Do the Hague-Visby Rules represent a fair compromise between the interests of the shipper and the interests of the Carrier?

Background

Historically, the carriers’ duties were strict, unless carriers could prove that its negligence had not contributed to the loss, or that one of four “excepted causes” (i.e. act of god, act of the Queens enemies, shipper’s fault, or inherent vice of the goods), the carrier was deemed responsible for the loss.¹ This led many to describe the carrier as an “insurer” of the goods,² which incorrectly conveyed the idea that the carrier was subject to broad liability under maritime law.

The rights of freedom of contract, and the common law appeared to introduce some flexibility. Yet, although bill of lading clauses were represented in the Carriage of Goods by Sea Act, agreements between the shipper and the carrier provided the shipper little discretion in negotiating these terms, which was seen to favour the carrier.³

In the U.K., the Carriage of Goods by Sea Act 1924 implemented the Hague Rules 1924, which governed the area. In Goose Millerd,⁴ Viscount Summer suggested that the revision of The Hague-Visby (amendments) 1968, as enacted by The Carriage of Goods by Sea Act 1971 was an attempt to represent a fair compromise between the interests of the shipper and the interests of the carrier, because of the constant attempt by carriers to relieve themselves from liability by legislative bargains. Indeed, complex and wide-ranging clauses exempting carriers from liability undermined the usefulness of bills of lading. This was unsatisfactory to holders of clean bills of lading, who were not parties to the original contract of carriage because they had no influence on its formation. For example, bankers who accepted the bills as security for advances, and insurers who were subrogated to the rights of the shipper.

A Fair Compromise – Due Diligence

At common law, the carrier had a strict liability to ensure that the ship was seaworthy.⁵ Arguably, the common law favoured the carrier because carriers circumvented the seaworthiness requirement by framing the breach in negligence to avail themselves from liability.⁶ Article 3, r. 1(a) of the Hague Visby Rules says that “before and at the beginning of the voyage, the carrier should exercise ‘due diligence’ to make the ship seaworthy.” Article 3, r. 1(a) also seems to favour the carrier because the duty of seaworthiness is less strict than under the common law. Article 3, r. 1(a) could say the same thing, but by stipulating “you have an absolute obligation to exercise due diligence to make the ship seaworthy”, which implies that the carriers are on notice.

Seaworthiness

Article 4, r. 1(a) says that whenever damage has resulted from unseaworthiness, “the burden of proving the exercise of due diligence shall be on the carrier”. The obligation of seaworthiness is non-delegable, so the carrier is responsible for the negligence of independent contractors if due diligence is not carried out.⁷ Therefore, if a contractor or sub-contractors performs substandard work, the carrier is liable. Article 4, r. 1(a) favours the shipper because the carrier is liable for acts concealed, or unknow to it. Furthermore, it holds liability for not only crew members but also agents employed to make the vessel seaworthy.

Deviation

At common law, deviation was permitted only to save life,⁸ to avoid danger,⁹ where deviation was brought about by some default on the part of the charterer,¹⁰ and where deviation was involuntary i.e. because of the unseaworthiness of the ship.¹¹ This favoured the shipper because the carrier could only deviate in limited circumstances. However, Article 4, r. 4 says that “any deviation in attempting to save life, any property at sea or any ‘reasonable deviation’ shall not be deemed to be an infringement or breach of these rules, or of the contract of carriage and the carrier shall not be liable for any loss or damage resulting therefrom.” The word ‘reasonable’ is ambiguous and can have adverse cost consequences on a shipper claiming damages caused by delay in the arrival of goods due to ‘reasonable deviation’. Therefore, Article 4, r. 4 arguably favours the carrier.

Socio-political reasons as to why the courts may favour a group over another

Carriers were politically powerful, because the subcommittee appointed to draft the code were representatives of carriers.¹² Shippers participating in the voyage also assumed that the carrier would do the best they could; therefore, it was fair to excuse them of the rules of the sea, as opposed to the aspects of the responsibilities undertaken.¹³ However, sailing in the 1800’s was much more perilous than sailing today given the technological advancements which have enhanced the security of the journey.

Conclusion & Reforms

A suggestion for reform would be to change the language in the articles. For example, the language in Article 3, r. 1(a) could be worded more thoroughly to put carriers on notice. A panel of experts to dictate and interpret the meaning of the terms as per the Vienna Convention model could also be considered. The experts would be multinational, giving an international interpretation of the convention.

The Hague Visby rules would be interpreted by these experts, clarifying instances where the jurisdictional law would differ from country to country, increasing certainty and reliability and falling in line with the objective of international harmonious interpretation.

In conclusion, the Hague-Visby Rules seem to represent a fair compromise between the interests of the shipper and the interests of the Carrier. As abovementioned, the duty to exercise due diligence under the Hague Visby rules is less strict than that of the common law, which favours the carrier. In contrast to the common law, where the carrier could defer liability onto an agent, the duty of sea worthiness under the Hague Visby Rules is non-delegable, which favours the shipper because the carrier can be liable for the acts of his agents.