309
1 INTRODUCTION
The‘UnitedNationsConventiononContractsforthe
InternationalCarriageofGoodsWhollyorPartlyby
Sea’ (the ‘Rotterdam Rules’) was adopted by the
General Assembly of the United Nations on 11
December2008. The SigningCeremony was heldon
23September2009,withimmediatepositiveresponse
from va
rious nations who have become the
Signatories.Atthetimeofwriting,Spain,Congoand
Togohave ratified.
3
The RotterdamRules will come
into force within a year after ratification by the
twentiethnation.
4
However, as canbe observed, the
processofratificationhasbeenslowovertheperiod
3
SeeUnitedNationsTreatiesCollection
<https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtds
g_no=XI‐D‐8&chapter=11&lang=en>accessed11June2014.
4
Article94.
ofalmostsixyearsandcountrieswhichhaveratified
the Rotterdam Rules so far are not countries with
shipping influence. They do not own large
commercialfleet.OnewouldhopethattheRotterdam
Rules can mark the end to a long journey of hard
work–startedin1990sasajointprojectoftheUnited
NationsCommissionontheInternationalTradeLaw
(UNCITRAL)andtheComiteMaritimeInternational
(CMI).
5
The world waits for the day it comes into
force with excitement since throughout the entire
history of international legal regimes governing
international transportation of goods by sea, a
uniformity of international rules has never been
achieved. Draftsmen of the Rotterdam Rules were
5
KirvalL.2012EuropeanUnion’sStanceontheRotterdamRules
TransNavInternationalJournalonMarineNavigationandSafetyatSea
Transportation6:555‐562.
Enhancing of Carriers’ Liabilities in the Rotterdam
Rules – Too Expensive Costs for Navigational Safety?
P.Sooksripaisarnkit
SchoolofLaw,CityUniversityofHongKong
ABSTRACT:TheUnitedNationsConventiononContractsfortheInternationalCarriageofGoodsWhollyor
Partly by Sea (the ‘Rotterdam Rules’) was adopted by the General Assembly of the United Nations on 11
December2008. The Rotterdam Rules contain two oft‐criticised changes from the existing regime governing
int
ernationalcarriageofgoodswidelyadoptedamongmaritimenations,namelytheInternationalConvention
fortheUnificationofCertainRulesRelatingtoBillsofLading,Brussels,25August1924(the‘HagueRules’)
and its subsequent Protocol in 1968 (the ‘Visby Protocol’ or the ‘Hague‐Visby Rules’). These changes are,
namely,anextensionofthecarrier’sobligat
ionstomaintainseaworthyvesselthroughoutthevoyage(Article
14) and a deletion of an exclusion of carrier’s liabilitiesdue to negligent navigation (Article 17). This paper
addressesimplicationsofthesechangesandassesswhethership‐ownersandship‐operatorscancomplywith
thesewithouthavingtoincurexcessiveadditionalexpenses.
http://www.transnav.eu
the International Journal
on Marine Navigation
and Safety of Sea Transportation
Volume 8
Number 2
June 2014
DOI:10.12716/1001.08.02.17
310
ambitioustoseetheRotterdamRulesfulfillgoals,as
summarisedfromthePreamblebyNikakiandSoyer,
6
1 Promotionoflegalcertainty;
2 Harmonization and modernization of the rules
governinginternationalcontractofcarriages;
3 Promotionofthedevelopmentoftradeinanequal
andmutuallybeneficiarymanner;
4 Enhancementofefficiency.
A million dollar question is whether the
RotterdamRules achieve thepurportedaimssetout
bythedraftsmen. Further quest
ioniswhetheraday
forsuchuniformitywillevercome.
Among the current imperfect state of uniformity,
the International Convention for the Unification of
CertainRulesRelatingtotheBillsofLading,Brussels,
25 August 1924 (the ‘Hague Rules’) along with its
subsequent Protocol of 1968 (t
he ‘Visby Protocol’ or
the ‘Hague‐Visby Rules’) has received warmest
welcomeamongmaritimenations,includingNorway,
UnitedKingdom,Poland,Singapore,andHongKong
SAR.
7
The Hague‐Visby Rules were negotiated and
signed,soonaftertheendoftheSecondWorldWar.
Severalnewnationshadcomeintoexistencebythen.
