Is the proper law of the bill of lading relevant? If so, how is it determined?
The majority of bills of lading or other sea carriage documents will include a choice of law clause selecting whichever law is most comfortable for, or convenient to, the carrier and will frequently also include what is known as a "clause paramount" which is often a cascading clause applying either the Hague, Hague-Visby or other rules as applied compulsorily in various jurisdictions. In Australia, those clauses will have varying levels of effectiveness depending upon the port of shipment and port of destination.
As a starting point, COGSA compulsorily applies the amended Australian version of the Hague Visby Rules (called the amended Hague Rules) to all shipments from a port in Australia to a port outside Australia and invalidates any agreement (or choice of law clause) which purports to preclude or limit that compulsory choice of law (see ss11(1) and 11(2(a)). However, because cargo claims will often be heard by a court in the country of destination, those courts may not be inclined to apply the Australian amended Hague Rules and may opt to apply the original rules by force of their own law and/or may have regard to the choice of law clause in the bill of lading.
Conversely, the Australian amended Hague Rules will apply (again by force of law through COGSA) to shipments from ports outside Australia to a port in Australia unless the contract would otherwise be governed by a different version of the rules (or the Hamburg Rules) by agreement or by law of another Contracting State (or a Contracting State to the Hamburg Rules). In other words if the law of another jurisdiction compulsorily applies another regime in the port of shipment (such as from, say, the United States), then that law will apply if the relevant jurisdiction is a Contracting State or if the bill of lading provides for the application of that law. For example, if a cargo claim is made in relation to a shipment from the United States, an Australian court should apply the unmodified version of the Hague Rules (without the Visby protocol) which applies compulsorily by force of US law which is a Contracting State to the Hague Rules. By way of further example, if the claim relates to a shipment from the United Kingdom, an Australian court should apply the Hague-Visby Rules and not the Australian version of those rules.
No. The parties of the carriage contract of goods by sea can choose the applicable law by agreement. However, in the absence of mutual agreement, the pre-printed governing law at the reverse of the bill of lading is normally not enforceable by Chinese courts.
The proper law of the bill of lading is relevant between the carrier and the lawful third-party holder of the bill of lading. The proper law will be determined according to the following key rules:
- the prime criterion will be whether there is an agreement on the applicable law (provided however that in relation to the carrier’s liability for loss of, shortage or damage to the cargo, the cogent provisions of the Croatian Maritime Code shall always apply where the port of loading or the port of destination is in the Republic of Croatia);
- where the law chosen by the parties cannot apply to the entire contract or to any of relations arising therefrom, or if the parties have not decided in an express manner on the law that is to be applied, and their intent as to application of specific law cannot be ascertained based on the circumstances of the case, then the law that is most closely related to the contract or contractual relations shall apply;
- where it is not possible to establish which law is most closely related to the contract, the following shall apply:
(a) the law of the place where the contract was entered into - for the determination of the principal rights and obligations of the parties;
(b) the law of the state of the carrier’s nationality - if the contract was entered into on the basis of the carrier’s general conditions established in advance.
There is an ongoing debate about validity of paramount/choice of law clauses. Although there is academic literature supporting the view that such clauses are to be deemed valid in Colombia, there is no case law yet supporting said position at the local level. In that regard it should also be noted that although some domestic laws expressly open up the possibility to the recognition of the validity of such clauses in the country (ie. Art. 101 of Law 1563 of 2012, regarding national and international arbitral proceedings, which clarifies that the Tribunal is to decide in accordance with the law selected by the parties) according to Art. 869 of the Commercial Code the execution of contracts entered into abroad that should be fulfilled in the country will be subject to Colombian law.
In deciding who is the “carrier” the Court will construe the terms in the bill of lading contract in accordance with the principles of construction of the proper law of the contract evidenced in the bill of lading. In determining what the proper law is, the Court will consider any choice of law clause in the bill of lading and will apply the law which the parties may have chosen.
In accordance with Article 5 of Regulation (EC) no. 593/2008 on the law applicable to contractual obligations (Rome I), in the absence of an express or implied choice of law the proper law shall be the law of the country of habitual residence of the carrier, provided that the place of receipt or the place of delivery or the habitual residence of the consignor is also situated in that country. If those requirements are not met, the law of the country where the place of delivery as agreed by the parties is situated shall apply.
According to the Israeli Order of Carriage of Goods by Sea as amended on 21st January 1992, the Hague-Visby rules will apply to any Bill of Lading (B/L) which governs the sea carriage of cargo either from any Israeli port; or from a port of a country which is a party to either the Hague or Hague-Visby Rules; or the sea carriage of a cargo when the B/L incorporates the Hague-Visby Rules or is governed by the laws of a country that applies the Rules.
In case the Hague-Visby Rules apply, the proper law of the bill of lading is only relevant to the matters which are not governed under the Rules.
If, on the contrary, the Hague-Visby Rules do not apply, then any aspect of the carriage will be ruled by the proper law of the bill of lading, which is evidence of the contract of carriage between the carrier and the shipper.
The proper law of the bill of lading is normally the one indicated in the relevant choice of law clause contained in the bill of lading. In the rare cases where the bill of lading does not contain such clause, the governing law is determined on the basis of the private international law rules.
If a bill of lading indicates a specific foreign law as a governing law, Japanese courts will respect and accept such foreign law. In the absence of a governing law clause in a bill of lading, it would be extremely difficult to predict the decision on what laws should be applicable to and govern the bill of lading. Almost all bill of lading forms issued by Japan-related carriers have a governing law clause.
