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55. Address by attorney-adviser, Office of the Assistant Legal Adviser for Private International Law ("PIL"), regarding draft UNCITRAL carriage of goods convention


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DEVELOPMENTS WITH THE UNCITRAL DRAFT CARRIAGE OF GOODS CONVENTION AND THE MLA COGSA AMENDMENT

Presented to the

Maritime Law Association of the United States

Scottsdale, Arizona

November 3, 2005

By Mary Helen Carlson

Attorney-Adviser

U.S. Department of State

Office of the Assistant Legal Adviser

for Private International Law

Washington, D.C.

PART I – GENERAL REMARKS

A. INTRODUCTION

My name is Mary Helen Carlson. In my capacity as an Attorney-Adviser in the Office of the Legal Adviser for Private International Law in the U.S. Department of State, it is my privilege to serve as the head of the U.S. delegation to the negotiation of a new international carriage of goods convention under the auspices of the United Nations Commission on International Trade Law (UNCITRAL). It is my pleasure to be with you this morning to provide you an update on this negotiation. The United States has submitted a comprehensive position paper on the key issues in this new convention, and you have been given copies of that document. I will be repeating some of those positions in my remarks. Any other comments are in my personal capacity and do not necessarily represent the views of the U.S. Government.[1]

The MLA is a key player in this negotiation. Your organization has for over 100 years been in the forefront of working for improvements in maritime law. Indeed, the MLA was highly instrumental in the drafting of the 1924 convention popularly known as the Hague Rules, and in convincing the U.S. Congress to enact the Hague Rules as U.S. law in the 1936 Carriage of Goods by Sea Act. You also play a major role in the U.S. delegation to the current UNCITRAL project. Chet Hooper, Vince de Orchis and Michael Sturley are all members of the U.S. delegation.

I am going to first give you a brief summary of the background and rationale for this project -- how did we arrive at this point both within the United States and internationally. I will also describe the negotiation process, both within the United States and at UNCITRAL. And then I will give you an overview of a few of the major issues in the draft convention, in particular those issues which are of special concern to the MLA. Those issues include:

Scope of Coverage

Obligations and Liability of the Carrier

Obligations and Liability of the Shipper

Limitations on Liability

Jurisdiction and Arbitration

Contractual Freedom

When I have concluded my remarks, Michael, Vince and Chet will address three of these issues -- Scope, Shipper’s Obligations and Jurisdiction and Arbitration – in more detail. You will be able to see for yourselves where the draft convention is consistent with the MLA’s position on an issue, and where it differs. We hope to show you why, in our view, the United States in general, and the MLA in particular, will be better off by a wide margin with this new instrument than we are now. The new instrument offers not only some substantive changes for the better, but also should reduce litigation simply by clarifying the rules on certain issues.

B. BACKGROUND

I don’t have to explain to you in any detail the background of this new convention, as you have taken a lead role in every step of its development. But a brief summary will be helpful to your understanding of the current status of the text.

Everyone agrees that none of the existing carriage of goods regimes meet today’s commercial needs. These include the 1924 Hague Rules (in use by the United States and a few other countries), the 1968 Hague-Visby Rules (in use by most of our major trading partners) and the 1992 Hamburg Rules (rejected by most major maritime and commercial powers). Most significantly, COGSA and the Hague Rules, with their tackle-to-tackle scope limitation, and $500 per package liability limitation, fail to address the astonishing changes brought about by containerization, multimodal transport and e-commerce. The MLA proposed detailed amendments to COGSA in the late 1990’s. These amendments were supported by some but not all of the affected U.S. industry groups. Congress was unwilling to legislate in this complex and technical area in the absence of a consensus among all the major affected interest groups.

Although the MLA proposal was not enacted, it nonetheless was an important step in cargo liability reform for at least two reasons. First, one of the lessons learned was that while no party has the power to get its favorite proposals enacted, any major party has the power to block enactment of any other proposal. Thus, everyone realized that cargo liability reform in the United States would not be possible without compromise and cooperation among the major U.S. players. Recognizing this, in 2001 the World Shipping Council (WSC), representing owners of liner vessels, primarily foreign, that serve the United States, and the National Industrial Transportation League (NITLeague), representing U .S. shippers, reached a compromise agreement on cargo liability reform. And second, the MLA proposal to amend COGSA got the attention of the international maritime community. The unwelcome suggestion that the United States might unilaterally reform its cargo liability laws helped convince our trading partners that the time was right for the negotiation of a new multilateral convention.

When UNCITRAL decided to consider the need for a new carriage of goods convention, the United States suggested that, rather than preparing the first draft of the new convention itself, UNCITRAL should invite the Comité Maritime International (CMI) to do so. After all, much of the expertise on this topic resides within the CMI. The CMI accepted the invitation, and, after a massive amount of work, delivered its draft text to UNCITRAL in December 2001. The MLA, as the U.S. member of the CMI, was an active participant in the CMI drafting exercise, and much of the MLA COGSA proposal found its way into the CMI draft.

