Unless China suddenly ratifies the convention, and this leads to ratification by a large number of Asian countries, it is reason to believe that the Rotterdam Rules will never see the light of day.

The Rotterdam Rules – Another nail in the coffin?

| Insight

The Malaysian government prepared a law bill last year regarding carriage of goods by sea, which is expected to come into force this year. This has a general interest, as it further reduces the hope of the modern Rotterdam Rules ever coming into play.

The fact that the Malaysian government has chosen to implement the Hague-Visby Rules into domestic law, may indicate that the international maritime community has given up on the Rotterdam Rules. This may therefore be another nail in the coffin for this convention. The Rotterdam Rules is an international convention which introduces new and modernized international rules regarding carriage of goods by sea, which were intended to solve many legal issues which the industry has dealt with over the years.

The announcement of the Rotterdam Rules in December 2008 was met with optimistic signs, as this would mean an actual replacement of the Hague-Visby Rules, an international convention that has been in force with few amendments since 1924.

However, more than ten years later, it looks like we are all concluding that this has been yet another failed attempt of replacing the Hague-Visby rules. In order for the Rotterdam Rules to come into effect, at least twenty countries need to ratify the convention. As of today, only four countries have ratified it, namely Spain, Cameroon, Congo and Togo.

There are some indication on the Netherlands moving towards domestic incorporation of the rules, but we are very far away from the international recognition of the Rotterdam rules that are needed. The earlier optimism of the US ratifying the convention appears to have diminished, as the current administration appears to have no interest in replacing the US Carriage of Goods by Sea Act (COGSA) with the Rotterdam Rules. There also seems to be little interest from China in moving towards ratification.

Norway appointed a law commission to review the Rotterdam Rules and possible ratification, and the commission was in principle in favour of incorporating the Rotterdam Rules, but recommended that Norway does not ratify the convention before the US or any larger EU states ratify. Incorporating the Rotterdam Rules would mean that Norway has to resign the Hague Visby Rules, something the commission advises against before it is certain that the Rotterdam Rules is being internationally accepted and becomes the new international instrument governing transport of cargo by sea. The Norwegian government has followed this advice.

The Norwegian position appears to be the stand taken by all maritime jurisdictions. With no signs from neither the US, nor China, in adopting these rules, the rest of the maritime community appears to be very reluctant to move forward. The Rotterdam rules may therefore be a project that is doomed. This is, however, somewhat sad, as the convention would introduce a modernised set of rules to the industry. I have below mentioned some of the changes which the Rotterdam rules would bring to the table.

The Hague Visby rules have been under criticism from cargo interests for decades, as the rules have been seen as unbalanced and too favorable for the carrier. The biggest points for criticism have always been the exemption from liability for faults in the navigation of the vessel and the relative low limitation amounts. Failed attempts of replacing the Hague Visby rules have been made in the past, e.g. the the Hamburg Rules, a convention which came into force in 1992, fourteen years after its announcement. However, the Hamburg Rules have not been ratified by any states representing any large shipping- or cargo interests.

With this as a backdrop, the announcement of the Rotterdam Rules in December 2008 was attached with a lot of interests within the maritime sector. The Rotterdam Rules were widely announced as the new transport liability regime, and the aim was to replace the Hague Visby Rules as the prevailing liability convention, and becoming the new legal regime on both maritime and combined transports.

The biggest changes from the Hague Visby rules are probably the following items:

  1. It covers not only transport by sea, as it contain a complete set of rules that may be used for combined transports as well, where parts of the transportation of the cargo is performed by road or rail. Where the Hague Visby rules have been said to cover the cargo from “tackle to tackle”, the Rotterdam rules cover the cargo from “door to door”.
  2. The exemption from liability for nautical errors has been removed.
  3. The limitation amounts have been increased from 667 SDR per unit or 2 SDR per kilo to 875 SDR per unit and 3 SDR per kilo.
  4. The time bar period for cargo claims has been extended from one to two years.

However, unless China suddenly ratifies the convention, and this leads to ratification by a large number of Asian countries, it is reason to believe that the Rotterdam Rules will never see the light of day. As of now, very few are optimistic about the Hague-Visby Rules being replaced in the near future.