Detailed Discussion of – Contract of Carriage Rules for Merchant Ship (Commonly Known as Hague Visby Rules)

When we talk about Hague Visby Rules, Bill of Lading comes into mind. These all are interrelated.

Where BLs are receipt of goods loaded on-board a ship, issued by the carrier to the shipper and Hague Visby Rules are the pre-defined international rules for carrying of goods by sea.

In another article, I will try to write on Bill of Lading. Meanwhile, you may watch the following video to understand the term “BL- Bill of Lading” better.

Let’s talk about Contract of Carriage Rules for Merchant Ship.

Nowadays if you want to open a bank account / Facebook account / Email account, there are some Terms and Conditions.

Even if you want to send one document to another city inside in your country there are some Terms and Conditions between you and courier company. The Government also have a “Set of Rules” for courier company, which they must abide by.

These Terms or Rules are set for the sake of safe and peaceful dealings and amended when required.

The ship is carrying goods from one corner of the world to another corner of the world, where Sometimes ship-owner and shipper are from different country, they might not have previous business relation. So, the shipper would not load his goods to the ship without some mutually agreed rules.

Suppose, we consider they have some mutually agreed rules and they shipped the goods. But, this set of rules may not be accepted by all the ship-owner or shippers in the world. They might have different views.

And each time can’t amend these rules, which will kill much amount of time.

So, to overwhelm this complication some pre-defined rules are in force.

The contract between the carrier and the shipper is already created before issuing the bill of lading when the cargo is loaded on the ship. This is done to safeguard the shipper in case the cargo is damaged before loading it on board the vessel and to help the shipper in the claim process. For the carrier and the consignee, the bill of lading will act as the actual contract of carriage.

Below are some popularly used conventions and rules which covers the contract of carriage for carrying goods by sea  :

–    Hamburg Rules

–    Rotterdam Rules

–    Hague Rules

–    Hague – Visby Rules

Today I will discuss on the Hague/ Hague-Visby Rules.

International Convention for the Unification of Certain Rules of Law relating to Bills of Lading drafted Hague Rules for the first time in Brussels on 25 August 1924.

So, the Hague Rules is a set of international rules for the international carriage of goods by sea.

Hague Rules is a set of International Rules for the Internation carriage of goods by sea.

Although Hague Rules brings the world business relation in a standard shape, still they have some limitations.

  • According to the Hague Rules, the Maximum penalty is 100 pounds sterling per unit of cargo. And it doesn’t have a provision for each KG of cargo loss.
  • As at the time of Hague Rules there was not much container vessel is in operational at sea, it had not taken into account bill of ladings covering container cargoes.
  • VOLREM for cargo which are expensive, should be mention in BILL OF LADING.

Hague rules were amended several times latest being the Rotterdam rules which were developed in 2009.

The official title of the Hague Rules is the “International Convention for the Unification of Certain Rules of Law relating to Bills of Lading”. After being amended by the Brussels Amendments (officially the “Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading”) in 1968, the Rules became known colloquially as the Hague–Visby Rules.

A final amendment was made in the SDR Protocol in 1979. Many countries declined to adopt the Hague–Visby Rules and stayed with the 1924 Hague Rules, e.g. shipper prominent countries like Malaysia. Some other countries which upgraded to Hague-Visby subsequently failed to adopt the 1979 SDR protocol.

in 1968, at the time of Hague Visby Rules, they have incorporated the shortcoming of Container cargo. Also had the solution for the each KG of goods loss/ damage penalty.

Some Limitations of Hague & Hague Visby Rules :

  1. No deck cargo included
  2. No delay damages included
  3. Navigation or management mistakes/ delays not included
  4. No electronic BL included.
  5. The provisions of this Convention shall apply to all bills of lading issued in any of the contracting States.

Hage Rules / Hague-Visby Rules do not apply to WAYBILL, Non-negotiable B/L.

While Hague Visby rules contain 10 ARTICLES. In the remaining portion of this post, I will try to write details on these 10 articles. Competency exams Candidates (Deck-Management Level) should have an understanding of these rules.

Whereas Articles 1 & 2 talked about Definitions & the owner’s obligations to NOT TO AVOID THESE RULES.

Article III

Article 3 talks about the carrier responsibilities and time frame for the shipper to sue the carrier.

Carrier’s responsibilities :

  1. Carrier must make the ship seaworthy
  2. Carrier must make hold ready to load, carry and discharge
  3. Issue bill of lading
  4. Have sufficient crew as per SMC/ comply with internation conventions.

Rule 6 says: the carrier will be discharged from all liabilities unless the shipper sues the carrier within one year from the delivery of the cargo. And the goods will be considered delivered upon removal from the ship unless notice of loss or damage is given within three days.

Rule 8 says: any clause that relieves the carrier of his responsibilities as per Hague rules shall be null and void.

Article IV

Art IV (2) lists seventeen exceptions which a carrier can rely on when faced with a claim.

In simple words, a carrier will not be responsible for the damage, loss or delays if he had not caused it intentionally, provided the carrier had exercised due diligence.

Another topic that article IV highlights are the compensation for shippers in case of damage or loss of the cargo. This is covered by Article IV(5).

Article IV (5a) defines the penalty limit. The maximum liability for carrier can be 666.67 SDR per package or 2 SDR per KG of the goods damaged or lost, whichever is greater.

Article V

Article V allows increasing the maximum liability for carrier from SDR 666.67 per package, which need to be mentioned in bill of lading.

Article VI

Article VI gives complete freedom to the shipper and carrier to enter into any agreement irrespective of what is required by other articles of Hague Visby rules provided.

Article VII

Article VII mentioned carrier’s responsibility is from time of loading to time of discharge. Whereas shippers and carriers are free to decide the extent of responsibilities and liabilities before loading and after discharge.

Article IX

Article IX states that if these rules contradicts any international convention or national law, that convention or law will have the priority.

Article X

  1. If the bill of lading is issued in the country which has ratified the hague visby rule, the hague visby rule will apply to that bill of lading. Or if the load port is in a country which has ratified hague visby rules, these rules will apply to the bill of lading issued for the cargo loaded.
  2. If the hague visby rules do not apply as per Article X (a or b), if the carrier and shipper has mentioned in the bill of lading that hague visby rules would apply then these rules will apply to the bill of lading.

Sometimes it may write “Paramount Clause” – which means Hague Visby Rules applied. If load port authority or discharge port authority (Any one port only), ratified Hague Rules then HAGUE VISBY rules would be applied. And if both Load and Discharge port ratified Hague rules, only then Hague rules would be applied.

Thanks for your interest on Marine Legends.

Bon Voyage

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