The Ambiguity of the Rotterdam

Abstract

The nexus of the UNCITRAL convention that drafted the Rotterdam Rules was to holistically develop and introduce a homogenous law that encompassed a provision for electronic transfer of records. However, since the group of the eight maritime law maestros is not infallible, there were some sections that had flaws that are subject to debate and further deliberation. This is owing to their ambiguity which may make the rules less elaborate. It is imperative that we acknowledge the important role that these rules have played towards giving impetus to flow of international commerce. This could only be seamlessly executed in the wake of the elimination of legal obstacles that impede collaboration of economies at a global scale in trade. On the converse, one salient area where these rules failed to meet their intended goal was the in the aspect of electric transfer of goods. The stringent regulations regarding the electronic transfer of goods have not been homogenized and still remain diverse across the globe. The failure to harmonize these rules results in a broad spectrum of contrasting regulations from country to country. This can be exemplified by discordant rules when the European Union is juxtaposed with the United States or China. The Rotterdam rules are plagued with clashing policy orientations which is coupled with misconstrued interpretations. The myriad of ambiguities are not substantial to dismiss these rules as a source of discord. This is because they provide a rudimentary platform from which nations can work on to forge a uniform set of laws that will comprehensively address all issues at hand with equitability (Chan, 2009).

Introduction

The signing of this treaty took place in Rotterdam, Netherlands on 23^rd September 2009. The scope of the Rotterdam rules is wide since it entails almost every facet of maritime activities and operations: goods delivery, the obligations of the carrier as well as its liability, the limits of these liabilities, obligations of the shipper to carrier, electronic transfer of records, arbitration as well as arbitration, the controlling and transfer rights of concerned parties. Some of the benefactors of these new regulations that substituted the archaic Hamburg Rules (1978) are developing nations (Reuters, 2009).

Discussion

One of the major pitfalls of the Rotterdam Rules is its ambiguities

This can be exemplified by article 17(6). This section states that “when the carrier is relieved of part of its liability, the carrier is liable only for that part of the loss, damage or delay that is attributable to the event or circumstance for which it is liable.” The most contentious part is “part of the loss” since it does not elucidate the exact guidelines to be followed during the apportionment in the event of such an occurrence. In addition to this, it is mandatory to have distinct parts of the consignments that may number from two parts or more. This will now constitute the portions which are either the carrier is exempted from liability and the other which it is to meet its costs. Alternatively, there may be the quantification of the overall loss from which the apportionment can be based on. This would substantiate the legality of apportionment. Both interpretations of article 17(6) are in tandem with the stipulation it makes. However, there is none of them has been specified as the sole interpretation of the article. This ambiguity create an obstacle in securing insurance This ambiguity in reference of the phrase “part of loss” is obscure due to its ambiguity(Sullivan, 2009).

Under article 40, the Rotterdam rules articulate some conditions that are to be adhered to in order to meet the contract particulars. This insinuates that the carrier is not charged with the onus of being responsible to confirm and verify the accuracy of the data availed by the shipper. The crux of the matter, in this case, is the diversity of policy orientations across the globe. This is because the stipulated qualifications fail to agree with those of nations that have subscribed to the Rotterdam rules. The loophole creates avenues for unnecessary litigation in the event of conflicting interests of such countries.

Another contentious article in the Rotterdam Rules is Art 50(1). The article vests the controlling party with the power to grant or alter instructions depending on the nature of the consignment in the event that it does not comprise a variation of contract. This is a blatant contradiction that is controversial and subjects one party to manipulation by the other. It is inevitable that once the instructions have been altered by the controlling party, the outcome will entail an alteration of the pre-modified instructions. The article attempts to turn a blind eye to the effect of the modification despite its obvious effect. It begs the question how rudimentary and to what extent should this change be to be deemed as a variation. It is imperative to have a solid and crystallized definition of this article since the controlling party is bound to change throughout the transit of the consignment. A myriad of modification may result in absolute distortion and confusion. There is also a dire need for the controlling parties to comprehend and appreciate what is within their jurisdiction. This will go a long way in guiding the on what to do and what not to(Tetley, 2008).

The volume of contract o exemption found in article 1 is also very obscure and inexplicable part of the Rotterdam Rules. It states, “Volume of contract” means a contract of carriage that provides for the carriage of a specified quantity of goods in a series of shipments during an agreed period of time. The specification of quantity may include a minimum, a maximum, or a certain range.” From a hypothetical point of view, this rule avails the provision for the carrier to negotiate for a higher freight charges depending on how high is the liability of the consignment. On the other hand, the practical application doe not tally since it is the converse of this. The practical application of the Rotterdam rules is the employment of contractual forms by the shipper that arguably adhere to these rules. However, the use of these procedures is devoid of any negotiations whatsoever (Diamond, 2009).

