Analysis Of The Hamburg Convention And The Hague/Visby Rules

Article 2 Application
The Hague/Visby rules, as has been mentioned above, state that,
‘The provisions of this convention shall apply to all bills of lading issued in any of the contracting
states.’
The Hamburg Convention is radically different to this. It states that it shall apply to all to all
contracts of carriage between ports in two different States when either the port of loading or
discharge is situated in a contracting state, any optional ports are in a contracting state, the
contract of carriage was issued in a contracting state or by agreement. This goes a long way to
remedying the shortcomings in the applicability of the Hague/Visby rules.
Article 3 Interpretation
As has been noted above, difficulties in interpretation have severely hampered the claims of the
Hauge/Visby rules to apply a uniform shipping law across the globe. Also, with the Hague rules, a
lot of the interpretation depended on the method of incorporating the rules into national law. If the
Convention was not signed, but merely annexed to a national statute as a schedule, such a state
was not a contracting party to the convention in international law and was also not bound to
interpret them according to the Vienna Convention but according to the rules of national
interpretation. While differences in interpretation are always possible with both national laws and
international instruments, the Hamburg Convention’s status as a United Nations convention
should at least ensure that the greatest weight is placed on its international and harmonizing
functions.
Article 4 Period of Responsibility
The Hague/Visby rules rightfully placed great importance on the question of liability and it was
decided as a fundamental rule, that the liability of the carrier would begin with loading of the ship,
and end with discharge from the ship. After discharge, the local law at that place would govern
liability. Article 1(e) therefore provides,
‘Carriage of goods covers the period from the time when the goods are loaded on to the time
when they are discharged from the ship.’
Complete freedom of contract is maintained for the regulation of liability before loading and after
discharge. This is logical as the risks at sea are far greater than on land and it is this aspect of
carriage that the rules are attempting to regulate. Also, the rules and procedures for loading and
discharging are different in different countries for various reasons and it would be unwise to
ignore these. Also, it can be argued that the carrier has very little control over the goods while
they are not aboard his ship and therefore it is fairer to allow the parties to provide for this
themselves.
Unsurprisingly in rules of this age, they have been subject to litigation. In Pyrene v. Scindia
Navigation Co. there was a dispute as to the purpose of the words with the court ruling that they
were intended only to ‘identify the first operation in the series which constituted the carriage of
goods by sea’. In Goodwin, Ferreira v Lamport and Holt it was held that discharge occurred when
all the goods had been discharged so that goods discharged in fact, were not discharged in law
until the entire cargo joined them on solid ground.
Article 4 of the Hamburg abandons this ‘tackle to tackle’ rule and states
4(1) The responsibility of the carrier for the goods under this Convention covers the period during
which the carrier is in charge of the goods at the port of loading, during the carriage and at the
port of discharge.
4(2) For the purpose of paragraph 1 of this article, the carrier is deemed to be in charge of the
goods
(a) from the time he has taken over the goods…
It is clear from this article that the carrier’s liability has been extended to all time under which he
has taken over the goods from the sender until such times as they are regarded by the
destination port as out of port and in storage, warehouse or onward transit etc.
Read in conjunction with Article 23 which states that,
‘Any stipulation… is null and void to the extent that it derogates, directly or indirectly, from the
provisions of this Convention’
it is clear that the carrier’s ability to contract out of this clause has been removed completely.
Article 5 Basis of Liability
There are three main ways of breaching a contract for the carriage of goods by sea, these are by
losing or damaging the goods, delivering the goods short of their destination, or there has been a
delay in carriage. Under Article 4(5) of the Hague/Visby rules, the carrier is liable for ‘any loss or
damage’ to the goods. It is unclear if this includes loss caused by a reduction in the value of the
goods due to delay. The House of Lords, in The Heron II, Koufas v. C. Csarnikow Ltd. stated that
