The Rotterdam Rules, a recent United Nations Convention on the carriage of goods by sea, as yet, is unsigned and unenforced by many Arab countries including the UAE. The question exists as to whether ratifying the convention is unfavourable for Arab countries given the nature of trading activity in the Arab region.
International agreements and conflicts of interest for signatory states
In maritime conventions, conflicts of interest commonly arise amongst shippers and carriers, and the countries respectively carrying out these activities. Shipping countries, predominantly made up of Arab countries, generally do not own large fleets or major shipping lines to undertake maritime transport, relying instead on import and export operations. Wealthier western countries on the other hand i.e. Europe, America, China, etc. commonly do own fleets and major shipping lines for the transportation of goods from country to country.
Shipping disputes
By their nature, shippers, carriers, shipping countries and transporting countries all have their own interests as a priority, commonly at the expense of the others. The risks surrounding the signature and ratification of international agreements are mainly associated with the way local courts handle maritime disputes that arise between shippers and carriers.
Shipper's interests
In such disputes, shippers will seek to assert their rights and recover their fees for shipments they have made in the event there is shortage, damage or total/partial loss of or to goods shipped, by proving that such shortage, damage or loss took place during the transportation of goods from the port of shipment to the port of destination. This places liability on the carrier of the goods, and in court, where this is proven, they will order the carrier to pay for the goods, wholly or partially, together with compensation.
Carrier's interests
On the other hand, carriers arguably attempt to alleviate any responsibility or liability for the shortage, damage or total/partial loss of goods by placing clauses within international conventions. One such example is a clause for limitation of liability for accidents, however more commonly we are seeing new clauses seeking to protect carriers from liability for other reasons.
The issue remains that there is a conflict of interest between shippers and carriers, and the countries carrying out these activities. Many Arab countries, by nature of trade, are predominantly engaged in import and export activities as opposed to owning fleets to carry out the transportation of these goods. The existence of shipping agencies within the respective shipping countries representing major shipping lines worldwide does not mean that the country is a carrier, as these agencies are only agents holding shares or interests in shipping lines owned by other countries. Therefore countries such as the UAE, that do not own shipping lines should scrutinize any international conventions prior to having the same signed and ratified in order to safeguard their interests against the risks involved.
The 1978 Hamburg Convention governing the carriage of goods by sea is currently valid and is ratified by the UAE. Under the convention, carriers are liable for shortage, damage and loss of goods under the principle of "presumed fault of carrier". As long as it is proven that the carrier received the goods from the shipper at the shipping port, and that the freight charges have been paid, the carrier becomes legally liable for any shortage, damage or total/partial loss of goods from the date of receiving the shipment until it reaches the destination port, even until the cargo has been delivered to the consignee. Liability is also enforced against carriers under UAE Maritime Law No. 26 of1981. Article 272 states:
- The carrier is obligated to take necessary care before and during the voyage to ensure the ship is navigable and to rig, crew and service the ship satisfactorily and to prepare the cargo decks, the cold chambers and other compartments of the ship for receiving, transportation and safekeeping of the goods.
- The carrier shall also take necessary care to freight, store, stow, put into lines, transfer, keep, and discharge and deliver the goods.
The general wording of the UAE Maritime Law is derived from rules of civil law in respect of contractual agreements and the rules of limitation of liability. The carrier is obligated to deliver the goods they receive, ship the goods aboard a vessel, and deliver them to the consignee at the port of destination in sound condition, without damage, shortage, or loss. In fact, this is the main role and legal obligation of the carrier. These rules favour shippers, most of which are developing countries and it is arguable that the Rotterdam Rules have not taken this factor into consideration, with certain rules being in favour of carriers. This principle doesn't apply in the case of damage to goods by fire, as the burden of proof lies with the shipper. This is a disadvantage of the Hamburg Convention for shippers.
Nevertheless, the Hamburg Convention is still deemed by many to be more favourable than the Rotterdam Rules, as within these rules this principle is fully removed. Article 17 of the Hamburg Convention exempts carriers from any responsibility for loss, damage or delay of goods, unless the shipper proves the carrier's responsibility, which is very difficult to do and can result in the shipper losing their rights entirely. How can shippers prove that the carrier should be responsible for the safe care and delivery of goods when the goods are in the possession of the carrier as soon as they leave the port? surely this burden of responsibility should be borne by the carrier in possession of the goods? If rules such as this are applied in international conventions it is arguable that they are inequitable, favouring one party over another. Arguably, this would also cause significant damages to countries engaged in shipping activities, such as the UAE and other Arab countries.
Current issues for shippers under the Hamburg Convention
The Hamburg Convention, although less carrier protective, still causes trouble for shippers in the courts in the case of damage to goods during transportation due to fire. This is because the courts commonly refuse claims by shippers against carriers because of their inability to prove that the fire occurred as a result of negligence on the part of the carrier. From the shipper's perspective, this aspect of the Hamburg Convention arguably removes the shippers right to compensation due to loss, damage or shortage of goods, thus relieving the carrier of liability.
Unfair burden of proof for shippers under the Rotterdam Rules
The Rotterdam Rules basically relieve carriers of their responsibility for goods in generalin the event of loss, damage or shortage on delivery. Instead in places the burden of proof on the shipper and it's safe to say that, as the shipper was not onboard the vessel during the course of transportation of goods it is impossible for the shipper to prove any shortage, loss or damage to the goods, this information lying solely with the carrier. In the event of a dispute in the courts under these rules the courts would likely dismiss the shipper's claim against a carrier as they would not be able to prove or suitably substantiate the carrier's liability.
The Rotterdam Rules go even further to relieve carriers from liability by shortening the period in which shippers can make a claim for the loss or damage of goods before the courts. Under this convention the shipper only has seven working days from confirmation of delivery of goods to file a claim for loss or damage. This may be difficult depending on the nature of the goods and whether the loss or damage is easily assessed. By comparison, under the Hamburg Convention, the timeframe is fifteen days from confirmation of receipt of goods. The Rotterdam Rules also shorten the period for claims against carriers for delay of goods to 21 days from receipt of confirmation of delivery. Under the Hamburg Convention the period is 60 days.
A final blow to shippers is that the Rotterdam Convention requires each signatory state to withdraw from the 1924 Brussels Convention on Bills of Lading, as well as the currently ratified 1978 Hamburg Convention referred to in this article, basically replacing these conventions.
Based on the arguments above it can be concluded that the Rotterdam Rules prejudice the legal rights of shippers in favour of carriers. Within the courts, it will be very difficult for shippers to recoup their losses for damage, loss or delay to goods to consignees against carriers. Should countries mainly engaged in shipping activities sign on to the Rotterdam Rules? Probably not.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
