Chapter 9

The Hamburg Rules and the Rotterdam Rules

Chapter Contents

Introduction

During the late 1960s, the Hague Rules and the Hague-Visby Rules came under vehement attack from underdeveloped nations who believed that the ‘operation of the “traditional maritime law” along with certain aspects of international trade law, impaired [their] balance of payments and ensured [their] continued poverty and perpetual underdevelopment in an industrial age’.1 The United Nations Conference on Trade and Development (UNCTAD),2 charged with the task of examining the operation of the Hague Rules and the commission of a working paper,3 consulted interested parties ranging from shippers, shipowners, insurers and legal bodies from many countries and concluded that there was a compelling need for a new carrier liability regime. A number of convincing objections in respect of the two existing conventions on carriage by sea were put forward. In brief:

•Lack of a uniform standard for burden of proof in both conventions. Where there was a reference to burden of proof, as in Art IV(1),4 the courts tended to interpret it in favour of the carrier, thus placing the shipper under a burden difficult to displace due to a lack of access to facts.

•Two of the long list of exceptions found in Art IV(2) operate exclusively in favour of the shipowner. Article IV(2)(a), which allows the carrier to escape liability for the ‘act, neglect or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship’, is objectionable on policy grounds since it allows the carrier to escape for negligent acts that take place on his vessel, despite his control of the cargo and the vessel.5 Art IV(2)(q) – the catch-all exception – gives the carrier an opportunity to escape liability arising from events not covered by Art IV (2)(a)–(p).6

•The ‘tackle-to-tackle’ formula adopted by the Hague-Visby Rules does not address carriage involving lighterage and transhipment adequately.7

•Article IV(4) seems to permit the carrier to deviate solely for the purposes of saving property; if this was the intended effect, it imparts an unfair advantage to the carrier.

•Loss due to delay in delivery is not specifically covered by the Hague-Visby Rules, even though some jurisdictions tend to read Art IV(1) widely.8

•The one-year time limit for bringing actions is too short since, in practice, it takes longer than a year to establish the identity of the party against whom suit must be brought.9

•Lack of provisions on jurisdiction and arbitration in the Hague Rules results in the inclusion of unfair jurisdiction and arbitration clauses in the bill of lading.

•Although Art III(8) renders null and void any clause that attempts to lessen or limit the liability of the carrier below that set by the Hague Rules, it does not deter the carrier from inserting such clauses.10 For instance, there is no mechanism for compensating a cargo owner for legal costs should he test the validity of such clauses.

10See Shah, ‘The revision of the Hague Rules – key issues’, in Mankabady (ed), The Hamburg Rules on the Carriage of Goods by Sea, 1978, Sijthoff, at p 5.

The results of the UNCTAD study were passed on to the United Nations Commission on International Trade Law (UNCITRAL),11 who took on the task of drafting a new convention. The move to the UNCITRAL did not, however, dampen the political zeal12 in the drafting of the Convention on the International Carriage of Goods by Sea 1978 (hereinafter ‘Hamburg Rules’). In drafting the convention, UNCITRAL had the following aims:

... the removal of such uncertainties and ambiguities as exist and at establishing a balanced allocation of risks between the cargo owner and the carrier, with appropriate provisions concerning the burden of proof, in particular the following areas, among others should be considered for revision and simplification:

(a)responsibility for cargo for the entire period it is in the charge or control of the carrier or his agents;

(b)the scheme of responsibilities and liabilities, and rights and immunities incorporated in Arts III and IV of the convention as amended by the Protocol [Hague-Visby Rules] and their interaction, and including the elimination or modification of certain exceptions to carriers’ liability;

(c)burden of proof;

(d)jurisdiction;

(e)responsibility for deck cargos, live animals and transhipments;

(f)extension of the period of limitation;

(g)definition under Art I of the convention;

(h)elimination of invalid clauses in bills of lading;

(i)deviation, seaworthiness and unit limitation of liability.13

The regime of carrier liability under the Hamburg Rules, in broad terms, is far more stringent than that of the Hague or the Hague-Visby Rules.The liability of the carrier is based on the principle of presumed fault or neglect, which means that the onus is on him to show otherwise. The carrier does not have the benefit of a long list of exceptions, including the negligence in navigation exception. Further, the Hamburg Rules are more of a self-contained code than the other two conventions since, among others, they include specific provisions on jurisdiction, the carrier’s right to freight and demurrage.

Reaction to the Hamburg Rules can be neatly classified into those against14 and those for15; needless to say, each camp had influential members. According to the anti-Hamburg Rules group, the convention, drafted largely under political pressure, did not reflect commercial practicalities and predicted increased insurance costs16 and uncertainty by ‘casting aside the results of half a

11Established in 1966 under GA Res 2205, 21 UN GAOR Supp (No 15) at 115, UN Doc A/7134.

12See Frederick, ‘Political participation and legal reform in international maritime rule making process: from the Hague Rules to the Hamburg Rules’ (1991) 22(1) JMLC 81 for an interesting account of the role of politics in international maritime treaties.

13TD/B/C 4 86; TD/B/C 5/ISL/8 Annex 1.

14See Moore, ‘The Hamburg Rules’ (1978) 10(1) JMLC 1; Tetley, ‘The Hamburg Rules – a commentary’ [1979] LMCLQ 1.

15 Honnold, ‘Ocean carriers and cargo; clarity and fairness – Hague or Hamburg?’ (1993) 24(1) JMLC 75. Professor Honnold was a member of the US delegation to the 1978 conference.

