A Summary of General Criticisms of the UNCITRAL Convention (The Rotterdam Rules)

by William Tetley December 20, 2008

The UNCITRAL Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (hereinafter the Rotterdam Rules)

I. Limited Scope 1. Art. 1(1) of the Rotterdam Rules defines the contract of carriage as a contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another. The contract shall provide for carriage by sea and may provide for carriage by other modes of transport in addition to the sea carriage. The Rotterdam Rules, therefore, only apply to multimodal transport contracts that include carriage by sea as one of the legs. The Rules for example will not apply to a multimodal carriage by air and road, but will apply to multimodal carriage by sea and road. This limited scope of the application of the Rotterdam Rules contradicts the very goal of creating a binding universal regime to support the operation of contracts of maritime carriage involving other modes of transport announced in the Preamble of the Rotterdam Rules. As a result, carriers and shippers in finding the scope of the Rotterdam Rules inadequate and incomplete will be forced to look to other conventions and other legal regimes to govern the transport contracts of their goods and their contracts. Thus, the Rotterdam Rules not only fail to create a uniform body of law for regulation of multimodal transport, but add to the complexity of existing multimodal transport regimes. A much sounder approach for carriage of goods can be found in the United Nations Convention on International Multimodal Transport of Goods (Multimodal Convention (1980), which under Art. (1) applies to the carriage of goods by at least two different modes of transport, not being limited to a sea carriage and another mode of carriage as is the case under the Rotterdam Rules.

2. Article 26 of the Rotterdam Rules states that if goods are damaged before or after loading and/or discharge from ship, other international instruments have precedence over the provisions of the Rotterdam Rules. For example, under a contract for multimodal carriage of goods involving carriage by road and sea, the Rotterdam Rules will apply only to the sea portion of the multimodal carriage; they will not apply to the road carriage being the period before loading or after discharge of goods from the ship. In consequence, the Draft Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea in fact can on occasion only apply to the carriage of goods wholly by sea.

This limited scope of application of the Rotterdam Rules also creates a problem of unpredictability. Under Art. 26(b) the provisions of other instruments have precedence over the Rotterdam Rules when these latter specifically provide for limitation of liability. Consequently limitations of liability of both Rotterdam Rules and of another instrument may apply to the same contract of carriage depending on what stage of the carriage the damage or delay occurred. Because different unimodal international conventions and national laws contain different limits of liability, it may be very difficult for the parties to the contract of carriage to predict the applicable limit. Art. 26 places an especially heavy burden on the lay cargo claimant who in most cases would not be familiar with the limitation of carriers liability under various unimodal conventions and would have no chance to predict the outcome of his potential claim. It would seem to be more practical and less confusing, to permit the Rotterdam Rules to govern all issues that can arise in the process of transporting goods on every stage of carriage.

3. Chapters 14 Jurisdiction and Chapter 15 on Arbitration of the Rotterdam Rules are not mandatory. The states that have ratified the Convention are given the choice of whether to opt-in to the provisions on jurisdiction and arbitration. Art. 74 of Chapter 14 Jurisdiction of the Rotterdam Rules states that this chapter shall bind only Contracting States that declare that they will be bound by the Rules. Art. 78 of Chapter 15 on Arbitration similarly provides that the provisions of this chapter shall bind only Contracting States that declare that they will be bound by them. In consequence, not all the states which ratify the Rotterdam Rules will be bound by its Jurisdiction and Arbitration provisions. The parties to the contract for multimodal carriage of goods governed by the Rotterdam Rules will be forced to specifically check if their contracting partys state has made a declaration to be bound by the Jurisdiction and Arbitration provisions of the Rotterdam Rules. If this is not the case, the contracting parties will be obliged to adopt a certain jurisdiction and arbitration regime to govern their contract. This exercise in itself may be confusing to the parties who will have to deal with the Rotterdam Rules as general regime governing their contract and at the same time deal with some other regime governing jurisdiction and arbitration provisions of their contract. The optional nature of jurisdiction and arbitration provisions of the Rotterdam Rules therefore not only does not contribute to attaining uniformity and legal certainty in regulation of multimodal transport of goods but adds to the complexity of existing regulatory regimes.

