Press release

In preparation for the 19th Session of the UN Working Group on the UNCITRAL draft Convention on maritime cargo liability that will take place in New York from 16 -27 April, the European Shippers’ Council has submitted a position paper to the delegates of the Convention outlining the risks facing European shippers as a result of the on-going discussions.

The position paper is based on ESC’s assessment of the draft Convention. It demonstrates that the draft provisions of the new international instrument will have a serious impact on European industry. The analysis shows that European shippers (and indeed global shippers) may be faced with new mandatory shipper obligations and that the draft Convention will seriously and irrevocably dilute and weaken shipper protections.

Nicolette van der Jagt, ESC’s Secretary General said: “Maritime liability issues are notoriously complex, often ignored and frequently misunderstood by shippers and shippers’ organisations. We have therefore gone through a robust analysis of the draft convention. Whilst ESC believes that adoption of an instrument which reflects modern shipping practices and up-to-date values for loss and damage to freight would be beneficial to shippers, we have found only some thin potential improvements for shippers which do not appear to outweigh the very real risks identified by the ESC.”

She continued: “European shippers are on the brink of liberation from the conference system. As liner shipping will be brought under the normal EU competition rules shippers will have greater opportunities to negotiate contract terms in relation to their traffic flows than has been the case until now. We welcome these partnerships between shippers and carriers to improve the performance of the logistics supply chain. However, commercial realism proves that smaller and medium-sized shippers will find it difficult to obtain fair trading terms from maritime carriers even in a new deregulated climate.

Historically, international conventions applicable to maritime law have been intentionally designed to limit the degree to which carriers can negotiate downwards their liability; this has been to protect shippers’ interests against the often stronger negotiating position of the shipowning community to produce unbalanced bills of lading. The present draft Convention undermines this concept, which is not in the shippers’ interest.”

Ms van der Jagt added “Furthermore we are uneasy about the fairness of the draft UNCITRAL Convention. A good example of this is on the issue of delay. European industry is most often the victim of losses involving service deficiencies (goods being left on the quay, skipping of ports of call, delivery delays) rather than actual damage, which general containerization has helped to reduce considerably. The draft provides a limited remedy for delay (one times the freight payable), below that in Hamburg Rules. Whereas ESC welcomes the inclusion of delay, as it could be an incentive for carriers to increase their service performance, it believes that the formula for compensation based on freight charges is anachronistic and inadequate. Yet if the shipper were blamed for delay incurred by the carrier (for example as a result of any misdeclaration of goods under US security requirements) the limits of liability under the proposed new Convention are an order of magnitude greater for shippers than those for the carriers; the shippers’ proposed limits of liability (500,000 SDRs) are related to the potential costs incurred by the whole vessel, such as loss of use of the vessel or additional port charges. My members do not believe that this blatant imbalance represents a fair deal.”

ESC has highlighted a number of other serious problems with the current draft of the proposed Convention:

Shippers will have greater obligations under the proposed Convention, yet they will have less scope for reducing them through contractual negotiations than is currently possible under other mainstream rules such as those of Hague or Hamburg Rules.
The draft instrument is essentially designed for maritime transport without proper regard for the needs of land transport or of modern trade logistics and will not establish an adequate system for door to door transport, though it purports to be a multimodal transport Convention.
The present draft is difficult to follow, complex and ambiguous. It is conceptually out of line with equivalent Conventions for road, rail and air transport. The Convention, if enacted, is likely to be a “lawyer’s charter” in litigious societies such as the US because of its myriad legal uncertainties.
It could disrupt a number of established trade practices, as for example between international buyers and sellers using letters of credit

European shippers have long supported the Hamburg Rules and believe that this Convention could now could offer a more balanced alternative instrument for port to port transport compared to the inadequacies and uncertainties of the UNCITRAL draft.

ESC also believes that liability of multimodal transport operators requires to be established in an instrument which has a clear conceptual base of mandatory door to door liability within a mode-neutral regime. The UNCITRAL draft is structurally incapable of meeting these criteria but there is a danger that it may prevent necessary work in this regard being undertaken in the future.

ESC will be attending the working group in New York opening on 16th April to discuss these issues further. An ESC assessment of the UNCITRAL draft has been transmitted to the European Commission, national experts, UNCITRAL, the Under-Secretary General for Legal Affairs and Legal Counsel to the United Nations, and to the Transport Division of the UNECE.

A copy of the ESC analysis and official submission to the UN are attached

For further information contact: Nicolette van der Jagt, Secretary General of the ESC - Brussels 00 322 230 2113