Development of the International Legal Regime for the Carriage of Goods by Sea Essay (Critical Writing)

How it Has Translated into the UK’s Maritime Law

The development of the international legal regime for the carriage of good by sea has taken a long path over the years as it seeks to promote fairness and a sense of responsibility to all the parties. For a long time, sea carriers enjoyed their immense bargaining power that they used to their advantage.¹ Using that power, they would insist on inclusion of clauses into the contract of carriages, which exempted them from any liabilities, including the basic common law liabilities.² They would get away with acts of negligence and other mistakes that led to a serious loss for the shippers. The shippers had limited option but to bear such losses because of the bargaining power of the sea carriers. Many countries around the world tried to come up with pieces of legislation to curb the power of the sea carriers in response to the complaints registered by the shippers and consignees. However, the national-level laws did very little in curtailing the unlimited freedom and power of the sea carriers. The failure of such national-level legal regimes was because the contract would be signed in one country and goods received in a different country. It became apparent that no single country could come up with effective laws to manage the unfair contract that favored sea carriers. As the relevant of international trade became evident at the turn of the last century, individual countries felt committed to working with other countries to streamline sea transport.³ The international community realized that to promote international trade, it was necessary to develop international legal regime to protect the interest of all the parties involved in the sea transport.

It was necessary to come up with flexible laws that allocated risks that occur during transportation in line with the commercial needs. The laws also emphasized on the elimination of abuse of power by protecting the parties with weak bargaining power. It was necessary to promote fairness to all the parties at all times. Every party had to be liable to mistakes committed by them, especially if such mistakes led to any direct or indirect loss to other parties. The international community committed to developing a legal regime that would be binding on all the stakeholders in this industry irrespective of their location. Nikaki and Soyer say that the effort by the international community “led to the drafting and implementation of the Hague Rules in 1920, which was the first ever international convention to unify certain rules relating to bills of landing and set forth a minimum protection for the cargo interest.” ⁴ This was a major step towards the development of an international legal regime for carriage of goods by sea. Amendments have been made to this regime to help ease sea transport and to ensure that every stakeholder takes responsibility whenever they have a role to play. Although the regime was strongly supported by shippers, the carriers were strongly opposed to it.⁵ For the first time, they found themselves in situations where they could not take advantage of the immense bargaining power they had.

Hamburg Rule was later developed with the primary goal of balancing the interest of the carriers and shippers.⁶ The rule was an alternative to Hague-Visby regime that the carriers strongly resented because it was seen to favor shippers. The international community, therefore, created an alternative rule that would take into consideration the interest of these two parties. However, the rule failed to get the support of top shipping powers around the world.⁷ The shippers viewed it as a major setback to the achievements that had been made through the previous regime. The failure of the Hamburg Rules to attract the support of major stakeholders meant that alternative regimes had to be developed that is acceptable to all the stakeholders. One of the biggest challenges that the international community often faces when developing the legal regime to govern carriage of goods by sea is the conflicting interests of both the shippers and the carries.⁸ Both parties are keen on bearing as minimal responsibility as possible. On the one hand, shippers feel that carriers enjoy immense power, which they use to ensure that the contracts they sign always favor them. On the other hand, carriers feel that the new regimes are increasingly benefitting the shippers at their expense.⁹ They feel that these new international laws are specifically put in place to frustrate them. It is the responsibility of the international community to ensure that the interests of both parties, and other parties involved in these activities, are protected. It explains why sometimes it often takes long to come up with relevant rules and implement them as would be desirable to both parties.

Currently one of the most current international rules that are guiding maritime contracts is the Rotterdam.¹⁰ It has taken long to come up with this convention. The regional trading blocs tried to come up with regimes that they believe would protect their interests.¹¹ However, lack of universal inclusivity made it difficult to implement these regional rules. It was easy for the players, especially the sea carriers, to circumvent most of these regulations based on the laws applicable in other regions. The stakeholders considered necessary to come up with an internationally recognized regime that would address the weaknesses of the existing laws. It is important to note that the international legal regime for the carriage of goods by sea is still in its developmental stage. The Rotterdam Rule is yet to be fully accepted by some countries. A number of contentious issues still need to be addressed for all the players to feel fully covered by these laws.

