Legal Frameworks in Regulating the

Transportation of Exports by SEA

Nor Emylia binti Atan 241005Ng Yan Ni 240153Nor Zuhairah binti Zainal 237894Lee Yee Liang 239887Tan Hui Ling 238527

*1.0 Introduction

*Goods which are deal with the subject matter of an export transaction, either in a contract of sale or of construction, have to be moved to the destination from the place of dispatch.

*The most common unimodal form of freight transportation that will apply by the company.

Hague-Visby Rules

Hamburg Rules

Hague-Visby Rules• Official title - ‘‘International Convention for the Unification

of Certain Rules of Law relating to Bills of Lading’’

• A set of international rules for the international carriage of goods by sea

• The updated version of the original hague rules by the brussels amendments

• Come into force 23 june 1977• To counter some of the problems of the

hague rules legislation• 10 Articles

Hamburg Rules • A set of rules governing the international

shipment of goods• Drafted due to the concerns of developing

nations that the Hague Rules were unfair in some respects

• Adopted in 31 march 1978 , came into force in 1 November 1992

• United Nation on the Carriage of Goods by Sea

• 34 Articles • The carrier is responsible for the loss and

damage of all goods unless they can prove that they have taken all reasonable steps to avoid the loss.

2.0 DEFINITIONThe Hague-Visby RulesHamburg Rules

THE HAGUE-VISBY RULES Definition:Art 1 - it covers the period from the time when the goods are loaded

on to the time they are discharged from the ship.Carrier: the owner or the charterer who enters into a contract of

carriage with a shipper. Goods: includes goods, wares, merchandise, and articles of every

kind whatsoever except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried.

What is “contract of carriage”? applies only to contracts of carriage covered by a bill of lading or

any similar document of title, in so far as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as foresaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same

HAMBURG RULESWhat is “contract of carriage of seas”?Art 1: any contract whereby the carrier undertakes against

payment of freight to carry goods by sea from one port to another; however, a contract which involves carriage by sea and also carriage by some other means is deemed to be a contract of carriage by sea for the purposes of this Convention only in so far as it relates to the carriage by sea.

Carriers: any person by whom or in whose name a contract of

carriage of goods by sea has been concluded with a shipper.Goods: includes live animals; where the goods are consolidated in a

container, pallet or similar article of transport or where they packed, “goods” includes such article of transport or packaging if supplied by the shipper

The Hague-Visby Rules

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solely connects the contract of carriage to the document issued thereunder, the bill of lading

Hamburg Rules---------------------------------

-----the definition of “contract of carriage” has been described with the obligation of the carrier and expressly excludes their application to the carriage by modes other than sea in case the contract involves the carriage by other modes.

DISTINCTION BETWEEN TWO RULES

3.0 EXCLUSIONSThe Hague-Visby Rules The definition of “contract of carriage” in Art 1 shows

they have impliedly excluded charter parties in the line “apply only to contracts of carriage covered by a bill of lading or similar document of title”

By referring to Article 3(3) and Article 6 of the Hague-Visby Rules, the rules will be applied also even before a bill of lading is issued.

Article of 3(3): the carrier must issue a bill of lading on demand of the shipper. Article 6 : when bill of lading is being issued, the carrier is granted

with freedom of contract.

3.0 EXCLUSIONSHamburg Rules Art 2(3) provides that this Convention is not

applicable to charter-parties.However, where a bill of lading is issued pursuant to

a charter-party, the provisions of the Convention apply to such a bill of lading if it governs the relation between the carrier and the holder of the bill of lading, not being charterer.

This means that the charter-party who is also the third party is not applicable for the protection under this rules unless there is documentary approach, which bill of lading is issued, then the charterer can be excluded from their scope of application of the Rules.

4.0 PERIOD OF APPLICATION AND PERIOD OF RESPONSIBILITY OF THE CARRIER

Article 1 of the United Nations Convention on the Carriage of Goods by Sea.

“carrier”any person by whom or in whose name a contract of carriage of goods by sea has been concluded with a shipper.

“actual carrier” any person to whom the performance of the carriage of the goods, or of part of the carriage, has been entrusted by the carrier, and includes any other person to whom such performance has been entrusted.

HAGUE-VISBY RULESArticle 1(e) of the rulesperiod of their application is for the transportation of dry

cargo is started as earlier as from the beginning of loading of the goods on the ship to the completion of their discharge at the buyer port.

the carrier takes the goods in charge before their loading on board and delivers them to the consignee in a warehouse of the port of discharge.

application of fully custody (beyond ship's tackle )

Uncle Ben’s Int’l Div. Of Uncle Ben’s, Inc. v. Hapag-Lloyd Aktiengesellschaft 855 F.2d 215.

