Convention May Up Terminal’s Liability

A new United Nations convention on carriage contracts (“Rotterdam Rules”) will impact the liability of marine terminal operators when it comes into force, according to TT Club.

The UNCITRAL “Draft convention on contracts for the international carriage of goods wholly or partly by sea”, now known as the Rotterdam Rules, has been submitted on 20 October 2008 to the International Legal Committee of the United Nations General Assembly. It is near certain that the Rotterdam Rules will be approved by the United Nations. However, a signing ceremony is scheduled for September 2009, and the Rotterdam Rules would enter into force one year after signature by the 20th United Nations Member State.

Application of the Rotterdam Rules would extend to any operator defined as a “Maritime Performing Party”, which includes stevedoring companies and cargo terminals at sea ports. This means that, if certain conditions are met, Maritime Performing Parties have the same obligations and liabilities as carriers (but would also be entitled to the carriers’ defences and limitations). Inland carriers are only affected if they operate exclusively within port areas.

The TT Club points out that terminal operators are currently not subject to any mandatory international convention. As a result many marine terminal operators are presently able to limit their liabilities, on the basis of incorporation of either of bill of lading terms or other trading conditions, to less than 875 SDR (Special Drawing Rights) per package or 3 SDR per kilogram, which is the level of liability the Draft convention would impose. The proposal from UNCITRAL would curtail the terminal operators’ freedom. Conversely, in some jurisdictions it may currently not be possible for terminal operators to take advantage of the carriage contract, other trading conditions or even legislation to avoid or limit liability. If such a jurisdiction ratifies or implements this draft convention, the terminal operators’ position would become more certain and probably more contained.

TT Club is encouraging its members and other terminal operators to take heed of the situation and monitor developments. The Club intends to provide more detailed guidance on this forthcoming convention in the coming months.

Peter Stöckli, Legal Counsel for the TT Club said, “We believe the changes in liability proposed by the draft convention deserve specific consideration by terminal operators.” At the same time, the Club has been reviewing and updating its booklet on the carriage conventions and their operation in international trade; it is anticipated that this will be published shortly.

The TT Club is an international transport and logistics industry's provider of insurance and related risk management services. Established in 1968, the Club's membership comprises ship operators, ports and terminals, road, rail and airfreight operators, logistics companies and container lessors.

(www.ttclub.com)