How it Has Translated into the UK’s Maritime Law

Development of the international legal regime for the carriage of goods by sea has had significant impact on the United Kingdom’s maritime laws. When the Hague Rules came to force in 1924, the United Kingdom was one of the few countries to denounce it.¹² The leaders felt that the new laws did not protect the interest of the local business community, especially the large sea carriers. However, that changed in 1968 when the country embraced the international maritime regime to protect the interests of its own local companies. The United Kingdom is one of the leading exporters in the world. The country also imports a significant amount of products from the United States. It also imports raw materials and agricultural produce from Africa. The business community in this country is affected by the laws governing the transportation of goods by sea. The pressure that shippers and the business community exert on the government in United States, Germany, Japan, and many other countries that have ratified these international conventions is the same pressure that the local government in the United Kingdom faces.

The United Kingdom’s maritime laws have been transformed significantly by the development of the international legal regime for the carriage of goods by sea. The United Kingdom is one of the countries that have tried to come up with legislations at the national level to govern maritime activities.¹³ However, such attempts have failed because of the loopholes they have. Carriers often consider signing contracts favorable to them in countries, which do not have harsh laws. These are some of the reasons, which have made it necessary for the country to streamline its laws with that of the international community. Although sometimes it may be challenging, for the country to adopt some of these international laws because of local interests, the country has to come to terms with the fact that it cannot have its laws to govern the international maritime activities.

The Concept of Uniformity

The concept of uniformity has forced many nations around the world to embrace the international legal regime for the carriage of goods by sea.¹⁴ It is important to appreciate that each country may have its priorities based on socio-political and economic forces it faces. However, the national interests must be closely balanced with the international interests. Currently, it has become clear that no single nation can enact laws, which can significantly influence maritime contracts. It is also evident that individual countries cannot continue to ignore the need to come together to enact laws that can regulate activities related to carriage of goods by sea. Countries need to work together in coming up with laws that can help streamline these activities. That is why the concept of uniformity has increasingly become relevant in the modern society as countries struggle to look for common solutions to the issue at hand.

According to Nikaki and Soyer, “Convention of contracts for the international carrying of goods wholly or partly by sea” was adopted on December 11, 2008, by the United Nations General Assembly in Rotterdam, South Holland.¹⁵ This was a major milestone in the development of international legal regime for the carriage of goods by sea. Its primary focus was to modernize the other existing rules related to contracts of maritime laws. Some of the laws it sought to replace include The Hague Rules, The Hamburg Rules, and The Hamburg Rules. One of the fundamental goals of any international instrument that focuses on the regulation of international trade is to enhance legal certainty.¹⁶ It is important to know that irrespective of the country within which the law will be applied, the parties should know what to expect. If one party is liable, it should be clear what the law says, and one should be less concerned about the country’s internal legal structures.

Comparing the Practice in the UK with That of the US

The United Kingdom is currently one of the countries that have embraced the concept of conformity when it comes to maritime laws. According to Nikaki and Soyer¹⁷, “The Carriage of Goods by Sea Act of 1971” was enacted by the United Kingdom as a Parliament Act to help streamline the country’s maritime laws with an international legal regime for the carriage of goods by sea. The Act was specifically meant to incorporate the Hague-Visby Rules into the English Law. As mentioned above, the United Kingdom is one of the countries that denounced the Hague-Visby Rules when it was first introduced in 1924. However, the events after the First and Second World Wars that saw it lose its prestigious position at the top world power made it necessary for the country to embrace these laws. It was not until 1971 that the laws became deeply entrenched into the country’s legal system through an Act of Parliament.

