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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Specialist insurance products and services packaged for the international transport and logistics industry
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Your liability might sky-rocket
This is how it could happen…
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Example 1
A forwarder assumes liability for the international carriage of 1,000 i-Pads,
which are packed in 50 large boxes each containing 20 iPads. In each box of 20, each iPad is in an individual carton box. The forwarder subcontracts the road portion in Canada to a trucker who is involved in a road accident in which the entire consignment is destroyed. The forwarder’s house bill of lading lists in the column “Number of packages” the entry “1,000”. An iPad weighs 1.0 kilogram and has a value of CAD 500. The forwarder’s trading conditions limit his liability to CAD 4.1 per kilogram.
What is the forwarder’s liability under the Rotterdam Rules (1 SDR equals around CAD 1.5)?
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Forwarder’s trading conditions
- Weight limitation:
1000 kg * CAD 4.1 per kg = CAD 4,100
Rotterdam Rules:
- Weight limitation:
1,000 kg * 3 SDR per kilogram = 3,000 SDR = CAD 4,500
- Package limitation:
1,000 packages * 875 SDR per package = 875,000 SDR = CAD 1,312,500, i.e. the terminal is exposed to full value liability for the 1,000 iPads of CAD 500,000
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Entry Into Force
• Requirement for entry into force
• Signing Ceremony on 23 September 2009 in Rotterdam
List of states is updated on www.uncitral.org
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Application and Scope
• Contract of carriage
• Sea carriage or multimodal carriage with a sea portion
• International character of the carriage contract
• The contractual agreement, not the mode(s) of carriage in fact used
• Excluded contracts and application to certain parties
• Agent or principal in relation to the carriage contract
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Example 2:
Q: Road carriage from Moncton NB to Halifax NS, then sea carriage from Halifax to Antwerp and finally land carriage from Antwerp to Paris.
(assumption: the Rotterdam Rules are in force in Belgium, but not in Canada or France).
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Moncton NB Antwerp ParisHalifax NS
Example 2:
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Mandatory Character
• Principle of mandatory force of law
• Exceptions from the principle of mandatory force
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Thursday, 13 May 2010
Volume Contracts
Greater or lesser rights, obligations or liabilities
Definition
Requirements for the validity of a “Volume contract” agreement
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Carriage Documentation
• Contract particulars
• Identity of the carrier
• Goods presumed to be in “apparent good order and condition”
• Qualifying information
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Liability of the Shipper
• Shipper’s liability fault-based, but unlimited
• Documentary shipper
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Thursday, 13 May 2010
Dangerous Goods
Definition
Strict liability by the shipper and the “documentary shipper”
Carrier’s measures on goods that are or become a danger
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Thursday, 13 May 2010
Electronic Transport Records
• Electronic documents in the current transport/ shipping industry
• Electronic transport record under the Rotterdam Rules
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Delivery
• Consignee’s obligation to accept delivery, goods remaining undelivered (uncollected cargo)
• Delivery under the transport documents provided in the Rotterdam Rules
• Negotiable transport document
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Transport Documents
Surrender of transport documentation
required for delivery
Surrender of transport documentation not
required for delivery
Negotiable
transport documentation
Art 47 (1) RR
(“Order” bill of lading)
Art 47 (2) RR
(New type “Order” bill of lading)
Non-negotiable
transport documentation
Art 46 RR
(“straight” bill of lading)
Art 45 RR
(Sea waybill)
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Rights of the Controlling Party
• Rights conferred on the controlling party
• Identifying the controlling party
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Example 3:
A forwarder assumes liability for the carriage of goods from Canada to the UK. The forwarder concludes the carriage contract with the UK buyer. In the forwarder’s “straight” bill of lading, the Canadian seller is named as the “shipper” and the UK buyer as the “consignee”.
Just before the goods are scheduled to arrive in the UK, the Canadian seller informs the forwarder that he has sold the goods to a party in France (because there was a problem with payment by the UK buyer) and instructs the forwarder not to deliver the goods to the original UK buyer.
When the UK buyer is made aware of the seller’s latest instructions, it clarifies that it would sue the forwarder if the latter did not deliver the goods to it on arrival.
What should the forwarder do (assumption: the Rotterdam Rules are in force in all the countries mentioned)?
