WMU Journal, OF MARITIME AFFAIRS, 2006, VoL. 5, No.1, 95-114 International Regulation of Liability for Multimodal Transport ~In Search of Uniformity Mahin Faghfouri* International MultiModal Transport Association (IMMTA) Abstract The establishment of a widely acceptable uniform international legal framework for muti- ‘modal transport has proven to be extremely difficult. In spite of attempts by various inter- national organizations, following the advent of container revolution, there is still no uni ‘form international legal regime in force to govern liability for loss, damage or delay arising from multimodal transportation. In 2002 the United Nations Commission on International ‘Trade Law (UNCITRAL) embarked on the elaboration of a draft instrument to cover contracts for the international carriage of goods. The Draft Instrument, which had been prepared to govern sea transport, is proposed also to cover multimodal transport involv ing a sea leg This paper provides a brief overview over the past international attempts and possible reasons for their failure. It also provides an account of the on-going developments within UNCITRAL with a view 10 establishing whether the Drafts likely to succeed in achieving the objective of uniformity in the field of multimodal transport law or that it will simply result in yet another convention contributing to further disunification. Key words: multimodal transport, UNCITRAL draft convention, UN convention of multimodal transport, UNCTAD/ICC rules 1 Introduction ‘The history of serious attempts to establish a uniform legal regime to govern liability for loss, damage or delay arising from multimodal transport extends back to the point at which containerisation became a technological reality. The advent of con- tainer revolution and the growth of door-to-door transportation, involving two or more modes of transport, in the late 1950s and 1960s, created new challenges, also in the legal field. The application of a variety of national laws and international uni- modal conventions to different portions of the multimodal carriage resulted in un. certainty as to the laws governing international door-to-door transportation of goods. The international unimodal conventions which applied to different parts of multimodal transport were inadequate to resolve the complex issues arising under multimodal * former Chief of Legal Section UNCTAD The views expressed in this article are those of the author and should not be construed as nec essary reflecting the views of IMMTA.96 Faghfouri transport. Each regime governed only part of the multimodal carriage and provided for different rules to govern key issues such as liability, limitation of liability and time bar. Thus, various organizations began work towards establishing an international uni- form liability regime to facilitate multimodal transport. 2 Past international attempts at unification 2.1 TCM Draft Convention The carly attempts at establishing a uniform rules for multimodal transport seem to have started as far back as the 1930s.' They were motivated by the desire to: (i) simplify the transport document so that one document would serve several stages of the ca riage where more than one means of transport was used; (ii) ensure that the shipper/ consignee could pursue their claim against one party responsible rather than against several carriers involved. While the work had first started within the International Institute for the Unification of Private Law (UNIDROIT), the issue was not treated as one of urgency until the advent of containers in international trade From 1957 onwards, UNIDROIT intensified its efforts towards the preparation of a draft convention on the international combined transport of goods. After prolonged. deliberations the draft was finally completed in 1965.’ This was followed by the preparation and adoption by the Comité Maritime International (CMI) of a “Draft ‘Convention on Combined Transport” known as the “Tokyo Rules” in 1969. The UNI- DROIT and CMI drafts differed in many respects. While the UNIDROIT draft was based on the Convention on the Contracts for the International Carriage of Goods by Road 1956 (CMR) and covered combined transport of goods by containers, the CMI draft, “Tokyo Rules’, followed the maritime liability regime of the Hague Rules! and covered only combined transport involving a sea leg.’ The two draft conventions were reconciled into one text known as the “Rome Draft” in 1970 under the auspices of the United Nations Economic Commission for Europe (UNECE). The ‘Rome Draft” was further refined by a series of joint meetings of the UNECE and the International Consultative Organization (IMCO)* during 1970 and 1971 and culminated in a draft which came to be known as the “TCM” (Trans- port Combine de Merchandise) Draft. In spite of years of preparatory work, the TCM Draft never went beyond the proposal stage. The UN/IMCO Container Conference, which was to finalize the TCM Draft in 1972, recommended that the United Nations Conference on ‘Irade and Development (UNCTAD) undertake further studies on 1 See Preparation of a Preliminary Draft of « Convention on International Intermodal Transport UNCTAD Document TD/B/AC.15/2, 1973, p.3. 2 bid. 3 See UNIDROIT Document UDB. 1965, Etude: XLII, Doc.32, see also UNMCO Conference on International Container Traffic: UN/IMCO Conference Document E/CONES9/3, 1971, paras. 1-2. avention for the Unification of Certain Rules of Law Relating to Bills of Lading. + International ¢ 1924. 3 Op. Cit. 3 paras. 4-5. © Later renamed the International Maritime Organization (IMO).International Regulation of Liability for Multimodal Transport 97 various aspects of the combined transport including its economic implications parti- culatly on developing countries.” The failure of the TCM Draft has been attributed to a number of factors, including, its voluntary nature and the adoption of a “network system” of liability as opposed toa “uniform system”, making the TCM liability rules applicable only if loss or dam- age could not be localized. As has been stated by one observer: Efforts to preserve the existing unimodal conventions resulted in an intermodal convention too weak to achieve the objective of uniformity and efficiency in inter- modal transportation... Moreover, a voluntary “network” liability scheme with a rule for unlocalized damage was already a de facto reality in many contractual arrangements with freight forwarders, so that the accomplishments of the TCM. Draft Convention was not considered to be worthy of ratification as an interna tional treaty. Furthermore, given continued applicability of various unimodal con- ventions limits and the addition of yet another document to the already manda- tory existing ones, it was clear that the TCM Drafi Convention would not, in actuality, result in any simplification.” 