or the fitness of crew, equipment and the like. The question of seaworthiness, then, may require consideration of many and varied matters.”
The Muncaster Castle case [1960] Facts Held Carrier liable for ship’s unseaworthiness despite the fact that the firm engaged was reputable and person carrying out work was not an employee of carrier • Cargo (ox tongue) damaged during voyage from Sydney to England because sea water entered hold through inspection covers on storm valves • Ship had been inspected in Glasgow by reputable firm of ship repairers • Ship repairer employee neg failed to tighten nuts holding covers after inspection
Leesh River Tea Co v British India Steam Navigation Co [1967] Facts Held Employee ‘thief’ acted outside his course of employment and shipowners had not breached duty to provide seaworthy ship Art 4(2)(q) HVR exempts carrier from liability when damage not caused by actual fault or privity of the carrier or the fault or neglect of his agents/servants • Employee of stevedoring company engaged by shipowner stole brass plate which covered a storm valve – ship unseaworthy • Sea water entered hold, damaging cargo
Tattersall v National Steamship [1988] Held Ship was unseaworthy even though the same ship would probably have been suitable to carry other cargo, such as metal or timber • Ship hired to carry cattle held not to be seaworthy because it had not been disinfected despite the fact that there was a warning of an outbreak of foot and mouth disease
The Europa case [1908] Facts Held Regardless of the unseaworthiness of the ship, the cause of the damage (collision) was not a direct result of that unseaworthiness Shipowner thus exempt under a contract clause covering the collision • Ship was technically unseaworthy • Damage to cargo caused by water entering ship after the ship collided with a dock wall
Great China Meat Industries Co Ltd v Malaysian International Shipping Corp [1998] (HC) Facts Held Cargo owner could not succeed because it had not established the vessel was unseaworthy Shipping company had complied with its obligation to properly man, staff and equip the ship Unnecessary to consider the perils of the sea defence because the shipping company had fulfilled its obligations to properly man, staff and equip the ship • GCMI was cargo owner • MISC was carrier • Contract of carriage to carry containers containing aluminium can body stock in coils from Sydney (Aust) to Keelung (Taiwan) • Vessel encountered rough weather (worse that was predicted) and cargo was damaged • Shipping company claimed perils of the sea defence • Cargo owner claimed the perils of the sea defence did not apply because the shipping company knew about the dangers before setting sail
Great China Meat Industries Co Ltd v Malaysian International Shipping Corp [1998] (HC) • Kirby J: • The costs of big oceangoing liners always staying in port just because of some predicted bad weather would far outweigh the savings to the few cargo-owners who suffer loss because of bad weather
(B) Duty of properly and carefully dealing with goods Article III(2) Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
(C) Duty to issue a bill of lading Article III 3. After receiving the goods into his charge the carrier or the master or agent of the carrier shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things: (a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts, provided such marks are stamped or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are contained, in such a manner as should ordinarily remain legible until the end of the voyage. (b) Either the number of packages or pieces, or the quantity, or weight, as the case may be, as furnished in writing by the shipper. (c) The apparent order and condition of the goods. Provided that no carrier, master or agent of the carrier shall be bound to state or show in the bill of lading any marks, number, quantity or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking.
(3) Can the carrier’s liability be excluded? Article III(8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. A benefit of insurance in favour of the carrier or similar clause shall be deemed to be a clause relieving the carrier from liability.
(A) Burden of proof on the carrier Article IV(1) Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to 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 in accordance with the provisions of paragraph 1 of Article III. Whenever loss or damage has resulted from unseaworthiness the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this article.
(C) Necessary and reasonable deviation Article IV(4) Any deviation in saving or attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom.
(D) Un-notified dangerous goods Article IV(6) Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any.
(E) Liability of carrier’s servants and agents: Himalaya clause Article IV bis (2) If such an action is brought against a servant or agent of the carrier (such servant or agent not being an independent contractor), such servant or agent shall be entitled to avail himself of the defences and limits of liability which the carrier is entitled to invoke under these Rules.
