Period Coverage of the Hague-Visby Rules
Hague-Visby Rules are applicable to a particular contract of carriage covered by a Bill of Lading (B/L). Hague-Visby Rules do not necessarily govern entire transportation, but merely govern the part of the contract relating to sea transport.
Therefore, the term contract of carriage in Hague-Visby Rules is defined as constituting the period from the time when the cargo is loaded on to the time cargo is discharged from the ship.
In other words, tackle to tackle period, from the time when the ship’s tackle is hooked onto the cargo at the port of loading until the hook of the tackle is released at the port of discharge, if the carrier is responsible for loading and discharge.
According to Hague-Visby Rules, if the carrier is responsible for loading and discharge, carrier liability is not only during the actual carriage, but also during the loading and discharging operations. For example:
- cargo falls back on the dockside while being lifted aboard with the ship’s tackle
- cargo falls into the sea while being discharged into lighters
Hague-Visby Rules do not apply to any additional time during which the goods are under the control of the carrier outside the tackle-to-tackle period.
Today, under modern trading conditions such periods of time may be extensive since cargo for shipment, delivered to shipping agents nominated by the carrier, will frequently be discharged into a designated warehouse at its destination. Hague-Visby Rules Art VII provides that the parties are free to negotiate their own terms in respect of care of cargo before loading and after discharge, the carrier will seek, where possible, to exclude responsibility during this period. This is known as the before and after problem and is an obvious weakness in Hague-Visby Rules.
Another problem arises where cargo is shipped under a Through Bill of Lading or a combined transport document which envisages that cargoes will be transshipped at an intermediate port.
Hague-Visby Rules applicable to the contracts of carriage which are covered by bills of lading. In other word, such document relates to the carriage of goods by sea. Hague-Visby Rules will be inapplicable to any segment of the through transport which involves carriage by land or air.
According to Canadian court, even where sea carriage is envisaged throughout the transit, Hague-Visby Rules will not cover any period during which the cargo is lying on the dockside awaiting transshipment. Therefore, in Captain v Far Eastern Steamship Co case, cargo was shipped from Madras to Vancouver under a contract which envisaged that the cargo would be transshipped at some point on the route. Bill of Lading (B/L) contained a term providing that the responsibility of the carrier should be limited to that part of the transport performed by carrier on ship. Eventually, when cargo was transshipped at Singapore, the container vans were stored in the open for three weeks during which time cargo suffered rainwater damage amounting to some $32,000. Court held that the carrier was entitled to rely on the contractual clause excluding liability during this period since the Hague-Visby Rules did not apply to the period during which the cargo was stored on the dock, that period does not relate to the carriage of goods by sea.
In another case this decision has since been distinguished by Bingham J, in Mayhew Foods v OCL case, where the contract provided for the carriage of frozen poultry from Sussex to Jeddah. Poultry would be transported by road from Uckfield to a south coast port and there shipped on one of the defendant’s ship for Jeddah. Bill of Lading (B/L) which was eventually issued provided for the carrier to accept liability for loss or damage to the cargo from the time of receipt in Sussex to the time of delivery in Jeddah, although such liability was limited to $2 per kilo of the gross weight of the goods, that amount significantly below the Hague-Visby Rules’ limit. In the event the goods were shipped from Shoreham, and not Southampton as originally intended and the carrier subsequently took advantage of a liberty in the combined transport document to transship the goods in Le Havre. Poultry eventually arrived in Jeddah in a putrefied state due to the fact that the temperature control on the container had been set at plus (+) 4 degrees centigrade instead of the required temperature of minus (-) 18 degrees centigrade. Evidence suggested that the damage had occurred while the cargo was lying ashore at Le Havre awaiting transshipment, the carrier contended, on the basis of Captain v Far Eastern Steamship Co, that the Hague/Visby Rules were not applicable during this period and that he could therefore limit his liability to the contractual figure of $2 per kilo. In rejecting this argument Bingham J distinguished Captain v Far Eastern Steamship Co on the grounds that the shipper there was told when the contract was made that there would be transshipment and there were separate Bills of Lading (B/L) for the two legs of the voyage. On the other hand, in Mayhew Foods v OCL case, issued Bill of Lading (B/L) covered the entire voyage from Shoreham to Jeddah and the shipper had no knowledge of the carrier’s intention to invoke the liberty to transship the container in Le Havre. If the carrier decided to exercise contractual right to discharge, store and transship the cargoes en route, these were still operations in relation to and in connection with the carriage of goods by sea within the meaning of the Hague-Visby Rules definition.
Whenever cargoes are shipped from a contracting state under a Bill of Lading (B/L) which covers the entire sea-carriage through to the ultimate destination then, despite any intermediate transshipment, Hague-Visby Rules will cover the operation throughout the entire voyage.
Hague-Visby Rules Period of Responsibility
The Hague-Visby Rules, formally known as “The Hague-Visby Rules – The Brussels Protocol 1968”, are an international convention that establishes certain responsibilities and liabilities for parties involved in the carriage of goods by sea. They represent an update of the original Hague Rules, which were drawn up in 1924 in Brussels.
Hague-Visby Rules Period of Responsibility:
The period covered by the Hague-Visby Rules, in terms of a Carrier’s responsibility for the goods, begins when the goods are loaded onto the ship and ends when they are discharged from the ship. Specifically:
- Loading: The responsibility begins from the moment the goods pass the ship’s rail.
- Carriage: During the sea transit, the carrier is responsible for the goods.
- Discharge: The responsibility ends once the goods pass the ship’s rail during discharge.
It’s essential to recognize that the Rules do not apply during the pre-shipment or post-shipment periods, such as storage or inland transportation, unless the contract of carriage so stipulates.
This period of coverage is defined in Article I(e) and is further reiterated in Article II, which states that the Rules apply only to contracts of carriage covered by a bill of lading or any similar document of title.
Hague-Visby Rules’ Limitations:
The Hague-Visby Rules introduce several defenses and limitations for carriers. For instance, carriers may be exempted from liability under certain circumstances, such as “act of God,” war, strikes, or inherent vice in the goods.