C. THE NEGOTIATION PROCESS

Within the U.S. Government, my office, the State Department’s Office of the Legal Adviser for Private International Law, is responsible for directing the negotiation of this convention. The State Department’s Bureau of Economic and Business Affairs, as well as the Department of Transportation’s Maritime Administration, are the other U.S. Government participants.

But we are not the subject matter experts in this negotiation. You and others like you who work in the industry are the experts. Except in situations where there is a governmental interest that differs from U.S. commercial interests, we view our role in this project as primarily that of helping the relevant U.S. commercial interests achieve their objectives in this convention. Of course, the relevant U.S. commercial interests don’t always agree among themselves as to what those objectives are! Thus, it’s our job 1) to make sure that everybody in the United States who has a stake in the outcome of this negotiation has the opportunity to participate actively in the process; 2) to develop within the United States a consensus position that is widely supported by U.S. industry; and 3) to do everything possible to ensure that the text adopted by UNCITRAL is consistent with that position.

We have held numerous meetings and conference calls seeking input as to what the U.S. position should be on various subjects. Every sector of industry concerned with the carriage of goods in the United States has participated in this process. This includes the MLA, the World Shipping Council, the National Industrial Transportation League, the Transportation Intermediaries Association, FedEx, UPS, the American Institute of Marine Underwriters, the Association of American Railroads, the American Trucking Associations, as well as representatives of the stevedores and terminal operators.

Since this negotiation began in the Spring of 2002, the UNCITRAL Working Group on Transport Law has met for a total of 13 weeks, in either New York or Vienna. The next two-week session will take place in Vienna in late November. The United States is doing everything we can to see that the new convention is completed and open for signature by the end of 2007. As we go through the significant provisions in the text, you will see those issues as to which the Working Group has reached tentative agreement, and those which remain undecided.

PART II - SIGNIFICANT PROVISIONS OF THE DRAFT CONVENTION

One of the most important aspects of the draft convention is the range of issues it covers. COGSA, the Hague, Hague-Visby and Hamburg Rules all are limited mainly to liability issues. This convention covers a much broader range of issues. In addition to the ones we will discuss today (scope, liability of the carrier and shipper, liability limits, jurisdiction and arbitration and freedom of contract) the convention also covers electronic transactions, transport documents, transfer of rights and right of control, and delivery to the consignee. It takes time to reach a consensus on all of these issues, especially those that have never before been the subject of an international convention. Given the complexity of the task, it will be quite an accomplishment to have this convention ready for signature by the end of 2007.

For each of the issues I am going to highlight, I will tell you what the current draft text says, whether that text has been generally accepted by the UNCITRAL Working Group, or has yet to be decided, and whether the text is consistent with the U.S. position. One caveat: No part of the draft text will be final until it is all final. Thus, when I say that the Working Group has tentatively agreed to particular language, it is still possible for the debate on that language to be reopened.

A. SCOPE OF COVERAGE

1. What is the geographic scope of the convention (port-to-port, tackle-to-tackle, or door-to-door)?

The approach that has been tentatively agreed to is a modified door-to-door approach that has come to be called a “maritime plus” or “limited network” regime. This means that, when there is a through bill of lading covering a multimodal shipment, and one of the legs of the journey is by sea, then, as between the parties to the contract, the convention’s terms, including its liability terms, apply, regardless of whether the damage occurred on the ocean leg or during the inland carriage. This is a huge improvement over the current situation where the liability rules depend on where the damage occurred. This uncertainty is the cause of much litigation.

There is one significant exception to this regime. Many European countries initially opposed a door-to-door scope because of fear that it would conflict with existing European unimodal regimes, such as the CMR and CIM-COTIF (the European road and rail conventions). The draft convention deals with this by providing that, when it can be proved that the damage occurred during land transport that would, absent this convention, have been subject to a mandatorily applicable international convention, then that land convention will apply.

The above approach has tentatively been agreed to by the UNCITRAL Working Group and is consistent with the U.S. (and MLA) position.[2]

2. Who is covered by the convention? (Treatment of Performing Parties)

The Hague Rules and COGSA were developed at a time when multimodal shipping contracts were much less common, and therefore it was appropriate that those rules regulate the relationship between the contracting shipper and the contracting carrier. The early regimes did not address the responsibilities of parties, other than contracting parties, who actually performed the contract. This caused some problems from the start, because shipowners have always contracted with independent stevedores and terminal operators to load and unload vessels, and to store cargo. Different countries, and different courts within a single country, have handled these issues inconsistently. The uncertainty is the source of much litigation. Under modern commercial shipping practices, and with the increasing number of door-to-door contracts, more and more of the contracting carrier’s responsibilities are performed by others.

It was not possible, either within the United States, or internationally, to achieve support to apply the convention’s rules to suits against inland performing parties (i.e., trucks and railroads). But there was widespread support for applying the convention to (in addition to the parties to the contract) maritime performing parties (e.g., terminal operators and stevedores). This is an improvement over current law. Cargo claimants will be free to sue inland performing parties (trucks and railroads) as they do today under national law.

