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Further copies of this book may be obtained from: Miss Fiona Pellant Thos. R. Miller & Son 14-20 St. Mary Axe London EC3A 8DA C.M.1. Comité Maritime International Colloquium on the Hamburg Rules Chairman : THE LORD DIPLOCK VIENNA 8th-10th January,1979 CONTENTS Introduction The Lord Diplock Page 1 The Practical and Economic Effects of the Hamburg Rules from the point of view of a Shipowner Mr N. McGovern Page 5 The Effect on International Trade of the Implementation of the Hamburg Rules from the point of view of the Shipper Mr R. Schilling Page 15 The Practical and Economic Effects of the Hamburg Rules from the view of a Cargo Underwriter Mr K. Schalling Page 21 Effect of the Hamburg Rules on Shipowners' Liability Insurance Mr C. W. I-I. Goldie Page 24 A Legal Analysis of the Hamburg Rules Sir Michael Mustill Page 29 Report of Group 1 Articles 4, 10 and 11 The Period of Liability including Through Carriage Mr R. Cleton Page 44 Report of Group 2 Articles 5 and 24 Basis of Liability, including problems relating to Salvage and General Average Professor E. Selvig Page 46 Report of Group 3 Articles 6, 8, 9(4) and 26(4) The Limits of Liability and the Loss of the Right to Limit Professor F. Berlingieri Page 48 Report of Group 4 Articles 14,15 and 17 The Contents of the Bill of Lading Reservations and Evidentiary Effect Professor F. J. Cadwallader Page 50 Report of Group 5 Articles 2, 23(iii), 25 and 31 Scope of Application and Co-existence with the Hague and Hague Visby Rules Mr M. J. Shah Page 52 Report of Group 6 Articles 21, 22 and 25(ii) Jurisdiction and Arbitration Dr. W. Muller Page 54 Summing Up The Lord Diplock Page 56 INTRODUCTION THE LORD DIPLOCK President, Ladies and Gentlemen, You may remember that a little over two years ago the CMI held a Seminar at Aix-en- Provence on the apportionment of risk in maritime transport. The topic was dealt with generally, considering such matters as the apportionment of risk between shipowners and cargo owners, between ships in collision, between ship and land installations and of course, particularly in the insurance market between cargo insurance, P & Iinsurance and Hull insurance. We then concentrated on the practical aspects of the apportionment of risks and in so doing considered the following items. What was the most economical way of approach- ing these various kinds of risks so that the total cost which has to be borne can be reduced to the minimum? What was the most economical way of spreading the risk between the various insurance interests? What organisation of the insurance market and methods of spreading the risks would involve least administrative cost? The situation at the time of the Aix-en-Provence Seminar was that the Hague Rules covered most of the world so far as apportionment of risk between shipowners and carrio owners was concerned in respect of voyages covered by bills of lading. The Visby Protocol which is based on the same regime as the Hague Rules was not in force and the Hamburg Rules were still a draft being considered by UNCTAD. Today the position has changed. What confronts those involved in maritime transport is a choice between two regimes for the apportionment of risk between shipowners and cargo owners. One of them, the Hague Visby Rules, is the basis upon which maritime trade has been conducted and the insurance market organised and operated for the last 50 years. Though far from perfect we have long experience of those Rules and know more or less where we stand. The other choice is the Hamburg Rules, new in design, different from the Hague Visby Rules and broadly incompatible with them in two main respects: first, the scope of application of the Hamburg Rules, in time, geographically and the type of contract to which they are to apply; and second, the manner in which risk is apportioned. The task which faces this Colloquium is very different from that which faced the Seminar in Aix-en-Provence. We are here to consider the practical consequences on maritime trade of the adoption of the Hamburg Rules. How are they going to affect shipowners and shippers? How will they affect the organisation of the insurance market throughout the world? What effect are they going to have on documentation, what effect are they going to have upon recourse actions by cargo underwriters and P & Iunderwriters? What are the economic consequences going to be if the Rules are adopted? What are the legal conun- drums which will arise if the new Rules are widely ratified? The question to which I hope we are really going to direct our minds is what is the effect of all this going to be upon the industry overall. Will it increase or reduce costs or is it going to leave things very much the same? This is a practical problem andI hope that throughout this Colloquium we shall be concentrating our minds on what the practical effect is going to be.IfI may use an English expression, "it is no good crying over spilt milk". It is no good looking at the Hamburg Rules and saying: "Well, it would have been better if that particular article had been drafted this way instead of that way. Why didn't they do this, why didn't they do that?" It is no good our discussing the Hamburg Rules on those lines because they are here. We 'cannot alter them, we have got to live with them as they are and not as we might have liked them to be if we had had a bigger say when they were being drafted. We really have in the maritime world a stark choice between two alternatives. One is to accept the Hamburg Rules, to let them replace the Hague Visby Rules and to consider, if that is done, what is the most practical way to organise the affairs of shipowners, cargo owners and various insurance interests to make the Rules work in such a way that, even if they do not reduce the overall costs, they will at least not increase them 1 by any substantial amount. The other choice is to leave the two competing and incompat- ible systems working together. Is that something with which we can live? Suppose we came to the conclusion that the Hamburg Rules would add substantially to the overall cost of maritime transport, a cost which will ultimately be met by the consumer, then would it be possible practically for the two systems to coexist? It may be that thP Hague Visby Rules would be retained by the industrial and maritime nations and the Hamburg Rules adopted by a majority of developing nations. When we consider the question of coexistence it must be remembered that, at any rate for some years, the two systems will have to coexist until governments decide whether or not to ratify the Hamburg Rules. What the decision is going to be I have at this stage no idea. It may well be that at this Colloquium we will not reach a consensus of opinion, but we shall,I hope, at any rate go back more conscious and more understanding of what the practical consequences are going to be of either choice. Now let me tell you very briefly what the plan is to enable you to come to an in- formed opinion.I am sure that it is not going to be an easy task but, at any rate, I hope that the procedure that we have laid down as the basis for reaching conclusions on the practical problems flowing from the two choices facing us will prove helpful. On Day 1you will hear papers given by the following speakers. Mr McGovern will look at the problems from the shipowners' point of view and then Mr Schilling will cover the shippers' attitude. We will then hear the views of the insurers, both cargo and P & I, in the persons of Mr Schalling and Mr Go!die both of whom will concentrate on the practical effects, not the interesting juridical views that one could form about this or that part of the Hamburg Rules. One of the things one wants to bear in mind when listening to them is to consider what effect, if any, the Hamburg Rules will have on the insurance market. Is there going to be a tendency towards insured bills of lading, removing or shifting the balance of the insurance from the cargo insurance market to the liability insurance market? Is there going to be a tendency to restrict liability? Is the market going to remain very much as it is? The day will end with a paper given by Mr Justice Mustill who will deal with some of the legal arguments which are likely to arise out of the more ambiguous provisions in the Rules. These will be considered by you all in your discussion Groups on Day 2. I now propose to go through the Hamburg Rules in a very summary way in order to suggest to you what are the problems which appear to me to be those on which we shall need to concentrate our thoughts. It seems to me that the Hamburg Rules do produce a coherent and consistent legal system. The system may be good or it may be bad, but one wants, I think to look at it as a whole because there is a philosophy that one can discern in it.