If there’s a claim for damage or loss, the carrier’s liability is capped to a certain amount based on the weight or volume of the goods, unless the nature and value of the goods have been declared by the shipper and inserted into the Bill of Lading (B/L).
It’s also worth noting that many countries have adopted the Hague-Visby Rules into their national law, but there may be variations and nuances in implementation. Moreover, other regimes, such as the Hamburg Rules or the Rotterdam Rules, have been introduced over time to address some perceived deficiencies in the Hague-Visby Rules. As a result, the applicability of these rules might differ depending on the jurisdictions involved in a particular shipment.
Other Provisions in the Hague-Visby Rules:
- Deck Cargo: Historically, cargo stowed on deck was exempt from the rules and often transported at the shipper’s risk. However, under the Hague-Visby Rules, deck cargo is covered unless it’s stated in the bill of lading that the cargo is carried on deck and is carried at the shipper’s risk.
- Notice of Loss or Damage: To make a claim, the consignee or receiver must give written notice of any visible damage to the carrier at the time of discharge. If the damage is not apparent (i.e., hidden or latent), then notice must be given within three days. Without such notice, the carrier is presumed to have delivered the cargo as described in the bill of lading, making subsequent claims harder to pursue.
- Time Bar: Claims under the Hague-Visby Rules are time-barred after one year, which means that legal action must be initiated within one year from the date of delivery or from the date when the goods should have been delivered. Parties can agree to extend this period, but it can never be reduced.
Limitation of Liability in the Hague-Visby Rules :
The Hague-Visby Rules introduced a higher limitation of liability compared to the original Hague Rules. The carrier’s liability is limited to 666.67 Special Drawing Rights (SDR) per package or unit, or 2 SDR per kilogram of gross weight of the goods lost or damaged, whichever is higher.
Comparison of the Hague-Visby Rules with Other Rules:
- Hamburg Rules: These were introduced in 1978 to address certain concerns some countries had with the Hague and Hague-Visby Rules, particularly from the shippers’ perspective. Notably, the Hamburg Rules extend the period of responsibility of the carrier, covering the period from when they take charge of the goods to when they deliver them, potentially including some pre- and post-shipment periods.
- Rotterdam Rules: Introduced in 2009, these rules aimed to modernize and harmonize international carriage by sea, taking into account technological advancements and multimodal transport. The Rotterdam Rules extend the period of responsibility even further, covering door-to-door transport in many cases.
It’s essential for parties involved in the carriage of goods by sea to be aware of which rules apply to their contract and the relevant jurisdictions. Many shipping contracts specify the applicable rules, but where they do not, the rules that have been adopted by the relevant national law will usually apply. Given the differences in liability, period of responsibility, and other provisions, the choice of rules can have significant implications in case of a dispute. As always, seeking guidance from professionals or legal counsel familiar with maritime law can provide clarity in specific situations.
Misdelivery Claims and Time Bars in the Hague-Visby Rules
A recent adjudication by the Commercial Court, in the context of an appeal, reaffirmed an arbitration tribunal’s conclusion. The tribunal determined that the stipulation delineated in Article III Rule 6 of the Hague Visby Rules indeed pertains to misdelivery claims subsequent to the unloading of cargo (FIMBank PLC v KCH Shipping Co Ltd 2022).
According to Article III Rule 6 of the Hague Visby Rules, any grievance concerning maritime transportation of merchandise is precluded after a year unless the aggrieved party initiates legal action within twelve months of the actual delivery or the anticipated delivery date.
In the aforementioned appeal, FIMBank PLC held the Bills of Lading (B/L), crafted under the CONGENBILL template, inherently adopting the Hague-Visby Rules.
The consignment, belonging to FIMBank PLC, was released from the ship based on letters of indemnity in the absence of the Original Bills of Lading (B/L). Astonishingly, the consignment was erroneously dispatched to an unintended recipient.
Regrettably, FIMBank PLC initiated arbitration against the incorrect entity. The actions were taken against Mirae Wise SA, who, upon later discovery, were mere Bareboat Charterers rather than the legitimate Shipowners. The rightful entity to have been approached for arbitration was KCH Shipping Co Ltd.
Upon the realization of this oversight, FIMBank PLC advanced a claim against KCH Shipping Co Ltd, but tragically, this action was initiated after the critical one-year post-delivery period.
FIMBank PLC’s contention was that their claim wasn’t constrained by the time limit under Article III Rule 6 of the Hague Visby Rules for the following rationales:
- The delivery occurred post the cargo’s discharge, rendering the time constraint irrelevant;
- The time constraint wasn’t applicable to post-discharge misdelivery claims, given that such rules predominantly govern maritime transport obligations and become void once cargo is unloaded; and
- The provisions within the CONGENBILL exempted the Hague Visby Rules by stating the carrier’s non-liability for damages to cargo outside the time bracket of loading and unloading.
Nevertheless, the Tribunal determined that the time restriction of Article III Rule 6 of the Hague Visby Rules was applicable to grievances associated with post-discharge misdeliveries. Furthermore, the CONGENBILL format did not revoke the application of the Hague Visby Rules post-discharge.
The Court’s Verdict:
The Commercial Court, after meticulous examination of Article III Rule 6 of the Hague Visby Rules’ architecture and objectives, corroborated the Tribunal’s stance, ascertaining that the Hague Visby Rules are indeed pertinent to misdelivery claims.
The Hague Visby Rules’ intrinsic intent was to establish conclusive resolutions and aid Shipowners in settling their accounts.
Moreover, the Court concurred with the Tribunal’s observation: the Bills of Lading (B/L) inherently insinuated that the parties sought to prolong the jurisdiction of the Hague Visby Rules even post the actual discharge and subsequent delivery of cargo.
It was further discerned that the clauses within the CONGENBILL did not overtly overrule the Hague Visby Rules, ensuring their sustained applicability.