The above approach has tentatively been agreed to by the UNCITRAL Working Group and is consistent with the U.S. (and MLA) position.[3]

3. What (which transactions) is covered by the convention?

From the beginning of this project, there has been no disagreement in substance as to what types of transactions should be within the scope of the convention. Everyone has agreed that, generally speaking, the instrument is intended to cover contracts in the liner trade because they are less likely to be negotiated individually and because a certain inequality of bargaining power between the shipper and the carrier has been assumed. Likewise, everyone has agreed that the instrument should not cover the tramp trade, where individually negotiated charter parties and an equality of bargaining power are normal. But there has been considerable disagreement as to how to reduce this substantive consensus into treaty language. Three different approaches were identified for defining the scope of application. These came to be called the “documentary” approach, under which the application of the Convention would turn on the issuance of a particular type of document, the “contractual” approach, under which application would depend on the parties’ concluding a particular type of contract, without regard to whether a particular document was issued, and the “trade” approach, in which application of the convention would turn on the of trade in which the carrier was engaged. All of these approaches have strengths and weaknesses. Any of them would work for the vast majority of transactions that everyone agrees should clearly fall within or without of the convention. But, with each approach, there is a danger that some transactions at the margins would accidentally be included or excluded from the scope of the convention.

The Working Group has developed a hybrid proposal that we like to characterize as an “elegant solution” that takes advantage of the strengths of each of the three approaches, while minimizing the weaknesses. Michael Sturley will present this proposal in detail in a few minutes. The UNCITRAL Working Group concluded that the hybrid proposal is a “sound text on which to base future discussion.” The U.S. supports this approach. [4]

B. LIABILITY OF THE CARRIER/BURDEN OF PROOF

I understand that the MLA has three main objectives for the carrier’s liability/burden of proof part of the new convention. Those objectives are: retention of most of the enumerated exceptions to carrier’s liability; elimination of the error of navigation or management defense; and improvement of the burden of proof rule. The current draft of the instrument meets those objectives.

The draft instrument eliminates the error of navigation defense. It retains all of the other COGSA defenses, although many of them are modified. For example, the traditional fire defense has been limited to fire on the ship, a change required because the new convention will apply (as between the contracting carrier and the shipper) to multimodal door-to-door shipments, and it was thought unnecessary for the fire defense to apply to fires on land. The exception for saving or attempting to save life at sea has been retained, but, the exception for saving or attempting to save property has been modified to “reasonable measures” to save or attempt to save property. An exception has been added for “reasonable measures to avoid or attempt to avoid damage to the environment.”

The order of the burden of proof is not covered by COGSA or the Hague Rules, but it is included in the draft convention. With one exception, the draft convention applies basically the same shifting burden of proof as has been imposed by U.S. courts, which have compared the process to a ping-pong game. The one change is for the last volley of the ping-pong game, and it concerns situations where the damage is attributable partially to something for which the carrier is liable, and partially to something for which the carrier is not liable. It is often impossible to determine the extent of damage caused by each. The U.S. courts follow a rather harsh rule which does not allow for equal or proportionate allocation of the loss but instead states that in such cases the carrier must bear the entire loss. The draft instrument includes a proportionate fault rule that states that in such cases the carrier is only liable for the part of the loss that is attributable to the event or occurrence for which it is liable, and that liability must be apportioned on the basis of the rules set forth in the convention. This should result in a more balanced and fair outcome.

The draft instrument’s treatment of the carrier’s liability has been tentatively approved by the Working Group, and it is consistent with the U.S. (and MLA) position.[5]

C. OBLIGATIONS OF THE SHIPPER

The principal obligation of the shipper under COGSA and the Hague Rules relates to the shipment of dangerous goods. The draft instrument would impose a wider range of obligations on the shipper, including obligations concerning delivery of the goods to the carrier and obligations concerning the furnishing of information. Vince de Orchis will discuss these provisions in a few minutes. The articles on shipper’s obligations have not been discussed in depth, and are scheduled to be considered by the UNCITRAL Working Group at its next negotiating session in November 2005.[6]

D. LIMITATION OF LIABILITY/DELAY

The liability limitations are likely to be the last thing agreed upon in this negotiation. The United States is in favor of adopting the Hague-Visby limitation amounts. In the very brief discussion of this topic thus far, a number of delegates have expressed support for the Hamburg Rules limitation (which is 25% higher than the Hague-Visby limits) and a few have argued for limitation amounts comparable to the much higher levels found in the European road and rail conventions.

The draft instrument has a special limitation for damages (including consequential damages as well as direct damages) caused by delay. Delay is determined by reference either to a delivery time agreed to by contract, or to a “reasonable” time. Compensation for consequential damages due to delay is limited to a multiple of the freight payable on the goods delayed. The multiple suggested is one times the freight. The United States opposes the inclusion of consequential damages for delay, unless this has been expressly agreed to by the parties. The inclusion of consequential damages inserts a strong element of unpredictability into what should be a predictable risk calculation by shippers, carriers and insurers. So far, we have not been able to persuade the Working Group to adopt our position. We will continue work on this.[7]

E. JURISDICTION AND ARBITRATION

Prior to the Supreme Court’s Sky Reefer decision, the U.S. courts uniformly held that COGSA prohibited foreign forum selection clauses. In Sky Reefer, the Court overruled these cases and applied the general rule that forum selection clauses are presumptively enforceable. As a result, U.S. cargo interests, and many in this organization, made reversing Sky Reefer one of their primary objectives. The MLA COGSA proposal (in Article 7(i)) would have allowed the plaintiff to choose the forum, even if the contract named a different forum. However, it further provided that this “plaintiff’s choice” provision did not apply as between the parties to a service contract (Article 7(j). The WSC/NITLeague compromise agreement went further and called for forum selection clauses to be enforceable in service contracts, even against third parties. All affected U.S. parties eventually agreed to submit to UNCITRAL a U.S. position that a plaintiff in a non-service contract would be able to choose the forum; and that forum selection clauses in service contracts would be enforceable between the parties to the contract, and, subject to certain conditions, against third parties.

