Lecture 6 Contracts For The International Carriage of Goods by Sea

MONASH
BUSINESS
BTW3201 INTERNATIONAL TRADE LAW
LECTURE 6: CONTRACTS FOR THE

INTERNATIONAL CARRIAGE OF GOODS
BY SEA
Dr. Thaatchaayini Kananatu
LECTURE OUTLINE
 (1) Introduction
 (2) Treaties, Rules, and Definitions
 (3) Bills of Lading and Sea Carriage Documents
 (4) Shipper’s Liability under @HVR
 (5) Carrier’s Liability, General Defences, Limitations.
 (6) Liability of C’s Servants and Agents
 (7) Liability of Independent Contractors
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SOG Contract
(Buyer  Seller)
COG Contract
(Carrier  Shipper/Consignor
(COR)
Shipper/Consignor  Consignee
(Seller/Buyer) (CEE)
(Buyer/Sub- B)
(1) Introduction
 This topic explores the laws that relate to the transport or
carriage of goods by sea, from one country to another.
 Carriage of goods by sea is by far the most popular mode of

transportation in the world, as it is economical and feasible.
Cf. carriage by air is faster, but expensive; carriage by land
only possible if countries are adjacent to each other (e.g.
Malaysia and Thailand or Singapore).
 In previous lectures, we looked at Incoterms, which deals with

the contractual rights and obligations of parties performing an
international sale of contract. Although the terms include the
transport of goods, there are specific treaties and laws which
regulate the carriage of goods by sea.
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(2) Treaties, Rules, and Definitions
 The legal framework for carriage by sea includes both

(a) international conventions (uniform rules) and
(b) domestic laws (varies from country to country).
 International Convention for the Unification of Certain Rules of

Law Relating to Bills of Lading 1924 [Hague Rules] (HR)
 Brussels Protocol Amending the Hague Rules Relating to Bills

of Lading 1968 [Hague-Visby Rules]
 Convention on the Carriage of Goods by Sea 1978 [Hamburg

Rules]
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 The legal framework for carriage by sea includes both

(a) international conventions (uniform rules) and
(b) domestic laws (varies from country to country).
 Carriage of Goods by Sea Act 1950 (Malaysia)

[adopted HR]
 Merchant Shipping Regulations 1960 and 1961 (Sabah and
Sarawak)
 Carriage of Goods by Sea Act 1924 (UK)

[repealed by COGSA 1971 – adopted Hague Visby Rules]
 Sea-Carriage Documents Act 1998 (Vic) (Australia)
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 Hague Rules 1924 (HR)
- 16 articles (10 on legal issues relating to bills of lading, and

rest procedural).
- Carrier’s (C) general liability to provide a seaworthy ship and
to handle goods with care.
- C’s liability limited to £100 per package per unit (unless
parties agreed to higher amount).
- amended and incorporated into the Hague-Visby Rules.
- Malaysia and US are signatories.
- In Malaysia, the COGSA 1950 adopted HR, but only West
Malaysia. Cf. In East Malaysia? MSR 1960.
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 Hague Rules 1924 (HR)

- Art. 10 – applies to all Bills of Lading (BoL) issued in any
contracting state.
- S.2 COGSA 1950 (Malaysia) – has effect in relation to and in

connection with carriage of goods by sea in ships carrying
goods from any port in Malaysia to any other port whether in or
outside Malaysia.
(NB: place of shipment not BoL)
- S.4 COGSA 1950 (Malaysia) – every BoL or similar

document of title issued in Malaysia shall contain express
statement that it takes effect subject to HR, as applied in
COGSA 1950.
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 Hague-Visby Rules 1968 (HVR)
- an amendment of HR, also 16 articles.