(1988)

the contractual extension of COGSA beyond tackle made the one-year COGSA time-bar applicable to the claim for pre-loading damage to the cargo.

Falconbridge Nickel Mines Ltd. v. Chimo Shipping Ltd (1996)

the bill of lading stated that the ship's liability ended with its discharge from the ship's gear, but this was held to be subject to the understanding that the cargo was to be lightered ashore by the ship's barge.

HAMBURG RULES 1978 Period of application (as well as the period of responsibility of

the carrier under the convention) is that during which the carrier is in charge of the goods at the port of loading and also include during the carriage and at the port of discharge.

In a port-to-port contract the rules normally apply to the whole period during which the carrier is in charge of the goods.

In a door-to-door contract or when the terminals of the carrier are outside the port area, because the rules applicable would be different, nor are there in the hamburg rules provisions on the allocation of the burden of proof as to the conditions of the goods when they arrive to the port of loading and when they leave the port of discharge.

Malaysia adopted The Hague-Visby Rules . Article 1 of The Rules `Carrier' includes the owner or the charterer who

enters into a contract of carriage with a shipper, `Contract of carriage' applies only to contracts of

carriage covered by a bill of lading or any similar document of title that regulates the relations between a carrier and a holder of the same while

`Carriage of goods' covers the period from the time when the goods are loaded on 8 to the time they are discharged from the ship.

5.0 Obligation of Carrier

Article II states that subject to the provisions of Article VI, under every contract of carriage of goods by sea the carrier, in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities hereinafter set forth.

obligation of carrier does not only limit to the process of carriage only. In fact, the responsibilities of carrier arise from the time the goods being loaded until the goods being discharged and it is subjected to the terms and conditions stated in the contract between the carrier and the shipper.

The Obligations Stated in Article 2 of The Rules

Before the carriage Ensure physical seaworthiness of the ship itself which is the physical

shape of the ship which should be fit in all aspects to carry the intended voyage, the manning of the ship and this implies a competent crew, the adequacy of the equipment and the ships supply.

Ensure cargo seaworthiness regarding to, make the holds, refrigeration and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

In Dixon v. Sadler case , seaworthiness was defined as: “she (the vessel) shall be in a fit state as to repairs, equipment, and crew and in all other respects to encounter the ordinary perils of the voyage”.

Properly man, equip and supply the ship. Because the ship to use for carriage purpose is going to voyage not for a short period of time.

Obligation to make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

The Obligation Stated in Article 3 of The Rules

During the carriage The carrier shall properly and carefully load, handle, stow, carry, keep,

care for, and discharge the goods carried. The carrier shall, after receiving the goods into his charge, based on

demand of the shipper, issue to the shipper a bill of lading which include the leading marks which are crucial to identify the goods as the same are furnished in writing by the shipper before the loading of such goods starts.

**make sure that the marks are stamped or otherwise shown clearly upon the goods to show that if the goods are uncovered, or ordinarily remain legible until the end of the voyage.

The carrier shall also include the Bill of Lading that includes either the number of packages or pieces, or the quantity, or weight, depends on a case by case basis as furnished in writing by the shipper. (if and only if he has reasonable ground believe so)

The carrier also needs to provide the apparent order and condition of the goods in the Bill of Lading for the shipper.

The Obligation Stated in Article 3 of The Rules

After the carriage the carrier and the receiver to give all reasonable facilities to

each other for inspecting and tallying the goods. issue the bill of lading to the shipper under the demand of

shipper after the goods are loaded. shipper shall have previously taken up any document of title

to such goods and surrender the same as against the issue of the `shipped' bill of lading.

document of title may be noted at the port of shipment with the name or names of the ship or ships upon which the goods have been shipped and the date or dates of shipment, and when so noted.

Carrier can constitute a ‘shipped’ bill of lading if the bill shows all the particulars mentioned.

The Obligation Stated in Article 3 of The Rules

6.0 Liability of Carrier

The carrier’s liability regime directly regulates the allocation of risks between the carrier and cargo interestsMost cases involve disputes concerning whether the carrier shall be liable for the loss of or damage to the goods and the scope of carrier’s liability.

Hague-Visby Rules• Art 3(1)(a): The carrier shall be bound before

and at the beginning of the voyage to exercise due diligence to make the ship seaworthy

• Art 4(1): the carrier shall not be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy

• The carrier is presumed at fault if any damage or loss arising while the cargo is under the possession of the carrier resulting from any unseaworthiness due to lack of due diligence.

Exception

• Art 4(2) Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:

• (a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship.

• (b) Fire, unless caused by the actual fault or privity of the carrier.