2.2. United Nations Convention on International Multimodal ‘Transport of Goods 1980 ‘The work within UNCTAD on multimodal transport began in 1973 upon the estab lishment, by its Trade and Development Board, of an intergovernmental preparatory group (IPG) for the elaboration of a “preliminary draft convention on international intermodal transport”’ After seven years of extensive deliberations the United Nations Convention on International Multimodal Transport of Goods (hereafter the MT Con- vention) was finally adopted by the by the United Nations Conference on 24 May 1980, Over 80 States, 15 specialized agencies and intergovernmental organizations and 11 non-governmental organizations took part in the deliberations. Around 70 States including many major maritime States signed the Final Act of the Conference.” ‘The MT Convention attempted to address the new problems raised by multimodal transportation including the questions of documentation and the Multimodal Trans- port Operator's (MTO) liability. The Convention envisages the issuance of one doc: ument (MT Document) to serve the entire transportation period and for the liability ‘See UN/IMCO Conference ox International Container Traffic. UN/IMCO Conference Document E/CONES59/47, 1971, Annex, 1, Resolution No. 7 adopted by the Conference. 8 Nasseri, Ks The Multimodal Convention. In: Journal of Maritime Law and Commerce. Vol. 19 (1988), No. 2, pp. 235-236. 8 See UNCTAD Document TD/MT/CONRS, Annex 2 July 1979, Resolution 1734 (LIV) of the Economic and Social Council, 10 January 1973, 10 See United Nations Convention on International Multimodal Transport of Goods, UNCTAD Docu- ment TD/MT/CONF/17, 1981, Vol. L98 Faghfouri of the MTO to cover the whole period during which he is “in charge” of the goods, that is from the time he takes the goods in charge until the time of delivery (article 14). On the key issue of the type of liability system, the MT Convention adopts a “uni form” system of liability of the MTO providing for the liability rules of the Con- vention to apply irrespective of the unimodal stage of transport during which loss, damage or delay occurs (art. 16 (1)). The Convention, however, envisages one excep- tion concerning the limits of the MTO’s liability. That is in cases of localized damage the limits of liability are to be determined by reference to any applicable international convention or mandatory national law which provides a higher limit of liability than that of the Convention (art. 19). Over 25 years have elapsed since the adoption of the MT Convention. It has only eleven contracting States and has not entered into force.” The failure of the Conven- tion to attract wide international support may be attributed to a number of factors asis evident from the results of a large scale survey of industry and government con- ducted by the UNCTAD secretariat concerning the feasibility of establishing a new international legal instrument for multimodal transport.'™” The respondents to the UNCTAD questionnaire highlighted a number of issues as giving rise to limited support for the MT Convention, including the lack of awareness and uncertainty on the part of the shippers as to the benefits of the Convention and resistance and adverse lobbying by the maritime industry. An underlying reason for the lack of support was considered by some respondents to be the close interlinkage with the Hamburg Rules, which had failed to gain much support among major maritime nations. The basis of liability, which was modelled after the Hamburg Rules, the higher monetary limita- tion of liability and the uniform liability system'* adopted by the MT Convention, were highlighted as giving rise to concern, Other factors highlighted were the inclu- sion of customs provisions and the large number of ratifications required for its entry into Force. Regarding the possible approach to a new convention, over 25% of the respondents supported the revision of the MT Convention with some expressing support for the Convention as originally adopted. It was pointed out that the basic principles of the MT Convention were still valid and should be studied to determine if a protocol to the Convention would provide an appropriate solution." While it may be unlikely 17 ‘The Convention requires a large number of Contracting States (30) for entry into force. 12 See Multimodal Transport: The Feasibility of an international Legal Instrument. UNCTAD Docu- ment UNCTAD/SDTE/TLB/2003/1, 13 January 2003. 13 AIL UNCTAD Documents hereafter referred to in this paper are available on the UNCTAD Website: http://www.unctad.orgttl/legal Ul Por discussion on ‘uniform’ and network’ system of liability, see para, 4.2.2.1 15 Op. Cit, 12, paras. 23-26, 30-33.International Regulation of Liability for Multimodal Transport 99 that this course of action will in fact be adopted, what is certain is that without having entered into force, the MT Convention has provided an important model for legisla- tion to govern multimodal transport enacted over the past years at the national, regional and subregional level.” It is likely that this trend will continue bearing in mind the on-going international developments on the subject."" 2.3 UNCTAD/ICC Rules for Multimodal Transport Documents The UNCTAD/ICC Rules for Multimodal Transport Documents were the result of a cooperative arrangement between an intergovernmental body and the industry, as an interim solution and pending the entry into force of the MT Convention. Follow- ing a request from the UNCTAD Committee of Shipping,” a joint Working Group of UNCTAD and ICC was established to elaborate model provisions for multimodal transport documents on the basis of international conventions in force (Hague and Hague-Visby Rules) and existing standard form documents such as the FIATA Bill of Lading (EBL). The joint Working Group completed the preparation of the UNCTAD/ICC Rules for Multimodal Transport Documents in 1991. The Rules entered into force on 1 January 1992.” The UNCTAD/ICC Rules share many important characteristics of the MT Conven- tion including that of MTO’s basis of liability. An important feature distinguishing the Rules from the Convention is the fact that the Rules provides for a network sys- tem with regards to limitation of liability and similar to the Hague Rules permit ‘nautical fault and fire’ exemptions in case of loss during carriage involving a sea leg, The UNCTAD/ICC Rules have received considerable support from the transport industry. They have been incorporated in widely used multimodal transport docu- ments such as the FIATA Bill of Lading (FBL) 1992 and the "MULTIDOC 95” of the Baltic and International Maritime Council. 1 See The Implementation of Multimodal Transport Rules. UNCTAD Documents UNCTAD/SDTE/ TLB/2, 25 June 2001 and Add.1, 9 October 2001. 28 See the work of UNCITRAL Working Group III on ‘Transport Law for the preparation of a Draft Convention on the Carriage of Goods [Wholly or Partly) [By Sea]. These documents are available on the UNCITRAL Website: http://www.uncitral.org/uncitral/en/commission/working__ groups/3Transport.html 1 UNCTAD's Committee on Shipping Resolution 60 (XII), November 1986. 20 See International Chamber of Commerce (ICC): UNCTAD/CC Rules for Multimodal Transport Documents, Publication No. 481. Paris: ICC, 1992, The Rules replaced the previous ICC Rules for Combined Transport Document, 1973 (modified in 1975) which were based on the "Tokyo Rules” and the” TCM” draft. 21 Ibid. Rules 6.4 and 5.4, Note that these are unusual exemptions for negligence.100 Eaghfouri However, it is important to note that the Rules are contractual in nature and do not have the ‘force of law’, They apply only if they are incorporated into a contract of carriage but once incorporated they override any conflicting contractual provisions, except in so far as these increase the responsibility or obligations of the MTO. How- ever, being contractual in nature, the Rules only take effect to the extent they are not contrary to the mandatory provisions of any international convention or national law applicable to the multimodal transport contract.” 