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Carriage of Goods by Sea Bill 1991

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House: Senate Portfolio: Transport and Communications Purpose To implement up- dated rules regarding the responsibilities and liabilities of those who carry goods by sea and for ship owners. This will be achieved by incorporating amendments to the current international convention and introducing a new convention that will not apply until adopted by Australia.

Background While shipping is very important to Australian trade, and in particular international trade, the Australian industry is very small and concentrated in areas such as bulk carriage. 1985- 86, world seaborn trade totalled 3 385 million tonnes. Of this, 7.7% was carried to or from Australia. Of the total tonne- miles of world seaborne trade in the same year, approximately 13.6% was trade to or from Australia. However, Australia's role in this trade is small. In 1985- 86, Australian flag carriers represented 0.6% of world tonnage and carried 4.1% of Australia's seaborne exports and 5.8% of seaborne imports. Australia's international shipping needs were serviced by 2 389 vessels (representing 6 682 ship visits) of which 51 vessels (251 ship visits) were controlled by Australian interests. 1

Coastal shipping has declined in importance as a freight carrier in Australia. Despite recent changes, the industry is largely uncompetitive when compared to other forms of freight transport (the main exception being bulk cargo). In the general freight area, other forms of transport are more competitive in terms of both cost and, importantly, delivery time. The latter is an inherent disadvantage for shipping. A large factor in the increase in road freight cartage has been the decline of the shipping industries role in this area, although rail's share has also declined.

The rules governing the liability of those who are responsible for the carriage of goods at sea are governed by international conventions which are rarely changed, with the current rules based on a 1924 agreement, the Brussels Convention for the Unification of Certain Rules of Law Relating to Lading.

On 30 March 1978, in Hamburg West Germany, a diplomatic conference adopted a convention titled the United Nations Convention on the Carriage of Goods by Sea 1978 (the Hamburg Rules). The Hamburg Rules were intended to replace the two international conventions which currently regulate international carriage of goods by sea. These are the Brussels Convention for the Unification of Certain Rules of Law Relating to Lading 1924 (the Hague Rules) (note: the Sea- Carriage of Goods Act 1924 provided for the incorporation of the Hague Rules into Australian law) and the 1968 Brussels Protocol to amend the International Convention for the Unification of Certain Rules Relating to Bills of Lading 1968 (the Hague- Visby Rules). The majority of nations concerned with international maritime transportation follow the Hague Rules.

After many years of use, it was generally recognised that the Hague Rules were in need of certain changes to suit modern developments in international maritime transportation. The Committee Maritime International therefore drafted amendments to the Hague Rules, which subsequently became known as the Hague- Visby amendments, and requested the Government of Belgium to convene a diplomatic conference to consider them. This conference resulted in the 1968 Protocol amending the Hague Rules. It was not until 1977 that the requisite number of ratifications were achieved, bringing the Hague- Visby Rules into effect (note: another conference was organised in December 1979 to reconsider the monetary units of the limitations stated in the Hague- Visby Rules, which resulted in an amendment, changing the units from Poincare gold francs to Special Drawing Rights). Even while the Hague- Visby Rules were being made, a new set of international maritime transportation laws were being developed, the Hamburg Rules. To date only 19 countries have acceded to the Hamburg Rules. A number of reasons have been given by commentators for the delay by the international community in adopting the Hamburg Rules, including: bureaucratic obstacles; uncertainty about the consequences of implementation for national law and policy; uncertainty about the commercial impact of the rules; and the political economic conflict between established maritime powers and developing maritime powers.

In the Second Reading Speech to this Bill, the Minister's stated reason for making provision for the incorporation of the Hamburg Rules into Australia is that "...the Government recognises the argument of the greater equity of the Hamburg Rules and the potential benefits for shippers that may accrue from a general international acceptance of the Hamburg Rules". The Minister also indicated that the Government did not propose to proclaim that part of the Bill dealing with the implementation of the Hamburg Rules. The reason given for this decision is the current international status of the Hamburg Rules and that its inclusion in the Bill is intended as a signal to the international community that Australia intends to adopt the Hamburg Rules when their international status is such that they can provide an alternative to the Hague- Visby Rules.

The principal features of the Hamburg Rules, as compared to the Hague Rules and the Hague- Visby Rules include: * the Hamburg Rules apply to all contracts for the carriage of goods by sea (Article 1). The Hague Rules apply only to contracts covered by a bill of lading or similar document of title;

* contracts for the carriage of all types of goods come within the Hamburg Rules (Article 1). The Hague Rules and Hague- Visby Rules, Articles I and 1, do not apply to contracts for the carriage of live animals or of cargo stated in the contract of carriage as being carried on deck;

* both the Hamburg Rules (Article 2.3) and the Hague Rules and Hague- Visby Rules (Articles V and 5) do not apply to charter- parties;

