Viewpoint BIMCO on the Rotterdam Rules (UNCITRAL)

Viewpoint BIMCO on the Rotterdam Rules (UNCITRAL)

30 December 2014

On 13 November 2014, BIMCO published its viewpoint on the Rotterdam Rules. 

BIMCO’s Position

BIMCO supports the ambition of establishing one global cargo liability regime that best reflects the practices of modern trade in respect of the mode of transportation and the distribution of liability between ship owners and shippers and, once and for all, retiring the previous dated regimes. The Rotterdam Rules reflect this ambition. BIMCO therefore promotes the early ratification and entry into forceof the Rules,feeling confident that they will contribute to the harmonisation of international trade practices and ultimately benefit the shipping industry.

Discussion

The Rotterdam Rules, adopted by UNCITRAL andopened for signature in September 2009, describe the contractual rights and obligations involved in the maritime carriage of goods. The new Rules represent an international solution covering multimodal transport involving an international sea leg seeking to address the various problems and limitations incumbent on the existing regimes (Hamburg, Hague and Hague-Visby Rules), including thatthese do not take into account the needs of modern trade such as door-to-door transport and electronic transport documents.Notably,the Rules facilitate e-commerce; are clearer on shippers’ obligations regarding making the cargo ready for transportation; and spell out detailed provisions on ship owners’ delivery obligations, thereby providing the latter with the right to limit liability for all breaches of their obligations under the Rules. At the same time, the Rules support the principle of freedom of contract between the parties to the transport contract and adopt a limited network liability system which ensures uniformity as far as possible.

Twenty-five states, including the US and eightEU Member states, have signed the Rotterdam Rules,but only three states have yet ratified the Rules. Spain, Togo and Congo have concluded their ratification procedures and a few other countries are expected to do so in the not too distant future. Although this is positive, it is far from the 20 ratifications necessary for the Rules to enter into force.

The Rotterdam Rules have a broader scope of application than the existing regimes both geographically, as they apply to both inward and outbound carriage under a contract of carriage with an international sea leg, and functionally, as they apply to all contracts of carriage such as waybills and bills of lading and have been extended also to cover deck cargo.On the other hand, certain elements in the Rotterdam Rulesareadmittedlynotadvantageousto ship owners, namely the increased liability limits, the forfeiture of the long-established defence of nautical fault, and the fact that ship owners have to accept an extended seaworthiness obligation applicable throughout the voyage.

The Rotterdam Rules need to be seen in a wider perspective since there is a genuine risk that, if not widely supported, alternative regional regimes are likely to emerge around the world. Such regimes would entail huge legal and logistical problems for the industry caused by the conflict with the Rotterdam Rules. In addition, ship owners could face a strict liability regime and higher limits, most likely along the lines of those contained in the Convention on the Contract for the International Carriage of Goods by Road (CMR).

Despite earlier plans to propose a regional regime, the European Commission appears – at least for the time being – to have put this idea on hold probably also due to the fact that eight EU member states have signed the Rotterdam Rules, one of which has ratified, thereby complicating a regional initiative from the Commission. At the same time, fears that the US could re-embark on previous efforts to modernise the 1936 US Carriage of Goods by Sea Act (COGSA) are unlikely to materialise in view of its signature of the Rotterdam Rules, provided that the Rules enter into force in the coming years. The US ratification package concerning the Rotterdam Rules, which has been delayed mainly due to a domestic issue concerning sovereign immunity of US ports, has been finalised and should hopefully be put forward to the Senate soon. US ratification is expected to create new momentum for the Rules.