The Hague-Visby Rules

Before the First World War shipowners had a position of dominance to impose their terms and conditions on parties
in a weaker position and closed Bills of Lading containing very widely drafted exclusion clauses. After the First
World War, the international community recognised the need to redress this imbalance. The result was the Brussels
Convention of 1924 which gave birth to the Hague Rules.

The Hague Rules attempted to impose uniformity into contractual terms relating to the carriage of goods under bills
of lading. In doing so a balance was struck between the interests of maritime nations and of trading nations. This
was done by providing:

Art 111: a bedrock minimum of contractual obligations on the part of the carrier.

Art 1V: a corresponding maximum of contractual defences and exceptions available to the carrier.

No Contracting-out:

Art 111(8) prevented contracting out by providing that any clause which attempted to go below the minimum duties
or the maximum defences set out in the Rules should be 'null and void and of no effect'. Art VII, However,
maintained the parties' freedom of contract as regards any contractual duties occurring before loading or after
discharge.

The Rules, where they apply, are obligatory, strict law, and the shipowners cannot vary their terms in such a way as
to fall below the Convention standards. Neither can he attempt to shift responsibility to a third party. Any such
clause reducing the shipowner's liability is void.

Clauses which increase the owners' liability above the standard are valid.

As a signatory to the Convention, the UK brought the Rules into domestic law by the Carriage of Goods by Sea Act
1924. The Act provided that bills of lading covering shipments out of Great Britain should be required to contain a
statement that the contract incorporated the Rules. The Rules were subsequently amended as the Hague-Visby
Rules, which became part of domestic law by the Carriage of Goods by Sea Act 1971 which came into effect in July
1977. The Act went further than its predecessor in providing that the Rules should have 'the force of law' in respect
of bills covered by the Act. Moreover, the Act extended the categories of bills of lading contracts to which the
Rules would apply.

THE CARRIAGE OF GOODS BY SEA ACT 1971

Applies, whether or not the bill of lading refers to the Rules, to carriage of goods by sea from a port in the UK; it
includes coasting voyages so long as the contract of carriage provides expressly or by implication that a bill of
lading will be issued.
Applies to carriage between any ports in different states, provided that the bill of lading is issued in a state that has
ratified the Protocol; carriage from a port in a contracting state to a port in another state; or from a port in any state
to a port in another state, where the parties to the contract have agreed on its being governed by the law of a state
that has adopted the Hague-Visby Rules or enacted legislation giving effect to them.
Applies where the contract is governed by UK law and the parties agree that a bill of lading or a non-negotiable
receipt subject to the Rules shall be issued.
Does not apply to deck cargo and live animals (Art I(C) of the Schedule to the Act).

What are the limits of the application of the Carriage of Goods by Sea Act in relation to the entire journey of the
goods?

The COGSA does not apply as a matter of law after goods have been discharged from the vessel, thus COGSA did
not apply as a matter of law to the inland portion of an intermodal carriage from Wisconsin to the Netherlands.
COGSA could apply as a matter of contract between the parties, but the bill of lading, although potentially
ambiguous, should be construed as applying by contract the Convention on the Contract for the International
Carriage of Goods by Road ("CMR") to plaintiff's claim arising from the alleged theft of cargo in Belgium en route
to the Netherlands –

Hartford Fire Insurance Co. v. Orient Overseas Containers Lines (UK) (2000) (US case)

THE AMBIT OF THE RULES

In order for the Hague-Visby Rules to apply, it is sufficient that the contract of carriage provide for the issue of a bill
of lading. It is not necessary that the bill of lading contain the terms of the contract of carriage -

Parsons Corporation & Others v. CV Scheepvaartonderneming – the Happy Ranger (2002) CA

The Rules can apply either mandatorily, in which case they will have 'the force of law', or voluntarily, through
incorporation by a 'clause paramount'.

Article 111(8) will only apply to the former category. Therefore, a clause in conflict with the Rules may prevail over
the Rules if they have been voluntarily incorporated.

