Bangkok Shipowners and Agent Association

Group warns agreement puts small shippers at risk

The European Shippers Council has warned that a new international agreement governing liability for cargo damaged at sea could put small and mid-size shippers at risk.

The council said that the "Rotterdam Rules," designed to replace the 85-year-old Carriage of Goods by Sea convention, could allow ocean carriers to opt out of almost all the rules that would protect shippers for goods carried under volume contracts, known in the United States as service contracts.

The United Nations General Assembly approved the new treaty last year, after multilateral negotiations by a maritime law working group under the U.N. Commission for International Trade Law. The agreement is scheduled for signing in otterdam on Sept. 21.

"ESC is currently minded to oppose the Rules and believes, even at this eleventh hour, it is not too late to prevent the convention from attracting he 20 signatories needed to be implemented," the group said.

However, the ESC has misinterpreted the treaty and the timetable for putting it into effect, said Chester D. Hooper, a U.S. attorney who was a ember of the U.S. delegation at the UNCITRAL negotiations.

"I think a lot of people just don't want to have to read another treaty and learn it," Hooper said. "When you do read it, and you understand COGSA, you will realize it simplifies things, and makes the results more predictable."

Some European countries balked at the idea that contracting parties could negotiate different liability terms than what was set by treaty. However, Hooper said that the Rotterdam Rules have built-in safeguards to protect shippers moving cargo under volume contracts.

For example, the rules prevent a carrier from coercing a shipper into an unwanted service contract by telling him that shipping his goods under a ill of lading would cost 10 times as much, Hooper said.

"I think shippers have more protection under the volume contract than they have today," Hooper said. He said that European delegates embraced the olume contract provisions as long as the Rotterdam Rules would be the default standard, a starting point for shipper-carrier negotiations.

Hooper also disagreed with the ESC's claim that the rules would take effect after 20 countries signed them. There will likely be more than 20 countries that sign the treaty in Rotterdam, but at least 20 will have to ratify it, a process that could take several years.

The ESC announced a seminar to discuss the Rotterdam Rules in Antwerp on June 22.

JOC 27/4/09