Carriage of cargo by sea is of major importance for the development of global economic relations. It is characterized mainly by the international character of the operation, implementation in conditions of strong competition as well as in conditions of special risk, which results directly from the sea perils. The diversity of entities involved in the carriage of cargo by sea thus influences the complex legal relationship between them. It became necessary to standardize such complicated connections in the international arena.
Regulation of cargo transport by uniform, comprehensive regulations has been experiencing some difficulties for years. Such a situation is caused by frequent reluctance on the part of some states to comply with international norms that could limit their previous freedoms in this regard. These include the principle of freedom of contract in international maritime relations. Lack of restrictions in this matter sometimes resulted in situations when carriers, using their stronger position, transferred to its contractors the risk of damage to the cargo or even its loss. It was, therefore, necessary to internationalize the rules regarding the liability of the shipping carrier for the loss or damage of the cargo.
The Maritime Conventions, became known colloquially as the Hague-Visby Rules, had a significant impact in this respect.
The Hague-Visby Rules, in short RHV, constitute a set of international regulations regarding the international carriage of cargo by sea. They are made up of: The International Convention on the Unification of Certain Rules of Law relating to Bills of Lading of 1924 (the so-called Hague Rules) with amendments from 1968 and 1979 - the Brussels Protocol of 1968 amending the Convention (the so-called Visby Rules) and the Brussels Protocol of 1979.
Characteristics of rules
The Hague Rules made a special carrier's liability regime for damage resulting from the loss or damage of the cargo. The Rules were formed on the initiative of the International Law Association at the conference in Hague in 1921. The project was initially conceived as a set of regulations that were intended to be incorporated by carriers into the content of contracts concluded. However, this assumption was not implemented. The project was transformed into the International Convention on the Unification of Certain Rules of Law relating to Bills of Lading and was signed on 25 August 1924 in Brussels. The Hague Rules were created in defense of the interests of cargo owners and shippers who were in a weaker situation compared to carriers with an unregulated responsibility for the cargo entrusted to them. Until the Rules were implemented, the liability of the sea carrier under the bill of lading was heterogeneous. Sometimes the contractual freedom was limited only by the so-called good manners, which did not constitute effective protection for counterparties.
The Convention on Bills of Lading of 1924 unified the legal principles related to the use of the bill of lading, which was one of the basic documents used in maritime trade in those days. It is not without reason that the Hague-Visby Rules are called the international regulation of the carriage of goods by sea "based on a bill of lading". An important feature of the Hague Rules was also the mandatory nature of the provisions.
It is worth mentioning that the Convention on the bill of lading was modeled on the American Harter Act of 1893 (the so-called Harter Act 1893) and the Anglo-Saxon Laws of the early 20th century. These acts defined the scope of contractual freedom and established the legal consequences of introducing clauses exempting the carrier from liability to cargo contracts. The Hague Rules constituted an enormous compromise at that time. That compromise meant the approval of the adoption of mandatory international standards regarding the basic duties and liability of the maritime carrier in return for a catalog of restrictions or even the exemptions of its liability.
The Visby Rules is a Protocol from 1968. This act went further than its predecessor, predicting that the rules should have "the force of law" concerning the bill of lading. They were further refined with the next Brussels Protocol of 1979, which gave the final shape to the Hague-Visby Rules. The modifications introduced by the protocols were dictated by technological and documenting progress. The existing provisions of the convention were considered insufficient. The changes that they introduced have improved the situation of consignees and have extended the scope of the Convention in international relations. They also extended the categories of bills of lading to which the Rules would apply. The Rules deprived the carrier of the right to take evidence against the bill of lading in good faith. The container clause in the content of the rules stated that the shipper has the right to obtain compensation for losses of each piece of goods (according to its value) loaded into a container, provided that they were listed in the bill of lading.
Besides, these Rules introduced a uniform liability regime for claims based on contract and tort, as well as new rules for limiting the liability of the carrier. The Rules established an additional limitation period for recourse claims and granted the right to protection against liability in the scope covered by the carrier to the subordinates of the carrier. The carrier was deprived of the right to limit the amount of liability in a situation when it was on his side intentional fault. The Protocol of 1979, changing the Convention, in setting the limit of the carrier's liability for cargo damage was intended to replace Poincargo's Franc in the Hague-Visby Rules by the unit of calculation of the International Monetary Fund (Special Drawing Rights - SDR). The liability limit has been set at 30 francs per kilogram gross weight or 10 thousand francs per unit of a load. It is worth mentioning that accession to the abovementioned Protocol of 1979, known colloquially as the SDR Protocol, were interested particularly countries that are members of the International Monetary Fund.
