Our group was formed in 2009,
between acceptance by the General Assembly of the Rotterdam Rules (the “Rules”)
on 11 December 2008 and the signing Ceremony in Rotterdam on 20-23 September
2009, as an alternative voice to those who wish to promote the Rules. Our group
has grown since then, but has recently lost one of its initial, and indeed,
most well-known and respected members, Professor William “Bill” Tetley Q.C.,
who passed away on 1 July 2014.
Bill and many of the group were
members of the initial CMI working groups that drafted the Rules and presented
them to Uncitral for consideration and further work. He was a popular member of
working groups, always ready to listen and always polite in reply even if in
disagreement. He, like us, was against the introduction of the volumetric
exemption clauses from the outset and agreed that the loss of the network
liability principle was unhelpful. Bill was also not a supporter of the
inclusion of clauses to deal with the particular legal internal problems of
certain countries as occurred with the introduction of jurisdiction and
arbitration clauses. Whilst these clauses are optional, their inclusion in the
Rules attacks the very principle of uniformity which these Rules were intended
to promote.
These initial meetings took
place in the late 90’s and we have come a long way since the CMI’s work on the
Rules with the Uncitral working group adding volume exemption clauses and
jurisdiction/arbitration clauses and deleting clauses that promoted the network
liability principle. It cannot be said that all is bad about the Rules, but
there is much that does not endear these Rules to the wider global commercial
community. They are too long. There are too many exemptions. The wording is not
tight enough and will lead to disputes as to how they are to be interpreted.
The Rules fail to deal properly with multimodal transport. They have introduced
new and unnecessary concepts such as the maritime performing party. The list
goes on, but what is good? The e-commerce sections and the removal of the
navigational fault exemption in terms of carrier liability. It may be contended
by some that the removal of the navigational fault exemption was premature as
although GPS is extremely accurate, there was and indeed still is no effective
plan B in the case of failure and it is relatively easy to block or disable
such systems if one intends to do so. Several countries including Russia,
Canada and the U.K. are developing similar back up plans that involve the use
of radio waves; technology that was devised during the Second World War. The
research project in the U.K. known as ELoran has proved locally effective but
it is as yet unknown if the projects in the various countries will be able to
work together as an effective global network to operate as back up in the event
of GPS failure.
At the signing ceremony, 19
countries signed up which was one
country short of the number that would eventually be required to ratify to give
the Rules the force of law. Since then there have only been 6 further
signatories, taking the number to 25. For a set of Rules intended to bring
uniformity to carriage of goods by sea law, this must be considered hugely
disappointing, particularly when one considers that historically many
conventions have failed to gain the force of law, despite having more
signatories than needed because signing often does not translate to eventual
ratification.
Looking at the countries who
have signed, there are notable absences. Not one South American country has
signed, nor has any country from the Far East. Of the G7 countries, only two
have signed (France and the U.S.) and only two of the G20 countries, (France
and the U.S.) have signed. Notable absences include all four of the BRIC
countries, Australasia, Canada, Germany, Italy, Japan and the U.K. What is it
about the Rules that has made them so unwelcome? Why has there been no rush to sign up or ratify,
despite the efforts of CMI and Uncitral to highlight the virtues of the Rules?
So far, ratifications have been effected by Spain, Togo and Congo. Virtually
all who have signed are from Western Europe or Africa along with the U.S.,
leaving large areas of the globe unrepresented.
Our group is of the view that
the Rules will do little to bring uniformity to the carriage of goods by sea
law and if anything, will simply further splinter an increasingly disparate set
of rules used worldwide with most countries adhering to either the Hague, Hague-Visby
or Hamburg Rules. Common law countries, where laws are built on precedent, are
unlikely to want to replace settled law with a Convention of over 90 articles
that will create a new body of law and owing to its alienation from the clauses
of the established conventions, will not be able to draw on the precedent
cases. Who will these Rules benefit? Lawyers? Insurers? Surely the Rules should benefit direct
users and providers of international transport, but there is little in the
Rules to endear them to these communities.
As some will be aware, our
group has prepared three papers on the subject of the Rules and Bill Tetley
drafted the summation to the first. It is worth repeating the text here as it
was insightful:-
The
negative reactions by some stakeholders
It seems to be a recurring
theme among those who support these Rules to question the lateness of such
commentaries. One has to remember that if these Rules do become a Convention
they will affect huge numbers of those involved in commercial contracts for
sale of and carriage of goods. These Rules were formed by a working Group with
a few hundred participants which is hardly representative and simply because
concerns arise after adoption of the Rules does not make such concerns any less
valid.
The objective of the Rotterdam
Rules to provide a comprehensive regulation is certainly acceptable but the
risk is obvious that some of the innovations compared with the present law will
limit the willingness of States to ratify the convention. From this perspective,
it might have been wiser restricting the revision work to a modernization of
the liability system and the introduction of rules for electronic transmission
so as to ensure a global acceptance of the Rotterdam Rules as a replacement of
the old system. The aim to expand the Rotterdam Rules to cover much more has
invited negative reactions by some important stakeholders to the effect that
some additions are considered at best unnecessary and at worst contrary to
their respective interests.