damages would be assessed at the difference between the market value at the time of contracted
delivery and the time of actual delivery. Article 3(1)(a) provides that the carrier must exercise due
diligence in ensuring that the ship is seaworthy and according to Article 3(2) must also exercise
due care of the cargo. However, it is Article 4(2) and its list of seventeen exceptions that has
been at the route of calls for an amended set of rules. In fact it is probably because of Article 4(2)
that we have a Hamburg Convention at all. Under these seventeen circumstances, the carrier can
contract out of his liability which you can be assured is overwhelmingly the norm. In the case of
The Marine Sulphur Queen they were termed the ‘uncontrollable causes’ and as such, the carrier
will not be liable for them.
Article 4(2)(a) is commonly termed the negligence clause and excludes liability from the carrier for
‘act, neglect, or default of the master, mariner, pilot or servants of the carrier in the navigation or
in the management of the ship’. While the practical use, to the shipping industry as a whole, of
this clearly unfair clause is open to question, marine insurers maintain that it is vital. The fear of
course is that it is not necessary to the majority of conscientious carriers and is therefore merely
relied on by a minority of negligent carriers to the expense both of the shipper in the particular
case, and to their more careful competitors.
Article 5 of the Hamburg Convention makes serious modifications to this provision stating,
Article 5(1) The carrier is liable for the loss resulting from loss of or damage to the goods, as well
as from delay in delivery, if the occurrence which caused the loss, damage or delay took place
while the goods were in his charge as defined in Article 4, unless the carrier proves that he, his
servants and agents took all measures that could reasonably be required to avoid the occurrence
and its consequences.’
This puts the liability for all loss, damage or delay clearly on the carrier unless he can show that
he took all reasonable actions to avoid the loss. At first sight this seems a far more logical
distribution of risk than what occurs under the Hague/Visby rules. Whatever the danger and
unpredictability of life at sea, the carrier is in far more control over such situations than the
shipper is. While the shipper can pass on the costs of insurance to shippers, the possibility now
exists for careful carriers to reduce insurance costs by making less claims than their competitors.
Likewise, negligent carriers will soon be unable to secure insurance and will rightfully be excluded
from operating. Surely this is a more rational and economically efficient way of operating the
market.
Delay is defined in Article 5(2) as occurring when,
‘the goods have not been delivered at the port of discharge provided for in the contract of carriage
by sea within the time expressly agreed upon or, in the absence of such agreement, within the
time which it would be reasonable to require of a diligent carrier, having regard to the
circumstances of the case.’
Article 5(3) gives the consignee a right after 60 days of non-delivery to recover for the loss of the
goods without having to wait for conclusive evidence of the loss.
Article 5 does allow the carrier to exclude liability in certain situations and these are,
1. where he proves that he, his servants or agents took all reasonable measures to avoid the
occurrence and its consequences,
2. the damage or loss is caused by fire and the claimant proves that the fire arose from the fault
or neglect on the part of the carrier, his servants or agents,
3. the damage or loss to live animals results from the inherent risks in their carriage, or
4. the damage or loss results from measures to save life or from reasonable measures to save
property at sea.
The carrier therefore, in order to remove liability, must take all reasonable measures to avoid the
loss. This could include many of the exclusions in Article 4(2) of the Hague/Visby rules but there
will be a test to pass. The standard is objective, being that of the ‘prudent owner’ in English or of
the ‘bon pere de famille’ in French. As science and circumstances advance, what will be
reasonable will evolve. Reasonableness will also be able to take into account the weather, sailing
conditions, any dangers to life and all other circumstances of the loss in order to rule with the
maximum of fairness and justice. The carrier will also be liable for fire loss subject to ‘a survey in
accordance with shipping practices’. The ability to exclude liability arising from the special risks
inherent in the carriage of live animals is fair and the carrier can satisfy the onus of proof in such
situations by showing that he complied with the instructions of the shipper regarding care for the
cargo.

