Hague Visby Application of Rules
The Hague Visby Rules represent the minimum mandatory contractual obligations on the part of the carrier. The rules cap liability and define the terms of the permissible defences. Attempts to contract beyond the terms of the rules by purporting to contract for less than the minimum duties or more than the “maximum” defences, are void and have no effect. The Rules preserve freedom of contract as regards other duties.
In most cases the rules are mandatory, but in some cases, they may be incorporated voluntarily. The rules apply mandatorily in respect of a bill of lading and similar documents of title. They apply to contracts of carriage, covered by a bill of lading or similar document of title insofar as the document relates to the carriage of goods by sea. The bill of lading need not contain the terms of the contract.
A charter party in itself is not subject to the rules. However, bills of lading issued under a charterparty are subject to the rules when and from that time at which the bill of lading or similar document of title regulates the relationship. Therefore, the rules do not apply to the bill of lading while it is held by the charterer. They regulate the relations of the carrier and other holder in this context.
Application by Contract
The Hague Rules provide that bills of lading issued in a contracting state must have a clause incorporating the rules.The rules may also apply if the contract expressly or by implication provides for the issue of a bill of lading or similar document of title. “Similar documents of title” are interpreted as referring to negotiable documents.
Every contract of carriage of goods by sea (to which the rules apply) in relation to loading, handling, stowage, carriage, care and discharge of the goods is subject to the responsibilities, liabilities, rights and immunities set out in the rules.
The rules are often incorporated into contracts other than bills of lading such as charter parties and waybills. In this case, they do not have the force of law, and accordingly, the individual terms may be varied / contracted out of.
Variation of the Rules
The rules allow a carrier to waive and vary its rights and immunities and thereby increase its obligations and responsibilities. This is provided that such variation or increase is embodied in the bill of lading issued to the shipper. If the carrier seeks to improve its position relative to the minimum rights of the shipper / consignees under the rules by providing contrary provisions in the bill of lading, they are rendered void by the rules.
The rules provide that “any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods arising from negligence, fault or failures in the duties and obligations provided for under the [rules] or lessening such liability otherwise than as provided under the rules is void and have no effect.”
Scope of Rules
“Goods” under the rules exclude live animals, and cargo carried on deck. This does not apply if the bill provides that the rules are to apply to the deck cargo or carriage of livestock, as the case may be. In the case of deck cargo, the bill of lading must state that it is to be carried on deck if the rules are not to apply.
It appears the rules apply from the moment of the loading forward. Trans-shipment clauses permit the carrier to terminate its responsibility once the goods have left its possession. Similarly, clauses which define the journey which the ship is to make are not repugnant to the rules, such as to constitute a deviation.
The contract may deem a person to be the contract party. This may allow variation of the obligations of such parties. Free in and free out clauses, allocate responsibility for loading and stowing. They may, to this extent, take obligations of the relevant party outside the scope of the rules in respect of that part of the voyage. The responsibility may be allocated to another.
Defences of Carrier
The defences to liability provided for under the rules apply in an action against a carrier in respect of loss or damage to the goods covered by the contract of carriage, whether the action is founded in tort or on the contract. If such an action is brought against an employee or agent of the carrier, not being an independent contractor, that employee or agent is entitled to avail himself of the defences and limits of liabilities which the carrier may invoke under the rules.
The limitations are not extended by statute to an independent contractor. They may take advantage of the rules through “Himalaya” clauses. In the United Kingdom, they may enjoy the benefit of specific third-party benefit clauses under the Contracts (Rights of Third Parties) Act.
Seaworthiness under the Rules
There is a modified duty in relation to seaworthiness. The rules provide that the carrier shall be bound before and at the beginning of the voyage
- to exercise due diligence to make the ship seaworthy;
- properly man, equip and supply the ship;
- make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried, fit and safe for the reception, carriage, and preservation of such goods.
This modifies the common law seaworthiness warranty. It is not absolute. There is an obligation to exercise due diligence. Broadly, the same principles apply. Once the ship is proved to be unseaworthy, and this is a cause of the less, then the carrier is liable unless he proves that he exercised due diligence.