In The Strathnewton [1983] 1 Lloyd's Rep 219, a time charter was subject to the Inter-Club Agreement. By virtue of
a clause paramount, it was also subject to the Hague Rules. It was held that the one year time limit under the Rules
did not apply to claims by charterers against owners for indemnity under the Inter-Club Agreement. It is therefore
critical to establish whether or not the Rules apply to any given contract mandatorily or voluntarily. If the Rules do
apply mandatorily, there is no question of their application being qualified by the provisions of the Unfair Contract
Terms Act 1977 as s 29(1)(a) of that Act permits reliance on contractual terms 'authorised or required by the express
terms or necessary implication of an enactment'.

Mandatory application

Section 1(2) of the Carriage of Goods by Sea Act 1971 provides that:

The provisions of the Rules as set out in the Schedule to this Act, shall have the force of law.

Application to bills of lading

With one limited exception (waybills which incorporate the Rules) the Rules apply only where the contractual
document is a 'bill of lading or similar document of title' within the following definition in Art 1(b):

'Contract of carriage' applies only to contracts of carriage covered by a bill of lading or any similar document of
title, in so far as such document relates to the carriage of goods by sea ...

This definition includes bills of lading issued under or pursuant to a charterparty but only from 'the moment at which
such bill of lading or similar document of title regulates the relations between the carrier and the holder of the same'.
Therefore, bills of lading will not attract the operation of the Rules, whilst in the hands of the charterer.

The reference to 'any similar document of title' allows for bills of lading other than 'shipped' bills of lading to fall
within the Rules, provided they are negotiable documents. However, if a bill of lading does not amount to a
negotiable document, as is probably the case with combined transport bills issued by a non-vehicle owning carrier
(NVOC), it will not be subject to the Rules.

Bills of lading subject to the Rules

Article X of the Hague-Visby Rules provides that the Rules shall apply to: ... every bill of lading relating to the
carriage of goods between ports in two different States if:
(a) the bill of lading is issued in a Contracting State;
OR
(b) the carriage is from a port in a Contracting State;
OR
(c) the contract of carriage, contained in or evidenced by the bill of lading, provides that these Rules or the
legislation of any State giving effect to them are to govern the contract, whatever may be the nationality of the ship,
the carrier, the shipper, the consignee or any other interested person.

Case (a) All the claimant needs to know is whether the bill of lading was issued in a Contracting State.

Case (b) Relevant when transshipment is involved. In Mayhew Foods Ltd v Overseas Containers Ltd [1984] 1
Lloyd's Rep 317 the contract was to carry goods from Shoreham to Jeddah. The bill of lading was not issued until
the goods were transshipped at Le Havre. It was held that the Hague-Visby Rules governed the entire voyage from
Sussex and not just from Le Havre as the parties had contracted on the basis that a bill would be issued at some
stage.

Case (c) Covers bills of lading which would otherwise fall outside the Rules, where the parties expressly provide
that the bill of lading shall be subject either to the Rules themselves or to the legislation of any State giving effect to
the Rules. So a bill of lading which expressly incorporated either the Hague-Visby Rules themselves or the Carriage
of Goods by Sea Act 1971 would be in this category.

NB Bills of Lading outside the Rules

The Carriage Of Goods By Sea Act 1971 does not impose the Rules on every bill of lading likely to generate a cargo
claim which will be heard in an English forum, such as bills of lading which fall outside Ast X or s1(3) or 1 (6)(a)
COGSA.

It is important to note that the state of loading, not discharge, is what is crucial to the operation of the Rules. So
shipment to the UK from non-Convention states will not involve the Hague-Visby Rules. eg the USA (which
however operates a similar statutory regime of its own to bills of lading under the Harter Act 1893 and the Carriage
Of Goods By Sea Act 1936, based on the Hague Rules.)

