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107 IN NZLC R50, the Law Commission indicated its intention to consider the possibility of New Zealand adopting the United Nations Convention on the Carriage of Goods by Sea 1978 (otherwise known as the Hamburg Rules).105 In particular, the Commission intended to consider whether the Hamburg Rules were more suited to electronic commerce than the Hague-Visby Rules currently enshrined in Schedule 5 of the Maritime Transport Act 1994.
108 As at 2 September 1999, 26 countries106 had ratified or acceded to the Hamburg Rules; however, few of them are of great significance to New Zealand as trading partners. Interestingly, 11 of these 26 countries are landlocked. While the United States, France, Germany and the Philippines all signed the Convention, their action merely indicates an intention to ratify in the future and does not bind these countries. Given the time that has elapsed since these countries signed the Convention (1979 for the United States and France, 1978 for Germany and the Philippines), it seems unlikely that ratification will be forthcoming. Commentators agree that it would be necessary for a major trading nation to adopt the Hamburg Rules before the current regime could be displaced.107
109 The Hamburg Rules are underpinned by the principle that the cargo carrier is presumed to be liable in the event of damage or loss, subject to certain exceptions outlined in the Rules. The carrier generally bears the burden of proof.
110 The Hamburg Rules cover “any contract whereby the carrier undertakes against payment of freight to carry goods by sea from one port to another” (article 1(6)). This wide application extends to the paperless exchange of electronic data and agreements, to meet the modern demands of electronic commerce.108
111 Under article 10(1), the initial carrier of a consignment is responsible for its entire carriage to the port of destination, even where it is performed by subsequent carriers. This provision has the advantage of clearly establishing the defendant in legal proceedings, and the initial carrier can always recover damages from the culpable carrier if necessary (article 10(6)). An exception is contained in article 11(1), where a subsequent carrier named in the contract of carriage may also become a defendant.
112 The Hamburg Rules apply to both inbound and outbound cargo (article 2(1)). They do not apply to domestic carriage unless expressly incorporated into the contract of carriage.
113 The Hamburg Rules introduce a single test of liability: no distinction is drawn between the duty to ensure the ship is seaworthy, and the continuing obligation to care for the goods. Under article 5(1) a carrier will be liable unless it proves that it took all measures that could reasonably be required to avoid loss, damage and/or delay of the goods.
114 There is, however, a different rule regarding liability for delay or damage caused by fire, where the fire arose from the “fault or neglect” of the carrier (article 5(4)). The burden of proof falls on the claimant. Another reform favouring carriers relates to the amount recoverable in respect of goods that have been delayed. Article 6(1) limits this amount to an “equivalent to two and a half times the freight payable for the goods delayed, but not exceeding the total weight payable under the contract of carriage of goods by sea”. Waldron sees no logical reason why a limit should be imposed on liability for delay, but not for other damage, as delay is likely to be just as detrimental as physical loss.109 Different treatment may lead to attempts to benefit from the cap on liability by drawing fine distinctions between whether perishable goods have been delayed or damaged.
115 The Hamburg Rules continue to use the Special Drawing Rights of the International Monetary Fund (IMF) as the basic unit of account. Although the limits are higher than those in 1968, when inflation is taken into account, as Waldron observes, the new units of account actually represent a reduction in limits of liability in real terms.110
116 While the Hamburg Rules apply to any contract for the carriage of goods by sea, rather than being limited to bills of lading or similar documents, they do require a document to contain prescribed and detailed particulars. Waldron notes that it remains to be seen what a shipper is entitled to demand as a document when loading,111 although he does not mention the possibility of electronic documentation.
117 The Hamburg Rules would double the current limitation period for bringing proceedings to two years (article 20(1)). Actions for indemnity may be entertained after the expiry of the limitation period, subject to the conditions specified in article 20(5).
