An Evaluation of The Rotterdam Rules From The US: Thomas J. Schoenbaum

AN EVALUATION OF THE ROTTERDAM RULES FROM THE US : SCHOENBAUM : (2011) 17 JIML
An Evaluation ofthe Rotterdam Rules

fromthe US
Thomas J. Schoenbaum
Research Professor of Law, George Washington University*
Few doubt the desirability of creating a new international legal regime to govern the
transport of goods in international trade. The three existing international legal regimes, the
Hague, Hague-Visby and Hamburg Rules, are widely regarded as inadequate. Furthermore,
there is a need for international uniformity so that major trading nations apply the same law
to improve administration of the law and to reduce transaction costs. The Rotterdam Rules,
concluded by UNCITRAL and adopted by the United Nations General Assembly in 2009, are
proposed as a new international transport legal regime for the twenty-first century that
take into account containerization of cargo, multimodalism and electronic communication.
This article concludes that, while on balance the Rotterdam Rules represent a marginal
improvement over the patchwork of existing international transport regimes, they also
present many difficulties. The Rotterdam Rules are far from ideal but represent a `next
best' solution that would contribute to the better multimodal international movement of
goods if adopted on a global scale to replace the three existing legal regimes.
Introduction
On 11 December 2008 the General Assembly of the United Nations formally adopted a new
regime for the transportation of most goods in international trade, a new Convention on
Contracts for the International Carriage of Goods Wholly or Partly by Sea, known as the
Rotterdam Rules.1 Not yet in force, the Rotterdam Rules are now under consideration by
governments around the world as the new, global, twenty-first century regime for
international transport law. The Rotterdam Rules are long and complex. Is this the longawaited document that will unify the disparate rules that now govern this important area of
international law?
The Rotterdam Rules have an impressive pedigree: they are the product of many years work
by experts under the auspices of the United Nations Commission on International Trade Law
(UNCITRAL) and the Comite Maritime International (CMI), in consultation with a wide variety
of other international bodies and interest groups.2 The Rotterdam Rules are explicitly
* Max Planck Gesellschaft: essay prepared for the Annual Hamburg Lecture delivered on 13 October 2011;
tschoen@law.gwu.edu.
1
United Nations General Assembly Sixty-third session, UN A/RES/63/122, distributed 2 February 2009. For commentary,
see D. Rhidian Thomas (ed.), A New Convention for the Carriage of Goods by Sea The Rotterdam Rules 2009).
2
For an account of the preparatory and drafting process, see Michael F. Sturley, Tomataka Fujita, Gertjan van der Ziel,
The Rotterdam Rules 121 (London: Sweet and Maxwell 2010).
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(2011) 17 JIML : AN EVALUATION OF THE ROTTERDAM RULES FROM THE US : SCHOENBAUM
intended to replace all the existing international regimes now governing international maritime transport law, the Hague Rules,3 the Hague-Visby Rules,4 and the Hamburg Rules,5 and to
create a single international code.
Few doubt the desirability of formulating a new international regime to replace the existing
patchwork of international maritime regimes and national laws. There is also no doubt that
the existing menu of international maritime transport conventions is outdated, having been
drafted and approved largely before such developments as cargo-containerization, door-todoor transport of goods, multimodalism, and electronic contracts and communications.
However, the existing regimes, although admittedly deficient, still work to a surprising extent,
supplemented at critical junctures by judicial decisions that address novel questions6 and by
the injection of new rules in new areas.7 We are not in a crisis situation. So the question is
whether the Rotterdam Rules represent an improvement over the existing situation. I
conclude that the Rules are a marginal improvement, but that some parts of the Rules are
problematic. Furthermore, the chief goal of the Rotterdam Rules, international uniformity, is
threatened by two dangers. First, some, even a substantial number of states may adopt the
Rules while other states will reject them. In this case the Rules will detract rather than add to
uniformity as they will represent a fourth international regime alongside the existing situation
of two Hague Rule regimes and the Hamburg Rules. Secondly, uniformity will also be
threatened if states that accept the Rules vary them by national legislation.8 Such outcomes
should be discouraged by all possible means.
Criteria by which to judge the Rules

By what criteria should the Rotterdam Rules be judged? I propose to judge the Rules according to five criteria. First, do the Rules enhance certainty and predictability in international
transportation? To meet this criterion, the Rules should be both as simple and as clear as
possible. Ambiguities that must be litigated should be avoided as inevitably different
jurisdictions will come up with different answers. Secondly, commercial needs should be fully
satisfied. Thus the Rules should address new business developments such as electronic bills
of lading and multimodalism. Thirdly, do the Rules minimize transaction and litigation costs?
Will the new regime operate efficiently with a minimum of legal snarls, conflicts of law and
jurisdictional controversies? Fourthly, will the Rules enhance distributive justice among the
stakeholders involved in international transportation? A fifth criterion is, of course, whether
the Rules will enhance international uniformity, the `holy grail' that is the raison d'etre of the
Rules, but the answer to this question will depend on whether the Rules will have achieved
virtual universal adoption when they come into force. This only time will tell.
3
The Hague Rules are contained in the International Convention for the Unification of Certain Rules of Law Relating
to Bills of Lading, 25 August 1924, 120 L.N.T.S. 155. The United States' law, the Carriage of Goods by Sea Act of 1936, Ch.
229, 49 Stat. 1207 (1936), Pub L. No. 109304, 120 Stat. 1485 (2006), reprinted in the note following 46 U.S.C. sec. 30701
(formerly codified at 46 U.S.C. secs. 13001315), is national legislation based on the original Hague Rules of 1924.
4
The Hague Rules were amended by the Visby Protocol, the Protocol to Amend the International Convention for the
Unification of Certain Rules of Law Relating to Bills of Lading, 23 February 1968, 1412 U.N.T.S. 128, and the SDR Protocol
of 1979, the Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to
Bills of Lading, 21 December 1979, 1984 Gr. Brit. T. S. No. 28 (Cmnd. 9197). Over 120 countries, including most important
trading nations, are parties to the Hague-Visby Rules.
5
United Nations Convention on the Carriage of Goods by Sea, 31 March 1978, 1695 U.N.T.S. 3. Thirty-four states have
ratified this Convention and adhere to the Hamburg Rules.
6
For example, the Supreme Court of the United States has tackled multimodalism in two important decisions. See the
discussion below accompanying notes 1224. For a comprehensive discussion of multimodalism, see Thomas J.
Schoenbaum, Admiralty and Maritime Law, vol. I, sec. 104 (St. Paul: West, 5th edn., 2011).
7
For example, the CMI has promulgated Rules for Electronic Bills of Lading (1999).
8
Although Article 90 of the Rotterdam Rules states that no reservations are permitted, this may not prevent states from
accepting the Rules while varying their provisions through national legislation.

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In the sections that follow, I will discuss the principal parts of the Rules, pointing out what I
believe are both the strong points and the problem areas measured against these criteria.
Special attention will be paid to the unique situation of the European Union. The EU is unique
because, as a union of 27 sovereign states and a single market, the Rules, if adopted, must not
only serve for the transport of goods to and from the EU to non-EU countries, but must serve
the needs of intra-EU trade. Although in 2010 the EU Parliament adopted a motion9 on EU
transport policy that included calling on Member States to adopt the Rotterdam Rules, many
European groups have criticized the Rules10 and the EU Commission has recently released a
white paper11 that calls for harmonization of EU transport policy as well as global transport
policy, but is non-committal on the Rotterdam Rules.
Recent cases in the U.S. ^ how would the Rules apply?

