Industry Issues


Background

The International Hague Rules Convention, governing liability for the loss or damage of oceanborne cargo was adopted in 1924, and in 1968 a group of national maritime law associations, known as the Comité Maritime International (CMI) drafted the Visby Amendments to the Hague Rules, which then came to be known as Hague/Visby. Although many countries ratified Hague/Visby, the United States was not among them. Instead, U.S. law continued to be governed by the Carriage of Goods by Sea Act (COGSA), enacted in 1936, which incorporated the terms of the original Hague Rules Convention with some amendments.

In 1978, the United Nations Commission on International Trade Law (UNCITRAL) finished work on a new convention covering liability for the carriage of goods by sea, which became known as the Hamburg Rules. This convention never received significant acceptance and has only been ratified by countries representing about four percent of world trade.

In 1992, the Maritime Law Association of the United States (MLA) began a review of the U.S. law - COGSA. Soon thereafter, the CMI formed an International Subcommittee on Transport Law which began drafting a new international instrument on cargo liability with the intention of delivering that draft to UNCITRAL for governmental action. These two efforts tracked each other closely in form and content up until 1996, when the MLA decided to support legislation in the U.S. to unilaterally address the issues by amending COGSA. This legislation failed to gain sufficient support and was abandoned in favor of the international effort at UNCITRAL to draft a new cargo liability convention.

The CMI finished its work on a draft international instrument late in 2001 and submitted the draft to UNCITRAL for governmental consideration. UNCITRAL held the first session of the Working Group to negotiate the new instrument in April, 2002. The Working Group held thirteen (13) negotiating sessions and finished its work in January 2008.

The text of the final convention, with the exception of a number of technical amendments, remained intact as approved by the Working Group. It was frmally adopted by the U.N. General Assembly on December 11, 2005. It was opened for signature by U.N. member states in Rotterdam in September 2009 and became known as The Rotterdam Rules. As of March 2010, 21 countries, including the United States and six member states of the European Union, have signed the convention indicating their intention to ratify it.

The convention will cover multi-modal shipments (not just port-to-port as is the case with existing conventions); will permit carriers and shippers to negotiate terms and limits that will differ from the convention in volume contracts or service contracts in U.S. trades; will introduce new, more balanced burdens of proof; and, will include a set of obligations for shippers not included in exiting conventions. The convention is currently opened for signature by U.N. member states and will enter into force one year after formal ratification by twenty countries.