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The Rotterdam Rules

Paul Apostolis / Ashley Southern

The United Nations Convention on convention applied globally which


Contracts for the International Carriage takes account of modern trade
of Goods Wholly or Partly by Sea (The practice.
Rotterdam Rules) has now been signed by
the requisite 20 member nations necessary 2. Modern wet multi-modal regime to
for it to be adopted by the United Nations cater for container carriage - the Rules
General Assembly. The Rules will therefore introduce a liability regime to cover
become effective on the first day of the all ocean transport and also those
month, one year after the instrument of land legs of multi-modal movements,
ratification was deposited with the UN. where no other convention currently
applies.
Current major shipping and trading
signatory nations include the United States, 3. Limited freedom of contract - many
France, Denmark, Norway, the Netherlands
large shippers already negotiate tailor
and Greece. To date, China, Japan, Taiwan
made carrier service agreements with
and Korea are not signatory nations.
shipping lines. Current conventions
Neither is the United Kingdom a signatory
do not acknowledge this and limit
and as such, the Rotterdam Rules are not
freedom of contract further than many
presently scheduled to become part of
shippers and carriers would like.
English law.

4. Reduce frictional costs - the Rules are


To date, the Rules have not been
ratified by any of the signatories into their designed to reduce costs of trade by
domestic law and accordingly, it is yet promoting e-commerce solutions and
to be determined whether the Rotterdam addressing issues which commonly
Rules will replace COGSA, the Hague lead to protracted legal disputes.
or Hague-Visby, and Hamburg Rules, as
intended. Changes from COGSA/Hague/Hague-
Visby/Hamburg Rules
The Objective of the Rotterdam Rules -
Why the need for change? A great deal has been written about
the changes which the Rotterdam Rules will
1. Global uniformity - the intention of implement. This article does not highlight
the Rules is to replace the current all of these but will focus on a select few
patchwork of outdated ocean which will have a major bearing on a ship
conventions with a single modern owners liability.

SEAVIEW 90 Issue Summer, 2010, Journal of the Institute of Seatransport http://www.seatransport.org/seaview.htm


The Rotterdam Rules Liability Regime to care for the goods; and

1. Period of Responsibility - Article 12 to exercise due diligence to


make the vessel seaworthy.
Under COGSA/Hague-Visby rules,
the responsibility of the carrying Under the Rotterdam Rules, the
ship (subject to such responsibility carriers general duty of care is the
being extended by contract) was same as that under Article III Rule 2
from tackle-to-tackle. The period of the Hague-Visby Rules except that
of responsibility has been extended the period of responsibility when
by the Rotterdam Rules, such that the carrier is required to exercise
the carrier and maritime performing due diligence is extended. Article 13
parties are responsible for the goods requires a carrier to properly and
at all times that the goods are being carefully receive, load, handle, stow,
carried or stored under a through carry and keep, care for, unload and
contract of carriage. In other words, deliver the goods.
the carriers responsibility commences
when the goods are received by 3. Specific Obligations on the Sea
the carrier or maritime performing Voyage - Article 14
party and ends when the goods
are delivered to the consignee at This article fundamentally changes the
the time and location agreed in the carriers obligation of seaworthiness.
contract of carriage or, failing any The Rotterdam Rules provided that
specific provisions relating to delivery, the carrier shall exercise due diligence
in accordance with the customs, to make and keep the ship seaworthy,
practices or usages of the trade. properly manned, equipped and
supplied and to keep the ship and
If the loss, damage or delay to the container supplied by the carrier in or
cargo occurs prior to loading or after upon which goods are to be carried,
discharge, the Rotterdam Rules do fit and safe for the reception, carriage
not replace the provisions of other and preservation.
compulsory applicable international
conventions such as the CMR or CIM Under the COGSA/Hague-Visby rules,
(Article 26). the carrier was under an obligation
to exercise due diligence to make the
2. Carriers Obligations - Article 13 vessel seaworthy before and at the
commencement of the voyage. The
The carrier has three fundamental Rotterdam Rules impose a continuing
obligations: obligation to keep the vessel
seaworthy whilst the goods remain in
to carry and deliver; the care of the carrier.