The temporal restriction, as embedded within Article III Rule 6 of the Hague Visby Rules, possesses extensive scope, transcending mere phases or apparent exceptions. Should parties desire to annul the Hague Visby Rules’ authority post-discharge, it must be explicitly negated contractually, which in this instance would be via the CONGENBILL. Moreover, it’s imperative for parties to discern intricate ownership structures in charter agreements and to be diligent in ascertaining that they pursue grievances against the appropriate entities.
What are Hague-Visby Rules?
The Hague/Hague Visby Rules represent an obligatory matrix of entitlements and duties pertinent to the maritime transport of goods. Beyond this foundational structure, contracting parties possess the latitude to deliberate supplementary stipulations at their discretion. However, this is contingent upon Article III Rule 8 of the Hague Visby Rules, which decrees that any endeavor to diminish the ascribed liability within these Hague Visby Rules shall be deemed invalid and non-binding. The Hague edicts were assimilated into English jurisprudence via the Carriage of Goods by Sea Act of 1924, subsequently undergoing refinements with the Carriage of Goods by Sea Act of 1971, ushering in the Hague Visby Rules.
The Hague-Visby Rules are a set of international rules for the international carriage of goods by sea. Hague Visby Rules are a modification of the original Hague Rules, which were drafted in 1924 in Brussels. The Hague-Visby Rules, in turn, came about as a result of a 1968 protocol, also done in Brussels.
The main objective of Hague Visby Rules is to establish a uniform system of rules governing the responsibilities and liabilities of carriers involved in the shipment of goods by sea. They primarily address the responsibilities of shipowners regarding the care of the goods and set out the conditions for exemptions from liability.
Some key aspects of the Hague-Visby Rules include:
- Scope of Application: The rules apply to all bills of lading (a document issued by a carrier to a shipper that acknowledges the receipt of goods for shipment) relating to the carriage of goods between ports in two different states if:
- The bill of lading is issued in a contracting state.
- The carriage is from a port in a contracting state.
- The contract of carriage provides that the rules apply.
- Carrier’s Responsibilities: The carrier is bound, before and at the beginning of the voyage, to exercise due diligence to ensure:
- The ship is seaworthy.
- The ship is properly manned, equipped, and supplied.
- The holds, refrigerating and cool chambers, and all other parts of the ship where goods are carried are fit and safe for their reception, carriage, and preservation.
- Exemptions from Liability: The carrier is exempt from liability for loss or damage arising or resulting from certain risks, such as:
- Acts of God (natural disasters).
- Acts of war.
- Seizures under legal process.
- Strikes or lockouts.
- Faults or errors in navigation or management of the ship.
- Other specified causes, provided they are not due to the carrier’s own wrongful act or neglect.
- Limitation of Liability: The rules establish a limitation on the liability of the carrier, often stated in terms of a specific amount per package or kilogram.
- Time Bar: Claims against the carrier for damage to goods must be brought within one year of their delivery or of the date when they should have been delivered.
It’s important to note that these rules have been adopted and ratified by many countries, but not all. Additionally, the rules might not apply to every type of contract for the carriage of goods by sea, as there are other international conventions like the Hamburg Rules and the Rotterdam Rules which can also apply, depending on the circumstances and the countries involved.
Why do we have Hague-Visby Rules?
Prior to the inception of the Hague Rules, contracting parties in affreightment relished an unbridled liberty to delineate their terms. This frequently culminated in expansive exemptions from accountability by maritime conveyors, capitalizing on their superior negotiation leverage. Consequently, the maritime trade was in pressing need of a standardized code to guarantee a more equitable framework, distinctly outlining the prerogatives and responsibilities of involved parties while stipulating the utmost permissible liability exemptions.
Which contracts are covered by the Hague-Visby Rules?
The Hague-Visby Rules (officially known as the “Hague Rules as Amended by the Brussels Protocol 1968”) are a set of international rules for the international carriage of goods by sea. They primarily relate to the rights and responsibilities of the carrier.
Contracts covered by the Hague-Visby Rules include:
- Bill of Lading: This is the most common contract that is covered by the rules. A bill of lading is a document issued by a carrier (or their agent) to acknowledge receipt of cargo for shipment. Even if a contract does not expressly incorporate the Hague-Visby Rules, if a bill of lading is issued in a contracting state, then the rules will usually apply.
- Similar Document of Title: This includes any document which serves the same purpose as a bill of lading, as long as it’s in a form that can be transferred to another party and entitles that party to delivery of the goods.
However, there are some contracts and scenarios where the Hague-Visby Rules do not apply:
- Charter Parties: The rules typically don’t apply to charter parties, unless the charter party bill of lading incorporates them.
- Goods carried on Deck: If goods are stated on the bill of lading to be carried on deck and are so carried, the Hague-Visby Rules do not apply.
- Live Animals: These are generally not covered by the rules.
- Certain Types of Ships: Ships not engaged in ordinary commercial operations, like warships, may not fall under the jurisdiction of the Hague-Visby Rules.
It’s essential to note that while the Hague-Visby Rules might apply by default in many situations, parties can often contract out of them or into them, subject to certain legal limitations.
Article I (b) delineates that the Hague Visby Rules are pertinent exclusively to contracts of conveyance endorsed by a Bill of Lading (B/L) or any analogous document of entitlement, insofar as this documentation pertains to the maritime transportation of goods.
Consequently, the Hague Visby Rules are not applicable to waybills or any other non-negotiable papers, given they don’t serve as Documents of Title (DOT). Hague Visby Rules also remain inapplicable to Bills of Lading (B/L) generated under charterparties, for the stipulations of the accord reside within the charter itself. Nevertheless, once a Bill of Lading (B/L) is transferred to an independent third entity, the Hague Visby Rules become pertinent, establishing the Bill of Lading (B/L) as the binding agreement between the transporter and the legitimate possessor thereof.
Furthermore, the Hague Visby Rules remain inoperative regarding charterparties, unless Hague Visby Rules are explicitly integrated within a Paramount Clause.
