A Critical Analysis of the Protection offered to Third Parties in Respect of Liabilities and Immunities under a Bill of Lading

Inhaltsverzeichnis

I. Introduction

II. Definitional issues in the protection of third parties under international uniform law

III. Mechanisms to link the effects of tortious claims to contractual claims under international uniform law

IV. The idea behind the Himalaya clause and the protection of third parties under uniform law

V. The issue of legitimacy of the Himalaya clause

VI. Conclusion

VII. Bibliography

I. Introduction

The transportation of goods between exporters in one country and importers in another is one of the most important elements of international commerce and thus constitutes a significant part of an international sales contract. Even today, a large amount of cargo is still transported from one country to another by sea. Thus, bills of lading continue to play a crucial role. As defined by Lord Justice Blackburn in “Blackburn on the Contract of Sale ” ¹, a bill of lading is "[a] writing signed on behalf of the owner of ship in which goods are embarked, acknowledging the receipt of the Goods, and undertaking to deliver them at the end of the voyage, subject to such conditions as may be mentioned in the bill of lading."² For a carrier, a bill of lading serves as evidence of a shipping contract and contains the terms of carriage. In particular, as any agreements not specified on the bill of lading do not affect third parties, the bill plays a crucial role in international trade.³

In terms of international universal rules which are applicable for international

carriages, and especially bills of lading, the most influential sets of rules are the Hague Rules and the Hague-Visby Rules, as well as the Hamburg Rules. Accordingly, the responsibilities and liabilities of carriers in cases in wheregoods are being transported on the basis of bills of lading are determined by the Hague and the Hague-Visby Rules, which are widely accepted in this realm. The Hamburg Rules, in contrast to the previous two, has found itself under more political pressure from developed nations and hence defines responsibilities of carriers in a wider fashion. However, due to this, it has not been as widely ratified and is, thus, more limited in its application⁴

However, due to the less wide net of the Hague-Visby Rules in relation to the period of responsibility as well as definitional issues regarding the limitation of liability and immunities of third parties in bills of lading, there is still a sense of uncertainty in the area of carriage contracts.

These will be briefly discussed in the following. A particular focus will be placed on the issues in defining third parties and the mechanisms used to link the effects of tortious claims to contractual claims under international uniform law. This will be followed by an examination of the rationale and legitimacy issues of Himalaya clauses to grant third parties liability protection under universal international law.

II. Definitional issues in the protection of third parties under international uniform law

The Hague-Visby rules were enforced in 1968 in order to protect the owners of cargo against carriers abusing the freedom of contract by introducing an excessive exclusion of liability.⁵ The establishing protocol was embedded in the Brussels Convention 1924, included protection not only for the carrier, but also for other parties involved in the shipping of goods, such as carrier agents or servants (third party), in order for them to be able to benefit from the same limitations to liability and other defences which were already applicable to the carrier ex lege.⁶ However, this amendment only applies when the third party is acting within the scope of his or her duties and the event was not caused by reckless conduct, knowing that the damage could have been caused or intending to cause the damage.⁷

This allowed for the protection of certain parties who were involved in carriages from injured parties taking direct action in tort. An issue arose in this regard in relation to the interpretation of which categories of third parties were to benefit from this protection.

Accordingly, the French version of the Brussels Convention, on the one hand, refers to the preposés (appointees), whereas, the English version, on the other hand, specifically refers to servants and agents and expressly excludes independent contractors from its remit.⁸ Throughout the travaux preparatoires at the Stockholm Conference 1963, this, however, was not considered an issue and that the French version did not require a specific exclusion clause for independent contractors, because “p reposés” was interpreted to merely include employees of the carrier. In English, the term “agent” is understood in a broader sense, and thus is not necessarily limited to employment relationships. Thus, it is apparent that the legislator intended to exclude third parties who are not employed by carriers and are not bound legally to the carriers’ instructions and orders.

Scholars have interpreted this to, hence, refer to any workers employed by the carrier as well as parties, who, although not subordinate, constitute a part of the carriers’ business organisation. This could include parties such as members of the crew of the vessel.⁹ Accordingly, the subjects considered to be excluded from the clause are seen to be the parties who are not a part of carriers’ business structures. This is a delicate point as the distinction determines whether or not there is a possibility to extend a carrier’s statutory protection to significant members of the transportation chain.

