Clear Definition of Shipping Laws - Essay Example

Shipping laws Introduction There is no clear cut definition as to what constitutes ‘dangerous goods’.Article 13(2) of the Hamburg Rules, read with Article 4(6) of the Hague-Vishy Rules terms it as “goods of an inflammable, explosive or dangerous nature” (Damage from Goods in Sea Carriage: The sender’s liability against the Carrier and the other Owners of cargo on Board (2001) (Segolson, 2001). Another important aspect regarding dangerous goods could be gained from the IMDG Code but these also give more prominence to what kind of items dangerous goods and how they could be dealt with rather than expounded about dangerous goods and the damages they are capable of perpetrating on the high seas. In the case of dangerous goods, it needs to be distinguished whether the inherent constituents of the goods are dangerous, thereby possessing damaging qualities , or under set of circumstances, in combination with other extraneous and internal agencies, it is capable of causing fire, corrosion, explosions, diseases etc. Under English law, there is an implied clause in a contract of sea carriage that the goods are seaworthy per se, and dangerous goods would not be shipped. English laws do not concern themselves with the classification or class of dangerous goods, but is more interested in whther there is a real threat that dangerous goods may bring about. It could be said that dangerous goods need not be shipped except with the expressed consent and acceptance of all the concerned parties to the contract. From the viewpoint of the carrier, the dangerous goods are those which are capable of causing physical and material damages and or/losses. It needs also to be said that dangerous elements in a particular cargo need not be presupposed, and therefore, the possibility of cargo turning dangerous is a real phenomenon. It is really the Shipper who has intimate knowledge about the goods, and the fact that there is latent danger present in the goods. It is necessary for him to disclose this to the carrier or charterer, if he has reasons to believe tht the goods were, are or may become dangerous and also have it noted it in the Bill of Lading and labelled. The Carrier is responsible for damages, if he or his crew has acted negligently or without sufficient care or prudence, but he may not be able to physically know what the contents of the container are, except what is informed to him. The Charterer has almost the same knowledge about the cargo, as the carrier, and can be only held responsible if there is a breach of contract, or a differentiation in the handling of the cargo, which is a contributory factor for the damages. The holder of the Bill of lading is not a party to the original contract and is not a de facto owner. He holds the BoL as security for the execution of the contract, and has no real interest in, or possession of the cargo. The different elements of the liabilities of the constituents of the shipping shall be discussed in greater length during the course of this study. When it comes to transporting goods by sea, there are many entities who shoulder various responsibilities in the safe shipment and delivery of goods. The transport of dangerous goods through sea is subject to various rules and regulations. This is because goods that are transported by sea can cause damages to the environment, and also can prove dangerous on many other accounts. However, some of the rules are flouted by entities such as the carriers or shippers and often complaints against such entities are common. Hence, each entity has been bound by specific rules, in order to contain their activity and motivate them to operate strictly within the rules of international conventions. Even though there are international rules and regulations in place that govern shipping activities, each country may have its own rules and regulations that determine shipping and transport activities. When dangerous goods are being transported, various rules and regulations apply to all the entities that are involved in the transport of such goods. For example, carriers, shippers, chartering agencies and the bill of lading holder are all covered under the law. These entities may either be covered under specific laws that are enforced by countries. They are also covered by international laws and regulations. Liability of the carrier for the shipment of dangerous cargo According to the United Nations Convention on the Carriage of Goods by Sea, which is also called The Hamburg Rules, the carrier has specific responsibilities while transporting goods by sea. These laws are also applicable when dangerous goods are carried by the carrier.” The implied duty under English common law extends to unlawful cargo that is likely to subject the ship to unusual delay due to arrest or detention (Konynenburg, 2003). In the decided case law the cargo could not be unloaded at Piraeus, Greece without the permission from the permission from the British Government. The permission was denied as a result of which the ship was delayed, and a cargo of foodstuff