Thus, one may inquire: to which specific contracts of conveyance do Hague Visby Rules extend? Hague Visby Rules are applicable to Bills of Lading (B/L) that function as Documents of Title (DOT), specifically, the Order Bill of Lading (B/L). Commodities encompassed under an Order Bill of Lading (B/L) are mandated to be relayed to the individual specified by the Consignee, typically effected through an endorsement inscribed directly upon the bill. Moreover, the Hague Visby Rules are valid for Straight Bills of Lading (B/L), meaning those designated explicitly to a named consignee, notwithstanding the fact that Straight Bills of Lading (B/L) aren’t negotiable Documents of Title (DOT).
What is Paramount Clause in Ship Chartering?
In the context of ship chartering, the “Paramount Clause” refers to a provision that typically incorporates the Hague-Visby Rules (or sometimes the Hamburg Rules or Rotterdam Rules, depending on jurisdiction and agreement) into a Bill of Lading (B/L) or Charter Party.
Hague-Visby Rules provide an international framework for the rights and liabilities of shippers and carriers regarding the carriage of goods by sea.
The Paramount Clause ensures that even if a Charter Party or Bill of Lading (B/L) is governed by the laws of a particular country, the international conventions such as the Hague or Hague-Visby Rules will still apply where necessary, especially when dealing with the carriage of goods between countries that are signatories to these conventions.
An example of a Paramount Clause might read something like:
“Notwithstanding anything contained herein to the contrary, it is hereby expressly agreed that every service to be rendered hereunder shall be subject to all the terms and conditions of the Hague-Visby Rules, current at the time of shipment, which are incorporated herein and made a part hereof.”
This incorporation by reference ensures that both parties, the shipper and the carrier, are bound by the international standards set out in the Hague-Visby Rules, or whichever set of rules the clause specifies. This can be especially important for ensuring uniformity in standards and practices across different jurisdictions and mitigating potential legal ambiguities.
Purpose of Paramount Clause
Paramount Clause serves several crucial purposes:
- Uniformity and Predictability: International shipping involves numerous jurisdictions, each with its own set of laws and regulations. The Paramount Clause provides a standardized set of rules which helps in ensuring a consistent approach irrespective of the countries involved. This standardization benefits all parties as they can anticipate the legal parameters of their operations, making the process smoother and more efficient.
- Limitation of Liability: The international conventions, like the Hague-Visby Rules, often limit the carrier’s liability for loss or damage to goods. By incorporating these rules into a charter party or bill of lading through the Paramount Clause, carriers can ensure these limitations apply even if local laws might otherwise hold them to a different standard.
- Protection for Shippers: While the rules might limit carrier liability in some aspects, they also provide certain protections for shippers. The conventions require carriers to exercise due diligence in certain areas, like ensuring the ship’s seaworthiness. By having the Paramount Clause, shippers can be assured of these protections.
- Flexibility: It’s worth noting that while the Hague and Hague-Visby Rules are the most commonly referred to in Paramount Clauses, other conventions like the Hamburg or Rotterdam Rules can also be invoked based on the preference of the parties involved or the jurisdictions they operate in.
- Legal Clarity: In case of a dispute, having a Paramount Clause helps in reducing ambiguity. When both parties have agreed to abide by a specific set of internationally recognized rules, it provides a clearer framework for legal proceedings and can aid in dispute resolution.
In conclusion, the Paramount Clause plays an essential role in ship chartering. It bridges potential legal gaps, ensures a level of consistency across different jurisdictions, and offers protections for both carriers and shippers.
While the specifics of each Paramount Clause can vary based on the parties and jurisdictions involved, its overarching goal is to introduce predictability and clarity into the intricate world of maritime commerce.
What voyages are covered by the Hague-Visby Rules?
Article X of the Hague Visby Rules elucidates that their jurisdiction shall be invoked for every Bill of Lading (B/L) under the circumstances where:
- Bill of Lading (B/L) originates from a signatory nation
- The transport initiates from a harbor within a signatory nation
- The accord delineated within or substantiated by the Bill of Lading (B/L) decrees that these Statutes, or any national law embodying them, shall preside over the agreement.
Customarily, Hague Visby Rules are overtly integrated via a Paramount Clause situated on the obverse side of the consignment note, though the precise phrasing employed warrants scrupulous consideration.
Carrier’s Obligation under Hague-Visby Rules
- Carrier’s Obligation to provide a Seaworthy Ship
- Carrier’s Obligation to Care of Cargo
1- Carrier’s Obligation to provide a Seaworthy Ship
Article III (1) of the Hague-Visby Rules posits that a carrier is bound to exercise due
diligence (exercise meticulous care) both prior to and at the voyage’s onset, ensuring the ship’s fitness for sea, equipping it with a competent crew, ensuring ample provisions, and ascertaining the cargo holds are in prime condition to accommodate the goods. The duty to ensure the ship’s fitness for sea is limited to the loading phase and prior to the voyage’s commencement. This responsibility is not perpetual; hence, any flaws manifesting mid-voyage will not be attributed to the Carrier. The courts have discerned “due diligence” to be synonymous with the customary legal obligation of care—a duty that remains non-transferable.
Burden of Proof and Responsibility:
The onus of demonstrating exercised due diligence rests upon the Carrier. However, this obligation only emerges post the claimant’s substantiation that the ship was unseaworthy, and such negligence culminated in the loss. This evidentiary task can be arduous for a claimant given the Carrier’s exclusive possession of all pertinent details. Yet, judiciaries have often inclined towards offering claimants the presumption of truth. For instance, the detection of seawater within the holds frequently serves as self-evident proof of a ship’s unfitness in cargo disputes.
2- Carrier’s Obligation to Care of Cargo
Article III, Section 2 of the Hague-Visby Rules delineates that the Carrier is mandated to meticulously and judiciously load, manage, stow, transport, preserve, oversee, and unload the entrusted goods. The prescribed standard parallels the principle of ‘diligent care’, and the commodities must be conveyed in harmony with a robust system. This commitment to safeguarding the merchandise remains unbroken and spans from tackle to tackle; that is, from the genesis of loading to the culmination of unloading. However, frequently, the responsibility of loading and unloading the cargo shifts to the shipper or consignee, provided the charterparty stipulations are aptly integrated.