There has been a great deal of discussion about jurisdiction and arbitration in the Working Group, and these issues have not been resolved. There were so many wildly opposed positions expressed that, were it not for the U.S. insistence that these topics be covered by the convention, I believe that the Working Group would have dropped jurisdiction and arbitration from the text. So, when we are tempted to complain about how long this negotiation is taking, we should remember that our insistence that certain topics be included is one of the reasons for the length of the negotiation. Chet Hooper will address jurisdiction and arbitration in more detail in a few minutes. I think that there is a good chance that the Working Group will agree to language consistent with the U.S. position when it takes up these provisions in November. [8].

F. CONTRACTUAL FREEDOM

COGSA, the MLA proposed amendments to COGSA and all of the existing multilateral conventions are “one-way mandatory,” i.e., the rules state that contracts must not derogate from the convention to the detriment of the shipper, but derogation that increased the carrier’s obligations is allowed. Just as the forum selection issue is a “deal breaker” one for the MLA, freedom of contract is a key element of the NITL/WSC compromise agreement. The NITL/WSC proposal on freedom of contract, which, with some modification, has become the U.S. position, calls for allowing service contracts to derogate from any and all of the terms of the convention. The rationale is that the existing mandatory regimes were developed for a commercial context that no longer existed, and that they do not meet today’s commercial realities. It can no longer be assumed that the carrier always has the more powerful bargaining position with regard to a shipper; nor can it be assumed that transport contracts are always adhesion contracts, which the shipper must take or leave.

There was nothing in the CMI draft on freedom of contract. When the United States first proposed to UNCITRAL that the new convention should allow parties to a service contract to opt out of one or more of the convention’s rules, there was strong opposition to our proposal. There was objection to the use of the term “service contract,” which is unknown in most of the world, and seemed to be designed specifically for the United States. And there was a more basic objection to the whole notion of freedom of contract from countries that take a more regulatory approach to trade issues, as opposed to the free-market approach the United States was endorsing. But after three years of discussion, that included many meetings outside of the formal Working Group, I think we have persuaded the Working Group that if the new convention is to be forward-looking and able to respond to the changing needs of industry, it has to provide, along with a strong framework of generally applicable rules, the flexibility that the commercial parties need to be successful. At its last meeting in April 2005, the UNCITRAL Working Group tentatively agreed to a proposal that would allow “volume contracts” (a more neutral term than “service contracts”), under certain conditions that would ensure that the shipper was not taken by surprise, to derogate from all but a few of the convention’s rules. Again, I would remind those who might complain that this negotiation is taking too long, that a great del of the Working Group’s time has been spent considering proposals from U.S. industry, that, but for our urging, would not be in the convention.[9]

IV. NEXT STEPS

If all goes well, the tentative meeting schedule for conclusion of this project is as follows:

Nov. 28-Dec. 9, 2005: Consideration of shipper’s obligations, transfer of rights, right of

control, delivery and jurisdiction and arbitration

April 2006 (2 weeks): Consideration of scope of application, right and time for suit,

limitation levels, and transport documents. This will complete

the second reading of the instrument.

Fall 2006 (2 weeks): Third and final reading of the instrument.

Spring 2007(2 weeks): The final Working Group session will likely be held in

conjunction with the annual meeting of the full Commission

(the parent body of the Working Group). If the third reading

has not been completed, that will take place. The text as

approved by the Working Group will be presented to the

Commission for its approval.

Fall 2007: The text of the convention will be submitted to the United

Nations General Assembly for its approval, after which it will be

open for signature.

There are no guarantees, but the draft convention is shaping up to be an instrument that is consistent with all major U.S. objectives, and therefore I am cautiously optimistic that it will be a convention that U.S. industry will want the United States to join. For this to happen, we need to continue the excellent partnership that we have developed between and among the State Department, the MLA, the NITL, the WSC and all of the other important U.S. stakeholders. We have all put enormous resources into this project. The cooperative attitude that all the U.S. participants have displayed thus far has been outstanding and it has produced outstanding results. If we keep it up, we stand a very good chance of bringing home a modern, comprehensive carriage of goods treaty that will serve industry’s needs for decades, and which the United States will be able to join.



[1] Documents pertaining to this project can be found at www.uncitral.org. Click on Working Groups, and then on Working Group III (Transport Law). The current draft text of the convention is WP 56; the U.S. position paper is WP 34.

