Tetley (2002) introduction to conflict of laws 5
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- Hague Rules, Hague/Visby Rules Hamburg Rules
- Sunds Defibrator Inc. et Al v. The M/V Atlantic Star, 1986 AMC 268.
- Daval Steel v. Acadia Forest
- Associated Metals Minerals v. M/V Lumbe, 1993 AMC 700.
- Various Conflict of Law Theories and Bills of Lading
- Negotiation of Bills of Lading
- Vita Food Products Ltd. v. Unus Shipping Co. Ltd., 1939
- US Carriage of Goods by Sea Act (COGSA), 1936
Bills of LadingDefinition: most universal and international form of contract, most common form of maritime contract, used to be referred to as a “bill of loading,” contract with an international character, piece of paper that lists what goods are received with clauses which limit the responsibility of the carrier, like an inventory. A bill of lading is a contract of carriage, a receipt and a document title, and therefore is the best evidence of the contract (Bill of lading is signed by only one party and issued only after the ship sails. So, it is not a contract but only the best evidence of the contract.) Example: Contract of Carriage. Comparisons: What is the difference between standard form contract and a contract of adhesion - Most significant difference is that in a contract of adhesion the clauses are not negotiable. Comparison between bill of lading and a contract of adhesion - Bill of Lading is a form that you complete; contract of adhesion is more like a bus ticket; you do not negotiate it and in the back it says: not negotiable; it is a contract drawn by one party which is a stronger party. Bill of Lading is like a standard form of contract, a bill of lading itself is not a contract of adhesion. What is the difference between a Bill of Lading and Charterparties – Both bills of lading and charterparites are contracts of transportation of goods, but the bill of lading is a contract of carriage of goods, while a charterparty is a contract of hire of the ship or the ships services. What is the difference between a Bill of Lading and a Waybill – A waybill is a nonnegotiable bill of lading, ie. it is a contract of carriage and a receipt but not a document of title. The modern contract of carriage includes not only a bill of lading and a waybill, but also a ship’s delivery order and electronic documents.
Hague Rules, Hague/Visby Rules & Hamburg RulesCarriage of goods under bills of lading, unlike transport under charterparites, is subject, in most cases, to the compulsory application of one or other of the international carriage of goods conventions. These carriage of goods conventions contain mandatory directives as to their applicability.
Directives in Conflict Conventions & Laws Montevideo Treaty, 1940 – provides that when “goods are transported within a single treaty state, such contracts are governed by the law of that State regardless of the place where the contracts were concluded.” Rome Convention, 1980 – Art. 3(1) contains a conflict directive as to a choice of law (express choice or most closely connected). Art. 4(1) if not express or implied choice, contract governed by the law of the country with which it is most closely connected. Art. 4(2) rebuttable presumption that most closely connected country is in which the party who is to affect the characteristic performance has his habitual residence or administration or principal place of business. Art. 4(4) the presumption mentioned above does not apply to contract of carriage of goods. The rebuttable presumption when the country of the carrier’s principal place of business is the most closely connected if it is also the country in which the loading or discharge took place or where the consignor’s principal place of business is located. Art. 4(5) escape hatch, presumptions in arts.4 and 4(2) are disregarded if by virtue of art.4(5) contract is more closely connected with another country; art. 4(2) doesn’t apply if the characteristic performance cannot be determined. Art.21 this convention shall not prejudice the application of international conventions to which the contracting state is or becomes a party; so, if conflict between a law chosen under this convention and a shipment form a Euro State which is party of Hague Visby Rules, the latter shall apply. Sunds Defibrator Inc. et Al v. The M/V Atlantic Star, 1986 AMC 268.Facts: Carrier transporting goods from Sweden to USA – bill of lading issued in Sweden– includes clause referring to Hague Rules Holding/Principle: Bill of Lading did not incorporate Swedish law. Clause only mentions Hague Rules so, court says: Hague/Visby rules don’t apply and can’t get the condition. If you want to have express choice, it must be express/clear. In this case express choice wasn’t express enough. Clause in contract found not clear enough to make the Swedish version of the Hague-Visby Rules apply to the carrier which transported goods from Sweden to USA. Daval Steel v. Acadia ForestFacts: shipment to NY from Belgium to New Orleans. Clause in contract says: “ …it is subject to the provisions of such act, ordinance or statue and rule, thereto attached.” Does this clause permit to apply Hague/Visby Rules? Holding/Principle: Court said: “ here, where the clause refers to the Hague Rules and takes as its point of reference law applicable in the jurisdiction where the bill of lading was issued, there is every reason to read “rules, thereto annexed” as including the Hague-Visby amendments, which have been adopted in Belgium” Bill of lading clause will be “construed” (interpreted) as