The Hague Visby Rules Articles III and IV

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The onus of proof in A cargo claim arts iii
iv of the hague-visby rules and the uncitral
draft convention

• The Hon Justice Steven Rares
• Federal Court of Australia
• Presented at the MIG/MLAANZ
• Lecture Series, 23 July 2008

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Overview

• The Hague and Hague-Visby Rules history
• Onus of proof in cargo claims - Arts III and IV
  of the Hague-Visby Rules
• UNCITRAL Working Group III (Transport Law)
• Draft Convention on Contracts for the
  International Carriage of Goods Wholly or Partly
  by Sea
• Aspects of the possible operation of the draft
  convention

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Hague-visby rules history

• International Convention for the Unification of
  Certain Rules of Law Relating to Bills of Lading,
  1924 (the Hague Rules)
• Protocol to Amend the International Convention
  for the Unification of Certain Rules of Law
  Relating to Bills of Lading, 1968 (the
  Hague-Visby Rules)
• Carriage of Goods by Sea Act 1991 (Cth)
• Harter Act 1893 (US)
• ? Demand for international uniformity in
  shipowners liability

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Draft Convention on Contracts for the
International Carriage of Goods Wholly or Partly
by Sea

• July 2008 - 41st session of UNCITRAL approves
  final text of Draft Convention on Contracts for
  the International Carriage of Goods Wholly or
  Partly by Sea (the Rotterdam Rules)
• Draft convention approved earlier this month
• To replace the various rules Hague Rules,
  Hague-Visby Rules, Hamburg Rules and the
  Multimodal Convention
• Sufficient safeguards or danger of a return to
  a pre-Hague Rules free-for-all?

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Onus of proof arts III iv

• Distinction in Australia between onus of proof
  and order of proof in cargo claims
• Made clear in unanimous HC decision in Gamlen
  Chemical (1980) 147 CLR 142
• Doubt cast by Gaudron, Gummow and Hayne JJ in
  Great China (The Bunga Seroja) (1998) 196 CLR 161
• Ankergracht (2007) 160 FCR 342 approach in
  order for a carrier to rely on the exceptions in
  Art IV r 2 it must not be negligent or at fault,
  ie not in breach of Art III rules 1 or 2
• Allsop Js observation in Hilditch 2007 FCA 752
  difficulties for plaintiffs in knowing what to
  plead

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Issues raised by arts III IV

• Art III r 1 obligation on carrier to exercise
  due diligence before and at beginning of voyage
• Derogates from common laws requirement of
  absolute obligation on shipowner to make vessel
  seaworthy before voyage
• Art III r 2 obligations before and during
  voyage on carrier subject to exceptions from
  liability provided in Art IV
• Art IV r 1 excludes carriers liability for
  unseaworthiness unless carrier failed to exercise
  due diligence at or before commencement of voyage
  burden of proof is on the carrier or other
  person claiming exemption
• Art IV r 2 list of exceptions to carriers
  liability

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The ankergracht case (2007) 160 FCR 342

• Factual background
• Steel coils rust on Korea-Australia voyage in
  northern winter moisture in holds
• Should carrier have fitted dehumidifiers to make
  vessel cargoworthy?
• Did carriers properly care for steel on voyage?
• Findings of trial judge carriers had filed to
  make vessels seaworthy at time of loading lack
  of due diligence

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The ankergracht case (2007) 160 FCR 342

• Appeal to Full Court unanimous finding
  upholding trial judges ruling that carriers had
  failed to take care majority overturned trial
  judges decision on lack of due diligence
• Ryan Dowsett JJ
• Insufficient evidence to justify finding of
  unseaworthiness no evidence of practice of
  fitting dehumidifiers question of due diligence
  did not arise
• Failure to remove moisture was a want of care,
  not want of due diligence
• Rares J
• The court should determine whether the practice
  was sufficient to determine question of
  seaworthiness and due diligence
• The question of whether a practice is adequate is
  a question of law to be determined by the courts
  Rogers v Whitaker (1992) 175 CLR 479

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SHIFTING ONUSES

• Lloyd J in Hellenic Dolphin 1978 2 Lloyds Rep
  336
• Cargo owner raises prima facie case by showing
  that cargo was damaged on arrival
• Ship owner meets prima facie case by relying on
  exception in Art IV r 2
• Cargo owner seeks to displace exception by
  proving
• vessel unseaworthy at start of voyage
• unseaworthiness caused of loss