II. Complexity 1. The Rotterdam Rules provide a detailed set of rules for three types of transport documents: negotiable transport documents, non-negotiable transport documents, and straight bills of lading. These different types of transport documents entail different results when determining the evidentiary effect of the contract particulars (Art. 43),

delivery of the goods (Chapter 9), and rights of the controlling party (Chapter 10). Will the average shipper or carrier be able to distinguish between a negotiable and a nonnegotiable transport document? This could lead to confusion and mistakes. Furthermore, a contract which is simply called a bill of lading is liable to be characterized as any one of the three legal characterizations, which again can only create confusion.1 The excessive detail of the Rotterdam Rules is liable to create uncertainty and hinder the goal of attaining legal certainty in multimodal transport regulation. The Rotterdam Rules seem fit for only for a small select group of trained lawyers. A more pragmatic approach of introducing only two types of transport documents: a negotiable and a non-negotiable multimodal transport document as is found in the United Nations Convention on International Multimodal Transport of Goods (Multimodal Convention (1980) would make the rules simpler and more understandable to merchants, shippers, consignees, carriers and even to lawyers and judges. III. Ambiguities

1. Under Article 17(6) of the Rotterdam Rules when the carrier is relieved of part of its liability, the carrier is liable only for that part of the loss, damage or delay that is attributable to the event or circumstance for which it is liable. A reference to part of the loss contemplates that liability may be apportioned. Art. 17(6), however, does not explain how such apportionment may be made in practice. Either to justify an apportionment, there must be two or more identifiable parts of the goods, one which the carrier is relieved from liability and the other which it is not, or there can be an apportionment of a single overall loss based on the degree to which each cause is responsible for it. The reference to part of the loss can be read as justifying either interpretation.2 Art. 17(6) calls for two interpretations, it is therefore ambiguous and should be redrafted to include the method of apportionment of the loss. 2. Article 40 of the Rotterdam Rules requires that in certain listed circumstances the carrier shall qualify the contract particulars3 to indicate that the carrier does not assume responsibility for the accuracy of the information furnished by the shipper. It is argued that such qualifications are likely to be different in different countries, and could give rise to unnecessary litigation. 3. Article 50(1)(a) of the Rotterdam Rules allows the controlling party to give or modify instructions in respect of the goods that do not constitute a variation of the contract of carriage. This seems, on its face, contradictory. How is one to modify instructions without having the result constitute a variation of the pre-modified instructions? What does a variation constitute? How fundamental must the change be in order to be considered a variation? This is important, because the controlling party could change

1 2

See Anthony Diamond, The Next Sea Carriage Convention?, 163. See Anthony Diamond, The Next Sea Carriage Convention?, 152. 3 See Rotterdam Rules Art. 36.

throughout the course of the shipment of the goods, and subsequent controlling parties need to be aware of what they can and cannot do.

IV. Drafting Deficiencies 1. An example of a drafting deficiency can be found in art. 12, which deals with the period of responsibility of the carrier. Article 12(1) states: The period of responsibility of the carrier for the goods under this Convention begins when the carrier or a performing party receives the goods for carriage and ends when the goods are delivered. Article 12(1) (a) and (b) provide specific criteria to determine when the period of responsibility begins and ends. At the same time, however, Article 12(3) allows the parties to determine this period themselves, subject to two exceptions. Article 12(1) and Article 12(3) therefore appear to be contradictory. It is suggested that Art. 12(1) should start with Subject to paragraph 3. The current wording of Article 21 may lead to mistakes and confusion. Careless readers might simply read the first paragraph and conclude that the period of responsibility can only conform to that stipulation. The reader may also wonder whether one paragraph trumps the other.

