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New Rules for Cargo Carriers

Transporting cargo across the sea is big business. As a result, a number of members of the United Nations have proposed revised rules to streamline the legal relationship between cargo carriers and cargo owners. This legislation is called the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, better known as the “Rotterdam Rules.” Rotterdam played host to the United Nations Commission on International Trade Law in 2009, hence the name Rotterdam Rules. So far, only a handful of countries, including the United States and France, have signed the treaty. While the United States signed the treaty, it has not ratified the treaty. With the Trump administration showing hostility to other international trade agreements, e.g. the TPP, it is uncertain whether the United States will ratify the Rotterdam Rules anytime soon.

The Hague Rules

Currently, the legal framework governing the relationship between carriers and cargo owners are the Hague Rules, formerly known as the Carriage of Goods by Sea Act or COGSA. Note that the Rotterdam Rules are more in the nature of a refinement and update to COGSA and not a complete legal overhaul. The basics of cargo liability would remain under the Rotterdam Rules as they exist currently under COGSA—the shipper shows that the damage occurred while the goods were in the custody of the carrier, and then the burden shifts to the carrier to show that the damage was due, wholly or in part, to an excepted cause. The carrier’s defenses under the Rotterdam Rules are mostly the same as those under COGSA, with one major exception: unlike COGSA, the Rotterdam Rules do not recognize a defense of “errors in navigation and management of the vessel.” However, the Rotterdam Rules specifically address the development of ocean shipping, with provisions to recognize multimodal shipping, electronic transport documents, arbitration, and volume shipping contracts. The Rotterdam Rules also provide different time limits for giving notice of damage and for filing suit.

Notably, the Rotterdam Rules propose to eliminate the nautical fault defense. The Nautical Fault defense is that carriers are responsible for loss and damage caused by means that carriers have direct control over, such as the seaworthiness of the ship and the manning and timing of the voyage but not for damage caused by other factors. Other matters would be acts or omissions that occur after the start of the voyage. The carrier would not be responsible for negligence on the part of the crew if the negligence causes damage to the cargo. The Rotterdam Rules seek to end this nautical fault defense.

It should be noted that only three countries have ratified the Rotterdam Rules – Spain, Togo, and the Congo. It needs ratifications from 20 parties to come into force. The World Shipping Council and the American Bar Association produced statements supporting the Rotterdam Rules. Yet it has thus far failed to gain traction amongst the international community.

Involved in maritime commerce? Partner with a law firm that understands the intricacies of maritime law. Contact the Kolodny law firm.

(image courtesy of Erwan Hesry)

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