UNCITRAL-COMITE SESSION DEBATES FREEDOM OF CONTRACT

UNCITRAL-COMITE SESSION DEBATES FREEDOM OF CONTRACT    The United Nations Commission on International Trade Law (UNCITRAL) and members of the Comite International Maritime comprising UNCITRAL’s Working Group III discussed different views of leeway to be permitted shipping contracts during a Thursday session at United Nations headquarters in New York.
   The issue of freedom of contract lies at the heart of a U.S.-proposed preliminary draft for an international convention that would harmonize different legal regimes governing the carriage of goods by sea.
   While many nations have their own internal equivalents of the U.S. Ocean Shipping Reform Act, which permits confidential service contracts between shippers and carriers, one thorny issue is the leeway an international covenant would give to arrangements, including considerations of liability, with third parties involved in such contracts.
   Delegates from France and Spain noted that under civil law (as opposed to common law), contracts of carriage differ from contracts of affreightment. Contracts of carriage, generally negotiated between shippers and liner companies, are formal and regulated. Contracts of affreightment, generally between shippers and tramp carriers, are more loosely interpreted. They proposed a similar degree of distinction in dealing with third parties in the proposed draft for a binding covenant.
   Delegates also discussed defining generally used shipping terms with enough precision to stick in an international convention. A number of delegates agreed that no one has ever been able adequately to define “charter party.” “We should not persist in this vagueness,” said a delegate from Germany. “We need to work from specifics, not generalities.”
   The Working Group chairman then instructed the U.S. delegation to use a morning coffee break to come up with more specific definitions of terms in the proposed covenant. After the break, the U.S. delegation verbally proposed three kinds of contracts to be part of the final draft:
   * Bill of lading contracts that would be entirely subject to the proposed convention.
   * Charter parties (their definition would be determined eventually) would be recognized but not covered by the convention, unless participants wanted such coverage.
   * Volume contracts, subject to the proposed covenant as far as their principals went, but not third-party participants, unless the third parties agreed to inclusion.
   How this shakes out remains to be seen, but delegates from France, Denmark and Russia expressed support for the more specific U.S. terminology.
   Interestingly enough, there was also widespread agreement with a delegate from the Netherlands, who said that “in carrier-shipper negotiations, it is generally given that rules must protect the shipper as the weaker party. Despite one-sided markets today that appear to favor shippers — and often, in fact, do so — we must remember that liner operators, in particular, have behaved as a virtual monopoly whenever they have had the upper hand, economically.”