Applicable Laws on Bill of Lading - Dissertation Example

 I. A commercial instrument which evolved from its original purpose is the Bill of Lading. Originally, it was a mere paper signed by the carrier to prove that the goods indicated by the shipper were received in good condition ready to be shipped and delivered to a specified person in the same state it was received. Presently, a bill of lading is a mercantile instrument to prove the existence of a valid contract of carriage, or a chartering contract which states, among others, the terms and conditions of the contract between the consignor/shipper and the carrier by reference; it is an acknowledgment receipt issued by the carrier validating that the specified goods were received in good condition; and lastly, it is a document of title which may be used to transfer rights over the goods shipped but nonetheless, it is not a negotiable instrument although it may be endorsed depending on the instructions of the shipper/consignor. This writer proposes to examine the current status of the liability of the carrier pursuant to the Carriage of Goods by Sea Act 1992, including relevant laws which may affect its application and for this purpose, the draft Table of Contents is reproduced: E-commerce and Sales of The central issue for resolution is—may a carrier’s liability be expanded or limited considering that the contract of carriage is characterized as a contract of adhesion as the shipper has no other recourse but to accede to the terms and conditions contained in the contract? This dissertation aims to determine whether a waiver executed by a shipper shall absolve a carrier from liability. Stated differently, if the shipper executes a waiver, any violation which accrues thereafter is likewise deemed waived. If not, what remedies are available to the consignee or transferee, if any? It shall likewise be determined if the aggrieved party may be able to recover the actual cost of damage or loss incurred from the carrier. This dissertation will answer if the bill of lading automatically confers absolute right to the holder, endorsee or consignee over the goods covered by the contract including the right to dispose, sell or transfer and more importantly, the right to sue and indemnity in case of damage or loss. It equally aspires to resolve which courts shall have jurisdiction over disputes arising from the possession, title or right over the consigned goods and parenthetically, may it be subject to arbitration proceedings? It is aimed to ascertain whether arbitration is a justifiable alternative to judicial adjudication. It likewise hopes to reconcile the applicable laws concerning the liability of the carrier, including all the legal ramifications of the various international instruments regulating carriage of goods by sea and in case of conflict, what laws shall apply? It expects that the laws governing the liability of the carrier pursuant to legislative acts are sufficient to resolve any conflict arising from the title, possession, loss, destruction, damage or other forms of disputes and if the laws are found inadequate, what reforms, amendments or modifications may be recommended? This dissertation will properly identify the aggrieved party and to determine whether the holder, endorsee, consignee or shipper may be the proper parties to institute action for restitution or indemnification in cases of loss, damage, destruction or other forms of assertion of rights? It further aims to analyze the application of various laws such as the sale of goods and e-commerce to the liability of the carrier as to the enforcement of the rights over the goods, including the right to sue and indemnification in case of loss or damage. Applicable Laws on Bill of Lading The importance of the bill of lading cannot be over emphasized. The Bill of Lading has been denominated as a mere acknowledgment to receive of goods however it has evolved into a mercantile instrument as evidence not only of the contract of carriage but as a document of title where rights in the goods may be transferred. The leading legislation to protect consignees or endorsees of cargoes is the United Kingdom when it enacted the Bills of Lading 1955. It contemplates that the cargo transported by sea were damaged in transit; short delivered; or lost. Damage may have due to the long voyage or the goods sold while in transit and thereafter may have been sold several times thus the person to whom the goods were delivered may not have been the intended party at the inception of the contract between the shipper and the carrier. Other problems envisioned to be resolved by this legislation is when delivery is made to a party who was not the buyer but under the terms of the original Bill of Lading or endorsement of the Bill. It would appear from the foregoing situations that the persons to whom the goods were delivered were not privy to the original transactions thus they could not sue or bring a suit under the principle of privity of contracts. This was ruling in the case of Tweddle & At kinson (1861) while in Thompson v Dominy (1845), the court held that the transfer of the Bill of Lading only transferred the property in the goods and not the contractual rights. Thus, the Bills of Lading Act 1855 was enacted to accord appropriate protection to the consignee or transferee of a Bill of Lading. However, the consignee’s or endorsee’s right to sue accrues in accordance with the original terms and conditions of the bill of lading and