- most developed countries adopted HVR.
- note that COGSA 1950 is based on COGSA 1924 (UK),
which was repealed by COGSA 1971 (UK) which adopted
HVR.
- Australia is a party to the rules, and the Carriage of Goods
by Sea Act 1991 (Cth) incorporates the rules arts 1 – 10.
- limitation of liability is higher than HR, but the amendments
made are regarded as unfair to shippers, especially by
developing countries and cargo-owner countries.
- led to the creation of the Hamburg Rules.
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- Art. 10 – Applies to every BoL issued for COG between ports

in two different countries if:
(a) BoL is issued in member state;
(b) COG is from a port in member state; or
(c) COG contract provides that HVR applies or law of a

member state applies.
NB: This is wider than HR.
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- Art. 10 – Applies to COGS where:
(1) there is a Sea Carriage Document (SCD) relating to COG

from ports in Australia to ports outside Australia (outgoing
shipments); and
(2) there is a SCD relating to COG into Australia from ports

outside Australia unless express agreement or law provides
that HR/HVR/Ham R applies to contract (incoming shipments).
- Art.10(6) – HVR does not apply to COG by sea under

charter-party unless SCD is issued for carriage.
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 Differences between HR & HVR

 Applicability of HVR Art. 10 is wider than HR’s applicability
under Art. 10.
 Art.3(4) HR – BoL is only prima facie evidence of receipt of
goods by C; in HVR it is also prima facie evidence of condition
of goods on receipt.
 Art.4(5) HR – C’s limit of liability only £100 (gold value not £) per
package per unit; for Art.4(5)(a) HVR it is 666.67 Special Drawing
Right (SDR) per package per unit or 2 SDRs per kg whichever is
higher.
 Art. 4 HVR – agent/servant of C entitled to same defences and limit
of liability as C provided loss or damage not caused
intentionally/recklessly. Not in HR.
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 Hamburg Rules 1978 (Ham R)
- wider liability on C (even wider than HVR, so considered less

carrier-friendly).
- e.g. C’s liability is for wider period of time – which includes
while goods are under C’s care and not just during the
carriage.
- Schedule 1A COGSA 1991 (Cth) – incorporates HVR as
modified/amended by Ham R.
- Ham R is applicable in Australia from 1998.
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 Australia’s legal regime

 HVR + Ham R = @ HVR (broader!)
 Schedule 1A COGSA 1991 – Schedule of Modifications
Not limited to BoL but SCD [Art. 1(b) & (g)].
Extends writing requisition to data message [Art. 1(h)].
Term of C’s liability expanded from loading to discharge concept to
when C is in charge of goods [Art. 1(1)(e)].
Covers cargo on deck - previously specifically excluded (Art. 1(c)).
Allows claims against C for delay (Art. 4A).
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 Australia’s legal regime

 Wider coverage of HV regime, whether C or shippers are
aware of it.
 Consider cargo delivered at port for carriage, some of
which is loaded on deck & some in holds.
 If port is
– Singapore & M’sia, only cargo in hold is covered by
Hague Visby Rules & Hague Rules when loaded.
– Melbourne, all cargo is covered from the moment it is
in charge of C, whether in hold or on deck.
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 Definitions
 Carriage of Goods by Sea Contract – between shipper (S) and
carrier (C).
 Carriage contract – represented (incorporated) by BoL,
Voyage Charter-Party, Sea Waybill, Consignment Note or
Mate’s Receipt. But contract can stand on its own without
being incorporated.
 Contract for COG – Art. 1HR/HVR (from where goods are
loaded on board vessel and unloaded – tackle to tackle) –vs-
Ham R/@HVR (when C is in charge of goods).
 Goods – includes goods, wares, merchandise and articles of
every kind except live animals and cargo state in carriage
contract as carried on deck and in fact so carried (on-deck
cargo inlucded as goods in Ham R/@HVR).
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 Definitions
 Consignee/CEE – Person specified as recipient of goods in
BoL or similar document (Art. 1(4) Ham R).
 Consignor/COR – Person who indorses or transfers goods

under BoL or similar document to CEE.
 Bill of Lading - document signed and issued by Carrier to Shipper to

acknowledge receipt of goods by C in condition stated & to set out
terms of contract of carriage. Evidences existence of carriage
contract. May also be the contract of carriage or co-exist with
contract of carriage. Should accurately reflect condition of goods
upon loading. But C may have exclusion clause in BoL or carriage
contract.
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(3) Bills of Lading and Sea Carriage Documents
 Characteristics of Bills of Lading

