The backdrop
The allocation of risk between carrier and cargo interests has ebbed and flowed over the centuries. The Romans considered the carrier should shoulder the risk as they were the ones best placed to protect the goods from harm. However, the perils were numerous for sailing ships – navigation, extreme weather and piracy amongst them. Over time, these causes of damage/loss, along with the inherent vice of goods, became standard exceptions to a sea carrier’s liability. As shipowners became more powerful and influential in international trade, they set about applying wider exclusions to liability in bill of lading terms. Cargo insurance also evolved, allowing traders to transfer risk.
As the influence of cargo interests in America grew, so did a dislike for how courts upheld bill of lading exclusions under freedom of contract principles. This led to the Harter Act of 1893, a forerunner to the Hague Rules in seeking to achieve a more balanced risk allocation. However, US legislation was not going to stop foreign shipowners and courts from deciding different outcomes. On the seas, the risk landscape had also started to improve through the transition from sail to steam and shipping regulation. The first Safety of Life at Sea Convention (SOLAS) was adopted in 1914 following the Titanic disaster in April 1912.
The solution
As other nations adopted their own versions of the Harter Act, the need for more uniform rules grew. Comité Maritime International (CMI), a non-governmental international organisation whose purpose remains the unification of maritime law, was influential in the work culminating in 26 states signing the Hague Rules in Brussels on 25 August 1924. Inevitably, the rules were a compromise between ship owning nations and those more representative of cargo interests. The fundamentals included obligations on carriers which they could not contract out of, such as seaworthiness and duties of care in relation to the goods. As a quid pro quo, carriers would benefit from certain exceptions to liability,
limited (package) liability, a one-year time bar for claims, and rights and protections in respect of dangerous goods shipped onboard. Also, of significance for trade, the evidential value of the bill of lading as a receipt was affirmed, giving buyers essential confidence in the description of the goods in the bill and against which payment was made.
A patchwork of regimes
With the advent of container shipping, the Hague Rules were slightly revised by the Hague-Visby Rules in 1968. The relatively low package limit was increased, and a 1979 protocol amended the package limit currency to units of account in the form of Special Drawing Rights. Otherwise, the fundamentals of the Hague-Visby Rules are more or less the same as the Hague Rules.
As world trade increased, cargo interests and developing nations not party to the drafting of the Hague Rules gained greater influence. Calls for change were heard at the United Nations. Its trade body, the United Nations Commission on International Trade Law (UNCITRAL), was established in 1966 and the Hamburg Rules came into being in 1978. These rules did away with the carrier’s listed exceptions to liability, creating a presumption of fault on the carrier and extending the Hague Rules tackle-to-tackle responsibility to the places of receipt and delivery at ports. They also featured express provision for delayed delivery, an increased package limit and a two- year time bar. However, the Hamburg Rules failed to achieve the same uptake as the Hague/Hague-Visby Rules, which had stood for much uniformity for over 50 years.
UNCITRAL also wanted to establish a multi-modal convention more aligned with land-oriented liability regimes and more fit for the digital future. A 1980 multi-modal transport convention providing a single liability system failed to gain traction, so the patchwork of regimes still needed to be tackled. Leading nations and industry organisations, including the CMI, came together and their impressive work culminated in 2008.
THE REPORT | DEC 2024 | ISSUE 110 | 137
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