Rotterdam Rules Introduction And Evaluation

There is an interesting history of marine trade and applicable laws governing the trade. There have been several attempts to bring out uniformity in the laws governing carriage of goods by sea. These include the Hague Rules, the Hague Visby Rules and the Hamburg Rules and lately the Rotterdam Rules. The Hamburg Rules have not been ratified by most of the shipowning countries. Abreast the increased development in shipping and logistics till date, there has been unsuccessful unification of international regulations governing multimodal and door to door transportation schemes.

In 2008, the United Nations Conference on International Trade Law (UNICITRAL), New York, published a Convention under the title “United Nations Convention on Contracts for the International Carriage of Goods wholly or partly by Sea.” This was the outcome of ten years of negotiation and discussions which UNICITRAL had with member states under inter governmental consultations. Most of the member countries showed interest and took part in the discussions. Earlier at the desire of UNICITRAL, preparatory work was done by the Committee Maritime International (CMI).

This Convention was adopted by the U.N. General Assembly on 11th December, 2008. This convention was signed in Rotterdam from 20th to 23rd September, 2009. Hence, it came to be known as ‘Rotterdam Rules’. Soon thereafter, 21 countries signed this Convention, together representing 25 per cent of the World’s trades. It will not enter into force until expiry of one year after the approval or accession. Experts feel that a very low setting (20 countries needed out of about 191), of subsequent ratification is kept. However, till very recent only 5 countries have ratified the convention.

Upon entry into force of the Convention for a country, it should denounce the Conventions governing the HV Rules as well as the Hamburg Rules as the Convention does not come into effect without such denouncements.

The European Community Shipowners Association (ECSA), the International Chamber of Shipping (ISC), the Baltic International Maritime Council (BIMCO) and the World Shipping Council (WSC) have greeted this Convention and are urging member countries to sign, ratify and implement this Convention. Protection and Indemnity Clubs of shipowners also favour ratification believing that while it may add some additional costs, a single liability regime would speed claims, payments and reduce ‘claims costs’ in the long run. Thus, they see smooth functioning in the long run.

A closer and deeper study of the Convention has revealed many deficiencies and many member countries, particularly of the European Union and U.K. owing to the existing regimes particularly applicable in multimodal situations and for other reasons are seriously debating as to, whether the Convention has to be ratified or not. Other countries in Asia are examining the Convention and have not expressed their views.

The Convention is covered in 18 chapters and 96 Articles. Here, a brief review is made highlighting the salient features, including the positive and negative aspects of this Convention.

  • The Rotterdam Rules do not apply compulsorily to charterparties but parties can incorporate the Rotterdam Rules into a charterparty by means of a Clause Paramount.
  • The objective is to replace The Hague Rules, The Hague-Visby Rules and the Hamburg Rules by introducing new rules to have uniformity of law in the field of maritime carriage.
  • While the scope of the Convention is greatly expanded as from earlier regimes such as The Hague, Hague Visby and Hamburg Rules, it is not a full multimodal Convention and is more accurately described as a “maritime plus” instrument. The Rotterdam rules are also called a “wet multimodal” Convention. The Rotterdam Rules are supposed to apply compulsorily to liner shipping contracts of carriage. The Rules were developed with liner shipping and multimodal transport “contracts of carriage” with a sea leg particularly in mind. This means a possibility of multimode with compulsory sea mode.


  • Multimodal transportation: It is the transportation of cargo under a single contract, but performed with at least two different modes of transport. Thus, more than one mode of transport is essential. The carriage is performed by several different modes of transport and can be by rail, sea, air and road. The carrier does not have to possess all the modes of transport. Normally, the carriage is often performed by sub-carriers or actual carriers. The carrier responsible for the entire carriage is referred to as a multimodal transport operator, or MTO. Thus, there are at least two different carriers / different modes under same contract. This means when a shipper delivers goods utilizing two different contracts for the same shipment of goods does not form a situation of Multimodal Transportation.
  • Door to Door transportation: This system however, is different as here the system needs the origin to be away from port of loading (inland). Even the destination is remote & inland from port of destination. Here the main carrier is responsible for the entire transit even if he sub contracts whole or part of the passage. ‘Different modes of transportation’ is not a requirement here.
  • Maritime Plus: The Rotterdam Rules differ from the earlier regimes and is made clear by Art 1(1). The points are;

1. Convention stipulates places rather than ports.

2. The rules can apply inlands, and

3. Use of different modes of transport is possible.

Reading 1(1) with 5(1) of Rotterdam Rules, the pre condition for Rotterdam Rules to apply is that, not only must there be a sea leg, but there must be international sea leg. Thus, Rotterdam Rules must be considered as ‘Maritime Plus’ or ‘Wet Multimodal Convention’.

