European shippers raise alarm over Rotterdam Rules
The European Shippers Council is cautioning that the new international convention on cargo carriage known as the “Rotterdam Rules” contains “inherent dangers,” especially for small and medium size shippers, and says it may seek to prevent them from coming into force.
The ESC said it fears the new cargo rules for intermodal shippers “could put some shippers in a worse position than that of the pre-1924 liability environment.”
In December the United Nations General Assembly adopted the Rotterdam Rules and has planned a signing ceremony for September. Under development since 2002, the rules are aimed at creating a modern and uniform law concerning the international carriage of goods which include an international sea leg, but which is not limited to port-to-port carriage of goods. Proponents of the new treaty hoped it would be widely embraced and replace a quilt work of rules that different nations use 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.
Noting the Rotterdam Rules were likely to enter into force within months, the ESC said it “is currently minded to oppose the rules and believes, even at this eleventh hour, it is not too late to prevent the convention from attracting the 20 signatories needed to be implemented. With sufficient member states, including the European Commission, understanding the implications and risks for business, we may yet be able to find international solutions that protect companies' legal rights and protection from losses that could otherwise bring them to the brink of financial ruin.”
The council, which claims to represent the interests of some 100,000 shippers, said, “The new international convention covering liability of carriers and shippers in a contract of carriage, allows the liner shipping companies to offer an opt-out from almost all of the rules for, what are referred to as 'volume contracts’; but volume contracts can be just three or four containerized shipments per year!”
It said it is concerned “many shippers may be lured into such an opt-out by the offer of lower rates or the promise of better service. Before shippers enter into such tempting offers they must first understand and weigh up the potential risks and consequences”
“The alternative could be to look for regional solutions, conventions that may at least cover co-modal movement of containerized freight, door-to-door,” the ESC said. It added the European Commission is 'already consulting on such a proposition for the movement of freight within and around the European Union.”
An analysis of the Rotterdam Rules undertaken by ESC is available on the ESC's Web site and the group is planning to hold a seminar on the rules on June 22 at 'Havenhuis' of the Port of Antwerp.
It said it has identified six key areas of concern with the new convention:
' Conflict with other international conventions such as the “CMR” and “CIM” treaties that govern rail and road transport in Europe. Those treaties would prevail over the Rotterdam Rules “but in practice only where the source of the damage can be localized — in reality a difficult thing identify in many cases,” the ESC noted, and not extend to short-sea shipping. Shippers concerned with intra-European shipments may choose against the use of short-sea services because of the increased obligations and liabilities of the Rotterdam Rules compared to other conventions.
' Carriers would 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. The unwitting shipper may be tempted into accepting such terms, but it would be equivalent to not renewing one's insurance policy in order to save money.
' “It is possible to contract out of nearly all the provisions in the rules by means of a volume contract. This represents the greatest of ESC's concerns.”
' Proving fault becomes harder for shippers.
' Claiming compensation becomes harder for shippers.
' Shipper obligations are far more onerous than previous conventions. ' Chris Dupin