Theyhadnotparticipatedintheprocessleadingupto
the formation of the Hague Rules. They strived for
competitiveness and they viewed principles as
enshrined in the Hague Rules to be in favour of
already developed countries with large ma
ritime
trade – which they found to be unacceptable.
8
The
Hague‐Visby Rules have been perceived as ‘ship‐
owningfriendly’fortheyallowship‐ownerstonegate
theirliabilitiesduetonegligenceof theirservantsor
theiragentsinnavigationofships(ArticleIV(2)(a)).
9
Therefore, these new nations moved for another
international legal regime for carriage of goods by
sea, namely the ‘United Nations Convention on the
Carriage of Goods by Sea (Hamburg, 1978)’ (the
‘HamburgRules’).However,theHamburg Rulesdid
not receive warm welcome among influential
maritime nations. Therefore, ‘the Hamburg Rules
frustrated the hopes of achieving worldwide
uniformity…by creating yet anot
her international
carriageregimethatappliestoatruncatedproportion
ofinternationalshippingcontracts’.
10
Tothereliefof
many countries, such exception provided to ship‐
ownersfor negligence oftheir servants or agents no
longer exists in the Rotterdam Rules (Article 17). At
the same time, in contrast to the ship‐owners’
obligations in the Hague‐Visby Rules to maintain
seaworthy ship ‘at the beginning of the voyage’
(Art
icle III(1)), the Rotterdam Rules have extended
this obligation throughout the entire voyage (Article
14).Therationaleforsuchanexceptionandsuchan
6
Nikaki,Theodora,andSoyer,Baris.2012ANewInternationalRe‐
gimeforCarriageofGoodsbySea:Contemporary,Certain,Inclu‐
siveANDEfficient,orJustAnotherOnefortheShelves?Berkley
JournalofInternationalLaw30:303‐348.
7
SeeComiteMaritimeInternational,‘CMIYearbook2010’
<http://www.comitemaritime.org/Uploads/Yearbooks/Yearbook%2
02010.pdf>accessed11June2014.
8
FrederickDavidC.1991PoliticalParticipationandLegalReform
intheInternationalMaritimeRulemarkingProcess:Fromthe
HagueRulestotheHamburgRulesJournalofMaritimeLawand
Commerce22:81‐117.
9
SeeBaughen,Simon,2012.ShippingLaw.Oxford:Routledge,page
95.
10
NikakiandSoyer(n4)304.
extentofdutyintheHague‐VisbyRuleswasbasedon
‘the anachronistic assumption that the ship‐owner
neither had control over the vessel once she sailed,
nor sophisticated technical navigation aids once at
sea…’
11
Itis doubtful such rationale stands atest of
timeinmoderncontext.Thepurposeofthisarticleis
toexaminethesetwosignificantchangesandevaluate
whetherthesearefeasibleforship‐owningintereststo
comply and whether such changes would be
welcomed by ship‐owning interest nations. To
achievethi
saim,thisarticlewillbedividedintothree
parts. In the first part, the author will explore the
ambit of the shipowners’ obligations to maintain
seaworthy vessel under the Hague‐Visby Rules and
also the ambit of the exception of negligent
navigation.Afterwards,inthesecondpart,theauthor
will tra
ce the rationale for changes made in the
Rotterdam Rules along with offering his analysis on
practicalimplicationsofsuchchanges.Thefinalpart
willbeconcludedbyevaluatingthefeasibilityofsuch
changesinlightofmodernmaritimepractices.
2 HAGUE‐VISBYRULES:SHIPOWNERS’
OBLIGATIONSTOMAINTAINSEAWORTHY
VESSELANDNEGLIGENTNAVIGATION
EXCEPTION
As mentioned ab
ove, two significant aspects of the
Hague‐Visby Rules will be briefly outlined in this
part:ship‐owners’obligationstomaintainseaworthy
vesselandnegligentnavigationexceptionavailableto
ship‐owners.
2.1 Ship‐owners’obligationstomaintainseaworthyvessel
Tobeginwith,ArticleIII(1)oftheHague‐VisbyRules
shouldbere‐citedinfull:
The carrier shall be bound before and at the
beginningofthevoyagetoexerciseduediligenceto:
1 Maketheshipseaworthy
2 Properlyma
n,equipandsupplytheship
3 Makethe holds, refrigerating and cool chambers,
andallotherpa
rtsoftheshipinwhichgoodsare
carried, fit and safe for their reception, carriage
andpreservation.