Norfolk Southern Railway Co. v. Kirby
At the outset, to show the actual impact of the Rotterdam Rules, consider how the Rules
would apply to two famous recent cases of multimodal carriage of goods in international
trade decided by the Supreme Court of the United States. In the 2004 case of Norfolk
Southern Railway Co. v. Kirby,12 which the Court characterized as à maritime case about a
train wreck',13 Kirby, an Australian exporter, sold 10 containers of machinery to a General
Motors plant located in Huntsville, Alabama. To transport the goods, Kirby contracted with
International Cargo Control (ICC), a freight forwarder, and was issued an ICC multimodal bill
of lading. ICC in turn contracted with a German carrier, Hamburg Sud, which issued its own
multimodal bill of lading to ICC to transport the goods door-to-door, from the exporter's
factory to the General Motors plant in Huntsville. Both bills of lading contained what are
called `Clauses Paramount' incorporating the defenses and liability limits of the U.S. Carriage
of Goods by Sea Act (COGSA),14 as well as so-called `Himalaya Clauses',15 extending the
defenses and limits of COGSA to servants, agents, and independent contractors who might
participate in the performance of the carriage contract. The cargo reached the United States
safely, but was damaged in a train derailment between the port of Savannah, Georgia and its
destination in Huntsville. The damage to the cargo totaled over $1.5 million.
The Supreme Court, which took the case on a petition for certiorari, ruled, first, that U.S.
federal admiralty jurisdiction16 extended to all aspects of both carriage contracts despite the
fact that they were both `mixed' contracts requiring some performance on land.17 This was a
practical judgment which allowed the Court to apply federal admiralty law to all aspects of
both contracts. Secondly, the Court ruled that since section 7 of COGSA18 gives parties to a
carriage by sea contract the option of extending its rules by contract, the Himalaya Clauses in
the bills of lading were enforceable.19 Thus the liability limits of COGSA, U.S.$500 per package
9
EU Parliament 2009/2095 (INI), para. 11, adopted 23 March 2010.

E.g., the European Shippers' Council, www.shippingonline.cn/news, accessed 3 July 2011.
11
Final Report, European Transport Study (30 Oct. 2010), available http://www.ec.europa.eu/transport/strategies/
studies, accessed 3 July 2011.
12
543 U.S. 14, 125 S.Ct. 385, 160 L.Ed. 2d 283, 2004 AMC 2705 (2004).
13
543 U.S. at 22.
14
COGSA is the U.S. codification of the Hague Rules of 1924; see supra note 3. COGSA was (apparently inadvertently)
omitted when new Title 46 of the United States Code was promulgated by Congress.
15
So called after the name of the ship in the English case in which such clauses first were litigated, Adler v. Dickson
(The Himalaya) (1955) 1 Q.B. 158 (C.A.).
16
28 U.S.C. sec. 1333 and Constitution of the United States. Art. III, sec. 2.
17
The Court reasoned that the determination of federal admiralty jurisdiction in contract cases depends not on the
place of performance of the contract but rather on the nature and character of the contract involved. Since the
essential character of both transport contracts was international transport by sea, the contracts involved federal
admiralty jurisdiction. 543 U.S. at 3032.
18
COGSA sec. 7, formerly codified at 46 U.S.C. sec. 1307.
19
543 U.S. at 3233.
10

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or, in the case of goods not in packages, per customary freight unit,20 extended to the inland
carrier, Norfolk Southern Railway. The Court admitted that as to the Hamburg Sud multimodal
bill of lading this rule strains traditional contract principles since the shipper Kirby was not in
privity of contract with either Hamburg Sud or Norfolk Southern, but, relying on prior case
law, the Court stated as a principle of federal admiralty law that àn intermediary [in the
multimodal carriage of goods] binds the cargo owner to the liability limits it negotiates with
downstream carriers'.21 In applying this rule, the Court held that, because the contract came
within admiralty jurisdiction, state contract law has no place because àpplying state law to
cases like this one would undermine the uniformity of the general maritime law'.22 Thus the
Court stated that the contracts in question must be judged and interpreted by one body of
law and `[h]ere, that one law is federal'.23
The decision of the Supreme Court in Kirby, however, soon created a new dilemma faced by
the federal courts: the Supreme Court had ruled that federal law applies to a multimodal bill
of lading for the carriage of goods in international trade, but two possible federal laws may
apply the rule in Kirby that a Himalaya Clause in a multimodal bill of lading allows the inland
carrier to invoke the liability limits of COGSA, on the one hand, and the federal statute known
as the Carmack Amendment,24 which deals with the liability of rail and road cargo carriers, on
the other. The question which had to be resolved by the courts was whether the Carmack
Amendment, which was not involved in Kirby, can be displaced by a Himalaya Clause in a
multimodal bill of lading. The United States' Courts of Appeal split on this question: four
courts25 ruled in favor of the Himalaya Clause, while two courts26 ruled that a federal statute,
the Carmack Amendment, cannot be ousted by parties' agreement.
Kawasaki Kisen Kaisha, Ltd. v. Regal-Beloit Corp.

The Supreme Court resolved this split of authority in the 2010 case of Kawasaki Kisen Kaisha,
Ltd. v. Regal-Beloit Corp.,27 which, like Kirby, was a maritime case about a train wreck. In
Kawasaki, cargo was shipped from China to various inland destinations in the Midwestern
United States on four multimodal bills of lading. When the cargo arrived at the port of Long
Beach, California, it was transshipped by train. However, the cargo never reached its
destinations and was damaged in a train derailment in Oklahoma. The Supreme Court
majority ruled that a multimodal, through bill of lading that contains a Himalaya Clause may
preclude the application of the Carmack Amendment so the limits of COGSA, not the
Carmack Amendment, determine the rail carrier's liability.28 The Court reasoned that the
Carmack Amendment classifies rail carriers into (1) receiving carriers; (2) delivering carriers;
and (3) connecting carriers. The Court interpreted Carmack section 11706 (a) as requiring the
20
COGSA sec. 4(5), formerly codified at 46 U.S.C. sec. 1304(5).

