Bills Digest No. 15   1997-98 Carriage of Goods by Sea Amendment Bill 1997


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WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

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

Purpose

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.

Background

'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.

Main Provisions

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:
  1.   where authorized by any special term in the policy; or
  2.   where caused by circumstances beyond the control of the master and his employer; or
  3.   where reasonably necessary in order to comply with an express or implied warranty; or
  4.   where reasonably necessary for the safety of the ship or subject-matter insured; or
  5.   for the purpose of saving human life, or aiding a ship in distress where human life may be in danger; or
  6.   where reasonably necessary for the purpose of obtaining medical or surgical aid for any person on board the ship; or
  7.   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.

Endnotes

  1. 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.
  2. Henry, C.E The Carriage of Dangerous Goods By Sea (1985) at p92.
  3. 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.
  4. Press Release Australia's shipping industry further strengthened Laurie Brereton MP of 13 October 1994.
  5. 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.

Contact Officer and Copyright Details

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

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 26 August 1997


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