Twopointsshouldbeemphasised here. First, the
durationoftheobligationsisonly‘beforeandatthe
beginning of the voyage’. Secondly, the standard of
such obligations is rested upon ‘due diligence’. The
aut
horityinpointastothedurationofthedutyisthe
decisionofthe Privy Council in Maxine Footwear Co.
Ltd v Canadian Government Merchant Marine Ltd.
12
In
thiscase,cargoeshadalreadybeenloadedwhenthe
ship’s pipes were found to be blocked by ice. The
Masterorderedtheuseofanacetylenetorchtothaw
out the ice. Due to negligence of the ship’s officers,
theshipcaughtfirecausingthelossofcargoes.
13
One
of the issues in this case was whether the duty to
provideaseaworthyvessel(ortobemoreprecisethe
11
Ibid.,329.
12
MaxineFootwearCo.LtdvCanadianGovernmentMerchantMarine
Ltd.[1999]A.C.589.
13
Ibid.,593.
311
duty under Article III(1)(c) of the Hague Rules
applicableatthetime)endeduponthegoodsloaded
ontotheship.ThePrivyCouncilexplainedthephrase
‘beforeandatthe beginning of the voyage’to mean
‘theperiodfromatleastthebeginningoftheloading
until the vessel starts on her voyage’.
14
As for the
standardofduediligence,thisisexplainedasequalto
the duty to take reasonable care in common law.
15
The modern authority which demonstrates this
standard is in the case of The Eurasian Dream.
16
The
case involved a car carrier which was destroyed by
fire. The claimants, whose cargoes were destroyed,
alleged unseaworthiness. Citing The Amtelslot,
17
Cresswell J. explained that ‘[t]he exercise of due
diligence is equivalent to the exercise of reasonable
care and skill: “Lack of due diligence is negligence;
andwhatisinissueinthiscaseiswhethertherewas
an error of judgment that amounted to professional
negligence”’.
18
Such obligations to exercise due
diligencetoprovideaseaworthyvesselaresaidtobe
‘non‐delegable’obligations.Thisisawell‐established
legalpositionsincethedecisionoftheHouseofLords
in 1961 in The Muncaster Castle.
19
The case involved
damagestocargoesduetotheseawater enteredthe
cargo hold. It was discovered that the inspection
cover was not properly tightened due to the
negligenceofthefitteremployedbytheindependent
contractor.
20
TheHouseofLords,takingintoaccount
the history of the Hague Rules and the need to
maintain uniformity in the interpretation of
internationalconventions,unanimouslyheldthatthe
ship‐owner in this case failed to exercise due
diligence.InthepassageofLordRadcliffe,‘[w]hatis
stressed throughout is that the obligat
ion of the
carrieris“notlimitedtohispersonaldiligence”…The
carrier’s responsibility for the diligence of those
whomheemploystodischargehisownprimaryduty
hasbeenstatedandrecognized…’
21
Suchentireschemeoftheship‐owners’obligations
to provide a seaworthy vessel has been well‐
understood and consistently applied for over eighty
years.Indeed,thisschemeiscoherentwithamarine
insurance system as far as the English law is
concerned. In English law, there exists a concept of
‘warranty’ which is explained as ‘a promissory
warranty, tha
t is to say, a warranty by which the
assuredundertakesthatsomeparticularthingshallor
shall not be done, or that some condition shall be
fulfilled, or whereby he affirms or negatives the
existence of a particular state of facts’.
22
Non‐
compliance with the warranty entitles the insurer to
bedischargedfromitsliabilityasfromthedateofthe
breach.
23
There may be either an express or an
14
Ibid.,603.
15
Girvin,Stephen,2007.CarriageofGoodsbySea.Oxford:Oxford
UniversityPress,para26.20.
16
PaperaTradersCoLtdandOthersvHyundaiMerchantMarineCo.
LtdandAnother(The“EurasianDream”)[2002]EWHC118(Comm);
[2002]1Lloyd’sRep.719.
17
UnionofIndiavN.V.ReederijAmsterdam[1963]2Lloyd’sRep.223.
18
TheEurasianDream(n14)para131.
19
RiverstoneMeatCompany,Pty.,LtdvLancashireShippingCompany
Ltd.[1961]1Lloyd’sRep.57.
20
Ibid.,65‐66.
