The Hague-Visby Rules and the Rotterdam Rules in the Light of the Modern Maritime Industry Developments

Olena Ptashenchuk

Lawyer, JSSC “Ukrrichflot”

International legal problems of modern merchant shipping: Collection of materials of the First International Research and Practice Conference (December 11, 2012, Kyiv) / Kyiv University of Law at the National Academy of Sciences of Ukraine. - Vol. 1. - K.: Lira-K 2013. - 270 p.

International carriage of goods by sea under bills of lading or similar document has been traditionally regulated by either international conventions or national and regional ‘hybrid’ regimes that incorporate conventional provisions into domestic law [12, 1-2].

The first major international convention on the matter concerned was the International Convention for the Unification of Certain Rules Relating to Bills of Lading (hereinafter referred as the Hague Rules). The convention was adopted at Brussels on 25th August, 1924 and came in force on 2nd June, 1931. It was ratified by most maritime countries establishing the regime that dominated in international maritime cargo transportation for four decades.

The conventional main objective was a compromise between carrier and shipper interests, designed to secure greater fairness and to establish uniformity in the international carriage of goods by sea. As it is evidenced by Effort Shipping Co Ltd v Linden Management SA the Hague Rules aimed to achieve its intentions by ‘pragmatic compromise between interests of owners and shippers’ [18, 337]. However, as a result, ‘the Hague Rules set out to be a limited code for the obligations of the carrier […] with some, much less complete, reference to the obligations of shippers’ [13, 236].

That is why the Hague Rules were amended by the 1968 and 1979 Protocols which were adopted respectively at Brussels on 23rd February, 1968 and on 21st December, 1979 and came in force on 23rd June, 1977 and on 14th February, 1984. These amended Rules (hereinafter referred as the Hague-Visby Rules) provide an update of the balance between carrier and shipper with the slight list towards shippers. The amendments and provisions incorporated, however, seemed to be far too modest [15, 62] and did not gain universal approval [4, 215].

All of these, together with the subsequent international political and economic changes led many developing countries to question the principles of the Hague and the Hague/Visby regimes [6, 81]. The attempts concerned resulted in the adoption of the International Convention on the Carriage of Goods by Sea at Hamburg on 31st March, 1978 (hereinafter referred as the Hamburg Rules), that came in force on 1st November, 1992. However, these Rules have not yet been ratified by any major maritime nation. Such factors as the abolition of the catalogue of exceptions and the substantial rise in liability limits lead the opponents of the Convention to the view that its implementation would have rather negative impact on the international maritime cargo transportation nowadays [4, 226].

Thus, even though the Hamburg Rules were the product of extensive discussions in the United Nations Commission on International Trade Law (hereinafter referred as the UNCITRAL) and were eagerly adopted by a number of jurisdictions aiming to reduce the power of shipowners in international carriage of goods by sea, the Hamburg Rules still hardly seem actually to have come into effect [13, 243]. In other words, ‘whatever the reasons […] the Rules can be said to have come to nothing or to very little’ [13, 246].

In addition, it is worth mentioning that in recent years the overall situation has been further complicated by the fact that a number of states, including China, Japan, the Scandinavian states and Australia, have unilaterally adopted a hybrid Hague–Hague/Visby–Hamburg regime [4, 228].

Such a variety of international rules on carriage of goods by sea leads to the fragmentation of the law applicable in any specific situation [12, 2]. Moreover, neither the international conventions discussed nor the ‘hybrid’ regimes derived from them, ‘adequately take into account modern transport practice, such as the widespread use of container, door-to-door transport contracts, and the use of electronic transport documents’ [12, 2].

Trying to resolve these problems the Comite Maritime International (hereinafter referred as the CMI) produced a ‘Draft Instrument on Transport Law’ which after the detailed examination by the UNCITRAL Working Group was circulated to all United Nations members for comment before being adopted by consensus by the UNCITRAL Commission at its 41st Session in New York in July 2008. The International Convention on International Carriage of Goods Wholly or Partly by Sea, to be known as the Rotterdam Rules, was opened for signature in Rotterdam on 23 September 2009.

The new regime is in many ways similar to the Hamburg Rules. However, it is certainly ‘less hostile-sounding’ to carriers, it applies to goods wholly or partly carried by sea and includes definitions of corresponding types of electronic documents [13, 247-248]. Moreover, many provisions of the Rotterdam Rules deal with standard problems much more elaborately than the Hague/Visby and the Hamburg Rules [13, 248].

