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Hamburg Rules 1978

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Hamburg Rules 1978. By the mid-19th century shipowners, who were generally a powerful group, were able to insert various protective clauses in their contracts of carriage with cargo interests.

European shipowners did, it must be stated, recognize that a standardized liability system was necessary and, as a form of self-regulation, introduced a “model bill of lading” called the “Hamburg Bill of Lading 1885”. This attempt to standardize liability failed. The new Hamburg Rules 1978 may show that standardization does not always have to fail. It may be interesting to see how the Hamburg Rules have come into being.

In the United States, the Hatter Act 1893 attempted to make carriage of goods by sea fair for both parties to the contract of carriage. The Hague Rules 1924 that followed and the later Hague-Visby Rules 1968 were imitations of the Hatter Act 1893, but there were provisions in these two sets of Rules that still favoured the carriers and shipowners.

Dissatisfaction came from courts which attempted to restrict the carriers’ use of the protective clauses but many developing countries which were mainly raw material suppliers to international trade were more radical and brought pressure to bear at the United Nations and at UNCTAD, the United Nations Conference on Trade and Development, to introduce a more equitable system governing carriage of goods by sea.

In 1971, the UNCTAD had prepared a report on bills of lading, which showed that the Hague Rules were unduly favourable to shipowners and unfair to cargo interests. Damage or loss suffered by cargo interests could be insured against but this was wasteful and involved unnecessary economic cost, especially to countries in the Third World. An alternative would, of course, be that shipowners could obtain higher cover, at a higher cost, from the P. and I. Associations.

A specialised UNCITRAL (United Nations Commission on International Trade Law) working party drafted a new code for carriage of goods by sea. After discussions at various levels, a Diplomatic Conference under the auspices of the United Nations took place at Hamburg in March 1978 to consider the UNCITRAL draft and this was adopted as “The United Nations Convention on the Carriage of Goods by Sea 1978”. The Conference also recommended that the Rules in the Convention be known as the “Hamburg Rules”.

The Convention will come into force one year after 20 countries have acceded to the Convention. Resistance to the provisions of the Hamburg Rules generally comes from countries in which shipowners are a powerful group because of the potential for additional liability on this group. However, some developed and developing countries have accepted the Hamburg Rules and also the Hague-Visby Rules, and have legislated for both sets of Rules. When the Hamburg Rules enter into force these countries will have to “denounce” their adherence to the Hague Rules or Hague-Visby Rules and impose the Hamburg Rules on carriage of goods by sea from (and to) places in these countries. For example, out of 84 “countries” (some not independent countries) about eight are party to the Hague Rules and also the Hamburg Rules. This shows that only about 70 states are still committed to the Hague Rules. By 1989 only 19 countries had become party to the Hague-Visby Rules. In Australia, for example, there was strong support for the adoption of the Hamburg Rules and the Government indicated that it preferred these. However, because these are not yet in force and because of strong opposition from shipowner interests, it proposed legislation for the Hague-Visby Rules and SDR (Special Drawing Rights) Protocol. These have been implemented first (taking Australia out of the Hague Rules regime). When the Hamburg Rules come into force, the Government may be able to implement them by proclamation. This is a compromise and a similar compromise may be reached in New Zealand. In the United States, the Carriage of Goods by Sea Act 1936, which implements the 1924 Hague Rules, is due for modernization and any moves by the Government to implement the Hamburg Rules may again be met with opposition by shipowner groups. The Government may have to compromise on accepting the Hague-Visby Rules and the SDR Protocol. In countries such as Australia and the United States, governmental acceptance of the Hamburg Rules will depend on the flow of trade between those countries and their trading partners which may have implemented these Rules.

By the end of 1991, 20 countries had ratified the Hamburg Rules. These include: Barbados, Botswana, Burkina Faso, Chile, Egypt, Hungary, Kenya, Lebanon, Lesotho, Morocco, Nigeria, Rumania, Senegal, Sierra Leone, Tunisia, Uganda and Tanzania.

The differences between the Hague-Visby Rules/Hague Rules and the Hamburg Rules are considerable, especially when it is realized that the former seem to assume that the carrier is not liable unless he fails to exercise due diligence to make the ship seaworthy. The Hamburg Rules presume that the carrier is liable for loss of or damage to or delay in delivery of the goods unless he proves otherwise. The change in burden of proof is important to carriers and shipowners and their legal advisers and P. and I. Associations. Perhaps this is the main reason why the Hamburg Rules have taken such a long time to come into force.

However, it must also be said that the Hamburg Rules do modernize the law of carriage of goods by sea to the benefit of the cargo interest and also, in some ways, the carriers. One criticism, mainly by shipowners’ lawyers, is that because the Hamburg Rules are not in force, there is little case law and precedent to support legal actions. This is a “Catch-22” approach, however, and it is most likely that the courts will mould the case law around the equitable and fair provisions of the Hamburg Rules.

In looking at the Hamburg Rules it depends from which viewpoint one looks, whether from that of the shipowner who has a greater burden of liability or that of the cargo interest, in developing countries, or that of the lawyer and academic.

It may be more valuable to attempt to summarize the major differences between the Hague-Visby Rules/Hague Rules and the Hamburg Rules. This is done below.

 

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