Consider:
THE PARAMOUNTCY OF THE BARGAIN BETWEEN THE PARTIES

Dairy Containers Ltd v Tasman Orient Line CV (The "Tasman Discoverer")

The UK Privy Council, on appeal from the Court of Appeal of New Zealand: Lords Bingham, Hoffman, Phillips and
Carswell, and Dame Sian Elias: 20 May 2004

The Claimant

Dairy Containers Ltd were the consignees of a consignment of coils of electrolytic tin plate shipped in October 1999
from Busan, Korea, to Tauranga in New Zealand

The Defendant

Tasman Orient Line, operator of the Tasman Discoverer, the vessel in the case. Tasman Orient operates liner
services between New Zealand and East and North Asian ports.

The Bill of Lading

Clause 6(B)(b)(i):
"Where no international convention or national law would apply [mandatorily], the liability of the Carrier for loss of
or damage to the goods shall be determined:
(i) By the Hague Rules contained in the International Convention for the Unification of Certain Rules relating to
Bills of Lading dated 25 August 1924 (hereinafter called the Hague Rules), if the loss or damage is proved to have
occurred at sea…..; for the purpose of this sub-paragraph the limitation of liability under the Hague Rules shall be
deemed to be £100 Sterling, lawful money of the United Kingdom per package or unit…. and the Hague Rules shall
be construed accordingly:"

Clause 8:
"If any provision of this Bill of Lading is held to be repugnant to any extent to any international convention or
national law which is applicable to this Bill of Lading by virtue of Clauses 6….. such provision shall be null and
void to that extent but no further."

The case was governed by New Zealand law. It was common ground that there was no international convention or
national law mandatorily applicable to the Bill of Lading.

The relevant provisions of the Hague Rules were

Article III Rule 8, which reads:
"Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or
damage to, or in connection with, goods arising from negligence, fault, or failure in the duties and obligations
provided in this article or lessening such liability and otherwise than as provided in this convention, shall be null and
void and of no effect……"

Article IV, Rule 5, which reads:

"Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection
with goods in an amount exceeding £100 per package or unit, or the equivalent of that sum in other currency
[unless…….]"

and Article IX which reads:

"The monetary units mentioned in this convention are to be taken to be gold value."

Consider the ‘gold clause trap’: ie the value of gold which 100 pounds sterling would have bought in 1924.

The Grounds of the Claim

On arrival in Tauranga, the coils were found to be damaged by sea water and the majority of them were sold as
scrap.

After deduction of salvage, the net claim of Dairy Containers amounted to NZ$613,667.

Tasman Orient accepted liability for the damage but maintained that they could limit their liability to the sum of
£100 per package or unit, in the total amount of £5,500 by virtue of the provisions of the Bill of Lading; ie the sum
provided according to the formula set out in the Bill of Lading.

Dairy Containers submitted that the carrier should have expressly adopted Articles I to VIII only of the Hague Rules
thereby avoiding the "Gold Clause Trap" implicit in Article IX. The failure to exclude Article IX expressly when
incorporating the Hague Rules was therefore fatal to the contract.

Ie the provisions of the Hague Rules should take precedence over the Bill of Lading which was actually closed,
irrespective of mandatory national laws.

The Court’s Decision

The court emphasised that it was not dealing with mandatory national legislation; it was concerned only with the
interpretation of the agreement that the parties had made.

A careful analysis of clause 6(B)(b)(i) of the Bill of Lading showed that the words "the limitation of liability under
the Hague Rules shall be deemed to be £100 Sterling, lawful money of the United Kingdom per package or unit"
were clearly intended to replace the limit that would otherwise have applied under Articles IV.5 and IX of the Hague
Rules by a new limit written in terms of national currency only. The final words of the clause – "and the Hague
Rules shall be construed accordingly" had to be read as requiring that the relevant parts of the Hague Rules be read
as being amended by the new ‘deemed’ parts.

The end result was that the carrier’s liability was limited to £100 sterling, lawful money of the United Kingdom per
package or unit, that is, to a total in this case of £5,500.