Thus, Article I of the Hague-Visby Rules defines the ‘carrier’ ‘in an open-ended manner’ [3, 104] as ‘the owner or the charterer who enters into a contract of carriage with a shipper’. In the Rotterdam Rules the carrier is defined as ‘a person that enters into a contract of carriage with a shipper’. This definition is more practical nowadays as it includes any person who has concluded, as principal, a contract of carriage with the shipper even though such person may have no intention of physically carrying the goods itself. It comprises a freight forwarder, a combined transport operator or any other type of non-vessel owning carrier, [4, 225] a number of which has been constantly growing in the shipping industry [10, 240].

In addition, the concept of ‘performing party’ (‘marine’ or ‘non-marine’ party who performs or undertakes to perform any of the carrier’s obligations under the contract in respect of the physical carriage of the goods (e.g. loading, stowage etc.) at the carrier’s request), provided by the Rotterdam Rules, helps to keep the carrier liable for the acts or omissions of such party or its employees. Moreover, the ‘maritime performing party’ for its part will be entitled to rely on the carrier’s defences and limits of liability granted by the Rotterdam Rules. This solves the ‘Himalaya problem’ [21, 267] that is left partially unsolved by the Hague-Visby regime.

The definition of the ‘contract of carriage’, provided by Article I of the Hague-Visby Rules, is rather restrictive, and concentrates only on ‘contracts of carriage covered by a bill of lading or any similar document of title’. The Rotterdam Rules, on the other hand, following the Hamburg Rules apply to contracts of carriage by sea irrespective of the type of documentation used, including non-negotiable documents, but excluding charterparties. Moreover, the ‘most progressive feature of the draft Convention’ is that for the first time the Rotterdam Rules deal in great details with the electronic documents and general provisions regarding them [13, 248]. The aforestated is of great importance nowadays, as despite the widespread use of electronic documents in international maritime trade over the past forty years there is still no international convention harmonizing their use [2, 283]. Uncertainties as to the legal recognition of the electronic alternatives to paper bills of lading still prevail in many jurisdictions [9, 160].

Additionally, it is important to specify that the ‘carriage of goods’ under Article I of the Hague-Visby Rules are merely relevant ‘from the time when the goods are loaded on to the time they are discharged from the ship’ , i.e. ‘from tackle to tackle [3, 81]’, including carrier’s liability during loading and discharging operations. However, the Hague-Visby Rules do not apply to any additional time outside the tackle-to-tackle period, and even though Article VII of this Rules provides that the parties are free to negotiate their own terms in respect of care of cargo before loading and after discharge, the carrier will still seek, where possible, to exclude responsibility during this period [4, 182]. Thus, currently cargo owners are truly hoping to resolve this ‘before and after problem’, as well as the problem connected with the transshipment operations under a through or combined bill of lading, by the Rotterdam Rules. As, the Rotterdam Rules that go far beyond the sea transportation (the ‘maritime plus’ scope of application) with the ultimate ability to regulate the ‘door-to-door’ transport operations can resolve the problem mentioned above.

Article III (1) of the Hague-Visby Rules requires the carrier to exercise due diligence to provide a seaworthy ship ‘before and at the beginning of the voyage’, that has been interpreted as covering ‘the period from at least the beginning of the loading until the vessel starts on her voyage . . .’ [4, 187]. The term ‘voyage’ in this respect has been construed as covering the entire voyage covered by the bill of lading, irrespective of calls at intermediate ports [4, 187]. The obligation supersedes the common law obligation under the ‘doctrine of stages’ [1, 246]. The Rotterdam Rules following the Hague-Visby Rules extend the seaworthiness duty to cover the entire period of the carriage by sea and the cargoworthyness duty to cover container shipment. Thus, it is true to say that the new provisions adopted by the Rotterdam Rules are truly significant nowadays, in the age of containerized traffic.

