An overview and analysis of – “UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL CARRIAGE OF GOODS WHOLLY OR PARTLY BY SEA 2008”

by F R Chowdhury

1. The Convention cannot be signed with reservation. This clause is very appropriate for this Convention as any reservation would make it meaningless.
2. There is no way to escape from the Convention once it is in force because it will apply to a State which is a Party to the Convention and if that State happens to be the loading or discharging State. This means to say that even if Bangladesh is not a Party to the Convention, it may still be governed by the Convention if one of the interested parties (shipper or consignee) happens to be in a Party State and they resort to any litigation in that country.
3. The Convention has done away with the term “Bill of Lading” or B/L and has introduced “Contract of carriage” and “Transport document” or T/D. The transport document appears to be the closest substitute for B/L.
4. The Convention for the first time introduces “electronic documents”.
5. The obligations and responsibility of the carrier are outlined in Articles 11 and 12. They are in conformity with current international practice and procedures.
6. Article 13.1 states clearly that carrier shall be responsible for properly and carefully receive, load, handle. Stow, carry, keep, care for, unload and deliver the goods. This part is in line with common liner terms.
7. Article 13.2 provides for carrier and shipper to agree for loading, handling, stowing and unloading of the goods to be performed by the shipper, documentary shipper or consignee as normally done for voyage charter (volume contract) which may include FIOST.
8. Article 14 makes it obligatory for the carrier to keep the ship and hold fit for loading; and to maintain the ship sea-worthy.
9. Article 16 “sacrifice of the goods during the voyage” is in line with common practice of jettisoning under General Average.

Liability for loss, damage or delay:

10. Article 17 to 20 (both inclusive) deal with basis of liability. I have gone through them. They merely codify the existing practice and procedures. There is nothing that gives blanket cover to the carrier against loss, damage or delay.
11. Article 22 deals with calculation of compensation. The basis is fair.
12. Article 23 deals with time restrictions for raising a claim against loss, damage or delay.
13. Article 25 deals with “Deck cargo” and there is nothing objectionable there.
14. Article 26 deals with loss, damage or delay prior to the loading onto the ship or after discharge from the ship.
15. Article 27 deals with shipper’s obligations to deliver the goods properly packed so that it can withstand loading, handling, stowing, lashing, securing and discharging.
16. Article 28 deals with cooperation and exchange of information between the carrier and shipper.
17. Article 29 outlines shipper’s obligation to provide information, instructions and documents.
18. Article 30 explains shipper’s liability to the carrier in the event of loss suffered by the carrier caused by a breach of shipper’s obligations.

Transport documents and electronic transport records

19. Articles 35, 36, 37, 38 and 39 have nothing contentious.
20. Article 40 is quite complicated but still there is nothing to object seriously. Article 41 is clear and reasonable.
21. Article 42 about “Freight prepaid” is understood but the significance of the last sentence about the shipper and consignee being the same person is not understood.

Delivery of the goods

22. Articles 43 and 44 about obligation to accept delivery and obligation to acknowledge delivery are straight and simple.
23. Articles 45 and 46 deal with delivery of goods when no negotiable transport document.
24. Article 47 deals with delivery when a negotiable transport document or negotiable electronic transport record is issued.
25. Article 48 is about goods remaining undelivered.
26. Article 49 is about right to retain cargo to secure freight.

Rights of the controlling party

27. Article 50 to 56 (both inclusive) have nothing objectionable. They are logical provisions.

Transfer of rights

28. Article 57 deals with how a negotiable document may be transferred. Article 58 deals with liability of the holder. There is nothing objectionable.

Limits of liability

28. Articles 59, 60 and 61 deal with this subject. This is very much in line with the “limitation of liability” Convention. (Further losses may be covered only through insurance – not stated in the Convention).

Time for suit

29. Articles 62, 63 and 64 deal with the above matter. It duly covers the ship-owner or the bare-boat charterer as the carrier. The general time limit is two years with some variations.

Jurisdiction

30. Article 66 to 74 (both inclusive) discusses matters relating jurisdiction of competent courts and enforcements of their decisions. Article 70 deals with arrest but in 70 (b) makes reference to an international convention (presumably the Arrest of Ships Convention).

Arbitration

31. Article 75 to 78 (both inclusive) deal with matters related to Arbitration. Nothing is mentioned with regard to the qualification and competence of the Arbitrators or about the enforcement of an arbitration award which presumably will be dealt as per the law of the land.
32. Article 79 deals with Validity of contractual terms under “general provisions” to emphasize that any stipulation contrary to the Convention shall be void.

