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The Rotterdam Rules: A Modernized International Convention on Carriage of Goods by Sea

The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, also known as the Rotterdam Rules, aims to establish uniform rules for the international transportation of goods. It addresses gaps in existing laws and takes into account modern container transport and electronic commerce. The convention was adopted in 2008 and has been signed by multiple countries.

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The Rotterdam Rules: A Modernized International Convention on Carriage of Goods by Sea

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  1. The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (the “Rotterdam Rules”) Gertjan van der Ziel for the UNCITRAL Secretariat

  2. Compelling Reasons • Pursuit of Harmonization • Lack of a universal system: • Hague Rules – 1924 • Visby Protocol– 1968 • Hamburg Rules - 1978 • Domestic gap-filling legislation and Regional attempts • Achieve a global regime

  3. Compelling Reasons • Pursuit of Modernization • No current regime takes into account modern container transport • No current regime provides for electronic commerce

  4. Origin of the Convention • UNCITRAL Working Group on Electronic Data Interchange – 1994 and 1995 • Electronic bills of lading and transport documents • 29th Session of UNCITRAL - 1996 • Proposal to include in work programme a review of current practices and laws in international carriage of goods by sea • Aimed at establishing uniform rules where there were gaps • And to achieving greater uniformity where rules existed

  5. Origin of the Convention • Comité Maritime International (CMI) • Work already underway • Very important to the process: fundamental to involve industry early • From 1996 – 2001, CMI and UNCITRAL secretariat worked together • Information-gathering, consultations with industry • Industry extremely interested

  6. Origin of the Convention • 2000: Transport Law Colloquium – CMI & UNCITRAL • Problems identified: • Gaps in existing law: • Functioning of bill of lading and sea waybill • Relationship of transport documents to rights and obligations of seller and buyer of goods • Legal position of financing entities • Multimodalism • Electronic commerce • Clarification of roles, responsibilities, duties and rights of all parties • Clearer definition of delivery • Rules for non-localized damage to cargo • Provisions to prevent fraudulent use of bills of lading • Examine liability regime and limitations thereon

  7. Origin of the Convention • 34th Session of UNCITRAL – 2001 • Consultations had indicated that work could usefully commence towards an international instrument that would: • Modernize the law of carriage • Take into account the latest technological developments • Eliminate legal difficulties that had been identified • UNCITRAL established the Working Group on Transport Law to consider the project • Consider the preliminary text received from CMI • Broad mandate: including liability issues and the feasibility of door-to-door coverage

  8. Origin of the Convention • 34th Session of UNCITRAL – 2001 (continued) Report suggested the following additional issues should be considered in any future instrument: • Scope of application - Chapter 2 • Period of responsibility of the carrier – Chapter 4 • Obligations of the carrier – Chapter 4 • Liability of the carrier – Chapter 5 • Obligations of the shipper – Chapter 7 • Transport documents – Chapter 8 • Freight – deleted – Art. 42 “freight prepaid” • Delivery to the consignee – Chapter 9 • Right of control – Chapter 10 • Transfer of rights – Chapter 11 • Right of suit against the carrier - deleted • Time for suit – Chapter 13

  9. Time frame and Stakeholders • Time frame • 9th Session of WG III (Transport Law), April 2002 • 21st Session of WG III, January 2008 • 25 weeks of intergovernmental deliberations • Stakeholders • UNCITRAL Member and Observer States • IGOs: UNCTAD, UNECE, European Commission, MOWCA • NGOs: CMI, ICC, IUMI, FIATA, ICS, Bimco, International Group of P&I Clubs, IAPH, Association of American Railroads, OTIF, European Shippers’ Council, el Instituto Iberoamericano de Derecho Maritímo, IRU, IMMTA • Domestic industry consultations

  10. Adoption of the Convention • Draft Approved – July 2008 – 41st session of United Nations Commission on International Trade Law (UNCITRAL) • Adopted – 11 December 2008– 63rd Session of United Nations General Assembly • Opened for signature 23 Sept 2009 in Rotterdam • Recommended Convention be known as the Rotterdam Rules • Called upon all Governments to consider becoming party to the Convention

  11. Signing Ceremony – 23 Sept 2009 16 States signed: Congo Ghana Nigeria Spain Denmark Greece Norway Switzerland France Guinea Poland Togo Gabon Netherlands Senegal United States World Trade Volume: Over 25%* Compare: Hamburg Rules – 34 Contracting Parties: 5%* *According to UN United Nations 2008 International Merchandise Trade Statistics Yearbook

  12. Additional Signatures since 23 Sept • Madagascar 25 Sept 09 • Armenia 29 Sept 09 • Cameroon 29 Sept 09 • Niger 22 Oct 09 • Mali 26 Oct 09 • Luxembourg 31 Aug 10 • Democratic Republic 23 Sept 10 of Congo TOTAL: 23

  13. The 23 Signatory States Armenia Gabon Mali Poland Cameroon Ghana Netherlands Senegal Congo Greece Niger Spain Denmark Guinea Nigeria Switzerland DRC Luxembourg Norway Togo France Madagascar United States Intriguing mix: • strong maritime and trading nations • shipper and carrier states • developing and developed countries Process toward ratification underway in a number of States, including Spain and US