* the basic rules of carrier liability are set out in Article 5 of the Hamburg Rules. The carrier is liable for loss resulting from loss of, or damage to, the goods, or delay in delivery, if the occurrence which caused the loss, damage or delay took place while the goods were in the carrier's charge, unless they prove that they took all measures that could reasonably be required to avoid the occurrence and its consequences. Under the Hague and Hague- Visby Rules the carrier is bound before and at the beginning of the voyage to use due diligence to make the ship seaworthy, properly crew and equip it, and to make the vessel safe and fit for the carriage of the cargo (Articles III.1 and 3.1). By Article IV.1 of the Hague Rules and Article 4.1 of the Hague- Visby Rules, the carrier is not liable for loss or damage arising from unseaworthiness unless they have breached Article III.1 of the Hague Rules or Article 3.1 of the Hague- Visby Rules. Article III.2 of the Hague Rules and Article 3.2 of the Hague- Visby Rules require the carrier to properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. This duty is subject to certain exemptions contained in Articles IV.2 and 4.2 of the Hague and Hague- Visby Rules, including loss or damage resulting from: an act, neglect, default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship; fir, unless caused by the actual fault of the carrier; saving or attempting to save life or property at sea; strikes or lockouts or stoppage or restraint of labour from whatever cause; and perils, dangers and accidents of the sea or other navigable waters;

* the limits of liability under the Hamburg Rules provide for a dual formula, based on that found in the Hague- Visby Rules. The limits are the national currency equivalent of 835 International Monetary Fund Special Drawing Rights or 12 500 gold units per package or other shipping units and 22.5 Special Drawing Rights 37.5 gold units per kilogram of the gross weight of the goods lost or damaged (Articles 6 and 26). The corresponding provisions are set out in Articles IV.5 and IX of the Hague Rules and Article 4.5 of the Hague- Visby Rules. The limit under the Hague Rules is 100 pounds sterling or the equivalent in national currency per package or unit unless a declaration as to value is made by the shipper or a maximum in excess is otherwise agreed. The Hague- Visby Rules provide in addition to a package or unit criterion, a criterion based upon weight. The respective limits are the national currency equivalents of 10 000 Poincare gold frances per package or unit or 30 gold francs per kilogram of the gross weight of the goods lost or damaged, which ever is the higher;

* the Hamburg Rules require notice of loss, damage or delay to be given (Article 19). Written notice of loss or damage specifying its general nature is to be given to the carrier or a person acting on their behalf not later than the working day after the goods are handed over to the consignee (under the Hague Rules and Hague- Visby Rules, before or at the time they are removed into the custody of the person entitled to them). If the loss or damage is not apparent the period is extended to 15 days (under the Hague Rules and Hague- Visby Rules, 3 days);

* the Hamburg Rules provide that where all or part of the carriage is entrusted to another carrier, the contracting carrier remains liable in respect of the whole carriage and in respect of the part of the carriage performed by the actual carrier, the carrier is liable for the acts and omissions of the actual carrier, their servants and agents (Article 10). Article 11 of the Hamburg Rules provides an exception to the responsibility of the carrier in that the contract may relieve the carrier of liability for a part of the carriage, which is specified in the contract to be performed by a named person other than the carrier. Neither the Hague or Hague- Visby Rules contain provisions corresponding to Articles 10 and 11 of the Hamburg Rules; and

* the Hamburg Rules provide that the shipper is not liable for loss or damage sustained by the carrier or damage to the ship unless it is caused by their fault or neglect, or that of their servants or agents (Article 12). Under the Hague and Hague- Visby Rules, Articles IV.3 and 4.3 provide similar protection in respect of loss or damage sustained by the carrier. 2

Outline The Bill will give the Hague- Visby Rules (see above) force of law in Australia. The amendments will not alter the basic liability of carriers and ship owners and relate to the accounting unit used (International Monetary Fund Drawing Right Units rather than a gold based standard) and increased liability limits to reflect more modern costs. The changes will not apply to intra- State shipping and the Hamburg Rules will not commence until the relevant convention is adopted.

Main Provisions Clause 2 deals with the commencement of the Bill. The effect of the clause is as described in the `Outline' of this Digest (see above).

Clause 3 states the objects of the Bill which include the introduction of up- to- date, equitable and efficient rules dealing with marine cargo liability.

Clause 8 will give effect at Australian law to the Hague- Visby Rules as contained in Schedule 1 of the Bill. Basically, the new rules will apply to international and interstate contacts for the carriage of goods by sea but will not apply to intra- State contracts of carriage of goods by sea (clause 10).

Part 3 of the Bills deals with the application of the Hamburg Rules. Basically, on commencement, the Hamburg Rules will apply to international and interstate contracts for the carriage of goods by sea but will not apply to intra- state contracts of carriage of goods by sea (clause 15).

The Sea- Carriage of Goods Act 1924 will be repealed by clause 20. The Sea- Carriage of Goods Act 1924 will continue to apply to contracts of carriage of goods by sea entered into before the commencement of Part 2 (clauses 7- 11) of this Bill.

References 1. Australian National Maritime Association, Australian Shipping, 1989, pp. 21- 24. 2. Attorney- General's Department, Fifth International Trade Law Seminar, June 1978, pp. 48- 61.

Bills Digest Service 19 August 1991 Parliamentary Research Service For further information, if required, contact the Economics and Commerce Group on 06 2772460.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1991

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Published by the Department of the Parliamentary Library, 1991.a