The essence of the rules is to establish harmony in the transport of goods by sea law. It therefore contradicts itself by introducing exceptions in a cause for creation of uniformity. This is a fallacious standpoint in regard to the ramifications that arise from the exemptions according to article 1. It is preposterous to bestow discounts to certain items in commercial trade without considering the ramifications of such discounts. These may include a change in the liability that bind the given contract hence changing the status quo. The rule in business that is flouted is that liabilities are directly proportional to the venture and it is not determined quantitatively. Such ambiguities give room for opting-out which is a common phenomenon is such contracts. This is categorically the most egregious shortfall of these rules. This enables countries to proactively participate in signing of the convention yet they have a choice to “opt-out”. This would mean that a country have the freedom to subscribe to a section or all the rules in order to protect its interests. This can be exemplified by the United Kingdom deciding to “opt-out” in order to shield its shipping capital-London. It is even appalling that art 1 is indirectly complemented and coupled by article 80. This article of the stipulates contentious minimum requirements expected of a carrier in order to be deemed as a suitable candidate for the volume of “contract.” (European Shippers,2009)

Article 47(2) may be imperceptibly deluding yet it may appear as a direct and plain statement. It states that delivery of goods may be made without the handing over the bill of lading as long as there is an express statement. This may go against the intended functionality of the leading bill. The bill is supposed to facilitate the transfer of title of the consignment by the transfer of the bill or alternatively the electronic form of the bill form one party to the other. Furthermore, there is a need for the consignee to be assured that him and him alone will this the one who will receive the consignment in lieu of a mere compensation once he hands over the leading bill to the shipper. This is a red flag in the case of the misunderstandings arising from the article in regards to sales contracts. We are left at crossroads unable to determine is the article document is meant to serve as a managing document that oversees the dispositions of goods. It is not clear if the stipulations of this article tally with article 58 of the UN. This article of United Nations Convention on Contracts for The International Sale of Goods (CISG) must not be violated by article 47(2). It is beyond a shadow of doubt that there is high likelihood that it does so. It is malpractice to use indemnities whilst tendering goods to consignees in the event they fail to produce the leading bills. It is a gross erosion of the bill undermining the most important and trusted document in international commerce(UNCITRAL,2009).

Ambiguities in article 12 regarding the duration of responsibility of the shipper for the consignment it is transporting are rife. Art 12(1) states, “The period of responsibility of the carrier for the goods under this Convention begins when the carrier or a performing party receives the goods for carriage and ends when the goods are delivered.” Both section (a) and (b) of 12 (1) clearly state the inception and the termination of the duration of responsibility of the shipper to the consignment. The sharp contrast is exhibited by article 12(3) that makes the concerned parties at liberty to determine the timeframe for this responsibility over the consignment with respect to two exceptions. These to articles (1) and (3) of 12 appear to contradict each other instead of complimenting each other. A lot of confusion stems from the two.

Another section with ambiguities is article 51(1) of the Rotterdam rules. It states: “Except in the cases referred to in paragraphs 2(a negotiable transport document), 3 (negotiable transport document)and 4(negotiable electronic transport document)..” With the listed documents as exceptions in the article, we are compelled to assume that we are dealing with the type of document that has been left out in the list: the non-negotiable electronic document. In addition to this, omission of bill of lading in 2, 3 and 4 make it in order to be included in our assumption as part of what we are dealing with . However, it is not clear which document we are dealing with of the two that had been exempted from mention and it is still not clear if they are legally acceptable (lading bill and non-negotiable electronic transport document). It is in grossly inappropriate that we are left to our own devises such as speculation and guesswork. Consideration of the inclusion of residual transport documents in our list of possibilities aggravates the matter(Tetley, 2009).

