Rules Governing Carrier’s

Obligations and Liabilities

Sets of rules, ie International Conventions, governing the carrier’s
and shipper’s obligations, exceptions and liabilities under
contracts of carriage. These are:
• Hague Rules
• Hague-Visby Rules
• Hamburg Rules
• Rotterdam Rules (awaiting Ratification)

As with other Conventions, when a State adopts these Rules, they

enter into National Law, eg in UK the Hague Visby Rules are
adopted in the Carriage of Goods at Sea Act (COGSA) 1971.
https://www.legislation.gov.uk/ukpga/1971/19/contents
 Hague-Visby Rules (& Hague)
International conventions that define the contractual
requirements and responsibilities of carriers (ships) and
shippers (consignors), when using either ‘Bills of Lading’ or
‘Sea Waybills’.

Apply to all transported goods except live animals

and cargo carried on deck!*

Hague-Visby Rules – UK and a number of others

Hague Rules – adopted by most trading countries
[*some provision for live animals with Hague]
 Hague-Visby Rules
Carriers obligations:
• ‘Seaworthiness’ – at the commencement of the voyage, ie:
• Make ship seaworthy*
• ‘Man’ the ship appropriately (trained crew)
• Supply the ship
• Cargo spaces fit for purpose
• Look after the cargo (throughout the voyage):
• Load, Handle, Stow, Carry, Keep, Care for, & discharge.
• Shipper must provide special instructions where special
care is required
• Issue a Bill of Lading (if required by the shipper)

*Must exercise due diligence – taking all reasonable

precautions to ensure the vessel is fit for the voyage.
 Hague-Visby Rules
‘Seaworthiness’ (under the Hague-Visby Rules) requires a ship’s:
• Hull & Vessel to be sound (structurally & mechanically)
• Charts on board (up to date for upcoming voyage)
• To be manned by trained crew
• Cargo holds/spaces safe and fit for purpose.

Cargo is to be ‘properly and carefully’ loaded, cared for while on board

and discharged.

Why does ‘properly and carefully’ requires greater care than ‘due
diligence’?
• ‘Properly and carefully’ – taking the greatest degree of care, as if it
were the property of the carrier (ship)
• ‘Due Diligence’ – all reasonable precautions.
Loaded ‘Properly and Carefully’?
 Hague-Visby Rules
As with Livestock, Deck Cargo is excluded from the Hague-Visby
Rules.

However, under COGSA 71, UK Law reverses this for deck cargo
where there is a statement to that effect on the Bill of Lading.

So, it must state either:

‘Carried on deck without liability to the Carrier for loss or

damage howsoever caused’
or
‘carried on deck at Shipper’s risk’
 Exceptions from liability
Carrier will not be responsible for loss or damage arising from:
• Act of neglect or default of the Master, Pilot or Manager*
• Fire - unless caused by actual fault of carrier
• Perils, dangers and accidents of sea
• Acts of God, war, public enemies
• Arrest or restrain of Princes or Rulers.
• Quarantine regulations
• Act or omission of shipper or his agents
• Strikes, lockouts, etc.
• Riots and civil commotions
• Saving or attempting to save life or property at sea
• Wastage of cargo due to its inherent qualities, insufficient packing marks, etc
• Latent defects not discoverable by due diligence
• Any other cause arising without the actual fault of owner.
*Nautical fault defence
Neither contracting carrier nor ship shall be responsible for loss and damage to cargo resulting from “act,
neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the
management of the ship”.
 Exceptions from liability (cont)
Dangerous Cargoes:
• Goods of an inflammable, explosive or dangerous nature if not properly
marked or are shipped without the knowledge and consent of carrier,
may be landed, destroyed, jettisoned or rendered innocuous at any time
before discharge.

• If carried with consent of carrier, but become dangerous at a later stage

can also be dealt with likewise.
 Hamburg Rules
‘UN International Convention on the Carriage of Goods by Sea
adopted in Hamburg – 1978’
More modern (reflecting containerisation, etc) and less biased towards ship-
operators.
Hamburg Rules favoured by developing nations, but not by more affluent
countries, because:
• Fewer exceptions from liability for the carrier
In particular, the carrier is not exonerated from liability arising from
negligence in navigation or management of the ship
• P&I normally refuse to cover cargo carried under Hamburg Rules
Also:
• Hamburg rules cover live animals
• Cargo can be carried on deck only when there is a custom of the trade to
do so or by an agreement with the shipper
 Rotterdam Rules
United Nations Convention for the International Carriage of Goods
Wholly or Partly by Sea, 2008

