P.S.P.G.

Vithanage
Attorney- at- Law
Department of Commercial Law
Faculty of Law
University of Colombo
 Frame work of Carriage of goods by sea
The carriage of goods by sea is presently regulated by both international conventions and national
laws. While the national laws will differ from country to country, the following international conventions
purport to achieve uniformity in relation to carriage of goods by sea.

i) The Hague Rules (1924)

The international conventions for the I unification of certain rules of law relating to Bills of Lading.

ii) The Hague Visby Rules (1968)

The Brussels protocol amending the Hague Rules relating to Bills of Lading

iii) The Hamburg Rules (1978)

The conventions on the carriage of goods by sea, Hamburg

iv) The United Nations convention on international on multi modal transport of goods, Geneva (1980)

v) The United Nations conventions on the liabilities of operators of transport terminals in

International Trade (1994).

vi) The Rotterdam Rules (2008) (still not in force). The United Nations conventions on contracts for the
International carriage of goods wholly or partly by sea.
 Rotterdam Rules
• The "Rotterdam Rules" (formally, the United Nations
Convention on Contracts for the International Carriage of
Goods Wholly or Partly by Sea) is a treaty proposing new
international rules to revise the legal framework for carriage of
goods by sea.
• address the legal relationship between carriers and cargo-
owners.
• modernize existing international rules and achieve uniformity
of International trade law in the field of maritime carriage,
updating or replacing many provisions in the Hague
Rules, Hague-Visby Rules and Hamburg Rules.
• establishes a comprehensive, uniform legal regime governing the
rights and obligations of shippers, carriers and consignees under
a contract for door-to-door shipments that involve international
sea transport.
• Still not if force
 Rotterdam Rules- important changes
• Can be applied only if the carriage includes a sea legislation other
multimodal carriage contracts which have no sea legislation are
outside of the scope of the Rules.
• It allows for more e-commerce and approves more forms of electronic
documentation.
• It increases the limit liability of carriers to 875 units of account per
shipping unit or three units of account per kilogram of gross weight.
• It extends the time that legal claims can be filed to two years following
the day the goods were delivered or should have been delivered.
• It obliges carriers to keep ships seaworthy and properly crewed
throughout the voyage. The standard of care is not "strict", but "due
diligence" (as with the Hague Rules).
• It extends the period that carriers are responsible for goods, to cover
the time between the point where the goods are received to the point
where the goods are delivered.
• It eliminates the "nautical fault defence"
• It allows parties to so-called "Volume Contracts"
 The Hague/Hague Visby Rules
Applicability
• Article X of the Hague Visby Rules states that they will
apply to every bill of lading if
• a) the bill of lading is issued in a contracting state
• b) the carriage is from a port in a contracting state
• c) the contract contained in or evidenced by the bill of
lading provides that these Rules, or legislation of any
State giving effect to them, are to govern the contract.
• Art I (b) states that the Rules are applicable ‘only to
contracts of carriage covered by a bill of lading or any
similar document of title in so far as such document
relates to the carriage of goods by sea’
 Time bar
• Article III (6) of the Rules states that any claim in
respect of the goods carried will be time barred
unless proceedings have been commenced within
one year of their delivery, or the date when they
should have been delivered.

• Limitation of Liability
Carriers can limit their liability for cargo damage
under the Rules in order to protect themselves
from the risks associated with high-value goods of
undisclosed value.
 Cargo worthiness
The Vessel must be uncargo worthy when the carriage is
loaded.
The ship owner is under an implied obligation to provide a
fully equipped ship which is suitable for the carriage of
cargo. The ship-owner must provide refrigeration system in
the ship if he is in contract to carry frozen meat, there is an
‘implied warranty’ that the ship and the refrigeration is fit
to decided voyage.

Cargoworthiness is categorized under the seaworthiness

requirements, the vessel must be in every way reasonably
fit to receive and carry the contemplated cargo in order to
be considered as a seaworthy vessel
McFadden v Blue Star Line[1905] 1 KB
697 by Channell J
• In this case the vessel’s ballast tank was being filled with
water & the crew attempted to close the sea cock, but did so
ineffectively.
• The continued water pressure eventually forced a defective
value chest & water flowed through the value chest and
through the open sluice door into the hold containing the
plaintiff’s cargo of cotton, which was damaged.
• Two of the causes
– 1. The failure to close the sea- cock
– 2. & the failure to close the sluice door took place after the goods
were on board
• These two causes took place during the interval between the
loading & sailing stages and did not therefore constitute a
breach of the warranty of sea worthiness.
• However, the warranty was breached by the third cause, the
defective value chest which had been defective at the start of
loading.
• The breach was a cause of the damage & therefore the ship
owner was liable in full for the damage to the cotton.
 Maori King v Hughes [1895] 2 QB 550
• In this case a cargo of frozen mutton was damaged during the
voyage due to the breakdown of the vessel’s refrigeration unit.

Leesh river tea company, ltd., AND OTHERS v.

British india steam navigation company, ltd. [1966]
1 Lloyd's Rep. 450
• A vessel was held not be unseaworthy within Article 3, when the
cargo was damaged when a storm cover was removed by an
unidentified person secretly at an intermediate port.

• ( The term voyage in Art. 3 has been constructed as covering the

entire voyage covered by the bill of lading, irrespective of calls at
intermediary ports.
Maxine Footwear Company Ltd. v. Canadian
Government Merchant Marine Ltd., [1957]
S.C.R. 801.