The complexity of the Rotterdam rules can result in a lot of confusion to the shipper. It avails comprehensive information that highlights the three types of transportation documents. They are listed as: negotiable transport documents, non-negotiable transport documents as well as straight bills of lading. The ramifications and implications of each transport document as well as their use and end result of the transportation of the consignment differ depending on the rules governing each document according to article 43. These documents have different rules concerning the delivery of the consignment they are bearing according to chapter 9. Finally the rights of the controlling party according to the 10^th chapter of the rule apply differently to each of the three documents. The stringent rules defining and governing these documents are not to be easily understood by laymen who work as carriers. The end result is grievous mistakes and immense pandemonium in the freighting process. There is ambiguity since some terminologies used are beyond the comprehension of an average carrier operator. In addition to this, contracts are casually referred to as a “bill of lading”. This generalization predisposes people to more confusion yet there are three distinct and clearly defined legal characterizations. The overwhelming and strict details of the Rotterdam rules limit the attainment of the intended goals in multimodal transport regulation due to the uncertainty amongst the users conforming to the rules.

The Rotterdam rules are also characterized by unreasonable provisions that are vulnerable to misinterpretation hence ambiguity

They are laced with contradictions that leave the user at a loss. Article 17(5) charges the claimant with an onus of proving the shipper”s negligence during freight. The claimant is expected to demonstrate the unseaworthiness of the ship, to show that there was improper crewing during transit, insufficient supplying and equipping of the necessities for the ship and finally that sections of the consignment were tampered with on arrival. It is the responsibility of the shipper to refute these claims by providing evidence (Marine Cargo Claims, 2008).

The claimant was not present during the freight process yet s/he is expected to draw assumptions that will point out the lack of diligence on the side of the shipper. This is a contradiction of the premier proof principle. According to this principle, the carrier always receives the consignment when it is in good condition. Any damage inflicted on the consignment whilst on transit is presumptuously blamed on the shipper. It is therefore the call of the shipper to exonerate himself from this prima face .The policy is mandatorily subscribed to by shippers as it is a principle of public order that allows no room for debate. Therefore, charging the claimant with an onus of proving the shipper”s negligence during freight violates two things: (1) it violates logic since it is an unreasonable expectation for the claimant to come into knowledge of the conditions of the consignment yet is the shipper who is accessible and conversant with such information during freight, (2) It goes against the grain of the principle of public order. Part (b) of article 17(5) seems to appreciate the principle of prima facie. However, the obscurity that makes the whole article unclear stems from the insinuations of the second paragraph(Marine Cargo Claims, 2008).

Another instance of unreasonable provisions in the Rotterdam rule is found in article 51 (2) (a). The carrier is automatically presumed to be controlling party as far as the consignment is concerned. It is in this respect that the carrier is entitled to transferring the controlling power to the next party. To do this, s/he is expected to hand over all the documents in original form in the case of non-negotiable transport documents. This is a good intention that is unfortunately impractical in the shipping business. This is because it is impossible to collect and avail all documents in original form since there are chances that not all those in custody of these documents might be available. It is a grossly idealistic and narrowly opinionated perception that would either slow down or stagnate the process of commercial trade. The more appropriate to approach is to notify the carrier when the controlling power has been transferred. The anomaly becomes more pellucid in article 51 (2) (b). This article prohibits the shipper from exercising the controlling powers unless he is in possession of the original documents. This irrational approach makes it ridiculous to limit the one who has received the controlling power as the new controlling party unable to use them yet all that has been transferred to him by the carrier. The same erroneous an impractical assumption recurs in article 51 (3) (Svante et al…, 2009).

The Rotterdam rules are characterized by a limited scope of coverage as it fails to encompass some aspects that are deemed to be important. According to article 1 (1). A contract of carriage is defined as, “contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another. The contract shall provide for carriage by sea and may provide for carriage by other modes of transport in addition to the sea carriage.” In other words, the rules limit their application to only one leg of transportation if and only if the contract has sea transport involved in the multimodal transport contract. The rules are will be irrelevant in the case of freight that involves non sea mode of transport such as air and road. However, the same rules will discriminately apply to freight that involves sea and road or sea and air in any order. The limited application of the rules is antagonistic and in contrast to the intended goal of the formation of the Rotterdam rules. The publicized intention of the rules was to forge a unifying universal domain that will fledge the functioning of maritime carriage that entails different modes of transport.

The Rotterdam rules end up proving to be unsatisfactory to shippers and carries. They are then compelled to seek other legal regimes that will wholesomely embrace their variations and meet their needs in regards to contracts to seamlessly transport their consignments without any hitches. The presence of the Rotterdam rules in creates a problem instead of solving the existing one. In lieu of harmonizing the existent laws and coalescing them, it proves unsatisfactory and transporters may move out of the agreement seeking conventions that holistically embrace multimodal transport. This would increase the number of legal regimes creating more chaos. Such an alternative is found in United Nations Convention on International Multimodal Transport of Goods. In as much as it is a 1980 convention, it is able to accommodate the needs of freight which is of two different modes without restricting it to sea transport (Svante et al.., 2009).