21
Ibid.,84.
22
Section33(1)oftheMarineInsuranceAct1906.
23
Section33(3)oftheMarineInsuranceAct1906;TheBankofNova
ScotiavHellenicMutualWarRisksAssociation(Bermuda)Ltd(The
impliedwarranty.
24
Itmustbeobservedthatthereis
a warranty implied by law for seaworthiness.
However, for a voyage policy,
25
the extent of this
implied warranty only encompasses ‘the
commencement of the voyage’.
26
In case of the time
policy, the implied warranty of seaworthiness does
not exist. But, the insurer will not be liable if it can
prove the assured was privy to such
unseaworthiness.
27
There is no doubt that cargo
insurancesarecontainedinavoyagepolicyfromthe
loadingporttothedischargeport.However,onemay
argue the Marine Insurance Act which sought to
‘codify’thecommonlawrelatingtomarineinsurance
as existed prior to 1906 is an even older piece of
legislat
ion in comparison with the scheme in the
Hague‐VisbyRules.
TheHague‐VisbyRulesmakeitclearoftheprime
importance of the seaworthiness obligation in the
sense that ship‐owners can only rely on a list of
exceptions provided to them in Article IV(2) if they
fulfilled their duty under Article III(1). This is
a
pparentfromthelanguageofArticleIV(1):‘Neither
the carrier nor the ship shall be liable for loss or
damage arising or resulting from unseaworthiness
unlesscausedbywantofduediligenceonthepartof
the carrier to make the ship seaworthy…Whenever
loss or damage has resulted from unseaworthiness
the burden of proving the exercise of due diligence
shall be on the carrier or other person claiming
exemptionunderthi
sarticle’.
Article IV(1) of the Hague‐Visby Rules contains
the list ofseventeen grounds for ship‐owners to
seek exemption from their liabilities. The widest
ground is provided in Article IV(2)(q) which is
dubbed by academ
ic commentators as a ‘catch‐all
exception’, gives exception for ‘any other cause
arising without the actual fault or privity of the
carrier,orwithoutthefaultorneglectoftheagentsor
servantsofthecarrier…’TheRotterdamRules,whilst
donotspelloutthi
sexceptionsoexplicitly,retainthis
‘catch‐all exception’ as in the language of Article
17(2): ‘The carrier is relieved of all or part of its
liability…if it proves that the cause or one of the
causesoftheloss,damage,ordelayisnotat
tributable
toitsfaultortothefaultofanypersonreferredtoin
Article18’.Indeed,ascanbeseenfromArticle17(3),
theRotterdamRulesretainlistoftheexceptioninthe
Hague‐Visby Rules, except one – exception as per
Article IV(2)(a) mentioned earlier. This particular
exceptionreads:‘Neitherthecarriernortheshipshall
beresponsibleforlossordamagearisingorresult
ing
from – (a) Act, neglect, or default of the master,
mariner, pilot, or the servants of the carrier in the
navigation or in the management of the ship’. To
what extent ship‐owners are negatively affect
ed by
“GoodLuck”)[1991]2Lloyd’sRep.191.
24
Section33(2)oftheMarineInsuranceAct1906.
25
Accordingtos.25(1)oftheMarineInsuranceAct1906:‘Wherethe
contractistoinsurethesubject‐matter“atandfrom”,orfromone
placetoanotherorothers,thepolicyiscalleda‘voyagepolicy’,and
wherethecontractistoinsurethesubject‐matterforadefiniteperi‐
odofti
methepolicyiscalleda‘timepolicy’.Acontractforboth
voyageandtimemaybeincludedinthesamepolicy…’
26
Section39(1)oftheMarineInsuranceAct1906.
27
Fordiscussiononthisissue,seeManifestShippingCo.LtdvUni‐
PolarisShippingCo.LtdandOrs[2001]1UKHL/1;[2001]1Lloyd’s
Rep.I.R.247.
312
suchachangebroughtaboutbytheRotterdamRules?
It is the question which the paper now turns to
address.
2.2 Negligentnavigationexception
As explained by Wilson, this type of exception had
existed long before the Hague‐Visby Rules.
28
This
negligent navigation exception has come to a sharp
focus again following a fairly recent decision of the
Supreme Court of New Zealand in The Tasman
Pioneer.