• Only if the carriage includes a sea leg - so other multimodal carriage

are not included
• It allows for more e-commerce and approves more forms of
electronic documentation.
• It eliminates the nautical fault defence* which protected carriers and
crew from liability for negligent ship management and navigation.
• It obliges carriers to keep ships seaworthy and properly crewed
throughout the voyage.
 Rotterdam Rules
United Nations Convention for the International Carriage of Goods
Wholly or Partly by Sea, 2008

Signed by 25 States, but not yet ratified by the minimum of

20…

https://uncitral.un.org/en/texts/transportgoods/conventions/rotterdam_rules#:~:text=The
%20Rotterdam%20Rules%20provide%20a,under%20a%20single%20contract%2C%20and
 MV Libra Grounding May 2011 Xiamen, China
On 17 May 2011, the CMA CGM LIBRA grounded whilst leaving the port of
Xiamen, China. Salvage and other general average expenses totalling
US$13 million were incurred as a result.
The vessel had been navigated outside the buoyed fairway and ran aground
on a shoal in an area where there were charted depths of over 30 metres.
The shoal was not marked on the paper Admiralty charts available at the
time, but recent Notices to Mariners had warned that numerous depths less
than the charted depths existed in the approaches to the port….

Review the Admiralty Court (March 19) and subsequent Supreme Court
(November 2021) rulings:
• Which Rules were being tested?
• What were the courts findings?
• What implications may it have?

https://www.lexology.com/library/detail.aspx?g=28f9afb0-eeac-4b92-8897-b9313a593358
 Bills of Lading
Bills of Lading are required to enable a consignee
(buyer) to receive goods from a carrier/ship.

They are a requirement of the:

• Hague Rules
• Hague Visby Rules
where shippers (consignors) demand them.

This will be a requirement noted within a

contract between the consignor/consignee.
 Bills of Lading

The most widely used Voyage Charter party is the BIMCO

https://www.bimco.org/contracts-and-clauses/
GENCON C/P (94), and is being updated in 2021. Clause 10:

bimco-contracts/gencon-1994
The B/L clause above refers to the CONGENBILL form (1994)…
 Bills of Lading
CONGENBILL (standard B/L format):

https://www.bimco.org/contracts-and-clauses/
bimco-contracts/congenbill-2016
B/Ls are cited in most Voyage and Time C/Ps.
 Bills of Lading
Functions

Functions of a Bill of Lading:

• Receipt for goods
• Document of Title
• Evidence of a contract

Where marked ‘freight paid’, provides evidence of

freight payment.
 Bills of Lading
Information contained
Information contained on a Bill of Lading:
• Number of B/Ls issued
• Load port/date
• Discharge port
• Cargo info - number/type of packages, contents,
weight/volume, statement regarding condition, ie:
‘Good order’ or ‘Clean on board’ (a Clean B/L)
‘Defective’ or other remarks
• Ship’s Name
• Shipper’s/Consignor’s name & address
• Buyer/Consignee’s name/address, or ‘Order’, ‘To order’ ‘To
their order’
• Master’s and Agent or carrier’s signature
Bills of Lading
 Mate’s Receipt
• Document signed by the C/O or

https://africandomall.com
agent for the receipt for goods
received on board the ship.
• It is an acknowledgement that
the goods have been received
on board.
• Not a document of title, but
issued as an interim measure
until a proper B/L is issued.
• Compiled from a ship’s tally;
describes the exact condition &
quantity of the goods as
received.
Mate’s Receipt Content
include:

• Name of the vessel

• Name & address of shipper
• Name & address of
consignee (importer)
• Date of Shipment
• Port of loading
• Berth
• Marks
• Numbers
• Description & condition of
the goods at time shipped.
 Mate’s Receipt - Significance
• It is issued to enable the

https://africandomall.com
exporter or his agent to secure
bill of lading from the shipping
company.
• The Bill of Lading (the title to
the goods) is prepared on the
basis of the Mate’s receipt. So,
it should be obtained without
any adverse remarks
• Port trust authorities are
enabled to collect their dues as
it is routed through them.
• Still used in conventional trades such as general cargo, dry bulk &
tanker but has been replaced by a standard shipping note in container
& ro-ro trades.
Mate’s Receipt Types:
• Triplicate copies made:
• Original copy to shipper.
• One copy kept on board - compare with info on B/L.
• One copy to agent.
• Details of consignment must be copied exactly on to the Bill Of Lading.
Mate’s Receipt Types:

• Clean Mate’s Receipt

• Issued if the condition, quality of the goods and their packing are
proper and free from defects

• Qualified Mates Receipt

• Issued if the receipt contains any adverse remarks as to the quality
or condition of the goods and /or packing. It my be endorsed with
remarks regarding the adverse state of the cargo.
• M/R should carry endorsements about the condition of the cargo,
such as rust stained, pitting, broken bags, etc.