Article 3.8 of the Hague Rules would operate as a paramountcy clause when the Rules applied compulsorily as a
matter of statute, but that was not the case here, where the court was concerned simply with the interpretation of a
contract.

In that context, the more general provisions of Art.3.8 have to give way to the express limitation stated by the parties
in clause 6(B)(b)(i) of the Bill of Lading. The more specific provision has to be preferred "as a matter of the
common sense reading of the bill of lading as a whole. The parties’ plain purpose was to alter that aspect of the
Hague Rules. That purpose must be given effect to."

Similar points could be raised in answer to the arguments based on clause 8(2) of the bill of lading but, in the court’s
view, that clause could apply only ‘to the extent’ that the Hague Rules were applicable by virtue of clause 6. That
extent was determined in relevant part by clause 6(B)(b)(i). The extent of the Hague Rules as so applied, did not
include the original limitation provisions of Art.IV.5 and IX. As a result, there could be no repugnancy between the
bill of lading and those provisions. It would make no sense, the court held, to direct a modification in those Articles
and then immediately to make it null and void.

Contrary to the judge at first instance, the court did not view the reference to ‘lawful money of the United Kingdom’
as simply defining the currency in which payment should be made. "No reason," the court said, "can be given for
such a strained reading."

Judgment of the Privy Council

The Privy Council upheld the Judgment of the Court of Appeal in favour of the carriers, essentially for the same
reasons.

The Privy Council adopted the principles of construction of negotiable documents such as bills of lading articulated
by Lord Hoffman and Lord Hobhouse of Woodborough in The "Starsin" [2003] UKHL 12, [2003] 2 WLR 711:
A party relying on an exemption must do so in clear words – any ambiguity or lack of clarity must be resolved
against that party;
There may reasonably be attributed to the parties to a contract such as this, such general commercial knowledge as
a party to such a transaction would ordinarily be expected to have;
Where there is a printed form of contract negotiable by one party to another, no inference should be drawn as to the
knowledge or intention of any particular party;
The contract should be given the meaning it would convey to a reasonable person having all the background
knowledge which is reasonably available to the person or class of persons to whom the document is addressed. (That
would certainly include a bill of lading holder such as Dairy Containers.)

The Privy Council agreed with the Court of Appeal that Dairy Containers’ arguments based on Article III rule 8 of
the Hague Rules and clause 8(2) of the Bill of Lading could not succeed, essentially for the reasons identified above
in discussing the Court of Appeal Judgment. It similarly agreed that clause 6(B)(b)(i) could not be interpreted as
simply making it plain that the reference in Article IX was to British pounds and not other pounds (such as Irish or
Kenyan pounds, as suggested by the judge at first instance): the authoritative French text of the Hague Rules
referred to "livres sterling".

In the event, therefore, the carrier was able to limit its liability to £5,500.

SO: Where
cargo was carried under a Bill of Lading into which the Hague Rules [as contained in the International Convention
for the Unification of Certain Rules relating to Bills of Lading of 25 August 1924], were incorporated as a matter of
contract in their entirety but

the Bill of Lading, in incorporating the Rules, specifically provided in sufficiently clear terms that the package
limitation was to be "£100 sterling, lawful money of the United Kingdom per package or unit"

in circumstances in which there was no mandatory national law applying the Hague-Visby Rules

then the contractual provision was applicable, and not the package limitation set out in Articles IV Rule 5 and
Article IX of the Hague Rules, namely the value of the gold which £100 sterling would have bought in 1924.
THE CONTENT OF THE RULES

The carrier's duties under Art III

The Rules impose two duties on the carrier:

1) Art III(1)

The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:

(a) make the ship seaworthy;

(b) properly man, equip and supply the ship;
(c) 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.

2) Art III(2)

Subject to the provisions of Art IV (below), the carrier shall properly and carefully load, handle, stow, carry, keep,
care for and discharge the goods carried.