29
An extreme situation in this case indeed
leadstosomedoubtswhetherdebatesontheneedfor
this negligent navigation exception which have
persistedsincethenegotiationleadingtothedrafting
oftheHamburgRulesshouldactuallyberevisited.As
a re‐collection, the Hamburg Rules took a cargo‐
owning orientated a
pproach and there is no similar
list of exceptios as provided in the Hague‐Visby
Rules.Instead,ship‐ownersarepresumedtobeliable
forlossordamagetocargoes.
30
InTheTasmanPioneer,theMasterchosetonavigate
thevesselviatheshorterrouteinordertomakethe
voyageonschedule.Unfortunately,thevesselhitthe
rockscausingdamagetothehullofthevesselletting
inseawater.Insteadofreportingincidentstotheship‐
owner and the relevant aut
horities for necessary
measures to be arranged in time, including salvage,
the Master proceeded with the voyage. He tried to
changethe route back to theoriginal longer one the
vessel should have taken. He also instructed the
alteration of the navigational chart and asked his
colleaguestolieastothecauseofthedamage.
31
Due
to the delay in taking appropriate measures, the
plaintiffs’ cargoes were damaged by seawater.
Nevertheless, the Supreme Court of New Zealand
heldinthiscasetheship‐ownerisentitledtoinvokea
defence under Article IV(2)(a) of the Hague‐Visby
Rules.
32
Theonlyqualificationtolimittheapplicabilityof
the aforementioned Article IV(2)(a), as explained
further in The Tasman Pioneer, is when there was a
‘barratry’,
33
drawing reference from Article IV(5)(e)
depriving carriers’ servant or agent from raising a
defence or entitlement to limit liability again if the
losses or damages were ‘resulted from an act or
omissionofthe servantoragentdonewithintentto
causedamage…’Inthisrespect,toprovebarratry,it
mustbe est
ablished that ‘damagehad resulted from
an act or omission of the master or crew done with
intent to cause damage, or recklessly and with
knowledge that damage would probably result’.
34
28
Wilson,JohnF.,2010.CarriageofGoodsbySea.Essex:PearsonEd‐
ucationLimited,page273.
29
TasmanOrientLineCVvNewZealandChinaClaysandOthers(The
“TasmanPioneer”)[2010]NZSC37;[2010]2Lloyd’sRep.13.
30
Article5(1)oftheHamburgRulesprovides:‘Thecarrierisliable
forlossresultingfromlossofordamagetothegoods,aswellas
fromdelayindelivery,iftheoccurrencewhichcausedtheloss,
damageordelaytookplacewhilethegoodswereinhischargeas
definedinart
icle4,unlessthecarrierprovesthathe,hisservantsor
agentstookallmeasuresthatcouldreasonablyberequiredtoavoid
theoccurrenceanditsconsequences’.
31
TheTasmanPioneer(n27)[1]‐[4].
32
Ibid.,[31]‐[32].
33
Ibid.,[10]‐[12].
34
Ibid.,[13].
This qualification, plausible as it is, may attract
certain difficulties in practice. The burden of proof
falls upon consignees who hold constructive
possessiontogoodsbyway of a transfer of abillof
lading.
35
These persons did not involve in a voyage
and did not have any means of access to
communicationsbetweenship‐ownersandcrewmen.
Unless in rare cases of clear circumstances, it is
submitted that consignees are likely to fail in their
burden of proof and ship‐owners would be able to
resorttotheirexceptionunderArticleIV(2)(a).
3 SHIP‐OWNERS’OBLIGATIONSTOMAINTAIN
SEAWORTHYVESSELANDNEGLIGENT
NAVIGATIONEXCEPTION:CHANGESMADE
BYTHEROTTERDAMRULES
Unlike the Hague‐Visby Rules, the R
otterdam Rules
takeintoaccountrealityofmoderntransportationof
goods. This can be seen from a definition of a
‘contra
ct of carriage’ in Article 1(1): ‘…a contract in
which a carrier, against the payment of freight,
undertakestocarrygoodsfromoneplacetoanother.