got rotten and had to be jettisoned causing losses to the sender. (Damage from Goods in Sea Carriage: The sender’s liability against the Carrier and the other Owners of cargo on Board (2001) (Segolson, 2001). The scope of the rules that are applicable to the carrier merits consideration According to this convention, the carrier is responsible for the goods that it transports for the period during which it is in charge of the goods. The carrier is responsible for the goods once it comes under its control at the port of loading, during the carriage and at the port of discharge. The carrier is also responsible for the goods from the time the goods have been taken delivery of and until the time the goods have been delivered. In case the consignee is not available, the carrier is responsible until the goods are placed at the disposal of the consignee in accordance with the contract or with the law. The responsibility of the carrier is over once the goods have been delivered to an authority who has been assigned to receive the goods. The carrier is liable for loss or damage to the goods if the claimant can prove that the damage was caused because of the neglect of the carrier. Similarly, the carrier is also responsible if it can be proved that the carrier did not take adequate steps to safeguard the goods according to the guidelines issued when the goods were entrusted to the carrier. However, the carrier will not be responsible for the goods if loss or damage resulted from measures to save life or property at sea. (UN, 1978). The position of UNCTAD (United Nations Contract on Trade and Development) in the transport of dangerous goods by carriers must be mentioned here. According to Art. 12, Variant A, a carrier can refuse to carry dangerous goods. In addition, the carrier is also entitled to jettison the cargo or destroy it once it becomes known that the cargo can cause damages to the environment. This means that the carrier would not be liable even if destroyed goods because of its dangerous nature. The carrier can jettison dangerous cargo without compensation, even in cases where, for instance, the vessel was unseaworthy due to negligence of the carrier. It may be seen from the above rules that the carrier has the discretion to deny or allow loading of goods once it is known that the goods are dangerous in nature. This follows that the carrier, who is responsible for the safe maintenance of the dangerous goods also must ensure that it is has sufficient facilities for the safe upkeep and transport of such goods. However, if the carrier fails to safeguard the goods in spite of knowing that the goods that it is transporting are of a dangerous kind, it may be liable under the laws of the land. Liability of the shipper for the shipment of dangerous cargo The liability of the shipper is less complicated than that of the carrier. According to the general shipping rules as proposed by the UN, the shipper is not liable for loss sustained by the carrier, or for damage sustained by the ship, unless it may be proved that the loss or damage was caused because of the fault or negligence of the shipper or its associates. This makes it clear that it is the responsibility of the carrier to ensure that the goods that it is carrying are safe and not dangerous to the environment. In the case of dangerous goods, the rules and regulations of the UN states that the shipper must mark or label dangerous goods so that it may be understood that the cargo needs safe handling. In addition, it is the responsibility of the shipper to warn the carrier that the goods in question are dangerous with regard to its content. The shipper also must take the necessary precautions to ensure that the goods that are being transported may not cause harm to the environment or the ship as such in case the carrier fails to do so. In addition, the goods may be destroyed without compensation if the carrier deems it fit to destroy it. It is also interesting to note that according to Article IV, rule 3 of the Hague Rules, a shipper is only liable for loss sustained by the ship or the carrier in case of neglect or fault on its part. However, in the case of dangerous goods, Article IV, rule 6 imposes strict liability on shippers when they try to ship goods. In addition, the shipper is also required to explicitly provide documents stating that the goods in question are dangerous. If the shipper fails to inform the carrier that the goods are dangerous, it may be liable to penal action if the goods cause environmental damage. In the decided Case law, Acates V Burns, maize was shipped in, prima facie, good condition. However, during the course of the voyage, it developed dangerous conditions, and had to be jettisoned. Held, the shipper was not held responsible since he did not have the prior knowledge that the maize would spoil. Damage from Goods in Sea Carriage: The sender’s liability against the Carrier and the other Owners of cargo on Board (2001). (Segolson, 2001). Liability of the charterer for the shipment of dangerous cargo The case of liabilities for the charterer requires further