Obligation to Exercise Due Diligence
The obligation is to exercise due diligence and is accordingly somewhat lesser than the common law warranty. At common law, the duty may not be delegated. Therefore, it is not enough to appoint competent contractors.
A carrier is not obliged to take every possible precaution. Only those which a reasonable carrier would take, are required to be taken. Due diligence requires, in effect, that the unseaworthiness be due to some fact which is not discoverable by reasonable competence by a reasonable surveyor.
The Hague Visby Rules requires that the due diligence applies to the whole carriage from loading. This changes the common law principle of stages, which might otherwise apply.
It is the duty of the carrier to properly and carefully load, handle, store, cover, carry, care for, and discharge the goods carried. This obligation cannot be delegated. Compliance with the consignor’s instructions, where they are patently inadequate to a competent shipper, is not a sufficient discharge of the duty.
Scope and Onus of Proof
Neither the carrier nor the ship is 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, and to secure that the ship is properly manned, equipped and supplied, and 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 in accordance with the rules.
Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence is on the carrier or other person claiming exemption under this provision. The shipowner must prove that he has acted with due care or that he may rely on one of the exceptions. This conforms with the common law principle of bailment.
Defences for Carrier
The carrier may prove that the loss is not linked to his breach of duty. This is in accordance with the requirement for causation.
Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from—
- 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;
- fire, unless caused by the actual fault or privity of the carrier;
- perils, dangers and accidents of the sea or other navigable waters;
- act of God;
- act of war;
- the act of public enemies;
- arrest or restraint of princes, rulers, or seizure under legal process;
- quarantine restrictions;
- act or omission of the shipper or owner of the goods, his agent or representative;
- strikes or lockouts or stoppage or restraint of labour from whatever cause, whether partial or general;
- riots and civil commotions;
- saving or attempting to save life or property at sea;
- wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods;
- insufficiency of packing;
- insufficiency or inadequacy of marks;
- latent defects not discoverable by due diligence.
It is a defence to show that the loss or damage was due to any cause (other arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier). The burden of proof is 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.
Failures in navigation may be attributable to negligence in navigation or in a systems failure to have proper controls arrangements in accordance with the international shipping management code.
The defence in relation to fire is not available if the fire causes the vessel to be unseaworthy and the ship-owner has failed to exercise due diligence.
The perils, dangers and accidents defence are similar to the common law principle in relation to the perils of the sea. As at common law, it may be shown that the prior negligence of the carrier was the cause of the particular accident or ingress, e.g. a sudden ingress of water. However, if it is due to a hidden defect, which was not discoverable by due diligence, the exception is available.
Time Limits for Action
The carrier and the ship shall, in any event, be discharged from all liability whatsoever in respect of the goods unless legal action is taken within one year of their delivery or the date when they should have been delivered. This period may be extended by agreement. The time limit may be invoked by a carrier who has a relationship with the claimant under a bill of lading.
The Hague Visby Rules allow indemnity actions against third parties to be taken outside the one-year period if brought within the time allowed by the court. Action must be brought within three months of the settlement or when the claimant has been served with proceedings.
The contract under which the indemnity is provided must be governed by The Hague Visby Rules. The underlying contract of the claim need not necessarily be so governed.
The time-bar is not procedural in this context. It bars the claim entirely. It applies also to arbitration.
The Hague Rules provided a limit of £ 100 per package or unit. This may be varied by a declaration by the shipper as to the nature and value of the goods on the face of the bill. The above sums have been redenominated in SDR.
Neither the carrier nor the ship is responsible for loss or damage to or in connection with the goods if their nature or value have been knowingly misstated by the shipper in the bill.
The Hague Visby Rules have a package limitation, which differs to the Hague Rules. The Hague Visby Rules refer to SDR units of account per kilogram of gross weight of the goods lost. This is referable to the lost goods or damages damaged.
The Hague Visby Rules provide that neither the carrier nor the ship is entitled to the benefits of the limitations of liability if it is proved that the damage resulted from an act or omission of the carrier done with the intent to cause damage or recklessly and with the knowledge that damaged probably occur.