2. Article 51(1) states: Except in the cases referred to in paragraphs 2, 3 and 4, in other words, except when there is, respectively, a non-negotiable transport document, a negotiable transport document, and a negotiable electronic transport record. There are however three different types of transport documents: negotiable, non-negotiable, and straight bill of lading. Thus, given the exceptions, art. 51(1) would seem to be dealing with non-negotiable electronic transport documents, as well as straight bills of lading. But there is doubt without a specific stipulation to that effect in law. Why should we have to guess? And perhaps paragraph 1 also contemplates all residual transport documents as well (i.e., those that are not readily able to be characterized under the Rotterdam Rules). Defining the purview of a given stipulation solely by stating its exceptions lends itself to ambiguity. V. Unreasonable Provisions 1. Article 17(5)(a) of the Rotterdam Rules, places the burden of proving the carriers lack of due diligence on the claimant. This contradicts the first principle of proof according to which the carrier having received the goods in good order is prima facie liable for the loss or damage to the goods, which is presumed to have occurred while the goods were in carriers custody.4 The carrier has a burden of making proof sufficient to overturn claimants prima facie case. This principle is of public order and policy, from which the parties to the carriage of goods by sea contract are not free to derogate.5 Placing the burden of proof on the claimant not only contradicts this principle of public order but is also unreasonable, given that the information as to the conditions of the transportation of goods is available to the carrier and to much lesser extent to the claimant.
4 5

See Marine Cargo Claims, 4 Ed., 2008, Vol. 1 at p. 315. See Marine Cargo Claims, 4 Ed., 2008, Vol. 1 at p. 326.

Article 17(5)(b) seems to reflect the presumption of carriers prima facie liability as discussed above; nevertheless, its position in the second paragraph makes article 17 unclear. On reading of Article 17(5)(a), the burden is on the claimant to prove (i) the unseaworthiness of the ship; (ii) the improper crewing, equipping, and supplying of the ship; or (iii) the fact that the parts of the ship or the containers were not fit and safe for reception and on the carrier to disprove the same or alternatively prove that the carrier complied with its obligation to exercise due diligence. 2. Article 51(2)(a) of the Rotterdam Rules requires that, when there is a non-negotiable transport document, the shipper (who is always presumed to be the initial controlling party) must give all original documents that were issued to the person to whom he wants to transfer the right of control. Although this may seem prudent, it also can be quite impractical. Suppose, certain persons, who have an original copy, cannot be reached, or located? This would make the transfer of the right of control a very difficult task at times, impossible. It would be more practical that the carrier be informed of when the right of control is transferred, with all relevant information about the new controlling party (as is the case in art. 51(1)(b)). This anomaly is brought out even more in art. 51(2)(b), which does not permit the controlling party to exercise his right of control vis-vis the carrier unless he can produce all the original documents. This seems to be unreasonable, because if the shipper has transferred the right of control to someone else, that person should be able, through some practical means to exercise his right of control. (The same issue arises in art. 51(3).) VI. Conclusion: I therefore strongly believe and recommend that the Rotterdam Rules be opposed and neither signed nor adopted, but that they be returned to Working Group III of UNCITRAL for revision. A new Multimodal Convention along the lines of the United Nations Convention on International Multimodal Transport of Goods (1980) should be adopted. I would appreciate receiving your comments, suggestions, criticisms etc. Respectfully submitted,

William Tetley Prof. William Tetley, C.M., Q.C. McGill Law Faculty 3660 Peel Street, Room 1112 Montreal H3A 1W9 CANADA E Mail: william.tetley@mcgill.ca

Website entitled "TETLEY'S MARITIME & ADMIRALTY LAW" at http://www.mcgill.ca/maritimelaw/ Phone Business (514) 398-6619; FAX (514) 398-4659 Phone Residence (514) 733-8049

W.T.: Summary of General Criticism of Rotterdam Rules, Dec. 20, 2008