included Hague-Visby Rules. Here court finds that the express choice is express enough (although the clause if very similar to what was in the Sunds Case). “The contractual rule that ambiguities, if any, are to be construed against the party proffering the contract is fully applicable to bills of lading.” Associated Metals & Minerals v. M/V Lumbe, 1993 AMC 700.Facts: Shipment from Buenos Aires to New Jersey. The coils were shipped pursuant to a charter party dated March21, 1988. A bill of lading was issued as well. Neither one contains a statement that $500 per package limit applies as required by COGSA. Holding/Principle: Question of whether or not clause was express enough to overcome application of US COGSA - Court finds the bill of lading sufficiently clear, specifically enough of a choice. Clause says: “ the Hague Rules contained in the Intl Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. when no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply”. Argentina had the Hague Rules and court decide that package limitation was gold, court increased it, give it a high value. The defense of the Hague Rules’ limitation applied, as adopted in Argentina. … The charter party and bill of lading both specifically assert that the Hague Rules as enacted in the country of shipment shall apply to this contract. The evidence shows that the country of shipment is Argentina. So, the Argentinean version of the Hague Rules governs the rights and obligations of the parties, instituting the per package limitation contained therein. Class Discussion Cases illustrate: in contract, basic rule is choice of law, 2nd is closest and most real connection (lex loci) and that in carriage of goods there are mandatory rules (US have inwards and outwards—only to get higher limitation is to show that it is written in a K). Various Conflict of Law Theories and Bills of LadingLaw of the Flag The law of the ship’s flag was perhaps the earliest single criterion used to decide applicable carriage of goods law. The law of the flag is less relevant to bills of lading than to chaterparties. Territorial Theory a) Lex loci contractus – If a bill of lading is issued in a particular jurisdiction, then that jurisdiction must have had a prime significance for the parties. Not satisfactory in that it ignores the place of performance, place of suit, currency and place of payment, nationalities of parties, etc. b) Lex loci solutionis – depends on both parties having to perform their obligations in the same country. Like the flag and the place of contracting is a single factor which taken in isolation should not determine the applicable law. It must be considered along with other factors. Express Choice There need not be any connection between the contract and the applicable law if the choice is bona fide but not all jurisdictions follow this view. There are exceptions to any choice of law rule for public order/policy, mandatory rules, illegality and evasion of the law. In order to apply all the above rules and exceptions in a consistent, logical fashion, a uniform methodology is proposed. Rome Convention and CCQ have rules on express and implied choice; express validity and mandatory rules. Implied, Inferred or Imputed Choice When no express choice of law clause appears in a contract, English and other common law courts next attempt to find implied intentions by such evidence as an arbitration or jurisdiction clause. A bill of lading clause incorporating the terms of a charterparty has been held to imply an intention that the law governing the charterparty is to be applied to the bill of lading. Principle of contra proferentem is applied. Proper Law of the Contract – “closest and most real connection” CCQ Art. 3111-3112 (closest and most real connection), CCQ Art. 3113 (basic presumptions, help to come to the closest and most real connection). In 1951, English court, in Bonython v. Commonwealth of Australia said that law to govern a contract could be arrived by looking at the contract’s terms and the circumstances surrounding it, without the parties’ implied intention being the sole criterion. Lex fori - desire to promote local jurisdiction UK - Suit or arbitration in London can provide efficient and sound justice by competent courts; in the interest of many foreigners to resolve their dispute there; can provide important commercial, professional and financial benefits to London. Even if a contract has not been entered into or beached in the UK, English law could be applied if stipulated as being applicable. So, English courts applied English law even when some other law seemed to be the properly applicable law; in The San Nicholas - English law was implied in a second sub-charter, linked distantly to the head charterparty. In Mineracoas - foreign bill of lading was the contract, but is COGSA directive was ignored in favor of English law because of the London arbitration clause of the sub-charter. US—apply governmental interest analysis. Desire of litigants and courts to be able to award high sums of money to victims improperly treated. Negotiation of Bills of LadingA Bill of lading is a “document of title” as described in art.1(b) of the Hague Rules. It has been suggested that they are negotiable instruments and excluded from the authority of the Rome Convention 1980. This has little merits because (1) a bill of lading is not negotiable instrument and (2) art.4(4) of the Rome Convention that the contract of carriage is subject to the Convention. A bill of lading is not a “negotiable instrument” - Not