16Chandler, in ‘A comparison of “COGSA”, the Hague/Visby Rules and the Hamburg Rules’ (1984) 15 JMLC 233 writes ‘[the] Hamburg Rules were meant to cut overall shipping costs, particularly for the developing countries . . . they might well raise costs’ (at p 237). A fairly recent study on the effects of the Hamburg Rules is that of Eun Sup Lee who conducted a survey on insurance in Korea. According to Lee, the traders felt that the increase in carrier liability would not change cargo insurance practices, and change in insurance premiums would at most be minimal. The carriers, on the other hand, felt that the Hamburg Rules would have a strong impact on their business terms and there would be a rise in the costs of liability of coverage. To meet these costs, instead of raising freight they would try to ‘save by resorting to re-engineering, mark up reduction, and service reduction’. Eun Sup Lee on the basis of his study concludes that ‘ . . . in the long term, the Hamburg Rules have the potential to induce a restructuring of insurance practices . . . [and] majority of carriers, however, will not be able to charge additional freight because of intensive competition in the industry. Freight levels will consequently not be directly affected by the Hamburg Rules in the short term’: ‘Analysis of the Hamburg Rules on marine cargo insurance and liability insurance’ (1987) 4 ILSA Journal of International and Comparative Law 153.

century of expensive litigation and pave the way for another half century of legal debate on a new and different regime’.17 It has also been suggested that the drafting of the Hamburg Rules, civilian in style, also contributed to its unpopularity.18 As for those in favour, the Hamburg Rules promote a fair allocation of risks. And as for the argument that they ‘will herald a period of uncertainty and confusion is . . . a little like refusing to update computer software because it takes a certain investment in time to learn the new program and derive the full benefits from the innovation’.19

Despite its cold reception from the shipowning countries, the Hamburg Rules came into force on 1 November 1992 under the impetus of developing nations.20 This Convention now exists alongside the other two well established conventions: the Hague Rules and the Hague-Visby Rules. They are not yet part of English law, although it is likely that the English courts will be called on to apply and interpret the Convention.21 The parties may specifically incorporate the Hamburg Rules to a bill of lading or charterparty. Where the bill of lading attracts the mandatory application of the Hague-Visby Rules, the voluntary incorporation of the Hamburg Rules is unlikely to be regarded as void under Art III(8) of the Hague-Visby Rules since the liability scheme and liability amounts are favourable to the cargo interest.

It must also be pointed out that, despite of the small number of ratifications, the Hamburg Rules have impacted indirectly on the maritime legislation of countries with noticeable shipowning interests. For instance, China,22 Korea,23 the Nordic countries24 and Australia25 have hybrid maritime legislation that reflects both the Hague Rules/Hague-Visby and Hamburg Rules. More recently, the US Maritime Law Association26 has put forward proposals for a new Carriage of Goods by Sea Act that incorporates some of the Hamburg provisions. In light of these developments, it would be premature to dismiss the Hamburg Rules as unimportant.

What follows in this chapter is an overview of the main provisions in respect of carrier liability and immunities and shipper’s responsibilities that are found in other sea carriage conventions along with an account of some of the innovative provisions. The chapter concludes with an overview of a new convention for sea carriage drafted by UNCITRAL and the Comité Maritime International (CMI).

The Hamburg Rules

Interpretation of the convention

Before proceeding with an examination of the Hamburg Rules, a few words must be said about its interpretation since provisions of any international convention have to be interpreted in national

17See Waldron, ‘The Hamburg Rules’ [1991] JBL 305, at p 318, quoting BIMCO (Baltic and International Maritime Council) Bulletin produced in 1988.

18Tetley, ‘Mixed jurisdictions: common law v civil law (codified and uncodified)’ (2000) 60 Louisiana LR 677, at p 704.

19Nicoll, ‘Do the Hamburg Rules suit a shipper-dominated economy?’ (1993) 24(1) JMLC 151, at p 179.

20The convention needed 20 signatories to become effective. These came from Barbados, Botswana, Burkina Faso, Chile, Egypt, Guinea, Hungary, Kenya, Lebanon, Lesotho, Malawi, Morocco, Nigeria, Romania, Senegal, Sierra Leone, Tanzania, Tunisia, Uganda and Zambia. Since 1992, Austria, Burundi, Cameroon, Republic of Congo, Czech Republic, Dominican Republic, Gambia, Georgia, Jordan Kazakhstan, Liberia, Paraguay, Saint Vincent and the Grenadines and the Syrian Arab Republic have become contracting states to the convention.

21See East-West Corp v DKBS 1912 [2002] 2 Lloyd’s Rep 182.

22Li, ‘The Maritime Code of the People’s Republic of China’ [1993] LMCLQ 204; Xia Chen, ‘Chinese law on carriage of goods by sea’ (1999) 8 WTR Currents: International Trade LJ 89; Zhang Lixing, ‘Recent maritime legislation and practice in the People’s Republic of China’ (1994) 6 University of San Francisco Maritime LJ 273.

23Rok Sang Yu and Jongkwan Peck, ‘The revised maritime section of the Korean Commercial Code’ [1993] LMCLQ 403.

24Tiberg and Beijer, ‘The Nordic Maritime Code’ [1995] LMCLQ 527. The Nordic countries have adopted a substantial portion of the Hamburg Rules on the basis that they were forward looking.

25Hetherington, ‘Australian hybrid cargo liability regime’ [1999] LMCLQ 12.

26See www.mlaus.org for further details. The latest version of the US bill on carriage of goods by sea is also available at http:// tetley.law.mcgill.ca, along with Professor Tetley’s comments on the proposed changes.