Burden of Proof and Responsibility:
The Carrier’s pledge to protect the cargo is unambiguously linked to the defenses enumerated in Article IV, Section 2 of the Hague-Visby Rules. The prevalent stance suggests that once the cargo owner demonstrates that the goods sustained damage during transit, the onus then lies with the Carrier to ascertain that the causation of said damage aligns with one of the exemptions delineated in Article IV, Section 2 (a) – (p), or to establish the absence of any violation of the Carrier’s protective duties. Furthermore, Article IV, Section 2 (q) of the Hague-Visby Rules grants a Carrier exemption from accountability if the loss if the loss occurred “without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier”.
Primary Obligations of the Carrier under the Hague-Visby Rules:
The Hague-Visby Rules, officially known as “The Hague-Visby Rules – The Hague Rules as Amended by the Brussels Protocol 1968,” are a set of international rules that govern the carriage of goods by sea. They were created to establish certain rights and obligations for carriers under bills of lading, to provide a baseline of standards that must be adhered to.
Here are the primary obligations of the carrier under the Hague-Visby Rules:
- Duty to Provide a Seaworthy Ship: The carrier has an obligation to ensure that at the beginning of the voyage, the ship is seaworthy. This encompasses the ship’s physical condition, its equipment, and the competence of its crew.
- Duty to Properly Load, Handle, Stow, Carry, Keep, Care for, and Discharge Goods: The carrier must take care of the goods throughout the entire journey. This means they have to ensure that the goods are properly loaded, handled, and stowed. They also have to ensure that the goods are kept in good condition throughout the journey and are properly discharged upon arrival.
- Issuance of a Bill of Lading: The carrier must issue a bill of lading upon the shipper’s demand. This bill will note the condition of the goods and their quantity or weight. It serves as evidence of the contract of carriage and receipt of the goods.
- Liability for Damages: The carrier will be held responsible for any loss or damage to the goods during the period they are in charge of them, with a few exceptions. The exceptions are detailed in the rules and include natural disasters, acts of war, acts of public authorities, and inherent defects in the goods.
- Limitation of Liability: The Hague-Visby Rules also contain provisions that limit the carrier’s liability. This is usually expressed in terms of a set amount per package or unit of weight. This limitation, however, does not apply if it is proven that the damage resulted from an act or omission of the carrier done with intent to cause damage or recklessly and with knowledge that damage would probably result.
- Time for Suit: The Hague-Visby Rules specify that any action against the Carrier must be brought within one year from the delivery of the goods or the date they should have been delivered. This is, however, subject to extension if the parties so agree after the cause of action has arisen.
These are just the primary obligations of the carrier under the Hague-Visby Rules, and there are additional nuances and details to each obligation.
Hague-Visby Rules’ Exceptions to Liability
Article IV, Section 2, of the Hague-Visby Rules enumerates seventeen distinct exemptions upon which a Carrier might anchor their defense when confronted with a contention. These exemptions are an elaboration upon the foundational four common law exceptions inherent to each carriage:
- Act of God
- Queen’s Enemies
- Inherent Vice
- General Average (GA) Sacrifice
The Hague-Visby Rules encompass three distinct exceptions, unparalleled in any other convention:
- 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
- Fire, unless caused by the actual fault or privity of the carrier
- The catch-all exception.
Although this may seem like an extensive list, a Carrier will not be able to rely on a listed
- Peril could have been avoided by exercise of reasonable care
- Operative cause of the loss was the unseaworthiness of the ship
- Fundamental breach of the contract of carriage.
Hague-Visby Rules’ Limitations to Liability
Carriers may circumscribe their responsibility for merchandise impairments under the stipulated Hague-Visby Rules, safeguarding themselves against the unforeseen perils linked to undisclosed high-valued commodities. Article IV (5) of the Hague Rules delineated the Carrier’s liability to a ceiling of £100 in gold value for each parcel or entity. While the Hague Visby Rules preserved this notion of “parcel or entity” for individual merchandise limitations, Hague-Visby Rules concurrently introduced an ancillary computation rooted in the cargo’s heft.
The fiscal metric for limitation, termed the SDR (special drawing right), is delineated by the IMF (International Monetary Fund). It stands at 666.67 units of account for each parcel or entity, or 2 units of account per kilogram of the item’s gross weight, with the superior value taking precedence in cases of loss or damage.
Hague-Visby Rules and Time Bar
Article III, Section 6 of the Hague-Visby Rules delineates that any contention regarding the transported merchandise shall become statute-barred unless legal actions are initiated within a year of their receipt, or the anticipated date of such receipt. This stands as a paramount consideration upon receiving a claim, granting the Carrier an unassailable protection against said assertion.
Hague-Visby Rules and Charter Parties
If the Hague-Visby Rules incorporated in a Charter Party, the Common Law obligation to provide a seaworthy ship is replaced by the duty to exercise due diligence to make the ship seaworthy before and at the commencement of the voyage.
Furthermore, Shipowners will also be able to rely on the wide range of defences listed in Art IV of the Hague-Visby Rules in respect of any of the duties Shipowners are expected to
perform under the Charterparty.
Shipowners will be able to rely on the one year time bar in respect of claims linked to the cargo carried. If the claim is not linked to the cargo, for instance a claim for lost freight, it is unlikely that the time bar will be applicable.
What are the Exceptions to the Hague-Visby Rules?
The Hague-Visby Rules, which stand for “The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading”, are one of the most important sets of rules that govern the carriage of goods by sea. They were developed to strike a balance between the interests of cargo owners and carriers. However, there are some exceptions and defenses available to carriers under these rules.
Here are the main exceptions and defenses:
- 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: If the damage to or loss of cargo was due to a navigational error or poor ship management, the carrier is exempted from liability.
- Fire: The carrier is not responsible for damage or loss due to fire unless it is caused by the carrier’s actual fault or privity.