The United Kingdom is one of the countries that made it difficult for the Hamburg Rules to be successful. The Hamburg Rules focused on addressing the weaknesses of the Hague Visby Rule.¹⁸ However, the new rule was ratified by only 20 countries. The major international trade states, including the United Kingdom, failed to ratify it. The local practices and the fact that the country had embraced the Hague Visby Rules through an Act of Parliament made it difficult to ratify Hamburg Rules. The same trend that the United Kingdom took when it came to the ratification of the Hamburg Rules has been replicated with the much-publicized Rotterdam Rules. Although viewed as the most modern international regime that can help in governing the carriage of goods by sea, only 25 states. Of the 25 states who are signatories to this rule, only three have ratified it. They include Congo, Spain, and Togo. Once again, the major international trading states such as the United Kingdom and the United States are reluctant to ratify this law.

The practice in the United Kingdom closely compares with that in the United States. In the United States, a trend has been witnessed where local interests are valued over the international community requirements. In 1924, the United States became a signatory to the Hague Visby Rule, but the country has not been keen on ratifying it. The country also became a signatory to the Rotterdam Rules, but it has never ratified the law. It is evident that both the United States and the United Kingdom are reluctant when it comes to the ratification of these international laws. Both countries appreciate the need to have an international legal regime to govern contracts involving carriage of goods by sea. In practice, however, they are both keen on ensuring that they put local interest first.

Reviewing Relevant Sources

The international legal regime for the carriage of goods by sea currently relies on a number of conventions, some of which are yet to be fully accepted universally by all the affected countries. However, an important progress has been made to ensure that parties are held responsible for their actions in this industry.¹⁹ The immense bargaining power that the sea carriers had in the past is being regulated. These companies currently appreciate that they must remain responsible, especially in ensuring the seaworthiness of their ships before they can be released to the high seas. The shippers also have their responsibility to the sea carriers and other stakeholders that they must respect. The following are the relevant sources of law that have been governing carriage of goods by sea.

The Hague Rules

On August 25, 1924, several world leaders met in Brussels with the aim of unifying certain rules related with bills of landing.²⁰ These leaders were forced to enact universal laws that would be binding to all the member states who were signatories. They came up with a protocol that was named the Hague Rules. It outlined the roles and responsibilities of various stakeholders, especially the sea carriers and the shippers. The primary goal of this convention was to limit the excess power of the sea carriers that made it easy for them to avoid any liabilities, including those arising from their acts of negligence.²¹ The Hague Rules became the first a source of the international legal regime that governed sea transport. The United Kingdom avoided this international protocol.

The Hague-Visby Rules

On February 23, 1969, another convention was held to address challenges associated with the Hague Rules.²² As the first international protocol that governed carriage of goods by sea, The Hague Rules had a number of limitations that had made so many countries avoid its ratification. As such, a more acceptable version was needed. World leaders focused on addressing the contentious issues that had been raised with regard to the Hague Rules. Major amendments were made the existing international laws to accommodate varying views. Of importance was to ensure that the interest of individual countries and major world corporations, including sea carriers and shippers, were taken into consideration but in a fair manner. The United Kingdom was one of the countries that ratified this international protocol through an Act of Parliament.

The Hamburg Rules

On March 31, 1978, world leaders once again had another convention in Hamburg, New York, to address issues raised by the members relating to the Hague-Visby Rules.²³ The goal of this convention was to develop a uniform legal base that would govern the transportation of goods by sea.²⁴ The convention was specifically driven by the desire of developing countries to have a leveled playing field because the existing laws were considered favorable to the companies in developed nations. It is, therefore, not surprising that most of the countries that ratified it were from Africa. The Hamburg Rules never achieved any significant success because it was never ratified by all the major economic powers, including the United States, Japan, and the United Kingdom.