3 Current practice and problems International trade is increasingly carried on a door-to-door basis using two or more modes of transport and this trend is expected to dominate the future interna- tional movement of goods. There is, however, no uniform international regime in force to govern liability for loss, damage or delay arising from multimodal trans- portation, The MT Convention has not attracted sufficient ratifications to enter into force. The UNCTAD/ICC Rules are contractual in nature and thus not suitable to achieve international uniformity. ‘The present legal framework governing multimodal transport therefore consist of a mix of international unimodal conventions designed to regulate unimodal carriage (sea, road, rail and air),” diverse regional/subregional agreements, national laws and regulations and standard term contracts such as the FIATA Bill of Lading (FBL } 1992 and BIMCO’s MULTIDOC 1995, In view of the absence of an international uniform liability regime, there has been a proliferation of diverse regional, subregional and national laws and regulations on multimodal transport. The Andean Community, the Latin American Integration Asso- socia~ ciation (ALADD), the Southern Common Market (MERCOSUR) and the 4 tion of South-East Asian Nations (ASEAN) have resorted to regional/subregional solu tions.” While these liability regimes are often based on the MT Convention and the UNCTADJICC Rules, there are significant differences among different sets of rules on key issues such as the liability basis, limitation of liability and time-bar creating further ‘disunification’ at the international level.” Tbid., Role 13. “They include: the Fagus! Hague-Visby Rules and Hiasnburg Rules for sea carriage, the CMR 1956 for road carriage, the CIM-COTIF 1999 for rail carriage and the Montreal Convention 1999 for air cacriage. Further detail concerning the complex international liability framework is provided in Op. Cit. 17 paras, LI-1S. 24 See the Andean Community Decision 331 of 1993 as modified by Decision 393 of 1996 on International Multimodal ransports Partial Agreement for the Facilitation of Multimodal Trans port of Goods, 1995, adopted by MERCOUSUR; Agreement on International Multimodal Transport, 1996, adopted by ALADI; and Draft ASEAN Framework Agreement on Multimodal Transport. An overview of these liability regimes as well as the existing national laws and regulations on multimodal transport are provided in Op. Cit. 17. 25 Ibid.International Regulation of Liability for Multimodal Transport 101 Asa result the current liability framework governing multimodal transport is highly fragmented and complex, creating uncertainty as to the laws applicable ina given situ- ation. Goods are often carried in sealed containers, making it difficult to identify the stage of transport where a loss or damage occurs. Therefore the extent of liability of the MTO depends on whether or not the loss can be attributed to a particular stage of transport and on which of the potentially applicable liability regime is considered to govern the claim. Further problems and uncertainty also arise from the application of different liability rules/international unimodal conventions which provide for differ- ent financial limits of liability and time period within which claims must be brought.”* ‘Thus, after more than half a century the situation has not much improved and the extent of the MTO's liability for loss, damage or delay arising from multimodal trans. port remains unpredictable, Furthermore, the entry into force of the Hamburg Rules in 1992 also meant that there were three different international liability regimes in force to govern the carriage of goods by sea. As the Hamburg Rules failed to receive support from the major maritime interests various national governments began enact- ing domestic legislation on the subject incorporating provisions from both the Hague- Visby and the Hamburg Rules. There is therefore no uniformity of laws governing the international carriage of goods, including both maritime and multimodal transport Against this background and in view of the concerns regarding further disunifica tion of law governing transport, a number of organizations such as the Commission of the European Communities,” the UNECE and UNCTAD, initiated investigations with the objective of establishing a possible solution. The work within these organ- izations particularly focused on multimodal transport. At the same time the United Nations Commission on International Trade Law (UN CITRAL) also began work on transport law but with a different objective. The review of the liability regime was not initially the aim of the UNCITRAL work. The scope of the work was later expanded to cover liability for the carriage of goods by sea, and with a very small adjustment, also multimodal transport. Presently the UNCITRAL Working Group on Transport Law, which was established in 2001, is in the process of preparing a new Draft Convention on the Carriage of Goods [Wholly or Partly) [by Sea}. As the still ambiguous title suggests the Draft Convention is essentially geared for application to sea carriage but it is also proposed to govern multimodal trans- port involving a sea leg, The central question which arises in this context is whether a substantially maritime liability regime can provide an appropriate solution for the regulation of liability arising from multimodal transport 26 For an overview of the complexities of the current legal framework, Op. Cit. 12, Tables 1 and 2, pp.8-9, For the European Commission study, see Asariotis, R., ct al, European Commission, Directorate for Transport, DG VIL: Intermodal Transportation and Carrier Liability. Luxemburg: Office for Official Publications of the European Communities (EUR OP), 1999, 28 For detailed information Op. Cit. 17.102 Faghfouri The following will attempt to provide a brief account of the background to the UN CITRAL work as well as the relevant provisions of the Draft” with a view to estab- lishing whether or not the Draft Convention is apt to provide a suitable answer to the challenges posed by modern multimodal transportation. 4 UNCITRAL Draft Convention on Carriage of Goods [Wholly or Partly] [by Sea] —A solution or missed opportunity? 