provided further that the rights were expressly incorporated in the bill of lading or necessarily implied in the contracts for carriage of goods by sea. Thus, if the bill of lading did not carry the terms in the original contract of carriage between the carrier and the shipper, then it is not binding between carrier and the consignee or endorsee of the bill of lading. So also, it did not embrace the situation where the cargoes were discharged through letters of indemnity contrary to the requirement that it must be through consignment or endorsement. The receiver of the cargo became the owner of the goods through actual delivery and not be consignment or endorsement. The bill of lading was discharged upon delivery to the person named and therefore ceased as a transferrable document of title. This was the ruling in the case of Delfini [1990] and later to be referred as the Delfini Problem. Subsequently, the Carriage of Goods by Sea Act 1992, otherwise known as the COSGA, which was intended to plugged the loopholes in the Bill of Lading Act. It essentially refers to the transfer of contractual rights and the imposition of contractual liabilities concerning bills of lading, sea waybills and ship’s delivery orders. On the other hand, the United Nations has declared that the carrier is liable to compensate the receiver for any damage or loss caused to the goods. The Hague Rules 1924 absolved the carrier and the ship from liability from any loss or damage exceeding the fixed amount unless the nature or value of the goods were declared by the shipper before shipment and inserted in the bill of lading. However, the declaration is not conclusive against the carrier. The amount of liability may be agreed upon but not it should be lower than the statutory declaration. It is further declared that the carrier or ship shall not be held responsible for any loss or damage caused if the value of the goods has been deliberately and knowingly misstated or undeclared by the shipper. The Hague Rules was later amended by Hague-Visby Rules where it declared, among other, the liability of the carrier or ship was similarly limited but any indemnity shall be based on the current market price of the goods. The carrier or ship shall be entitled to the limited liability provided that the damage or loss did not emanate from the act or omission of the carrier with deliberate intent to inflict damage or through reckless act with knowledge to perpetuate damage or injury. Other laws and regulations relevant shall be correlated to the dissection of the carrier’s liability to adequately discuss its impact in commercial transactions, including sales and transactions completed through electronic means. It shall likewise ascertain if the aggrieved party can be fully compensated for any loss or damage sustained by the act or omission of either the carrier or shipper/consignee/transferee contra distinguished from the prevailing rules on limited liability of the carrier. IV. Reasons for Further Study The study of the limited liability of the carrier in Carriage of Goods by Sea Act in a Bill of Lading is important considering that it hinders commercial transactions. The shipper/consignee/transferee are prejudiced by the provisions on limited liability considering that the carry the burden of losses and damages. The carrier should be made fully responsible for any loss or damage for its failure to exercise due diligence in the maintenance of the goods in its original state. Further study is likewise important to determine whether it is proper for a carrier to be presumed negligent immediately when loss or damage occurs and it must adduce clear and convincing evidence that it acted with diligence to protect and maintain the goods consigned to it. Since the subject matter encompasses a special and wide array of laws, it is necessary to reconcile and harmonize all these laws to make it relevant and contemporary to the present time considering the advent of technology. REFLECTIVE DIARY ON: The Nature of the Carrier's Liability in a Contact of Carriage of Goods by Sea under a Bill of Lading I have submitted to Dr. Yihdego my chosen topic and research title: “The Nature of the Carrier's Liability in a Contact of Carriage of Goods by Sea under a Bill of Lading.” I have chosen this research topic because I believe that it is an important issue because of the continuously evolving conditions that the shippers or carriers work under. This paper seeks to study, reconcile and harmonize laws and new found technologies that have emerged and brought new interpretations and meaning to previous laws. The central problem of my proposed dissertation is that may the charter’s liability be expanded or limited considering that the contract of carriage is a characterized as a contract of adhesion as the shipper has no other recourse but to accede to the terms and conditions contained in the contract? Another research problem that I will seek to answer in the study is to identify who may be held liable and/or institute action in cases of lose, damage and other forms of contention of rights. Traditionally, the bill of lading is merely a paper that indicates the contents of one container and the quantity of the contents. The transactions and transportation of goods made are through a voyage in the open sea. This piece of paper provided by the carrier is merely compliance to the Carriage of Goods by Sea Act that was put forward by the United States of America House of Representatives to