According to Article 5(6),

‘The carrier is not liable, except by way of general average, where loss, damage or delay in
delivery resulted from measures to save life or from reasonable measures to save property at
sea.’
Article 6 Limits of Liability
Article 4(5) of the Hague/Visby rules have attracted much criticism as to the manner in which they
allow the carrier to limit the value of loss according the package or unit. First of all the provisions
are terribly ambiguous, with what exactly will constitute a package or unit being about as clear as
the using as a unit of length, a piece of string. It is not even stated if it is a unit of freight or a unit
of goods, and in any case these would not always be defined. Also, the monetary limits for such
loss were also very low.

Article 6(1)(a) of the Hamburg Convention states,

‘The liability of the carrier of loss resulting from loss of or damage to goods according to the
provisions of Article 5 is limited to an amount equivalent to 835 units of account per package or
other shipping unit or 2.5 units of account per kilogramme of gross weight of the goods lost or
damaged, whichever is the higher.’

Article 6(2) provides that,

‘For the purpose of calculating which amount is the higher in accordance with paragraph 1 (a) of
this article, the following rules apply:
(a) Where a container, pallet or similar article of transport is used to consolidate goods, the
package or other shipping units enumerated in the bill of lading, if issued, or otherwise in any
other document evidencing the contract of carriage by sea, as packed in such article of transport
are deemed packages or shipping units. Except as aforesaid the goods in such article of transport
are deemed one shipping unit,
(b) In cases where the article of transport itself has been lost or damaged, the article of transport,
if not owned or otherwise supplied by the carrier, is considered one separate shipping unit.’
Therefore, enumeration on the bill of lading should be able to provide conclusive evidence of the
quantity shipped. This should provide for a far fairer method of compensation to the shipper and
also to the carrier in that it provides for more certainty and foreseeability.

Article 7 Non-Contractual Claims

The normal defendant in a claim for loss or damage to cargo will be the carrier. This is the most
obvious situation and is probably too the most frequent. However, it is not uncommon at all for the
carrier to have a good defence that avoids his liability for the loss. The most common defence the
carrier will have available is that the bill of lading excluded liability for this particular loss. In this
situation, the shipper, while unable to hold the carrier liabile, may have a valid claim against one
or more of the shippers servants or agents.
There have been many successful attempts in the case records of shippers who have
successfully sued the agents and servants of the carrier in situations where the carrier had
excluded liability. The goal of this litigation, which found much judicial favour, was to defeat the
carrier’s exclusion of liability clause. The response of carriers to this attack was to insert into the
contract a clause extending the benefits of exclusions of liability to their servants and agents. To
reinforce this measure, carriers succeeded in the 1968 Protocol to the Hague rules, to have a
special provision on the rights and immunities of the carrier’s servants and agents inserted into
the rules.
Under English contract law, the position from first principles would appear to be that if the servant
of a carrier, through his own negligence, causes a loss to the shipper, the shipper will be able to
raise an action either against to carrier or against the servant. If he chooses to sue the servant, it
should be the case according to the rule of privity of contract, that the servant cannot rely on
either the Hague Rules, which apply by means of the bill of lading, or on the terms of the bill of
lading itself. This is a natural application of the rule that ‘a contract cannot confer rights or impose
obligations arising under it on any person except the parties to it.’ The situation is not absolutely
clear however as the case of Elder Dempster & Co. v. Paterson Zochonis & Co demonstrates. In
this case the plaintiff contracted with a charterer to transport a cargo from West Africa to England.
The Cherterer subsequently hired a shipowner to carry out the task. When the goods turned up
damaged through negligence, the plaintiff sued both the charterer and the shipowner. The
charterer was immune due to an exclusion of liability clause in the contract. The House of Lords
however, extended this immunity to the shipowner either on the ground that there was an implied
contract between the shipowner and the plaintiff with terms identical to those between the plaintiff
and the charterer, or alternatively, there is a doctrine of vicarious immunity whereby the agents of
a contract party are entitled to the immunities that the principle has secured under contract.
Under either explanation, the principle of privity of contract is breached.
However, in the Court of Appeal case of Alder v. Dickson and Another the decision went the
opposite way. In this case, the plaintiff, a passenger, couldn’t sue the carrier for negligence
regarding the gangway as they had excluded liability under the contract, however, she could
successfully sue the master and boatswain who should have taken care of the gangway as they
were not privy to the exclusion of liability clause in the contract. This rule was affirmed in the later
case of Midland Silicones v. Scruttons .
The contract term consequently found in most bills of lading regulated by the Hague Rules, often
called an Alder v Dickson clause, will typically state that in concluding the contract, the carrier is
‘acting as agent or trustee on behalf of and for the benefit of all persons who are or might be his
servants or agents from time to time (including independent contractors) and all such persons
shall to this extent be or be deemed to be parties to the contract in or evidenced by this bill of
lading’.
In the case of Eurymedon the Privy Council found that such terms could protect agents or
servants of the carrier provided that the bill of lading contained a clear intention to protect agents,
that the carrier contracts for the protection of his servants and agents, that the carrier had
authority of ratification to enter such contract on behalf of his agents and servants, and that there
is some consideration from the servant or agent in exchange for the protection so extended.