4.1 Background ‘The current work of UNCITRAL on transport law originates from the deliberations if its Working Group on Electronic Commerce in 1996. The discussions of the Work- ing Group on the issue of transport documents and their replacement with their elec- tronic alternatives, revealed wide differences in approach in national laws regarding the treatment of matters that were not covered by various international conventions, such as sea waybills, Before establishing laws pertaining to their electronic equivalence, it was considered desirable to promote uniformity of laws in the areas of carriage of goods by sea where no uniformity existed. the secretariat was then asked to act as focal point in gathering information on the subject with a view to establishing the need for uniform rules where no such rules existed. The UNCITRAL Commission, in endorsing the recommendations of the Working Group,” clearly emphasised that the work should not include the issues of liability which were already covered by the existing international conventions. It was pointed out that: the continued coexistence of different treaties governing the liabilities in the carriage of goods by sea and the slow process of adherence to the United Nations Convention on the Carriage of Goods by Sea, 1978 (Hamburg Rules) made it un- likely that adding a new treaty to the existing ones would lead to greater harmony of laws. Indeed, the danger existed that the disharmony of laws would increase.” ‘The UNCITRAL secretariat approached the CMI to undertake the work. The CMI responded positively to the invitation of UNCITRAL. It started the preparatory work by sending out a questionnaire to its National Maritime Law Association members. The nitially covered by the CMI investigations and questionnaire subjects which were 29 For further information on various aspects of the UNCITRAL Draft see, Transportrecht. (2004), pp. 273-308 (papers delivered at a Symposium in Hamburg); Lloyd’s Maritime and Commer- cial Law Quarterly. Part 3, August 2002 (papers delivered at a Southampton Conference); Commentary by the UNCIAD Secretariat on Draft Instrument on Transport Law. UNCTAD Document UNCTAD/SDTEITLB/4, (3 March 20025 and Preliminary Draft hnstrument on the Carriage of Goods by Sea. UNCITRAL Document A/CN.9/WG.II/WP21/ Add.1, 6 February 200: 30 See Report ofthe United Nations Commission on friternational Trade Law on the work ofits twenty- ninth session, UNCITRAL Document A/51/17, 14 August 1996, paras. 210-215, M Mbid. para. 213.International Regulation of Liability for Multimodal Transport 103 included issues such as the transport documents, freight, dead freight, demurrage, lien, obligations of shipper/consignee, delivery of goods and rights of disposal“? The CMI further established an international subcommittee on issues of transport Jaw to analyse the responses to the questionnaire and propose a basis for further work towards the harmonization of the law in the area of carriage of goods by sea The carly investigations of the CMI did not include liability issues."* It was only in June 2000 that the CMI made a proposal to the thirty-third session of the UNCI- ‘TRAL Commission to include the liability issues within the scope of its work." In this context it was further argued that although bills of lading were still used espe- cially where a negotiable document was needed, the actual carriage of goods by sea often represented only a short leg of an international transport, particularly in the container trade which invariably involved receipt and delivery of goods at an inland point. It was therefore proposed that a harmonizing instrument be prepared to cover the relationships between the parties to the contract of carriage for the entire dura tion of the carrier's custody of the cargo, including activities integral to the carriage before loading and after discharge. This would also require an updated liability regime to complement the terms of the proposed harmonizing instrument. Some support having been expressed for such a broad approach, the secretariat was re- quested to continue cooperating with the CMI with a view to identifying issues in transport law for possible inclusion in the future work of the Commission. The liability provisions, based on an earlier work of the CMI International Sub- Committee on the Carriage of Goods by Sea,* were then incorporated into the draft instrument under preparation. The Draft Outline Instrument, together with a paper on door-to-door transport, was submitted to the CMI International Conference held in Singapore in February 2001.” The Conference accepted the proposal that the Out- line Instrument should also cover other forms of carriage associated with the sea carriage (door-to-door)."* Thus, in order to accommodate multimodal transport, only minor amendments were made to the Draft Instrument which at the time wes already nearing completion. 5 See Issues of Transport Law: In: CMI Yearbook 1999, pp. 117~ 33 Tbid. 34 Ibid. pp. 119-120. 98 See Report of the United Nations Commission on Trade Law on the work of ts thirty-third session. UNCITRAL Document A/55/17, 10 August 2000, paras. 416-427, 36 During the late 1980s and 1990s the Comité Maritime International (CMI) had already init ated a number of studies with a view to preparing a new draft convention on the carriage of goods by sea to replace the three existing maritime regimes. See various CMI publications and Yearbooks including: Paris 1990, pp. 54-128 and Paris Il,p. 104; Antwerpen I, 1996, pp. 343-419 CMT Yearbook 1999, pp. 105-120, ‘See CMI Yearbook 2000. Singapore I, pp. 118-171. 38 See CMI Yearbook 2001. Singapore Il,p.188.104 Faghfouri Notably, one article dealing with the carrier's liability for loss or damage arising prior or subsequent to sea carriage was added to the Draft.” Asa result a draft for a purely maritime regime was turned into a draft for an instrument applicable to a large pro- portion of multimodal transport contracts. In July 2001 the CMI reported to the thirty-fourth session of the UNCITRAL Com- mission on the progress of the work and that a preliminary draft text of possible solutions fora future legislative instrument would be completed by December 2001. ‘The Commission then established the Working Group on Transport Law in order to consider the project. As to the scope of the work to be undertaken, suggestions were made to the effect that the Working Group be given a wide mandate covering also examination of the “door-to-door” transport. This, however, was not uncontroversial. Objections were made by some delegations to such an approach on the grounds that the Draft pre pared by the CMI had been prepared for application to sea transport and was not suitable to govern door-to-door transportation. This resulted in a decision by the Commission to limit the mandate of the Working Group to initial consideration of port-to-port transport operations. However, the Working Group was given liberty to study the desirability and feasibility of dealing also with door-to-door transport operation, and, depending on the results of those studies, recommend to the Commission an appropriate extension of its mandate. It was also agreed that the work would be carried out in close co-operation with interested inter- governmental organizations involved in work on transport law (such as UNCTAD, ECE). In December 2001, the CMI submitted a draft entitled “Draft Instrument on Trans port Law” to the UNCITRAL secretariat which was then translated and circulated as annex to the UNCITRAL document headed “Preliminary Draft Instrument on the Carriage of Goods by Sea" The Draft Instrument was then submitted by the UNCITRAL secretariat for comment to UNCTAD and ECE, as part of cooperation between the United Nations bodies. A detailed analytical commentary prepared by UNCTAD as well as comments by the ECE were also before the Working Group for consideration.” The first meeting of the UNCITRAL Working Group on Transport ® Draft Convention on the Carriage of Goods {Wholly or Partly! (by Seal. UNCITRAJ, Document AICN.SIWGIIL/WP.56, 8 September 2005, i\rticle 27, formerly article 4.2.1: Preliminary Draft Instrument on the Carriage of Goods by Sea. UNCITRAS. Document A/CN.9/WGIL/WP.21, 8 January 2002. The provision has remained largely unchanged. 4 Report ofthe United Nations Commission on International Trade Law on its thirty-fourth session, UNCITRAJ, Document 1/56/17, para. 345. 41 UNCITRAL Document A/CN/9./ WGI WP21, Op. Cit. 39. 