Article III (2) of the Hague-Visby Rules, in addition, requires from the carrier the exercise of a standard roughly equivalent to that of reasonable care. This care has to be exercised in accordance with a sound system applicable under all circumstances in relation to the general practice of carriage of particular goods by sea [16, 53]. But in any particular case the appropriate degree of care will depend on the cargo, the voyage, the vessel and the knowledge of each of these by the parties [1, 254]. Moreover, it should be noted that such duty of care is made expressly subject to the provisions of Article IV of the Hague-Visby Rules. Thus, in the case of any loss or damage to the cargo, it is supposed that the burden is upon the carrier to bring himself within Article IV of the Hague-Visby Rules, and if he does prima facie bring himself within an exception then the claimant must refute this by showing negligence. In any case, Article III (2) of the Hague-Visby Rules implies a continuous obligation on the carrier running from ‘tackle to tackle’ [4, 191], that does not meet the demands of modern transport practice. The Rotterdam Rules, in this respect, are designed to operate throughout the entire period, envisaging a regime applicable from door-to-door, provided only that the carriage includes a sea leg and that sea leg involves cross-border transport [4, 231]. Accordingly, the carrier’s period of responsibility will run from the time of receipt of the goods to the time of delivery to the consignee, unless it is expressly agreed by the parties that certain part(s) of the carriage contract to be performed by parties other than the carrier [4, 231].

In addition, the Rotterdam Rules fill the gap left by the Hague-Visby regime in Article III (2) regarding the delay in delivery. Thus, the Rotterdam Rules provide that a carrier will be liable for loss or damage resulting from delay in delivery occurring during its period of responsibility unless it can prove that such loss was not attributable to its fault or the fault of any person for whom it was responsible.

Moreover, Article III (2) of the Hague-Visby Rules does not entirely regulate the liability of the carrier under the multimodal contract of carriage evidenced e.g. by a combined transport bill of lading. It may seem that everything is clear, it is necessary just to establish under which means of transport involved into multimodal carriage the loss, damage or event causing delay occurred and then apply the appropriate unimodal legal regime, this is known as ‘network liability system’ [5, 275]. However, such solution is not relevant for the situation when location cannot be established or it is not exact because the damage, loss or delay has occurred gradually during the carriage. The Rotterdam Rules try to resolve this issue in Article 26, establishing a ‘limited network liability system’ [12, 28-29]. Thus, in case of localized damage before or after discharge from the vessel inland transport conventions and other international instruments are applicable, in all other cases, if the loss, damage, or delay in delivery cannot be localized, or it occurred during more than one transport leg, the Rotterdam Rules will be applicable. The abovementioned amendments seem to be an up-to-date response to the proliferation of the containerized traffic in modern international trade [2, 283].

Article III (6) of the Hague-Visby Rules is an important provision that imposes a one year time bar that applies only to the liability of the carrier or the ship, other claims such as those by the shipowner are subject to normal national time limits or any contractual bar [1, 260]. The time limit for judicial or arbitral proceedings, in this respect, under the Rotterdam Rules is set at two years from the time the goods are delivered or should have been delivered, it is applicable to both claims by or against the carrier, and is procedural rather than substantive. Such innovation is really favorable for countries that mainly represent cargo owners in the international sector of the transportation of goods by sea nowadays.

Moreover, Article IV (2) of the Hague-Visby Rules covers a number of situations where the carrier is excused from liability for loss or damage to the goods provided such loss or damage resulted from one of the exceptions enumerated. In this situation, they operate only if the peril or their consequences could not have been avoided by reasonable care and due diligence on the part of the carrier, considering the extent to which his knowledge or foreseeability of the peril was relevant [1, 270]. The list of the exceptions plays a central role in the mechanism of the Hague-Visby Rules, but does not appear in the Hamburg Rules [2, 160]. The Rotterdam Rules, on the other hand, have re-introduced the list of the majority of the original exceptions (excluding the navigation and management of the ship), along with some new offerings. The exceptions which survived reserve the burden of proof and require, if they are first established, the claimant to prove the carrier’s negligence [13, 247].

Under all circumstances, the re-introduction of the list of exceptions in such a modified form may prove to be one of the factors which determines the success or failure of the Rotterdam Rules [2, 162]. In this case, the abolishing of the ‘nautical fault’ defence and the addition of new excepted peril such as geographical deviation in order to avoid or attempt to avoid damage to the environment may play significant role. Thus, to prevent marine casualties the carrier will inevitably enhance the safety levels of his vessel which will consequently reduce the probability of marine pollution [11, 375]. Moreover, the new exclusion provides a clear signal that the objective of the new Convention is to create a global regime for the carriage of goods by sea with the substantial priority given to the protection of marine environment [11, 376].