The Hamburg Convention attempts to avoid the uncertainty of this situation, which is even more
uncertain in some jurisdictions than it is in England and thus, Article 7 states,

1. The defences and limits of liability provided for in this Convention apply in any action
against the carrier in respect of loss or damage to the goods covered by the contract of
carriage by sea, as well as of delay in delivery, whether the action is founded in contract,
in tort or otherwise.
2. If such an action is brought against a servant or agent of the carrier, such servant or
agent, if he proves that he acted within the scope of his employment, is entitled to avail
himself of the defences and limits of liability which the carrier is entitled to invoke under
this Convention.
3. Except as provided in Article 8, the aggregate of the amounts recoverable from the
carrier and any persons referred to in paragraph 2 of this article, shall not exceed the
limits of liability provided for in this Convention.

This is an example of one place where the Hamburg Convention seeks not only to protect the
interests of Shippers but to clarify and improve the law also. This provision is clearly to the benefit
of the carrier and specifically his servants and agents. However, in so clarifying the rules, and in a
fair manner, it should reduce the need for lengthy and complex provisions in bills of lading. It is
such complex legal arrangements that generally act to the detriment of developing nation
shippers as the lack the advice and expertise to interpret and negotiate the documents and in this
case often lose out. Cleraer, simpler rules, that lead to more straightforward contracts will always
benefit the weaker party in a any negotiation and therefore, such provisions should be supported
by both carriers and shippers as reducing transaction costs and complexity, reducing the scope
for potential disputes and for making the trading situation more fair.

Article 8 Loss of Right to Limit Liability

We have already seen that the carrier’s right to limit liability has been drastically reduced in Article
6 of the Convention. However, the Hamburg Convention sought to go farther than this and
exclude the ability to rely on these limitations completely in situations of serious fault or intentional
misconduct. The negotiation of such a provision did lead to some dispute between various
delegations but the result was the insertion of a clause similar to that found in Article 25 of the
Warsaw Convention.