(1) Document of Title (which allows its legal holder to claim goods)
[Delivery of goods without requesting production of BoL is fundamental
BOC.]
(2) Usually (not exclusively) issued by Master of the Ship.
(3) Evidences Receipt of goods by C on Shipment - S. 12 Sea

Carriage Documents Act 1998(Vic).
(4) Evidences existence of COG contract between C & Shipper &

terms of carriage.
(5) Constitutes undertaking by C to deliver goods to destination

specified.
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 Characteristics of Bills of Lading

(6) Evidences condition of goods at time of receipt/shipment.
(7) Constitutes undertaking by C to deliver goods in same condition

as they were when received by him.
(8) Forms contract of carriage between C & CEE – S. 8 SCDA

1998.
(9) Either negotiable (transferable) or non-negotiable (not

transferable).
C: Comalco Aluminium Ltd v Mogal Freight Services [1993] FCA 96
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 Classifications of Bills of Lading

House or Received Bill
issued by freight forwarder or C evidencing goods have been received
for shipment (but not that goods have been loaded on board the
vessel).
Not BoL but may become BoL if indorsed later by C once goods are
shipped (loaded).
C: Carrington Shipways v Patrick Operations [1991] 24 NSWLR 745
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 Shipped or Ocean or Marine Bill
 issued by master of ship or C.
 Evidences goods have been received & loaded on board vessel in the
condition stated therein.
 BoL may be clean/claused or negotiable/non-negotiable.
Clean or Claused Bill

Clean BoL – shipped BoL which states goods have been shipped in
good condition & order.
Claused BoL – goods have been shipped with noted defects/damage
in goods/packaging.
Art. 3(3) HR/HVR – Allows C to issue Clean or Claused BoL to reflect
true condition of goods.
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Negotiable or Non Negotiable Bill
BoL is document of title. Thus, it should be transferable or negotiable. This
facilitates goods being sold/resold in transit, etc (increases commerciality).
Art. 1(7) Ham R – basic feature of BoL is C undertakes to deliver goods to the
order of a named person (non negotiable) OR to order (of Shipper or CEE) or
to bearer (negotiable).
C: BHP Trading Asia Ltd v Oceaname Shipping Ltd [1996] Aust Fed Ct 67 FCR 211.
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Charter-party Bill
 BoL issued pursuant to charter-party or which has incorporated terms
of charter-party contract.
 Charter-party: contract for hire of a ship between S/o & Charterer.
 Charter-party bill is issued by S/o in a Time or Voyage Charter & by a
Charterer in a Demise Charter.
C: Hi-fert Pty Ltd v United Shipping Adriatic Inc & Ors - [1998] FCA 1622
If inconsistency between charter-party contract & BoL terms, charter-

party prevails as far as relationship between S/o & Charterer is
concerned.
C: President of India v Metcalfe Shipping Co. [19691 All ER 861.
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Non Negotiable Sea Waybills
Not document of title but evidences terms of carriage contract
between C & COR/S, receipt of goods, its condition & details of delivery
of goods.
Issued to COR & he keeps it as evidence of carriage contract. CEE
can be notified of its contents. CEE only needs to identify himself to C
in order to take delivery. Need not present Bill.
Art. 21 ICC’s UCP 600 (Documentary Credits) – Non negotiable sea
waybill will be accepted as document for financing international sales
only if credit requires it.
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Through BoL/Combined Transport BoL
Involves carriage of goods by several C/modes of transport i.e. C
issues BoL to S & undertakes to deliver goods at agreed destination
whether or not he needs to engage services of other Sub–C.
Throughout transport process, only one BoL as far as S or CEE are
concerned.
Thus, C remains liable for any damage to goods caused by Sub-C.
C may have recourse against Sub-C (actual carriers) - Art. 3 & 4
HVR.
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 Question
Cargo of two steam boilers from Baltimore to Shanghai under a
through BoL .
Goods reloaded on another ship at HK for remainder or carriage to
Shanghai.
On ship from HK, one boiler goes over the side, other is damaged.
Which regime applies? Hague (USA) or Hague-Visby (HK)?
Where BoL is issued, will generally determine which regime
applies (i.e. USA).
C: The Anders Maersk [1986] 1 Lloyd’s Rep 483
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Mate’s Receipt
 Not a BoL.
Issued by C to S if goods are delivered at dock but cannot immediately
be loaded.
Issued first before BoL & evidences condition of goods at time of
receipt.
 Ship’s Delivery Order