If goods are lost or damaged it is of the utmost importance to ascertain which of these two duties was breached,
because the exceptions provided in Art IV(2) can only be relied on for breaches of Art III(2) but not of Art III(1).

Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589 -

A ship in port caught fire, after loading had begun, due to crew negligence in thawing out scuppers with a
blowtorch. The loss was held to be due to the shipowners' breach of their obligations under Art 111(1) which meant
that they could no longer rely on the exception in Art IV(2)(a) of neglect or default ... of the master ... or the servants
of the carrier ... in the management of the ship'. Had the ship already sailed when the fire broke out, the shipowners
could have relied on this exception. The breach would by then have ceased to be one relating to seaworthiness and
have been transformed

Article IV:

Art IV(1) grants the carrier a 'due diligence' defence in respect of 'loss or damage' in respect of a list of causes:

 Act, neglect, default of the master, mariner, pilot or the servants of the carrier in the navigation or in the
management of the ship
 Fire, unless caued by the actual fault or privity of the carrier
 Perils, dangers and accidents of the sea or other navigable waters
 Act of God
 Act of War
 Act of public enemies
 Arrest or restraint of princes, rulers or people, or seizure under legal process
 Quarantine restrictions
 Act or omission of the shipper or owner of the goods, his servant or representative
 Strikes or lockouts or stoppage or restraint of labour from whatever cause, whether partial or general
 Riots and civil commotions
 Saving or attempting to safe life or property at sea
 Inherent defect, quality or vice of the goods
 Insufficiency of packing
 Insufficiency or inadequacy of marks
 Latent defects not discoverable by due diligence
 A General exception: Any other cause arising without the actual fault or privity of the carrier, or
without the fault or neglect of the servants or agents 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

NB This general exception is of limited use because of the proviso that the shipowner must establish that its fault or
privity or by the fault or neglect of its servants or agents had not contributed to the loss - although it was
successfully invoked in -

Goodwin, Ferreira & Co Ltd v Lamport + Holt Ltd [1929] 34 Lloyd's Rep 192

THE LIMITATION PERIOD

Art III (6):

The carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless
suit is brought within one year of their delivery or of the date when they should have been delivered. This period
may, however, be extended if the parties so agree after the cause of action has arisen.

Consider:

Trafigura Beheer BV v. Golden Stavraetos Maritime Inc. English High Court, Commercial Division: Morison J.: 12
June 2002: [2002] EWHC 1154 (Comm)
On arrival at the original contractual destination, the cargo interests refused to accept delivery of the cargo on the
grounds that it was damaged, and subsequently arranged with the shipowners for it to be carried to and discharged at
another port, the time limit under Article III Rule 6 of the Hague-Visby Rules began to run from the time at which
the cargo "should have been delivered" at the original port of discharge and not from the time that discharge was
completed at the new port of discharge. The Claimants’ suit was therefore time-barred and summary judgment was
entered in favour of the defendant shipowners.

THE HAMBURG RULES

Non-maritime nations complained that the Hague Rules unfairly protected the shipowner, placing too heavy a
burden on the shipper. Those countries are predominantly shippers although, as emergent nations, some of them are
anxious to build up their own merchant fleet as a means of earning hard currency.

Responding to the call for reform, the United Nations Commission for International Trade Law (UNCITRAL)
worked for several years on a new convention, and the terms of the United Nations Convention on the Carriage of
Goods by Sea were at last settled at a conference of plenipotentiaries from seventy-eight states, and observers from
shipping, trade and insurance interests, held in March 1978 at Hamburg - hence the new convention is known as the
Hamburg Rules.

These Rules make profound changes, summed up in the 'Common Understanding', contained in Appendix 11 of the
Final Act of the conference, which is, of course, not a legal provision but it explains the Convention's inequitable
rationale:
It is the common understanding that the liability of the carrier under this Convention is based on the principle of
presumed fault or neglect. This means that, as a rule, the burden of proof rests on the carrier but, with respect to
certain cases, the provisions of the Convention modify this rule.