analysis. In most cases the charterer is considered as par with the shipper. The time charterer is by its nature, a private contract. This means that in most cases the liabilities of the chartered arises from the contract of the charter itself. Over the years, certain standards and forms have been developed to govern the charterers responsibilities in the time charter relationship. Many of them are similar in the way it is used for the allocation of responsibilities between the ship owner and the charterer. Usually the time charterer does not carry as much risk and liability as the owner of the ship or the carrier. The carrier has to ensure the safety of the charterers goods and the charterer in return has to ensure that the goods are safe for transport. (Tony, 2004). “Charterers will be in breach if they load cargo falling within such clauses or if they fail to treat it before shipment in the manner stipulated by the contract. If the Master consents to the cargo knowing it is dangerous, owners will not be bound by his consent unless they also consent. The position is different under the Hague Rules. If they are incorporated into the charter party, the Master has implied authority to bind owners by his consent to the cargo. If charterers are in breach, owners may be entitled either to reject the cargo or terminate the contract (unless they have affirmed the contract by consensual words or conduct).” (Konynenburg, 2003) In the English case law, Royal Greek Govt V.Minister of Transport, a coal cargo was loaded onto a vessel and due to the inherent nature, later, it spewed explosive gas. During the repair on the ship, a spark ignited the gas causing damages. Held, since the precipitating cause of the fire was the spark and not the gas leak, the charterer was not held liable for damages. (Segolson, 2001). Liability of the bill of lading holder for the shipment of dangerous cargo Under the Carriage of Goods by Sea Act (1982), the holder may not have any liability under the bill of lading. This is because of the primary reason that the holder holds ownership to the goods, and not its possession. In normal business transactions, the indorsees of the Bills of Lading are generally banks, who hold the instruments, as security for loan or under a Letter of Credit arrangement. It would be farfetched to consider the bank claiming possession of the goods, in which case, the risk of liability would be higher than when possession was not claimed. In the case of losses/damages caused by the shipment of dangerous cargo, the holder bank could proceed for its recovery, against the party to whom it has advanced credit. In the decided Case Law of Sewell V. Burdick, the shipowners booked legal action against the indorsees of a bill of lading, contending that the liability has accrued to the indorsees u/s 1 of the Act 1815. Held, the indorsees were not liable since they were not “parties to the original contract of carriage” and had only taken the bill of lading as collaterals for loan advanced. (Burdick 1884). The bill of lading inherently carries certain provisions that can classify goods as dangerous or not. Since the bill of lading contains such information as the owner of the goods and the destination where the goods are meant for, it satisfies some of the preliminary conditions of safety and responsibility as mandated by law. The bill of lading document must contain the information about the dangerous elements in the cargo and the special methods in which it would have to be handling during the shipment. . (UN, 1978). It is clear from the above list that the bill of lading will provide a clear picture of the nature of the goods that are provided to the carrier by the shipper. This list will serve to warn the carrier about the inherent nature of the goods that are proposed to be transported in it. This also to some extent removes any ambiguity in terms of who the shipper is and clears the credentials of the shipper. Relevant International Sea Carriage Conventions: Liability for the shipment of dangerous cargo and damages caused by it : Liability of the Shipper Under Article 13 – Special rules on dangerous goods of the Hamburg Rules 1978, it is essential that the shipper should make out and delineate “Dangerous goods as dangerous” (United Nations Convention on the Carriage of Goods by Sea 1978). (1)Under this law, it is necessary that the shipper or the actual shipper should caution the Carrier regarding the dangerous nature of the goods and the necessary safeguards to be taken, to avoid an eventuality. If, either knowingly or unknowingly, he does not do so, and the shipper does not do so, and if the carrier does not have cognisance of it, too then, (i) The shipper is liable to the company for the loss that arises from such shipments (ii) The said goods may be deciminated, annihilated or rendered harmless, according to the demands of the situation and there would be no compensation payable. (iii)However, if the shipper has prior cognisance of the nature of the goods, the facts presented in (1) above do not apply. Again, in the case of 1 (ii),where