Hague-Visby Rules

End of the 19th century and start of the 20th century the balance of power in relation to the contracting for the carriage of goods by sea had swung heavily in favour of owners. The net result of this was that owners tended to exclude liability for virtually anything which could happen on board their vessels and, applying the rules of freedom of contract, to accept little if any responsibility for the carriage of goods on board their vessels. In order to promote international trade and develop a system that was fairer to both parties the Hague Rules were developed. Subsequent amendment to the Hague Rules resulted in the Hague-Visby Rules. The Rules (Hague and/or Hague-Visby) were drafted to apply to contracts of carriage of goods by sea, and particularly bills of lading or similar documents of title, and, in general terms, it is compulsory to apply the rules to the carriage of goods by sea under bills of lading from a large number of countries including the United Kingdom. These rules are not applicable to charterparties. However, to the extent that a voyage charterparty is similar to a contract of carriage of goods under a bill of lading the rules are often incorporated into the charterparty to provide a framework of obligations on the shipowner and the charterer and balancing limits of protection afforded by the exceptions to the rules. The incorporation of the rules into a charterparty is achieved by a paramount clause. In very general terms the rules impose an obligation on the Shipowner to exercise due diligence to ensure that the vessel is seaworthy and fit for the carriage of the particular cargo. In return, if the shipowner can establish the exercise of due diligence to ensure the seaworthiness of his vessel then he can rely upon the defences afforded to him by the rules in relation to any damage to the cargo which results during the laden voyage. In addition, the shipowner is entitled to limit liability in accordance with the terms set out in the rules to a capped monetary level.