1. When will the Rotterdam Rules come into effect?
If twenty states "ratify, accept, approve or accede to" the Rotterdam Rules, the Rules will enter into force 12 months after the twentieth state does so.
2. Are the Rotterdam Rules likely to enter into force on a widespread basis?
Sixteen states, including Denmark, France, Greece, Holland, Norway, Spain, Switzerland and the USA "signed" the Rules at the UN Ceremony in Rotterdam on 23 September. Signature signifies an intention to "ratify, accept or approve" in due course. The USA has been particularly vocal in support of the Rules and is committed to getting other states to follow its lead. If the initial sixteen states go on to ratify the Rules then many other important trading states will probably follow. China has also been making positive noises about ratifying the Rules.
3. What would be the earliest date for the Rules to enter into force?
Some states will not need public consultations to "ratify, accept or approve" or to "accede to" the Rules. If twenty such states were to do so quickly then the Rules might come into force on a limited basis as early as late 2010 or early 2011.
States that will undertake public consultations before ratifying the Rules will probably need at least a year to do so. Some states will need two or three years. Denmark, Holland and the USA have already consulted widely and their consultation processes will probably be quick. If they ratify in late 2010 or 2011, with a sufficient number of states that do not need consultations having done so in 2010, then the Rules might come into wider use by 2012.
4. Do the Rotterdam Rules apply compulsorily to charterparties?
No, but parties can incorporate the Rotterdam Rules into a charterparty by means of a clause paramount.
5. Does the Carrier need to issue a bill of lading for the Rules to apply?
No, the Rotterdam Rules apply to all international "contracts of carriage" if any one of the following is in a "Contracting State": place of receipt, port of loading, port of discharge or place of delivery. The Rules apply whether a bill is issued or not, which means that many short sea and waybill movements previously outside the scope of the Hague-Visby will be compulsorily subject to Rotterdam.
6. Do the Rotterdam Rules apply compulsorily to liner shipping contracts of carriage?
Yes, the Rules were developed with liner shipping and multimodal transport "contracts of carriage" with a sea leg particularly in mind. For this reason, some commentators have called Rotterdam a "wet multimodal" or "maritime plus" convention.
7. Do the Rotterdam Rules apply compulsorily to bulk shipping contracts of carriage?
In certain circumstances the Rotterdam Rules will compulsorily apply to bulk shipping. Where a voyage charterer of a ship claims against the shipowner for cargo loss or damage the Rotterdam Rules will not be compulsorily applicable. If, however, the consignee under a charterparty bill (for example a CFR/ CIF buyer) brings a claim against the shipowner the Rotterdam Rules will apply.
8. Do the Rotterdam Rules override the liability regimes in unimodal conventions such as CMR (Road), COTIF (Rail) and Budapest (Inland Waterways)?
No, where the liability provisions in a unimodal convention apply compulsorily, the Rotterdam Rules' liability regime is inapplicable.
9. If CMR, COTIF, etc can still apply to multimodal movements when will the Rotterdam Rules apply to road, rail and inland water legs?
The Rotterdam Rules will apply to any inland legs except where unimodal convention applies compulsorily. For example, if a container is discharged at Hamburg and carried by road to Berlin, the Rotterdam Rules will apply to the Hamburg to Berlin leg because CMR does not govern domestic movements.
10. Can I contract out of the Rotterdam Rules?
If the carrier and shipper have a genuine arm's length negotiation and agree to amend the Rotterdam Rules to improve the position of cargo interests or the carrier, the agreement will generally be enforceable providing certain formalities are complied with. The Rotterdam Rules defi nes such agreements as "Volume Contracts". Terms to reduce a carrier's liability not agreed in a "Volume Contract" are generally void.
11. Is the carrier's seaworthiness obligation more onerous under the Rotterdam Rules than under Hague-Visby?
Yes, under the Rotterdam Rules, the carrier's obligation is to exercise due diligence to make the vessel seaworthy not only before and on commencement of the voyage, but also during the whole voyage.
