The importance the Hague and HagueVisby Rules

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The importance the Hague and Hague-Visby Rules

• Bob Deering
• Jordan
• 22 May 2007

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Bills of Lading
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International regulation of carriage of goods

• The most important international conventions
• The Hague Rules 1924
• The Hague-Visby Rules 1968
• The Hamburg Rules 1978

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International regulation of carriage of goods
NB ! The Hague-Visby Rules are part of UK
statute law under COGSA 1971 BUTThe Hague and
Hamburg Rules are applied by other countries
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The overriding effect of the Hague and
Hague-Visby Rules
Article III Rule 8 Any clause, covenant, or
agreement in a contract of carriage relieving the
carrier or the ship from liability for loss or
damage to, or in connection with, goods arising
from negligence, fault or failure in the duties
and obligations provided in this article or
lessening such liability otherwise than as
provided in these rules, shall be null and void
and of no effect.
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Example of clauses rendered void

• Exception clauses
• Definition clauses
• Studebaker v Charlton (1938) 1 KB 459
• Time limits
• Ion (1971) 1 Ll. Rep. 541

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Example of clauses rendered void

• Package limits
• River Gurara (1997) 4 AER 498
• Law/jurisdiction clauses
• Hollandia (1983) 1AC 565

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Applicability of Rules

• Do the Rules apply to the particular
• Contract
• Voyage
• Cargo
• Stage of the voyage when loss/damage occurred

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Which contracts of carriage?
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Hague and Hague-Visby Rules
Article I (b) Contract of Carriage applies
only to contracts of carriage covered by a bill
of lading or any similar document of title
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Why the restriction?
The restriction is the product of public policy
i.e. the protection of third parties who may
become subject to the terms of a contract of
carriage despite the fact that they were not
originally parties to it and were not able,
therefore, to negotiate its terms
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Types of contract

• The following transferable contracts are subject
  to the Rules-
• Negotiable bills of lading and
• Straight bills of lading (since they can
  be transferred from the shipper to the named
  consignee)
• Rafaela S Times 21st February 2005 H/L

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Types of contract

• The following non-transferable contracts are not
  subject to the Rules-
• Charter parties and
• Seawaybills

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Types of contract
HOWEVER ! S.1(6)(b) of the UK COGSA 1971 provides
that the Hague-Visby Rules shall also have the
force of law in relation to- any receipt
which is a non-negotiable document marked as such
if the contract contained in or evidenced by it
is a contract for the carriage of goods by sea
which expressly provides that the Rules are to
govern the contract as if the receipt were a bill
of lading.
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Which goods?
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Hague and Hague-Visby Rules
Article I (c) Goods includes goods, wares,
merchan-dise, and articles of every kind
whatsoever except live animals and cargo
which by the contract of carriage is stated to
be carried on deck and is so carried. NB !
Unless both provisos are satisfied
deck carriage is subject to the Rules
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Whichvoyage?
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Hague Rules
There are no geographical restraints in the Rules
themselves but the statute incorporating the
Rules into the municipal legislation of
individual states usually provides that they
apply to exports or imports and exports E.g. US
COGSA 1936
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Hague-Visby Rules

• Article X
• 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 a ship, the carrier, the
  shipper, the consignee, or any other
  interested person.

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Hague-Visby Rules
Article X NB ! A bill of lading need not be
issued at the port of loading
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Whichstage of the voyage?
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Hague-Visby Rules
Article I (e) Carriage of Goods covers the
period from the time when the goods are loaded on
to the time they are discharged from the ship.
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The applicability of the Rules
Not all the transit is covered!
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Which Rules apply and when?

• Two basic questions
• Do any of the Rules apply compulsorily?
• If not, do any of the Rules apply
  contractually e.g. as a result of a Clause
  Paramount?

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Paramount clause
Despite the various exclusions the Rules may
apply contractually (i.e. by agreement) to the
excluded situations if the wording of the
Paramount Clause is sufficiently clear
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Paramount clause
The purpose of the Clause Paramount is to
introduce the Hague or Hague-Visby Rules in one
form or another into the contract of carriage
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General paramount clause

• The Hague Rules contained in the International
  Convention for the Unification of certain rules
  relating to Bills of Lading, dated Brussels the
  25th August 1924 as enacted in the country of
  shipment, shall apply to this Bill of Lading.
  When no such enactment is in force in the country
  of shipment, the corresponding legislation of the
  country of destination shall apply, but in
  respect of shipments to which no such enactments
  are compulsorily applicable, the terms of the
  said Convention shall apply

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General paramount clause

• Trades where Hague-Visby Rules apply.
• In trades where the International Brussels
  Convention 1924 as amended by the Protocol signed
  at Brussels on 23rd February 1968 - the
  Hague-Visby Rules - apply compulsorily, the
  provisions of the respective legislation shall
  apply to this Bill of Lading

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General paramount clause

• The Carrier shall in no case be responsible for
  loss of or damage to the cargo, howsoever arising
  prior to the loading into and after discharge
  from the Vessel or while the cargo is in the
  charge of another Carrier, nor in respect of deck
  cargo or live animals

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Matters NOT covered by the Rules

• Who is the carrier?
• Who can sue?
• What law/jurisdiction governs?
• These issues are determined by theterms of the
  contract of carriage itself

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The functions of the bill of lading

• It is a receipt for the goods
• It is good evidence of the contract of
  carriage
• It is a document of title
• The Rules govern the first two functions but not
  the third

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How the Rules affect the contract of carriage
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The basic duties of carrier
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Hague and Hague-Visby Rules

• Article III
• The carrier shall be bound before and at the
  beginning of the voyage to exercise due diligence
  to-
• Make the ship seaworthy.
• Properly man, equip and supply the ship.
• Make the holds, refrigerating and cool
  chambers, and all other parts of the ship in
  which goods are carried, fit and safe for their
  reception, carriage and preservation.