[2] Relevant provisions from the draft instrument (WP 56) related to geographic scope:

Article 1. Definitions

(a) “Contract of carriage” means a contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another. The contract must provide for carriage by sea and may provide for carriage by other modes of transport in addition to the sea carriage.

Article 11. Period of responsibility of the carrier

1. …[T]he responsibility of the carrier for the goods under this Convention covers the period from the time when the carrier or a performing party has received the goods for carriage until the time when the goods are delivered to the consignee. . . .

[Article 27. Carriage preceding or subsequent to sea carriage

1. When a claim or dispute arises out of loss of or damage to goods or delay occurring solely during the carrier’s period of responsibility but:

(a) Before the time of their loading on to the ship;

(b) After their discharge from the ship to the time of their delivery to the consignee;and, at the time of such loss, damage or delay, provisions of an international convention [or national law]:

(i) according to their terms apply to all or any of the carrier's activities under the contract of carriage during that period, [irrespective whether the issuance of any particular document is needed in order to make such international convention applicable], and

(ii) specifically provide for carrier's liability, limitation of liability, or time for suit, and

(iii) cannot be departed from by private contract either at all or to the detriment of the shipper,

such provisions, to the extent that they are mandatory as indicated in (iii) above, prevail over the provisions of this Convention.]

[3] Relevant provisions from the draft instrument (WP 56) related to which parties are covered by the convention:

Article 1. Definitions

. . . .

(d)“Carrier” means a person that enters into a contract of carriage with a shipper.

(e)“Performing party” means a person other than the carrier that physically performs or undertakes to perform any of the carrier’s responsibilities under a contract of carriage with respect to the receipt, loading, handling, stowage, carriage, care, discharge or delivery of the goods, to the extent that such person acts, either directly or indirectly, at the carrier’s request or under the carrier’s supervision or control. The term “performing party” includes maritime performing parties and non-maritime performing parties as defined in subparagraphs (f) and (g) of this paragraph but does not include any person that is retained by a shipper, a person referred to in article 34, consignor, controlling party or consignee, or is an employee, agent, contractor, or subcontractor of a person (other than the carrier) who is retained by a shipper, a person referred to in article 34, consignor, controlling party or consignee.

(f)“Maritime performing party” means a performing party that performs any of the carrier’s responsibilities during the period between the arrival of the goods at the port of loading [or, in case of trans-shipment, at the first port of loading] of a ship and their departure from the port of discharge from a ship [or final port of discharge as the case may be]. In the event of a trans-shipment, the performing parties that perform any of the carrier’s responsibilities inland during the period between the departure of the goods from a port and their arrival at another port of loading are not maritime performing parties.

(g)“Non-maritime performing party” means a performing party that performs any of the carrier’s responsibilities prior to the arrival of the goods at the port of loading or after the departure of the goods from the port of discharge.

Article 17. Basis of liability

1.The carrier is liable for loss of or damage to the goods, as well as for delay in delivery, if the claimant proves that

(a) the loss, damage, or delay; or

(b)the occurrence that caused or contributed to the loss, damage, or delay took place during the period of the carrier’s responsibility as defined in chapter 4.

Article 19. Vicarious liability of the carrier

1.Subject to paragraph 20(4), the carrier is liable for the acts and omissions of:

(a)Any performing party, and

(b)Any other person, including a performing party’s subcontractors, employees and agents, that performs or undertakes to perform any of the carrier’s responsibilities under the contract of carriage, to the extent that the person acts, either directly or indirectly, at the carrier’s request or under the carrier’s supervision or control, as if such acts or omissions were its own.

Article 20. Liability of maritime performing parties

1.A maritime performing party is subject to the responsibilities and liabilities imposed on the carrier under this Convention, and entitled to the carrier’s rights and immunities provided by this Convention if the occurrence that caused the loss, damage or delay took place (a) during the period in which it has custody of the goods; or (b) at any other time to the extent that it is participating in the performance of any of the activities contemplated by the contract of carriage.

[4] Relevant provisions from the draft instrument (WP 56) related to which transactions are covered by the convention:

Article 8. General scope of application

1. Subject to article 9(1), this Convention applies to contracts of carriage in which the place of receipt and the place of delivery are in different States, and the port of loading [of a sea carriage] and the port of discharge [of the same sea carriage] are in different States, if:

(a) The place of receipt [or port of loading] is located in a Contracting State; or

(b) The place of delivery [or port of discharge] is located in a Contracting State; or

[(c) The contract of carriage provides that this Convention, or the law of any State giving effect to it, is to govern the contract.]

References to [places and] ports mean the [places and] ports agreed in the contract of carriage.

2. This Convention applies without regard to the nationality of the vessel, the carrier, the performing parties, the shipper, the consignee, or any other interested parties.

Article 9. Specific exclusions and inclusions

1. This Convention does not apply to:

(a) Charterparties;

(b) Contracts for the use of a ship or of any space thereon;

(c) Except as provided in paragraph 2, other contracts in non-liner transportation; and

(d) Except as provided in paragraph 3, volume contracts.

2. Without prejudice to subparagraphs 1(a) and (b), this Convention applies to contracts of carriage in non-liner transportation when evidenced by or contained in a transport document or an electronic transport record that also evidences the carrier’s or a performing party’s receipt of the goods, except as between the parties to a charterparty or to a contract for the use of a ship or of any space thereon.