Pursuant to the provisions of the Hague-Visby Rules, the contract of carriage applies only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by sea. The contract of carriage also includes a bill of lading or a document issued under a freight agreement, starting from the moment when this document regulates the relationship between the carrier and the bearer of the bill of lading. The role of the bill of lading in the regulations of this Convention is, therefore, the foreground. After receipt and acceptance of the goods, the carrier, master or agent of the carrier, at the request of the shipper, should issue an appropriate bill of lading, in which they will specify the identification characteristics of the cargo. The bill of lading thus creates a presumption that the carrier accepts the goods in under the bill of lading, however, the carrier cannot take evidence against its content, when it was transferred to the holder acting in good faith.
The carriage of goods shall cover the period from loading the goods on the ship until they are unloaded from the ship. The carrier is responsible for the loss or damage of the load. This responsibility, however, is slightly different from the various stages of transport.
Carrier's liability - ensuring the seaworthiness of the ship
The carrier is liable for damage caused by failure to exercise due diligence in the field of preparing the ship for voyage and thus ensuring its seaworthiness. This concept includes the proper equipping of the ship, manning and the fulfillment of all safety requirements. It also defines the ability to accept cargo on a ship, its correct carriage and security by its specification. In the event of actual unseaworthiness, the carrier may release himself from liability if he has demonstrated that he has taken all reasonable measures to comply with the obligation, but the factors affecting the unseaworthiness of the ship could not be detected and removed. The responsibility of the carrier for preparing the ship for the voyage is, therefore, a liability based on the principle of guilt. It has a superior character. It lasts from the time the ship is loaded to the start of the journey.
The duty of the carrier to exercise due diligence in loading the cargo is slightly different. In the situation when loading and distribution of the load were done incorrectly, which caused damage to the load, it is important to make an appropriate mention in the bill of lading.
It is noteworthy that if the shipper delivers a container or any similar transport equipment, then each of the packages or units listed in the bill of lading as loaded into such a container will be considered as one package or unit.
Exemptions of carrier's liability
The carrier is released from liability for the transported cargo during the journey, if the damage or loss of cargo was due to circumstances which he could not avoid, despite due diligence. Such circumstances include, among others: act, neglect, or default of the of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship (so-called nautical fault exemption); the occurrence of a fire, unless caused by the actual fault or privity of the carrier; damage from perils, dangers and accidents of the sea or other navigable waters; from force majeure; from act of war or act of public enemies; acts of state power, restrictions resulting from quarantine; the act or omission of the shipper, owner of the goods, his agent or representative; Latent defects not discoverable by due diligence; insufficiency of packing or its hidden defects; insufficiency or inadequacy of marks on packing and in the event of saving or attempting to save life or property at sea.
Concerning the last premise, the carrier will not be liable for loss or damage to the goods resulting even from the departure from the route if it is justified by rescuing. Saving human life at sea is a statutory duty of the master of the ship. This action, therefore, cannot be considered as a breach of the contract of carriage. Saving property at sea is optional and payable.
It should be noted that the provision of RHV states that any clause releasing the carrier from liability for loss or damage to the cargo, which resulted from negligence or failure to fulfill obligations, will be considered void.
The provisions about the amount of compensation are reflected in the regulations of the Polish Maritime Code 2001. Compensation for loss of cargo is calculated according to the normal value of the cargo. Compensation for damage is calculated according to the difference between the normal value of the cargo and the value in the damaged condition. The total amount recoverable should be calculated by reference to the value of such goods at the place and time at which the goods are discharged from the ship by 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. In the situation when the value of the cargo was declared before loading by the shipper and shown on the bill of lading or other document based on which the transport is carried out, the compensation cannot exceed the declared value of the cargo.
Limiting the amount of compensation
The Hague- Visby Rules are sometimes referred to as a convention of lesser liability of the carrier, as it is a maximum of 2 SDRs for one kilogram of gross cargo weight (or 666.67 SDR per unit). If the type and value of the goods had not been declared by the shipper before loading and had not been included in the bill of lading, this rate would be the maximum amount. The possibility to take advantage of the limitation of liability arises only in the absence of a declaration of the value of the cargo in the bill of lading. However, the limitation shall not apply if the cargo damage resulted from an act or omission which the carrier committed through intentional fault or gross negligence.
The claim from the contract of carriage expires after 2 years from the due date. Claims to the carrier, related to the cargo and issued by a person holding a bill of lading, expire after 1 year from the date on which the delivery took place or was due.