The contract shall provide for carriage by sea and
mayprovideforcarriagebyothermodesoftransport
inadditiontoseacarriage’.Inasense,theR
otterdam
Rules acknowledge increasing use of multi‐modal
transportations.Specifically,inrelationtothecarriage
by sea, as mentioned earlier, the Rotterdam Rules
extend the ship‐owners’ obligations in this respect
throughout the voyage. The opening language of
Article14 reads: ‘The carrier is bound before, at the
beginning of, and during the voyage by sea to
exerciseduediligence…’Thischangenecessarilyhas
a bea
ring on the allocation of risks in sea carriage
between ship‐owners on the one hand and cargo‐
owners(shippersor consignees of the billof lading)
on the other hand. In other words, there is an
a
lterationinthemodeofdetermining‘whopaysfor
damage done to cargo during the movement of the
goodsby[shipping]industry…’
36
This,however,may
not have any impacts on ship‐owners’ current
practices. As Nikaki explains, the rationale of the
RotterdamRulesinthisregardisnothingmorethan
to align ship‐owners’ liabilities with those
responsibilitiestheycurrently have underthe public
law.
37
Areferencetothepubliclawhereisareference
to the ‘International Management Code for the Safe
OperationofShipsandforPollutionPrevention’(the
“ISMCode”).
38
RelevantpartsoftheISMCodemay
bequotedhereinsomelengths:
35
Section2(1)oftheCarriageofGoodsbySeaAct1992:‘(1)Subject
tothefollowingprovisionsofthissection,apersonwhobecomes:
(1)thelawfulholderofabilloflading…shall(byvirtueofbecom‐
ingtheholderofabillor,asthecasemaybe,thepersontowhom
deliveryistobema
de)havetransferredtoandvestedinhimall
rightsofsuitunderthecontractofcarriageasifhehadbeenaparty
tothatcontract’.
36
Sweeney,JosephC.1991UNCITRALandTheHamburgRules–
TheRiskAllocationProbleminMaritimeTransportofGoodsJour‐
nalofMaritimeLawandCommerce22:511‐538.
37
Nikaki,Theodora.2010TheCarrier’sDutiesundertheRotterdam
Rules:BettertheDevilYouKnow?TulaneMaritimeLawJournal35:
1‐44.
38
TheISMCode‘wasadoptedbytheInternationalMaritimeOr‐
ganisation(IMO)onNovember4,1993,andlaterincorporatedinto
313
4 RESOURCEANDPERSONNEL
Thecompanyshouldensurethatthemasteris:
1 properlyqualifiedforcommand;
2 fully conversant with the Company’s safety
managementsystem;and
3 given the necessary support so that the master’s
dutiescanbesafelyperformed.
The Company should ensure that each ship is
mannedwithqualified,cert
ificatedandmedicallyfit
seafarers in accordance with national and
internationalrequirements.
The Company should establish procedures to
ensurethatnewpersonnelandpersonneltransferred
tonewassignmentsrelatedtosafetyandprotectionof
theenvironmentaregivenproperfamiliarizationwith
their duties. Instructions which are essential to be
provided prior to sailing should be identified,
documented,andgiven.
The Compa
ny should ensure that all personnel
involved in the Company’s safety management
system have an adequate understanding of relevant
rules,regulations,codesandguidelines.
The Company should establish and maintain
proceduresforidentifyinganytrainingwhichmaybe
requiredinsupportofthesafetyma
nagementsystem
and ensure that such training is provided for all
personnelconcerned.
The Company should establish procedures by
which the ship’s personnel receive relevant
information on the safety management system in a
workinglanguageorlanguagesunderstoodbythem.
The Company should ensure that the ship’s
personnelare ab
leto communicate effectively in the
execution of their duties related to the safety
managementsystem.
5 MAINTENANCEOFTHESHIPAND
EQUIPMENT
TheCompanyshouldestablishprocedures toensure
that the ship is maintained in conformity with the
provisions of the relevant rules and regulations and
with any additional requirements which ma
y be
establishedbytheCompany.
In meeting these requirements, the Company
shouldensurethat:
1 inspectionsareheldatappropriateintervals;
2 any non‐conformity is reported, with its possible
cause,ifknown;
3 appropriatecorrectiveactionistaken;and
4 recordsoftheseactivitiesaremaint
ained.
The Company should identify equipment and
technical systems the sudden operational failure of
whichmayresultinhazardoussituations.Thesafety
management system should provide for specific
measures aimed at promoting the reliability of such
equipment or systems. These measures should
theInternationalConventionfortheSafetyofLifeatSeaConven‐
tion(SOLAS)1974’.Ibid.
includethe regulartestingofstand‐byarrangements
and equipment or technical systems that are not in
continuoususe.