Not a BoL.
Issued by S to C instructing C to deliver parts of shipment to various
B/Beneficiaries of D.O. upon presentation of it.
document of title.
C: The Dona Mari [1973] 1 W.L.R. 341.
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C: The Dona Mari [1973] 1 W.L.R. 341

F: Thai Shipper delivered cargo of broken tapioca roots to ship under CIF
contract.
C issued to “mate’s receipts” which stated goods were “not quite dried”.
Two BoLs subsequently issued stated “Shipped in good order & condition”.
When cargo arrived, found to have been damaged because shipped in moist
condition. Damages were sought from C.
C argued as defence that goods were moist when received, as evidenced in
mate’s receipts.
H: BoL were conclusive record.
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SCD
 Art. 1(g) @ HVR introduces & defines SCD to replace BoL appearing
in HVR, so as to give wider meaning/scope.
SCD means –
(i) BoL;
(ii) negotiable document of title similar to BoL & contains/evidences
COGS contract;
(iii) not negotiable; or
(iv) non-negotiable document (including consignment note, sea waybill
or ship’s D.O.) that contains/evidences COGS contract.
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Sea Carriage Documents Act 1998 (Vic)

 Solves privity of contract problem.
Note definitions of SCD & “Lawful holder” (S. 5).
S. 8 & 9.
All rights & liabilities under contract of carriage in relation to SCD are
transferred to:
– successive holder of BoL;
– in case of seaway bill to whom delivery of goods is to be made in
accordance with contract;
– in case of ships delivery order, to person to whom delivery is to be
made.
S. 12(3) - SCD is conclusive evidence against C in favour of lawful
holder (CEE).
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(4) Shipper’s Liability under @HVR
 Q: What are the Shipper’s (S) liability under the HR, HVR as
well as under the @HVR?
 (a) Obligation to provide accurate information on the goods to

the Carrier (C).
 (b) Obligation to give appropriate warning and instructions to C
for carriage of dangerous cargo.
 (c) Responsible for C’s loss and damages if caused by S’s act,
fault or neglect. Note that this can be extended to S’s agent
and servants.
 (d) Liable to pay freight to C.
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the Carrier (C).
 When the C issues a BoL or SCD to the S, it becomes the C’s

undertaking to Cee or Holder of the BOL to deliver the goods
in the state and quantity recorded in the BOL.
 Most often, C cannot thoroughly examine the goods, so relies
on the information provided by the S.
 Art.3(4) – SCD is prima facie evidence of C’s receipt of goods
as described therein in accordance with Art.3(3)(a) – (c). It
must reflect leading marks of identification stamped on goods,
number of packages or weight, apparent order and condition of
goods.
 NB Proof to contrary not admissible where negotiable SCD
transferred to bona fide (in good faith) third party.
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the Carrier (C).
 C has a right to indemnity.

 Art.3(5) – S deemed to guarantee C accuracy at time of
shipment of marks, number, quantity and weight furnished by
S and shall indemnify C against all loss, damage and
expenses resulting from inaccuracy therefrom.
 NB However, this does not limit C’s responsibility and liability

under the COG contract, to any other person (other than S).
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 This obligation flows from the obligation to provide accurate

information.
 Art. 4(6) – Where goods of inflammable, explosive or

dangerous nature are shipped without C or Master’s consent
with knowledge of their dangerous nature, goods may at any
time before discharge be landed at any place or destroyed or
rendered innocuous by C without compensation to S. S is
liable for all damage and expense directly or indirectly arising
therefrom.
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 If such dangerous goods are shipped with C or Master’s

knowledge and consent but before discharge become a
danger to ship or cargo, the goods may be dealt with in the
same way without C being liable.
 The difference here is C’ consent.
C: Ocean Shipping Co. of Shanghai v Haerbing Chemical Products Dalian Co.