42. For the UNCTAD Commentary on the Draft Instrument on the Catriage of Goods by Sea see both the UNCITRAL and UNCTAD Documents, Op. Cit. 29.International Regulation of Liability for Multimodal Transport 105 Law was then scheduled to take place in New York in April 2002 to commence con- sideration of the subject 4.2. Deliberations of the UNCITRAL Working Group on Transport Law ‘The original Draft Instrument (DI) consisted of 17 chapters. These covered issues normally found in existing international conventions governing the carriage of goods by sea namely the Hague-Visby Rules and the Hamburg Rules, but also provi- sions on matters not currently regulated by the international maritime conventions such as freight, right of control, transfer of rights and rights of suit.” As noted above, it had been prepared by representatives of maritime transport interests with the primary intention of addressing the problems of the uniformity of laws govern- ing the carriage of goods by sea. ts liability provisions consisted of a mix of the Hlague- Visby and the Hamburg Rules, with considerable modifications and amendments. Provisions such as the ocean carrier's obligation to exercise due diligence to make the ship seaworthy, the list of the Hague-Rules exemptions derived from the bills of lading of the nineteenth century including (albeit in brackets) the archaic defences of “nautical fault and fire” as well as “act of God” and “perils of the sea” together with other provisions particular to maritime transport formed an important part of the Draft Instrument. Despite its clear maritime orientation, it had a wide scope of application, proposing to cover also multimodal transport involving a sea leg, Overall the Draft Instrument represented an ambitious attempt to provide uniform regulation to govern not only contracts for the carriage of goods by sca, whether tackle-to-tackle or port-to-port, but also all multimodal/door-to-door transport contracts which include a sea leg. The important question, however, was whether an instrument tailored to addressing the problems of maritime transport could pro- vide a solution to the current problems of multimodal transport. 4.2.1 Scope of application 4.2.1.1 Port-to-port or door-to-door? The question of the scope of application of the Draft Instrument and whether it should only apply to port-to-port or also should cover door-to-door transportation was subject to considerable debate within the UNCITRAL Working Group right from the start of the meeting in April 2002. It was generally agreed that multimodal trans port was growing rapidly and there was a need for an instrument to govern liability arising from such transportation, There was, however, strong opposition to extend the application of the Draft Instrument to multimodal/door-to-door transport, on the grounds that this was a purely maritime regime, prepared by representatives of mari- time transport interests without consultation with those involved in multimodal B See UNCITRAL Document A/CN/9./WGIM/WP.21, Op. Cit. 39, chapters9, 11, 12 and 13. In the meantime, following extensive criticisms, chapter 9 dealing with freight has been deleted. See the last version of the Draft: UNCITRAL Document A/CN/9./WGI/WP56, Op. Cit. 39. 44 See UNCITRAL Document A/CN/9./WGILWP21 (2002 Draft) and AJCN/9.WGUUWP.56 (2005 Draft) Op. Cit, 38, chapters 5 and 6 which deal with carrier’s obligations and liability106 Faghfouri transport. It was also argued that the approach of the Draft Instrument went beyond. the limits of the mandate of the Working Group which was to deal initially with port- to-port transport. The proponents of the draft argued that the Draft Instrument did not aim at estab- lishing a multimodal regime but it adopted a door-to-door approach which adjusted maritime transport to modern reality: ..the door-to-door approach put forward for consideration was not aimed at constituting a fully-fledged multimodal regime but rather a maritime regime that took into account the reality that the maritime carriage of goods was frequently preceded or followed by land carriage. The draft instrument reflected the reality and was limited to resolving conflicts with mandatory treaties on land carriage.” At the end of its first meeting the Working Group proposed to continue discussions under the provisional working assumption that it would cover door-to-door opera- tions. During the April and October 2003 sessions the subject of the scope of appli- cation was extensively discussed. At the core of the debate was the question of how far door-to-door/multimodal transport should be covered by the Draft Instrument. The proponents of the Draft used the expression “maritime plus” to describe the approach adopted by the Draft Instrument, but without describing exactly how it differed from multimodal trans- port involving a sea leg. Others, however, considered that the Draft Instrument pro- vided for a true multimodal regime and strongly resisted the arguments for the extension of application of its maritime liability regime beyond sea carriage. The representative of the International Federation of Freight Forwarders Association (FLATA) correctly pointed out that: the draft instrument was originally conceived as a maritime law draft, as was evident throughout its provisions, and that its scope should thus be confined to port-to-port coverage... the door-to-door approach advocated in the Working Group was truly multimodal transport, and the Group should take care to use precise language in describing the various options it was considering... the “mar- itime plus” expression was merely a euphemism for the expansion of maritime Taw onto land,...” 15 Report of the Working Group on Transport Law on the work of its ninth session, UNCITRAL Docu: ment A/CN.9/510,7 May 2002, para. 28, “© Ibid., pata. 32. This working assumption was approved by the Commission at its thirty-fifth session in June 2002, but subject to further consideration of the scope of application of the DI upon examination of its substantive provisions. See Report of the United Nations Commission on International ‘Trade Law in its thirty-fifth session UNCITRAL Document 4/57/17, 18 July 2002, paras, 223-224. 4 Report of the Working Group on the work of its eleventh session, UNCITRAL Document A/CN.91 526,9 May 2003, para. 228.International Regulation of Liability for Multimodal Transport 107 Further doubts were expressed as to “whether the draft instrument, as currently drafted, could serve as a useful basis for a door-to-door instrument and that there ‘was increasing scepticism that a multimodal regime on the basis of a maritime- based draft could gain general acceptance" The outcome of the UNCTAD secretariat’s enquiry on establishing the feasibility of a new international legal instrument for multimodal transport was also presented to the meeting, It clearly showed that only a minority of respondents, mainly parts of the maritime transport industry, supported the extension of an international sea carriage regime to all contracts for multimodal transport involving a sea leg.”” However, in spite of various opposing views expressed, a conclusion was reached at the eleventh session in April 2003 that the scope of application of the DI should be door-to-door rather than port-to-port."" It was further discussed whether there should be any qualification as to the type carriage to be covered such as the internationality of