The Rules came into force on 1 November 1992 but, understandably, the UK is not a current signatory.
Nevertheless, disputes involving the Hamburg Rules may still be resolved in the UK, where, for instance, a cargo
claim arises out of a voyage where the State of loading is a Contracting Party to the Rules. Additionally, of course,
the dispute may be resolved for Arbitration in the UK, according to the terms of the Parties' agreement.

The Hamburg Rules have dismantled the system of carrier's duties and immunities contained in Articles 111 and IV
of the Hague Rules. No longer are the individual duties, for instance, regarding seaworthiness, proper loading and
stowage, enumerated. Instead, Art. 5(1) of the Hamburg Rules provides that the carrier shall be liable for loss,
damage or delay while in charge of the goods

'unless [he] proves that he, his servants or agents took all measures that could reasonably be required to avoid the
occurrence and its consequences'.

Article 5(i) of the Hamburg Rules also shows that the catalogue of defences in Art. IV of the Hague Rules has gone.
Neglect of master and crew in the management of the ship will no longer be a defence, nor will perils of the sea,
unless reasonably required preventive measures can be proved. Act of God as a cause of loss, or acts of war and
related causes, will no longer only themselves have to be proved, but the carrier will also have to prove that it was
beyond his power to avert all the consequences of the occurrences.

Likewise, the defence of fire has been cut down; it ceases to be a defence if the claimant - for once not the carrier -
can establish negligence of carrier, servants or agents not only in respect of the outbreak of the fire but also in
respect of 'measures that could reasonably be required to put out the fire and avoid or mitigate its consequences'.

Live animals are now included in the 'goods' definition, but the carrier is protected against 'special risks inherent in
that kind of carriage' (Arts 5(5) and 1(5)). Where, in breach of agreement, cargo is carried on deck, consequences
resulting solely from that fact, for instance rusting, must be compensated for. To be valid against a consignee
without notice an agreement to carry on deck requires mention in the bill of lading (Art.9).

The carrier escapes liability if loss, damage or delay is caused by measures to save life, or by reasonable measures to
save property, at sea (Art. 5(6)). Nor is the carrier liable for that part of damage caused by a third party, say, by
collision for which both are to blame, if he can prove what proportion of the damage is attributable to the third party
(Art. 5(7)).

NB Other changes Art 19: The notice of apparent damage which the consignee must give may also be given
on the day following delivery, and the period of notice of non-apparent damage is extended from three to fifteen
days

Art 20: The time-bar for action or arbitration request is extended from one year
to two years

Art 21: Jurisdiction clauses are outlawed to all intents and purposes, claimants
having a choice between courts in the country where the defendant has his principal place of business or his habitual
residence, where port of loading or discharge were situated, or where the parties had agreed that disputes should be
settled

Art 22: Interim proceedings are allowed in the court of a country where the
defendant ship or a sister ship has been arrested.

Art 22(2): Where a charterparty contains an arbitration clause, to be binding on

a consignee without notice, this must be mentioned as 'a special annotation' in the bill of lading.
The coming into force of this convention will bring about important changes for the shipping industry and in the
ratio of hull and cargo insurance, a problem commented on by Lord Diplock, during the second reading of the
Carriage of Goods by Sea Act 1971. Probably much against its sponsors' intention the uniformity of the law (Art. 3)
may also be disturbed. Other shipping conventions took care that they should come into force not only when a
certain number of states had ratified, but when those ratifying accounted for a big percentage of the world's tonnage.
The second requirement is not contained in Art. 30, which provides that twenty ratifications - no matter how small
the state or its fleet - shall lead to the convention coming into force. It is now clear that several important maritime
nations have held back, retaining the Hague Rules. Including the greatest one of all. Us.

THE TROUBLE WITH THIRD PARTIES…. THE CASE OF THE HIMALAYA

1 Take the basic principles of law

CONSIDER THE BASIC PRINCIPLES OF CONTRACT:

Ie The Parties….