118 The Hamburg Rules and issues of civil liability were considered in 1992 by the Department then known as Maritime Transport, as part of a review of the Shipping and Seamen Act 1952. The outcome of that review was the Maritime Transport Act 1994. Contracts for the international shipment of goods by sea are currently regulated in New Zealand by what are known as the Hague-Visby Rules,112 which have force of law by virtue of section 209 of the Maritime Transport Act 1994.
119 The Hague-Visby Rules apply to contracts of carriage “covered by a bill of lading or any similar document of title” (article 1(b)), and are therefore more restrictive than the Hamburg Rules in that a particular document is specified. The Hague-Visby Rules can be interpreted as requiring the existence of a physical document,113 and therefore imposing restrictions on those wanting to use electronic systems for trade documentation. Section 13(5) of the Mercantile Law Act 1908 currently provides that regulations may be made for the application of the Act to cases where a network or other information technology is used for effecting transactions corresponding to the issue, endorsement, delivery or other transfer of a document to which the Act applies. While section 13(5) could facilitate the use of electronic trade documents, it is currently inactive as no such regulations have been passed. Even if regulations were passed providing that certain technology could be used, the issue arises as to whether an electronic document would be considered a “bill of lading” for the purposes of the Hague-Visby Rules.
120 The introduction of a single test of liability is perhaps the most significant way in which the Hamburg Rules differ from the Hague-Visby Rules, which impose a dual duty on the carrier to ensure the seaworthiness of the transporting vessel, and to take proper care of the goods (article 3(1) and (2)).
121 However the Hamburg Rules do not perpetuate the provision in the Hague-Visby Rules permitting a carrier to contract out of the standard of care prescribed in the latter Rules. Unlike the Hague-Visby Rules, the Hamburg Rules make no specific provision relating to deviation, which is instead subsumed into the general liability.
122 Under the Hague-Visby Rules, any suit for loss or damage must be brought within one year either of the delivery of the goods, or of the date when the goods should have been delivered, unless the parties agree on an extension to the period after the cause of action has arisen (article 3(6)). If no agreement has been reached, the claim will be entirely extinguished after a year if no proceedings have been brought. An action for indemnity against a third person may, however, be brought even after the expiration of the year, if brought within the time allowed by the law of the court seised of the case.114
123 If adopted, the Hamburg Rules would apply automatically should one of the following five situations outlined in article 2 be present:
(a) the port of loading as provided for in the contract of carriage by sea is located in a Contracting State, or
(b) the port of discharge as provided for in the contract of carriage by sea is located in a Contracting State, or
(c) one of the optional ports of discharge provided for in the contract of carriage by sea is the actual port of discharge and such port is located in a Contracting State, or
(d) the bill of lading or other document evidencing the contract of carriage by sea is issued in a Contracting State, or
(e) the bill of lading or other document evidencing the contract of carriage by sea provides that the provisions of this Convention or the legislation of any State giving effect to them are to govern the contract.
Article 2 also provides that the Convention applies only where carriage is between two different States, so domestic carriage within New Zealand would not be affected.
124 The Commission does not recommend adoption of the Hamburg Rules. Among industry groups there appears to be no demand for the Rules to become part of New Zealand law, and none of the submissions received in response to the Commission’s reports on electronic commerce115 favoured adoption. Furthermore, few of New Zealand’s major trading partners have adopted the Rules.
125 One advantage of the Hamburg Rules is their provision for electronic documentation. To take advantage of this provision, rather than adopting the Hamburg Rules wholesale, another possibility would be to pass regulations under section 13(5) of the Mercantile Law Act 1908 to give effect to electronic transportation documents. However, as noted above, the issue does arise as to whether an electronic document would be considered a “bill of lading” for the purposes of the Hague-Visby Rules. The Commission intends to comment further on these issues in its forthcoming third report on electronic commerce.
126 The Commission notes that market participants are forming non-regulatory solutions to the issue of acceptability of electronic trade documentation. The most significant example is the Bolero project.116 This project, which went live in September 1999, provides a common, open system by which businesses can exchange electronic trade data and documentation electronically.117
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