the sea carriage, or that the sea leg to be the predominant part of the door-to door transport with the inland carriage being an ancillary service. Again after an extensive discussion the Working Group provisionally decided that the DI should apply to any type of multimodal carriage involving a sea leg and no dis- tinction should be made in respect of the relative importance of the various modes of transport used." ‘Thus, the result is effectively a multimodal transport instrument with a substantially maritime liability regime. This is also reflected in the title of the Draft. The 2003 ver- sion of the Draft replaced the original title of “Preliminary Draft Instrument on the Carriage of Goods by Sea”, with the title “Draft Instrument on the Carriage of Goods [Wholly or Partly] [by Sea]. In the 2005 version, however, the Instrument in the title has been replaced by ‘Convention’ so the title now reads: “Draft Convention on the Carriage of Goods [Wholly or Partly] [by Sea. 48 “The observer for the Intergovernmental Organisation for International Carriage by Rail (OTIF), ibid, para, 230, See also ibid, para. 229 for the statement by the representative of the Association of American Railroads (AAR) #9 Op.Cit. 12. 50 Op. Cit, 45, para. 239. 51 [bid., paras. 241-244 52 Drafi Instrument on the Carriage of Goods [Wholly or Partly] [by Sea}. UNCITRAL Document AICN.9/WG,IIl/WP32, 4 September 2003. A note to the definition of “contract of carriage” proposed that the WG may consider whether the phrase “Wholly or Partly” should appear in the title of the DI. ibid. p.8. 5 A footnote by the secretariat states: “Without intending to predetermine the form of this Instrument, the word “Instrument” has been replaced with the word “Convention” through- out, in an effort to achieve consistency.” See UNCITRAL Document A/CN.9/WGHIUWP.56, Op. Git. 39, p.?.108 Faghfouri 4.2.1.2 “Contract of carriage” According to article 3.1 (2002 version),* the Draft Instrument was to apply to “con- tracts of carriage” in which the place of receipt and place of delivery are in different States provided there were certain connecting factors to a Contracting State. Article 1.5” defined a “contract of carriage” as “a contract under which a carrier, against pay- ment of freight, undertakes to carry goods wholly or partly by sea’. Thus, the definition of “contract of carriage”, was central in determining the scope of application the Draft Instrument. As drafted, the definition was wide enough to cover any multimodal transport contract if part of the transport was carried out by sea. In discussing the definition of “contract of carriage’, further attempts were made to limit the scope of coverage of the DI. The definition, particularly the term “partly by sea” was subject to much debate and criticism. The delegations that were against the application of the maritime liability regime of the DI to multimodal carriage of goods. partly by sea, attempted to highlight the maritime focus of the DI in the definition of the “contract of carriage” The definition was, therefore, subject to a number of amend- ments and redrafting by small informal working groups during the sessions. An exten- sive debate held at the twelfth session in October 2003, produced the following draft text: ‘Contract of carriage’ means a contract under which a carrier against payment of freight undertakes to carry goods by sea’ from a place in one State to a place in another State; such contract may also include an undertaking by such carrier to carry the goods by other modes prior or after the sea carriage. This draft which attempted to highlight the maritime character of the contract of carriage received relatively wide support and was retained by the Working Group for farther discussions.” The draft, however, was amended later in the context of dis- cussions with regard to the issue of freedom of contract. The latest draft definition as presently appears in the 2005 version of the Draft reads: ‘Contract of carriage’ means a contract in which a carrier, against payment of freight, undertakes to carry goods from one place to another. The contract must Thid., Article 8 (2005 Draft) Ibid, Article 1(a) (2005 Dr) 56 Emphasis added. 37 Report of Working Group FAI on the work ofits twelfth session. UNCITRAL Document A/CN.9/ 544, 16 December 2003, paras. 57-74; see also Preparation of « Draft Instrument on the Carriage of Goods [Wholly or Partly} {by Sea}. UNCITRAL Document A/CN.9/WG.L/WP.36, 23 March 2004, para. 6.International Regulation of Liability for Multimodal Transport 109 provide for carriage by sea and may provide for carriage by other modes of trans- port prior to or subsequent to the sea carriage. ‘Thus, the definition as presently drafted seems to be sufficiently wide to bring with- in the scope of coverage of the maritime liability regime of the Draft Convention any type of international transport of goods which includes a sea leg.” Asa result a multimodal transport involving a very short sea leg (short sea shipping) and a very long land carriage will fall within the scope of coverage of the Draft Convention This being the case, the question whether the Draft Convention provides an appro- priate liability system to govern multimodal transport becomes extremely impor- tant. 4.2.2 Liability system 4.2.2.1 “uniform” vs. “network” system In any discussion in relation to establishing an international legal instrament to govern multimodal transport, a key issue has been the choice between the ‘uniform’ or ‘network’ system of liability. It may be useful to recall that in a ‘uniform’ system the same rules apply to the entire multimodal transport, irrespective of the stage of transport where loss or damage occurs. In a ‘network’ system, the applicable liability rules will depend on identifying the unimodal stage of transport where the loss or damage occurs. A set of fall-back provisions will apply in cases where a loss cannot be localized.” A uniform system which offers a set of simple, transparent and predictable liability rules from the outset is favoured by cargo interests. Carriers, on the other hand, sup- port the network system which preserves the rules applicable to unimodal stages of the transport to ensure the possibility of recourse actions against unimodal opera- tors. Thus, there is a serious conflict of interests between the users and providers of multimodal transport which has been subject of lengthy debate and controversy during previous deliberations to elaborate an international instrument to govern multimodal transport. This issue has probably been one of the most serious obsta~ cles to establishing an international legal framework for multimodal transport. At the UNCITRAL Working Group meetings the issue was the subject of some dis- cussion and proposals to provide for a uniform system of liability did not receive wide support. It was generally considered that “a uniform system was likely unattain- able” 58 See UNCITRAL Document A/CN.9/WGII/WP.56 Op. Cit. 39, art. 1a): see also Report of Working Group III on the work of its fifteenth session. UNCITRAL Document A/CN.9/576, 13, 2005, para. 52. 59 There is, however, a widely held view that the sea carriage should be international. ‘This is re- flected Ibid, art. 8 (1) of the current draft, which also requires that the ports of loading and discharge should be in different States For detailed information Op. Cit. 12, paras. 44-58. 