- Perils, Dangers and Accidents of the Sea: This encompasses events that are unforeseeable and irresistible like storms, stranding, or other major accidents.
- Act of War or Act of Public Enemies: Damage or loss resulting from war or similar public hostilities.
- Arrest or Restraint of Princes, Rulers or People, or Seizure under Legal Process: Essentially, political acts or interventions that are outside the control of the carrier.
- Quarantine Restrictions: If cargo is damaged or lost because of quarantine measures.
- Act or Omission of the Shipper or Owner of the Goods: If the damage or loss is due to the negligence or misconduct of the person shipping the goods.
- Strikes or Lock-Outs or Stoppage or Restraint of Labor: Damage or loss due to industrial actions.
- Riots and Civil Commotions: Loss or damage resulting from riots or similar disturbances.
- Saving or Attempting to Save Life or Property at Sea: This involves scenarios where, in an attempt to save lives or other property, cargo is damaged or lost.
- Wastage in Bulk or Weight or any other Loss or Damage arising from Inherent Defect, Quality, or Vice of the Goods: This covers situations where the goods themselves have an inherent issue that causes damage or loss.
- Insufficiency of Packing: If the goods were not packed adequately, and this insufficiency leads to their damage or loss.
- Insufficiency or Inadequacy of Marks: This concerns situations where the goods aren’t properly marked, which contributes to their loss.
- Latent Defects not Discoverable by due Diligence: If there’s a hidden defect in the ship that couldn’t have been detected through proper diligence, and this defect causes damage or loss.
- Any other Cause Arising without the Actual Fault or Privity of the Carrier, or without the Fault or Neglect of the Agents or Servants of the Carrier: This is a catch-all provision that covers situations not explicitly listed above.
Note that these exceptions don’t automatically exempt the carrier from liability; the carrier must demonstrate that no negligence or fault on their part contributed to the loss or damage.
It’s also important to be aware that the application of the Hague-Visby Rules may vary depending on the jurisdictions involved. Some countries have adopted variations or have introduced local laws that can affect how the rules apply. If you’re dealing with a specific case or scenario, it’s advisable to consult with a maritime lawyer who’s familiar with the relevant jurisdiction and the specifics of the situation.
What is the difference between Common Law and Hague Visby rules?
The duty to provide seaworthy ship under Common Law is absolute while in the Hague-Visby Rules a duty to apply due diligence is bestowed. If the the Hague-Visby Rules doesn’t apply, the Carrier remains under the absolute duty.
The Common Law and Hague-Visby Rules are often mentioned in the context of the carriage of goods by sea, but they operate at different levels and in different capacities. Here’s a breakdown of the differences:
- Nature and Origin:
- Common Law: Common law refers to the body of law developed by judges, courts, and tribunals over centuries through decisions in individual court cases. It’s based on precedent – meaning, decisions are made based on the outcomes of previous, similar cases.
- Hague-Visby Rules: These are a set of international rules for the international carriage of goods by sea. They were drafted in 1924 in Brussels as the Hague Rules, and later amended in Visby in 1968 and 1979.
- Common Law: Covers a wide range of legal issues, not just carriage of goods by sea.
- Hague-Visby Rules: Specifically pertain to the carriage of goods by sea, especially the rights and obligations of the carrier and the shipper.
- Common Law: Before international conventions like the Hague-Visby Rules came into play, carriers’ liabilities were determined by common law principles, which could vary greatly from one jurisdiction to another.
- Hague-Visby Rules: These rules standardized many aspects of liability, offering more predictability. For instance, they prescribe specific circumstances under which a carrier might be exonerated from liability, and set a limit to the amount the carrier might have to pay in case of loss or damage.
- Common Law: Directly applied by courts in jurisdictions where common law is the basis of legal jurisprudence (e.g., UK, USA, Canada).
- Hague-Visby Rules: To become applicable in a country, these rules have to be incorporated into the national law of that country. For instance, the UK incorporated the Hague-Visby Rules into its national law through the Carriage of Goods by Sea Act 1971.
- Common Law vs. Hague-Visby Rules: In situations related to the carriage of goods by sea in jurisdictions that have adopted the Hague-Visby Rules, these rules would typically take precedence over domestic common law principles where there’s a conflict between the two.
- Common Law: Is quite flexible as it can evolve and adapt based on new court decisions and changing societal values.
- Hague-Visby Rules: Changes require international consensus and further amendments to the rules. The evolution process is slower than common law.
- Application and Acceptance:
- Common Law: The principles of common law are inherent to countries that have historically followed the British legal system. These principles apply even if they are not codified, and their application is through the interpretation by courts.
- Hague-Visby Rules: For a country to be bound by the Hague-Visby Rules, it must actively ratify or accede to them. Therefore, the application is not universal, and only countries that have chosen to be a party to the rules are bound by them.
- Common Law: Is typically not codified. It is a system where the law is made by judges in the form of judgments, which then provide precedents for future decisions.
- Hague-Visby Rules: They are a set of codified rules. They provide a clear and written framework for the international carriage of goods by sea. This codification offers clarity but can also mean that interpretations might be more restrictive compared to the flexible nature of common law.
- Resolution of Disputes:
- Common Law: Disputes are resolved by relying on judicial precedents. Judges look at previous similar cases to guide their decisions.
- Hague-Visby Rules: Disputes under these rules are resolved by interpreting the text of the rules themselves and relevant case law. The emphasis is on the specific provisions of the rules.
- Purpose and Development:
- Common Law: Developed organically over centuries, responding to a variety of societal needs and issues. It wasn’t designed with a specific focus in mind but rather evolved as a general system of justice.
- Hague-Visby Rules: Were specifically crafted to address concerns related to the international carriage of goods by sea. Their development was more deliberate, aiming to bring uniformity and clarity to this area of law.
- Evolution and Adaptability:
- Common Law: Has a natural mechanism of evolution through new case law. As societal norms and views change, new judgments can reflect those changes.
- Hague-Visby Rules: While they provide stability, any change or adaptation requires international consensus, which can be a lengthy and complex process. This makes them less adaptable to rapid changes in the maritime industry or international trade practices.