Application of Rules
The principles contained in the Rules are reflected in the Maritime Code mainly in Title I of Title VI. The provisions of the Code do not constitute, however, a repetition or translation of the Rules. It should be emphasized that the Hague-Visby Rules apply to carriage in which the carrier's obligation results from the bill of lading. A document that is not a Bill of Lading (e.g. an electronic bill of lading or even a sea waybill) may refer to Rules in its content, but only if the citation is effective between the parties the rules apply to this agreement. On the other hand, if the parties of the contract only incorporate all or only some of the provisions of the Hague-Visby Rules into their contract (the so-called paramount clause), these rules are contractual provisions. It is up to the contents of the bill of lading to decide whether the Hague-Visby Rules will bind the parties to the contract as legal provisions.
Article 10 states that “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 the bill of lading is issued in a contracting State, or the carriage is from a port in a contracting State, or 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.” Therefore, the provisions of the Convention apply to the vast majority of transports by bill of lading executed from or to Polish ports and from or to European ports. In this situation, all issues, related to the contract for the carriage of goods by sea where a bill of lading was issued, should therefore be resolved in the light of Polish jurisdiction, taking into account the provisions of the Hague-Visby Rules (the judgment on July 16, 2003, I ACa 1387/02, LEX No. 106683, Gdansk, the case of Jutha Parichart).
The importance and practical international reach of the Hague-Visby Rules are not only due to the significant number of ratifications and their popularity. The carrier's liability rules contained therein also affected the legislation of states that did not participate in the convention. Concerning an international bill of lading contracts, the Hague-Visby Rules apply by the power of law. They are used when at least one of the countries between which the transport of cargo is carried out is a party to the Rules or when a bill of lading is issued in such a country. The conventional regime also includes such a contract of carriage, which directly refers to the application of the Rules or acts incorporating them.
The lack of uniformity in the acceptance of the entire legal regime by the states, unfortunately, weakens the scope of the Rules and the desirable unification of regulations relating to the carriage of cargo by sea. Many countries refused to accept the Hague-Visby Rules, remaining in the Hague Rules, or even when they adopted the Rules, then did not accept the Brussels Protocol of 1979. The Hague Rules have accepted by 86 countries, but it should be emphasized that a number of countries have also come out of them, including Australia (1993), Denmark, Finland, Hong Kong, Norway, Sweden (1984), Italy (1984), Japan (1992), Lebanon (1997), the Netherlands (1982), Romania (2002) and the United Kingdom (1977). 23 countries are the Parties to the Visby Rules (Protocol 1979 - 24 countries). The Hague Rules has bound Poland since January 16th, 1936, Visby Rules - since May 12, 1980, and the Brussels Protocol since October 6, 1984.
It should be noted that the changes in the organization of shipping and international trade over the years have contributed to the gradual criticism of the Hague-Visby Rules. Some of the countries proposed more radical transformations. As a result of legislative work undertaken by the ONZ commission on international trade law - UNCITRAL (United Nation Commission on International Trade Law), the United Nations Convention on the carriage of goods by sea, called the Hamburg Rules, was adopted in 1978 in Hamburg. The convention introduced, among others a new definition of a contract of carriage and extended the scope of its operation to transport confirmed by other documents than a bill of lading. Despite the departure from the anachronistic regulations of the Hague-Visby Rules, the Hamburg Rules have not been approved by the "great flag states". Their impact on international maritime trade is still quite marginal. Although 34 countries have ratified the Convention, further legal modifications in the field of cargo transport by sea was necessary. Poland has not acceded to the Hamburg Rules.
We should also mention the latest achievement of international maritime legislation - the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea from 2009, referred to as the Rotterdam Rules. The main objective of the legislative work on the new convention was to replace the obsolete and, as already mentioned, for many years criticized the Hague-Visby and Hamburg Rules. However, the Rotterdam Rules largely rely on the system of existing regulations.
It cannot be denied that the Hague-Visby Rules of 1924, as amended in 1968 and 1979, for a long time will constitute a kind of foundation for contracts for the carriage of cargo by the sea on the international stage. Even the Rotterdam Rules, despite the legislative effort put in them, are quite complicated in comparison to earlier transport conventions. This fact makes it difficult to adapt to national legal systems. Probably also for this reason the Convention has been so far signed by 25 states; it was only ratified by the Congo, Cameroon, Spain, and Togo. Although its final text was received with great enthusiasm already more than a decade ago, the principles that it set up still do not come into effect. For its validity the ratification of the Rules for at least 20 countries is required. Thus, most of the economically developed countries still accept and apply the system resulting from the Hague-Visby Rules. Moreover, for the effective entry into force and ratification of the Rotterdam Rules, it would also be necessary to simultaneously terminate the RHV.
Summarizing, to shape the still developing international economic relations, the need to regulate such phenomena as multimodal transport, mass transport of dangerous goods, etc. seems to be a priority.
Legal adviser Mateusz Romowicz
Legal Marine - Legal Consultancy Gdynia