MULTIMODAL transport generally refers to the carriage of goods by at least two modes of transport under the responsibility of a single transport operator; the different modes may refer to carriage by water (both ocean and inland waterways), air or land.
In December 2008, the UN General Assembly adopted new rules for multimodal transport and the same was signed by 16 states in September 2009, with many countries, including the Philippines, signing soon. Once ratified, these new rules will have far-reaching effect on responsibilities and liabilities of shippers, carriers and forwarders.
The “UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea” (designated as “Rotterdam Rules”) is aimed at creating a modern and uniform law on the international carriage of goods which include an international sea leg. It provides expanded liability for carriage door-to-door (instead of from point of loading to point of discharge) and additional responsibility for the goods from the point of “receipt” until the point of “delivery”.
The convention was first signed by 16 states (The Republic of Congo, Denmark, France, Gabon, Ghana, Greece, Guinea, Netherlands, Nigeria, Norway, Poland, Senegal, Spain, Switzerland, Togo and the United States) at a ceremony held in Rotterdam, the Netherlands. Armenia, Cameroon and Madagascar have also signed the convention.
Accession to the treaty, which requires ratification by each national government, is the first step towards enforcing the convention. The Rotterdam Rules will come into force once at least 20 countries deposit their ratification documents with the United Nations. The Philippine government is already preparing the ‘Instrument of Accession’ to be signed by the President and to be submitted subsequently to the Philippine Senate for ratification.
Proponents of the new treaty hopes the convention will be widely applied and will replace the different rules used by countries today to regulate the carriage of goods at sea, including the Hague Rules of 1924, the Hague-Visby Rules of 1968, and the Hamburg Rules of 1978.
Old Rules vs. New Rules
We have outlined below some major differences between the new rules against those previously adopted by the UN:
- The Rotterdam rules provide new lines of liability for door-to-door carriage, particularly relating to those goods under DDU and DDP terms of trade. While the emphasis of the Hague-Visby Rules was from port to port (port of loading to port of discharge), the new rules require wider responsibility for the carrier responsible for the goods from the point of “receipt” until the point of “delivery”.
- A number of defenses available to the carrier from door to door have been reduced, e.g., a carrier’s reliance on the negligent act of the employee resulting in a navigation error.
- The liability compensation levels have been raised (from maximum liability limited to two special drawing rights [SDRs] per kilo or 66 SDRs per package, whichever is higher to three SDRs per kilo and/or 875 SDRs per package).
- The period for initiating legal claims has been extended from 1 to 2 years.
- The Rotterdam rules have provisions on “volume contract” and “”maritime performing party”. Accordingly, “volume contracts” parties are actually free to contract out of most of the liability regime so long as the contract provides a “prominent statement that it delegates from this convention”.
Obviously, the expanded liabilities and responsibilities will mean additional insurance coverage and costs for the parties in the multimodal chain.
Areas of Concern
The European Shippers Council has identified six key areas of concern with the new convention for small and medium-sized importers/exporters:
- There is conflict with other international conventions such as the “CMR” and “CIM” treaties that govern carriage of goods by rail and road transport in Europe.
- Carriers will be able to continue to offer purely sea carriage under the Rotterdam Rules and to limit their period of responsibility to exclude loading, handling, stowing and unloading if the shipper agrees.
- It is possible to contract out of nearly all the provisions in the rules by means of a volume contract.
- Proving fault and claiming compensation is harder for shippers.
- Shipper obligations are more difficult than previous conventions.
The author is the legal director of AFPI, PISFA and PUC. He is a lecturer on logistics, indirect tax and customs, and a trainor of Ateneo and BayanTrade on International Supply Chain Management. Please contact email@example.com for your comments.