Nicola Mason Vice President Deputy Head of Syndicate SKULD (Far East)Ltd

Transcription

1 The Rotterdam Rules How Will They Affect Owners Nicola Mason Vice President Deputy Head of Syndicate SKULD (Far East)Ltd How Will The Rotterdam Rules Affect Owners? The Bad News Owners will lose some defences Take on greater limits of liability The burden of proof is more complicated. Some Good News Cargo interests have clearer obligations Better provisions for when cargo is abandoned Better provisions on deviation for Owners. 1

2 Main Changes Applies door-to-door. Not relevant, however, for owners and charterers not involved in pre/post sea-carriage Continuing obligation for keeping a vessel seaworthy, including due diligence throughout the sea carriage The nautical fault exclusion no longer an available defence Loss, etc. by fire caused by crew negligence no longer available as a defence Liability for economic loss resulting from delay beyond the agreed delivery time Main Changes Loss of the any other cause arising without the actual fault or privity of the Carrier defence. Increased package and weight limitation Changes to Deviation (Art 24) Where a deviation constitutes a breach of the carrier s obligations, it shall not of itself deprive the carrier of its right to rely on statutory and contractual defenses or limit its liability. How does this work? When you deviate you will not lose your right to limit provided you do not do it intentionally or recklessly in the knowledge that such loss would occur. Example Vessel loads iron ore at Haldia and sails for China. Owners intend to sell the vessel and deviate to Singapore for an inspection. Vessels sinks just off Singapore. Found as a matter of fact cargo liquefied. 2

3 Main Changes Changes in the burden of proof Some argue this has been improved for the Carrier as Shippers Load Stow & Count clauses will be upheld. Extension of Rules to Maritime Performing Parties e.g. stevedores and terminal operators, lashing companies Extension of Rules to Volume Contracts but with opt out options subject to limits A holder (controlling party) of a bill of lading or similar document may, during the carriage, re-direct a ship to another discharge port or order the cargo to be discharged for another party Main Changes The list of exceptions now contains the following:- Hostilities Armed conflict Piracy Terrorism Reasonable measures to avoid or attempt to avoid damage to the environment. Note for the Carrier to rely on the exceptions he must show absence of fault. 3

4 Owner s Exposure Continuing duty of seaworthiness/due diligence Under Hague/ Hague -Visby duty only applied before and at the beginning of the voyage Art 14 adds and during the voyage by sea What will the full consequences be? Will carriers have to better equip their ships with spare parts? Provide highly skilled crew for repairs mid-voyage? Will any minor breaches of ISM obligations be viewed as a rich source of material to allege unseaworthiness? Example Damage when seawater enters the hold through leaking hatchcovers Note the obligation to exercise due dilligence extends throughout the voyage. In reality unlikely to be any excuse for leaking hatch covers. ISM system is now A fertile ground for disputes. 4

5 Removal of negligent navigation defence Article IV, r.2(a) of the Hague and Hague-Visby Rules provided an exclusion of liability for any Act, neglect or default of master... or servants of the carrier in the navigation or management of the ship. That 1924 exclusion is gone The Rationale no good reason for its continued existence in 2009 I am sure most of us here can think of some good reasons! Undoubtedly will cause a significant change in approach to cargo claims Limits of Liability Increased. (Art 59) Loss or damage- greater of 875 SDRs per package or other shipping unit and 3 SDRs per Kg Hague -Visby limits are 666 and 2 respectively Hamburg limits are 835 and 2.5 respectively Clarifies position re containers- Art 59(2) Broadly, two year time bar remains- Art 62 Even after the two years time bar has expired one party may be able to rely on its claim as a defence for the purpose of set off against a claim by another party. Indemnity claims 90 days from the date of commencement of action against the Carrier. Time extensions can be given. 5

6 EXAMPLE Project cargo consisting of three pieces of drilling equipment weighing 10mt each. The freight rate is US$10,000 per piece. A piece is damaged when seawater ingresses the hold through leaking hatchcovers (which have been in poor condition for a long time). That damage is assessed at US$100,000. The package limitation for the claim for cargo damage. Hague-Visby Rules Article IV Rule 5(a) SDRs per package or unit, or 2 SDRs per kilogramme, whichever is higher. Consequently, the package limitation for 10mt piece will be 20,000 SDR (equivalent to approximately US $31,350.91). Rotterdam Rules Article 59(1) 875 SDRs per package or unit, or 3 SDRs per kilogramme, whichever is higher. Consequently, the package limitation for each 10mt piece will be 30,000 SDRs (equivalent to approximately US $47,026.37). 6