[1991]
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 (c) Responsible for C’s loss and damages if caused by S’s act,
fault or neglect. Note that this can be extended to S’s agent
and servants.
 Art.4(3) – S is not responsible or liable for C’s or ship’s loss or

damage arising from any cause without S’s act, fault or
neglect.
 This provision serves as a defence to S.
 NB The defence extends to S’s servant or agents.
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 (d) Liable to pay freight to C.
 Generally, S is required to pay freight in advance to C.

 However, S may specify in the COG contract that Cee is to pay
freight. In that case, C bears risk of not being paid.
 Note that HVR does not cover payment of freight.
 Under the common law, C may possess a lien over goods

carried, until payment of freight is made, or may bring an
action against S under contract, to recover unpaid freight.
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(5) Carrier’s Liability, General Defences, Limitations.
 C’s liability is for risks that arise during the COG.
 But what is “COG” ?

 Art. 1(e) HR/HVR – during the time goods are on board the
vessel (unless parties have contracted to extend the COG
period).
 Cf. Art.1(e) @HVR – during the period C is in charge of goods

(from the point the goods are delivered to C or C’s agent at the
port of departure, until delivered to or placed at Cee’s disposal
at port of destination.
 This is a wider period.
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 C’s responsibilities, under Art. 3(1) is to exercise due diligence

before and at the beginning of a voyage. This includes:
 (a) to make ship seaworthy
 (b) to properly man, equip and supply the ship
 (c) to make the holds, refrigerating and cool chambers as well
as other parts of the ship in which goods are carried, fit and
safe for reception, carriage and preservation.
 NB This is not an absolute duty.
C: Great China Metal Industries Co. v Malaysian Shipping Corp [1998] HCA 65
‘The Bunga Seroja’
 However, C bears the burden of proving due diligence.
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 What is “seaworthy”?
 It depends on the conditions the ship is likely to encounter
on the voyage.
 Ship is unseaworthy if it is unfit to carry particular cargo or
not properly manned by qualified master and crew or not
equipped with adequate chart for areas it is meant to sail.
C: The Sanko Steamship v Sumitomo Australia Ltd [1995] FCA 962
Lord Denning, The Aquacharm [1982] 1 Lloyd’s Rep. 7
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 Defects of the hull (design/structure)
C: The Muncaster Castle [1961] AC 807
 Inefficient/incompetence of crew.
C: Cth v Burns Philp (1946) 46 SR(NSW) 307
 Cargoworthiness (ability of ship to carry cargo in particular way
– refrigerated as specified in contract).
C: Pacific Composites v Transpac Containers (1998) FCA 496
 State of holds – ship unseaworthy because holds infested with
parasitic insect.
C: The Good Friend [1984] 2 Lloyds Rep 586.
 State of holds - inability to carry containers.
C: The Waltraud [1991] 1 Lloyds Rep 389.
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 Art. 3(2) – subject to Art. 4C, C shall properly and carefully load,
handle, stow, carry, keep, care for and discharge goods carried.
C: Shipping Corp of India v Gamlen Chemical Co Ltd [1980] HCA 51
C: Jindal Iron & Steel v Islamic Solidarity Shipping [2004] UKHL 49
 Art. 3(3) – Once C takes over the goods, on S’s demand, C must
issue SCD (BoL) to S showing:
(a) leading marks necessary for identification of goods as furnished
in writing by S before loading (provided marks are stamped or shown
clearly on goods).
(b) number of packages, pieces, quantity or weight of goods as
furnished by S in writing.
(c) apparent order and condition of goods.
Note: C not bound to state marks, etc. if has reasonable grounds to
suspect it does not accurately represent goods received or C had no
reasonable means of checking.
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 Art. 3(5) – S has obligation to supply C with accurate

information or else indemnify C for loss.
 Indemnity is necessary because C may become liable to bona

fide third part Cee under the BoL or SCD for something which
is not C’s fault. Hence the proviso in Art. 3(3) is a protection.
 C must deliver goods in the condition and state as noted in

BoL to Cee or Holder of BoL. This is founds in Art.3(4)
HVR/@HVR but not in HR.
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 Art.4A @HVR – C is liable to S for loss (including pure
economic loss) caused by goods being delayed while C is in
charge of goods unless C shows on balance of probabilities:
(a) delay was excusable, and

(b) C took all measures reasonably required to avoid delay and
its consequences.
 Art.4A(3) @HVR – as to when delay is excusable.

