There is currently an ongoing battle between various sectors of the shipping industry about the Rotterdam Rules which are due to be signed in September 2009. The Rules are intended to replace the Hague/Hague Visby Rules and the Hamburg Rules.

The differences

  1. The Rules use descriptions such as "volume contract" and "maritime performing party" which will need to be clarified.
  2. The Rules seek to establish lines of liability for carriage from door to door. The emphasis in the Hague Visby Rules was from port to port from the point of loading to the point of discharge. The Rotterdam Rules seek to push responsibility for a wider carriage onto the carrier who would be responsible for the goods from the point of "receipt" until the point of "delivery". It is not clear whether this would have an impact on other conventions like CMR which seek to deal with the land based side of the transportation regime.
  3. In addition, the number of defences available to a carrier from door to door is intended to be reduced. A carrier's ability to rely upon the negligent act of an employee due to a navigation error will be cut down.
  4. The liability compensation levels in the new convention have been raised. Under the Hague Visby Regime, the maximum liability for a carrier is limited to two special drawing rights (SDR's) per kilo or 66 SDR's per package, whichever is deemed to be the higher of the two. The Hamburg Rules attempted to increase those levels. Under the new convention, the carrier's liability is now limited to three SDR's per kilo and/or 875 SDR's per package.
  5. The time limit for initiating legal proceedings for claim has been extended from one to two years.
  6. There is a rather curious set of clauses within the Rotterdam Rules which basically says that where there are "volume contracts" parties are actually free to contract out of most of the liability regime detailed above as long as the contract provides a "prominent statement that it delegates from this convention". Carriers are not allowed to contract out of their obligations to exercise due diligence to make and keep the ship seaworthy or look after the crew and equip the ship accordingly. The ambit/extent of the "contracting out" is unclear.

It is interesting to see how the various interests within the community are reacting to the advancement of the Rotterdam Rules. To a greater or lesser extent the impact of the Rules will be felt as market conditions determine. At the moment, the European Freight Forwarders have stepped up their criticism on the Rules describing the proposals in the convention as "a very extended grey area of uncertainty" that will actually add to supply chain confusion. On the other hand, organisations such as the ICC and the World Shipping Council has called for the Rules to be adopted.

The United Nations presented the new legal framework on the basis that they were to take into account technological and commercial developments that have occurred in the maritime transport industry over the last few decades. Shippers are clearly concerned that the "get out clauses" in relation to volume contracts will provide owners with an opportunity to contract out of the new rules. For their part, owners and operators are aware that the contractual obligations provided by the new convention goes wider than the current regimes but that there is an opportunity to narrow their effect. It has been suggested that certain nations are in favour of adopting the new regime, such as the US and Japan.

The signing of the treaty is due to take place in Rotterdam in September but it would appear that an ongoing struggle will take place in the ensuing months to ensure that certain nations do or do not sign and then ratify the treaty. Watch this space.

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