07 - Asynchronous Recording 2 - Bills of Lading

Carrier's Immunities: Article 4

  • Overview: Discussion on carrier's immunities under Article 4 of Hague-Visby Rules.
    • Emphasis on calculating carrier's liability.
    • Immunities are self-explanatory, liability calculation requires more discussion.

Conditions for Applying Immunities

  • Due Diligence Requirement:
    • A carrier cannot rely on Article 4 immunities if they have not fulfilled their obligation to exercise due diligence in making the ship seaworthy.
    • Due diligence does not mean the ship must be perfect, but the carrier must not be negligent.
  • Personal Obligation of the Carrier:
    • The duty to exercise due diligence is personal to the carrier and cannot be delegated.
    • Example: If a carrier hires a reputable firm to inspect the ship, and the firm is negligent, the carrier is still liable even if the firm issues a certificate of seaworthiness.
    • The carrier must exercise due diligence in properly manning, equipping, and supplying the ship.
      • Manning the ship involves hiring qualified personnel after proper interviews and tests.

Immunity for Negligence of Master, Mariner, or Pilot

  • Immunity Clause:
    • Neither the carrier nor the ship shall be responsible for loss or damage arising from the act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or management of the ship.
    • Scenario: If qualified personnel make a mistake after being properly hired, the carrier is not liable.
  • Example: The Titanic
    • Experienced captain and navigators made a mistake, leading to the collision with an iceberg.
    • The carrier (ship owner) is not liable for the goods lost due to the mistake of qualified personnel.

Other Immunities

  • Fire:
    • A carrier is not liable for damage to goods as a result of fire, unless the fire was caused by the negligence of the carrier.
  • Perils of the Sea and Act of God:
    • Carriers are not liable for damage caused by acts of God such as hurricanes, storms, and typhoons.
  • Act of War and Act of Public Enemies:
    • Act of War: Damage caused by war between two countries (e.g., a Ukrainian vessel shot down by a Russian vessel).
    • Act of Public Enemies: Actions by terrorists and pirates that result in the theft or destruction of goods.
  • Quarantine Restrictions:
    • Carriers are not liable for goods destroyed due to quarantine restrictions preventing the ship from docking.
  • Strikes and Lockouts:
    • Carriers are not liable for delays or destruction of perishable goods due to strikes or lockouts preventing docking at the port.
  • Riots and Civil Commotions:
    • Immunity from liability in case of riots and civil commotions.
  • Deviation in Saving Life or Property:
    • Deviation to save life or property at sea is an immunity.
  • Wastage in Bulk:
    • The carrier is not liable for wastage of bulk due to inherent characteristics of the goods.
      • Example: If 20 tons of sugarcane are shipped, and it reduces to 19.5 tons due to natural weight loss, the carrier is not liable.
  • Insufficiency of Packaging:
    • The carrier is not liable if the shipper did not package the goods properly because packaging is not the obligation of carrier.

Hague-Visby Rules: Minimum Level of Liability

  • Background: Carriers used to exclude liability through exclusion clauses, leading to the implementation of the Hague-Visby Rules.
  • Minimum Liability:
    • The Hague-Visby Rules set a minimum level of liability for the carrier, which cannot be contracted out of.
    • This is a minimum amount of liability that the carrier cannot reduce by agreement.

Calculation of Minimum Liability

  • Special Drawing Rights (SDR):
    • Calculated in SDR, a basket of currencies defined by the IMF.
    • The value of SDR can be checked at any time via Google.
  • Liability Calculation Methods:
    • Weight Calculation: Two SDR per kilogram.
      • 2 \text{ SDR/kg}
    • Unit Calculation: 666.67 SDR per unit.
      • 666.67 \text{ SDR/unit}
  • Determining Minimum Liability:
    • Calculate liability using both methods (weight and unit).
    • The higher of the two amounts is the minimum liability of the carrier.
  • Example:
    • A shipment of 20 packages weighing 10 kilograms.
    • Weight Calculation: 10 \text{ kg} \times 2 \text{ SDR/kg} = 20 \text{ SDR}
    • Unit Calculation: 20 \text{ units} \times 666.67 \text{ SDR/unit} = 13333.4 \text{ SDR}
    • In this case, the unit calculation (13333.4 SDR) is higher, so the minimum liability is 13333.4 SDR.

Increasing Liability by Agreement

  • Declared Value:
    • Shippers can declare the value of goods (e.g., expensive diamonds) to increase the liability.
    • This declared value can be included in the bill of lading.
  • Binding Nature:
    • The declared value is not automatically binding.
    • The carrier can prove in court that the declared value is not the actual value of the goods.

Proving Actual Value

  • Carrier's Opportunity to Prove:
    • If the carrier can prove the declared value is incorrect, the shipper does not get the declared value.
  • Shipper Receives Actual Value:
    • If the carrier cannot prove the declared value is incorrect, the shipper receives the actual value of the goods.