 Art.4A(6) @HVR – quantum of C’s liability for losses caused
by delay.
 Note: this is not in HR and HVR.
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 Exclusion Clauses
 Art. 3(8) – any term in COG contract relieving C or ship from

liability for loss/damage to or in connection with goods due to
negligence, fault or failure in the duties in Art. 3 or lessening
such liability (otherwise than as provided in @HVR) shall be
void and of no effect.
 Benefit of insurance in C’s favour or similar clause is deemed
to be a clause relieving C from liability.
C: Chapman Marine Pty Ltd v Wilhelmsen Lines [1999] FCA 178
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 C’s Defences
 Art. 4(1) – C is only liable for loss or damage arising from

unseaworthiness, if there was want of due diligence by C in
complying with Art.3(1). Burden of proving due diligence on C.
 Art. 4(2) – C or ship not liable for loss or damage arising
from…
 (a) act, neglect, or default of the master, mariner, pilot or the
servants of the carrier in the navigation or in the management
of the ship;
C: Minnesota Mining v The Ship Novoaltaisk [1972] 2 NSWLR 476

Cf. C: Chubu Asahi v The Ship Tenos [1968] 12 FLR 291
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(5) Carrier’s Liability, General Defences, Limitations..
 C’s Defences
from…
 (b) Fire – unless caused by actual fault or privity of C.

Onus of proving fault/privity of C is on the S.
 (c) Perils, dangers and accidents of sea or other navigable
waters.
C: Great China Metal Industries Co. v
Malaysian Shipping Corp [1998] HCA 65
(d) Act of God. ‘The Bunga Seroja’
(e) Act of war.
(f) Act of public enemies.
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 C’s Defences
from…
 (g) Arrest or restraint or seizure under legal process;
 (h) Quarantine restrictions;
 (i) Act/omission of S/Owner of goods/agent/rep;
 (j) Strikes or restraint of labour from whatever cause;
 (k) Riots & civil commotions;
 (l ) Saving/attempting to save life or property at sea;
 (m) Wastage/loss/damage due to inherent defect of goods;
 (n) Insufficiency of packing;
 (o) Insufficiency or inadequacy of marks;
 (p) latent defects not discoverable by due diligence;
 (q) any other cause arising without actual fault or neglect of C
or C’s agents or servants (he who alleges, to prove).
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 C’s Defences
 Art. 4(5)(h)@HVR/4(5) HR & HVR

- C or ship shall not be responsible for loss/damage to or
in connection with goods if nature/value of goods has
been knowingly misstated by S in SCD.
 Art. 4(4)
– Any deviation in saving or attempting to save life or
property at sea or any reasonable deviation by C is not
breach of contract for COG nor breach of HVR (or @
HVR) & C not liable for any loss or damage.
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 C’s Right to Indemnity
 Art. 3(5)
– S is deemed to guarantee C accuracy at time of
shipment, of marks, number, quantity and weight
furnished by him and shall indemnify C against all loss,
damage and expenses resulting from inaccuracy
therefrom.
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 Art. 4(6)
– Where goods of inflammable, explosive or dangerous
nature are shipped without C or master’s consent with
knowledge of their dangerous nature, the goods may at
any time before discharge be landed at any place or
destroyed or rendered innocuous by C without
compensation to S and S is liable for all damage &
expense directly or indirectly arising therefrom.
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 If such dangerous goods are shipped with C or master’s

knowledge and consent, but before discharge becomes a
danger to ship/cargo, goods may be dealt with in same
way, without C being liable.
 But Art. 4(3) – S not responsible/liable for C’s/ship’s
loss/damage arising from any cause without S’s (or his
servant’s/agent’s) act, fault or neglect.
 Thus, S’s liability to C is fault based.
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 Limitations of C’s Liability
 Art. 4(5)(a) HVR/ @ HVR