543 U.S. at 34. The Court gave four reasons for applying this rule: (1) the intermediary (ICC) was Kirby's agent for the
single, limited purpose of moving cargo to its destination; (2) this limited agency role accords with industry practice;
(3) if carriers' liability limits negotiated with cargo owners were reliable while limits negotiated with intermediaries
were not, the result would be chaos; and (4) the rule produces an equitable result because Kirby can presumably
recover from ICC any discrepancy between the limits agreed by ICC and the limit ICC granted to Norfolk Southern. 534
U.S. at 3435.
22
543 U.S. at 32.
23
543 U.S. at 323.
24
The Carmack Amendment imposes liability on rail carriers under federal law. See 49 U.S.C. sec. 11706 (rail carriers)
and 49 U.S.C. sec. 14706 (road carriers).
25
Altadis USA, Inc. v. Sea Star Line, LLC, 458 F. 3d 1288 (11th Cir. 2006); Capital Converting Equipment, Inc. v. LEP
Transport, Inc., 965 F.3d 391 (7th Cir. 1992); Shao v. Link Cargo (Taiwan) Ltd., 986 F.3d 700 (4th Cir. 1993); and American
Road Service Co. v. Consolidated Rail Corp., 348 F.3d 565 (6th Cir. 2003).
26
Sampo Japan Ins. Co. v. Union Pacific R.R. Co., 456 F.3d 54 (2d Cir. 2006); Neptune Orient Lines, Ltd. v. Burlington
Northern and Santa Fe R. R. Co.,<spacing OK or as above?> 213 F.3d 1118 (9th Cir. 2000).
27
130 S.Ct. 2433 (2010).
28
130 S.Ct. at 2442.
21

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issuance of a bill of lading only by a receiving rail carrier, and `for Carmack's provisions to
apply, the journey must begin with a receiving rail carrier'.29 Since the bill of lading was issued
by a person other than a rail carrier initially receiving the cargo, Carmack cannot apply. The
Court further sought to make sure that this rule would apply to all multimodal bills of lading,
stating that it `sees no reason to read COGSA and Carmack to outlaw this efficient [multimodal] mode of international shipping by requiring these journeys to have multiple bills of
lading'.30 The Court in effect allows parties including inland carriers to a multimodal bill of
lading to invoke COGSA maritime liability limits to govern all aspects of the carriage contract.
Would the U.S. Courts' ruling be different under the Rules?

Would this ruling be different under the Rotterdam Rules? As will be explained more fully
below, the answer is `no', other than the fact that instead of being able to claim the limits and
defenses of COGSA, the limits and defenses of the Rotterdam Rules would apply. The reason
for this is that Article 4 of the Rotterdam Rules states that the defenses and limitations of
liability under the Rules automatically cover the sea carrier and any `maritime performing
party' under the contract. `Maritime performing party', we shall see, does not include an
inland carrier of the cargo. Furthermore, Article 26 of the Rules prescribes a `network' system
of liability to cover non-maritime performing parties carriers other than sea carriers where
a state party to the Rotterdam Rules is also a party to an international convention covering
modes of shipment other than sea carriage, transport by air, rail, road or inland waterway.
Since the United States is not a party to any mode of international transport convention other
than the Montreal Convention for the Unification of Certain Rules for International Carriage
of Goods by Air (1999), no international convention would apply to the multimodal bills of
lading involved in the Kirby and Kawasaki cases, so the rule in such cases would not be
affected the U.S. Courts would apply otherwise applicable law to continue to give effect to
Himalaya Clauses in multimodal bills of lading. Only in an unusual case involving multimodal
transport by sea and air would the network rule of Article 26 apply to the United States.
However, the situation would be very different for parties to the Rotterdam Rules, such as EU
countries, which have also ratified international conventions covering rail, road and inland
waterway modes of transport. In these states the network rule of Article 26 would have a
major impact and inland carriers would not be able to claim the defenses and limits of the
Rules, but would be subject to the often very different liabilities of the other transport
conventions. Himalaya Clauses purporting to cover inland carriers in such countries would
have no effect.
Is this strength or a weakness of the Rotterdam Rules? Perhaps `both' is the answer to this
question. It can be considered an ingenious result where the same international convention
can have disparate impact on state parties that accept it, minimizing the legal changes
required to adhere to the Rules. On the other hand, to the extent the purpose of the Rules is
to engender international uniformity, the disparate impact of the Rules may be considered a
weakness.
This vignette describes a fundamental characteristic of the Rotterdam Rules that we will see in
the analysis to come: the Rules have chameleon-like quality in that they seem to change
colors at will so that what seems to be the case is really not so on closer inspection.
Scope of application of the Rotterdam Rules

What is the scope of coverage of the Rotterdam Rules? This question is addressed by Articles
5, 6 and 7 of the Rules. With respect to the connection to a contracting state, the Rules apply if
either the place of receipt, the port of loading, the place of delivery, or the port of discharge
29
30
130 S.Ct. at 2444.

130 S.Ct. at 2445.
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of the goods is located in a contracting state. With respect to the time period of applicability
the Rotterdam Rules may apply door-to-door or to the entire period of responsibility of the
carrier.31 Thus the Rules are drafted to cover multimodal transport. With respect to the types
of transport subject to the Rules, the Rotterdam Rules eschew the documentary approach of
the Hague and Hague-Visby Rules, wherein the type of document determines whether the
convention applies, as well as the contract approach of the Hamburg Rules, wherein the Rules
apply to all types of contracts between a carrier and a shipper. Instead the Rotterdam Rules
employ a hybrid approach: on the one hand, contract and documentary approaches so that
the Rules apply to all contracts of carriage and documents that include at least one
international sea leg;32 on the other hand, a trade approach so that the Rules apply to both
liner and non-liner trades, but not to charterparties or to like agreements for the use of a ship
or space on a ship. Thus the Rules retain the traditional charterparty exclusion of the Hague,
Hague-Visby and Hamburg Rules by stating that (1) with respect to liner transport the Rules
do not apply to charterparties and other contracts for the use of space on a ship;33 and (2)
excluding non-liner contracts of carriage as a general rule.34 But the Rules apply to contracts
of carriage in non-liner transportation if there is no contract for the use of a ship or space on a
ship and some other transport document (most probably a bill of lading) is issued.35 In
addition, the Rules apply as between a carrier and a consignee so that the charterparty
exclusion applies only between the original contracting parties and if the bill of lading or
other contract is negotiated or passed to a consignee.36
For the most part the coverage provisions of the Rules are admirable. The door-to-door
approach takes into account multimodalism. With respect to the contracts covered, the
hybrid approach of the Rotterdam Rules is generally welcome as the documentary approach
of Hague and Hague/Visby as well as the contract approach of the Hamburg Rules are too
narrow. The Rotterdam Rules use both these approaches as well as a deft use of a trade
approach to define more precisely the traditional charterparty exclusion. This is to be
applauded.
Problems
But there are two problems with the scope of application of the Rotterdam Rules. First is the
precondition that for the Rules to apply, the transport must involve at least one international
sea leg. This requirement means that the Rules will not be a true universal multimodal
transport convention. If international transport involves two or more modes but no sea leg,
the Rules will not apply. This is a backward step from the United Nations Convention on
International Multimodal Transport of Goods (1980)37 (not in force), which would have
applied whenever the international transport of goods involves at least two different modes
of transport.38 This omission is particularly problematic for the EU, which for geographic
reasons has frequent instances of international multimodal transport which does not involve
a sea leg. The Rotterdam Rules will not apply to such transactions, and the parties will have to
sort out the applicability of other conventions, which will add unnecessary complexity to
multimodal transport.
A second problem of the scope of the Rules is the exception contained in Article 80 that
allows carriers to opt out of the coverage of the Rules by entering into a volume contract with
31
32
33
34
35
36
37
38
Arts. 11 and 12.