12. What is the most significant difference between the Rotterdam Rules and Hague-Visby in terms of defences?
The Rotterdam Rules abolish the negligent navigation/ management defence that used to be in Article IV, Rule 2(a) of Hague and Hague-Visby. The abolition of this defence will mean that carriers and their P&I clubs will almost certainly end up paying more claims to cargo interests than has historically been the case. This may lead to an increase of P&I insurance premiums.
13. What are the limits of liability for cargo loss or damage under the Rotterdam Rules?
The Rules provide that the carrier can limit its liability to 3 SDRs per kilo of the goods lost/damaged or 875 SDRs per package, whichever is the higher. Under Hague-Visby, the applicable fi gures were 2SDRs per kilo or 666.67 SDRs per package, whichever was the higher.
14. Do the Rotterdam Rules clarify what cargo interests can claim if the goods are delayed and pure financial losses are suffered?
English law has historically been very unclear on claims for pure fi nancial losses arising out of delay in ocean carriage. The Rotterdam Rules provide some clarity and entitle the carrier to limit its liability for "economic loss" to 2.5 times the freight paid in respect of the delayed goods.
15. What is the general time bar for bringing claims?
No proceedings can be issued after 2 years from the date of the relevant breach under the Rules. There is, however, a longer time bar for "indemnity" claims.
16. Do the Rotterdam Rules change the law on releasing cargo without presentation of an original bill?
Yes, in certain circumstances the Rotterdam Rules impose upon carriers an obligation to verify the identity of the party holding the bill before the cargo can be released.
17. How do the Rotterdam Rules' limitation provisions and the tonnage limitation conventions interact?
The Rotterdam Rules' limitation provisions take effect subject to any applicable limitation convention.
18. If the shipper causes an onboard incident which leads to vessel damage or third party cargo damage, can the shipper limit its liability?
Whilst the right of a shipper to limit its liability was debated in the UNCITRAL Working Group, the idea of giving shippers a right to limit their liability was dismissed on policy grounds.
19. Do the Rotterdam Rules deal with jurisdiction?
Yes, but the relevant articles are optional and many states who sign are unlikely to opt in. For those who do opt in, the jurisdiction provisions provide that the claimant may bring his claim in a variety of jurisdictions which were connected with the relevant carriage. Where the jurisdiction rules apply, exclusive jurisdiction clauses will therefore generally be unenforceable. For those countries not opting into the jurisdiction articles, however, exclusive jurisdiction clauses may still be enforceable.
20. Do the Rotterdam Rules deal with arbitration clauses incorporated into charterparty bills of lading for non-liner bulk cargoes and Volume Contracts?
Yes, arbitration is a well established dispute resolution procedure used in bulk trades and the Rotterdam Rules recognise and uphold arbitration clauses validly incorporated into charterparty bills of lading.
Arbitration clauses in "Volume Contracts" will also be enforceable if certain formalities are complied with.
21. Do the Rotterdam Rules prevent a carrier from declaring general average?
No. The Rotterdam Rules will, however, prevent carriers from recovering general average contributions from cargo interests if the incident was caused by negligent navigation/management of the vessel.
22. Will the Rotterdam Rules encourage carriers and shippers to adopt electronic alternatives to bills of lading?
Yes, the Rotterdam Rules provide that e-bills are "functionally equivalent" to paper bills. The industry will, however, need to develop IT systems with robust security procedures before e-bills can really take off .
23. What other important matters do the Rotterdam rules deal with?
The Rotterdam Rules are hugely ambitious in scope. As well as carrier liability, jurisdiction and arbitration, they deal with direct claims against sub-contractors (such as port operators), dangerous goods, deck carriage, the carrier's identity, deviation, modifying the contract of carriage, what information is required in "transport documents", "freight prepaid" endorsements, the disposal of uncollected goods ... to name but a few areas.
In this note we provide non-technical answers to the questions posed. The Rotterdam Rules are, however, extremely technical and they have not been tested in court. Some of the Articles present real problems with interpretation and our simple answers should therefore not be relied on as a substitute for specific legal advice. Legal comment is from an English law perspective.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
