AN AUSTRALIAN PERSPECTIVE ON THE NEW CONVENTION TO REPLACE THE HAGUE VISBY RULES ON THE CARRIAGE OF GOODS BY SEA


On 3 July 2008 the United Nations (UN) Commission on International Trade Law (UNCITRAL) approved the draft Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (the Convention).

The draft Convention will be presented for adoption to the sixty third session of the UN General Assembly in November 2008 and is likely to eventually replace the fragmentary treaty arrangements governing the carriage of goods by sea under the Hague Rules as Amended by the Brussels Protocol 1968 (the Hague Visby Rules), the United Nations Convention on the Carriage of Goods by Sea 1978,l and the United Nations Convention on International Multimodal Transport of Goods 1980.

According to an UNCITRAL report delivered to the Sixth Committee of the Sixty Third Session of the United Nations General Assembly (GA/L/3346) (the Sixth Committee Meeting), the uncertainties under the current legal regime has adversely affected international trade. In 2006 seaborne trade accounted for 89.6 per cent of global trade in terms of volume, and 70.1 per cent of its value. As the most significant sector of the international carriage of goods, seaborne trade can least afford the inefficiencies that characterise the current system.

The new Convention aims to create a modern and uniform law concerning the international carriage of goods which include an international sea leg, but which is not limited to port-to-port carriage of goods.

The Draft Text 

The text of the new Convention emerged from more than six years of intensive negotiations involving eighty UN Member States, and observers from various governmental, non governmental, inter-governmental and industry organizations.

Some key features of the new treaty include:

• Extension of coverage beyond tackle-to-tackle and port-to-port movements to include multi- modal contracts of carriage.
• Providing the method of allocating the burden of proof between claimant and carrier when determining liability for loss, damage or delay.
• Extension of ‘due diligence’ to make the ship seaworthy throughout the entire period of transportation by sea.
• Inclusion of provisions allowing for electronic transport records, and other more technical features to fill perceived gaps in existing transport regimes.
• Increasing the limitation for liability to 3 SDR/kg or 875 SDR per package for cargo loss or damage.
• Introduction of the cargo claimant’s right to include the actual carrier in a cargo dispute.
• Potential introduction of limited carrier’s liability for delay, although only for physical loss or damage, not pure economic loss arising out of delay.
• Extension of the time-bar for suit from the one year limitation period to two years.
• Extension of the shipper’s obligation to deliver goods in a condition fit for carriage and to provide the carrier with relevant information and instructions etc in order for the carrier to fulfil his obligations.

UNCITRAL expects that the new Convention will provide “harmonization and modernization of the legal regime in this area, which in many countries dates back to the 1920s or earlier, and will lead to an overall reduction in transaction costs, increased predictability when problems are encountered, and greater commercial confidence when doing business internationally”.

Controversially, however, the new Convention expands the freedom to contract out provisions of the treaty, which would seem to be at odds with its objectives in harmonising the law regulating the dealings between carriers and shippers.

Entry into force 

Article 24(1) of the Vienna Convention on the Law of Treaties 1969 provides that a treaty will enter into force in accordance with the provisions of the treaty, or as agreed by the parties. The draft Convention specifies that it will enter into international law twelve months after it achieves 20 ratifications by member states of the United Nations.

According to an UNCITRAL Working Group summary on the draft Convention, the United States has actively participated in the drafting process, together with many other nations, including Australia, which may auger well for an early ratification.

The Australian perspective 

Should the Australian government decide to sign and ratify the new Convention, its entry into force will represent Australia’s agreement to be bound by its provisions as a matter of international law between it and other States. Even if the Convention is ratified by Australia and the requisite twenty states, this will not immediately have any direct effect on Australian domestic law. As a practical matter for maritime and associated transport businesses, the new arrangements will not regulate the carriage of goods by sea locally until the incorporation of the Conventions provisions is passed under an Act of parliament.

While the Convention is expected to generally represent the interests of shipper nations such as Australia, it is hard to predict whether the new regime will in fact deliver on such expectations.

At the Sixth Committee Meeting the Australian delegation reiterated the country’s qualified support for the new Convention as a workable and modern instrument on the carriage of goods by sea. However, the real position of the Australian government may be more ambivalent/ It has expressed dissatisfaction with many of the provisions of the new Convention which it considered to adversely affect the interest of shippers. Concern was raised that the small and medium sized shippers would be in worse position under the new regime.

In a lecture delivered at the Federal Court on 23 July 2008 entitled ‘The onus of proof in a cargo claim – articles III and IV of the Hague-Visby Rules and the UNCITRAL Draft Convention’, the Hon Justice Steven Rares noted that the new Convention had the potential to reverse the recent Australian decisions in Gamlen Chemical and Hilditch (No 2) relieve carriers of all or part of their liability if they were able to proves that the cause, or one of the causes of the loss was not attributable to their fault, or that one or more of the stipulated events or circumstances caused or contributed to the loss, damage or delay.

Rares J seemed to concur with the Australian Government’s general observation that the Convention text is so different from current international law, that the potential for lengthy and costly litigation will be high. As most litigation will be domestic, there remains the potential for the uniformity of the international law to be undermined by having provisions interpreted differently in different countries.'


James Harb
Partner 
Blackstone Waterhouse Lawyers
Phone: 61 2 9279 0288
jharb@blackstonewaterhouse.com.au

Nikolai Haddad
Lawyer 
Blackstone Waterhouse Lawyers
Phone: 61 2 9279 0288
nhaddad@blackstonewaterhouse.com.au