Another case of the limitation of the Rotterdam rules is article 26.It state: “if goods are damaged before or after loading and/or discharge from ship, other international instruments have precedence over the provisions of the Rotterdam Rules.” This is to say that the rules are only applicable to the sea portion of the transport in the case of multimodal transport. The rules will be inappropriate and irrelevant to the other portion of carriage be it road or air since they are outside the jurisdiction of the Rotterdam rules. This includes the duration in time that involves before loading or immediately after offloading the consignment from the ship. The application of the Rotterdam rules wholly by sea whether another mode of transport is involved is very ineffective, discriminative and selective. The other effect of this is the creation of uncertainty. (Transport Canada Department of International Marine Policy, 2009).

Still under article 26 (b) the extent/limit of the liability is almost unpredictable. This is because many factors come into play that affects the article 26(b). The ultimate result is the contribution of limitations by the Rotterdam rules coupled with other instruments on the contract being affected. This effect is highly determined by the stage in freight which the consignment has reached when there was a case of damage or lateness (delay) was experienced. It becomes more difficult to project the limits of liability due to the many and varying laws of every country the consignment may travel through. This becomes more complex for the parties bound by the contract when other unimodal conventions that are applied on global scales have an effect on the contract (Transport Canada Department of International Marine Policy, 2009).

The article is also ludicrously involved in placing unrealistic demands on the claimant. The claimant is charged with an onerous task of correctly speculating and singling out the claims which only the shipper is familiar with. This is because it is only the carrier is in a position to give an account of the liabilities s/he experienced during freight using different unimodal conventions. It would be more appropriate if the Rotterdam rules were applicable through out the freight of the consignment regardless of the mode of transport instead of limiting it to sea carriage only (Bovio, 2009).

Finally, chapters 14 and 15 are not mandatory. The two chapters focus on jurisdiction and arbitration respectively. The nations that have subscribed to the Rotterdam rules have the option of either to opt-in or opt-out as far as jurisdiction and arbitration. Chapter 14, article 74 talks about jurisdiction of the convention. It states that, “this chapter shall bind only Contracting states that declare that they will be bound by the Rules”. Chapter 15, article 78 talks on arbitration. The same choice to either opt-in or opt-out applies to these nations that subscribe to be the Rotterdam rules. The result is a checkered membership comprising of certain nations that are fully bound by Rotterdam rules including chapter 14 and 15. On the other hand, there is a group of nations which still subscribe to the Rotterdam rules but they are not governed by either the arbitrations or the jurisdictions or both. In the process of international commerce, parties that are bound by the Rotterdam jurisdictions and arbitrations will be compelled to confirm that their trade partner conforms to them in the event of multimodal transportation of consignment. In the event that the partner has opted-out of the jurisdiction and arbitration of chapters 1 4 and 15 respectively, there will be another path to be taken in doing business with them. They will be required to employ a different jurisdiction that will be able to accommodate both parties which are interested. The arbitrations and jurisdictions that will be adopted will now be used to cement the common interest and govern the contract between these two parties (Canadian International Freight Forwarders Association, 2009).

The shortfall of this mode of contract signing is that it gets to a point that it becomes perplexing owing to the complexities of conformity and non-conformity of the two different parties to the Rotterdam rules. It is cumbersome to deal with the already laid Rotterdam rules but it becomes more complex when there are differences between the two parties in regards to chapter 14 and 15. It makes international commerce cumbersome and a complex.

Conclusion

Given the many ambiguities in the Rotterdam rules, it is imperative that the rules be revised. It is obvious that the rules give room to misconstrued interpretations and confusion that can turn commercial trade into a medieval and chaotic market. To curtail any opportunities of litigation and any form of discord, all issues that are contentious must be addressed. It is imperative that all countries are put into consideration so that divergent views and policy orientations can be amicable harmonized and coalesced. The marginalized should be given a level playing ground with the big shipping countries. Therefore the first and most important amendment is striking off the volume of contract in article 1. This will exonerate the rules from the most basic criticisms and cynicism to demonstrate their just cause in brining harmony without respect or fear of the countries which are more established and of immense clout.

Flexibility in the rules in order to embrace the other forms of transport would enable the Rotterdam rules to achieve its dreams that were publicized on its preamble. It is high time that these rules become more pragmatic and less hypothetical. Sobriety is the only approach that will be needed to approach the revision of these rules.