3. (a) This Convention applies to the terms that regulate each shipment under a volume contract to the extent that the provisions of this chapter so specify.

(b) This Convention applies to the terms of a volume contract to the extent that they regulate a shipment under that volume contract that is governed by this Convention under subparagraph (a).

Article 10. Application to certain parties

Notwithstanding article 9, if a transport document or an electronic transport record is issued pursuant to a charterparty or a contract under article 9 (1)(b) or (c), this Convention applies to the contract evidenced by or contained in the transport document or electronic transport record as between the carrier and the consignor, consignee, controlling party, holder, or person referred to in article 34 that is not the charterer or the party to the contract under article 9 (1)(b) or (c).

[5]Relevant provisions from the draft instrument (WP 56) related to liability of the carrier/burden of proof:

Article 17. Basis of liability

1. The carrier is liable for loss of or damage to the goods, as well as for delay in delivery, if the claimant proves that

(a) the loss, damage, or delay; or

(b) the occurrence that caused or contributed to the loss, damage, or delay

took place during the period of the carrier’s responsibility as defined in chapter 4. The carrier is relieved of all or part of its liability if it proves that the cause or one of the causes of the loss, damage, or delay is not attributable to its fault or to the fault of any person referred to in article 19.

2. If the carrier, alternatively to proving the absence of fault as provided in paragraph 1, proves that an event listed in paragraph 3 caused or contributed to the loss, damage, or delay, then the carrier is relieved of all or part of its liability subject to the following provisions:

(a) If the claimant proves that the fault of the carrier or of a person referred to in article 19 caused or contributed to the event on which the carrier relies, then the carrier is liable for all or part of the loss, damage, or delay.

(b) If the claimant proves that an event not listed in paragraph 3 contributed to the loss, damage, or delay, and the carrier cannot prove that this event is not attributable to its fault or to the fault of any person referred to in article 19, then the carrier is liable for part of the loss, damage, or delay.

(c) If the claimant proves that the loss, damage, or delay was or was probably caused by or contributed to by

(i) the unseaworthiness of the ship;

(ii) the improper manning, equipping, and supplying of the ship; or

(iii) the fact that the holds or other parts of the ship in which the goods are carried (including containers, when supplied by the carrier, in or upon which the goods are carried) were not fit and safe for reception, carriage, and preservation of the goods,

and the carrier cannot prove that;

(A) it complied with its obligation to exercise due diligence as required under article 16(1); or

(B) the loss, damage, or delay was not caused by any of the circumstances referred to in (i), (ii), and (iii) above,

then the carrier is liable for part or all of the loss, damage, or delay.

(e) Strikes, lockouts, stoppages, or restraints of labour;

(f) Fire on the ship;

(g) Latent defects in the [ship][vessel][means of transport] not discoverable by due diligence;

(h) Act or omission of the shipper or any person referred to in article 35, the controlling party, or the consignee;

(i) Handling, loading, [stowage,] or discharging of the goods [actually performed] by the shipper or any person referred to in article 35, the controlling party, or the consignee;

(j) Wastage in bulk or weight or any other loss or damage arising from inherent quality, defect, or vice of the goods;

(k) Insufficiency or defective condition of packing or marking not performed by [or on behalf of] the carrier;

(l) Saving or attempting to save life at sea;

(m) Reasonable measures to save or attempt to save property at sea;

(n) Reasonable measures to avoid or attempt to avoid damage to the environment;

[(o) Acts of the carrier or a performing party in pursuance of the powers conferred by articles 15 and 16(2) when the goods have become a danger to persons, property, or the environment or have been sacrificed.]

3. The events mentioned in paragraph 2 are:

(a) Act of God;

(b) Perils, dangers, and accidents of the sea or other navigable waters;

(c) War, hostilities, armed conflict, piracy, terrorism, riots, and civil commotions;

(d) Quarantine restrictions; interference by or impediments created by governments, public authorities, rulers, or people including detention, arrest, or seizure not attributable to the carrier or any person referred to in article 19;

4. When the carrier is relieved of part of its liability pursuant to the previous paragraphs of this article, then the carrier is liable only for that part of the loss, damage, or delay that is attributable to the event or occurrence for which it is liable under the previous paragraphs, and liability must be apportioned on the basis established in the previous paragraphs.

[6]Relevant provisions from the draft instrument (WP 56) related to obligations of the shipper:

CHAPTER 8. OBLIGATIONS OF THE SHIPPER

Article 28. Delivery for carriage

The shipper must deliver the goods ready for carriage, unless otherwise agreed in the contract of carriage, and in such condition that they will withstand the intended carriage, including their loading, handling, stowage, lashing and securing, and discharge, and that they will not cause injury or damage. In the event the goods are delivered in or on a container or trailer packed by the shipper, the shipper must stow, lash and secure the goods in or on the container or trailer in such a way that the goods will withstand the intended carriage, including loading, handling and discharge of the container or trailer, and that they will not cause injury or damage.