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SHIFTING ONUSES

• Hague-Visby rules do not explicitly identify who
  has onus of proving unseaworthiness
• At common law, it falls on those who allege it
  Lindsay v Klein (The Tatjana) 1911 AC 194
• The standard of seaworthiness or fitness Great
  China (1998) 196 CLR 161
• Auld LJ in The Kapitan Sakharov 2000 2 Lloyds
  Rep 225 reasonably fit to encounter ordinary
  incidents of the voyage objective test
• Art III r 1 also imposes obligation on carriers
  to make ship cargoworthy

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Onus of proof and care of cargo

• Art III r 2 Subject to the provisions of
  Article IV, the carrier shall properly and
  carefully load, handle, stow, carry, keep, care
  for and discharge the goods carried.
• Properly means
• in accordance with a sound system and that may
  mean more than carrying the goods carefully
  Albacora SRL v Westcott Laurance Line Ltd
  1966 2 Lloyds Rep 53 per Lord Reid
• Depends on the conditions which it is anticipated
  the vessel will meet Great China (1998) 196 CLR
  161

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Onus of proof and care of cargo

• If goods are shipped in apparent good condition
  and lost or damaged when discharged ? prima facie
  breach of Art III r 2
• Carrier bears onus of proving defence under Art
  IV r 1
• Carrier bears onus of bringing cause of damage
  within an exception in Art IV r 2
• The question of concurrent causes Gamlen
  Chemical (1980) 147 CLR 142 treat the two
  concurrent causes as inseparable, and therefore
  joint
• The carrier will only escape liability if it can
  prove that the loss or damage was caused by an
  excepted peril alone see e.g. Hilditch (No 2)
  (2007) 245 ALR 125
• If unseaworthiness is the cause of the loss, and
  the carrier is in breach of its obligation to
  exercise due diligence to make the ship seaworthy
  as required by Art III r 1, it cannot rely on an
  exception under Art IV

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Principles of proof

• Professor William Tetleys four general
  principles of proof (Marine Cargo Claims (4th
  ed))
• The carrier is prima facie liable for loss/damage
  to cargo received in good order and out-turned in
  bad order
• The parties are required to make proof of
  whatever facts are available
• Onus of proof does not mean proving all
  circumstances to point of absurdity, but means
  making proof to a reasonable degree
• Once a party conceals, modifies or destroys
  evidence, other evidence of that party is suspect

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Order of proof

• Order of proof sequence in which
  facts/allegations are proved by one party or the
  other during trial
• The traditional order of proof
• Onus on SHIPPER to prove
• Contract of carriage
• Goods shipped in apparent good order condition
• Goods missing or delivered damaged on arrival
• Prima facie case of carriers breach of Art III r
  2
• Onus shifts to CARRIER to rebut shippers prima
  facie case by establishing that damage/loss
  caused by Art IV r 2 exception
• If an exception established, onus shifts to
  SHIPPER who may displace carriers defence by
• Proving carrier failed to satisfy requirements of
  Art III r 2
• Proving ship was unseaworthy at start of voyage,
  and that caused the damage/loss Arts III r 1
  IV r 1

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The Great china case
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The Great china case(1998) 196 CLR 161

• Obiter comments by Gaudron, Gummow and Hayne JJ
  suggest a different Australian position
• Trial judge and NSW Court of Appeal held that
  damages resulted from perils of the sea
• McHugh J said that defence of perils of the sea
  did not apply because the cargo owners failed to
  prove breach of Art III r 2
• Kirby and Callinan JJ suggested that the
  traditional onus of proof would apply
• Gaudron, Gummow and Hayne JJ said that nothing
  turned on the allocation of the burden of proof

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The Great china case

• Obiter remarks of Gaudron, Gummow and Hayne JJ
• Davies Dickey (Shipping Law) have described
  their Honours views as radical so far as they
  depart from the onus and order identified in
  Gamlen Chemical
• Their views are inconsistent with the travaux
  préparatories for the Hague Rules which suggest
  that the carrier should prove which specific
  exception in Art IV caused the loss/damage
• The practical effect of their Honours approach
  may be that, in circumstances where the cause of
  loss/damage is uncertain, the carrier may escape
  liability simply by demonstrating that due
  diligence care were exercised, without having
  to prove how the cargo became lost/damaged.