The Rotterdam Rules

The Rotterdam Rules are some of the most recent sources of the international legal regime governing the transportation of goods by sea. It was drafted on December 11, 2008, and signed on September 23, 2009.²⁵ The Rotterdam Rule is the 21^st century legal structure that was seen as comprehensive in addressing major concerns by stakeholders involved in the sea transport industry. The parties agreed that it would become effective if it were ratified by at least 20 states. It is yet to become effective.

Case Law

Case laws are also important sources of the international legal regime governing the transportation of goods by sea. In the United Kingdom, the precedents set by higher courts often form a strong legal basis for the lower courts.²⁶ The decisions made by the Supreme Court of the United Kingdom are binding to the lower courts when presented with a similar case.

Bibliography

Berlingieri Francesco, International Maritime Conventions (2nd edn, Routledge 2014).

Carbone Sergio and Mattina Andrea, ‘Uniform international Law on the Carriage of Goods by Sea: Recent Trends Toward a Multimodal Perspective’ (2013), vol. 5, no. 1, International Courts and the Development of International Law, p. 827.

Carr Indira and Stone Peter, International Trade Law (Taylor & Francis Group 2014).

Djadjev IIian, The Obligations of the Carrier Regarding the Cargo: The Hague-Visby Rules (Springer 2017).

Dunt John, International Cargo Insurance (2nd edn, John Wiley & Sons, 2012).

Eftestøl-Wilhelmsson Ellen, European Sustainable Carriage of Goods: The Role of Contract Law (Wiley & Sons 2016).

Glass David, Freight Forwarding and Multi Modal Transport Contracts (Taylor & Francis Group 2012).

Goode Roy, Kronke Herbet, and McKendrick Ewan, Transnational commercial law: International instruments and commentary (Oxford University Press 2012).

Halliday Terence, ‘The theory of transnational legal orders’ (2016), vol. 110, no. 1, Proceedings of the ASIL Annual Meeting, p. 65.

Larcon Jean, New Silk Road: China Meets Europe in the Baltic Sea Region, a Business Perspective (World Scientific 2017).

Nikaki Theodora and Soyer Baris, ‘A New International Regime for Carriage of Goods by Sea: Contemporary, Certain, Inclusive and Efficient, or Just another One from the Shelves’ (2012), vol. 30, no. 2, Berkeley Journal of Internal Law, p. 304.

Rogers Antony, Chuah Jason and Dockray Martin, Cases, and Materials on the Carriage of Goods by Sea (Cengage 2016).

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Shicun, Wu, Maritime Security in the South China Sea: Regional Implications and International Implications (3rd edn, Taylor & Francis Group 2016).

Soyer Baris and Tettenborn Andrew, Carriage of Goods by Sea, Land, and Air: Uni-Modal and Multi-Modal Transport in the 21^st Century (Taylor & Francis Group, 2014).

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Usman Khan, Theory and Practice of International Economic Law (Malthouse Press 2017).

Wiedenbach Lina, The Carrier’s Liability for Deck Cargo: A Comparative Study on English and Nordic Law With General Remarks for Future Legislation (3rd edn, Springer Science and Business Media 2015).

Yaodong Yuan and Chang Yu, ‘The One Belt One Road Initiative and Its Impact on Shipping Law in China’ (2017), vol. 87, no. 2, Marine Policy, p. 294.

Zhao Lijun, ‘The Limited Scope of Seaborne Cargo Liability Regime: New Political–Economic Environments in The 21st Century’ (2016), vol. 43, no. 6, Maritime Policy & Management Journal, p. 762.