• When there is a dispute over the quantity, the lower figure of the tally
should be used and the number in dispute stated.
 Bills of Lading
Process

Cargo arrives at port

‘Shipping note’ supplied to Master

Received from
Shipper
 Bills of Lading
Process

Cargo arrives at port

‘Shipping note’ supplied to Master

Ship tallies cargo, generates Mate’s Mate’s

Receipt & passes to shipper Receipt
Completed
by C/O,
signed by
Master
 Bills of Lading
Process

Cargo arrives at port

‘Shipping note’ supplied to Master

Ship tallies cargo, generates Mate’s Mate’s

Receipt & passes to shipper Receipt

Bill of Ladings generated by shipper

original and copies, passes to Master. B/LB/L
B/L
Returned
by Shipper,
signed by
Master
 Bills of Lading
Process

Cargo arrives at port

‘Shipping note’ supplied to Master

Ship tallies cargo, generates Mate’s Mate’s

Receipt & passes to shipper Receipt

Bill of Ladings generated by shipper

original and copies, passes to Master. B/LB/L
B/L
Master compares B/Ls against Mate’s
Receipt & signs if accurate.
 Bills of Lading
Process
If freight is paid, will be endorsed B/L
‘Freight Paid’ ‘Freight Paid’

3 Original Bills of Lading will be returned

to the shipper/consignor. These are
forwarded to the Consignee. B/LB/L
B/L
Copies including will also be produced
and marked:
• ‘Master’s copy’
• ‘copy, non-negotiable’

B/L is presented by consignee to

receive cargo at discharge port.
 B/L
Bills of Lading B/L B/L
‘Letters of Credit’
Letters of credit are used where early payment by the
consignee is required. Ordinarily once the cargo is loaded

B/L endorsed with ‘Freight Paid’.

B/L passed to Consignor’s bank.
B/L Consignor’s Bank endorses and
transfers to Consignees bank.

B/L Consignee’s Bank passes to

Consignee.

Consignee uses B/L to receive cargo.

 Bills of Lading
A ‘Straight Bill of Lading’ has the consignee’s identity on
it, and can only be delivered to that party.

Some B/Ls are made out ‘To order’ (or ‘Order’ or ‘To
their order’) as some cargoes can be sold a number of
times during carriage. [Oil and Dry Bulk]
PROBLEMS WITH B/L

1. Carrier, agent or master endorses B/L with remarks

regarding shortage or damage - a “dirty” B/L – but
shipper needs “clean” B/Ls!

2. Cargo arrives at discharge port before B/L.

Consignee demands cargo, but cargo can only be
released against B/L.
PROBLEMS WITH B/L

1. Carrier, agent or master endorses B/L with remarks

regarding shortage or damage - a “dirty” B/L – but
shipper needs “clean” B/Ls!

2. Cargo arrives at discharge port before B/L.

Consignee demands cargo, but cargo can only be
released against B/L.
IMPORTANT POINTS WHEN DEALING WITH THE B/L ARE:
• check that the date of loading is correct
• check that the cargo quantity or amount is correct
• check that the cargo description is correct
• check that the destination for the delivery of the goods is correct
• ensure that any clause inserted in the Mate’s Receipts is included in
the B/L
• check that the number and sequence of the B/L are correct and that
all the original bills are signed
• if the bill is marked ‘Freight pre-paid’, be careful as you do not have
specific knowledge of this. this can only be signed on the authority of
your owners/operators or their agents
• you do not have to sign the B/L if it incorrectly states the amount or
condition of the cargo (‘boukadoura’ 1989).
• you should not sign the B/L if it bears the wrong date (‘Almak’ 1985).

[Michael Lloyd, Captain’s Legal]

 Sea Waybills
These are not Documents of
Title, nor are they required to
receive the cargo, ie used
where a B/L is not required.

Used in liner trades and where

trust exists between parties (eg
short-sea trades), or used to
transport between locations
within the same company.

They are simpler and more

efficient, eg GENWAYBILL

https://www.bimco.org/contracts-and-
clauses/bimco-contracts/genwaybill
Sea Waybills
 Bill of Lading Questions
1. State the 3 basic functions of a bill of lading.
2. Which function does not apply to a ‘Seaway Bill’?
3. Why would a shipper want a clean bill of lading?
4. Do the Hague Visby Rules cover deck cargo or live
animals?
5. What endorsement should be made on the Bill of Lading
when cargo is carried on deck?
6. What does the endorsement ‘To Order’ mean on a Bill of
Lading?
7. How is a Mate’s Receipt used (to create a Bill of Lading)?

Kahoot: SMLB - Charter Scenario Tutorial 2 Questions