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CIFFA Report

CMI - From the Hague Rules to U.S. Rules?

by George Kuhn

In February 2001, the Comit Maritime International (CMI) held an international conference in Singapore. Its purpose was to regulate multimodal transport and to replace the current Hague-Visby Rules (in place since the early 1920s and amended in 1968), which form the basis of all shipping nations’ maritime laws, including U.S. Carriage of Goods by Sea Act (Cogsa) and Canadian Cogwa.

Alarmed by the United States’ Maritime Law Association’s unilateral initiative in 1998 to transform U.S. Cogsa (1936) into a multimodal carriage law through a proposed senate Cogsa bill under the sponsorship of Senator Kay Bailey Hutchison (Republican, Texas), the CMI hastily formed an international “Issues of Transport Law” subcommittee in 1999 in an attempt to prevent disunification of maritime law and to modernize the 75-year old Hague Rules. The last attempt at a multimodal convention was the one sponsored by the United Nations in 1980 and it failed to garner support from major shipping nations, most notably the United States.

This time, however, the United States would play a key role at the CMI. The co-drafter of the proposed “Outline Instrument” was the chief drafter of the Senate Cogsa bill. Therefore, not surprisingly, many of the provisions found in the senate bill are also in the “Outline Instrument,” some of which are:

• Door-to-door scope of application.

• Uniform Hague-Visby liability limitations (two SDR per kilo or 666.67 SDR per package, whichever is greater).

• Elimination of the “Himalaya” defence through the introduction of a “Performing Carrier” definition that conjoins all agents and subcontractors of the contracting carrier as parties to the contract of carriage for liability purposes.

• Elimination of the carrier’s “Error in navigation or management of the vessel” defence.

As with the failed UN Multimodal Convention, shipowner interests once again proved to be strong at the CMI’s Singapore conference as modifications were adopted to immunize ocean carriers from multimodal liability. The Outline Instrument would allow ocean carriers to contract out of inland liability altogether under a “through transport” provision that limits the scope of their contractual responsibility to sea carriage only, even if they were to handle the inland transport. Additionally, nations would be free to opt out of uniform door-to-door liability and adopt a “network” liability regime, which means they may apply their existing inland liability regimes — if any — to the inland segments of a multimodal contract of carriage. This, of course, would result in a conflict of laws and forum shopping in the United States since the Outline Instrument would permit the United States to enact its door-to-door uniform “per kilo/per package” limitation, while Europe and Canada would have only a “per kilo” limitation for inland loss and damages.

The Canadian International Freight Forwarder’s Association (CIFFA), is opposed to the Outline Instrument (and to U.S. Cogsa) on the grounds that a proposed multimodal convention that would exempt ocean carriers from inland liability is a sham. The proposed convention is also prejudicial to 40,000 freight forwarders and Non-Vessel Owner Container Carrier Companies (NVOCCs) around the world by its “performing carrier” provisions creating contractual liability on agents who otherwise have no such liability. CIFFA, nevertheless, supports the notion of a uniform multimodal transport convention but believes that such convention must be fair and equitable to all affected groups. Above all, CIFFA believes that any such convention must involve the direct participation of multimodal transport operators, i.e.: the freight forwarding industry and ocean transportation intermediaries, as otherwise it has no legitimacy.

This turn of events is no tempest in a teapot. It is an instrument that will affect every carrier, freight forwarder, NVOCC and logistics professional in the world!