the goods can be destroyed without paying any compensation, except where there is a responsibility to”general averages or where the carrier is liable in accordance with the provisions of Article 5” ( United Nations Convention on the Carriage of Goods by Sea (The Humburg Rules ) Hamburg : 1978 Liability of the Carrier Under Article 4 of the Hamburg Rules 1978, the goods are professed to be in the safe custody of the carrier and he is held responsible for it from the initial port of loading, during the course of its transportation, till the port of its destination. He is also liable for any losses, damages or belated deliveries of the cargo, unless he can prove, beyond reasonable doubt, that he and his crew took all possible efforts to avoid such occurrences and was outside their control and jurisdiction. Liability could accrue “from the fault or neglect on the part of the carrier”. Where the fault on the part of the carrier could comprise of losses, damages and belated deliveries and other incidental causes, the carrier is only responsible for delivery losses attributable to such fault or neglect. (United Nations Conventions on the carriage of Goods by Sea. 1978). The case of the Giannis NK (1994) which throws light on the physical dangers posed by cargo is next taken up for study. It relates to a cargo of groundnuts on board a ship which became swarmed with Khapra beetles, rendering it not only unfit for consumption, but also became a threat to other cargoes also. The ship had to be quarantined which further, delayed its onward voyage. Subsequently, only two options were available for the affected cargo, constituting both groundnuts and also other affected cargoes. Either it had to be jettisoned or it had to be send back to the country of its origin. After consultations, it was decided to jettison the affected goods. The house of Lords while passing judgement, ruled that the cargo was physically dangerous. In the words of the learned judge, “the rejection and subsequent dumping of other cargo on board the same vessel seems to me a natural and not unlikely consequence of shipping Khapra infected cargo which is thus dangerous in the sense of being liable to give rise to loss of other cargo shipped in the same vessel It therefore conclude that the groundnut shipped by the (shippers) were ‘goods of a dangerous nature under Art IV, r6 of the Hague Rules.” . (Segolson 2001) Part B: The recently introduced Brussels regime is an example of an instrument which is effective in more than one country, depending upon its adoption by the country, and is yet not termed as a treaty. The mutual understanding among the various forms of execution of judgements regime which is implemented by many Commonwealth Countries and is enforced in other countries by laws and all these are achieved without the signing of treaties. Sometimes, it may happen that there could be an area of ambiguity between the Convention and any local piece of legislation of a country, which may, or may not give rise to area of conflicts. However, it needs to be emphasized, in this context, that the Convention does not seek to govern the internal mechanism of countries for the acceptances or enforcement of domestic pronouncements in another country. For instance, the New York judgement need not be enforceable in Queensland, New South Wales and similarly, a decision pertaining to Queensland need not be enforced in New York. It is best left, in the hands of the local regulators to enforce or abstain from enforcing such judgements. This gesture provides a very important aspect about the cross border enforcement of jurisdiction and enforcement of judgements. The Convention does not wish to control the internal allocation of compliance between the Courts, even in the case of its apportionment between the State and Federal. This apportionment of compliance between State and Federal powers and the place of jurisdiction is determined by a natural process of laws of the contracting states. The conflict areas that may arise could be as follows: 1. The Convention provides for a particular State X to exercise jurisdiction, but under other arrangements, State X is debarred from exercising jurisdiction or had to decline jurisdiction. 2. The Convention may require State X, restraining itself from exercising jurisdiction, but another arrangement provides for State X to exercise it. 3. The Convenion requires that the contracting state has exclusive jurisdiction under the proper convention but treaties prohibit the use of such jurisdiction. 4. The Convention provides for state X to refuse to exercise jurisdiction under Art 21 /22 or Art 4, but the arrangements provide for State X to exercise it. 5. State X and Y are both signatories to conventions for judgments passed in Courts of State X to be validated in State Y, which is also enforceable by other treaties, but the procedures may be different and may pose difficulties in enforceability. Therefore, the following conditions may be present: 1. The judgement may be enforceable in State B, but may not be enforceable by other arrangements. 