– Unless nature & value of goods have been declared by
S before shipment & inserted in SCD, C not liable for any
loss/damage to/in connection with goods which exceeds
666.67 units of account (Special Drawing Right - SDR)*
per package or unit or 2 units of account per kg of
gross weight of goods, whichever is higher.
 *SDR - international reserve asset created by the IMF to

supplement member countries’ official reserves. Based
on basket of 5 major currencies (USD, euro, pound
sterling, Japanese Yen and Chinese Yuan).
MONASH
53 BUSINESS
 Art. 4(5)(c) HVR/@ HVR

– Where container/pallet/similar article of transport is
used to consolidate goods, number of packages/units
stated in SCD as packed in such article shall be deemed
the number of packages/units for this para. If nothing is
stated, the article(s) shall be considered the
package/unit. (S loses out).
C: El Greco (Aust) Pty Ltd v Meditteranean Shipping Co [2004] FCAFC 202
MONASH
54 BUSINESS
 Art. 4(5)(g) HVR/@ HVR & Art. 4(5) HR – C & S may not
contract to decrease C’s minimum liability limit in Art.
4(5)(a) but it may be increased
 Art. 4(5)(e) HVR/@ HVR – C not entitled to limit liability
under Art. 4(5)(a) if loss/damage to goods resulted from
C’s act/omission done with intent to cause damage or
recklessly with knowledge that damage would probably
result.
 Art. 7 – C and S can contract as to any additional
obligation to be imposed with respect to goods prior to
loading on vessel & subsequent to discharge from vessel.
MONASH
55 BUSINESS
 Art. 4(5) HR
– 100 pounds sterling (gold value not £) per package or
unit.
 much lower than HVR.
 HR does not provide for weight measurement unlike
HVR.
 HR does not have Art. 4(5)(e) HVR equivalent which
states C cannot limit liability if loss/damage caused by
intentional/reckless conduct.
MONASH
56 BUSINESS
 Art. 3(6)
– S/CEE who claim loss/damage to goods against C
must give 3 days’ written notice to C/agent specifying
nature of loss/damage, at port of discharge before/at
time of removing goods there from and must sue C
within 1 year of delivery of goods/when goods should
have been delivered.
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57 BUSINESS
(6) Liability of C’s Servants and Agents
 Art. 4(2) HVR
– defences and limits of liability available to C under HVR
also available to C’s agents/servants (but not
Independent Contractors (IC)).
 Art. 4(3) HVR
– maximum amount claimable against C and/or his
agents/servants cannot in total exceed limit in Art. 4(5)(a)
HVR.
 Art. 4(4) HVR
– C’s servant/agent cannot rely on limit or defences under
this article if proved by S/CEE that damage resulted from
his act or omission with intent to cause damage or
recklessly with knowledge that damage would probably
result.
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58 BUSINESS
(7) Liability of Independent Contractors
 Art. 4 HVR does not protect IC hired by C.
E.g. Stevedores, warehouse operators.
 IC who have been subject to liability in negligence to

cargo owners [S/B/CEE ] have tried to rely on Himalaya
Clause* to relieve or limit liability by incorporating clause
into BoL/SCD or COG contract between S & C to protect
IC engaged by C.
 Problem is privity of contract. No privity of contract
between IC and cargo owner.
 *Adler v. Dickson (The Himalaya) [1954]
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59 BUSINESS
 Cargo owner may sue IC if goods are damaged due to

IC’s negligent handling of it. IC’s reliance on Himalaya
Clause however, technically goes against privity of
contract because IC is seeking to rely on a clause which
is in a contract between C and cargo owner.
 Nevertheless, the position today (compelled by
commercial reality) - if such clause is clearly and
expressly incorporated in SCD/COG contract so as to
limit or exclude IC’s liability, it applies.
C: Chapman Marines Ltd v Wilhelmsen Lines [1999] FCA 178
C: NZ Shipping v Satterthwaite [The Eurymedon] [1975] AC 154
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60 BUSINESS
 Freight Forwarders?
 Intermediary between cargo owner and S.

 Common in containerised carriage.
 Offer door to door service.
 Collect cargo at shipper’s warehouse, package it into
containers, arrange for road/rail transit to wharf, sea
carriage to port of destination, road/rail carriage from
wharf at discharge and unpack at importer’s warehouse.
 Q. Is freight forwarder a “carrier”?