The agreed text of Article 8 states,

(1) The carrier is not entitled to the benefit of the limitation of liability provided for in Article 6 if it is
proved that the loss, damage or delay in delivery resulted from an act or omission done with the
intent to cause such loss, damage or delay, or recklessly and with knowledge that such loss,
damage or delay would probably result.
(2) Notwithstanding the provisions of paragraph 2 of Article 7, a servant or agent of the carrier
shall not be entitled to a benefit of the limitation of liability provided for in Article 6 if it is proved
that the loss, damage or delay in delivery resulted from an act or omission of such servant or
agent, done with the intent to cause such loss, damage or delay or recklessly and with knowledge
that such loss, damage or delay would probably result.
This means that carriers can no loner contract out of intentional or reckless conduct leading to
loss, damage or delay. This is another reasonable clause that should not prejudice reputable
carriers but only those that compete with them and act recklessly or wilfully resulting in loss to
shippers. All reasonable parties and observers should be in favour of such a clause and it is
difficult to justify any arguments against it.
Article 8 covers a wide array of potential conduct. This will range from extreme situations such as
theft or malicious vandalism, to less blameworthy conduct that nevertheless, the shipper has a
right to avoid. According to Foscolo, Mango & Co. v. Stag Line the House of Lords can consider
deviations from a normal or agreed route, which have not been allowed in the contract, as
unjustified conduct that will deprive the carrier of exclusion of liability clauses. Carrying cargo on
deck or in another manner contrary to the instructions of the shipper or overloading the ship
weould also be covered. Such a rule, it is argued here, would have the effect of improving
shipping practices and making cargoes and crews safer. It would cause otherwise careless
captains or shipowners to think twice before engaging in potentially dangerous conduct and give
them a sound financial incentive to err on the side of safety.
Article 9 Deck Cargo
Carrying goods on deck is inherently more dangerous than if they are stowed in the hold below
deck. The Hague/Visby rules therefore allow the carrier to exclude liability for this risk in Article
1(c). Under the Hague/Visby rules, the shipper and the carrier must have agreed in advance to
carry the goods on deck, and furthermore, the goods must in fact be carried on deck. If the
contract gives the carrier a liberty to carry the goods on deck, this will only be a valid ground for
exclusion of liability if the carrier is compelled to do so. This might occur under the Article 2(2)
duty of the carrier in the Hague/Visby rules to properly and carefully carry, keep and care for the
goods. If there was some reason to carry the goods on deck for their own safety this would be
justified. If the carrier decides to carry the goods on deck simply for his own benefit, then a term
authorising such conduct in the contract would be effective, but the carrier would also be
precluded from relying on the exclusion of liability clause that he would generally have for deck
cargo.
Certain goods by their nature will be carried on deck as a matter of course, such as goods too
large for the hold or goods that require ventilation. In such cases, it is still wise under the
Hague/Visby rules to stipulate deck carriage in order to benefit from the terms of Article 1(c).
The aims of the Hamburg Convention with regards to deck cargo are to entitle the carrier to carry
the goods on deck only if it has been agreed by the shipper, if it is required by law, or it is in
accordance with usage or trade. Also, if it has been agreed with the shipper, this agreement must
be entered into the bill of lading or other contract of carriage. If it is not in the bill of lading or
contract, there shall be a presumption that the shipper did not agree to it. According to Article 9 of
the Hamburg Convention, any other reason for carrying the goods on deck will place the carrier in
breach of contract.
Article 10 Liability of the Carrier and Actual Carrier
Under Article 10 of the Hamburg Convention, identity of carrier clauses and demise clauses will
not be valid. They may however be allowed under Article 11. If the carrier provides for the use of
other carriers in the contract or bill of lading, he will be deemed to be the agent of the actual
carrier. The contractual carrier will be the one liable under the contract. Under Article 10(2)
however, the shipper will have a right to bring a claim against the actual carrier if the loss,
damage or delay occurred while the goods were under his charge. Article 11 allows for contracts
of through carriage and as such, the through carrier can limit his liability to only such time as the
goods are in his charge. While such contracts would have the effect of avoiding the limitations in
Article 10, they would mean that the entire character of the contract would have to change, and
so they could not be inserted surreptitiously. It would be impossible for the carrier to represent
that he was going to carry the goods the entire way as the contract would have to take on
completely, the form of a contract for through carriage. This is in accordance with one of the
central themes of the Hamburg Convention which is to invest more clarity and certainty into the
contract of carriage.
Article 12 Liability of the Shipper
While many of the delegations that had called for the drafting of the Hamburg Convention
vehemently opposed the insertion of a clause on shipper’s liability, it was felt that one was
justified. With the exclusions of liability previously found in Article 1 of the Hague/Visby rules now
unavailable, it was felt that on a balance of fairness, the shipper owed more to the carrier than
simply to pay freight. Therefore, under Article 12(1) the shipper could bare liability for an act or
omission of himself, the owner, or their agents and representatives. Under Article 12(2) for
wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or
vice of the goods. This would cover loss due to the nature of the cargo or pressure exerted on it
as a result of stowing. It would also cover inherent defects in the goods or goods that due to their
very nature, would be unable to withstand the shipping and transit arrangements that were
arranged for them by the shipper. Under Article 12(3) the shipper may bare liability for
insufficiency of packaging which can often be dictated by the form and custom of the trade in
question. While the carrier can be liable for damage caused by unsuitable stowage, he should not
bare any liability under the Hamburg Convention for packaging which comes entirely within the
control of the shipper. Under 12(4) the shipper is responsible for insufficiency of marks on the
packaging.
The Hamburg Rules also provide for the carriage of dangerous goods which seeks to provide for
some of the ambiguities in the Hague/Visby rules, again with the goal of making the system
clearer and less open to potential abuse by the carrier and dispute by either party. The Hamburg
Convention also puts more emphasis on the drafting and content of bills of lading and other
contractual documents . Articles 19 and 20 deal with making claims while Article 21 deals with
jurisdiction and 22 with the related matter of arbitration.