  • Though the increase in liability for sea carriers is no good for shipowners and operators, but the Convention contains a number of new and positive features. Thus, its scope will extend to ‘door-to-door’ carriage as well as ‘tackle-to-tackle’ and ‘port-to-port’ carriage. Many of the beneficial aspects of existing Conventions and regimes are retained. Thus, it retains the existing concept of network liability, whereby liability and the applicable limits of liability for loss and or damage occurring before or after the sea-leg will be determined by any unimodal international instrument provided it is compulsorily applicable to the relevant mode of transport where the loss or damage occurs. Thus, if after sea leg the cargo is carried further by road and that part comes under Convention on the Contract for the International Carriage of Goods by Road (CMR), the liability to loss or damage will be governed by CMR if the loss or damage occurs on road leg. Number of states, though, earlier supported a regime of uniform liability under which the same scope and the same limits of liability for loss and damage would apply, wherever the loss or damage occurred. Thus, if a container is discharged at port A and carried by road to port B, the Rotterdam Rules will apply to the A to B leg if Roadways Convention does not exist and govern the domestic movements between A & B. On the other hand if cargo was carried by land between C & D and Roadways Convention compulsorily governed this leg, the local Roadways Convention would apply.
  • Functionally, the Convention is extended to all transport documents in liner traffic.  The Convention also provides detailed rules on all documentary aspects to ensure uniformity and certainty. Thus, ‘bills of lading’ and ‘seaway bills’ now fall within the general term ‘Transport Document’ in this Convention.
  • In case of Rotterdam Rules, the parties may agree about the period of responsibility. For example, they may agree carriage terms are to be “tackle-to-tackle” or “port-to-port” or “door-to-door”.  In HVR the period of responsibility is limited to “tackle to tackle”. It extends the period of time that carriers are responsible for goods to cover the time between the points where the goods are received to the point where the goods are delivered.
  • Convention.The Rotterdam Rules allow for and facilitate maritime e-commerce to be developed in the areas of maritime transport, by providing that an ‘electronic record’ of a contract of carriage or other information in electronic form has the same legal effect as its paper equivalent (such as a bill of lading). Neither the Hague Visby Rules nor any other present regime approves so much of electronic documentation.
  • Unlike the most existing regimes, Rotterdam Rules puts obligation on carriers to have ships that are seaworthy and properly crewed throughout the voyage. Thus, the carrier’s seaworthiness obligation is more onerous under the Rotterdam Rules than under Hague-Visby because under the Rotterdam Rules, the carrier’s obligation is to exercise due diligence to make the vessel seaworthy not only before and at commencement of the voyage, but also during the whole voyage. In HVR the statement is diluted by saying that, neither the carrier nor the ship shall be liable for loss or damage arising or resulting from un-seaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy.
  • The Convention continues to maintain a list of exceptions similar to, but more extensive than that contained in the Hague Visby Rules. It however, presumes absence of fault on the part of the carrier, with the onus on the carrier to prove.  It must be noted that, the list of “exceptions” includes “fire on the ship”.  The list also includes current concerns such as “terrorism”, and “reasonable measures to avoid damage to the environment”.  
  • The Convention permits the carriage of cargo on deck when such carriage is required by law, or such carriage is undertaken by contractual agreement or by custom of the trade, or the cargo is carried in containers or vehicles fit for deck carriage. The carrier is not liable for loss, damage or delay caused by the special risks involved in deck carriage.  All other liabilities arising from the deck carriage will be subject to the usual rights, where deck carriage is undertaken in cases other than those permitted. The carrier is liable and is not entitled to the defenses as to liability provided for in the Convention but may be able to limit the liability in accordance with the Convention limits.  However, if the carrier carries goods on deck, in breach of an express agreement to carry them under deck and, if the loss or damage occurs by reason of the carriage on deck, the carrier may also lose the right to limit liability.


1. Thus, there is a situation where carrier is not liable for loss, damage or delay caused by the special risks involved in deck carriage.

2. There is situation where other liabilities arising from the deck carriage will be subject to the usual rights, where deck carriage is undertaken in cases other than those permitted.

3. There is a third situation, where if the loss or damage occurs by reason of the carriage on deck, the carrier may also lose the right to limit liability, if goods were carried on deck, in breach of an express agreement to carry them under deck.