The
Consequences of the “Opting-Outs” (including no opting-in)
The Rotterdam Rules contain
multiple opting-outs, which will allow major shipping nations to “opt-out” of
all or part of the Rules. The United Kingdom, for example, could support the
signing of the Convention but could also be able to protect its important
arbitration centre and arbitration business in London by opting-outs. And the
world’s shipping/carrier/oil producer nations such as Norway could adopt the
Rotterdam Rules, but the opting-outs could also allow them to avoid many
provisions of the Rules that do not favour them.
The United States of America
and those nations, which like the United States of America have not adopted the
Hague, or Hague/Visby or Hamburg Rules, will seemingly have progressed to some
extent by the adoption of the Rotterdam Rules but is this “half loaf” better
than a new try at adopting a uniform, binding, modern Multimodal Carriage of
Goods by Sea Convention of the 21st Century?
Are not the Rotterdam Rules a
step backwards for the vast majority of shipper/carrier nations of the world,
who have already adopted a universal and uniform, and less
complex carriage of goods by sea legislation with broader scope and fewer
opting-outs, particularly for jurisdiction and arbitration and for volume
contracts?
And are the Rotterdam Rules
really universal and uniform as so declared in the Preamble to
those Rules?
The Rotterdam Rules provide a
detailed set of rules for three types of transport documents: negotiable
transport documents, non-negotiable transport documents, and straight bills of
lading. These different types of transport documents entail different results
when determining the evidentiary effect of the contract particulars (Article
41), delivery of the goods (Chapter 9), and rights of the controlling party
(Chapter 10). Will the average shipper or carrier be able to distinguish
between a negotiable and a non-negotiable transport document? This could lead
to confusion and mistakes. Furthermore, a contract which is simply called a
“bill of lading” is liable to be characterized as any one of the three legal
characterizations, which again can only create confusion.1
The excessive detail of the
Rotterdam Rules is liable to create uncertainty and hinder the goal of
attaining legal certainty in multimodal transport regulation. The Rotterdam
Rules seem fit only for a small select group of trained lawyers. A more
pragmatic approach of introducing only two types of transport documents: a
negotiable and a non-negotiable multimodal transport document as is found in
the United Nations Convention on International Multimodal Transport of Goods
(Multimodal Convention (1980)) would make the rules simpler and more
understandable to merchants, shippers, consignees, carriers and even to lawyers
and judges.
Drafting
Deficiencies in the Rotterdam Rules
An example of a drafting
deficiency can be found in Article 12, which deals with the ‘period of
responsibility’ of the carrier. Article 12(1) states: “The period of
responsibility of the carrier for the goods under this Convention begins when
the carrier or a performing party receives the goods for carriage and ends when
the goods are delivered.” Article 12(2) (a) and (b) provide specific criteria
to determine when the period of responsibility begins and ends. At the same
time, however, Article 12(3) allows the parties to determine this period
themselves, subject to two exceptions. Article 12(1) and Article 12(3)
therefore appear to be contradictory. It is suggested that Art. 12(1) should
start with “Subject to paragraph 3…” The current wording of Article 12 may lead
to mistakes and confusion. Careless readers might simply read the first
paragraph and conclude that the period of responsibility can only conform to
that stipulation. The reader may also wonder whether one paragraph trumps the
other.
Article 51(1) states: “Except
in the cases referred to in paragraphs 2, 3 and 4…”, in other words, except
when there is, respectively, a non-negotiable transport document, a negotiable
transport document, and a negotiable electronic transport record. There are,
however, three different types of transport documents: negotiable,
non-negotiable, and straight bill of lading. Thus, given the exceptions,
article 51(1) would seem to be dealing with non-negotiable electronic transport
documents, as well as straight bills of lading. But there is doubt without a
specific stipulation to that effect in law. Why should we have to guess? And
perhaps paragraph 1 also contemplates all residual transport documents as well
(i.e., those that are not readily able to be characterized under the Rotterdam
Rules). Defining the purview of a given stipulation solely by stating its
exceptions lends itself to ambiguity.
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It is plain from the above
extract from one of our papers drafted by Bill that he had masterfully surveyed
a broad subject and analysed it critically. These words show the drawbacks of
the Rules as effectively as any written on the subject since they were opened
for signing in Rotterdam in September 2009. Many words have been written on the
subject and when read against the even greater number of words written in
favour of the Rules, they show the flaws in those words and their sentiment.
We can say no more in ending
than that it would be a fitting tribute to Bill if the Rules were not signed or
ratified by any country which has yet to do so. The silence of most of the main
commercial trading powers across the globe has been loudly heard by the rest
and should be heeded, particularly when the main purpose of the entire project
that led to the creation of these Rules was to seek to bring uniformity to the
law of carriage of goods by sea. In this purpose it has plainly failed, but let
us not forget the good work done. Let us take the e-commerce clauses, the
navigational fault exemption and the initial comparative work done by CMI
groups to bring out the best from the Hague, Hague-Visby and Hamburg Rules and
focus on effectively dealing with multimodal transport to create a set of rules
that will work for all.
Notes
1 See Anthony
Diamond, “The Next Sea Carriage Convention?” [2008] LMCLQ at p. 163.