See Rotterdam Rules, Art. 1.1.
Art. 6.1.
Art. 6.2.
Art. 6.2(a) and (b).
Art. 7.
24 May 1980, U.N. Doc. No. TD/MT/CONF/16.
Multimodal Convention Art. 1.
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a shipper.39 `Volume contract' is defined as à contract of carriage that provides for the
carriage of a specified quantity of goods in a series of shipments during an agreed period of
time'. The breadth of this definition means that a large number perhaps a majority of
international transport contracts will be undertaken avoiding the Rotterdam Rules in favor of
a freedom of contract approach. Powerful shippers and carriers may compel derogations from
the Rules. This is a great departure from the law as it has existed since the Hague Rules were
drafted over 80 years ago. Although deregulation is desirable in some cases,40 this may not be
one of them. Lower liability standards may lessen the economic incentive for carriers to take
due care of goods.41 This provision may also lead to higher insurance costs as cargo insurers
will be the ones to pay any increased damages suffered by shippers who embrace the new
freedom of contract regime. If insurance costs rise, the consumers of imported goods may be
the ultimate losers.
Multimodal aspects
If and when the Rotterdam Rules enter into force, they will represent the first true multimodal
convention for the international transportation of goods. Certainly a legal instrument that
takes into account containerization of cargo and routine multimodal and door-to-door
transportation is long overdue. At the same time, the Rotterdam Rules are flexible enough to
allow parties to enter into traditional `tackle-to-tackle' or `port-to-port' transport contracts if
they wish.42 However, as I have already pointed out, the Rotterdam Rules do not represent a
complete multimodal approach; rather the Rules adopt what is termed a `maritime plus'
regime43 because for the Rules to apply a contract must include international sea carriage.
Existing legal regimes

In adopting a multimodal approach the drafters of the Rules had to decide what to do about
the fact that under existing law not only international conventions but also national laws
regulate non-maritime modes of international transport of goods. For each of the four modes
of transportation other than sea transport there are international conventions. For road
transport there is the Convention on the Contract for the International Carriage of Goods by
Road (CMR);44 for inland waterway transport there is the Budapest Convention on the
Contract for the Carriage of Goods by Inland Waterway (CMNI);45 for rail transport there is
the Uniform Rules Concerning the Contract for International Carriage of Goods by Rail (CIMCOTIF);46 and for air transport there is the Montreal Convention for the Unification of Certain
Rules for International Carriage of Goods by Air.47 Each of these conventions has its own
distinctive liability regime and limitation of liability amounts vary widely. Mandatory national
laws for each of the four modes also vary and apply in those countries that have not accepted
one or another of the conventions.
The drafters of the Rotterdam Rules had to decide how to deal with these existing legal
regimes. Perhaps an ideal would have been the adoption of a uniform system for multimodal
39
Article 80(5) and (6) permit volume contract derogation to bind a third party who claims for damage under a volume
contract bill of lading, but only if the third party gave express consent to the derogation.
40
For a defense of the volume contract derogation, see Proshanto K. Mukherjee and Abhinayan Basu Bal, A Legal and
Economic Analysis of the Volume Contact Concept in the Rotterdam Rules: Selected Issues in Perspective, 40 J. Mar. L.
& Comm. 1 (2009).
41
In economic jargon this is known as ùnder-deterrence'.
42
Art. 12.3.
43
Sturley et al, op. cit. at 61.
44
19 May 1956, 399 U.N.T.S. 189.
45
22 June 2001, U.N. Doc. No. ECE/TRANS/CMNI/CONF/2/FINAL.
46
Appendix B to the Convention Concerning International Carriage by Rail (COTIF) of 9 May, 1980, as amended by the
Protocol of 20 Dec. 1990.
47
28 May 1999, 2242 U.N.T.S. 350.
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transport that would have preempted all of the conventions and national laws. In this case
multimodal transport of goods would be a sui generis system and the various conventions
and national laws would apply only to unimodal transport as defined by each legal
instrument. Such a uniform multimodal legal regime would have concluded that there is no
important reason why the limitation amount for air cargo under the Montreal Convention
should be 19 SDRs (special drawing rights)48 per kilogram while the limitation amount for
inland waterway cargo under the Budapest Convention should be 2 SDRs per kilogram or
666.7 SDRs per unit, whichever is higher. Instead the applicable limit for all modes would be
the Rotterdam Rules limitation of 3 SDRs per kilogram or 875 SDRs per unit, whichever is
higher.
But the drafters apparently concluded that a uniform regime for the Rotterdam Rules was not
possible, so the Rules adopt what is called a `limited network' system that preempts all
mandatory national laws but applies in substantial part the liability regimes of each of the
other four modes of transit as concluded by the four conventions stated above. This is
accomplished by Article 26 of the Rotterdam Rules, which adopts a `hypothetical contract' test
to determine if in fact one of the four international conventions would apply to the particular
transport contract ìf the shipper had made a separate and direct contract with the carrier in
respect of the particular stage of carriage' where the damage to the goods occurred. If this
legal test is met, `the provisions of [the Rotterdam Rules] do not prevail over those provisions
of another international instrument' that applied at the time the loss or damage occurred.
Thus under this limited network approach, the Rotterdam Rules would displace mandatory
national laws, but the four international conventions will continue to apply where they now
apply. However, Article 26 states that the four conventions apply only to what is termed
`localized damage', damage that occurs `solely before' the goods are loaded onto the ship or
`solely after' the goods are discharged from the ship. Thus the Rotterdam Rules regime will
apply to `non-localized' damage, where the damage occurred cannot be identified, as well as
`progressive' damage, where the damage occurs gradually during different modes of
transport. Moreover, the Rules obviously apply to damage that occurs during the sea leg of
transport.
Article 82
In order to supplement Article 26, the Rules further address the status of the four
international unimodal conventions in Article 82, which contains savings clauses assuring the
validity of each of the four existing unimodal conventions, including any future amendments
in the face of the Rotterdam Rules. These four savings clauses broadly validate each of the
four conventions insofar as they `regulate the liability of the carrier for loss or damage to the
goods'. There is a disconnect between the heading of Article 82 and the body of the article.
The heading indicates that the article covers only `matters not covered' by the Rotterdam
Rules. But the body of the article consists of broad savings clauses. As Professor Eric Rosg49
has pointed out, these savings clauses in Article 82 are unwise. While they were intended by
the drafters to eliminate `minor' possible conflicts in the liability regimes of each of the
conventions and the Rotterdam Rules50 and to make sure that in the event such conflicts
arose they would be resolved in favor of each convention, in fact the savings clauses are too
broad. Each clause in Article 82 may plausibly be interpreted to require elements from each
convention that conflicts with or complicates the Rotterdam Rules regime. Professor Rosg
has identified four problem areas:51 first, each convention may require the use of its own
48
The Convention limit of 17 SDRs was raised to 19 SDRs as of 30 December 2009. See Carriage by Air (Revision of
Limits of Liability under the Montreal Convention) Order 2009.
49
Eric Rosg, Conflicts of Conventions in the Rotterdam Rules, 15 JIML 238 (2009).
50
See Sturley et al, op. cit. at 6875.
51
Eric Rosg, op. cit. at 242245.
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documentation in addition to documents that satisfy the Rotterdam Rules. This is an