 A. Depends on facts.
MONASH
61 BUSINESS
 Freight Forwarders?
 Agent for shipper

– Traditional classification;
– Contract of sea carriage is between Shipper and Carrier;
– FF negotiates with C for shipper (who is usually an undisclosed
Principal);
– FF will usually issue “consignment note” to shipper which is not
BoL.
 A carrier in its own right

– Especially where door to door service provided.
C: Comalco Aluminium Ltd v Mogul Freight Services (1993) ALR 677.
FF issues BoL to shipper.
– C will also issue BoL to FF.
(For losses at sea, shipper will claim against FF, FF will claim
against C).
MONASH
62 BUSINESS
MONASH
BUSINESS
THANK YOU

Lecture 6 Contracts For The International Carriage of Goods by Sea

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Lecture 6 Contracts For The International Carriage of Goods by Sea

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MONASH

BTW3201 INTERNATIONAL TRADE LAW

LECTURE 6: CONTRACTS FOR THE

 Carriage of goods by sea is by far the most popular mode of

 In previous lectures, we looked at Incoterms, which deals with

 The legal framework for carriage by sea includes both

 International Convention for the Unification of Certain Rules of

 Brussels Protocol Amending the Hague Rules Relating to Bills

 Convention on the Carriage of Goods by Sea 1978 [Hamburg

 The legal framework for carriage by sea includes both

 Carriage of Goods by Sea Act 1950 (Malaysia)

 Carriage of Goods by Sea Act 1924 (UK)

 Hague Rules 1924 (HR)

- 16 articles (10 on legal issues relating to bills of lading, and

 Hague Rules 1924 (HR)

- S.2 COGSA 1950 (Malaysia) – has effect in relation to and in

- S.4 COGSA 1950 (Malaysia) – every BoL or similar

 Hague-Visby Rules 1968 (HVR)

- an amendment of HR, also 16 articles.

 Hague-Visby Rules 1968 (HVR)

- Art. 10 – Applies to every BoL issued for COG between ports

(a) BoL is issued in member state;

(b) COG is from a port in member state; or

(c) COG contract provides that HVR applies or law of a

NB: This is wider than HR.

 Hague-Visby Rules 1968 (HVR)

- Art. 10 – Applies to COGS where:

(1) there is a Sea Carriage Document (SCD) relating to COG

(2) there is a SCD relating to COG into Australia from ports

- Art.10(6) – HVR does not apply to COG by sea under

 Differences between HR & HVR

 Hamburg Rules 1978 (Ham R)

- wider liability on C (even wider than HVR, so considered less

 Australia’s legal regime

 Australia’s legal regime

 Consignor/COR – Person who indorses or transfers goods

 Bill of Lading - document signed and issued by Carrier to Shipper to

 Characteristics of Bills of Lading

(2) Usually (not exclusively) issued by Master of the Ship.

(3) Evidences Receipt of goods by C on Shipment - S. 12 Sea

(4) Evidences existence of COG contract between C & Shipper &

(5) Constitutes undertaking by C to deliver goods to destination

 Characteristics of Bills of Lading

(7) Constitutes undertaking by C to deliver goods in same condition

(8) Forms contract of carriage between C & CEE – S. 8 SCDA

(9) Either negotiable (transferable) or non-negotiable (not

C: Comalco Aluminium Ltd v Mogal Freight Services [1993] FCA 96

 Classifications of Bills of Lading

C: Carrington Shipways v Patrick Operations [1991] 24 NSWLR 745

 Classifications of Bills of Lading

Clean or Claused Bill

 Classifications of Bills of Lading

 Classifications of Bills of Lading

If inconsistency between charter-party contract & BoL terms, charter-

 Classifications of Bills of Lading

 Classifications of Bills of Lading

C: The Anders Maersk [1986] 1 Lloyd’s Rep 483

 Ship’s Delivery Order

C: The Dona Mari [1973] 1 W.L.R. 341

Sea Carriage Documents Act 1998 (Vic)

 (a) Obligation to provide accurate information on the goods to

 When the C issues a BoL or SCD to the S, it becomes the C’s

 C has a right to indemnity.