1 Op. Cit. 47, para. 239,110 Faghfouri Article 4.2.1 of the original 2002 Draft establishing liability provisions for localized loss or damage, was entitled “Carriage preceding or subsequent to sea carriage”, It established a network system of liability for localized loss or damage, giving prece- dence to certain provisions of a mandatory international convention applicable to the stage of transport'where loss, damage or delay occurs. The article was subject to much discussion and criticism. It was considered by its original drafters as merely a mechanism to solve the possible conflict with existing unimodal conventions. This was broadly accepted by the Working Group.” The provision has basically remained unchanged in the 2005 consolidated text of the Draft (art. 27), except for some edi- torial amendments.” ‘Thus, under the UNCITRAL Draft if the loss is (a) localized, that is if it is proved during which stage of transport the loss, damage or delay occurred and if (b) there is a mandatory international regime applicable to that particular stage, then provi- sions dealing with ‘carrier's liability, limitation of liability and time for suit’ of this inter- national regime will apply, together with the remaining provisions of the Draft Con- vention including its complex provisions on transport documents, delivery, lien, juris- diction, etc. To determine if a mandatory international regime applies, there will still be the need to identify the stage of transport where loss or damage occurs and further establish the existence of any possible mandatory regime applicable in a given juris- diction. The applicable rules will then consist of a combination of some provisions of the applicable unimodal regime, as interpreted by the relevant court or arbitral tribunal, together with the remaining part of the UNCITRAL Draft. As correctly stated by the UNCTAD secretariat in its commentary: in instances where the provision is triggered, an obscure patchwork of different regimes which were not designed to complement each other would apply. There is much scope for confusion and itis likely that national courts would take radically different approaches to the question of which provisions of one ot other regime are applicable and to which parties.” In cases of non-localized loss, that is if the stage of transport where loss or damage occurs can not be established, or if no international mandatory regime applies, then the maritime liability regime of the Draft Instrument will apply to the entire multi modal transport, irrespective of how short the sea leg and how long the land leg may be, It is likely that this situation will become the norm bearing in mind (i) the fact that unimodal conventions are mainly European conventions and do not have global application and (ii) the difficulty in localizing the loss in relation to goods carried in containers. Furthermore, the burden of proving the stage of transport where loss or @ [bid, paras, 220, 245-250. 63 See UNCITRAL Document A/CN.9/WGIIT/W.56 Op. Cit. 39, article 27 © Commentary by the UNCTAD Secretariat on Draft Instrument on Transport Law. Op. Cit. 29, para, 44, See also Preliminary Draft Instrument on the Carriage of Goods by Sea. Op. Cit. 29.International Regulation of Liability for Multimodal Transport in damage occurs will be on the party who would like to rely on higher liability limits provided by unimodal conventions, i.e. the cargo interests. This burden will be ex tremely difficult for cargo interests to discharge, in view of their lack of access to the facts surrounding a loss and the relevant evidence in respect of a claim. As a result, where a loss is not Jocalized, the liability of the MTO under a multimodal transport contract involving a very long proportion of land carriage would remain subject to the essentially maritime liability regime of the Draft Convention, n for cases of multi- nT Asis evident the liability system proposed by the Draft Conven modal transport is extremely complex and the MTO’s liability under the Draft s remains fragmented and difficult to assess in advance. 4.2.2.2 One party responsible throughout? As stated carlier, an important reason behind early initiatives to establish a uni- form liability regime to govern multimodal transport was the desire to ensure that the shipper/consignee could pursue his claim against one party responsible through- out the entire transport rather then against several unimodal carriers involved. The existing rules and regulations on multimodal transport have succeeded in achieving this objective. Under the MT Convention 1980, the MTO is defined as a person who, as principal and not agent, enters into a MT contract and is responsible for the whole multimodal carriage. The position is the same under the UNCTAD/ICC Rules for Maltimodal Transport Documents and the existing laws and legislation adopted at the regional, subregional, and national level."* ‘The importance placed by traders on this as a central feature of a multimodal trans- port regulation is evident from the results of the survey conducted by the UNCTAD secretariat on the feasibility of an international legal instrument for multimodal transport. There a clear majority of respondents considered that any international instrument to govern multimodal transport should follow the same approach as ex- isting statutory and contractual multimodal liability regimes by providing for con tinuing responsibility of the MTO throughout the entire transportation.” ‘The Draft Convention, in article 11 (2005 Draft), primarily provides for the carrier’s responsibility to cover the period “from the time when the carrier or a performing party has received the goods for carriage until the time when the goods are delivered to the consignee.” But articles 11 (2) and 11 (4), by providing for the time and loca- tion of delivery to be determined by contract, effectively allow the carrier the possi- bility of limiting his responsibility by contractually defining the time and location of receipt and delivery of the goods. In addition a carrier may also be permitted to con tract out of responsibility for certain parts of the carriage, by express agreement, acting as agent only (art. 12, variants A and B). Thus, a carrier may contractually limit his See para. 2.1 above. © Op. Cit.17., § Op. Cit. 12, paras. 83-88,112 Faghfouri period of responsibility e.g, to tackle to tackle. There is a further provision (art. 14 (2)) that would also permit contractual allocation of responsibility for certain func- tions such as loading, stowing and discharging to the shipper/consignee. In the context of maritime transport, an ocean carrier often, acting as agent for the shipper, arranges for land portion of the transport, excluding responsibility for such carriage. And under charter party a shipper may contractually undertake the func- tions of loading, stowing or discharging. The Draft Convention in attempting to accommodate these maritime transport practices tends to create uncertainties in rela~ tion to multimodal transport. While the latter provisions are still under discussion, their inclusion in the Draft would seriously affect the position of multimodal cargo claimant who would find that the carrier, issuing the multimodal transport docu- ment, was not liable for all parts of multimodal transportation. ion the Draft Convention covers both contracting carrier and performing parties. Article 1(d) defines the carrier as a person that enters into a contract of car- riage with a shipper.