The exponential growth in goods and commodities transported by sea cannot be over-emphasised. Such goods and commodities include dry bulk cargoes, liquid bulk cargoes, containerized cargoes and break-bulk cargoes. Surely, an international regime to regulate the transportation of such goods and commodities carried by sea is a sine qua non.
The Hague Rules of 1924 is one of such international regimes regulating the carriage of good by sea. The Rules were implemented in post-Independence Ghana by the Bills of Lading Act (1961) (Act 42). Before touching on some of the provisions of the Act, the present writer deems it expedient to digress for a while and shed some light on the historical aspects of law relating to carriage of goods by sea before the adoption of the Hague Rules.
Until, at least, the latter part of the nineteenth century the general principle in English law and for that matter Ghanaian law was that the carrier was liable as an “insurer” of the goods entrusted to his care.
Thus, the carrier was liable for cargo damage unless it could be proved that his negligence had not in any way contributed to the loss suffered or if the loss was due to natural causes directly and exclusively without human intervention otherwise referred to an Act of God or which were caused by the Queen’s enemies.
Later further exclusions such as inherent vice of the goods, defective packing and jettison or general average sacrifice were recognised by the common law.
Later in the nineteenth century
Later in the 19th Century, the dominating credo of the common law courts in their approach to contracts of which carriage of goods by sea is a part was laissez-faire or freedom of contract. Shippers were at the mercy of shipowners and terms of contracts presented to shippers excluded liability for every conceivable act of shipowners. One of the main criticisms levelled by shippers related to the insertion of clauses exempting shipowners from negligence caused by their servants and agents.
Despite the constant complaints by traders, there was no sufficient impetus for an international solution. As a result, several countries went ahead and enacted domestic legislation with USA in the lead. In 1892, a Congressman from Ohio, Michael Harter introduced a Bill which later carried his name.
After extensive amendments in the Senate Committee, the Bill was passed the Senate and the House of Representatives without dissent and was signed by the President on 13 February 1893 and took effect on 1 July 1893.
Legislation in other countries
The passage of the Harter Act 1893 provided the requisite impetus to other nations. New Zealand, Australia and Canada all passed legislations modelled on the Harter Act.
Because of the cataclysmic impact of the World War I, future developments on the domestic front and internationally were abandoned. After the armistice in 1918, most countries were once again in a position to consider the regulation of private trade. In this connection, sight must not be lost of the significant contributions by the International Law Association and Comité Maritime International (CMI), a transnational association of maritime lawyers’ association founded by the eminent Belgian lawyer Louis Frank in 1897.
A set of uniform rules were drafted under the auspices of the Maritime Law Committee of the International Law Association at its meeting held in London in May 1921.
At its next conference held at The Hague from 30 August to 3 September 1921, the members attending agreed to the text of what was to become known as the Hague Rules.
The Hague Rules were considered at a diplomatic conference which was specially convened by the Belgian government in Brussels in August 1924 and were signed as the International Convention for the Unification of certain Rules of Law Relating to Bills of Lading on 25th August 1924.
United Kingdom implemented the provisions of the Convention by passing the Carriage of Goods by Sea Act of 1924 which received Royal Assent on 1st August 1924 which was some three weeks before the final diplomatic conference and came into force on 1 January 1925.
Most territories which were British colonies or under British control including the then Gold Coast acceded to the Convention by exchange of notes at Brussels between November 1928 and December 19l 1930 and such accessions took effect from June 2, 1931.
In the post-independence Ghana, the Hague Rules were implemented by the Bills of Lading Act, 1961 (Act 42) which repealed the Carriage of Goods Ordinance (Cap 242). The simple question being posed by the present writer is that should the Bills of Lading Act 1961 (At 42) in its present form be in our statute books?
In the 1920’s most cargoes were shipped break bulk in cartons or other types of packing but such carriages are now a very small part of maritime trade. Accordingly, since the adoption of the Hague Rules, courts throughout the common law have had to grapple with the meaning of “package” in view of containerization and the importance of bulk cargo carriage since World War I.
Despite the technological advances in the shipping industry, no attempts have been made in Ghana to amend the Bills of Lading Act despite some salient developments on the international plane.
The first amendment to the Hague Rules was the Visby Protocol which dealt with the following matters:
(a) new monetary limits are adopted; these being expressed in Poincaré francs;
(b) there are for the first-time alternative limits; the first being the traditional limit per “package or unit” the second being based on weight;
(c) a special clause dealing with containerized transport;
(d) certain kinds of international reckless conduct which deprive the carrier the benefit of limitations;
(e) there are provisions linking recovery to the value of goods at the time of delivery.
Section 5 of the Bill of Lading Act 1961 (Act 42) stipulates that “Rule 5 of Article 4 of the Rules shall be read as though for reference to “£100” there were substituted “two hundred Ghanaian pounds”.
To appreciate the full import of the Rule, the present writer wants to set out Article 4 Rule 5 of the Rules in extenso.
It stipulates as follows: “Neither the carrier or the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding £100 per package or unit, or the equivalent of that sum in any currency unless the nature and the value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.
