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This Digest was prepared for debate. It reflects the legislation as
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CONTENTS
Carriage of Goods by Sea Amendment Bill
1997
Date Introduced: 18 June 1997
House: House of Representatives
Portfolio: Transport and Regional
Development
Commencement: Royal Assent
The purpose of the Bill is to defer the Hamburg Rules for 3
years to allow more discussion and protection for both shippers and
carries.
'Historically, maritime law held the carrier absolutely liable
for loss of or damage to cargo' regardless of whether they were
negligent and '(with a few exceptions) regardless of the cause of
loss'.(1) Dangerous cargo was one such exception but at that time
the only cargoes considered dangerous were rum, brandy and gun
powder.(2) Needless to say, things have changed and now there are
numerous international agreements, generally established under the
auspices of the International Maritime Organisation, which govern
all aspects of maritime law.There are special regimes for the
transport of dangerous goods, a myriad of rules of shipping and
treaties governing who should be liable for the loss or damage to
cargo.
The International Convention For The Unification Of Certain
Rules Of Law Relating To Bills of Lading 1924 (the 'Brussels
Convention') was the first international treaty comprehensively
covering the carriage of goods by sea.Since its adoption in 1924,
there have been two protocols to the Brussels Convention, the first
in 1968 (the 'Visby Protocol') and the second in 1979.The Visby
Protocol inserted, among other things,the 'container clause' which
allows a shipper to claim the amount of money specified on the bill
of lading for each container.The Visby Protocol also created 'a
liability system which is generally known as the Hague-Visby
Rules'(the 1968 Hague Rules).
The 1979 Hamburg Rules (The United Nations Convention on the
Carriage of Goods by Sea 1978) adopted a regime that was
intended to:
...strike a fairer balance between carriers and shippers in the
allocation of risks, rights and obligations with regard to
liability....They shift the balance of liability slightly from the
shipper to the carrier, but without radically changing the
established liability system.(3)
The Carriage of Goods By Sea Act 1991 is the relevant
Australian legislation on this topic and provides for the
incorporation of the Hague Rules as part of Australian domestic
law.The Carriage of Goods By Sea Act 1991 also, currently,
provides for an automatic trigger that will make the Hamburg Rules
part of Australian law and render the Hague Rules obsolete.One of
the things this Bill will do is remove this automatic trigger.
The Bill implements changes that were first announced by the
Minister for Industrial Relations on 13 October 1994:
...the decision to defer the Hamburg Rules follows extensive
consultations with industry and a thorough assessment of the merits
of proceeding at this time....Although the Hamburg Rules remain the
preferred longer term approach because of their potential
advantages for shippers, there is currently insufficient evidence
that the commercial advantage will override the drawbacks of legal
uncertainty and the costs that may be attached to their early
introduction.(4)
The Hamburg Rules are favoured by shippers and predictably are
opposed by shipowners and their liability insurers.Given the shift
in liability that the Hamburg Rules advocate this divergence of
opinion is hardly surprising. In his speech to the Conference of
the Maritime Law Association of Australia and New Zealand, the
Minister for Transport and Regional Development, stated that the
Government supported a package which proposed:
- amendments to the Carriage of Goods by Sea Act 1991,
which would bring into the ambit of the Act some of the perceived
benefits of the Hamburg Rules, thus benefitting shippers without
embracing the negatives of the Hamburg regime;
- replacement of the Hamburg Rules automatic trigger mechanism in
the Act by a periodic review of the international situation as far
as the required pre-condition for the adoption of the Hamburg Rules
are concerned;
- that Australia support, in international forums, widespread
adoption of a modernised cargo liability regime.(5)
The perceived problems with or objections to the Hamburg Rules
include:
- the Hamburg Rules set a limit on the liability of the
carrier;
- the Hamburg Rules essentially reverse the burden of proof where
there has been a loss, so that the carrier bears the onus of
proving that they took all reasonable steps;
- that the adoption by some countries of the Hamburg Rules will
erode the present uniformity of the law in this area.As some
countries will be bound by the Hamburg Rules, some by the Hague
Rules etc;
- the transportation by sea of live animals (which was not
covered by the Hague Rules) would be caught by the Hamburg
Rules.
Examples of countries that have signed and ratified the Hamburg
Rules are Chile, Egypt and Hungary.Examples of countries that were
not original signatories to the Hamburg Rules but who have since
acceded to them are Kenya,Nigeria, Morocco, Romania and Uganda.Many
of Australia's trading partners have not yet ratified or acceded to
the Hamburg Rules.The Bill provides, among other things, that when
deciding whether or not to adopt the Hamburg Rules, the Minister
must consider the extent to which those rules have been adopted by
Austraia's major trading partners.
Schedule 1 - Amendment of the Carriage of Goods By Sea Act
1991
Item 1 repeals all the existing provisions that
automatically implement the Hamburg Rules and replaces them with a
new regime. Under proposed Sub-section 2(3), the Minister will have
to table a statement replacing the Hague Rules with the Hamburg
Rules.If this does not occur within 10 years (of the commencement
of the new Item 1) then a sunset clause operates to repeal all the
provisions relating to the Hamburg Rules.This will give the
Minister flexibility to implement the Hamburg Rules at any stage in
the next decade.
