HFW Shipping Bulletin - September, 2009

The Rotterdam Rules - Deadline Day By Craig Neame

23 September 2009 marks the opening for signature of the Rotterdam Rules, the latest attempt at harmonisation and unification of the current patchwork of cargo regimes encompassed predominantly in the Hague/Hague-Visby and Hamburg Rules. The ratification/adoption of 20 states is required before the Rules become law and it remains to be seen whether, unlike their Hamburg predecessors, the Rules will indeed attract universal acceptance. A decision on whether the UK will sign and ratify the Rules will be the subject of a full consultation exercise scheduled to be published early next year.

The vast scope of the Rules and potential impact on the carriage of goods both inland and by sea (at least in terms of teething problems in their implementation) promises a continued and forceful debate amongst the various stakeholders for months to come.

In terms of a carrier's liability, the Rotterdam Rules combine elements of the Hague/Hague-Visby and Hamburg Rules with a qualified presumed fault liability regime. The majority of the Hague/Hague-Visby catalogue of defences to the carrier's liability subsist but with the notable exception of the "negligent navigation" exclusion, raising crucial questions as to how this will impact the potential liability of carriers facing claims arising out of casualties, and consequently investigations as to cause. The balance of risks is likely to be affected, potentially with losses borne by cargo underwriters pursuant to the Hague/ Hague-Visby regimes to be assumed by P&I Clubs under the Rotterdam Rules, with ensuing uncertainty as to how and if this shift of responsibility will be translated into premiums. The list of parties affected by the Rotterdam Rules is significantly longer, again pointing towards changes in the insurance market in terms of, for example, freight and terminal liability policies.

The Rules regulate a significantly wider area of activity than earlier cargo conventions, applying from the point when the carrier receives the goods for carriage up to the point of delivery of the goods, and therefore (with some exceptions in the event that another international instrument is applicable to that mode of transport) extend to inland carriage. The introduction of so-called "volume contracts" creates a new ball game altogether and it will be interesting to observe the extent to which the market makes use of the relative freedom allowed under these...