2. The judgement may be enforceable in state B by other arrangement, but may not be enforceable by convention. 3. Although the judgement may be enforceable in State B through other arrangements, its use may be banned in State B, since it was decided on the Black list basis of jurisdiction in the Court where the judgment was first passed, or due to the fact that some other contracting State has total jurisdiction over this. 4. Its enforcement is applicable in State B both under convention and local arrangements, but the procedure for enforcement is different, which makes one arrangement more beneficial to the judgment holder than the other. It is believed that where 2 or more Contracting States have voiced that there is a valid agreement of enforceability between them, under which the judgements pronounced in one State could be validated or used in another, by virtue of the convention or arrangement, at the behest of the party seeking its usage and validation. However, where the state of origin of the arrangement and the state in which the person seeks its enforcement are parties to the agreement, the enforcement by the convention may be denied, although the Agreement ratifies its jurisdiction. Coming to the aspect of the International Convention for Unification of certain Rules relating to the arrest of the seagoing ships 1952, with relevance to the arrest and attachment of ships for realization of maritime dues. Under Article 2 of the said Act, it is said that a ship may be arrested in the jurisdiction of any of the contracting states, but with respect to no other claims, other than settlement of maritime claims. Further, a ship can be placed under arrest only once for settlement of a maritime claim. by the same authority. Any arrest of the ship for the second time for the same offence by the ship-owner would be null, void and unenforceable. It is further said, under Art 3, that the claimant may arrest either the ship” in respect of which the maritime claim arouse, or any other ship which belongs to the same ship owner, in this case the ownership being determined by the facts that all the shares relating to the ship are owned by the same owner. Next, we come to the most important aspect of the study. The interaction between the Brussels regime on jurisdiction and enforcement of judgements and the International convention for unification of certain rules relating to the arrest of sea going ships 1952. This refers to seizing the property of the ship for settlement of maritime dues. It could be said that, in both Article 6 of the Act and also Brussels Convention, it is found that all matters related to the arrest and costs of bailing out the ship upon seizure, or its imminent arrest, provision of security for release and other costs falls within the jurisdiction of the law of the Contracting State in whose jurisdiction, the arrest was enforced or demanded. Thus, the jurisdiction of the Courts of the country in which the arrest took place shall be deemed to be the deciding and jurisdictional authority. Further, Article 8 further specifies that the Covenants of the Convention apply to any ship that belongs to the contracting state within the territorial waters of the contracting state. Any ship which belongs to a non-contracting country, may be arrested in the territorial jurisdiction of any contracting state. Works cited United Nations Convention on the Carriage of Goods by Sea. (1978). Hamburg. [online]. Last accessed 16 July 2007 at: http://www.jus.uio.no/lm/un.sea.carriage.hamburg.rules.1978/doc CARRIER LIABILITY AND FREEDOM OF CONTRACT UNDER THE UNCITRAL DRAFT INSTRUMENT ON THE CARRIAGE OF GOODS. (2004). [WHOLLY OR PARTLY] [BY SEA]. UNCTAD. Last accessed 16 July 2007 at: http://72.14.235.104/search?q=cache:IWlLY2GCqhkJ:www.unctad.org/en/docs/sdtetlb20042_en.pdf+liability+of+the+carrier&hl=en&c (accessed July 16, 2007). Nunes, Tony. (2004). Charterers liabilities under the ship time charter. Houston Journal of International Law. [online]. Last accessed 16 July 2007 at: http://goliath.ecnext.com/coms2/summary_0199-763484_ITM Konynenburg, Fred. (August 2003). Shipping & International Trade. Updates. [online]. Last accessed 16 July 2007 at: http://www.middletonpotts.co.uk/library/default.asp?p=93&c=414 Burdick, Sewell V. (1884). House of Lords. [online]. Last accessed 16 July 2007 at: http://ourworld.compuserve.com/homepages/pntodd/cases/cases_s/sewell.htm United Nations Convention on the Carriage of Goods by Sea. (30 March 1978). (The Humburg Rules) Hamburg. UN. [online]. Last accessed 16 July 2007 at: http://www.jus.uio.no/lm/un.sea.carriage.hamburg.rules.1978/doc United Nations Conventions on the carriage of Goods by Sea. (1978). Hamburg Rules. [online]. Last accessed 16 July 2007 at: http://r0.unctad.org/ttl/docs-legal/unc-cml/CARRIAGE%20OF%20GOODS%20BY%20SEA%20HAMBURG%20RULES%201978.pdf Segolson, Mats. (2001). Damage from Goods in Sea Carriage: The sender’s liability against the Carrier and the other Owners of cargo on Board. Last accessed 16 July 2007 at: http://www.juridicum.su.se/transport/Forskning/Uppsatser/segolson.doc Read More