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BILL OF LADING

PRINCIPLE OF THE LAW

Introduction

The Hague-Visby Rules as adapted by the Protocol of 79, mainly aims at protecting the third holder of the bill of lading and consequently regulates in a very clear manner, via compulsory provisions, the relation between the carrier and the shipper (in fact the third holder of the bill of lading after transfer by endorsement). To this end, the Hague-Visby Rules are composed of the three following parts:

1. a minimum of liabilities from which the carrier cannot back out;
2. a maximum of exemption or exonerations that cannot be extended;
3. the limitation of liability of the carrier to a certain sum (see further Limitation of Liability).

A minimum of Liabilities

According to Article III, par. 1 of the Hague-Visby Rules, the carrier (and thus also the master) shall be bound before and at the beginning of the voyage to exercise due diligence to:

1. Make the ship seaworthy.
2. Properly man, equip and supply the ship.
3. Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goodsare carried, fit and safe for their reception, carriage and preservation.

In principle, the previous voyage is terminated and the new voyage begins from the moment the ship is discharged and that it is ready to receive a new shipment.

The new voyage receives a new number, which has to be properly entered in the log book. The log book must also state that, for instance, all the holds were clean and free of smells, that the bilges have been tested and found in good order, in short, that the ship was ready in every respect to receive the goods on board. It often happens that the loading has already started in one or several holds before the other holds are empty. In this case, the readiness of each hold separately has to be entered in the log book.

With regard to the seaworthiness of the ship, see Time Charter party, Seaworthiness of Vessel.

In accordance with Article III, par. 2, the carrier (and thus also the master), shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.

This paragraph is very important and prescribes in fact that the master is always responsible for the goods he takes on board even if they have been loaded and stowed by the charterer. (See also Voyage Charter party, Clause 2, Owner's Responsibility Clause.)

A Maximum of Exemptions

According to Article IV, par. 1 of the Hague-Visby Rules, neither the carrier nor the ship shall be liable for loss or damage to the goods, arising or resulting from unseaworthiness of the ship providing that a due diligence has been exercised to make the ship seaworthy, before and at the beginning of the voyage.

It further says that whenever loss or damage to the goods has resulted from  unseaworthiness the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under the said Article.

According to par. 2 of Article IV of the Hague-Visby Rules, neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:

1. 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.
2. Fire, unless caused by the actual fault or privity of the carrier.
3. Perils, dangers and accidents of the sea or other navigable waters.
4. Act of God.
5. Act of war.
6. Act of public enemies.
7. Arrest or restraint of princes, rulers or people, or seizure under legal process.
8. Quarantine restrictions.
9. Act or omission of the shipper or owner of the goods, his agent or representative.
10. Strikes or lockouts or stoppage or restraint of labour from whatever cause, whether partial or general.
11. Riots and civil commotions.
12. Saving or attempting to save life or property at sea.
13. Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods.
14. Insufficiency of packing.
15. Insufficiency or inadequacy of marks.
16. Latent defects not discoverable by due diligence.
17. Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

Note that the exemptions as stated in Article IV, par. 1 and 2 are not agreements between the parties but lawful prescriptions. Beside this enumeration, even in case of due diligence, the carrier cannot release himself of his liability, in other words, an extension of these exemptions of liability to other cases, not foreseen by the law is null and void, since the Hague-Visby Rules are of public order.

Burden of Proof

The first paragraph of Article IV is in fact a repetition of paragraph 1 of Article III.

This paragraph is nonetheless of the utmost importance for the master, because in case of an eventual loss or damage of the goods, as a consequence of the unseaworthiness of the ship, the burden of proof will be on the carrier, thus on himself. Consequently, the master must, at any time, be able to prove that, before and at the beginning of the voyage, he has exercised a due diligence to make his ship seaworthy.

The means that the master can use to show that he exercised a due diligence to make his ship seaworthy are:

• produce all valid safety certificates (national and international ones);
• produce a valid classification certificate;
• the log book in which all measures to make the ship seaworthy MUST be entered, before as well as when the ship is ready to leave;
  • inspection of the holds, refrigeration and cools chambers, tanks, bilges, etc.;
  • make the ship ready for sea (especially the watertight sealing of the holds);
  • check if the crew is complete plus allocation of tasks;
  • fire muster and boat muster;
  • check provisions;
  • quantity of fuel and water before leaving;
  • test all bridge instruments and equipment, steering gear, whistle, navigation lights, etc.;
  • test engines;
  • stability condition with possible reference to the "captain's booklet" or "loading manual";
  • if necessary remarks relating to the goods during loading and/or discharging such as: damages to the goods, shortages, stevedore's damage, etc.;
  • to put it briefly, everything that the receiver of the goods could bring forward to make the carrier liable in case the goods arrive damaged or in an other condition than described in the bill of lading.
  