Conclusion
It cannot be denied by anyone looking at this area of law, that the Hague/Visby rules continue to
be the governing law of the carriage of goods by sea. They still constitute the rules that govern
the vast majority of contracts globally. They have proved to be one of the most successful and
important international law regimes ever, and have succeeded in establishing a sufficiently clear,
universal and dependably international norm that can be depended on and carried out globally.
They have withstood the changes and variances of over 70 years of application and technological
change and despite some difficulties in interpretation, have consistently maintained their
‘international currency’ and uniformity. In this regard the Hague/Visby rules should be rightfully
regarded as an amazing success of international law.
However, the rules are not perfect. There are serious shortcomings in their scope of application.
There are inconsistencies in interpretation that can leave huge amounts of uncertainty. This
uncertainty is all to often abused by the stronger bargaining partners and many weaker parties
cannot afford the speculative litigation that would be required to safeguard their rights.
There is also the serious issue of an imbalance in the interests, rights and liabilities of carriers vis-
à-vis shippers. In this era of fair trade and new approached to the issues of global poverty and
inequality, perhaps it is time to allow for a fairer, clearer and more level playing field in all areas of
international trade. As the vast majority of trade between the developed and developing worlds
rely centrally on carriage by sea, this would be a very good place to start in such reform. As an
issue of fairness, it is the conclusion of this paper that the Hamburg Rules provide significant
improvements in terms of certainty of law, clarity of contracts, and fairness in the allocation of
liabilities, and should be adopted as the global standard in international shipping law.

Bibliography

Books and Articles

MJ Shah, The Revision of the Hague Rules on Bills of Lading within the UN System – Key Issues,
published in The Hamburg Rules on the Carriage of Goods at Sea, Mankabady (Ed.) 1978
Sijthoff-Leydon
S Munkabady, Comments on the Hamburg Rules, published in The Hamburg Rules on the
Carriage of Goods at Sea, Mankabady (Ed.) 1978 Sijthoff-Leydon
Chitty on Contracts, Vol. 1, 23rd ed. (1968)

Websites
Tetley’s Maritime and Admiralty Law at McGill Faculty of Law, available at
www.mcgill.ca/maritimelaw accessed on November 3 2005
OECD website at http://www.oecd.org/dataoecd/38/5/2751633.pdf accessed on 2 November
2005
United Nations Conference on Trade and Development (UNCTAD) www.unctad.org

Legislative Instruments
The German Commercial Code (Handelsgesetzbuch), Book 4 (Commercial Contracts) as
amended by the Transport Law Reform Act 1998.
The French Constitution
The Hague Rules
Hague/Visby Rules
UK Carriage of Goods by Sea Act 1971 (c.19)
US Carriage of Goods by Sea Act 1936, 49 Stat. 1207
Warsaw Convention

United Nations Official Documentation

UN document E.72.II.D.2 New York, 1972, report of UNCTAD secretariat on Bills of Lading
UNCTAD Document TD/B/C.4/ISL.19
UNCITRAL report A/CN.9/63 Add.

Cases
Vita Food Products Inc. v. Unus Shipping Co. Ltd. (The Hurry On) [1939] AC 277
Dominion Glass Co. v. The Anglo-Indian [1944] SCR 409 at 417
Ocean SS Co. Ltd. V Queensland State Wheat Bd. [1941] 1 KB 402
The Morviken [1983] 1 Lloyd’s Rep. 1 at 9 (HL)
The Starsin [2003] 1 Lloyd’s Rep. 571 (HL)
Pyrene v. Scindia Navigation Co. (1954) 2 QB 402
Goodwin, Ferreira v. Lamport and Hold (1929) 34 Ll.L.Rep. 192
The Heron II, Koufas v. C. Csarnikow Ltd. (1954) 9 Exch. 341
The Marine Sulphur Queen (1970) 2 Lloyd’s Rep. 285 (US Dist. Ct.)
Elder Dempster & Co. v. Zochonis & Co. (1924) AC 522
Alder v. Dickson and Another (1954) 2 Lloyd’s Rep. 267
Midland Silicones v. Scruttons (1962) 2 WLR 186
Eurymedon (1974) 1 Lloyd’s Rep. 534
Foscolo, Mango & Co. v. Stag Line (1931) Ll.L. Rep 271