Rotterdam Rules…the future?

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On 11 December 2008, the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea was signed in Rotterdam. (The Rotterdam Rules).(1) These Rules provide a modern alternative to the other international maritime international conventions: The Hague, Hague-Visby and Hamburg Rules. On 23 September 2009, The Rotterdam Rules were opened for signature, and the current 25 signatory countries present a mix of developed and developing countries, including traditional shipping, seafaring and trading nations.

  • Application

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The Rotterdam Rules expand the scope of application of the current law, that basically covers the tackle-to-tackle system. The new rules include the door-to-door transport and of course the port-to-port shipments.(3) This is relevant for modern commerce, because the container transport is typically performed under door- to-door contracts of carriage; therefore, the legal infrastructure shall allow this type of trading system.To illustrate this, one of the 35 most important maritime countries is China, the second ship owning nation after Japan in Asia, having 65.5 m.dwt (4) of capacity in its fleet.(5) The General Maritime Regime of the Chinese Maritime Code (CMC) is a port-to- port basis regulation, but it also covers the multimodal contracts of carriage. (6) Therefore, this scope of application is relevant for some of the interests of the big maritime nations.

  • ‘Maritime Plus’ Approach

In order to achieve uniformity and certainty, it was logical to ask for a single legal regime covering the whole performance of the contract of carriage, widening the scope of liability for all the parties involved in the entire process.

The current system provides a different contract of carriage for each segment of the transport of the goods (air, road, rail and others) there might be contractual agreements on that, but without the backup of a uniform legal system covering those situations. To avoid any conflicts with the unimodal inland conventions, on contracts where the Rotterdam regulations may apply; the Rules include a provision preventing the affection of these conventions, regarding the carriage of goods by air, road, rail, or inland waterway that regulates the carrier’s liability for loss or damage.

  • Equalized Carrier’s Liability

3f02350The duty of due diligence on seaworthiness and cargo-worthiness, has been expanded to the period before the beginning of the voyage. Additionally, in these Rules the carrier has lost his defence for loss or damage resulting from his navigational fault and management of the ship failure. About fire provisions, the concept in the previous Rules (8)has been reduced to ‘fire on the ship’ (9)It is suggested that this is a modern approach to maritime transport, due the technology systems in navigation, limiting the fire defence to the maritime stage of transport and widening the carrier’s responsibility for fire caused by his or his agents fault. The Carrier’s main obligations are expressly listed to avoid any misinterpretation (10). Deck cargo, is included in the Rules, and the rules are clear. (11)It is suggested that the issues that were vague and potential problems are solved by the Rotterdam Rules, establishing a more efficient and direct way to deal with the mentioned situations.

  • Direct Liability of Maritime Performing Parties

Usually, the negligent third parties seek to rely on the carrier’s defences and limitations of liability. The Hague-Rules did not deal directly with this; the Hague-Visby Rules were vague about the independent contractors (12) and the Hamburg Rules did not deal with the topic. Under the Rotterdam Rules the carriers’ agents, employees, and independent contractors are able to suit. (13)Therefore, the maritime performing party is jointly and severally liable along with the carrier. It is believed that this is a relevant improvement widening the scope of liability to those who were subjected to the carrier’s exceptions and in some way were responsible of the faults.

  • Limitation of Carrier’s Liability

18197beThe Rotterdam Rules contain a slight increase of the limitation levels on carrier liability provided in the Hague-Visby Rules. This is in the amount of 875 SDRs per package, and 3 SDRs per kilogram. (14)It is important to mention that most of the today’s world trade is subject to the Hague-Visby Rules provisions on this matter. Nonetheless, in terms of progress of the new maritime transport systems this increase was needed. As a logical consequence, it is believed that this increase will have a limited impact, because of the rise of containers packed with small packages; therefore, the amount will not be too high because of the individual weigh of each package.

  • Obligations of the Shipper

The previous Maritime Conventions have mainly dealt with the duties of the carrier towards the shipper. Therefore, The Rotterdam Rules provide clear provisions on the shipper’s obligations. The shipper continues to be liable for loss or damage resulting of its failure to properly label or inform the carrier of the nature of dangerous goods.(15)The shipper also bears a fault-based liability for loss or damage caused by its failure to provide necessary information, instructions and documents to the carrier.(16)These documents are bound to be necessary for the carrier to avoid any possible loss or damage.

  • The future?

The Rotterdam rules offer a comprehensive international governing instrument that would modernise the industry with the analysed new features. The new Convention represents an industry-driven approach with competing interests on the consensus on practical solutions. Conversely, some respectable attorneys differ: ‘The Convention (a) will not prevent regional solutions, (b) fails the test of reasonable fairness, (c) is too ambitious in anticipating commercial and technical developments, and (d) introduces legal uncertainty and the industry would pay a heavy price in legal costs for adopting it. (17)This conclusion might be drastic, but it is a straightforward statement that explains why the Rotterdam Rules are not yet widely agreed by the traditional Maritime Nations, and the entire maritime community. Consequently, the future?…no….the distant future?….possibly.