The term “independent contractors” comprises of a wide range of different professions, who throughout the carriage, are often found to be subjected to continuous direct contact with the cargo. This makes it particularly likely that mistakes could be made which may damage the goods. In the event that these contractors constitute third parties who have been contracted by service agreements, this would result in extra-contractual liability towards the owner of the goods.¹⁰

However, if, according to the above, they are able to be seen as directly engaged with the cargo, the contract between the carrier and the owner may regulate a claim for damages, and may, thus, override the exemption clauses from the carriage contract which could benefit the relevant third party.¹¹ However, this remains a current issue, as there is still no guidance on the correct way to lay out the scope of the terms servants and agents, as successive international conventions¹² so far merely replicate the original categories.¹³

III. Mechanisms to link the effects of tortious claims to contractual claims under international uniform law

As discussed above, the irregular protection for third parties of carriage contracts entails ensuring that they benefit from the same liability limitations and immunities as the carrier. The solution to realize this kind of assimilation of liability positions of third parties to those of carriers’ was initially introduced by the so-called Himalaya clause. This is a procedural rule which provides for third parties, in conjunction with the relevant applicable rules of the bill of lading, to be granted the limitations and immunities of carriers against claims from cargo interests for damages or the loss or the delay of the cargo, which has been suffered by a claimant,¹⁴ making the extra- contractual nature of the contractual relationship irrelevant. Accordingly, this liability regime dissolves any differences between tortious and contractual liability.¹⁵

This means, on the one hand, that a claimant will be able to avoid recourse to the generally more burdensome action under extra-contractual claims due to more onerous evidential burdens.¹⁶ Instead, the claimant can seek damages merely on the evidence that there was a specific damage, which occurred during the carrier’s period of liability. However, on the other hand this may mean that the carrier’s limitations may apply which could potentially mean that the claimant may not be able to recover the full amount of his or her loss,¹⁷ as they are not able to pursue claims directly against these third parties.

[...]

¹ Coventry v Gladstone [1867] L.R. 4 Eq. 493

² Blackburn, C., A Treatise on the Effect of The Contract of Sale, on the Legal Rights of Property and Possession in Goods, Wares and Merchandize (1947) printed in The Law Library, Vol. 57., (Philadelphia: J.S. Littell, 1833-) 134.

³ Agrawal, K. B., & Singh, V, Private International Law in India (Alphen aan den Rijn: Kluwer Law International, 2010) 121.

⁴ Carr, I. & Stone, P., International Trade Law (London: Cavendish Pub., 2013) 151.

⁵ Gillies,P., & Moens, G, International Trade & Business Law & Policy (Sydney: Cavendish Pub., 2000) 182.

⁶ Clarke, M. A, Contracts of Carriage by Air (London: Loyds List 2010) 136.

⁷ The International Convention for the Unification of Certain Rules Relating to Bills of Lading, Brussels, 1924, as amended by the Protocols of 1968 and 1979, referred to as Hague-Visby, Articles 4-bis (4).

⁸ Ibid. Art 4-bis (2): “[…] such servant or agent not being an independent contractor […] ”.

⁹ Goldie, W., “The carrier and the parties to the contract of carriage ” ( 1979), Diritto Marittimo 616-628, at 616; Donaldson, J., “Servants and Agents”, ( 1983) IDM at 209.

¹⁰ Blaskovic, I., Certain legal aspects of the Himalaya clause in the contract of international carriage of goods by sea, A critical perspective on legal challenges raised by the clause under international uniform law and general contract law principles (2013) University of Oslo, 8 et seq., available online at: https://www.duo.uio.no/bitstream/handle/10852/38410/Thesis.pdf?sequence=1&isAllowed=y [accessed: 9th June 2015].

¹¹ Ibid. at 10.

¹² See for example: The 1974 Athens Convention on the transportation of passengers.

¹³ Ibid.

¹⁴ Baatz, Y., Maritime Law, (Oxon: Routledge, 2014) 38 et seq.

¹⁵ Ibid.

¹⁶ Tetley, W., Marine Cargo Claims (Carswell, 2008) 17 et seq.; Blaskovic, I., Certain legal aspects of the Himalaya clause in the contract of international carriage of goods by sea A critical perspective on legal challenges raised by the clause under international uniform law and general contract law principles (2013) University of Oslo, 29, available online at: https://www.duo.uio.no/bitstream/handle/10852/38410/Thesis.pdf?sequence=1&isAllowed=y [accessed: 9th June 2015].

¹⁷ Ibid.