unnecessary complication if multimodal transport under the Rules requires duplicative sets
of documents52 to satisfy the different modal regimes. Secondly, each convention has its own
distinctive rules for disposal and delivery of cargo. Thirdly, each convention defines and deals
differently with non-localized damage. Fourthly, each convention has different standards for
shipper's liability. It is at least arguable that because of the broad wording of Article 82, each
of these areas of the unimodal convention regimes may be interpreted to apply to a
multimodal transaction under the Rotterdam Rules, in which case multiple conflicts may arise
between the Rotterdam Rules and the four conventions despite (or because of) Article 82.
A better course of action would have been to phrase Article 82 as preempting the applicability
of the four conventions in carriage to which the Rotterdam Rules apply except as specified in
Article 26. As it is, by incorporating these four conventions into the Rotterdam Rules regime,
unnecessary duplication of unknown value is carried into the new Rules introducing
potentially further great complexity and perhaps conflicts of law into the new multimodal
regime.
Transport documents
The most innovative and revolutionary aspect of the Rotterdam Rules will be the new
documentary requirements. Article 35 requires the carrier to issue, not a bill of lading as in
prior sea cargo conventions, but a `transport document', defined in Article 1.14 as a document
that meets two of the traditional functions of the bill of lading, evidence of receipt of goods
and evidence of the contract of carriage. Four types of transport documents are allowed: (1)
negotiable;53 (2) negotiable without need for surrender; (3) non-negotiable; and (4) nonnegotiable requiring surrender. This section is drafted to encompass the documents now in
use, non-negotiable sea waybills; non-negotiable straight bills that require surrender;
standard bills of lading (order and bearer bills); and standard bills that dispense with
surrender. But the Rotterdam Rules specify that the shipper and the carrier can agree to
replace the use of any paper transport document with an electronic transport record.54 The
Rotterdam Rules therefore appear to make possible and to facilitate the long-hoped for
transition from paper documents to electronic transport records in international trade.55
Furthermore, Article 35 allows the parties by agreement to dispense entirely with using any
transport document and provides that no transport document may be required if it is the
custom or trade practice not to use one. This provision opens the way to a `paperless' system
through the use of the `rights of control' in Chapter 10, Articles 50 to 56 of the Rotterdam
Rules. The right of control may be used with or without a transport document.56 Normally the
shipper will have the right of control, which may be exercised throughout the period of
responsibility of the carrier.57 The right of control is transferable and may be transferred to a
bank or a consignee with notice to the carrier.58 The carrier generally must execute the
instructions of the controlling party, although it must be reimbursed for any additional
52
Each convention has its own document requirements. For example, the CMR Convention requires the issuance of a
CMR Consignment Note. CMR Convention, Art. 4.
53
The term `negotiable transport document' is defined in Article 1.15.
54
Arts. 810. Èlectronic transport record' is defined in Art. 1.18.
55
Miriam Goldby, Electronic Alternatives to Transport Documents and the New Convention: A Framework for Future
Development? 14 JIML 586 (2008). Negotiable electronic transport systems can function through the use of a registry
system of rights and liabilities, a `private key' system which designates the holder or a registry system that records the
issuance and transfer of rights in a central registry. Articles 57 and 58 of the Rules govern the transfer of rights and the
liability of the holder of a negotiable transport document. For non-negotiable waybills an electronic system a
controlling party may be designated.
56
Art. 51. See also the definitions, Art. 1.12 and 1.13.
57
Art. 51.
58
Ibid.
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expense and may demand security.59 The controlling party and the carrier may vary the
contract of carriage by agreement.60 The right of control opens the way to a system of transfer
of the rights to the goods in which there are two variations: where electronic documents are
employed there may be cash against documents as in the present system, but done
electronically.61 Where the parties agree to forego the use of a transport document, there may
be a new system of cash against transfer of control in which the documentary title function of
the bill of lading is performed entirely electronically.62
An additional innovation of the Rotterdam Rules is detailed provisions on the necessary
contract particulars which must be contained in the transport document or the electronic
transport record.63 There are also detailed provisions on how and when the carrier may
qualify the information relating to the condition of the goods in the contract particulars.64 For
example, the Rules allow the carrier to qualify the contract particulars with the statement
`shipper's weight' or `shipper's load and count' where the goods are in a closed container and
there is no reasonable way for the carrier to verify the shipper's information.65 There are also
detailed rules on the evidentiary effect of the contract particulars;66 where a non-negotiable
document has been issued, the carrier may not submit proof to the contrary against a
consignee who in good faith relied upon the contract particulars furnished by the carrier.67
Finally the Rotterdam Rules contain detailed rules on delivery of the goods against the various
types of documents. The consignee is required to accept delivery and to acknowledge receipt
of the goods regardless of what or whether a transport document is employed.68 Where there
is a non-negotiable or no transport document, the carrier must deliver the goods to a
consignee who must present proper identification.69 Where a non-negotiable transport
document requiring surrender is used, the carrier must deliver the goods to the consignee
who must present proper identification and surrender the original transport document.70 If a
negotiable transport document is used, the carrier must deliver the goods to the holder upon
surrender of the document and upon identification of the party as the proper holder.71 The
practical problems connected with delivery are addressed by the Rules. For example, if the
consignee does not collect the goods at the time of delivery, the carrier may ask specified
parties for instructions and is discharged from its obligation to deliver the goods if it follows
the instructions given.72 Article 47.2 creates a delivery procedure that the carrier may use if for
some reason the consignee is unable to present the negotiable bill of lading. In this case the
carrier may ask the shipper for instructions and may deliver without surrender of the bill if the
document expressly states that the goods may be delivered without surrender of the bill of
lading and upon receipt of proper security.73 The Rules also give the carrier the option of
storing, unpacking and even selling or destroying undelivered goods at the expense of the
party entitled to take the goods.74
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
Art. 52.
Arts. 54 and 56.
See Art. 53 on deemed delivery.
G.J. van der Ziel, Delivery of the Goods, Rights of the Controlling Party and Transfer of Rights, 14 JIML 597 (2008).
Arts. 3639.
Art. 40.
Arts. 36 and 40.
Art. 41.
Art. 41(c).
Arts. 4344.
Art. 45.
Art. 46.
Art. 47.1.
Arts. 45(c)(d) and 46(c)(d).
Art. 47.2(b) and (c).
Art. 48.
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In summary, the Rotterdam Rules break new ground and constitute a new departure with
respect to transport documents in international trade. Chapters 3 (electronic transport
records), 8 (transport documents), 9 (delivery), 10 (rights of the controlling party), and 11
(transfer of rights) represent innovative additions and a new and detailed code that will, upon
coming into force, revolutionize the law and practice of multimodal transport documents.
Carriers' liabilities
The heart of the Rotterdam Rules consists in the provisions of Chapters 4, 5, 6, 12 and 16 on
the liabilities of carriers. These liability rules draw upon the fault-based liability regimes of the
Hague, Hague-Visby and Hamburg Rules so the substantive content as well as the legal
concepts employed are largely the same. However, the Rotterdam Rules are much more
detailed than the current regimes and, while carriers will have potentially only marginally
greater substantive liability under the Rules, they will face greater limits of liability than even
the higher limits of the Hamburg Rules.
The carrier has three principal duties under the Rules: (1) the obligation to fulfill the contract
of carriage by carrying the goods to the named destination and delivering them to the
consignee;75 (2) the obligation carefully to receive, load, handle, stow, care for and unload the
goods during the period of its responsibility for the goods;76 and (3) the obligation to exercise
due diligence before and during the voyage by sea and to make and keep a seaworthy ship
that is properly crewed, equipped and supplied with fit and proper holds for carrying cargo.77
The first of these duties is implicit in current regimes; the second is virtually identical to
current law but the third goes beyond the Hague and Hague-Visby Rules in that the duty is a
continuing obligation. The carrier is also vicariously liable for the acts and omissions
amounting to a breach of obligations of any performing party (a person who undertakes to
perform an obligation of the carrier78), employees and the master and crew of the ship.79
There are three exceptions to these obligations: (1) the carrier and the shipper can agree that
the shipper will take responsibility for some or all of the loading, handling and unloading of
the goods;80 (2) the carrier may take action to render dangerous goods harmless;81 and (3) the
carrier may sacrifice the goods in general average.82 Although the liability provisions of the
Rules apply to deck cargo carried in containers or in vehicles fit for deck carriage, special
rules apply to deck cargo in other cases.83 Special rules also apply to shipping live animals.84
The carrier is liable for loss or damage to the goods as well as for any delay in their delivery if
the claimant proves that the loss, damage, or delay, or the event that caused it, took place
during the period of the carrier's responsibility for the goods.85 But the carrier is relieved of all
or part of its liability if it proves that a cause of the loss was one or more of 15 types of
enumerated events.86 This list of excepted causes is similar to the Hague Rules with some
75
Art. 11.
Art. 13.
77
Art. 14.
78
Art. 1.6.
79
Art. 18.
80
Art. 13.2. See also Art. 17.3(i).
81
Art. 15. See also Art. 17.3(o).
82
Art. 16. See also Art. 17.3(o).
83
Art. 25.
84
Art. 81.
85
Art. 17.1.
86
Art. 17.3. These events are act of God; perils, dangers and accidents of the sea or other navigable waters; war,
hostilities, armed conflict, piracy, terrorism, riots and civil commotions; quarantine restrictions, interference by or
impediments created by governments, public authorities, rulers, or people, including detention, arrest, or seizure not
attributable to the carrier or performing parties; strikes, lockouts, stoppages or restraints of labour; fire on the ship;
latent defects not discoverable by due diligence; act or omission of the shipper, the documentary shipper or
76