The inspections mentioned in 5.2 as well as the
measuresreferredtoin5.3shouldbeintegratedinto
theship’soperationalmaintenanceroutine.
ItmustbenotedthattheISMCodeprovidesaset
of modern regulations concerning ship safety.It
cameoutam
idstmodernshippingpractices.Thisisin
contrastwiththeHague‐VisbyRuleswhichcameout
just after the Second World War. This is not to
mention that the rules on seaworthiness of ship did
notchangefromthatoftheHagueRuleswhichcame
outin1924.Therewasarationaleba
ckthentolimit
obligationstoprovideseaworthyvesseltotheperiod
atthebeginningofthevoyageconsideringdifficulties
in communications and controls between ships and
shores. Such a scene has completely changed. In
modernshippingenvironment,withdevelopmentsof
communicationsandsat
ellitesystems,shipstaffsand
ship‐ownersalongwiththeirpersonnelsonshoreare
infrequentcommunication.Ship‐ownershaveaccess
to a network of shipping agents worldwide. This
necessarilymeansthatanydefectsonanypartsofthe
vessel occurred during the voyage which may
compromise the safety and the seaworthiness of the
vesselcanbecorrectedatthenearestport.Repairsof
either permanent or tempora
ry nature can be
expediently arranged. Specific training institutions
areavailabletotrainupshipstaffs.A decadeofthe
existenceoftheISMCodemeansthatship‐ownersare
familiarwiththerequirementsundertheISMsystem
and have implemented and embraced thi
s into their
firms’ culture. Taking all these into account, the
author is inclined to agree with Nikaki
39
that the
Rotterdam Rules did not impose any additional
demanduponship‐owners.Ship‐ownersareunlikely
to incur additional costs to make themselves in
compliance with their obligations to provide
seaworthy vessel under the Rotterdam Rules.
CompliancewiththeISMCoderendersafavourable
presumption on the part of ship‐owners tha
t due
diligence was exercised. In contrast, a failure to
complywiththeISMCodewouldprovideapistolfor
cargointerests to point thatthere was a lack of due
diligence.
40
However, there has been a view that the ship‐
owners’ seaworthiness obligations should be
differentlyinterpretedbetweentheobligationsatthe
time before the commencement of the voyage and
thoseatthetimeduringthevoyage.Inthecaseofthe
latter, ‘the carrier will only be liable for those
decisions it ma
de or for those which it should have
been made during the voyage’.
41
However, during
thevoyage,thecontrolisinthehandsoftheMaster
and therefore it is maintained that the breach of
seaworthiness obligations at the commencement of
the voyage would be easier to prove.
42
It is
39
SeeNikaki(n35).
40
Girvin(n13)para23.17.
41
Ülgener,FehmiM.,‘ObligationsandLiabilitiesoftheCarrier’in
Güner‐Özbeck,M.D.(ed.)2011.TheUnitedNationsConventionon
ContractsfortheInternationalCarriageofGoodsWhollyorPartlybySea:
AnAppraisaloftheRotterdamRules.BerlinandNewYork:Springer,
page139,142.
42
Ibid.
314
respectfully argued that this interpretation fails to
take into account instantaneous means of
communicationsavailableinthispresenteraandthe
languageofArticle14doesnotsuggestanydifferent
standard.
Theactualincreasingcostsforship‐owners,ifthe
Rotterdam Rules are in force, come from a new
liability
in ‘negligent navigation’, which they would
not have met under the Hague‐Visby Rules. This
causesdifficultiesforship‐ownersinpracticeaseven
the most competent crewman can act negligently.
43
Ship‐owners are not always on board to control
decisions made by ship staffs. ‘T]he removal of the
nautical fault defense would result in less efficient
and less cost‐effective management of the risks and
divisionofthefinancialconsequencesbetweenP&I
Clubs and cargo insurers’.
44
Ship‐owners may face
largeclaimsfromcargo‐ownersintheeventofserious
damages to goods due to large incidents such as a
collisioncausedbynegligent navigation.
45
However,
this appears to disregard balancing mechanism for
ship‐ownerstobeableto limit their liabilities under
the Rotterdam Rules (Articles 59‐60) or the
Convention on Limitation of Liability for Maritime
Claims,1976.Plus,itisquestionablewhyship‐owners
should benefit from the privilege granted under the
‘negligent navigation’ exception when same is not
available to carriers in other modes of
transportation.