® Article 1(e) defines the “performing party” as a person that “physically performs or undertakes to perform” any of the carrier's responsibilities under the contract of carriage. Articles 1(f) and (g) further define maritime and non-maritime performing parties.” Objections raised by land transport interests and complexities arising from the possible application of the essentially maritime liability regime to inland carriers resulted in a decision by the Working Group to exclude non-maritime performing parties from the scope of the Draft Convention, Thus, the liability of non-maritime performing parties, such as inland truckers or railroad carriers, would remain subject to the existing laws and regulations, whether national law or regional conventions such as the CMR. ‘The Draft Convention (art. 20) only applies to maritime performing parties who are essentially parties that perform or undertake to perform the contracting carrier's responsibilities during the port-to-port portion of the carriage such as ocean carriers, stevedores and terminal operators.” It was, however, recognised that the adoption of the geographical area of port as. criterion for defining maritime performing parties ©The Draft Convention further makes some attempt in identifying the contracting carrier. Articte 40 (3) of 2005 Draft (still in brackets), provides that if the contract particulars fail to identify the carrier but indicate that the goods have been loaded on board a named vessel, then the reg- istered owner of the vessel is deemed to be the carrier. The registered owner can defeat the pre- sumption if it proves that the ship was under bareboat charter at the time of the carriage in which case the bareboat charterer is presumed to be the carrier. Clearly this provision is irrele- vant as far as multimodal transport is concerned. It is also unlikely to solve the problem of identity of the carrier in the context of sea transport if the bareboat charterer itself disputes being the contracting carrier. The cargo claimant would be in the same position as if no pre- y claim against the true contracting carrier (time sumption applied, or even worse, by then charterer) would likely be time barred TRAL Document A/CN.9/WGIT/ W236 Op. Cit. 39. 7 For detailed discussion see Report of Working Group IIl on the work of its twelfth session. Op. Git. 57, paras. 20-42.International Regulation of Liability for Multimodal Transport 13 is likely to create uncertainties and difficulties and has the likelihood of being defined by reference to national law. Further uncertainties would arise in relation to inland carriers performing functions at the port area. For example, whether or not a rail carrier performing services within a port should be deemed to be a ‘maritime’ or” non-maritime’ performing party and be subject to which liability regime.” Asis evident from the above brief overview, the UNCITRAL Draft Convention does not provide for responsibility of one party throughout the entire transport. In practice the position of a multimodal cargo claimant would become additionally complicated by the need to identify the party responsible (contracting carrier/performing party) and the applicable liability regime so as to bring action against the right party in the »n within the short one year time limit. right jurisdi 5 Concluding remarks As can be seen from the foregoing, past attempts have failed to produce a widely acceptable legal instrument for multimodal transport. The early initiatives under the auspices of organizations such as the UNIDROIT, CMI, UNECE, and the then TMCO, resulted in the elaboration of the TCM Draft Convention which failed to go. beyond the proposal stage. Being of a voluntary nature with a network liability system, the Draft was considered, in some sectors, to be too weak to achieve the objective of uniformity and efficiency in multimodal transportation. The 1980 MT Convention which provided a ‘uniform system’ of liability, with the exception of limitation amounts, faced strong resistance from major maritime inter- ests. While the Convention did not receive sufficient ratifications to enter into force, it has been widely used as a model in enacting legislation to govern multimodal transport. In this context it is interesting to note that the world-wide survey catried out by the UNCTAD secretariat, concerning the feasibility of a new international instrument for multimodal transport, revealed considerable support for the revision of the MT Convention with some expressing support for the Convention as originally adopted.” The on-going deliberations within UNCITRAL for the preparation of the “Draft Con- vention on Carriage of Goods [Wholly or Partly] [by Sea)” could have been an oppor- tunity to make a further attempt at unification of the laws governing multimodal trans- port. However, the approach adopted by the UNCITRAL Draft Convention does not seem to reflect the objective of a multimodal regime establishing one set of liability rules to cover the entire multimodal movement of goods under the responsibility of one operator. Instead the Draft Convention contents itself with extending the applica- tion of a maritime liability regime to multimodal transport, without giving serious considerations to the specific issues arising from this type of carriage. 7 Thi, paras. 30-31 ce para. 2.1 above. 7 See para.2.2 above.14 Faghfouri Thus, while the development of uniform international legal framework for multi- modal transport is desirable, it is doubtful whether the approach adopted by the UNCITRAL Draft provides an appropriate solution. As pointed out by the UNCTAD. commentary on the Draft, “any new international liability regime would have to offer clear advantages as compared with the existing legal framework in order to succeed. Any new but poorly designed or otherwise unsuccessful regime would only add to the current complexity without providing any benefits” The UNCITRAL Draft Convention unfortunately does not appropriately address the problems and challenges of the multimodal transport. It does not provide for responsibility of one contracting party throughout the multimodal transport, nor does it provide for uniform liability rules to govern the entire multimodal transport and irrespective of the stage of transport where loss, damage or delay occurs. Thus, it is questionable if it offers any advantages over the existing system, or in any way attempts to contribute to uniformity and efficiency in multimodal transport. Further- more, its highly complex structure (105 articles including Final Clauses) and draft- ing leaves much scope for varying interpretation and reduces the chances of inter- national uniform application. In the end the fact remains that multimodal transport is in urgent need of a simple, transparent and predictable legal framework which would avoid the complex and costly investigations in identifying the modal stage where loss occurs or the applicable liability rules. This is of course incompatible with the concept of a ‘network’ system which is so fiercely defended by the transport industry. Until the time that an agree- sue to respond to the challenges of multimodal trans- ment can be reached on this port of the 21" century the multimodal saga will continue. 74 See Commentary by the UNCTAD Secretariat on Draft Instrument on Transport Law. Op. Cit 29, para.6