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modifications: (1) the navigational fault exception is omitted; (2) the fire exception is treated
the same as other excepted perils87 so that the rule of Hague and Hague-Visby that the carrier
is protected from liability for fires unless relatively senior management is shown to be at fault
is deleted; (3) and the carrier is protected if the loss stems from reasonable efforts to avoid
damage to the environment.88
Article 17 also allocates the burden of proof of the parties. The claimant must first prove that
the goods were lost, delayed or damaged and that this occurred during the carrier's period of
responsibility.89 Then the carrier has the burden of proving either that the cause of the loss or
damage was not attributable to its fault or that the loss or damage was caused by one of the
causes listed in Article 17.3.90 At this point the burden returns to the claimant, who must
prove that the loss or damage was caused at least in part by carrier fault under Articles 17.4 or
17.5. In cases of multiple causes of the loss or damage, Article 17.6 governs the allocation of
liability when the carrier is liable only in part but not solely for the loss, damage or delay. This
allocation of the burden of proof is identical to that of the Hague Rules, but is explicit in the
Rotterdam Rules.
The obligation placed upon the consignee to give notice of the loss, damage or delay is
covered in Article 23 of the Rules, which reflects the similar obligations under the Hague and
Hamburg Rules. The obligations are that notice for apparent damage must be given before or
at the time of delivery; notice for non-apparent damage must be given within seven working
days; and notice of loss due to delay must be given within twenty-one consecutive days of
delivery. Failure to give notice, however, does not bar the claim but creates a rebuttable
presumption that the carrier has performed the carriage contract.91
The calculation of compensation for damages is governed by Rotterdam Rules Article 22,
which fixes damages on the basis of the àrrived value' of the goods, the value the goods
would have had if they had arrived safely. Consequential damages are excluded92 unless
agreed beforehand by the carrier and the shipper.93
The most important change that will be wrought by the Rotterdam Rules is the substantial
increases in the limits of liability for carriers. Article 59.1 sets out the basic rule that the
carrier's limit for loss or damage to the goods is 875 units of account (defined as Special
Drawing Rights as determined by the International Monetary Fund94) per package or other
shipping unit, or 3 units of account per kilogram of the gross weight of the goods, whichever
amount is higher. When goods are carried in or on a container, pallet, or similar article of
transport used to consolidate the goods, the packages or shipping units enumerated in the
contract particulars are deemed the packages or shipping units to be used for purposes of
calculating the limits of liability. If no enumeration is made, the container or article of
transport used to consolidate the goods will be deemed one shipping unit.95 Damages for
delay are to be calculated according to Article 22 (as explained above, the àrrived' principle
controlling party; loading, handling, stowing, or unloading of the goods performed by the shipper or its agents under
an agreement; wastage in bulk or weight or any loss arising from inherent vice or defect of the goods; insufficient or
defective packing; saving or attempting to save life at sea; reasonable measures to save or attempt to save property at
sea; reasonable measures to avoid or attempt to avoid damage to the environment; and acts of the carrier to deal with
dangerous cargo or general average.
87
Art. 17(f).
88
Art. 17.3(n).
89
Art. 17.1.
90
Art. 17.2 and 17.3.
91
Art. 23.1 and 23.2.
92
A separate rule applies to delay, see below.
93
Art. 22.3.
94
Art. 59.3.
95
Art. 59.2.
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applies), and consequential damages, which may be recovered for delay, are limited to two
and one-half times the freight payable on the goods delayed.96 Loss of limitation of liability
will be very rare under the Rotterdam Rules: only intentional or reckless conduct with
knowledge that damage or delay would probably result will preclude limitation.97
Article 4 of the Rotterdam Rules makes clear that the defenses and limitations of liability of
the Rules apply to any judicial or arbitral proceeding against the carrier whether founded in
contract or tort.98 Importantly, the defenses and limitations of the Rules apply also to
`maritime performing parties', defined very broadly as à performing party that . . . undertakes
to perform any of the carrier's obligations under a contract of carriage with respect to the
receipt, loading, handling, stowage, carriage, care, unloading, or delivery of the goods'.99 This
provision extends automatic Himalaya100 protection to all maritime performing parties, such
as stevedores and terminal operators so that these parties can claim the protections of the
Rules. The automatic protection of maritime performing parties under the Rotterdam Rules
means that no longer will it be necessary to place a Himalaya Clause covering them in the
transport document that evidences the contract between the shipper and the carrier.
However, Article 4 in effect excludes non-maritime performing parties, such as inland carriers,
from the protections of the Rules. The impact of this exclusion is profound: its effect is to
leave questions as to the liabilities of non-maritime performing parties to otherwise
applicable law. Thus the Rotterdam Rules do not represent any change in regime for nonmaritime performing parties, such as inland carriers.
The exclusion of non-maritime performing parties in Article 4 also means that the Rotterdam
Rules will have very different impacts in different jurisdictions. For example, in the EU, where
Member States have accepted the four unimodal conventions, the limited network principle
of the Rotterdam Rules will apply so that the liability of non-maritime performing parties will
be determined by the applicable convention's rules.101 However, the United States, for
example, has accepted the Montreal Convention, but is not a party to the CMR, CMNI, or
CIM-COTIF, the road, inland waterway and rail conventions, so the liability of road, inland
waterway and rail carriers is determined by national law. But, as explained above, the
Supreme Court of the United States has ruled that under U.S. maritime law a Himalaya Clause
in a bill of lading that extends the defenses and limitations of liability of the carrier to inland
carriers will be given effect even if this ousts the application of national statutory law.102
Under United States' law Himalaya clauses will continue to be widely used to bring nonmaritime performing parties within the ambit of the Rules. In the EU, however, the liability of
non-maritime performing carriers will continue to be determined by the four inland carrier
international conventions. Thus it appears that the Rotterdam Rules will have quite different
impacts in different jurisdictions that accept the Rules. Article 26 of the Rules, which
establishes the network principle, will have little effect in the United States and <for>many
other parties; but this Article will have effect in the EU and <for>some other parties. This point
throws into question the adequacy of the Rules to bring uniformity into international
transport law.
96
Art. 60.
Art. 61.
98
Article 24 of the Rules also makes clear that a deviation will not deprive the carrier of a Rotterdam Rules defense or
limitation.
99
Art. 1.7.
100
This term is used to refer to a clause in a bill of lading that extends the defences and the limitations of liability of the
carrier under the Hague or Hague-Visby Rules to parties such as terminal operators and stevedores who are agents or
subcontractors of the carrier. The name `Himalaya' comes from the name of the vessel in which a court encountered
such a clause in the leading case of Adler v. Dickson (The Himalaya) (1955) 1 Q.B. 158 (C.A.). See also Robert C. Herd &
Co. v. Krawill Machinery Corp., 359 U.S. 297 (1959).
101
Art. 26.
102
Kawasaki Kisen Kaisha, Ltd. v. Regal-Beloit Corp., 130 S.Ct. 2433 (2010), discussed supra.
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On the whole, the carrier liability regime of the Rotterdam Rules is expertly drafted to present
clear and detailed rules that constitute an improvement over the Hague, Hague-Visby and
Hamburg regimes.103 The Rotterdam Rules are tilted somewhat in favor of shippers and
against carriers compared to Hague and Hague-Visby, but in most cargo cases the result will
be the same except for the application of higher limitation amounts. As noted above, a big
change under the Rotterdam Rules will be the exception for volume contracts. Powerful
carriers as well as shippers will be able to opt out of the mandatory nature of the Rules and
employ a freedom of contract approach to multimodal carriage of goods with at least one sea
leg. Whether this benefits carriers or shippers and the extent to which this will derogate
from the liability scheme established by the Rules cannot be accurately stated at the present
time.
Obligations of shippers
In contrast to earlier cargo transport regimes, the Rotterdam Rules contain extensive
provisions concerning the obligations of shippers. However, the Rules are still not a complete
code; many topics are not covered, for example, the liability of shipper to third parties if cargo
explodes at sea. The Rules cover the relationship of the shipper to the carrier. The shipper has
three primary duties under the Rules. First, the shipper must deliver the goods ready for
carriage and in such condition that they will withstand the intended carriage. When a
container is loaded by the shipper, the contents must be carefully loaded and stowed so that
they do not cause harm to persons or property.104 Secondly, the shipper must provide the
carrier in a timely manner all information, instructions and documents relating to the goods
that are reasonably necessary for the proper handling of the goods and to comply with
regulations of public authorities.105 The shipper and the carrier are required to cooperate
concerning information and instructions pertaining to the goods.106 Thirdly, the shipper must
furnish to the carrier in a timely manner accurate information necessary to compile the
contract particulars referred to in Article 36.
In addition to these general duties, the Rotterdam Rules contain special rules on dangerous
cargo. If the goods by their nature or character are, or are reasonably likely to become a
danger to persons, property or the environment, the shipper must inform the carrier in a
timely manner,107 and must mark the goods in accordance with any applicable law or
regulation.108 Failure to fulfill either of these two duties will make the shipper liable to the
carrier for any loss or damage resulting from such failure.109
The overall basis of the shipper's liability to the carrier in the Rotterdam Rules is fault, which
must be proved by the carrier in order to recover damages. The shipper is liable for loss or
damage sustained by a carrier if the carrier proves that such loss or damage was caused by a
breach of the shipper's obligations under the Rules.110 The shipper is vicariously liable for
breaches committed by employees, agents or subcontractors to which it has entrusted any of
its obligations.111 A so-called `documentary shipper', defined as someone who consents to be
103
Some important observers disagree with this assessment. See D. Rhidian Thomas, An Appraisal of the Liability
Regime Established under the new UN. Convention, 14 JIML 496, 511 (2008), stating that the liability provisions contain
`suffocating wordiness, careless use of language, and persistent refusal to abide by the basic rules of elegant and
effective drafting'.
104
Art. 27.
105
Art. 29.
106
Art. 28.
107
Art. 32(a). The duty to inform may be excused if the carrier has knowledge of the dangerous nature or character of
the goods.
108
Art. 32(b).
109
Art. 32.
110
Art. 30.
111
Art. 34.
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named in the transport document as shipper,112 assumes all the rights and obligations
imposed on the shipper,113 including possible duties as a controlling party.114
The provisions of the Rotterdam Rules on the obligations of shippers are welcome. The Rules
are clear and balanced and are necessary to make explicit what is only implicit and therefore
ambiguous under current cargo regimes. The Rules preserve the idea that the shipper is liable
only for fault and the burden of proof is placed on the carrier who must also prove causation
to recover damages.
Filing suit: jurisdiction and arbitration