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
CAN
B/L
Seller
Example 3:
Buyer A
Buyer B
UK
Shipper
Rotterdam Rules
Consignee
B/LRotterdam Rules
Shipper Documentary Shipper
France
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Carrier’s period of responsibility
Art 12(1)
The period of responsibility of the carrier begins when the carrier receives the goods for carriage and ends when the goods are delivered
Art 11
The carrier shall carry the goods and deliver them
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Seaworthiness
Exercise due diligence to…
Rotterdam
…make and keep the vessel seaworthy
Hague-Visby
…make the vessel seaworthy
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Basis of Liability & Burden of Proof
- Cargo damaged in carrier’s
possession – 17(1)
- Not the carrier’s fault – 17(2)
- Defences apply – 17(3)
- Carrier’s Fault – 17(4)
- Unseaworthiness – 17(5)
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A Practical Guide to the Rotterdam Rules
Thursday 5 November, 2009
List of Defences
ROTTERDAM
Hague-Visbyxxxxxx
Error in navigationAct of God
Act of GodPerils of the sea
Perils of the seaWar, piracy, terrorism, riots, civil commot’n
Act of warxxxxxx
Act of public enemiesxxxxxx
Restraint of princes; public processQuarantine; Interference by governments
QuarantineStrikes
StrikesFire on the ship
Fire unless caused by actual fault or
privity of carrierLatent defects
Latent defectsActs of shipper etc
Acts of shipper etcFIOS agreement
xxxxxxWastage in bulk
Wastage in bulkDefective packing/marking
Defective packing/markingSOLAS
SOLASSaving property at sea
Saving property at seaEnvironmental damage
xxxxxxDangerous goods; Sacrifice for common
xxxxxxadventure
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A Practical Guide to the Rotterdam Rules
Thursday 5 November, 2009
Limits of Liability
Rotterdam Rules (whichever is the highest of)
• 3 SDR per kg• 875 SDR per package
Hague-Visby (whichever is the highest of)
• 2 SDR per kg• 667 SDR per package
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Delay
Compensation
2½ the freight – capped at SDR 875/SDR 3
Two Requirements
• Agreement• Economic Loss
What do they mean?
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Thursday, 13 May 2010
Breaking Limitation
“(…) a personal act or omission of the person claiming a right to limit done with the intent to cause such loss or recklessly and with knowledge that such loss would probably result.”
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Thursday, 13 May 2010
Time Bar
• Two years
• Applies to claims by either party
• Indemnity claim similar to Art III(6bis) of the Hague-Visby Rules
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Thursday, 13 May 2010
Misdelivery
• Probably within the scope of the Rotterdam Rules
• Is the carrier entitled to limit its liability?
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Multimodal Transport
• Basic principle: Rotterdam Rules apply to a contract for sea carriage or to a contract for multimodal carriage with a sea leg
• First exception: international conventions which are already in force when the Rotterdam Rules enter into force (Art 82 RR)
• Second exception: occurrence solely before or solely after the sea portion (Art 26 RR)
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Art 26. Carriage preceding or subsequent to sea carriage
When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay:
(a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to the goods, or any event or circumstance causing delay in their delivery occurred:
(b) Specifically provide for the carrier’s liability, limitation of liability or time for suit; and
(c) Cannot be departed from by contract either at all or to the detriment of the
shipper under that instrument.
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Example 4:
A forwarder assumes liability for “door to door” carriage from China and subcontracts the performance of the ocean voyage and the final land portion. Will the Rotterdam Rules increase the forwarder’s liability if the goods are damaged during the final land portion:
(4.1) Vancouver – Edmonton
(4.2) Long Beach – Oklahoma City
(4.3) Antwerp - Paris
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Art 26. Carriage preceding or subsequent to sea carriage
When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay:
(a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to the goods, or any event or circumstance causing delay in their delivery occurred:
(b) Specifically provide for the carrier’s liability, limitation of liability or time for suit; and
(c) Cannot be departed from by contract either at all or to the detriment of the
shipper under that instrument.
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Example 5
Q. A carrier undertakes carriage of a chemical liquid in a tank container first by road from the Netherlands to Belgium, then by sea onwards to Canada.
On arrival in Canada, the chemical liquid was declared a total loss as it got gradually polluted by the residues of the cargo that was previously in the tank container.
Under which rules is the carrier liable (assumption: the Rotterdam Rules are in force in all the countries mentioned)?
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Thursday, 13 May 2010
Example 5:
Belgium USAThe Netherlands
Pollution
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Thursday, 13 May 2010
Art 26. Carriage preceding or subsequent to sea carriage
When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay:
(a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to the goods, or any event or circumstance causing delay in their delivery occurred:
(b) Specifically provide for the carrier’s liability, limitation of liability or time for suit; and
(c) Cannot be departed from by contract either at all or to the detriment of the
shipper under that instrument.
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Example 6
A machine is carried first by lorry from France to Antwerp, then by sea from Antwerp to Halifax NS and, due to urgency, finally flown from Halifax to Boston.
During the initial road haulage in Europe, rough driving weakens some bolts, but the machine remains in one piece. While being loaded on board an airplane at Halifax airport for its final leg to Boston, the machine is handled in a rough manner and, already weakened by the vibrations during the road haulage in Europe, falls to pieces.