Item 2 inserts a new section 2A which requires
the Minister 'from time to time' to consider whether the Hamburg
Rules should be brought in to replace the Hague Rules.The first of
such reviews by the Minister is to be completed within 5 years of
the commencement of the section and is to involve the Minister
considering:
- the extent to which Australia's trading partners have adopted
the Hamburg Rules;
- the submissions made by or on behalf of shippers, ship owners,
carriers, cargo owners, insurers and maritime law
associations;
before putting his or her decision in a statement and tabling it
before each House of Parliament.The section provides a minimum time
limit after tabling a statement in support of changing to the
Hamburg Rules so that they are not introduced immediately.
Item 3 amends the existing references to the
SDR Protocol and the Visby Protocol (of 21 December 1979) to
include any amendments made by the regulations.
Item 4 amends the objects of the Act.Currently
the objects provide that the Hamburg Rules will be replacing the
earlier versions (which give effect to the Brussels Convention and
the Visby Protocol).This is amended by item 4 to ensure that the
Hamburg Rules will only be introduced if the Minister, after
conducting a review, decides so.
Item 5 inserts a definition of 'marine
insurers'.Marine insurers need not exclusively offer marine
insurance and they may be the Australian representatives of member
Associations of the International Group of Protection and Indemnity
Associations.
Item 6 inserts a definition of 'maritime law
associations' as a law association with an interest in maritime law
irrespective of whether that association has interests in any other
areas of law.
Item 7 replaces existing section 7 so that
references in the Act to the Hague Rules include the amendments
made by the Visby Protocol and the SDR Protocol.
Proposed section 7(2) will allow regulations to be made which
include the details of what the Explanatory Memorandum at p6 refers
to as the 'industry-endorsed package'.The Explanatory Memorandum
gives an extraordinary explanation for the need for extensive
regulations rather than putting more detail in the Bill:
Given the need not to overburden Parliament's business agenda
and recognising that the resources of the Office of Parliamentary
Counsiel are under pressure, it is quite appropraite that such
technical matters be handled by regulation.
In any event, the Bill allows these regulations to provide
for:
- the coverage of a wider range of sea carriage documents (a term
that is not specifically defined) such as electronic
documents;
- an increased coverage of deck cargo.This is significant
because, as would be expected, deck cargo has a much higher risk of
being damaged in transport than cargo carried beneath the deck.
However, there are often operational or economic reasons for
wanting to carry the cargo on the deck.
The general rule (article 9.1 of the Hamburg Rules) is that a
carrier is not allowed to put cargo on the deck without the
shipper's consent.If the cargo is carried on deck with consent and
damaged the carrier only has to show that they took all reasonable
steps to protect it to avoid liability.If, however, the cargo is
carried on deck without the shipper's consent, then this defence is
unavailable to the carrier.The Explanatory Memorandum (at p7)
indicates that it is intended to make regulations to the effect
that the deck cargo will be covered only if the 'specific stowage
requirements of the shipper' were notified to and agreed by the
carrier at the time of booking.This seems to reverse the previous
position where the onus was on the carrier to show the existence of
such agreement (ie that the cargo be carried on deck).
- the extension of the period during which carriers remain liable
for the cargo.This seems consistent with article 23 of the Hamburg
Rules.Article 23 provides that any contractual term which derogates
directly or indirectly from the obligations spelled out in the
Convention is null and void, however, leaves open the issue of
increased carrier's liability.The Explanatory Memorandum at p7
states that it is intended to make regulations extending the
carrier's liability to the precincts of the wharf or terminal at
the port of loading and discharge.
- increasing the carrier's liability for loss arising out of a
delay or set circumstances 'identified as being inexcusable'.The
Explanatory Memorandum at p7 states that the list of excuses will
be 'based broadly' on those in the Marine Insurance Act
1909.Section 55 of that Act lists the following excuses:
- where authorized by any special term in the policy;
or
- where caused by circumstances beyond the control of the
master and his employer; or
- where reasonably necessary in order to comply with an
express or implied warranty; or
- where reasonably necessary for the safety of the ship or
subject-matter insured; or
- for the purpose of saving human life, or aiding a ship
in distress where human life may be in danger; or
- where reasonably necessary for the purpose of obtaining
medical or surgical aid for any person on board the ship; or
- where caused by the barratrous conduct of the master or
crew, if barratry be one of the perils insured against.
Proposed subsection 7(4) requires the Minister to consult with
various interested groups before making the regulations outlined
above.
Item 8 In the existing Act, section 11
prohibits, for example, entering into a contract that seeks to
prevent Australian Courts from exercising jurisdiction over
disputes.Item 8 includes an exemption to this by saying that
agreements to go to arbitration in the event of a dispute will not
be negated by section 11 provided that the arbitration takes place
in Australia.
Item 9 inserts new section 22 which will allow
the Governor-General to make regulations under the Act.
- The Economic and Commercial Implications of The Entry Into
Force of the Hamburg Rules and The Multimodal Transport
Convention (1991) United Nations publication at p8.
- Henry, C.E The Carriage of Dangerous Goods By Sea
(1985) at p92.
- The Economic and Commercial Implications of The Entry Into
Force of the Hamburg Rules and The Multimodal Transport
Convention (1991) United Nations publication at p2.
- Press Release Australia's shipping industry further
strengthened Laurie Brereton MP of 13 October 1994.
- Press Release of the Minister for Transport and Regional
Development of 10 September 1996. Speech given to the Maritime Law
Association of Australia and New Zealand Conference, at
Brisbane.
Susan Downing
25 August 1997
Bills Digest Service
Information and Research Services
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.
ISSN 1328-8091
© Commonwealth of Australia 1997
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Published by the Department of the Parliamentary Library,
1997.
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Last updated: 26 August 1997
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