• Art 4(2)(a)-(q)

• Art 4(2)(q) Any other cause arising without the actual fault or privity of the carrier, or without the actual fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

• The carrier is not liable when there is an error in the navigation and management of the ship or fire, unless if the faults are made by his servants or agents as stated in article 4(2)(q)

Maxine Footwear Company Ltd. v. Canadian Government Merchant Marine Ltd[ [1957] S.C.R. 801]• Facts: Supper pipes of a ship belonged to the defendant

company which was loading in Halifax harbour were frozen. A contractor was engaged to thaw them. The contractor's employees used an acetylene torch, which set fire to cork insulation that the contractor had not been informed to the existence of it. Part of the cargo belonged to the plaintiffs was destroyed by the fire and subsequently, the plaintiffs claimed its value.

• It was found as a fact that the cargo was stowed after the fire broke out but before it was discovered. It was held that the loss of the appellant's goods was the action of the carrier's employees in bringing the cargo to, and loading them on, a burning and unseaworthy ship by which the ship was not fit and safe for their reception and carriage, thus, the carrier lose his right to the defence of Article 4(2)(b) because the fire was caused by the lack of carrier’s due diligence to provide a seaworthy vessel.

• The category of the agents appears to be rather limited, because article 4bis(2) provides that they do not include independent contractors and because the scope of application of the Hague-Visby Rules is limited to the period between commencement of loading on and completion of discharge from the ship; therefore, actions performed ashore in the ports of loading and discharge are not subject to the Hague-Visby Rules.

• But agents probably include the master and crew of the ship if they are not under the employment of the carrier, as is the case where the carrier is the time charterer of the ship.

Limitation of Liability• The liability of the carrier regarding to the

loss or damage of the goods is limited• Financial limit of the carrier: the limits of

the liability of the carrier for the loss of or damage to the goods reach an amount equivalent to 666.67 SDR per package or other shipping unit, or 2 units of account per kilogram of the gross weight of the goods lost or damaged, whichever is higher, unless the nature and value of the goods have been declared by the shipper

• Time limit: one year

Hamburg Rules• Art 5(1): the carrier is liable for loss resulting from the

loss of or damage to the goods as well as for delay in delivery if occurrence that causes the loss, damage or delay took place while the goods were in his charge as defined in Article 4, unless the carrier proved that he, his servants or agents had taken all reasonable measures required to avoid the occurrence and its consequences

• Article 4(1) : Period of responsibility : during which the carrier is in charge of the goods at the port of loading, during the carriage and at the port of discharge.

• Art 10(1): the carrier is responsible for loss, damage or delay for which a sub-carrier is liable

• Basis of carrier’s liability under Hamburg Rules is based on presumed fault as stated in article 5(1) and always liable for loss, damage or delay caused by fault of the carrier, his servants or agents.

• No exclusion in the case where the loss or damage is done by the servants or agents even in the course of navigating or managing the ship

• Carrier is liable as long as the goods are in his custody or possession

Exceptions• Art 5 of the Hamburg Rules provides

exceptions to the liability of the carrier in specific instances

• Art 5(5): in respect of carrying living animals, carrier will not liable for loss, damage or delay in specific circumstances resulting from any special risks inherent in their carriage

• Art 5(4): fire unless the claimant can prove that the fire is either caused by the negligence on the part of the carrier or guilty of fault to take any reasonable measures to put out the fire

• Art 5(6): deviation to save a life or property at the sea

Limitation of Liability

• The liability of the carrier regarding to the loss or damage of the goods is limited

• Financial limit: limited to an amount equal to 835 SDR per package or other shipping unit or 2.5 SDR per kg or gross weight, which-ever is higher

• Time limit: 2 years

*7.0 Conclusion

*International Maritime Organization (IMO), sea transport has become an economical way to trade between countries over water

*90% of the world’s trade is carried by the sea *The most ‘inexpensiveness’ cost of shipping.

*In 1924, the Hague rules had come into existence under the International Convention for the Unification of Certain Rules of law relating to Bills of Lading.

*However, it was then amended and become Hague-Visby Rules in 1968.

*Due to the variety and large coverage of the rules, the Hague-Visby Rules have come under scrutiny by some groups. These situations have caused much criticism, and so because of this scrutiny a new set of laws called the Hamburg rules were created and came into effective date on 1 November 1992.

*However, the Hamburg Rules have an advantage of being able to re-construct some of the Hague-Visby Rules that are thought to be unfair, unclear or likely to cause misinterpretation.

*the Hamburg Rules has been strongly opposed by ship owning interests as it is feared that they would tend to increase carrier’s liability. The Hague-Visby Rules continue to be the governing law of the carriage of goods by sea. This is because the Convention still constitutes the rules that govern the vast majority of contracts globally.