Bill of Lading Developing Trends (1)

7/29/2019 Bill of Lading Developing Trends (1)

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DEVELOPING TRENDSINTHE

BILLOF LADINGDinesh Gautama


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DEVELOPING TRENDS

From Port to Port to Door to Door

From gold value to SDRs

From Hague Rules to Rotterdam Rules

UCP 600


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FROMPORTTO PORT TODOORTO DOOR

In view of extensive containerization, cargo moves

from factory to shop, or from warehouse to

warehouse.

All types of containers are available to suit the

cargo

All items of logistics packing, labeling, stuffing,

transporting, are all integrated.

Reverse logistics is also attended.


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FROMGOLDVALUE TOSDRS

A carrier could Limit his Liability as follows:

Under Hague Rules

Pounds 100 per package or unit

(Pounds Sterling of gold value) Under Hague Visby Rules

10000 francs Poincare (gold francs) per package

or 30 francs Poincare per kg of gross weight.

Under Hamburg Rules

835 SDRs per package or 2.5 SDRs per kg.


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FRANC POINCARE

Franc Poincare is defined as 65.5 milligrams of

gold of finesse 900. It was a unit of account that

was used for the international regulations on the

Limitation of Liability.

It was nearly equal to a French franc during the

1900s.

It was named after Raymond Poincare, who served

as President of France from 1913 to 1920.


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SDR

SDR stands for Special Drawing Rights

It was created by IMF in 1969

It is an international reserve asset

It is neither a currency nor a claim on IMF. It is a potential claim on the freely-usable

currencies of the IMF members.

Holders of SDRs can get these currencies in

exchange for their SDRs.


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FROM HAGUE RULESTO ROTTERDAM RULES

The transportation industry has, over the years,

been governed by a series of conventions,

including the Hague Rules, the Visby Protocol and

the Hamburg Rules (maritime), the Warsaw

Convention and its successor the MontrealConvention (air), the CMR Convention (road), the

CMNI Convention (inland waterways) and the

COTIF Convention (rail), among others.


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FROM HAGUE RULESTO ROTTERDAM RULES

Hague Rules

International Convention for the Unification of

Certain Rules of Law relating to Bills of Lading

(Brussels, 25 August 1924)

It has 16 Articles

The Emperor of India at that time, authorized its

plenipotentiary to sign it.

10 Countries apply Hague Rules (20.2.2004)


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HAGUE VISBY RULES

These are the Hague Rules as amended by the

Brussels Protocol in 1968.

They were signed in Visby.

They were just amendments which amended thefirst ten Articles only.

10 countries apply Hague Visby Rules.


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HAMBURG RULES

United Nations Convention on the Carriage of

Goods by Sea, 1978

( also called Hamburg Rules).

It is signed by 21 countries. The countries are Botswana, Lesotho, Lebanon,

Burkino Faso, Nigeria, malawi, Morocco,

Barabados, Kenya, Senegal, etc.

It did not take off well.


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ROTTERDAM RULES

They are called United Nations Convention on

Contracts for the International Carriage of Goods

Wholly or Partly by Sea.

They opened for signature on Wednesday Sept 23,

2009 in Rotterdam

15 Countries, including USA signed it on the first

day.


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ROTTERDAM RULES

Till 19th Nov 2009 1800 hrs IST, 21 countries had

signed it. It will come into force in November 2010.

Countries are USA, Spain, Switzerland, Greece,

Netherlands, Denmark, Norway, France, Poland,

Armenia, Cameroon, Congo, Gabon, Ghana,

Guinea, Madagascar, Mali, Niger, Togo, Nigeria and

Senegal.


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ROTTERDAM RULES

The Rotterdam Rules are the result of inter-

governmental negotiations that took place between

2002 and 2009.

These negotiations took place within the United

Nations Commission for International Trade Law

(UNCITRAL) after the Comit Maritime International

(CMI) had prepared a basic draft for the

Convention.

On 11th December 2008, the General Assembly ofthe United Nations adopted the Rotterdam Rules.


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ABOUT ROTTERDAM RULES

It describes the rights and obligations involved in

the maritime carriage of goods.

It will give a boost to world trade as 80% of world

trade is conducted by sea.

If the same law applies all over the world, this

will facilitate international trade by making its

underlying contracts and documentation more

efficient and clearer.


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ABOUT ROTTERDAM RULES

The Rotterdam Rules are the first rules governing

the carriage of goods by sea and connecting or

previous transport by land.

(This land leg used to have different contracts)

Responsibility and liability during the whole

transport process are clearly demarcated.

The infrastructure for the development of e-

commerce in maritime transport has been put in the

Rotterdam Rules.


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WHY EU SHIPPERSDONTWANTIT?