Norway has implemented rules on contracts of carriage based on the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1924, as amended by the Protocols of 1968 and 1979 (the Hague-Visby Rules). The proper law of the bill of lading is not relevant for the application of the Norwegian rules. In fact, the rules of NMC Chapter 13 on bills of lading apply depending on where the trade is being performed, cf. NMC sec. 252. NMC Chapter 13 applies to trade between the Nordic countries (Norway, Denmark, Finland and Sweden) or if:
- the agreed port of loading is in a Convention State (meaning the Hague-Visby Rules, cf. NMC sec. 251),
- the agreed port of discharge is in Norway, Denmark, Finland or Sweden,
- several ports of discharge have been agreed and the actual port of discharge is one of these and is situated in Norway, Denmark, Finland or Sweden,
- the transport document is issued in a Convention State, or
- the transport document states that the Convention or the law of a Convention State based thereon shall apply.
Considering the Civil Code provision on common carriers that [‘t]he law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration’, the litigation over goods destined for the Philippines is primarily governed by Philippine law.
Such provision however does not preclude the application of private international law rules to determine the proper law, including giving effect to the contractual stipulation of the parties.
Where the contract of carriage involves an international dimension, any resulting cargo claim will raise issues as to what is the proper law of the contract. The proper law of the bill of lading is relevant as it determines how the contract should be performed and the law under which the dispute shall be settled.
The proper law may be determined by the express choice of law of the bill of lading itself. Otherwise, the court will determine if there is an implied choice of law and in the event where no choice is indicated, the proper law would be the system of law with which the bill of lading has its closest and most real connection.
Part V (Maritime) Chapter Two (Carriage and Charter) Section Six of the KCA stipulate provisions on documents of carriage including the bill of lading and sea waybill (Articles 852-864). Under Korean law and practice, the bill of lading is generally understood to serve three functions: (i) evidence for contract of carriage; (ii) receipt for loading of the cargo on board the vessel; and (iii) document of title to the cargo, i.e. the right to claim delivery of the cargo.
It is not clear in Taiwan. However, according to Article 43(1) of the Act Governing the Choice of Law in Civil Matters Involving Foreign Element, the proper law of the B/L can be decided by mutual consent of the parties. If there is in lack of mutual consent, the law of the place most closely connected with the B/L shall be the proper law.
Contracts for carriage of goods by sea must be construed like any other contracts: by their terms and consistent with the intent of the parties. As such, where parties clearly specify in their contractual agreement which law will apply, admiralty courts will generally give effect to that choice. COGSA applies “tackle to tackle” by force of law, but the period it covers (e.g., pre-loading and post-discharge or carriage between two non-U.S. ports) frequently may be extended by clauses in bills of lading.
As a matter of contract interpretation, federal courts sitting in admiralty seek to interpret a contract “so as to give meaning to all of its terms -- presuming that every provision was intended to accomplish some purpose, and that none are deemed superfluous.” E.g., Foster Wheeler Energy Corp. v. An Ning Jiang MV, Etc., 383 F.3d 349, 354 (5th Cir. 2004). Ambiguities can lead to disputes – for example, if a competing regime applies a higher limitation of liability than COGSA’s $500 per package limitation – and as such careful attention should be paid to the contract language including its choice-of-law and forum selection provisions. See id.
The proper law of a bill of lading is always relevant, but unless evidence is brought as to what that proper law provides, then the court will assume it is the same as English law.
English law will normally recognise and apply choice of law provisions in a contract.
If there is no choice of law expressly stated, then – in the past – the governing law would be determined by applying the principles in the Rome I Regulation (EC/593/2008). Whether this will continue to be the case after Brexit is unclear. UK legislation might continue to apply Rome I, but maybe not. In which case it is likely the UK will revert to determining the system of law with which the transaction has its closest connection.
In most cases arising out of bills of lading, proper law is crucial. Subject to what is stated below related to jurisdiction clauses, Maltese courts have regularly applied the Clause Paramount in Bills of Lading and have in the main decided cases arising under such Bills of Lading by applying the legal regime identified in the Clause Paramount being either the Hague or the Hague Visby Rules.
In accordance with numeral 10 of Article 566 of Law 8 mentioned in answer 7 above, the law included in the bill of lading is relevant to the rights and obligations of the parties to an action filed in the Panamanian Maritime Courts. If the bill of lading does not provide the substantive law applicable to the contract, the laws of the country where the cargo was loaded to the vessel, would apply.
If Panamanian Law is applicable to the bill of lading, rights and obligations of the carrier and holder of the bill of lading will be determined by its clauses, except if the bill of lading is part of the charter party, in which case, the latter will serve as the contract, as provided in article 85 of Law 55.
Brazil is not party of any international convention concerning Bills of Lading. All the regulation is disposed on the 1850 Brazilian Commercial Code, on the 2002 Civil Code, on the Multimodal Transport Law and in the Decree-Law n 116/1997.
Brazilian Commercial Code states that the following information must be necessarily included in the bill of lading:
Name of the issuer; number of the bill of lading; name of the carrier; name and flag of the vessel; port of loading and delivery port; name and head offices of the receiver of the cargo; description of the cargo; conditions and status of the cargo; value of freight and form of payment; and name and signature of the master.
The absence of some of such information will not result in the in the annulment or invalidity of the bill of lading.