Loss or Damage of goods


Statement of fact

1. Loss or Damage of goods between delivery of goods and their loading on the ship as well as the completion of discharge all are governed by the national law. A solution that normally avoids such duality of regimes was found by the Hamburg Rules, pursuant to which the period of responsibility of the carrier covers the period during which the carrier is in charge where the goods are loaded, during the carriage and at the port of discharge. Normally, the goods at taken in charge and are delivered outside the port areas.

But none of the existing instruments applies to the whole contract period when the carrier undertakes to take the goods in charge at the door of the shipper and to deliver them at the door of the consignee, as gradually has become more and more frequent with the advent of containers.

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The industry has since 1971 felt the need for a unique instrument governing the whole transport performed by different modes and BIMCO issued a form of combined transport bill of lading which, after setting out general rules on the liability and constraint of liability of the carrier, that where the loss or damage occurred can be proved in international conventions or the national law, the carrier and the merchant are entitled to liability determined by the provision which cannot be departed from to the detriment of the merchant and would have applied if the merchant had made a separate contract with the carrier in respect of that particular stage of transport where loss or damage occurred.

In such rules the general provision on the liability of the carrier based on article 5(1) of the Hamburg Rules, but for loss, damage or delay in respect of goods "carried by sea" the exemptions granted by article 4(2)(a) and (b) of the Hague- Visby Rules apply as well as the due diligence obligation to make the sip seaworthy at the commencement of the voyage.

2.Continuous development of electronic communications and the fact that so far the attempts to create a workable system allowing the replacement of paper documents by electronic records have not been successful, the provisions regulating such possible replacement have been drafted in such a way as to allow their application whatever future system may in the future be envisaged.

3. When it was considered whether and to which extent the sub-contractors of the carrier, called performing parties, should be subject to the Rotterdam Rules and liable to be sued by the shipper or consignee, it was decided that it would be convenient to do so only in respect of services rendered at sea or in the ports and therefore the notion of maritime performing party was created, thereby incorporating in the Rotterdam Rules the principles on which the Himalaya clause is based. Article 19(5), therefore extends the rule adopted in article 10 of the Hamburg Rules to sub -contractors performing services ashore but within the port areas and provides that a obligation and liabilities imposed on the carrier which is the maritime performing party and they are also entitled to the carrier's defenses and the limits of liability as provided in the Rotterdam rules.

4. In the Hamburg rules and Hague- Visby rules does not have any conditions in respect of the rights and the obligation of the parties relating to the delivery of the goods after their arrival at destination. The problems that may arise are instead various: from the right of the carrier to withhold the goods if freight is not paid, to its powers in case nobody appears to take delivery of the goods, or to the request of delivery by a person that has failed to properly identify itself or that does not surrender the negotiable transport document. All such problems must therefore be solved on the basis of either the proper law of the contract or the lex fori and the ensuing uncertainty is obvious.


1. This discussion aim is to compare the Rotterdam Rules (RR) and Hague Visby Rules (HVR) and to explore the main differences between them in order to identify the RR advantages.

The HVR are viewed as a documentary approach, this can be clearly seen in article 1 "Definition of contract of carriage". In contrast The RR's basic approach is contractual which is supplemented by a combination of a type of trade and a documentary approach.

Definition of contract of carriage

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The HVR contract of carriage (article 1. b) provision is validated only once bill of lading or document of title is issued and does not work on the basis of the obligations of the parties. While the RR contract of carriage rule (article 1.1) defines the obligation of the carrier which is the carriage of goods against payment from one place to another. The Rotterdam Rules also differ in the fact that the rule is extended to the carriage by other modes if the parties have agreed accordingly. In comparison to The HV definition the RR of contract of carriage gives a broader definition with wider application which includes multimodal issues.

Geographical scope of application

The HVR's of Geographical scope of application Article 10, it is compulsory that either the bill of lading or the port of loading be located in a contracting State, or when national legislation giving effect to them is incorporated in the bill of lading. The HVR's are not relevant to a contract from a port located in a non-contracting State to a port of discharge located in a contracting State. Also nations of who have adopted the HVR's may be implemented with variations under national legislation. Under this application issues of considerable uncertainty and of lack of homogeny arise resulting in misinterpretation and varying judgements in matters of dispute. As per the Article 5 in RR, geographical scope of application is the places of delivery and receipts (door to door contracts). The RR's apply regardless of whether a bill of landing or similar document was issued or not.

Period of application and period of responsibility of the carrier

Defined under article 1(e) of the HVR, the period of their application is from the beginning of loading of the goods on the ship to the completion of their release from the ship. Therefore the carrier responsibility under the HVR begins at the time of loading and ends at time of discharge. As a result of this the carrier period of responsibility does not cover the goods before their loading on board ship or after their release even though the carrier is in charge of the goods throughout this period of time. Article 12.1of the RR the period of application and the period of responsibility of the carrier match with that during which the carrier is in charge of the goods, The carrier shall be responsible for the goods from "receipt" until "delivery" not from "loading" to "discharge".

Obligations and Liability of the carrier

The obligations of the carrier under the HVR (article 2, article 3.1 &3.2) is to make the ship seaworthy at the beginning of the voyage, to care for the cargo and to exercise due diligence. However, the carrier is relieved from the obligation of providing a seaworthy ship once sailed from the port.