Under which liability regime is the carrier liable (assumption: the Rotterdam Rules are in force in all the countries mentioned)?
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Thursday, 13 May 2010
Damage 1
France
Example 6
CanadaBelgium USA
Damage 2
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Art 26. Carriage preceding or subsequent to sea carriage
When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay:
(a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to the goods, or any event or circumstance causing delay in their delivery occurred:
(b) Specifically provide for the carrier’s liability, limitation of liability or time for suit; and
(c) Cannot be departed from by contract either at all or to the detriment of the
shipper under that instrument.
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Maritime Performing Parties
Principle of “Same liability as the Carrier”
Definition of “Maritime performing party”
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Thursday, 13 May 2010
Defintion of “Maritime performing party”
Article 1(7)
“Maritime performing party” means a performing party to the extent that it performs or undertakes to perform any of the carrier’s obligations during the period between the arrival of the goods at the port of loading of a ship and their departure from the port of discharge of a ship. An inland carrier is a maritime performing party only if it performs or undertakes to perform is services exclusively within the a port area.
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Carrier
Shipper
RRRR
Liability joint & several
Not RR
Terminal 1
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Thursday, 13 May 2010
Defenses available to a “Maritime Performing Party”
The Rotterdam Rules give the shipper a sword against the
Maritime performing party, but they also give the Maritime
performing party a shield against the shipper.
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Example 6
A forwarder assumes liability for the carriage of a machine “door to door” from the USA to Hong Kong and instructs a Hong Kong terminal to handle the goods on arrival at the Hong Kong port.
A stevedore, who is employed by a subcontractor of the Hong Kong terminal, in an act of negligence, drops the containerised machine, which is deemed a total loss. Cargo insurers sue the forwarder in contract and the Hong Kong terminal, the terminal’s subcontractor and the stevedore in tort.
Which of the four defendants can rely on Rotterdam Rules liability limits (assumption: the Rotterdam Rules are in force in the USA and in Hong Kong)?
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Example 6
Claim
NVOCC (Rotterdam Rules: carrier)
Rotterdam Rules Claim
Shipper
Terminal (RR: maritime performing party)
Terminal’s sub-contractor (RR: maritime performing party)
Stevedore
“Himalaya” type protection under
Art 4 RR
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Thursday, 13 May 2010
Legal actions outside the Rotterdam Rules
The Rotterdam Rules do not apply to Terminals which do
not “perform or undertake to perform any of the Carrier’s
obligations”.
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Thursday, 13 May 2010
Carrier
Shipper
Terminal 2
Not RR
RRRR
Liability joint & several
Not RR
Terminal 1
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Thursday, 13 May 2010
Legal actions outside the Rotterdam Rules
The Rotterdam Rules do not apply to legal actions by the
Terminal against the Shipper
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Carrier
Shipper
RRNot RR
Terminal
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Legal actions outside the Rotterdam Rules
The Rotterdam Rules do not apply to recourse actions
between Carrier and Terminal
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
Carrier
Shipper
Terminal 2
Not RR
RRRR
Liability joint & several
Not RR
Terminal 1
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Thursday, 13 May 2010
Effects of Volume Contracts on “Maritime Performing Parties”
Terminals as Maritime Performing Parties are not parties
to Volume Contracts, but a volume contract between the
Shipper and the Carrier can affect the Terminal indirectly
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Thursday, 13 May 2010
Carrier
Shipper
RRRR
Terminal
Volume contract
Act 19(2) RR
Liability
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Thursday, 13 May 2010
Jurisdiction and Arbitration
• Jurisdiction
• Arbitration
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Thursday, 13 May 2010
Example 7
A forwarder assumes liability for carriage “door to door” from Canada to the United Kingdom. The forwarder subcontracts the UK land carriage to a haulier who trades under the UK Road Haulage Association (RHA) conditions. After the UK haulier damages the goods, the forwarder is sued by cargo interests.
Might the forwarder fall into the liability gap (assumption: the Rotterdam Rules are in force in Canada and in the UK)?
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Thursday, 13 May 2010
Moncton NB
Example 7
Halifax London Bristol UK
Rotterdam Rules
RHA
London
CMR
CMR
Damage
Damage
Bristol UKHalifaxMoncton NB
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Thursday, 13 May 2010
What amendments to transport documents and contracts
will be required when the Rotterdam Rules become law?
•Freight forwarding conditions and framework contracts
•Sea carriage and multimodal transport documents
•Terminal operator conditions and service agreements
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Rotterdam Rules – Your liability might sky-rocket
Thursday, 13 May 2010
So – are the Rotterdam Rules good for
forwarders?
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