7 DELAY Economic Loss due to delay Limited to 2.5 times the freight EXAMPLE Vessel grounds due to error in navigation. The vessel has to be towed to the discharge port and arrives at the discharge port some 7 days after she should have arrived, causing the consignee significant economic losses (assessed at US$200,000 for the undamaged pieces) due to delays in starting the project. No delivery date was specified in the contract. 7

8 Limitation for economic loss Hague-Visby Rules Article IV Rule 5(a) Economic loss (if recoverable) is also covered by Article IV Rule 5(a) (in that it is loss or damage... in connection with the goods ); consequently, the limitation figures of SDRs per package or unit, or 2 SDRs per kilogramme (whichever is higher) also apply here. Rotterdam Rules Article 60 Liability for economic loss caused by delay is limited to two and a half times the freight payable on the goods delayed. This may not exceed the limit established under Article 59(1). The limit for each piece is therefore US$25,000. However, note that delay under Article 21 is ambiguously defined as occurring when the goods are not delivered...within the time agreed. What about cargo interests? Under previous regimes, obligations on shipper essentially limited to obligation not to ship dangerous goods Now a variety of obligations on shippers (Arts 27-34) Shipper is obliged to : Deliver cargo in such a condition that it can withstand the rigors of the intended carriage and will not cause harm to person or property. Shippers are obliged to give carriage instructions/ information to enable safe carriage of cargo. Shippers bear strict liabilities under the Rules in two situations Damage caused by dangerous goods Damage caused by inaccurate information provided by shipper for the compilation of transport documents. 8

9 Example Cargoes that can liquefy Shippers will have to ensure that they give accurate information on the transportable moisture limit. If the cargo does liquefy, Shippers are likely to be liable for the results Possibly, loss of the vessel, pollution, wreck removal, loss of life. Will this mean Shippers take out liability insurance for greater limits? Cargo interests obligations Obligations on consignees- see Arts Obligation to accept delivery Obligation to acknowledge receipt New Safeguards where Consignee fails to take delivery of the cargo Carrier can : inspect goods, store goods sell goods at the cost of the Consignee / goods Provided reasonable notice given Disputes may arise as to how to interpret reasonable notice. 9

10 Burden of Proof What does Article 17 say? Claimant is to prove loss, damage or delay Or an event or circumstances That caused or contributed to the damage Or that it took place during the carrier s responsibility Carrier then has to prove the cause was not attributable to its fault or the fault of any person referred to in Art 18. Or carrier can prove one or more of the exceptions outlined in Art 17 which follow Hague-Visby save for:- 1. errors of navigation, management pilotage of a vessel are not available 2. and see changes to fire defence where carrier s obligations to seaworthiness will extend to performing parties. The effect of this is that the carrier cannot rely on the fire defence if the person referred to in Art 18 caused the fire. Rotterdam Rules-Burden of Proof Article 17 Liability of the carrier for loss damage or delay Carrier relieved of all or part of its liability New wording in Art 17(2), (3), (4) and (5) Wording, especially Art 17(6) is ambiguous Does it apply only where some cargo is damaged due to carrier s fault, and some damaged not due to carrier s fault? Or where there are two contributing causes, is the carrier s liability to be apportioned? The English lawyers response is that it must be the former. Will Civil Law lawyers think the same? Lawyers in the USA may think differently. 10

11 Rotterdam Rules Burden of Proof An American View (Acknowledgement to Chester D Hooper ) Claimant has the burden to prove receipt by the carrier in good condition and delivery by the Carrier in damaged condition Carrier bears the burden to prove that the loss or damage was caused without its fault Or that it was caused by one of the exceptions Cargo interest bears the burden to prove that a fault of the carrier caused the loss or damage. Cargo interest might for example argue that an unseaworthy condition contributed to the loss or damage or that the carrier did not take proper care of the cargo Both parties would then bear an equal burden to prove the percentage of fault that should be attributed to each cause and this to each party. Rotterdam Rules Burden Of Proof An American view (Acknowledgement to Chester D Hooper ) Example If improper ventilation ( Carrier s fault) combined with Insufficient packaging( shipper s fault and an exception from liability), The Carrier would try to place as much blame as possible on the insufficient packaging Cargo interest would try to put as much blame as possible on the improper ventilation. If the Trier of Fact decided that insufficient ventilation was 40% to blame and Insufficient packaging was 60% to blame The cargo interest would recover 40% of their damages. 11

12 Conclusion Change Some treasured principles lost New terminology to get used to But not all bad news for Owners. 12