Analysis of the Hamburg Convention and the Hague

8/8/2019 Analysis of the Hamburg Convention and the Hague

1/9

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, thecontract 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 Conventions 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


2/9

It is clear from this article that the carriers 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 carriers 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 bylosing 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.


3/9

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 saveproperty 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,


4/9

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

carriers 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 carriers 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, couldnt sue the carrier for negligence

regarding the gangway as they had excluded liability under the contract, however, she couldsuccessfully 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.


5/9

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 carriers 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


6/9

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 considerdeviations 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


7/9

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 shippers liability, it was felt that one was

justified. With the exclusions of liability previously found in Article 1 of the Hague/Visby rules nowunavailable, 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-

-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


8/9

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

Tetleys 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 Lloyds Rep. 1 at 9 (HL)The Starsin [2003] 1 Lloyds 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 Lloyds Rep. 285 (US Dist. Ct.)

Elder Dempster & Co. v. Zochonis & Co. (1924) AC 522

Alder v. Dickson and Another (1954) 2 Lloyds Rep. 267

Midland Silicones v. Scruttons (1962) 2 WLR 186


9/9

Eurymedon (1974) 1 Lloyds Rep. 534

Foscolo, Mango & Co. v. Stag Line (1931) Ll.L. Rep 271

Documents

Analysis of the Hamburg Convention and the Hague