U.S. Signs New Convention on Contracts for International Carriage of Goods
September 28, 2009
World Trade\Interactive
The U.S. joined 14 other countries Sept. 23 in signing on to a new international agreement that will drastically change the rights and obligations of those involved in the maritime carriage of goods. The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, also known as the Rotterdam Rules, aims to create a contemporary and uniform law reflecting modern container transportation practices. Benefits of the convention are expected to include an overall reduction in transaction costs, increased predictability when problems are encountered and greater commercial confidence when doing business internationally.
The Rotterdam Rules include a number of features that differ from the increasingly outdated framework of international laws on cargo transportation liability, which include the Hague Rules of 1924, the Hague-Visby Rules of 1968 and the Hamburg Rules of 1978. For example, the convention provides for door-to-door transportation contracts covering not only carriage from the port of loading to the port of unloading, as provided under current rules, but also intermodal transportation from the factory all the way to the customer’s warehouse. The convention also significantly increases the limits on carrier liability for cargo loss or damage, which will be pegged to fluctuating special drawing rights set through the International Monetary Fund (currently, approximately $1,400 per package or $5.60 per kilogram, whichever is greater). In addition, the convention encourages the use of electronic transportation documents by allowing signatories to accept such documents in lieu of traditional paper documents and proposing to replace the bill of lading with a “negotiable transport document.”
The convention will not come into force until it has been ratified by 20 countries. In the U.S., the Senate will have to approve the agreement. Once that is accomplished, amendments to the primary U.S. maritime regulatory law, the Carriage of Goods by Sea Act, which was enacted in 1936, will be needed to harmonize U.S. law with the agreement’s provisions.
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