The declaration if embodied in the bill of lading shall be prima facie evidence, but shall not be binding or conclusive on the carrier.
By agreement between the carrier, master of agent of the carrier and the shipper another maximum amount than that mentioned in this paragraph may be fixed, provided that such maximum shall not be less than the figure above named.
Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with, goods if the nature or value thereof has been knowingly misstated by the shipper in the bill of lading’’.
It will be appreciated that the new monetary limits set out in the Visby Protocol are 1000 francs per package or unit or 30 francs per kilo. A franc is not a unit of currency but “a unit consisting of 65.5 milligrams of gold millesimal fitness 900”. The definition of “Poincare” franc named after the French Prime Minister who held office in 1928 when the parity of the franc was fixed by French law.
Poincaré franc was used as unit of account in the Warsaw Convention of 1929 and the Limitation Convention of 1957, among others. As already indicated above, under Bills of Lading Act 61 (Act 42), the limit “per package or unit” is two hundred Ghana pounds but is Ghana pounds a legal tender in Ghana now? What happens if a judge is confronted with such a situation?
It is manifestly clear that there is the need to amend this existing regime operative in Ghana for carriage of goods by sea.
The second amendment introduced by the Visby Protocol is spelt out above the first being the traditional limit per “package or unit” and the second being based on the weight. One of the shortcomings of the original Hague Rules is that there was no provision in the Rules in respect of bulk cargoes either dry or liquid. Surely such bulk cargoes cannot by any stretch of imagination be classified as a “package or unit”. In the circumstances what happens if a cargo of crude oil or grain which are bulk cargoes are lost during carriage by sea and the owner of the bulk cargo has to claim from the carrier? This is a sixty-four-million-dollar question.
The next shortcoming of the Bills of Lading Act 1961 (Act 42) which implements the original Hague Rules in Ghana is in respect of goods shipped in a container. It must be observed that at the time the Hague Rules were drafted goods were not shipped in containers and consequently the Rules did not address the issue of goods stuffed in a container. The container revolution started in the 60s when the Rules were already in force.
The Visby Protocol of 1968 has addressed the issue of goods stuffed in container. Since the Bills of Lading Act which implements the original Hague Rules is silent on this point, what happens if a judge is confronted with such a situation. Will the whole container be described as a “package or unit” or will the various items stuffed in the container and enumerated in the bill of lading be described as a “package or unit” for the purpose of limitation? The present writer is not unaware of a number of decided cases in United States of America dealing with this point but these decisions are only of persuasive authority in Ghanaian courts.
The other issue covered by the Visby Protocol is that certain intentional or reckless conduct may deprive the carrier of the benefits of limitation. The original Hague Rules which were implemented in Ghana by the Bills of Lading Act 1961 (Act 42) is silent on this point. The drafters of the Visby Protocol deemed it expedient to incorporate such a provision which was modelled on Article 25 of the Hague Protocol to the Warsaw Convention concluded in 1955.
Incidentally, the Warsaw Convention of 1929 is the Convention for the Unification of Certain Rules relating to International Transportation by Air.
Another important amendment introduced by the Visby Protocol is that there are provisions linking recovery with the value of the goods at the time of delivery.
The Bills of Lading Act which implements the original Hague Rules in Ghana is conspicuously silent on this as there were no provisions in the original Hague Rules dealing with this point.
‘The present writer has attempted to address above some of the shortcomings of the Hague Rules which was implemented in Ghana by the Bills of Lading Act 1961.
Further developments on the international scene after the Visby Protocol is the SDR Protocol of 1979 dealing with new monetary limit.
As already observed, the limit fixed at Visby was 10,000 gold francs per package or unit or 30 gold francs per kilo of gross weight of goods lost or damaged. The Protocol defined a franc as meaning a “unit consisting of 6.5 milligrams of gold millesimal fineness 9000” and further provided that the date of conversion of the sum awarded into national currencies should be governed by the law of the court seized of the case.
Unfortunately, the Poincaré francs system collapsed very soon after the Brussel Conference because of ravages of inflation.
Limitation amount Special Drawing Rights
In an effort to promote some sort of uniformity, the CMI in 1977 appointed an International Sub-Committee to prepare proposals for reform based on the new SDR unit of account defined by the International Monetary Fund (IMF). Incidentally the SDR of IMF is a basket of currencies currently based on the euro, Japanese yen, Pound sterling and the US dollars.
The draft proposals were once again submitted to the Belgian government which agreed to call a new diplomatic conference in December 1979. The Conference adopted, without amendment, the SDR Protocol to the Visby Protocol on 21 December 1979. This replaced the Poincaré franc with SDR and came into force on 14 February 1984.
During the 1970s, pressure mounted from both developing countries and major shipper countries e.g., United States, Canada, France and Australian for a full re-examination of the regime governing carriage of goods by sea.
Developing countries took the view that the Hague Rules had been developed by “Colonial Maritime Nations” in 1924 largely for the benefit of their own maritime interests and that the balance between the shipowner and shipper interests needed to be reconsidered.
