Courses

Basic Course in Sea Freight Forwarding

Chapter : International Regulations


Sea Freight world over is governed by various International Regulations which were formulated in various International Conventions on cargo shipped by sea, as follows:

·        Hague rules

·        Hague-Visby rules

·        Carriage of goods by Sea Act 1971

·        Hamburg rules


The Hague Rules: The Hague Rules 1924 were adopted in Brussels on 25 August 1924 as an 'international convention’ on the carriage of goods by sea and entered into force on 2 June 1931. There are 16 articles in total. Ten of them deal with legal issues relating to bills of lading and the rest are concerned with procedural issues relating to the operation of the Rules. Many jurisdictions have formally incorporated the Hague Rules into their domestic laws, while a few others have adopted the Hague Rules without having formally adopted them. The purpose of the Hague Rules was to unify the rules governing the liability of a carrier. Under the Hague Rules a carrier has a general liability to provide a seaworthy ship and to handle the goods with care. However, the Hague Rules also list several exceptions, such as fault of the master of the ship or pilot in the navigation or management of the ship, act of God, act of war, riots, strikes, saving life or property at sea, and others, to restrict the liability of the carrier.


The Hague-Visby Rules: The Hague-Visby Rules are based on the 1968 Brussels Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of lading. The protocol was adopted in Brussels in February 1968 and entered into force on 23 February 1968. The amended Hague Rules (the Hague--Visby Rules) have 16 articles in total. While about 25 jurisdictions have formally incorporated the Hague--Visby Rules in their domestic laws, about seven jurisdictions have adopted the Hague Visby Rules without having formally acknowledged them.

The Hamburg Rules: The Hamburg Rules were adopted by the United Nations in Hamburg on 30 March 1978. There are 34 articles in total. Twenty-six articles deal with substantial legal issues and eight deal with procedural issues. Having been ratified by 27 countries, the Hamburg Rules entered into force on 2 November 1992. The Hamburg Rules impose wider liabilities upon the carrier and are relatively even-handed in comparison with the Hague Rules or the Hague Visby Rules.


Under the Hague Rules or Hague-Visby Rules, the carrier is only liable for the risk in goods during the 'carriage of goods' -- the period after the goods pass the ship's rail for loading and before the goods pass the ship's rail for discharge.

Carrier's liabilities under the Hague-Visby Rules:  Under the Hague--Visby Rules, a carrier is liable for the risk arising from the 'carriage of goods'. The expression 'carriage of goods' is defined in article 1 (e) of the Hague-Visby Rules. It refers to the period of time in which goods are carried by a carrier. The period commences from 'the time when the goods are loaded on to the time they are discharged from the ship'. Although the definition of carriage of goods in article 1(e) implies that the Hague--Visby Rules intend to limit the carrier's liability under the rules to the period when the goods are on board a vessel, the period of the carrier's liability can also be determined by the terms of the bill of lading or contract of carriage.


A contract of carriage by sea is a contract entered into between a shipper (who may be a seller, a buyer, or an agent of the seller or the buyer), and the carrier (who could be a ship-owner, a charterer of a vessel, or their agent), for the purpose of transporting goods from one place to another by sea. Such a contract has the following characteristics:

- It is made between a shipper and a carrier

- It is a contract for providing the services of transporting goods

- It involves transmission of goods by sea either partly or entirely

- It often involves transport of goods from one country to another

 

A contract of carriage stipulates matters relating to safe conveyance of goods from one designated place to another designated place. The purpose of the contract is to ensure that the goods are carried in a safe and timely manner by the carrier. The rights and duties of the contracting parties are defined on this basis. Generally speaking, the parties should agree on the time and place of shipment and delivery, the route of voyage, the payment of freight, the liabilities of the parties in performing the necessary task of transmitting the goods from the agreed place to their destination, trans-shipment, liability of the carrier's servants or agents, choice of law choice of forum or arbitration, incorporation of charter party clauses (if applicable), and any other matters which may affect the rights and liability of the parties.


The agreement on the route of the voyage is important, in order to avoid unnecessary risks, and to ascertain the scope of the carrier's liability when losses or damages arise from unauthorized stopovers. The agreed route of the voyage is also important in practice, in the sense that a certain type of cargo, such as fruits, may only stand a relatively short period of carriage before turning bad, or that the market for a certain type of product is too volatile to stand a long period of carriage.