SEAVIEW 90 Issue Summer, 2010, Journal of the Institute of Seatransport http://www.seatransport.org/seaview.htm


This has interesting practical (iii) The burden then shifts to cargo
consequences. Immediately after interests to prove on balance of
a collision at sea, a vessel may be probabilities that:
unseaworthy, rendering the carrier
responsible for damage to cargo (a) the carriers act caused the
caused by that unseaworthiness in loss; or
circumstances where the cause of the
loss is not necessarily their fault and (b) the vessel was unseaworthy.
in circumstances where the carrier is
unable to remedy the unseawothiness (iv) The carrier can avoid responsibility
until such time is the vessel undergoes if it proves that it exercised due
temporary or permanent repairs as diligence to make the vessel
required by class. What the owner seaworthy.
will need to show, is that immediately
after the collision, they exercised due There are some notable differences
diligence to prevent further damage
between the Rotterdam Rules and
to cargo beyond that caused by the
COGSA/Hague-Visby rules. In
collision itself with whatever resources
particular, the defence of error in
were available to them on board.
navigation or management of the
vessel has been omitted. In a collision
4. Basis of Liability - Article 17
or grounding, therefore, cargo
interests can now bring a claim against
Under the Rotterdam Rules, the
the carrying vessel notwithstanding
liability regime can be summarised as
the absence of unseaworthiness.
follows:

(i) There is a presumption that the Moreover, the carrier may escape all
carrier is liable for cargo loss or part of its liability if it can show
or damage if cargo damage is that the loss was not attributable to its
proved. fault or the fault of any person listed
in Article 18 or if the cause falls under
(ii) The carrier can rebut that it is the defences listed in Article 17(3)(a)-
liable for cargo loss or damage (m).
by adducing prima facie
evidence that: However, if a cargo claimant can
prove that the fault of the carrier
(a) the loss or damage was not or performing party caused or
caused by the carrier; or contributed to the loss, the carrier
may remain liable for all or part of
(b) it can show the existence of the loss notwithstanding any defence
one of the excepted perils under Article 17(3). If the carrier
listed at 17(a)-(m). can avoid part of its liability under

SEAVIEW 90 Issue Summer, 2010, Journal of the Institute of Seatransport http://www.seatransport.org/seaview.htm


Article 17, the carrier will continue to Visby rules is that the time limit for
remain liable for the part of the loss bringing suit is increased from one
which it cannot avoid. Accordingly, year to two years commencing on
in circumstances where there is more the day on which the carrier has
than one cause of the loss, difficult completed delivery of the goods or,
issues of apportionment of liablility if there is no delivery, on the last day
will arise. on which the goods should have been
delivered.
5. Limits of Liability - Article 59
An action for indemnity may be
The Rotterdam Rules increase the instituted after two years of the later
package limitation above those of the of the time allowed by the applicable
Hague, Hague-Visby and Hamburg law of the jurisdiction where
Rules. The carrier and/or maritime proceedings are instituted, or 90 days
performing partys liability is limited to of the date that the person seeking an
875 SDR units per package or 3 SDR indemnity has settled the claim or has
units per kilogram of the gross weight been served with process in the action
of the cargo, whichever is the higher against itself or, if earlier, within the
(Article 59). time.

Additionally, if there is delay in Notwithstanding the additional


delivery of the cargo which causes liabilities that carriers will incur, the
loss, which does not result from Rotterdam Rules are a genuine attempt
the destruction of or damage to the to update the carriage of goods by sea
cargo, economic loss due to delay law and provide an uniform approach
is recoverable and is limited to a across the world.
multiple of 2.5 times the freight
payable on the goods delayed (Article
60). (Paul Apostolis: Partsner, Holman Fenwick
The test for breaking limitation, Willan
notably due to the act being done Ashley Southern: Trainee Solicitor, Holman
with intent to cause such loss or Fenwick Willan)
damage or recklessly and with
knowledge that such loss or damage
will probably result, in the Rotterdam
Rules follows the test from the
previous regimes.
6. Time Bars - Article 62

An important difference between the


Rotterdam Rules and COGSA/Hague-

SEAVIEW 90 Issue Summer, 2010, Journal of the Institute of Seatransport http://www.seatransport.org/seaview.htm

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