provide consistency in the issuance of bills of lading and to comply with the Brussels Treaty co-signed by countries which were maritime powers. The emergence of technology promoting paperless transactions through online or internet negotiations has direly changed the way that carriers conduct their business transactions. At this point I have gone to the library to supplement and verify the information found in the internet. The following were found to be the most relevant laws that may be applied and discussed in the study. These laws are the Carriage of Goods by Sea Act, the Bill of Lading and E-commerce law in the UK. I have also found United Nations Conventions that are related to my study, the latest of which are the Hague Visby Rules amended in 1979. Developing the Scope of the Dissertation After finding the laws and other relevant materials in this study I have developed and outlined the contents and points that I will be discussing in my study. I have also referred to a number of books that have helped me develop the scope of this dissertation. The list of these books will be incorporated in the table of references. Since the legislative enactments will be the backbone of this dissertation, thus these enactments will be discussed extensively in the dissertation. This dissertation will be divided into seven chapters. The first chapter will cover a brief introduction and scope of the study. The last part of the first chapter shall include the statement of the problem where my dissertation will revolve upon. The second chapter in my dissertation will be an overview of the related literatures in my study; these would include applicable laws on the Bill of Lading; these shall include the Bill of Lading Act that was first signed in 1855, the Carriage of Goods by Sea Act in 1992 and supporting documents from the United Nations Conventions. This study would also include relevant case laws that would strengthen my position in this dissertation. In the third chapter of my dissertation it would discuss the impact of the relevant law on the UK’s carriage of goods by sea act; these are the sales of goods act and e-commerce law. The fourth chapter of this dissertation shall present the historical background of how business transactions through the sea are made in the United Kingdom. It would include the evolution, defects and imperfections of the Bill of Lading that was produced in 1855. This chapter would also study the relevance of the Carriage of Goods by Sea Act on the E-commerce and Sales of Goods. The fifth chapter of the dissertation is the critical analysis. The scope of the analysis is the carrier’s liability in a broad-spectrum, transfer and effects of the rights and obligations between the shipper and the carrier; it would also include the documentation and representation of the transactions and the effects of mis-declaration and non-disclosure on the part of the shipper. This would also include the limitations of the carrier’s liability based on the laws provided by the United Kingdom, under this segment of the chapter the privity of contract, right to sue, doctrine of subrogation, tort and damages will be discussed. The sixth chapter shall tackle the judicial, arbitration and remedial processes that may be applied to the circumstances in a given case. Under this chapter the court jurisdiction will be defined, forum selection, choice and conflict of laws that may be used in a case. It would also include the arbitration. The last chapter is for the conclusion. The next part of this reflective diary is a brief explanation of what I understood from the texts that I have read in m search for references such as laws, journals and UN conventions for this dissertation. The Carriage of Goods by Sea Act The Carriage of Goods by Sea Act is an international law that states that any object that is or are under any document that is covered with the said act, that any person who had the right to the object/s being shipped and are able to present documents have the right to take or demand the delivery from shipper/carrier of the said good/s that is stated in the presented documented known as the bill of lading. The person who holds the documents of the object that is/was shipped is allowed not to make a claim that is under the contract of the carriage that could be against the carrier due to the possible damage the carriage has obtained during the shipment of the carrier. The person, who has claimed, took or demanded an object to be delivered from the carrier would be subjected to the liabilities that are under the contract of the carrier. “Where the goods to which a ship’s delivery order relates form a part only of the goods to which the contract of carriage relates, the liabilities to which any person is subject by virtue of the operation of this section in relation to that order shall exclude liabilities in respect of any goods to which the order does not relate.” 