European Shippers Council Responds on Rotterdam Rules

In spite of some beneficial improvements made to the final draft of the Convention, the overall opinion of the European Shippers Council (ESC) has not altered with regard to the inherent dangers of the Rotterdam Rules that exist for European importers and exporters, said the group. The ESC was responding to the National Industrial Transportation League (NITL). The US group, said ESC, had published a document in early June that was critical of the ESC position on the rules governing cargo liability.

The critique from the NITL, which received support from the European Community Shipowners' Association (ECSA), has served to make ESC and others review their assessments of the implications of the Rotterdam Rules, said the ESC. “This has been a positive period of review and promotion of awareness of what is undoubtedly the most complex international convention on liability and conditions of carriage there has ever been: academics, lawyers, members states and industry representatives are struggling to understand it and agree on what it means and will mean if this international convention were to be ratified,” continued the ESC in a statement.

Recently CLECAT, the European Freight Forwarders Association, has issued an equally negative view on the Rotterdam Rules as have a number of leading legal commentators, said ESC. Even a number of European carriers have expressed a negative opinion. Also many European Member States have their final view pending because of considerations on the downsides of the Rules in case they become reality. The divergence of views became very clear at the ICC [convention] where, contrary to assertions made by a number of critics of ESC, ICC merely raised various points regarding the Rotterdam Rules but has taken no formal policy position due to a lack of consensus by industry stakeholders.

ESC would want to refute the suggestion that it is isolated in its criticism on the Rotterdam Rules, the group continued. Nicolette van der Jagt, ESC's Secretary General, said: "We have at all times in this debate maintained a willingness to review our assessment and amend our conclusions in light of any new information, persuasive argument and expert guidance. Whilst we have sought to clarify a number of issues, our conclusions continue to place us in general opposition to the final draft of the convention."

She continued, "One of our biggest concerns remains for those shippers that choose or are persuaded to opt out from the minimum liability and obligations placed on the different parties under the Rotterdam Rules through ‘volume contracts'. But equally we are concerned about the legal uncertainty of when the Rules would apply, the other ambiguities in the text which would lead to increased litigation, the difficulty of avoiding conflict with other unimodal Conventions, the changes to the burden of proof provisions relative to other Conventions, the difficulty of securing insurance against the increased shipper liabilities and the serious issues for international trade raised by the apparent reductions in the carrier liability for misdelivery of goods and opportunities to qualify information in negotiable transport documents.”

The ESC view on the convention is available at: (View of the European Shippers’ Council on the Convention on Contracts for the International Carrying of Goods Wholly or Partly by Sea also known as the ‘Rotterdam Rules’ March 2009)

"We now see that other interested parties such as the European Union have begun to appreciate that, even setting aside any shipper misgivings about impact on buyers and sellers, the proposed Convention does not fully address multimodal issues. The wisdom of signing and ratifying the Convention is being questioned, particularly as it could prevent worldwide multimodal solutions from being developed for many years. Because of that, the Rotterdam Rules could accelerate rather than restrain regionalization in this area as they appear to contain loopholes as to their mandatory application," said ESC's van der Jagt.

Ms. van der Jagt continued, "Since our involvement in the debate in 2005 a number of improvements have been made to the draft, thanks in large part to ESC's constructive engagement and re-drafting suggestions. It would be exaggerated for anyone to suggest that European shippers have not been involved in the debate. We concede that it would have been preferable to have been more fully engaged earlier in the debate; that may have prevented the debate from being somewhat railroaded by other interests in the first years of development. Nevertheless, we are happy that we were in a position to influence some parts of the text and improve on it, although it still remains overly complex and long."

When assessing and commenting on the various drafts of the Convention and ultimately the final Rules, ESC's review focused on the following key areas:

Will it create international uniformity in the carriage of goods?

Does it achieve a fair balance between carrier and shipper interests?

Does it enable freedom of contract for large players while still protecting those who have little or no bargaining power?

Will it facilitate multimodal, door-to-door freight movement, particularly within Europe?

Does it maintain present safeguards for buyers, sellers, their banks and insurers in relation to delivery of goods and the value and status of negotiable transport documents?

Does it accommodate the evolution towards e-freight in trade, commerce, transport and logistics management?

With the exception of e-commerce, ESC does not find a convincing case made out for ratification of the Rotterdam Rules. E-commerce could easily be facilitated by simple protocols to the existing Hague Visby and Hamburg Rules, as is being done in the case of the CMR carriage by road Convention.

ESC continues to believe that the Convention in its current guise should not be signed or ratified. Should it one day nonetheless be ratified by the 20 states necessary before it can come into force, we would try to help and educate shippers to avoid the pitfalls. We are already willing to work with others in this regard who have shippers' interests at heart, said ESC.

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