  

  Example>

  Due to a breakdown of the steering gear, the ship sheers out of line and runs aground. The goods suffer hereby water damage. If the carrier can prove that the breakdown of the steering gear is due to an Act of God (e.g. cargo ship safety equipment certificate, classification certificate, certificate of inspection of the steering gear and testing of steering gear before the ship's departure with proper entry thereof in the logbook, and the like), he will not be held responsible for the water damage to the goods. If the carrier cannot prove that the damage to the steering gear is due to an Act of God and resulted in not making the ship reasonably seaworthy, than he will have to compensate for the damage to the goods.

  In case of damage to the goods resulting from an exemption as foreseen by the Hague-Visby Rules, the receiver of the goods will always hold the carrier liable and the carrier will have to prove that he is not liable, in other words the burden of proof will always be with the carrier (cf Hague-Visby Rules, Article 4, par. 2, (q)).

  For goods to which the Hague-Visby Rules do not apply such as deck cargo "shipped on deck at shipper's risk" the carrier (in this instance the master) is also obliged to take good care of these goods but if, for instance, they arrive damaged, the receiver will now have to prove that the master committed a fault or that he is liable which means that the burden of proof now lies with the receiver and not with the carrier.

  In a nut shell we can say that regarding the exemptions as laid down in the Hague-Visvy Rules (and which are of public order), the burden of proof lays with the person who by virtue of these exemptions claims to be released of liability. With a negotiable bill of lading it will always be the carrier.

  Exemptions in contracts to which the Hague-Visby Rules do not apply and which can be freely negotiated between parties, the carrier can include in that contract any exemption clause which will be fully legal. The burden of proof shall now however be with the party who wants to reject the exemption clause, in other words, the burden of proof will now be with the receiver of the goods.

  IMPORTANT REMARK>

  It is not because the Hague-Visby Rules do not apply to certain goods or that in certain cases they are not applicable at all, that the carrier is not obliged to take good care of the goods. The master is always responsible for the merchandise he takes in his care.

  On the other hand, it is not because the master can exempt himself of his liability as provided by Article IV, par. 1 and 2 of the HVR that he not obliged to take good care of the goods.

  I once saw an officer watching a sling hanging in the crane and which was about to break. When I asked him why he didn't do anything about it he answered "it doesn't matter as in any case we are insured against this". This was to me a criminal act.

  Management of the Ship/Management of the Cargo

  From what precedes, we can state that the carrier or the master shall be liable for damage resulting from the handling of the goods, in other words for commercial faults or the management of the cargo such as: taking poorly care of the cargo during loading or discharging, bad equipment of the holds, bad state of the loading gear, bad stowage of the goods, bad or insufficient care of the goods at sea (except in case of Act of God), inadequate or insufficient functioning of the refrigerating and cool chambers, etc.

  On the other hand, the carrier or the master shall not be liable for the navigation of his ship, in other words for nautical faults or the management of the ship such as: a faulty manoeuvre, a wrong course or position, a collision, a faulty action with the bilges or ballast tanks, etc.

  It is clearly understood that this non-liability for nautical faults only relates to the goods, thus towards the receiver of the goods. The master will always have to justify himself with regard to damages to the ship e.g. in case of stranding or collision or any other professional faults.

  Deviation

  According to Article IV, par. 4 of the HVR the carrier shall not be liable for any deviation in saving or attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an infringement or breach of the Hague-Visby Rules or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting from that.

  Quick Reminder

  The HVR aim at protecting the third holder of the bill of lading.

  The HVR impose a minimum of liabilities:

  • make the ship seaworthy;
  • properly man, equip and supply the ship;
  • make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

  Each voyage must be numbered. Write in the logbook all steps taken to make the ship seaworthy before the beginning of the voyage.

  A new voyage starts when the voyage receives a new number, i.e.when discharging is completed and loading commences.

  The master is always responsible for the goods he takes in his care.

  The HVR allows a maximum of exemptions;

  • The master must exercise due diligence at all time to make his ship seaworthy;
  • The HVR gives a list of the cases in which the master or the carrier are not responsible in case of loss or damage to the goods. This list cannot be extended.

  The master must be able to prove that before the beginning of the voyage he has exercised a due diligence to make his ship seaworthy. The burden of poof lays with him.

  For goods to which the HVR do not apply, the burden of proof lays with the receiver.

  The master is always liable for the management of the cargo.

  The master is not liable for the management of the ship (regarding the goods).

  
  
  
  
  
  
  
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