Article 29. Carrier’s obligation to provide information and instructions

The carrier must provide to the shipper, on its request [and in a timely manner], such information as is within the carrier’s knowledge and instructions that are reasonably necessary or of importance to the shipper in order to comply with its obligations under article 28. [The information and instructions so provided must be accurate and complete.]

Article 30. Shipper’s obligation to provide information,instructions and documents

The shipper must provide to the carrier [in a timely manner, such accurate and complete] information, instructions, and documents as are reasonably necessary for:

(a) The handling and carriage of the goods, including precautions to be taken by the carrier or a performing party, except to the extent that the shipper may reasonably assume that such information is already known to the carrier;

(b) Compliance with rules, regulations, and other requirements of authorities in connection with the intended carriage, including filings, applications, and licences relating to the goods;

(c) The compilation of the contract particulars and the issuance of the transport documents or electronic transport records, including the particulars referred to in article 38(1)(b) and (c); the name of the party to be identified as the shipper in the contract particulars; the name of the consignee, if any; and the name of the person to whose order the transport document or electronic transport record is to be issued, if any, unless the shipper may reasonably assume that such information is already known to the carrier.

Article 31. Basis of shipper’s liability

1. The shipper is liable for loss, damage [, delay] or injury caused by the goods, and for breach of its obligations under article 28 and paragraph 30(a), [unless][unless and to the extent that][except to the extent that] the shipper proves that neither its fault nor the fault of any person referred to in article 35 caused or contributed to the loss, damage [, delay] or injury.

[Variant A of paragraph 2

2. The shipper is liable for loss or damage caused by a breach of its obligations under paragraphs 30(b) and (c).]

[Variant B of paragraph 2

2. The shipper is deemed to have guaranteed to the carrier the timeliness, accuracy and completeness at the time of receipt by the carrier of the information, instructions and documents that the shipper is required to provide under paragraphs 30(b) and (c). The shipper must indemnify the carrier against all loss, damages and expenses arising or resulting from any breach of obligations under paragraphs 30(b) and (c). The right of the carrier to such indemnity in no way limits its responsibility under the contract of carriage to any person other than the shipper.]

3. When loss or damage [or injury] is caused jointly by the failure of the shipper and of the carrier to comply with their respective obligations, the shipper and the carrier are jointly liable to the consignee or the controlling party for any such loss or damage [or injury].

[Article 32. Material misstatement by shipper

A carrier is not liable for delay in the delivery of, the loss of, or damage to or in connection with the goods if the nature or value of the goods was knowingly and materially misstated by the shipper in the contract of carriage or a transport document or electronic transport record.]

Article 33. Special rules on dangerous goods

1. “Dangerous goods” means goods which by their nature or character are, or reasonably appear likely to become, a danger to persons or property or an illegal or unacceptable danger to the environment.

2. The shipper must mark or label dangerous goods in accordance with any rules, regulations or other requirements of authorities that apply during any stage of the intended carriage of the goods. If the shipper fails to do so, it is liable to the carrier and any performing party for all loss, damages, delay and expenses directly or indirectly arising out of or resulting from such failure.

3. The shipper must inform the carrier of the dangerous nature or character of the goods in a timely manner before the consignor delivers them to the carrier or a performing party. If the shipper fails to do so and the carrier or performing party does not otherwise have knowledge of their dangerous nature or character, the shipper is liable to the carrier and any performing party for all loss, damages, delay and expenses directly or indirectly arising out of or resulting from such shipment.

Article 34. Assumption of shipper’s rights and obligations

If a person identified as “shipper” in the contract particulars, although not the shipper as defined in paragraph 1(h), [accepts][receives][becomes a holder of] the transport document or electronic transport record, then such person is (a) [subject to the responsibilities and liabilities] imposed on the shipper under this chapter and under article 59, and (b) entitled to the shipper’s rights and immunities provided by this chapter and by chapter 14.

Article 35. Vicarious liability of the shipper

The shipper is liable for the acts and omissions of any person to which it has delegated the performance of any of its responsibilities under this chapter, including its sub-contractors, employees, agents, and any other persons [except the carrier or performing parties] that act, either directly or indirectly, at its request, or under its supervision or control, as if such acts or omissions were its own. Liability is imposed on the shipper under this article only when the act or omission of the person concerned is within the scope of that person’s contract, employment, or agency.

[Article 36. Cessation of shipper’s liability

If the contract of carriage provides that the liability of the shipper or any other person identified in the contract particulars as the shipper will cease, wholly or partly, upon a certain event or after a certain time, such cessation is not valid:

(a) With respect to any liability under this chapter of the shipper or a person referred to in article 34; or

(b) With respect to any amounts payable to the carrier under the contract of carriage, except to the extent that the carrier has adequate security for the payment of such amounts.

(c) To the extent that it conflicts with article 63.]

[7]Relevant portions of the draft instrument (WP 56) related to delay:

Article 22. Delay

Delay in delivery occurs when the goods are not delivered at the place of destination provided for in the contract of carriage within the time expressly agreed upon or, in the absence of such agreement, within the time it would be reasonable to expect of a diligent carrier, having regard to the terms of the contract, the characteristics of the transport, and the circumstances of the voyage or journey.