The period of time for filing suit or instituting arbitration under the Rotterdam Rules is
specified to be two years, beginning on the day on which the goods have been delivered or
the last day on which the goods should have been delivered.115 This time limit applies equally
to actions against carriers or shippers and is twice as long as the one-year time period
specified under the Hague and Hague-Visby Rules. There are four exceptions to this rule: (1) a
time-barred claim may be used as a set-off against a claim filed by the other party;116 (2) the
person against whom a claim is made may extend the period by a declaration to the
claimant;117 (3) an indemnity action may be filed until the later of 90 days from the date the
original plaintiff served the person with the indemnity claim in the original action or the time
allowed by applicable law;118 and (4) actions against a carrier identified under Article 37
(where the person originally identified as carrier is not and another carrier is identified).119
The Rotterdam Rules include detailed and confusing provisions on jurisdiction and
arbitration. The somewhat tortured outcome of these provisions is the result of unbridgeable
disagreements among the UNCITRAL negotiators. Some delegations, such as the United
Kingdom, sympathetic to carrier interests, wanted no provision on jurisdiction or only one
that enforced choice of court and arbitration agreements. Other delegations, sympathetic to
cargo interests, wanted to protect a cargo claimant's right to seek recovery in the forum of its
choice regardless of choice of court or arbitration agreements in a transport document.120
The United States wanted a compromise approach, but one that would overrule the Supreme
Court of the United States' decision in Vimar Seguros y Reaseguros v. M/V Sky Reefer,121 which
upheld the enforceability of a foreign forum selection clause in a bill of lading, thus taking
cargo claimants (and their legal business) away from the United States. A further complication
is the fact that Member States of the EU lack competence over jurisdiction (but not
arbitration) since the matter is covered by Council Regulation (EC) No 44/2001 (December 22,
2000), which addresses jurisdiction and the recognition and enforcement of judgments in civil
and commercial matters. Article 23.1 of this Regulation broadly upholds the validity of choice
of court agreements, so that a Member State could not adhere to the present Chapter 14 (and
as a practical matter Chapter 15) of the Rotterdam Rules without a request to the EU
Commission and a decision by the EU Council.122
112
Art. 1.9.
Art. 33.
114
Art. 33.1 and Art. 55.
115
Art. 62.
116
Art. 62.3.
117
Art. 63.
118
Art. 64.
119
Art. 65. In this case the claim may be filed within the later of 90 days after the true carrier is identified or the time
allowed by applicable law.
120
Sturley et al, op. cit. at 32728.
121
515 U.S. 528 (1995).
122
Yvonne Baatz, Jurisdiction and Arbitration under the Rotterdam Rules, 14 JIML 608 (2008).
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The jurisdiction provisions of the Rules represent a compromise approach to accommodate