Footnotes

1. Sergio Carbone and Andrea Mattina, ‘Uniform international Law on the Carriage of Goods by Sea: Recent Trends Toward a Multimodal Perspective’ (2013), vol. 5, no. 1, International Courts and the Development of International Law, p. 827.
2. Yuan Yaodong and Yu Chang, ‘The One Belt One Road Initiative and Its Impact on Shipping Law in China’ (2017), vol. 87, no. 2, Marine Policy, p. 294.
3. Gregory Shaffer and Terence Halliday, ‘With within and beyond the state: The promise and limits of transnational legal ordering’ (2017), vol. 9, no. 3, Law Research, p. 12.
4. Theodora Nikaki and Baris Soyer, ‘A New International Regime for Carriage of Goods by Sea: Contemporary, Certain, Inclusive and Efficient, or Just another One from the Shelves’ (2012), vol. 30, no. 2, Berkeley Journal of Internal Law, p. 304.
5. Lijun Zhao, ‘The Limited Scope of Seaborne Cargo Liability Regime: New Political–Economic Environments in The 21st Century’ (2016), vol. 43, no. 6, Maritime Policy & Management Journal, p. 762.
6. Denis Rumley, Sanjay Chaturvedi and Mat Yasin, The Security of Sea Lanes of Communication in the Indian Ocean Region (Taylor & Francis Group 2015).
7. Antony Rogers, Jason Chuah and Martin Dockray, Cases, and Materials on the Carriage of Goods by Sea (Cengage 2016).
8. Wu Shicun, Maritime Security in the South China Sea: Regional Implications and International Implications (3rd edn, Taylor & Francis Group 2016).
9. Jean Larcon, New Silk Road: China Meets Europe in the Baltic Sea Region, a Business Perspective (World Scientific 2017).
10. Indira Carr and Peter Stone, International Trade Law (Taylor & Francis Group 2014).
11. Terence Halliday, ‘The theory of transnational legal orders’ (2016), vol. 110, no. 1, Proceedings of the ASIL Annual Meeting, p. 65.
12. Baris Soyer, and Andrew Tettenborn, Carriage of Goods by Sea, Land, and Air: Uni-Modal and Multi-Modal Transport in the 21^st Century (Taylor & Francis Group, 2014).
13. John Dunt, International Cargo Insurance (2nd edn, John Wiley & Sons, 2012).
14. Paul Todd, Principles of the Carriage of Goods by Sea (McMillan Publishers 2016).
15. Theodora Nikaki and Baris Soyer, ‘A New International Regime for Carriage of Goods by Sea: Contemporary, Certain, Inclusive and Efficient, or Just another One from the Shelves’ (2012), vol. 30, no. 2, Berkeley Journal of Internal Law, p. 304.
16. Lina Wiedenbach, The Carrier’s Liability for Deck Cargo: A Comparative Study on English and Nordic Law With General Remarks for Future Legislation (3rd edn, Springer Science and Business Media 2015).
17. Theodora Nikaki and Baris Soyer, ‘A New International Regime for Carriage of Goods by Sea: Contemporary, Certain, Inclusive and Efficient, or Just another One from the Shelves’ (2012), vol. 30, no. 2, Berkeley Journal of Internal Law, p. 304.
18. Lina Wiedenbach, The Carrier’s Liability for Deck Cargo: A Comparative Study on English and Nordic Law With General Remarks for Future Legislation (3rd edn, Springer Science and Business Media 2015).
19. Ellen Eftestøl-Wilhelmsson, European Sustainable Carriage of Goods: The Role of Contract Law (Wiley & Sons 2016).
20. Francis Rose, Blackstone’s Statutes on Commercial & Consumer Law 2015-2016 (Oxford University Press 2015).
21. Francesco Berlingieri, International Maritime Conventions (2nd edn, Routledge 2014)
22. Khan Usman, Theory and Practice of International Economic Law (Malthouse Press 2017).
23. David Glass, Freight Forwarding and Multi Modal Transport Contracts (Taylor & Francis Group 2012).
24. IIian Djadjev, The Obligations of the Carrier Regarding the Cargo: The Hague-Visby Rules (Springer 2017).
25. Francis Rose, Blackstone’s Statutes on Commercial & Consumer Law 2015-2016 (Oxford University Press 2015).
26. Roy Goode, Herbet Kronke, and Ewan McKendrick, Transnational commercial law: International instruments and commentary (Oxford University Press 2012).