chapter  12
THE OVERALL IMPACT OF THE ROTTERDAM RULES ON THE LIABILITY OF MULTIMODAL CARRIERS AND THEIR SUBCONTRACTORS
ByRichard Williams
Pages 15

It is not my intention in this chapter to comment on the minutiae of those terms of the Rotterdam Rules that regulate multimodal carriage “from door-to-door” nor to comment on the desirability or otherwise of the Rules as a regime which is intended to govern such carriage. Forests of trees and lakes of ink have already been sacrifi ced to that end. 2 My intention is to stand back from such considerations and consider the manner in which the Rules may affect the existing liability balance between carrier and cargo claimant, and also between carrier and subcontractor. Such a consideration is important since a change in the liability balance can have a direct ricochet effect on the need that affected parties may have for liability insurance and the level of such insurance. I then leave it to others to draw their own subjective conclusions as to whether the Rules achieve their stated aims which are described in the preliminary rubric to the Rules as follows:

BACKGROUND TO THE CURRENT SYSTEM

The “container revolution” which originated in the 1960s has transformed traditional port-to-port shipping operations dramatically. Cargo can now be carried in one sealed receptacle from its point of origin inland in one country to its point of delivery inland in another country on the other side of the world without the need for any interim discharge, storage or reloading of the cargo. The container itself is designed to be carried by different modes of transport (i.e. by ship, river barge, road truck or rail truck 4 ) from the point of origin to the point of delivery. One party (the carrier) will normally assume responsibility for the whole of the transit and the cargo owner will normally receive a contract of carriage from the carrier in which the latter assumes responsibility on agreed terms for any loss or damage that may be incurred by the cargo at any stage of the overall transit whether it occurs on land, road, rail or river. However, the problem with this is that it has not been possible thus far to ratify an international convention which will regulate such carriage “from door-to-door”; consequently, the carriage is either unregulated or different stages of the overall transport may be subject in one way or another to one or more unimodal conventions that regulate that particular stage. 5 The problem with this is that fi rstly, liability under these various conventions is not uniform and secondly, it can be diffi cult in view of the fact that the container is sealed from point of origin to point of fi nal delivery, to establish during which stage the loss or damage occurred. Consequently, the industry has had to develop its own form of self-regulation which is based on certain standard principles and clauses in the contract of carriage which is given by the carrier to the cargo interest. 6

These clauses are designed to do two things:

1. Establish the degree of liability that is to be borne by the carrier. The liability of the carrier is usually based on the “network” principle which provides that

i. if the loss or damage is proved to have occurred at a particular stage of the overall transit, and

ii. carriage on that stage would have been compulsorily regulated 7 by a national law or international convention if a separate contract had been agreed for that transport stage,

However, if i. the loss or damage occurred during a particular stage but carriage on that stage

would not have been compulsorily regulated by a national law or international convention if a separate contract had been agreed for that transport stage; 9 or

ii. it is not possible to establish at what stage the loss or damage occurred, then liability is to be governed by the terms of the contract. In these circumstances, the liability of the carrier can either be negated completely or is, in most cases, subject to specifi ed defences or limits of liability, or is no greater than the liability that the relevant subcontractor has under its own contractual terms or tariff. 10 Therefore, the current system is based on a “patchwork” of international

unimodal regulation augmented by national regulations and private terms 11 and the matter may sometimes be further complicated by the fact that, in some instances, these unimodal conventions can regulate carriage by more than one transportation mode. 12 Consequently, the carrier’s liability to the cargo claimant under the current fragmented system is fi rmly based on a foundation of freedom of contract and can be very different depending fi rstly on whether or not the loss or damage can be localised and, if so, on the particular leg of the overall transit on which the loss or damage occurred.