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draft convention
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Recent developments the draft convention

• Draft Arts 14-19 significantly alter the regime
  in Arts III IV of the Hague-Visby Rules
• Draft Art 18 deals with carriers liability
  which party bears the onus of proof

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Recent developments the draft convention

• Australian Governments observation
• Australia is of the opinion that the current
  text is so different from current international
  law and so complicated that the potential for
  lengthy and costly litigation is high. As this
  litigation will be domestic, there remains the
  potential for the uniformity of the international
  law to be undermined by having provisions
  interpreted differently in different countries.

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the draft convention

• Draft Art 18
• Claimant must prove that loss etc (or
  event/circumstance that caused/contributed to the
  loss etc) took place during period of carriers
  responsibility draft Art 18 r 1
• Carrier relieved of responsibility if it proves
  that the (or a) cause of the loss etc was not its
  fault or that of any servant or agent, including
  master, crew or any performing party draft
  Art 18 r 2
• Carrier can also prove exemption draft Art 18 r
  3
• list of exemptions similar to those in Art IV r 2
  of Hague-Visby Rules
• but draft Art 18 r 3 expressly provides that the
  carrier bears the onus of proving that one of the
  circumstances caused/contributed to loss etc
• draft 18 r 3 omits the nautical fault exception
  now the carrier is to be liable for the
  acts/omissions of the master, crew or any
  performing party

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the draft convention

• Despite carrier establishing exemption under r 3,
  carrier will still be liable if claimant proves
  that carrier (or person for whom it is
  responsible) caused/contributed to
  event/circumstance on which carrier relies
  draft Art 18 r 4
• ? Although carrier has proved it is not at fault
  (r 3), claimant can prove that carrier is at
  fault (r 4)!
• If carrier succeeds in establishing exception (r
  3), onus shifts back to cargo claimant to prove
  that loss etc was (or was probably) caused by
  unseaworthiness etc draft Art 18 r 5(a)
• If unseaworthiness etc proved, draft Art 18 r
  5(b) shifts onus back onto carrier who is liable
  unless it proves
• unseaworthiness etc did not cause loss etc
• it complied with its obligation to exercise due
  diligence this extends to an obligation to keep
  the ship seaworthy etc during voyage draft Art
  15

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the draft convention

• Draft Art 18 r 5 compared with Art IV r 1
• Similarities
• Both deal with liability of carrier where damage
  arises or results from unseaworthiness of vessel
• Both require carrier to prove that it exercised
  due diligence or that damage was not caused by
  unseaworthiness etc

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the draft convention

• Draft Art 18 r 5 compared with Art IV r 1
• Differences
• Art IV r 1 is framed as a negative proposition
  carrier is not liable except in circumstances
  specified
• Neither the carrier nor the ship shall be
  liable for the loss or damage arising or
  resulting from unseaworthiness unless caused by
  want of due diligence on the carrier to make the
  ship seaworthy
• Draft Art 18 r 5 is framed as a positive
  proposition claimant must prove carrier is
  liable
• The carrier is also liable for all or part of
  the loss, damage, or delay if (a) The claimant
  proves that the loss, damage, or delay was or was
  probably caused by or contributed to by (i) the
  unseaworthiness of the ship

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the draft convention

• Draft Art 18 r 5 compared with Art IV r 1
• Australian Government expressed concerns
  regarding the alteration of the burden of proof.
  Australia argued that
• the carrier is in a better position than the
  shipper to know what happened while the goods
  were in the carriers custody
• the shipper would have difficulty proving
  unseaworthiness etc

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the draft convention

• Other Draft Articles
• Draft Art 14 r 1 restates carriers obligations
  in Art III r 2 in familiar terms
• Draft Art 15 broadens significantly Art III r 1
  expansion of obligation of due diligence must
  keep ship seaworthy etc during voyage
• Draft Art 19 introduces liability of carrier
  for other persons

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the draft convention

• Other Draft Articles
• The exception in Art IV r 2(q) (damage arising
  without fault, or privity of carrier) has been
  made a distinct exception under draft Art 18 r 2
• Draft Art 18 rr 2, 3, 6 affect position under
  amended Hague Rules relating to carriers
  liability where there are concurrent causes
• Rules 2 3 relieve carrier of all/part liability
  if it proves cause of loss not its fault, or
  stipulated event/circumstance caused/contributed
  to loss etc
• ? rr 2 3 reverse the interpretation in Gamlen
  Chemical and Hilditch where carrier was liable if
  there were concurrent causes but it only
  established one exception
• ? r 3 reverses the position stated by Staughton
  LJ in The Antigoni 1991 1 Lloyds Rep 209 that
  a shipowner who seeks to rely on Art IV r 1 need
  not establish an exception under Art IV r 2

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The end