Article IV of the Hague-Visby Rules is also dealing with the limitation of liability. Thus, under its provisions the carrier benefits from the package limitation of responsibility of 666,67 SDRs as per package and 2 SDRs as per kilo. SDRs are the Special Drawing Rights in the International Monetary Fund which reflects the value of the basket containing the market value of fixed amounts of main international currencies [2, 125].

Moreover, it has to be clarified that ‘package’ and ‘unit’ do not have the same meaning under the Hague-Visby Rules. Ordinarily the packages will be identified by the use of the cases, wrappers, boxes, cartoons, bags, envelopes etc. [3, 88]. A package must indicate something packed, and size is not important [1, 293]. However, in each particular situation a court has to consider comprehensively the nature and extent of the packing avoiding unlikely conclusions. A unit is supposed to refer to a ‘shipping’ unit, being an item that is ready to be shipped with no packing or consolidation [1, 294]. Where a container is used the principle set in the River Gurara has to be applied considering the fact whether the bill of lading expressly stipulates a number of containers ‘said to contain’ a specified number of separate items [23, 53]. In other circumstances a container will be considered as a package by itself.

The Rotterdam Rules in this respect did not create a new policy but introduce some cosmetic amendments [2, 127]. The limitation amount has been set at 875 SDRs per package or shipping unit and at 3 SDRs per kilogram. Moreover, the Rotterdam Rules introduce a limitation for ‘breach of its obligation under the convention’, that have widening effect comparing with the Hague-Visby Rule limitation for ‘any loss or damage to or in connection with the goods’. The amendments concerned enable more claims to be opened to limitation as well as wider range of parties (including ‘performing parties’) to benefit from provisions concerned.

Article VI (6) of the Hague-Visby Rules talking about ‘goods of an inflammable, explosive or dangerous nature’ does not give the conclusive definition of ‘dangerous goods’. The Giannis NK, trying to solve this problem, gives them broad interpretation not restricted by their inflammable or explosive nature and not demanding existence of direct physical damage to the vessel or other cargo [20, 337]. The Rotterdam Rules, on the other hand, for the first time define ‘dangerous goods’ as goods which ‘by their nature or character are, or appear likely to become, a danger to persons, property or the environment.’ Although, this definition remains the question whether the danger concerned needs to be a physical danger, the fact that there is now such definition will have crucial impact on the international transportations of dangerous goods.

Finally, the Rotterdam Rule, in contrast to the provisions of Article X of the Hague-Visby Rules but following the Hamburg Rules, will be applicable to both inward and outward voyages from a contracting state thus considerably extending the scope of its application. However, it is questionable whether this is a useful development, as it still doesn’t solve the forum shopping problem [8, 219] and will definitely lead to litigation if the rules come into force [8, 220]. Thus, ’if the state in which the port of loading is located applies the Hague-Visby Rules, whereas the port of discharge or place of delivery applies the Rotterdam Rules, it may depend on where the proceedings are brought as to which Rules are applied’ [8, 219].

Therefore, taking into account the abovementioned outdated aspects of the Hague-Visby Rules, the Rotterdam Rules embodies a big step forward towards the development of global transport industry[5, 274]. However, it is important to consider that the Rotterdam Rules are argued to be extremely lengthy and quite complicated [13, 248-250]. It is seemed by some international transport associations that these Rules do not provide uniformity but add more confusion and lead to new potential conflicts [10, 227]. It is recommended to oppose them because of their unfamiliar content, terms, style and drafting [14, 253]. Moreover, the provisions of the Hague-Visby Rules, even though not perfect, have been well tested in litigation and their effects are now reasonably clear [4, 226].


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16. Albacora v Westcott and Laurance Line, [1966] 2 Lloyd’s Rep. 53.

17. Captain v Far Eastern Steamship Co, [1979] 1 Lloyd’s Rep. 595.

18. Effort Shipping Co Ltd v Linden Management SA, [1998] 1 Lloyd’s Rep. 337.

19. El Greco case, [2004] 2 Lloyd’s Rep. 537.

20. Giannis NK, [1998] 1 Lloyd’s Rep. 337.

21. Himalay case, [1954] 2 Lloyd's Rep. 267.

22. Mayhew Foods v OCL, [1984] 1 Lloyd’s Rep. 317.

23. River Gurara case, [1996] 2 Llloyd’s Rep. 53.

24. Scruttons v Midland Silicones, [1962] AC. 446.

12 April, 2014
Ukrainian maritime bar association