A contract of carriage can be made orally or in writing. Although the existence of a contract of carriage is often represented by a bill of lading, a voyage charter party, or a similar document, such as a sea waybill, consignment note or a mate's receipt, the contract can exist independently of the bill of lading, the voyage charter party or similar document. In other words, the parties have an option either to conclude a written contract of carriage in addition to the bill of lading issued by the carrier, or to rely on the bill of lading to be the evidence of any prior existent oral contract.


A contract of carriage 'means a contract of carriage covered by a sea carriage document (to the extent that the document relates to the carriage of goods by sea), and includes a negotiable sea carriage document issued under a charter party from the moment at which that document regulates the relations between its holder and the carrier concerned'. The meaning of 'sea carriage document' is also defined in article l(1) of the modified Hague-Visby Rules, incorporated into Schedule 1 and l A of the Carriage of Goods by Sea Act l991. Therefore, it is necessary to remember that a contract of carriage means more than a bill of lading

Meaning of carrier: A carrier is a person who undertakes the responsibility of transporting goods from one place to another under a contract of carriage, against the payment of freight. It is crucial, for the purpose of determining the responsibilities of the parties to a contract of carriage, that the carrier is the person who is the named party under the contract of carriage. This is because the contract forms the basis of the parties' responsibilities, although the relevant international conventions, such as the Hague-Visby Rules and the Hamburg Rules, stipulate the parties' duties under a contract of carriage falling under the conventions.  The meaning of carrier may vary in different countries, depending on the relevant provisions of law.


Meaning of carrier under the Hague-Visby Rules: The Hague-Visby Rules adopt a narrower definition of 'carrier' than the Hamburg Rules. Under the Hague-Visby Rules, a carrier 'includes the owner or the charterer who enters into a contract of carriage with a shipper'. An agent of the ship-owner or charterer is not a 'carrier' under the Hague-Visby Rules, even if the agent might have issued and signed a bill of lading. In contrast, the Hamburg Rules define the meaning of a ‘carrier’ broadly as referring to 'any person by whom or in whose name a contract of carriage of goods by sea has been concluded with a shipper'.

Meaning of shipper: (under the Hague-Visby Rules): A shipper is a person who is a party to a contract of carriage with a carrier. The Hague-Visby Rules (and the Hague Rules also) do not define the meaning of 'shipper', although the word 'shipper' is used in these conventions. Under the Hague-Visby Rules, 'shipper' has its ordinary meaning, referring to anyone whose name appears as party r to a contract of carriage with a carrier.


Meaning of shipper under the Hamburg Rules: Under article 1 (3) of the Hamburg Rules, 'shipper' is clearly defined as - 'Shipper' means any person by whom or in whose name or on whose behalf a contract of carriage by sea has been concluded with a carrier, or any person by whom or in whose name or on whose behalf the goods are actually delivered to the carrier in relation to the contract of carriage by sea.

The carrier's responsibilities are set out in article 3(l) of the Hague-Visby Rules. This provision provides the following responsibilities:

  • to make the ship seaworthy;
  • to staff, to equip and supply the ship properly
  • to make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit for their reception, carriage and preservation.

The seaworthiness of a vessel has wide meanings. A vessel is unseaworthy if it is not fit to carry the particular cargo concerned. A vessel is also unseaworthy if it is not properly manned by a qualified shipmaster and staff A vessel can be unseaworthy if it is not equipped with an adequate chart for the areas it is meant to sail.

A duty of properly and carefully dealing with goods: This duty is set out in article 3(2) of the Hague-Visby Rules. This provision states that 'the carrier shall properly and carefully load, handle, stow carry, keep, care for, and discharge the goods carried'. This provision requires the carrier to handle and carry goods in a proper and careful manner. The 'propriety' and 'carefulness' of the carrier's act must be construed in the circumstances concerned, taking into account the nature of the goods, established commercial practices, the contract terms, and the reasonableness of the carrier in loading, handing, stowing, carrying, keeping and discharging the goods. The meaning of property stowage depends 'on all the circumstances, including the nature of the particular goods and the conditions of the weather and of sea likely to be encountered on the voyage'