these interests. Article 66 protects the plaintiff's right to institute judicial proceedings in one
of four venues: the domicile of the carrier, the agreed place of receipt of the goods, the
agreed place of delivery or the port of loading or discharge. An action against a maritime
performing party may be instituted in a court at the domicile of the maritime performing party or
at the port where the goods are received, delivered, or where the maritime performing party
performs activities concerning the goods. This part of the jurisdiction regime is intended to
overrule the Sky Reefer case and to invalidate inconsistent choice of court agreements.123
Article 71 further protects the claimant's choice of forum against attempted forum shopping
by the defendant. However, there are important exceptions to these protections accorded to
the plaintiff's chosen forum. First, choice of court agreements in volume contracts will be enforced if they meet specified conditions.124 Secondly, parties can agree to resolve their
dispute in any court after it has arisen.125 Thirdly, state parties to the Arrest Convention126 can
empower their courts to hear cargo cases on the merits wherever the carrying ship or the
sister ship is arrested.127
Most importantly, Article 74 of the Rules states that the Chapter on jurisdiction is binding only
on contracting states that affirmatively declare in accordance with Article 91 that they will be
bound by it. Undoubtedly EU Member States will not make this declaration. Thus the Rules
once again derogate from the goal of uniformity as some contacting parties such as the
United States, will make the Article 74 declaration while many contracting parties will not.
As to arbitration the situation is much the same. Article 75 protects the plaintiff's selection of a
place of arbitration against the carrier except in cases relating to volume contracts128 and
charter parties.129 But the provisions of the Chapter on arbitration bind only contracting
parties that declare in accordance with Article 91 that they will be bound by them.130 Thus, as
with the chapter on jurisdiction, two different or more groups of states are bound to emerge
if the Rules come into force, derogating from the international uniformity ideal.
Conclusions
As the foregoing analysis demonstrates, the Rotterdam Rules are an important achievement
given the constraints of the diverse parties and interests involved in the UNCITRAL
negotiation process, but the Rules themselves are less than ideal. Despite the major problems
of the Rules, should they be widely adopted as the international multimodal transit regime of
the twenty-first century? According to the criteria I set out at the beginning of this essay, I
believe that despite their many flaws, the Rotterdam Rules would be an improvement over the
present patchwork system if they achieve virtually universal adoption by nations active in
international trade. On the whole the Rules are clear and detailed; many ambiguities of the
current cargo regimes are clarified. Of course the complexity and detail of the Rules may
create new ambiguities, and there are instances of infelicitous drafting: for example, Article
17.5 provides for carrier liability if the claimant proves that the damage `was probably caused'
by certain enumerated events. But on balance the Rules represent an advance in certainty and
predictability over existing law.
Second, the Rule address current business needs by addressing containerization, multimodalism, and electronic communications. In fact the Rules may serve as a basis to create a
123
124
125
126
127
128
129
130
Art. 69.
Art. 66(b) and Art. 67.
Art. 72.
International Convention on the Arrest of Ships (1999).
Art. 70.
Art. 75.3.
Art. 76.
Art. 78.
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largely paperless transit system for international trade. With respect to a commercial needs
criterion, again the advantages outweigh the problem areas I have analyzed in this essay.
Third, the Rules should help to minimize transaction costs by providing concrete guidance to
shippers and carriers as to their obligations, although the adoption of a limited network
system for multimodal transport creates the possibility of conflicts with existing unimodal
conventions.
Fourth, the Rules do not change dramatically the balance between carriers' interests and
shippers' interests. Deleting the negligent navigation defence and positing a continuing duty
of seaworthiness were not opposed by carriers given improvements in vessel safety and the
mandatory nature of the International Safety Management (ISM) Code under SOLAS (the
International Convention for the Safety of Life at Sea). The raising of limits of liability is long
overdue and should have only a minimal impact on cargo insurance costs.131
The Rotterdam Rules will enhance international uniformity only if they are universally
adopted, which is unknowable at this point. If the Rules are adopted only by some nations
there is the possibility that they will become a fourth cargo regime along with the Hague,
Hague-Visby and Hamburg Rules. How can we prevent this? We need coordinated adoption
of the Rules, perhaps through putting the matter of their adoption on the agenda of the G-20,
which meets twice each year, an organization of twenty nations representing 85% of world
gross domestic product. This organization is better situated than the United Nations or even
UNCITRAL to coordinate ratification of the Rules.
For many nations such as the United States, China, and Japan, the Rotterdam Rules would
apply to over 90 percent of international trade, because moving cargo by sea is paramount.
The `limited network' system of the Rules would have little importance. In the EU, however,
the Rules would not govern most intra-EU trade since even multimodal transport would not
include sea leg in most cases. In the EU therefore the limited network principle would
continue to have great importance, and this would provide a unifying element between intraEU trade and trade between the EU and non-EU nations. The Rotterdam Rules appear to have
the flexibility to satisfy the need in some nations for a uniform transport regime in
international trade, while the EU wishes to retain the existing network system, which is
continued under the Rules. If the Rotterdam Rules come into force, EU Members can tweak
the existing unimodal regimes to make bring them into conformity with the Rules and to
eliminate conflicts.
On the whole the Rotterdam Rules represent not the perfect solution but a `next best'
solution132 that will contribute to modernizing the multimodal international transport of
goods. Given the difficulty of international negotiations, it would be unwise to forego this
opportunity while awaiting a more perfect system that will probably never come. As Dr. Ellen
Eftestol-Wilhelmsson has written, `the European Commission should not try to navigate
around [the Rotterdam Rules], but rather should accept the modified network liability system
as a sufficient alternative'.133
131
See Richard Williams, The Rotterdam Rules: Winners and Losers, 16 JIML 191 (2010).
K. Haak, Carriage Preceding or Subsequent to Sea Carriage under the Rotterdam Rules, (2010) 2:1/2 European
Journal of Commercial Contract Law 63, 71.
133
Ellen Eftestol-Wilhelmsson, The Rotterdam Rules in a European Multimodal Context, 16 JIML 274 (2010).
132

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AN EVALUATION OF THE ROTTERDAM RULES FROM THE US : SCHOENBAUM : (2011) 17 JIML