In the RR (article 11, article 13.1& 13.2, article 14) also includes the above obligations. However, there is no such exception regarding a ship's seaworthy once departed from the port and throughout the journey. The carrier remains obligated to take all possible actions to maintain a seaworthy ship.

When comparing Liability of the carrier of the HVR ( article 4.1 & 4.2) and the RR the main difference is the HVR pardoned from liability a) with respect to damage of goods or loss arising or resulting from unseaworthiness unless caused by the breach by the carrier of his due diligence obligation and, b) and the damage to the goods arising from fault of the master, mariner, pilot, in the management of the ship and for damage to the goods due to fire caused by fault of the crew. However, the RR (article 17.1, 17.2, 17.3) states that the carrier is always liable for loss, damage or delay caused by fault of the carrier, his servants or agents.

Obligations and liability of the shipper

The HVR have three provisions on the obligations and liability of the shipper in article 3.5, 4.2 & 4.6 although The RR regulate in chapter 7 (articles 27-34) details the obligations and the liability of the shipper in more depth. The main difference of the RR is special rules for dangerous goods and documentary inaccuracies in relation to such goods. Under the obligation the shipper has to inform the transporter of the precarious nature of the goods to mark or label such goods in accordance with any applicable law or regulation. If the shipper fails to comply with his obligations he is strictly liable for all loss or damage which may result and is not entitled to limit.

Limitation of liability and time of suit

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As with HVR the carrier loses his right to limit if the loss, damage or delay results from a personal act or omission done with intent or recklessly knowing that the loss or damage would probably result. The carrier also loses his right to limit if he carries goods on deck in breach of an express agreement to carry them under deck. The type of claims in respect of which the carrier may claim the right to limit has also been expanded under the RR to now include claims of tort and bailment and also mis-delivery (article 59.1). This is wider in scope than the provision under the HVR, which limited the right to limit to claims for loss or damage related to the goods.

Under the RR time for suit has been extended from the HVR 1 year period to 2 years.

The RR has raised levels Liability compensation, the carrier's liability is limited to 3 SDR's per kilo or 875 SDR's per package. At present The HVR limits carriers liability to 2 special drawing rights (SDR's) per kilo or 666 SDR's per package whichever is the higher.

2. The following elements of the RR do not exist under the HVR of 1968. Changes in technology, trade and disputes of liability have validated the provisions of Electronic Commerce, Delivery of the Goods, Maritime Performing Parties, and Transfer of rights, Jurisdiction, Arbitration and Carriage beyond the sea leg to be included.

Electronic Commerce

Under the RR all the transport documents are recorded in an electronic transport document record, with the consent that the electronic transport record is with the carrier and the shipper. It should also have the same effect as the transport document" (or bill of landing), possession or transfer of a transport document. It is anticipated that by including such provisions the Convention will be equally applicable to electronic trading.

Delivery of the Goods

As per the contract of carriage, the consignee has to accept the delivery of goods within the specified time period and at the decided location in the contract, and if the consignee fails to follow the terms of agreed agreement, the following could occur,

  • Customs.
  • Usages or practices of the trade.
  • The circumstances of the carriage.

In addition under the RR provisions a carrier can deliver the goods without production of the original transport document in prescribed circumstances, where the transport document which states delivery of goods without production.

However the method is evaded with caution and does not give total protection to a carrier, in particular if a third party has acquired rights against the carrier before delivery, of which the carrier is most unlikely to be aware.

Rights of the controlling party:

The right of control is limited for the controlling party in the following ways:

  • Right to modify in respect of goods, that does not constitute any variation in the contract of carriage.
  • Right to obtain delivery of goods.
  • Right to replace the consignee by any other person including the controlling party.

Maritime Performing Parties

"Performing party" is a person(s) or party that performs contract of carriage under carrier's obligation with all the obligations of the receipts, loading, handling, unloading and delivery of the goods. Introduced under The RR obligations and liabilities of maritime performing parties says a party other than the contracting carrier who performs any part of the sea leg or provides services ancillary to the sea leg. Stevedores and terminals acting normally as sub-contractors of the carrier would be "maritime performing parties" as would sea carriers performing under an e.g. a bill of lading, now "Transport Document". Such a performing party is subject to the same liabilities and responsibilities as the carrier but essentially only whilst it has custody of the cargo. Regardless, the carrier remains liable in the contract of carriage for the whole performance.

Transfer of rights:

Article 57 of the RR regulates the manner in which the holder of a negotiable transport document may transfer the rights incorporated therein.

Article 58 regulates the situations in which the holder of a negotiable transport document assumes liabilities under the contract of carriage.

Jurisdiction and Arbitration

Under the Court Jurisdiction provision of the RR, a claimant with a wide choice of jurisdictions connected with the carriage namely domicile of the carrier, unloading port, delivery of the goods, or discharge port, in which to bring claims. It also prevents a carrier from commencing pre-emptive proceedings.

The provision provide parties with the contract of carriage where they can agree the carriage of goods and its related disputes under the RR can be referred to arbitration and that the arbitration proceedings shall take place either as agreed in the arbitration agreement or at the option of the claimant in any of the jurisdictions specified under the jurisdiction provisions.

Carriage beyond the sea leg

In contract of carriage between states, the following rules will apply:

  • Place of receipt
  • Port of loading
  • Place of delivery
  • Port of discharge is in a contracting State (Article 5, Rule 1).

It will not apply to charter parties for use of a ship neither in liner transportation or carriage in non liner transportation until there is no charter party and a transport document is issued (Article 6 Rules 1 & 2).