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Important aspects of the duty under Article III
Rule 1

• The carrier includes all the carriers
  servants, agents and contractors
• Before is not restricted to immediately
  before
• Lack of due diligence is negligence

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Article III Rule 2
Subject to the provisions of Article IV, the
carrier shall properly and carefully load,
handle, stow, carry, keep, care for, and
discharge the goods carried.
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Article III Rule 2 (cont.)

• This article is addressed by asking two
  questions in the following order
• For which of the activities itemised in the
  Rule is the carrier responsible?
• Has the carrier performed that duty
  properly and carefully?
• Renton v Palmyra (1957) AC 149

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The rights of the carrier
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Exclusion of liability

• There is a long list of exclusions in Article
  IV Rules 1 and 2
• The carrier is not entitled to rely on these
  exclusions unless and until he proves that he
  has satisfied his obligations under Article
  III Rules 1 and 2

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Article IV Rule 2
Most of the exclusions are force majeure in
nature but in the following circumstances the
carriers liability is excluded despite the fact
that there is negligence on the part of the ship
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Article IV Rule 2 (cont.)

• Neither the carrier nor the ship shall be
  responsible for loss or damage arising or
  resulting from
• Act, neglect or default of the master,
  mariner, pilot, or the servants of the
  carrier in the navigation or the management
  of the ship.
• Fire, unless caused by the actual fault or
  privity of the carrier.

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Time limits
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Hague-Visby Rules, Article III Rule 6
..Subject to paragraph 6 bis the carrier and the
ship shall in any event be discharged from all
liability whatsoever in respect of the goods
unless suit is brought within one year of their
delivery or of the date when they should
have been delivered.
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Important aspects of the time limit rule

• The one year time limit applies only to
  claims against the carrier and ship
• The time limit commences to run on delivery
  not discharge
• Suit must be brought in the right
  jurisdiction (court or arbitration)

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Important aspects of the time limit rule

• The time bar extinguishes the claim
  completely and it cannot be used thereafter
  even by way of set-off. Aries (1977) 1 Ll.
  Rep. 334
• The time limit can apply to claims other than
  those merely for cargo loss or damage so long
  as they relate to the carriage of goods.
• Leonidas (2001) 1 Ll. Rep. 533

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Indemnity claims
Hague Rules BEWARE ! There are no express
provisions in the Hague Rules relating to
indemnity claims.
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Hague-Visby Rules, Article III Rule 6 bis
An action for indemnity against a third person
may be brought even after the expiration of the
year provided for in the preceding paragraph if
brought within the time allowed by the law of the
Court seized of the case. However, the time
allowed shall be not less than three months,
commencing from the day when the person bringing
such action for indemnity has settled the claim
or has been served with process in the action
against himself
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The crucial difference between the Rules
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Package limitation
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Hague Rules

• Article IV
• Neither the carrier nor the ship shall in
  any event be or become liable for any loss or
  damage to or in connection with goods in an
  amount exceeding 100 per package or unit, or
  the equivalent of that sum in other currency,
  unless the nature and value of such goods
  have been declared by the shipper before
  shipment and inserted in the bill of lading.

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The problem with the Hague Rules

• There is no package or unit in the case of
  bulk cargoes.
• (Contrast US COGSA which also has the words
  per customary freight unit.)
• What is the relevant package or unit in
  the case of containerised cargo?

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Hague-Visby Rules

• Article IV Rule 5
• Unless the nature and value of such goods
  have been declared by the shipper before
  shipment and inserted in the bill of lading,
  neither the carrier nor the ship shall in any
  event be or become liable for any loss or
  damage to or in connection with the goods in
  any amount exceeding the equivalent of
  666.67 units of account per package or unit or
  2 units of account per kilo of gross weight of
  the goods lost or damaged, whichever is the
  higher.

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Hague-Visby Rules

• Article IV Rule 5
• Where a container, pallet or similar article
  of transport is used to consolidate goods,
  the number of packages or units enumerated in
  the bill of lading as packed in such article
  of transport shall be deemed the number
  of packages or units for the purpose of this
  paragraph as far as these packages or units
  are concerned. Except as aforesaid such
  article of transport shall be considered the
  package or unit.

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When is the right to limit lost?
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Hague Rules
The Hague Rules state that the carrier can limit
in any event and Tuckey LJ said in the
Happy Ranger (2002) EWCA Civ.694
that- However, I think the words "in any event
mean what they say. They are unlimited in scope
and I can see no reason for giving them anything
other than their natural meaning. Kapitan
Petko Voivoda (2003) 2 Ll. Rep 3
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Hague Rules
It therefore appears that under the Hague Rules
the carrier can limit his liability in all
circumstances.
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Hague Rules
HOWEVER ! The US court has held that there is no
right to limit under US COGSA in the case of
deviation. Jones v Flying Clipper (1954) F.Supp
386
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Hague-Visby Rules, Article IV Rule 5

• Neither the carrier nor the ship shall be
  entitled to the benefit of the limitation of
  liability provided for in this paragraph if it
  is provided 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.
• The relevant conduct is that of the alter ego of
  the carrier itself.
• See European Enterprise (1989) 2 Ll. Rep. 195

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The right to rely on global limitation
Article VIII The provisions of these Rules shall
not affect the rights and obligations of the
carrier under any statue for the time being in
force relating to the limitation of the liability
of owners of sea-going vessels.
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