46
It may be the case that, in order to
balanceandcopewithexpectedincreaseinliabilities,
ship‐owners will not hesitate to increase freights.
However, shipping industry has its scene changed
from the time before the coming into force of the
HagueRules.Attheperiodpriortothe
draftingofthe
Hague Rules, ship‐owners had a relatively stronger
bargaining power. They had a practice of inserting
exclusionclausesintobillsofladingexemptingtheir
own liability for negligence. Courts in different
jurisdictionsreacted differentlytosuchacontractual
provision.IntheUnitedKingdomwhereship‐owning
interestswere
influential, the validity of such clause
wasupheld.
47
Thefactisthatship‐ownersnolonger
hold strong bargaining power. This is especially the
casesincetheglobaleconomicdownturninlate2008
whichhascausedship‐ownerstofightfortrade.Ship‐
ownerswhounscrupulouslyincreasethefreightwill
be sanctioned by industrial mechanism. Protection
and Indemnity
(P & I) clubs, representing ship‐
owninginterests,alsoneedtobearthisinmind.Any
unnecessaryincreaseincallswillfaceanobjectionby
ship‐owning representatives sitting on the Board of
Directorsof the P & I club in question. At the same
time,P & I clubs also
havetheir own mechanismin
calculatingtheircalls,takinginto account also claim
recordsofrelevantship‐owners.Inordertominimise
claim records, it is necessary for ship‐owners to
43
Bachxevanis,Konstantinos.2010‘CrewNegligence’and‘Crew
Incompetence’:theirdistinctionanditsconsequenceJournalofInter‐
nationalMaritimeLaw16:102‐131.
44
Weitz,LeslieTomasello.1997‐1998TheNauticalFaultDebate
(theHamburgRules,theU.S.COGSA95,theSTCW95,andtheISM
Code)TulaneMaritimeLawJournal22:581‐594.
45
Ibid.
46
Tetley,William.2008MarineCargoClaimsVolume1,Quebec:Les
EditionsYvonBlaisInc,954.
47
Yiannopoulos,AthanassiosN.1957‐1958ConflictsProblemsin
InternationalBillofLading:ValidityofNegligenceClausesLouisi‐
anaLawReview18:608‐627.
tighten up their safety and security measures. This
can be done, for example, by appointing owners’
representativesregularlyjoiningthevesseltoprovide
shipstaffswithguidance,especiallywhensignificant
decisions in relation to navigation have to be made.
Placing many procedure manuals on board for ship
staffstocomplywould
nolongerbeefficient.Regular
drillingsshouldbeconductedonshoreandonboard
for ship staffs and shore staffs so they are familiar
withdecisionmaking and they can co‐ordinate with
eachotherinemergencysituations.Promotionofship
staffsintosignificantrankssuchastheMasterneeds
to be carefully considered, taking into account
experiencesofrelevantshipstaffs.Insteadof raising
unnecessary concerns on the unavailability of
negligent navigation exception, it is submitted that
ship‐owners should turn their focus on risk
management aspects of their business. They should
focus their concerns on how to avoid or
reduce
liabilitiesfornegligentnavigation.
6 CONCLUSION
Superficially,theRotterdamRulesappeartoincrease
ship‐owners’ liabilities beyond those in the Hague‐
Visby Rules and of course one concern would be
whethertheRotterdamRuleswillgainsupportfrom
shipping interests or ship‐owning countries.
However,uponcloser scrutiny, the
RotterdamRules
do not seem to increase ship‐owners’ obligations
beyond acceptable limits. Obligations to provide a
seaworthy vessel throughout the voyage are merely
reflectionsofship‐owners’currentpracticesunderthe
ISMCode.Thedeletionofshipowners’exceptionfor
negligent navigation is just a mere adjustment for a
right balance
between ship‐owning interests and
cargo‐owning interests and an attempt to put
liabilities of ship‐owners in line with liabilities of
operatorsofothermodesoftransportation.Itwillnot
be reasonable if any countries will change their law
relating to internationalcarriage of goods along this
line,abandoning
theusualapproachasintheHague‐
VisbyRules.However,whethertheRotterdamRules
shouldbeadoptedinfull,givingacomplexstructure
of 92 provisions in total, should be left for further
discussion,whichisbeyondthescopeofthisarticle.
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