Article 65. Liability for loss caused by delay

Variant A

Subject to paragraph 66(2), compensation for physical loss of or damage to the goods caused by delay must be calculated in accordance with article 23 and[, unless otherwise agreed,] liability for economic loss caused by delay is limited to an amount equivalent to [one times] the freight payable on the goods delayed. The total amount payable under this article and paragraph 64(1) may not exceed the limit that would be established under paragraph 64(1) in respect of the total loss of the goods concerned.

Variant B

Subject to paragraph 66(2), unless otherwise agreed, if delay in delivery causes [consequential] loss not resulting from loss of or damage to the goods carried and hence not covered by article 23, the liability for such loss is limited to an amount equivalent to [one times] the freight payable on the goods delayed. The total amount payable under this article and article 64(1) may not exceed the limit that would be established under article 64(1) in respect of the total loss of the goods concerned.

[8] I am not including many of the provisions from WP 56 relating to jurisdiction and arbitration because right now the draft contains every proposal that anybody has ever made. Thus, it could be misleading, as some of these proposals stand little or no chance of being adopted. The provisions shown below are very close to the U.S. position:

Article 75. Actions against the carrier

In judicial proceedings against the carrier relating to carriage of goods under this Convention the plaintiff, at its option, may institute an action in a court in a Contracting State that, according to the law of the State where the court is situated, is competent and within the jurisdiction of which is situated one of the following places:

(a) The domicile of the defendant; or

(b) The contractual place of receipt or the contractual place of delivery; or

[(c) the port where the goods are initially loaded on a ship; or the port where the goods are finally discharged from a ship; or]

(d) Any additional place [designated][agreed upon] for that purpose in the transport document or electronic transport record.

Article 77. Actions against the maritime performing party

In judicial proceedings against the maritime performing party relating to carriage of goods under this Convention, the plaintiff, at its option, may institute an action in a court in a Contracting State that, according to the law of the State where the court is situated, is competent and within the jurisdiction of which is situated one of the following places:

(a) The domicile of the maritime performing party; or

(b) The place where the goods are [initially] received by the maritime performing party; and the place where the goods are [ultimately] delivered by the maritime performing party.

Article 78. No additional bases of jurisdiction

Subject to article 80, no judicial proceedings relating to carriage of goods under this Convention may be instituted in a place not designated under article 75 or 77.

[9] Relevant provisions from the draft instrument (WP 56) related to freedom of contract: :

Article 1. Definitions

(b) “Volume contract” means a contract that provides for the carriage of a specified quantity of cargo in a series of shipments during an agreed period of time. The specification of the quantity may include a minimum, a maximum or a certain range.

Article 94. General provisions

1. Unless otherwise specified in this Convention, any provision is void if:

(a) It directly or indirectly excludes or limits the obligations of the carrier or a maritime performing party under this Convention;

(b) It directly or indirectly excludes or limits the liability of the carrier or a maritime performing party for breach of an obligation under this Convention; or

(c) It assigns a benefit of insurance of the goods in favour of the carrier or a person referred to in article 19.

[2. Unless otherwise specified in this Convention, any provision is void if:

(a) It directly or indirectly excludes, limits, [or increases] the obligations under chapter 8 of the shipper, consignor, consignee, controlling party, holder, or person referred to in article 34; or

(b) It directly or indirectly excludes, limits, [or increases] the liability of the shipper, consignor, consignee, controlling party, holder, or person referred to in article 34 for breach of any of their obligations under chapter 8.]

Article 95. Special rules for volume contracts

1. Notwithstanding article 94, if terms of a volume contract are subject to this Convention under article 9(3)(b), the volume contract may provide for greater or lesser duties, rights, obligations, and liabilities than those set forth in the Convention provided that the volume contract [is agreed to in writing or electronically], contains a prominent statement that it derogates from this Convention, and:

(a) Is individually negotiated; or

(b) Prominently specifies the sections of the volume contract containing the derogations.

2. A derogation under paragraph 1 must be set forth in the contract and may not be incorporated by reference from another document.

3. A [carrier’s public schedule of prices and services,] transport document, electronic transport record, or similar document is not a volume contract under paragraph 1, but a volume contract may incorporate such documents by reference as terms of the contract.

4. The right of derogation under this article applies to the terms that regulate shipments under the volume contract to the extent these terms are subject to this Convention under article 9(3)(a).

5. Paragraph 1 is not applicable to:

(a) Obligations stipulated in article 16(1)(a) and (b) [and liability arising from the breach thereof or limitation of that liability];

[(b) Rights and obligations stipulated in articles, [28], [29], [30], [33] and [66] [and the liability arising from the breach thereof]].

6. Paragraph 1 applies:

(a) Between the carrier and the shipper;

(b) Between the carrier and any other party that has expressly consented [in writing or electronically] to be bound by the terms of the volume contract that derogate from this Convention. [The express consent must demonstrate that the consenting party received a notice that prominently states that the volume contract derogates from this Convention and the consent shall not be set forth in a [carrier’s public schedule of prices and services,] transport document, or electronic transport record. The burden is on the carrier to prove that the conditions for derogation have been fulfilled.]



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