1 “This section, so far as it imposes liabilities under any contract on any person, shall be without prejudice to the liabilities under the contract of any person as an original party to the contract.”2 The Bill of Lading The Bill of Lading is a special document that aims to keep of track of certain events in a series of transactions. A bill of lading starts when an individual through an agent or directly consigns with a shipping line by reserving a space in a ship to transport objects. The shipper will dictate the time of arrival of the goods in the place or port of delivery. It would also include the contents, quantity and condition of the goods before it was transported. Upon receiving the goods the agent and the carrier would place in the paper the condition of the goods upon its arrival in the port. From point A to point B until the consignee is able to receive the goods the carrier will not be held liable for any damage and loss in transit of the goods unless it is deliberate. The shipper, in turn will accomplish the bill of lading form. It is in this form that he will indicate the contents and their quantity, with important details like, the port of destination, the time and the consignee. However, the carrier may not insert details except in cases where the carrier has reasonable grounds to suspect the marks, numbers, quantity or weight given by the shipper do not represent the goods actually received on board.3 Another exception to the rule is that when he has no means of checking the details indicated in the bill of lading made by the shipper.4 The agent sent by the carrier will verify the information in the bill of lading presented by the shipper. The goods will be weighed up and then it will be signed by both the shipper and the consignee. The consignee has the power to sell the goods while the goods are in transport after which he may endorse the bill in favor of the purchaser. The bill of lading will be surrendered at the port upon the goods’ discharge from the carrier. Table of Authorities Legislations Bills of Lading Act 1855…………….…………………………………………….. 1 Carriage of Goods by Sea Act 1971…………………………………………….. 2 Carriage of Goods by Sea Act 1992……………………………………………. 1, 2, 4, 6, 8, 9, 10 Sale of Goods Act 1893. 56 & 57 VIcT……………………………………………2 Sale of Goods Act 1979………………………………………………………….....2 The Electronic Commerce (EC Directive)………………………………………..2, 5, 10 International Treaties Convention on the Carriage of Goods by Sea (1978)………………………….2 The Hague-Visby Rules - The Hague Rules as Amended by the Brussels Protocol 1968…………………………….7, 10 The Hague-Visby Rules - The Hague Rules as Amended by the Brussels Protocol 1979………….………………... 7, 10 The Hague-Visby Rules……………………………………………………………6, 7 Unit of Account Provision and Provisions for the Adjustment of the Limit of Liability in International Transport and Liability Conventions ……..………………3 United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea…………. ….2, 6, 10 Cases Thompson v Dominy……………………………………………………………….6 Tweddle v Atkinson …..……………………………………………………………6 Bibliography Books Carr, I., Stone, P., International trade law, 2nd Edition, Routledge-Cavendish, 1999 David, P., Stewart, R., International Logistics The Management of International Trade Operations, 3rd Edition, Cengage Learning, 2010 Hendrikse, M. L. , Margetson, N. H., Aspects of maritime law: claims under bills of lading, Kluwer Law International, The Netherlands, 2008 Laryea, E.T., Paperless trade: opportunities, challenges and solutions, Kluwer Law International, The Netherlands, 2002 Schaffer, R., Agusti, F., Earle, B. International Business Law and Its Environment, South-Western Cengage Learning, 2005 Legislation Bills of Lading Act 1855. (UK) c.111. [online] Available from http://www.legislation.gov.uk/ukpga/Vict/18-19/111/enacted [Accessed 04 April 2011] Carriage of Goods by Sea Act 1971. (UK) c. 19. [online] Available from http://www.legislation.gov.uk/ukpga/1971/19 [Accessed 04 April 2011] Carriage of Goods by Sea Act 1992. (UK) c. 50 [online] Available from http://www.legislation.gov.uk/ukpga/1992/50/contents [Accessed 04 April 2011] Sale of Goods Act 1893. 56 & 57 VIcT. (UK) Ci-i. 71. [online] Available from http://www.legislation.gov.uk/ukpga/1893/71/pdfs/ukpga_18930071_en.pdf [Accessed 04 April 2011] Sale of Goods Act 1979. (UK) c. 54. [online] Available from http://www.legislation.gov.uk/ukpga/1979/54 [Accessed 04 April 2011] The Electronic Commerce (EC Directive) Regulations 2002. (UK) No. 2013. [online] Available from http://www.legislation.gov.uk/uksi/2002/2013/regulation/16/made [Accessed 04 April 2011] The Sale and Supply of Goods to Consumers Regulations 2002. (UK) No. 3045. [online] Available from http://www.legislation.gov.uk/uksi/2002/3045/contents/made [Accessed 04 April 2011] International Treaties Admiraltylaw.com. The Hague-Visby Rules. [online] Available from http://www.admiraltylaw.com/statutes/hague.html [Accessed 04 April 2011] Lex Mercatoria. The Hague-Visby Rules - The Hague Rules as Amended by the Brussels Protocol 1968. [online] Available from http://www.jus.uio.no/lm/sea.carriage.hague.visby.rules.1968/doc.html [Accessed 04 April 2011] Commission on International Trade Law. United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea. Vienna 2009 [online] Available from http://www.uncitral.org/pdf/english/texts/transport/rotterdam_rules/09-85608_Ebook.pdf [Accessed 04 April 2011] Commission on International Trade Law. United Nations Unit of Account Provision and Provisions for the Adjustment of the Limit of Liability in International Transport and Liability Conventions (1982). [online] Available from http://www.uncitral.org/pdf/english/texts/transport/UoAP/unit_of_account_English.pdf [Accessed 04 April 2011] United Nations Convention on the Carriage of Goods by Sea (1978). [online] Available from http://r0.unctad.org/ttl/docs-legal/unc-cml/CARRIAGE%20OF%20GOODS%20BY%20SEA%20HAMBURG%20RULES%201978.pdf [Accessed 04 April 2011] Cases Thompson v Dominy [1845] 14 M & W 403, 153 ER 532. 14 LJEx 320 Tweddle v Atkinson [1861] 1B&S 393 Read More