Special rules for volume contract

33. Volume contracts are normally in accordance with Voyage charter-parties. Here for the first time they try to give an outline in the form of special rules in Article 80. Basically it emphasizes on the application of the Convention provisions as far as practicable.
34. Article 81 deals with carriage of live animals and certain other goods.

Matters not governed by this Convention

35. Article 82 deals with transportation by air and road for which provisions of other international conventions apply.
36. Article 83 respects the global limitation of liability of ship-owners under relevant convention and national laws.
37. Article 84 allows the provision of “General Average” under respective national law. This means to say that Party States will have to have their own provisions for GA in accordance with latest provisions of the international practice.
38. Article 85 states clearly that the Convention does not apply for carriage of passengers and their luggage. Obviously this will be covered by the Athens Convention.

Damage caused by nuclear incident

39. Article 86 refers to Paris and Vienna Conventions on the question of damage caused by nuclear incident.

Final clauses

40. Article 89 is very important. It requires signatory Parties to denounce all other international conventions on carriage of goods by sea and issue of bills of lading including the Hamburg Rules of 1978. It is good in the sense that there will be a single international instrument governing the whole issue except that Party States will have to define the scope and extent of “General Average” in their own law.
41. Article 90 clearly states that acceptance or accession to the Convention with reservations shall not be permitted. This will ensure common platform on all issues dealt with in the Convention. This also means to say that the only way to modify the Convention is to first become Party to it and then motivate sufficient members to move for amendment. There is no way to shield under reservation.
42. Article 91 provides procedures for making declarations with regard to jurisdiction and arbitration (Articles 74 and 78).
43. The provisions of the Convention shall not apply to a territory of a Party State unless the Party State extends the Convention to the territory.
44. Regional organizations like EU and GCC may also become Parties to the Convention. Though regional organizations shall be treated as a Party but for the question of number of Parties (such as for amendment etc.) only the individual sovereign States shall be considered as Parties.
45. Articles 94, 95 and 96 deal with entry into force (20 States), revision and amendment and denunciation. They are in line with common provisions of other conventions.

GENERAL OBSERVATION AND REMARKS

1. The Convention brings a sigh of relief from too many complicated international instruments. Hopefully, it will be an easier world when the Convention comes into force internationally.
2. The Convention has already been welcomed by major international shipping and trade organizations. It will not make any sense to remain on the sidelines. Best is to be a Party and then be a motive force for desirable amendments.
3. The Convention requires a number of amendments:
4. a) Article 6 refers to charter-parties as a contract in liner transportation which is not the case. The word “charter-party” is one word meaning a contract for carriage of cargo under time charter or voyage charter (some time in space charter). The bare-boat C/P is not a contract for carriage of cargo but is a contract for hiring the ship on long term basis. Paragraph 2 of the same Article is also equally confusing. The entire Article needs to be re-written to reflect what it actually intends to state.
5. b) The last sentence of Article 42 is seriously confusing. Was there at all a need to write this sentence?
6. c) The Convention recognizes “General Average” but leaves the entire thing on national legislation. This may give rise to unnecessary disputes and litigation. The Convention needs to define what it is; circumstance under which GA may be declared, conditions that must be fulfilled to make such declaration lawful and the mode of settlement of GA.
7. d) The Convention should provide some basic outline for volume shipments. Parties should be allowed to draw C/P so long those basic outlines are complied with. It should then provide for issue of transport document in compliance with the terms and conditions of the C/P.
8. Depending on the present status of the Convention – we may ask for a Diplomatic Conference to adopt a Protocol if the Convention is not yet ratified by 20 States or if the Convention is already ratified by more than 20 States then we should be a Party and then move for Amendments.
9. I have particularly looked at the common perception that the carrier has been favored by not having sufficient responsibility and liability. This is not true. The obligations, responsibility and liability are very much in line with present practice and procedures. It is in no way less than what it is in the Hamburg Rules of 1978.
10. I have also reviewed all the objections raised by European Shippers’ Council and European Freight Forwarders’ Association but could not find anything of material interest.
11. The UN-Economic Commission for Europe has clarified various aspects of the Convention and addressed the criticism against the Convention. I found them reasonable except the amendments suggested by me.

Final comments and recommendations:

We (Bangladesh) can be a party to the Convention only after due consultation with the Ministry of Trade & Commerce and the Chamber of Commerce (including Shippers’ Council and association of ship-owners). Please also refer to points 3 and 4 above under general observation and remarks.

<fazlu.chowdhury@btinternet.com>