CONSIDER THE BASIC PRINCIPLES OF NEGLIGENCE IN TORT:

Ie Who owes the Duty of Care?

2 Now apply a problem scenario

Adler v Dickson [1954] 2 Lloyd’s Rep. 267, [1955] 1 Q.B. 158 (C.A.).

Mrs. Adler was a passenger on the P & O liner Himalaya, when she was injured by a gangway negligently lashed,
which fell throwing her 16 feet to the dockside.

Her ticket contained a non-responsibility clause exempting the carrier, so Mrs. Adler took suit against the Master
(Mr. Dickson) and the bo’sun.

The Court of Appeal held that in the carriage of passengers as well as in the carriage of goods the law permitted a
carrier to stipulate not only for himself, but also for those whom he engaged to carry out the contract, and such
stipulation might be express or implied. In the case of Captain Dickson, however, the Court held that the passenger
ticket did not expressly or by implication benefit servants or agents and thus Dickson could not take advantage of
the exception clause.

3 What problem must be cured?

Servant? }
Agent? }
Sub-contractor? }
Independent contractor? } will demand protection

Following Adler v Dickson, specially drafted ‘Himalaya’ clauses benefiting stevedores were drafted into Bills of
Lading.

“It is hereby expressly agreed that no servant or agent of the carrier (including every independent contractor from
time to time employed by the carrier) shall in any circumstances whatsoever be under any liability whatsoever to the
shipper, consignee or owner of the goods or to any holder of this Bill of Lading for any loss, damage or delay of
whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in
the course of or in connection with his employment and, without prejudice to the generality of the foregoing
provisions of this clause, every exemption, limitation, condition and liberty herein contained and every right,
exemption from liability, defence and immunity of whatsoever nature applicable to the carrier or to which the carrier
is entitled hereunder shall also be available and shall extend to protect every such servant or agent of the carrier
acting as aforesaid and for the purpose of all the foregoing provisions of this clause the carrier is or shall be deemed
to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be his servants or
agents from time to time (including independent contractors as aforesaid) and all such persons shall to this extent be
or be deemed to be parties to the contract in or evidenced by this Bill of Lading.”

4 So who should have the protection of the Bill of Lading provisions?

Servant? }
Agent? }
Sub-contractor? }
Independent contractor? }

Consider:

The benefit to commerce of allowing stevedores and terminal operators to limit or extinguish their liability?

But:

In the commercial world it is preferable for persons who cause damage to cargo to be held responsible for that
damage. Otherwise they will continue to be negligent and will do nothing to alter their practices.

It is a fundamental principle of good business practice and of efficient, fair and low-cost insurance that persons who
are responsible for losses should be held accountable, in some way, for those losses.

For example, theft and pilferage continued in epidemic proportions in the Port of Montreal until finally stevedores
and terminal operators were held responsible for negligence by the Quebec courts. Thereafter, losses were
considerably reduced, insurance premiums of shippers and consignees as well as stevedores and terminal operators
were reduced and the port experienced a surge in traffic. See O’Connor J. in The Federal Schelde [1978] 1 Lloyd’s
Rep. 285 at pp. 287-288 (Qué. Supr. Ct.); Walsh J. in The Tarantel (Circle Sales & Import Ltd. v. The Tarantel)
[1978] 1 F.C. 269 at pp. 283 and 295 (Fed. C. Can.); Marceau J. in Marubeni America Corp. v. Mitsui O.S.K. Lines
Ltd. & I.T.O. [1979] 2 F.C. 283 at p. 289 (Fed. C. Can.)

5 Conclusion: The need for change?

The basic problem is to find a way to permit third parties who are neither agents nor servants to limit their liability;
specifically, to find a way to allow stevedores and terminal operators, whom the carrier declares are not his agents or
servants but independent contractors, nevertheless to benefit under the contract of carriage.