subject to the exclusion of art.1(2)c because not a negotiable instrument in common law and civil law. To be negotiable must be transferable by delivery, by endorsement and delivery and to confer a good title on a bona fide transferee. So, bill of lading not negotiable because the endorsee does not get a better title to the goods than his assignor by virtue of the endorsement of the bill. A bill of lading is a document of transfer-document of title - endorsement and /or delivery of which transfers ownership of the goods which the bill identifies. The ownership of the goods is transferred not by endorsement or delivery of the bill but by underlying sales contract. It entitles the holder to claim delivery of the goods at the port of discharge from the carrier who has had physical possession of them while at sea. The exclusion of “other negotiable instruments” under art.1(2)c to see if negotiable, not look to the Rome Convention but rather to the law of the forum; if not regarded as negotiable, it is not excluded even if he obligations under it are transferable. If bills of lading were negotiable, within the meaning of art.1(2)c, they would be excluded from the Convention as regards obligations arising from their negotiable character. Vita Food Products Ltd. v. Unus Shipping Co. Ltd., 1939Facts: Shipment from Newfoundland to NY when Newfoundland was not in Canada yet but had adopted the Hague Rules for all shipments within and outbound from Newfoundland. Cargo damaged off the coast of Nova Scotia and suit against the carrier brought there. Bill of lading invoked English law but on paramount clause invoking the compulsory applicable Newfoundland version of the Hague Rules. Ratio: English law is applied and not the mandatory provisions of the Hague Rules. Reasoning: Court said: the Hague Rules were not mandatory if the paramount clause was not present in the bill of lading. Class Discussion: Privy Council ignored the compulsory nature of the Hague Rules, under Arts.3(8) - the clause invoking English law is invalid under this article because it relieves or lessens the carrier’s responsibility under the Hague Rules. By the time of this decision, The Torni case decided the mandatory nature of the Hague Rules and to specify other law would upset the whole applecart of the countries who adopted the Brussels convention. This decision was opposed by the courts. In Shackman - US court ignored this decision and held that where the paramount clause is absent, the paragraph of the Carriage of Goods by Sea Act would be a part of the bill of lading. In Dominion Glass Co - court looked to this decision but didn’t follow it and said: action in Canada with reference to a bill of lading issued in Canada, the law of Canada must be applied notwithstanding the inclusion in the bill of lading of clause 26. In Boissevain , Denning said: parties are not free to stipulate by what law the validity of their contract is to be determined. Their intention is only one of the factors to be taken into account. Today, intention is considered as only one of the factor; express choice is binding unless contrary to public policy/order, a mandatory law or was made to evade the law or the proper jurisdiction This decision is not approved authority for the mandatory nature of the Hague Rules but it is a good law concerning the express choice being a fundamental criterion or contact in determining the proper law of the contract. US Carriage of Goods by Sea Act (COGSA), 1936Applies inward to the US and outward from the US in foreign trade. This violated the principle of comity of nations. The inward application is today an handicap in the light of the higher limits of Visby and Hamburg and the drop of the value of $500/pkg from 1936 to the present. Under s.1303(8) – “carrier may neither relieve nor lessen its responsibilities.” Hague Visby Rules are more favorable to cargo claimant than Hague Rules (COGSA) - package and kilo limitation generally and delay for suit may be extended. Hague Visby Rules less favorable to cargo claimant than Hague Rules - unbreakable limit in cases of deck carriage and deviation; limits of recovery; when Hague applies god, then Hague is more favorable to cargo claimant as 100 pounds sterling gold was roughly $8486 US. Apply COGSA even if shipments from Hague/Visby nations which have a higher package and kilo limit. However, they now permit bill of lading clauses if they increase liability; so, now shipments from other countries are subject to higher Visby limitation; Result: Nine package and kilo limitation today in the world: When limitation is subject to local law on pubic policy/order and limitation clauses; these countries not party to Hague or Hague/Visby Rules; Countries that are part of the Hague Rules - 100pound sterling gold. Argentina, Peru, India. Part of the Hague Rules but have national limitation - Cuba, Ireland, New Zealand… Countries that apply Hague Rules to shipments to Hague Rules nations and Visby Rules to other cases; Countries that apply Hague/Visby Rules but impose a limitation in Poincare gold francs; South Africa, Ecuador, Syria… Countries that apply the Hague-Visby rules; 666.7 and 2.00 SDR; Countries that apply H/V Rules and SDR but within national limits; China and South Korea; Countries that apply Hamburg Rules; 21 nations apply 835 and 2.5 SDR; Hamburg Rules with reservation; until Nov 1, 1997, Egypt will apply the Hamburg Rules to Hamburg contracting states and the Hague/Visby Rules to others. 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