  • The Rules provide that the carrier can limit his liability to 3 SDRs per kilo of the goods lost/damaged or 875 SDRs per package, whichever is the higher. Under Hague-Visby, the applicable figures are 2SDRs per kilo or 666.67 SDRs per package, whichever is the higher.
  • It eliminates immunity for the ‘nautical fault defense’, which prevents carriers and crewmen from being held responsible for negligent ship management and navigation.
  • It extends the time limit that the legal claims can be filed to two years following the day the goods were delivered or should have been delivered.
  • If the carrier and shipper agree to amend the Rotterdam Rules to improve the position of cargo interests or the carrier, the agreement will generally be enforceable after some documentation. The Rotterdam Rules has a provision for “Volume Contracts“. Terms to reduce a carrier’s liability not agreed in a “Volume Contract” are generally void. ‘Volume contract’ means a contract of carriage that provides for the carriage of a specified quantity of goods in a series of shipments during an agreed period of time. The specification of the quantity may include a minimum, a maximum or a certain range.
  • It introduces the new concept of the ‘maritime performance party’. This is a party that conducts business wholly within a port area.
  • The new Convention deals with jurisdiction and arbitration, and the relevant provisions are essentially based on the overly restrictive approach of the Hamburg Rules. Under the Convention, cargo owners are effectively able to choose from a number of jurisdictions, the court where they can sue the carrier. The ability of cargo owners to choose from a number of jurisdictions is likely to lead to greater uncertainty for carriers and insurers. It will also cause increased legal costs. The courts of countries unfamiliar with such issues will be asked to decide crucial cases arising under the Convention. Jurisdiction related articles are optional and many states who sign are unlikely to opt in.
  • Rotterdam Rules recognise and uphold arbitration clauses validly incorporated into charterparty, bills of lading, etc. Arbitration clauses in “Volume Contracts” will also be enforceable if certain formalities are complied with. Rotterdam Rules allow a carrier to declare general average. It will however prevent carriers from recovering general average contributions from cargo interests if the incident was caused by negligent navigation/management of the vessel.
  • The Rotterdam Rules provide that a non-negotiable transport document such as a sea waybill may also have conclusive evidence effect when the consignee acts on it in good faith and in reliance of the contract particulars.
  • The new concept of the ‘maritime performing party’ is a party that conducts its business wholly within a port area. Therefore a party that collects from the environs of the port and delivers inland is not a maritime performing party. Also, while a port operator is a maritime performing party provided its duties do not exceed the boundaries of the port.
  • The Rotterdam Rules apply even if the Carrier does not issue a bill of lading. It applies  to all international “contracts of carriage” if any one of the following is in a “Contracting State”:
  1. place of receipt,
  2. port of loading,
  3. port of discharge, or
  4. place of delivery.

    The Rules apply whether a bill is issued or not, which means that many short sea and waybill movements previously outside the scope of the Hague-Visby will be compulsorily subject to Rotterdam.
  • The provision of delivery and the carrier’s right to deliver the goods without the surrendering of the original bill of lading is risky. Carrier may request instructions from the shipper for a better safety. The RR Convention legislates for the circumstance where the consignee has not obtained possession of a negotiable transport document by giving the carrier the possibility to deliver the goods without presentation of the negotiable transport document while at the same time protecting the interests of all the parties involved.  It provides the carrier with the right to limit liability for any claims that might subsequently arise, in accordance with the Convention limits.  Although, the permitted use of electronic documentation will help to speed up the movement of paperwork and reduce delays in the receipt of documents. The Hague Visby Rules contains no provisions on the Carrier’s delivery obligations i.e., as to whom the carrier may deliver.  Most maritime jurisdictions however provide that the carrier can safely deliver only against the bill of lading and where this is not done, the carrier is liable for claims for any subsequent wrongful delivery and such liability may be without limit.
  • Customary bill of lading clauses exempt the carrier from such ‘consequential’ loss. The Rotterdam Rules, entitle the carrier to limit its liability for “economic loss” to 2.5 times the freight paid in respect of the delayed goods. This allows for ‘More than loss of damage’ or ‘Indirect Losses’.
  • Freight forwarders will probably face more law suits under the Rotterdam Rules than at present. Rotterdam Rules are more likely to allow the ocean carrier to avoid liability under ‘volume contracts’, leaving forwarders more exposed to cargo claims because forwarders have more ‘one off’ (not ‘volume’) contracts with shippers than the carriers.
  • Freight forwarders consider that implementing the Rotterdam Rules will extend grey area of uncertainty, both in legal and judicial terms. These uncertainties will end up adding a new liability regime side by side with existing ones, thus increasing confusion. Local or regional interpretations may create more confusion. Thus harmonisation or simplification may be a far off dream.
  • The Hague-Visby Rules refer generally to bills of lading or similar document of title and indicate only some of the particulars that are normally included in a transport document, i.e. the marks, the number of packages or pieces or the quantity or weight.  The Rotterdam Rules specify that the transport document may be negotiable or non-negotiable and set out in greater detail all the particulars that must be mentioned in the transport document and place a strict liability on the shipper for supplying the necessary details to the carrier. The shipper is subject to a strict liability for documentary inaccuracies in respect of the matters to be included in the transport document.  The shipper is also under an obligation to inform the carrier of the dangerous nature of goods and to mark or label such goods, in accordance with any applicable law or regulation.  If the shipper fails to comply with his obligations in this respect, he is again subject to a strict liability for all loss or damage which may result. The RR Convention does not provide the shipper with a limit of liability; however, it also does not preclude the shipper from claiming any limit of liability available under the applicable national law.

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