While the Common Law system and the Hague-Visby Rules can intersect in certain legal issues related to the carriage of goods by sea, they stem from distinct origins and have different mechanisms of operation and evolution. When operating in the realm of international sea trade, it’s crucial for parties to understand both systems and the intricacies of how they interact, especially in jurisdictions where the Hague-Visby Rules have been ratified.
While both Common Law and Hague-Visby Rules might govern issues related to the carriage of goods by sea, they do so from different angles and with different priorities. The Hague-Visby Rules were developed in response to a need for international uniformity in this area, while Common Law has its roots in centuries of case-by-case decision-making.
Carrier’s Duties under the Hague-Visby Rules
1- Period Covered By The Hague-Visby Rules
In accordance with Article II’s stipulations, Carriers are beholden to the duties and liabilities delineated in the Hague-Visby Rules, encompassing every contractual agreement for maritime transportation of commodities. This encompasses the entirety of the process, from the initial loading phase until the ultimate discharge of the merchandise. Such an assertion is further fortified by the elucidation of “carriage of goods” in Art. I(e), marking the duration commencing with the loading and culminating at the discharge from the ship. Similarly, Art. VII bestows unbridled liberty upon involved entities to craft any accord regarding the obligations and accountability of the ship or its Carrier for any mishaps or impairments transpiring either before the goods are boarded or after their removal from the ship.
In the case of Pyrene v Scindia, the litigants contended that the term “loading” ought to be deciphered aligning with the conventional demarcation of duty at the ship’s rail, as posited by Common Law. By such a definition, goods not having traversed ship’s rail were not deemed loaded, hence exempt from the Hague-Visby Rules. The frailty in this assertion lay in its over-reliance on purely Anglican interpretations, sidelining globally acknowledged principles.
In a landmark adjudication, Devlin J decreed that Hague-Visby Rules Article III doesn’t mandate the Carrier to manage the loading. Instead, it places upon the Carriers the onus to adeptly execute any tasks foisted upon them within the contract, spanning from loading to discharge. Given that the Carrier was entrusted with the holistic operation, the Hague-Visby Rules were deemed pertinent from commencement to culmination, even if the commodities hadn’t physically made their presence aboard during the unfortunate event but were merely in the progression of being loaded.
This method of deciphering the Hague-Visby Rules garnered affirmation from the House of Lords in the Renton v Palmyra case, which dealt with contractual journeys and deviations. A futile resistance was seen in The Jordan II case. Here, the Hague-Visby Rules were amalgamated into an agreement which embedded a FIOST provision, denoting FIOST (free in and out stowed and trimmed). FIOST implies the Charterers bearing the onus for loading, stowing, trimming, and unloading the shipment at their singular risk and expense. However, the House of Lords refrained from invalidating Renton v Palmyra and ruled that the FIOST provision was not antithetical to Art. III, Rule 8, thereby shifting the onus from the Carrier onto the cargo owner.
Provisions akin to FIOST (free in and out stowed and trimmed) are rendered nugatory by the Hamburg Rules, as evinced by Art. 10(2). This article posits that a Carrier, under all circumstances, must maintain unwavering accountability for the full transportation in accordance with the stipulated rules, even if a portion of the task is subcontracted.
Conversely, the Rotterdam Rules (Art.13(2)) validate such provisions. To ensure the enforceability and legitimacy of these clauses within contracts, they must be explicitly and meticulously documented in the contractual details.
2- Duty to use Due Diligence to make the Ship Seaworthy
Carriage of Goods by Sea Act (COGSA 1971) Section 3 articulates, albeit perhaps redundantly, that the implication of an absolute commitment to furnish a seaworthy ship is absent when the Hague-Visby Rules are in play. As delineated in Art. III, Rule 1, the carrier is obligated ‘prior to and at the voyage’s commencement’ to employ utmost care to:
- Ensure the ship’s seaworthiness
- Adequately man, outfit, and provision the ship
- Render the storage spaces, refrigeration units, and all other ship sections housing goods, apt and secure for their intake, transport, and preservation.
From this trio of stipulations, it becomes evident that the foundational notion of seaworthiness bears little to no deviation from its common law counterpart. The verbiage of Art. III, Rule 1, juxtaposed with Art. IV, Rule 1, unequivocally states that carriers, upon their ship’s confirmed unseaworthiness, have no defenses apart from the demonstration of utmost care. In stark contrast to the obligations laid out in Art. III, Rule 2, the mandate to ensure seaworthiness through due diligence stands independent of Art. IV’s provisions.
Consequently, in the case of Maxine Footwear v Canadian Govt Merchant Marine, it was opined that Art. III, Rule 1 imposes a paramount duty. The harm in this case stemmed from a fire. However, given the Carriers’ lapse in exercising utmost care, their appeal to the fire defense under Art. IV, Rule 2(b) was rendered null. In a subsequent endeavor to curtail the Hague-Visby Rules by introducing quintessentially English interpretations, the Carriers posited that “prior to and at the voyage’s start” should adhere to the stages doctrine. Nonetheless, it was decreed that this responsibility starts at least from loading inception, persisting until the voyage onset.
The Muncaster Castle verdict affirmed the duty’s non-transferable nature. This implies that any negligence in due diligence by any delegatee, such as those overseeing inspections and repairs, renders the Carrier accountable. The mere selection of a renowned repairer doesn’t exonerate the carrier. Nevertheless, acts or oversights predating the ship’s entry into their operational realm are not the carrier’s burden, as exemplified in The Muncaster Castle and The Happy Ranger cases.
Lack of due diligence is the same as negligence: if surveyors eschew specific tests, their negligence is confirmed only if their judgment lags behind the customary professional benchmark, The Amstelslot Case. Concerning ship design flaws, the obligation of seaworthiness is invoked once the ship enters the carrier’s sphere, The Muncaster Castle Case. Hence, the Carrier’s duty to ensure seaworthiness commences post-ship acquisition, The Happy Ranger Case. The crux remains factual, yet judicial precedents serve as invaluable references in litigations involving due diligence.
