John Habergham, Myton Law, Hull U.K.

The Dutch Government has incorporated the ‘Rotterdam Rules’ into its civil code, a move seen as an attempt to reignite interest in an internationally accepted code for the multimodal carriage of goods.  John Habergham of shipping, rail and logistics law firm Myton Law asks “what this could mean for UK forwarders?”

The Rotterdam Rules have once again been championed by the Dutch who passed them into legislation last summer (2018).  For the Rules to be adopted as an international convention 20 countries must ratify them, including crucially the US, which back in 2008 supported the idea, but has not been so enthusiastic since.  Could the Dutch decision be the trigger for more countries to follow suit?

Certainly there is a case for an international convention.  The two major 20th Century revolutions in the carriage of goods – containerisation and electronic communications, neither addressed effectively by the current patchwork of regimes, were catalysts for the development of the Rotterdam Rules.  Now, we have an additional driver for change – the potential role of drones in the multimodal mix.

Usually associated with flight, a drone is any autonomous vehicle, for example, driverless cars or lorries and pilotless vessels on water.  One estimate suggests there could be 76,000 drones in operation in the UK by 2030 in what PWC* predicts could become a £42 million business.  Drones are being experimented with by the likes of Amazon to drive down the cost of the ‘final mile’, but, drones are expected to become larger and capable of carrying heavier payloads, so present opportunities for forwarders too.  Yet, currently, it is not clear what legal regime would apply to the carriage of goods by drone.

Despite the formal title, the ‘Convention on Contracts for International Carriage of Goods Wholly or Partly by Sea’, the Rotterdam Rules could be the answer.  If adopted internationally the Rules could replace existing laws to cover multimodal deliveries combining not just legs by sea, road, rail and air, but also by drone.

They would mean operators would no longer be able to rely on the Hague, Hague Visby, Hamburg Rules etc and, though there is much in the Rules which will be familiar, they would bring important changes for carriers.

Broadly speaking, the Rules would increase the carrier’s limits of liability and the carrier would become liable for loss or damage caused by delay.  The carrier’s duty to exercise due diligence to ensure a vessel is seaworthy would be extended throughout a voyage – the defence of nautical fault or ‘error of navigation’ would go.

The Rules also define the obligations upon the parties with regard to delivery of the goods.  Very briefly, they define who would be able to give instructions about delivery of goods; who the carrier should look to for alternative instructions in identifying who is a proper party to receive the goods; and what should happen to the goods if they remain undelivered.  They also deal with the transfer of rights under a transport document.  Similar to CMR, the carrier would be responsible for any breach of its obligations committed by a party the carrier employs to fulfil the contract.

When it comes to choice of law and jurisdiction the Rules would introduce far more cargo friendly provisions.  The days of your typical bill of lading containing a London arbitration/English law clause would be consigned to history.

It would be possible to contract out of the Rules in the case of a volume contract, but the circumstances in which contracting out is allowed is narrowly proscribed.

There is a view that Rotterdam Rules would be too complex and reach too far, going beyond a convention for multimodal movement of goods, which perhaps explains why states have been hesitant to adopt them.  Nevertheless, the case for an international convention remains strong and, as a legal regime will need to be found for the carriage of goods by drone, perhaps now it is stronger than ever.

*‘Assessing the wider economic impact of the growth in commercial drone use’ by Elaine Whyte, Director, Technology and Investments and UK Drones Leader, PWC, September 2018.