• loading was completed

• Was due to sail in the following morning
• Some pipes were found to be blocked with ice.
• An attempt was made to remove the block by using oxyacetlene
lamp.
• Fire started and the cargo was lost
• The PC held that: Breach of seaworthiness/ Obligation of the carrier
to exercise due diligence continued throughout the entire period.
 ‘The Muncaster castle’ case
• A consignment of ox tongue had been shipped from
Sydney. During the voyage the cargo was damaged by
water via the inspection covers on the storm values.

• Some months earlier, an inspection of the storm valve

was done by a reputed firm of ship repairers. After the
inspection, the task of replacing the inspection covers on
the storm valves had been delegated to an employee.
•
• Despite the fact that there had been no negligence on the
part of the carrier in that he had to delegate the work to a
reputed firm, the House of Lords held the carrier liable for
breach of the obligation to exercise due diligence.
The Hellenic Dolphin case, [1978] 2 Lloyd's
Rep. 336
A cargo of asbestos was damaged by sea water.
Sea water gained access by a 4ft long indent in the ship
plating, of which the ship-owner had previously been
unaware.
Held: The ship owner can rely on the exception of perils
of the sea.
 International Packers London, Ltd. V. Ocean
Steam Ship Company, Ltd. [1955] 2 Lloyd's
Rep. 218. Queen's Bench Division
• A cargo of tinned meat shipped from Brisbane to
Glasgow was damaged by sea water during the voyage as a
result of tarpaulins (sheet of heavy water proof fabric)
stripped from the hatch covers during a storm.
• The vessel was equipped with locking bars designed to
secure the hatches.
• The trial Judge held that the loss was caused not by
unseaworthiness of the vessel but by the negligence of
the crew in failing to make use of the equipment
provided.
 The Thorsa, [1916] P. 257.
• A cargo of chocolate was tainted by cheese
loaded next to it. The chocolate was loaded
before cheese, therefore, at the time of
loading the vessel was in a fit state to carry
that cargo.
• The cargo owner failed to discharge the
burden of proof since the damage resulted
from bad storage rather than any unfitness of
the vessel to receive the contract cargo.
 Effect of the breach
• Having established the breach, the next
important factor is to decide whether remedies
are available to the charter.
 Hongkong Fir Shipping Company, Ltd.
v. Kawasaki
• The ship owner’ s obligation to provide a seaworthy vessel was
classified as an innominate or intermediate term by the court
of appeal.
• While damages would always be available for breach of the
undertaking, a charterer should only be allowed to repudiate
his obligations under the charter party where the breach
deprived him of substantially the whole benefit which it was
intended that he should obtain from the contract
• In assessing whether the right to terminate arises, the court
will be guided by comparing the delay caused by remedying the
unseaworthiness with the total contractual period.
 Art III Rule (1)
• Art III (1) states that a carrier must exercise due diligence
before and at the beginning of the voyage to make the
ship seaworthy, to properly man and supply the ship,
and to ensure the holds are fit to receive the goods.

• The obligation to carry out due diligence to make the

ship seaworthy arises only during loading and before the
commencement of the voyage; it is not a continuing
obligation and the carrier will not be responsible for
defects which develop during the voyage. Due diligence
has been interpreted by the courts as equivalent to the
common law duty of care and the duty cannot be
delegated.
 The Burden of Proof
• The burden of proving that due diligence has been
exercised is on the carrier, but only arises after the claimant
has first established that the ship was unseaworthy and
that this breach of duty caused the loss.

• This can often cause difficulty to a claimant because the

carrier is usually the party with full access to the facts, but,
on the other hand, the courts have shown a willingness to
give the claimant the benefit of the doubt. For example the
presence of seawater in the holds is often treated as prima
facie evidence of unseaworthiness in cargo claims.
 Article 3 Rule 2
The Hauge Visby rules

• “2. Subject to the provisions of Article IV, the Art III (2) states
that the carrier shall properly and carefully load, handle, stow,
carry, keep, care for and discharge the goods delivered.

• Burden of proof The carrier’s obligation to care for the cargo is

made expressly subject to the defences listed in Art IV (2).
 Article 4 Rule 1.
• “Neither the carrier nor the ship shall be liable for loss or
damage arising or resulting from unseaworthiness unless
caused by want of due diligence on the part of the carrier to
make the ship seaworthy, and to secure that the ship is
properly manned, equipped and supplied, and to make the
holds, refrigerating and cool chambers and all other parts of
the ship in which goods are carried fit and safe for their
reception, carriage and preservation in accordance with the
provisions of paragraph 1 of Article III.

• 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 exemption under this
article.”
 Art IV Rule (2)- exceptions
• Art IV (2) lists seventeen exceptions which a carrier can rely on when
faced with a claim. These exceptions build upon the four common law
exceptions applicable to every carriage: act of God, Queen’s enemies,
inherent vice and a general average sacrifice.
• The Rules also include three unique exemptions which cannot be
found in any other convention:
• 1) 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
• 2) Fire, unless caused by the actual fault or privity of the carrier
• 3) The catch-all exception.

• Although this may seem like an extensive list, a carrier will not be able
to rely on a listed exception if
• a) the peril could have been avoided by exercise of reasonable care
• b) the operative cause of the loss was the unseaworthiness of the
vessel
• c) there has been a fundamental breach of the contract of carriage.