They say that :

It conflicts with other conventions

present unequal obligations and liabilities between shippersand carriers

present a risk that carriers may significantly reduce their

own limits of liability and obligations under so-calledvolume contracts'

make proving fault harder for the shipper

make it increasingly difficult for shippers to successfullymake a claim for damages

make shipper obligations far more onerous may deter shippers from integrating short-sea shipping into

their door-to-door logistics due to obligations and limits ofliability being worse than under individual modalconventions


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WHYDOES IRU HATEIT?

They dismantle the unity of current laws which

regulate road traffic between Atlantic and Pacific

trade.

Creates inequity between sea-land transport and

land only transport.


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ANDOTHERS?

European Freight Forwarders feel it will add to

supply chain confusion. They say that it is too

complicated and in ship-owners favour.

ICC and World Shipping Council want it.

Ship-owners have broadly favoured it.

DG Shipping (India) has asked for comments in a

letter addressed to Indian Ship-owners.


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WHATISDIFFERENT?

The Rotterdam Rules use descriptions such as "volumecontract" and "maritime performing party" which will need tobe clarified.

The Rules seek to establish lines of liability for carriage fromdoor to door. The emphasis in the Hague Visby Rules wasfrom port to port from the point of loading to the point of

discharge. The Rotterdam Rules seek to push responsibilityfor a wider carriage onto the carrier who would be responsiblefor the goods from the point of "receipt" until the point of"delivery". It is not clear whether this would have an impact onother conventions like CMR which seek to deal with the landbased side of the transportation regime.

In addition, the number of defenses available to a carrier fromdoor to door is intended to be reduced. A carrier's ability torely upon the negligent act of an employee due to a navigationerror will be cut down.


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WHATISDIFFERENT?

The liability compensation levels in the new

convention have been raised. Under the Hague

Visby Regime, the maximum liability for a carrier is

limited to two special drawing rights (SDR's) per kilo

or 66 SDR's per package, whichever is deemed tobe the higher of the two. The Hamburg Rules

attempted to increase those levels. Under the new

convention, the carrier's liability is now limited to

three SDR's per kilo and/or 875 SDR's perpackage.

The time limit for initiating legal proceedings for

claim has been extended from one to two years.


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WHATISDIFFERENT?

There is a rather curious set of clauses within the

Rotterdam Rules which basically says that where

there are "volume contracts" parties are actually

free to contract out of most of the liability regime

detailed above as long as the contract provides a"prominent statement that it delegates from this

convention". Carriers are not allowed to contract out

of their obligations to exercise due diligence to

make and keep the ship seaworthy or look after thecrew and equip the ship accordingly. The

ambit/extent of the "contracting out" is unclear.


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WHATISDIFFERENT?

Shippers are clearly concerned that the "get out

clauses" in relation to volume contracts will provide

owners with an opportunity to contract out of the

new rules. For their part, owners and operators are

aware that the contractual obligations provided bythe new convention goes wider than the current

regimes but that there is an opportunity to narrow

their effect.


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UCP 600

The Uniform Customs and Practices (UCP) forDocumentary Credits were first issued in 1933 by theInternational Chamber of Commerce. The purpose wasto overcome conflicting national laws on letters of creditas well as to bring about uniformity in banking practices.

The rules have been revised many times. Recent revision, UCP 600, took more than three years

of consultation and the Consulting Group, whichcomprised more than 40 representatives from 26countries.

During its 24-25 October 2006 meeting, the ICCCommission on Banking Technique and Practiceapproved the new UCP 600 rules for documentarycredits.


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UCP 600

"UCP" is the common reference for the Uniform

Customs and Practice for Documentary Credits.

The objective of the UCP is to create a set of

contractual rules that would establish uniformity to

conflicting national regulations

Effective from July 1, 2007


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DIFFERENCES - UCP 600AND UCP 500

A reduction in the number of articles from 49 to 39

New articles on "Definitions" and "Interpretations"

providing more clarity and precision in the rules

A definitive description of negotiation as "purchase" of

drafts of documents

The replacement of the phrase "reasonable time" for

acceptance or refusal of documents by a maximum

period of five banking days

New provisions allow for the discounting of deferredpayment credits

Banks can now accept an insurance document that

contains reference to any exclusion clause.


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SOMEIMPORTANTCHANGESANDIMPLICATIONS

FORBANKSINHANDLING LCS

UCP 600 does not apply by default to letters of

credit issued after July 1st 2007. A statement needs

to be incorporated into the credit (LC), and

preferably also into the sales contract that

expressly states it is subject to these rules. Article 1of UCP 600 also leaves open the possibility for

either party to exclude the application of any part of

UCP 600 as long as the exclusion is stipulated in

the credit.


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THANKYOU

Documents

Bill of Lading Developing Trends (1)