(F) Financial limitations on the carrier’s liability Article IV(5) • Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding the equivalent of 666.67 units of account per package or unit or units of account per kilo of gross weight of the goods lost or damaged, whichever is the higher. • The total amount recoverable shall be calculated by reference to the value of such goods at the place and time at which the goods are discharged from the ship in accordance with the contract or should have been so discharged. The value of the goods shall be fixed according to the commodity exchange price, or, if there be no such price, according to the current market price, or, if there be no commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality. • Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned. Except as aforesaid such article of transport shall be considered the package or unit.
(F) Financial limitations on the carrier’s liability Article IV(5) cont • The unit of account mentioned in this Article is the special drawing right as defined by the International Monetary Fund. The amounts mentioned in h_visby/art/art04_5asub-paragraph (a) of this paragraph shall be converted into national currency on the basis of the value of that currency on a date to be determined by the law of the Court seized of the case. • Neither the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result. • The declaration mentioned in sub-paragraph (a) of this paragraph, if embodied in the bill of lading, shall be prima facie evidence, but shall not be binding or conclusive on the carrier. • By agreement between the carrier, master or agent of the carrier and the shipper other maximum amounts than those mentioned in sub-paragraph (a) of this paragraph may be fixed, provided that no maximum amount so fixed shall be less than the appropriate maximum mentioned in that sub-paragraph. • Neither the carrier nor the ship shall be responsible in any event for loss or damage to, or in connection with, goods if the nature or value thereof has been knowingly mis-stated by the shipper in the bill of lading.
(B) Notice of loss: at time of removal of goods Article III(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. The notice in writing need not be given if the state of the goods has, at the time of their receipt, been the subject of joint survey or inspection.
(C) Time limitation: one year from delivery Article III(6) cont. Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered. This period, may however, be extended if the parties so agree after the cause of action has arisen. In the case of any actual or apprehended loss or damage the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. 6 bis. An action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph if brought within the time allowed by the law of the Court seized of the case. However, the time allowed shall be not less than three months, commencing from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself.
Comparison of the Hague-Visby Rules and Hamburg Rules See Scott Thompson, The Hamburg Rules: Should They Be Implemented in Australia and New Zealand?
The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (known as the ‘Rotterdam Rules’) • Not yet in force • As of 12 October 2009, the Rotterdam Rules have attracted 21 State signatories • But no State has ratified the rules • A total of 21 States must sign and ratify the Rules before they Rules enter into force • UPDATE (as of Sept 2011): • Currently 24 signatory States and 1 ratification. The Rotterdam Rules have still not entered into force
“[T]he [Rotterdam Rules] establishes a uniform and modern legal regime governing the rights and obligations of shippers, carriers and consignees under a contract for door-to- door carriage that includes an international sea leg … The Rotterdam Rules provide a legal framework that takes into account the many technological and commercial developments that have occurred in maritime transport since the adoption of those earlier conventions, including the growth of containerization, the desire for door-to-door carriage under a single contract, and the development of electronic transport documents. The Convention provides shippers and carriers with a binding and balanced universal regime to support the operation of maritime contracts of carriage that may involve other modes of transport.” (Souce: UNCITRAL, ‘2008 – United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea – the Rotterdam Rules’ (2009) United Nations Commission on International Trade Law <http://www.uncitral.org/uncitral/en/uncitral_texts/transport_goods/2008rotterdam_rules.html>, (accessed 29 October 2009).)
Wide definition of contract of carriage • Regulate contracts for carriage wholly or partly by sea • ‘contract of carriage’ is defined broadly to include: • contracts for carriage (against payment) from one place to another, involving carriage by sea but potentially also other modes of transport (Art 1(1)) • Period of liability is broader • Period of responsibility is defined in terms of when the carrier or performing party receives the goods and when they are delivered (rather than in terms of the duration of a sea voyage) (Art 12(1)) • But, where loss, damage or delay occurs wholly before or wholly after the sea leg of a voyage the Rotterdam Rules may potentially give way to other pre-existing conventions that deal specifically with the relevant mode of transport (Art 26)
