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127 WHILE THE HAMBURG RULES establish liability for loss, damage or delay of goods during carriage, the United Nations Convention on the Liability of Operators of Transport Terminals applies immediately before and after carriage, when the goods are being loaded, unloaded or stored. This Convention was adopted by the General Assembly on 17 April 1991, prior to which the issue of transport terminal operator liability had received little attention from the international community.
128 This Convention has not yet entered into force. As at 2 September 1999, only Egypt and Georgia had acceded to the Convention. While France, Mexico, the Philippines, Spain and the United States have all signed the Convention, signing only represents an intention to ratify and is not binding. The Convention must be ratified by three further States before it enters into force; the issue we address is whether New Zealand should be one of these States.
129 A transport terminal “operator” is defined as:
a person who, in the course of his business, undertakes to take in charge goods involved in international carriage in order to perform or to procure the performance of transport related services with respect to the goods in an area under his control or in respect of which he has a right of access or use.118
Operators are responsible for the goods from the time they take charge of them, to the time they make them over to the party entitled to take delivery of them (article 3). The Convention applies where transport-related services119 are performed in a State which is party to the Convention (a “Party State”), or by an operator whose place of business is located in a Party State. It also applies where the services are governed by the law of a Party State (article 2(1)(c)).
130 Article 5 details the basis of the operator’s liability. An operator will be liable for loss resulting from loss, damage or delay during the time the operator is responsible for the goods, unless he or she (or his or her servants or agents) took all measures that could reasonably be required to avoid the loss and its consequences. The burden of proof is on the operator. Liability for delayed goods is limited by article 6(2) to two and a half times the charges payable to the operator for services in respect of the delayed goods, and not exceeding the total charges payable in respect of the whole consignment. This cap on liability for delayed goods could lead to the same artificial distinctions being drawn between delayed and damaged perishable goods as those identified in respect of the Hamburg Rules.120 Where loss is caused by the intentional or reckless act or omission of the operator or his or her agents, then the limitations on liability contained in the Convention will not apply (article 8(1)).
131 Article 11(1) provides that unless notice of loss or damage is given within three days of an operator handing over goods to the person entitled to receive them, the handing over is prima facie evidence that the goods were as described or in good condition. However, if the operator participated in an inspection of the goods at the point of handing over, then no such notice need be served.
132 In the event that “dangerous goods” (not defined in the Convention) are handed over to an operator and he or she is not informed of their dangerous character, under article 9 the operator may “take all precautions the circumstance may require”, including destroying the goods. Furthermore, an operator is entitled to be reimbursed for all costs incurred in taking such measures, and a failure to reimburse will activate the rights of security in goods outlined in article 10. That article provides that the operator has a right of retention over goods for costs due in connection with the services performed by him or her. However, this right may not be exercised if a sufficient guarantee is provided, or if an equivalent sum is deposited with a mutually acceptable third party or official institution (article 11(2)).
133 The Contracts (Privity) Act 1982 applies where one person contracts for the benefit of a sufficiently designated third party and there is no intention that this person should be a contracting party. A third party operator can therefore benefit from a contractual term excluding liability, provided that the contract is governed by New Zealand law. However, if the contract is governed by the law of another country, it is unlikely that either a New Zealand court or a foreign court will permit a third party to sue in reliance on the Contracts (Privity) Act.121
134 Himalaya clauses limit the liability of stevedores and others, including operators, when such persons are mentioned in the relevant bill of lading. The name for the clauses derives from the ship Himalaya in the case Adler v Dickson,122 in which a ship’s master was sued in respect of injuries sustained by a passenger. Himalaya clauses provide an exception to the privity principle that only parties to a contract can benefit from its terms, such as a term excluding liability. The contract is between the carrier and the shipper; however, the operator (and his or her agents) benefit from the exclusion.123 In New Zealand Shipping Co Ltd v AM Satterthwaite and Co Ltd (The Eurymedon),124 the rationale for the stevedores avoiding liability was that the clause in the bill of lading could be treated as an offer of a unilateral contract; therefore, if those performing the main contract played their part (unloading the cargo), the consignor would hold them free from liability.125
135 The validity of Himalaya clauses has been the subject of much judicial debate. Where they have been upheld, there are usually dissenting judgments.126 However, recently in The Mahkutai,127 the Privy Council acknowledged that there was a commercial need for such a principle, and considered that there would come a time when these clauses would be recognised as a fully fledged exception to the privity doctrine. Burrows, Finn and Todd agree that giving effect to these clauses reflects commercial realities.128 The Hague Rules129 on the Carriage of Goods by Sea incorporate this principle in article 4 bis (2) by providing:
If such an action is brought against a servant or agent of the carrier (such servant or agent not being an independent contractor), such servant or agent shall be entitled to avail himself of the defences and limits of liability which the carrier is entitled to invoke under this Convention.
136 Article 7 provides that the defences to and limits of liability provided for in the Convention apply in any action against the operator, whether it is founded in contract, tort or otherwise. Chatterjee contends that article 13 of the Convention “sounds the death knell” of the Himalaya clause.130 Article 13 provides:
Unless otherwise provided in this Convention, any stipulation in a contract concluded by an operator or in any document signed or issued by the operator pursuant to article 4, is null and void to the extent that it derogates directly or indirectly from the provisions of this Convention.
137 Many international contracts for the carriage of goods by sea specify that the law of the United Kingdom is the applicable law. The doctrine of privity in the United Kingdom has recently been the subject of reform. The Contracts (Rights of Third Parties) Act 1999 (UK) confers on third parties the right to sue under a contract made for their benefit, doing away with the need for judges to engage in “jurisprudential gymnastics” such as relying on an implied contract to avoid the doctrine of privity (as in The Eurymedon).131
138 The Convention applies only to “international carriage”, which is defined in article 1(c) as carriage in which the place of departure and the destination are identified as being located in two different States. Therefore, domestic carriage within New Zealand would not be affected if this Convention were adopted.
139 While it may be preferable for New Zealand parties to specify New Zealand law as the applicable law in their shipping contracts, where this is not possible then the law of England and Wales may be a preferred option, given its similarities to New Zealand law. A prime consideration in enacting the Contracts (Rights of Third Parties) Act 1999 (UK) was to bring English law into line with the law of Scotland and the majority of European Union States, as well as with that of the United States, New Zealand and some Australian states.132
140 Given that none of New Zealand’s major trading partners is party to the United Nations Convention on the Liability of Operators of Transport Terminals, the Commission sees no benefit in adopting it and thereby introducing further uncertainty into what is already a complicated area of the law. The Contracts (Privity) Act ensures that under New Zealand law a third party operator can rely on exclusion clauses. Moreover, the introduction of similar legislation in the United Kingdom means there is already a degree of commonality with the law governing the majority of shipping contracts.
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