Recent notable rulings include:
- Kriti Rex (omitting routine checks for lubricating oil contamination)
- Fjord Wind (insufficient probing despite known issues)
- Kapitan Sakharov (breaching safety protocols for hazardous container storage, yet displaying due diligence for undisclosed perilous contents)
- Eurasian Dream (lacking fire-fighting equipment and crew’s inadequate training), wherein core principles are comprehensively outlined
- Happy Ranger (overlooking mandatory testing of crane hooks designed for heavy lifting).
It’s established that the onus of proving a ship’s unseaworthiness rests on the bill of lading possessor, The Fjord Wind CASE. Under the Hamburg Rules, carriers’ duties are broadly defined with liability hinging on presumed fault.
According to Article 5: liability arises from damage, loss, or delivery delays if the causative event transpired under the carrier’s guardianship, as delineated in Article 4, barring scenarios where the carrier can prove that all feasible preventive measures were implemented.
In cases where cargo detriment is attributed to a ship’s unseaworthiness, carriers can only sidestep accountability by aligning with the general exemption of the Hamburg Rules’ Article 5.
Under the Rotterdam Rules, the seaworthiness mandate remains ongoing (Article 14), yet isn’t absolute (Article 17-6). Additionally, the seaworthiness obligation explicitly encompasses the fitness of containers provided by the carrier.
Overlooking these nuances, the Rotterdam Rules’ seaworthiness directive shares attributes with the Hague-Visby Rules: the obligation still takes effect before and at the voyage’s initiation, rooted in the carrier’s commitment to due diligence.
3- Carriers’ Duty to Carry the Cargo Properly and Carefully
Pursuant to Hague-Visby Rules Article III, Article2, Carriers are mandated to meticulously and attentively oversee the loading, handling, stowage, transportation, preservation, tending, and discharging of goods. It has been firmly established within English jurisprudence that obligations regarding loading, stowage, and discharge can be transitioned from the carrier to the proprietor of the cargo, contingent upon the stipulations of the carriage contract. Nevertheless, Hague-Visby Rules Article III, Article 2 principally obligates carriers to execute the aforementioned duties which the contract ascribes to them with utmost diligence and caution.
Contrary to Beldam LJ’s assertion in The Coral, wherein he stated the absence of an onus on the carrier’s part concerning the detailed functions under Hague-Visby Rules Article III, Article2, it remains incontrovertible that no accord can validly delegate the duty of transporting the goods from the carrier.
During the case of Albacora v Westcott & Laurance Line, the House of Lords deliberated upon an alleged transgression by the Carrier under Hague-Visby Rules Article III, Article2, wherein cargo necessitating refrigeration (unbeknownst to the parties) was transported sans refrigeration, leading to its degeneration. The judgement clarified that the term “properly” essentially indicates that carriers should employ a robust methodology, commensurate with the comprehension they possess or should rightfully possess about the cargo’s characteristics. Thus, the carriers were exonerated from the alleged breach.
This precedent set in Albacora v Westcott & Laurance Line was subsequently revisited by the Court of Appeal in the case of Volcalfe Ltd v Compania Sud Americana de Vapores SA. Herein, the appellate court opined that if the carrier effectively demonstrates a prima facie case under the clause of inherent vice in Hague-Visby Rules Article IV Rule 2(m), the onus then transitions to the cargo stakeholders to substantiate that the exception is inapplicable, primarily due to the Carrier’s negligence.
The Hamburg Rules remain silent regarding the carrier’s explicit duty towards cargo care. Nonetheless, such an obligation is unmistakably encapsulated within Article 5(1), which outlines carriers’ duties in a rather broad spectrum. Conversely, the Rotterdam Rules lucidly detail this responsibility in Article 13(1). Here, carriers are compelled to vigilantly undertake the reception, loading, handling, stowage, transportation, preservation, tending, unloading, and delivery of goods.
Article 13’s directives are perpetually valid during the carrier’s tenure of accountability, as defined by Article 12.
4- Duty to issue Bill of Lading (B/L)
In relation to the issuance of Bill of Lading (B/L) by the carrier, the crux is that Rule 3’s operation is solely instigated by the Shipper’s request. The mandates within the Hague-Visby Rules concerning the production and essence of the Bill of Lading (B/L) are not intrinsically applicable. Instead, Hague-Visby Rules obligate the carrier to proffer a Bill of Lading (B/L) post the receipt of the goods under their care, given that the contract of carriage either overtly or subtly warrants the issuance of such a document, refer to Section 1(4) of Carriage of Goods by Sea Act (COGSA 1971)). Thus, a Shipper who assents to a Bill of Lading (B/L) penned as “quantity unknown” has not expressly solicited a bill detailing the volume of goods, as mandated by Rule 3(b), rendering these stipulations inoperative, as illustrated in The Mata K Case.
A provision articulating “weight, and quantity unknown” or analogous phrases within a Bill of Lading (B/L) is not invalidated by Article III, Rule 8, cited in The Mata K and The Atlas Case. Such provisions are perceived merely as declarations, observe the phrasing of Article III, Rule 8, which alludes solely to clauses, covenants, and accords, but omits references to declarations. Although such provisions might negate the probative value of Bill of Lading (B/L) concerning the cargo’s weight and volume, they are conventionally inscribed as standard clauses on the respective forms, for instance, CONGENBILL, highlighted in Wilson, Appendix 18. This underlines the peripheral practical significance of Article III, Rules 3–5 about the composition and ramifications of Bill of Lading (B/L).
As delineated in Article 14 of the Hamburg Rules, the Carrier’s responsibility to furnish a Bill of Lading (B/L) emerges upon the Shipper’s insistence post the cargo’s dispatch. Conversely, under the Rotterdam Rules, the onus is on the Carrier to provide one of the transportation documents highlighted in the regulations to the contractual shipper, barring any mutual agreement or trade tradition negating such usage, refer to Article 35 of the Rotterdam Rules).