  14. Main Innovations • Scope of Application: Contractual approach • Hague and Hague-Visby: Bill of Lading • Hamburg: Contracts of carriage by sea • Rotterdam: ALL Contracts of carriage with an international sea leg • Scope of Application: Door-to-Door Transport • Hague and Hague-Visby: Tackle to tackle • Hamburg: Port to port • Rotterdam: Door to door • Limited network principle (Art. 26) • Art. 82 – International conventions governing the carriage of goods by other modes of transport

  15. Main Innovations • Electronic Commerce • Hague, Hague-Visby and Hamburg: No electronic commerce provisions • Rotterdam: Provides legal infrastructure for e-commerce (Chapter 3)

  16. Main Innovations • Containerisation • Hague-Visby and Hamburg: Limited to “container clause” in the per package limitation provision • Rotterdam: • Door to door contracts of carriage • Due diligence obligation extends to carrier-provided containers (Art. 14(c)) • Qualifying clause provision takes into account that carrier usually has no opportunity to inspect goods inside a container (Art. 40) • Shipper packing its own container must do so properly and carefully (Art. 27(3)) • Containers carried on deck subject to same regime as containers carried below deck (Art. 25)

  17. Main Innovations • More Balanced Carriers’ Liability • Due diligence extended to an ongoing obligation (Art. 14) • Onus of proof clearly on carrier regarding cause of damage and that it was not caused by its fault (Art. 17(2)) • Errors in navigation and management of the ship deleted as excuses for liability, and fire exception has been restricted (Art. 17(3)) • Deck cargo no longer outside regime (Art. 25) • Increase in monetary amounts for limitation on liability (Art. 59(1)) • Direct Liability of Maritime Performing Party (Art. 19)

  18. Main Innovations • Controlling Party, Right of Control and Transfer of Rights • Not dealt with in previous maritime transport conventions • Important for providing instructions to carrier during the carriage • Decoupled from transport document – important key to e-commerce • Limitation amounts on carrier liability • Hague: per package limitation only • Hague-Visby: 666.67 SDRs per package and 2 SDRs per kilo • Hamburg: 835 SDRs per package and 2.5 SDRs per kilo • Rotterdam: 875 SDRs per package and 3 SDRs per kilo

  19. Main Innovations • Delivery of goods to the consignee • Not expressly in current maritime transport conventions • Extensive rules on delivery in Chapter 9 of Rotterdam Rules to improve legal certainty • Identity of the carrier • To assist in identifying the contractual counterpart of the shipper (Art. 37) • Shippers’ obligations • Not new, but consolidated in a systematic and logical manner

  20. Main Innovations • Time for Suit • Hague, Hague-Visby: One year for cargo claimant to file before time-barred • Hamburg: Two years • Rotterdam: Two years • Jurisdiction and Arbitration • Hague, Hague-Visby: No specific rules • Hamburg: Specific provisions • Rotterdam: Opt-in chapters (Art. 91 declaration)

  21. Main Innovations Freedom of Contract Only in “volume contracts” – Art. 1(2) definition Aimed at large shippers with equal or greater bargaining power than carriers “series of shipments” – Shipper can insist on individual contract for each shipment to avoid Strong protection for the shipper – Art. 80: Volume contract must prominently state that it derogates from the Convention Must be individually negotiated or must prominently specify the derogations Cannot incorporate the derogations by reference or in a contract of adhesion Shipper must ALWAYS be given opportunity to contract without derogation Some provisions are ‘super-mandatory’ and cannot be derogated from

  22. Provisions of concern to IRU • Clear conflict of convention provision in article 82 • Where there is an actual conflict with inland conventions, like the CMR, the RR give way • Article 26 limited network system • Similar approach to contractual approach currently used (UNCTAD/ICC Rules) • Per package limitation on carrier’s liability • Clearly applies to each package of goods carried in a road vehicle - definition of ‘vehicle’ in art. 1(27)

  23. Provisions of concern to IRU • Per package limitation on carrier’s liability • Number of goods must be enumerated in transport document – no change from rule in Hague-Visby and Hamburg Rules • So-called ‘non-ordinary shipments’ counting entire road vehicle as a single package no longer allowed • Definition of maritime performing party clarified • Clearly excludes road and rail carriers from the scope of the RR

  24. Strong support from: • International Chamber of Shipping (ICS) • Bimco • International Group of P&I Clubs • World Shipping Council (WSC) • US Shippers’ Organization (National Industrial Transportation League) • European Community Shipowners’ Associations (ECSA) • American Bar Association • European Parliament • Arab League Workshop

  25. Conclusion • Industry-driven project • Global solution • Comprehensive instrument • Modernizes • Harmonizes • Preserves existing unimodal transport regimes • Commercial and Legal Predictability and Transparency • Enhanced efficiency • Reduced transaction costs

  26. The Rotterdam Rules For further information on the work of UNCITRAL please visit our web site http://www.uncitral.org/ THANK YOU FOR YOUR ATTENTION

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