The Hague Visby Rules provide for container traffic. The carrier’s responsibility is determined by general principles. The carrier is to exercise due care to make the holds, refrigerating, cool chamber and other parts of the ship in which they are carried fit and safe for the reception, carriage and preservation of the goods.
The principles in relation to the apparent condition of the goods are of limited application in the container context. However, if the container itself is in poor condition, and it is accepted without reservation, the principles would appear to apply, where damage later ensues in consequence.
Where goods are damaged due to failures in stowage, the carrier is unlikely to be liable. It will generally be in a position to rely on defences, even if liability arose.
Packages for the Rules
The question may arise as to what is a package for the purpose of the rules. It is conceivable that a whole container may constitute a package for this purpose. It appears that the package is not the container but the separate packages within it. However, where the bill of lading does not set out the number of packages, the position may be different.
Under the Hague Visby Rules it is provided that where a container, palette or similar article of transport is used to consolidate the goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport are deemed to be the number of packages or units for the purpose of the rules. In so far as the packages or units are concerned except as aforesaid, such article of transport is considered to be the package or unit.
The pack limitation applies under both sets of rules to both the general obligation to take care and the seaworthy obligation.
The shipper is obliged to notify the carrier of any dangerous aspects of the goods. It appears that the shipper’s ignorance of their danger is not a defence. However, if the relevant characteristics are known or ought to be known by the ship-owner or carrier, the position differs.
The Hague Rules and Hague Visby Rules provide that goods of an inflammable, explosive or dangerous nature whose shipment, the carrier, master or agent of the carrier has not consented with the knowledge of their nature or character, may at any time before discharge, be landed at any place or destroyed or rendered innocuous by the carrier without compensation.
The shipper of such goods shall be liable for all damages and expenses directly and indirectly thereby caused. If any goods, shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place or destroyed or rendered innocuous by the carrier without liability on the part of the carrier, except as to general average.
Exemption for Shipper
The rules further provide that the shipper shall not be responsible for loss or damage sustained by the carrier or the ship or resulting from any cause without any act, default or neglect of the shipper, his agents or his servants. This does not qualify the shipper’s above obligations. The ship will not be responsible if it is proved that the loss or damage was due at least in part to the negligence of the carrier.
References and Sources
Consumer Law Long 2004
The Law of Transport and Road Haulage (1999) Canny
Consumer Law Rights & Regulation Donnelly & White 2014
Commercial Law White 2nd ed 2012
Commercial & Economic Law in Ireland White 2011
Commercial Law Forde 3rd ed 2005
Schmitthoff: The Law and Practice of International Trade 13th ed Carole Murray, David Holloway, Daren Timson-Hunt, Schmitthoffs 2018
Bills of Lading in Export Trade 4th ed Charles Debattista 2018
Arnould’s Law of Marine Insurance and Average 19th ed Jonathan Gilman, Robert Merkin, Claire Blanchard, Mark Templeman 2018
O’May on Marine Insurance 2nd Ed Julian Hill 2018
Shipping Law 3rd ed Sweet & Maxwell Ltd 2018
The UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2nd ed Michael Sturley, Tomotaka Fujita, Gertjan van der Ziel 2018
Commercial Maritime Law Edited by: Melis Ozdel 2018
Springer-VerlagScrutton on Charterparties and Bills of Lading 23rd ed: 1st Supplement
Scrutton on Charterparties and Bills of Lading 23rd ed: 1st Supplement (Book & eBook Pack) Scrutton on Charterparties and Bills of Lading 23rd ed: 1st Supplement (Book & eBook Pack)
Bernard Eder, Howard Bennett, Steven Berry, David Foxton, Christopher Smith 2017
The Bill of Lading: Holder Rights and Liabilities The Bill of Lading: Holder Rights and Liabilities
Frank Stevens 2017
Charterparties: Law, Practice and Emerging Legal Issues Edited by: Baris Soyer, Andrew Tettenborn 2017
Shipping and Trade Law 2017
Multimodal Transport Law Michiel Spanjaart 2017
Maritime Law 4th ed Edited by: Yvonne Baatz 2017