The lead to the negotiation in 1978 of a Convention known as the United Nations Convention on the Carriage of Goods by Sea 1978 (Hamburg Rules).
The Hamburg Rules involved a major rewriting of the cargo liability rules rather than amending the Hague Rules. Under the Hamburg Rules, shipowners are substantially more liable for loss or damage to cargo caused by them.
The Hamburg Rule entered into force on 1st November 1992. Ghana only signed the Convention but did not take any further steps to ratify or accede to same.
The traditional maritime countries did not like the provisions of the Hamburg Rules and consequently, the Rules did not attract widespread international support. Meanwhile the international regime for carriage of goods by sea is in fluid state.
“Some states still adhere to the Hague Rules, some to the Hague-Visby Rules (of which some have adhered to one or two further protocols on the package or unit limitation and some not); some have enacted the Hague Rules, and some the Hague-Visby Rules (with or without either of the two variants) into domestic law with or without adhering to the Convention); some have enacted none of these, with the result that they apply their domestic law unless their conflict of laws rules regime otherwise; some have adhered to the Hamburg Rules; and some have inserted into their national laws provisions similar to the Hague Rules, two Protocols or the Hamburg Rules sometimes with mixtures of these” (Vide Carver on Bills of Lading Third Edition page 626).
This state of affairs is highly unsatisfactory for international trade.
As a result of this, a new Convention was negotiated and adopted on 11 December, 2008 by the General Assembly of United Nations. The Convention is known as the “UN Convention on Contracts for International Carriage of Goods Wholly or Partly by Sea”. It was opened for signature at a ceremony held on 23rd September 2009 at Rotterdam. Ghana is one of the 17 States which signed the Convention on the same day but it must be borne in mind that signature of the Convention does not of itself bring the Rules into force. A further step of ratification, acceptance or approval by the signatory states is required.
The Rotterdam Rules is the proposed new International regime for carriage of goods by sea. The new Convention required ratification or other mode of adoption by, at least 20 states. No reservations are permitted, ratifying or adopting states are obliged to denounce earlier conventions on international carriage of goods by sea to which they may be a party namely the Hague Rules and any amending protocol and the Hamburg Rules. It is pertinent to observe that “reservation” means a unilateral statement, however phrased or named, made by a State when signing, ratifying, accepting, approving or acceding to a treaty, whereby, it purports to exclude or to modify the legal effect of certain provisions of the treaty in their application to that state.
To permit a Convention to become honeycombed with reservations by a series of countries can jeopardise the whole exercise. Denunciation, on the other hand, takes place when a state expresses its desire not to be bound by a treaty or convention which it has already ratified or acceded to.
The Rotterdam Rules are complex and extend to 96 Articles divided into 18 Chapters.
From 2009 to date only five countries have ratified the Convention. Whether the Convention will enter into force is a moot point. The gift of prevision is denied to mortal man as the present writer.
As already observed, the Hague Rules implemented by the Bill of Lading Act 1961(Act 42) is the predominant regime operating in the world today. The Hague Rules were updated by two Protocols, to wit, the Visby Protocol of 1968 and the SDR Protocol of 1979 which entered into force on 13th June 1977 and 14 February 1984 respectively. It is patent that the Bills of Lading Act in its present form is deficient. It does not address changes in the shipping industry. What are the possible options to Ghana then to ensure smooth facilitation of its international trade? The present writer will attempt to put down possible options open to Ghana.
These are as follows:
- a) amend the Bills of Lading Act 1961 by acceding to the Visby and SDR Protocols and implement them in our municipal law / domestic law;
(b) accede to the Hamburg Rules and introduce legislation which will adopt the Rules;
(c) amend the Bills of Lading Act so, as to adopt the provisions from either Convention which appear best suited to national requirements.
The present writer will humbly suggest that his preferred option will be option (a); the amendment of the Bills of Lading Act 1961 by acceding to the Visby and SDR Protocols and implement same in our municipal law at least for now and watch developments in other countries. This suggestion does not preclude the consideration of any other options by others more able and experienced than the present writer in the jurisprudence of maritime law to proffer any other option for consideration.
Before any option is adopted by Ghana, the present writer will humbly suggest that a Stakeholders’ Forum comprising of players in the maritime industry, insurers, the Ministry of Trade and Industry, the Ministry of Transport, Ghana Shippers’ Authority, the Ghana Chamber of Shipping and the Ghana International Trade Commission be convened at the appropriate time to discuss the options and adopt one.
In any discussion, of the possible option open to Ghana, sight must not be lost of the regime being utilised by Ghana’s major trading partners.
It is the position of the present writer that the consideration of the issues raised in this short paper is long overdue and the earlier the issues are addressed, the better they will be for Ghana’s international trade.
The Writer is a Legal Practitioner who was called to the Bar in October 1969. He holds a Master of Laws Degree from University of London having attended London School of Economics and Political Science. His areas of specialization are Maritime Law and Insurance Law. Currently, he lectures in Company and Commercial Practice at the GIMPA campus of the Ghana Law School.
Email: [email protected].