RIGHTS AND OBLIGATION OF PARTIES UNDER THE CONTRACT OF CARRIAGE OF GOODS BY SEA
INTRODUCTION
Under international trade, there are different ways of transportation of goods, which includes transportation by air, by sea and by land (rail and road transportation). Transportation of goods by sea is however very essential in international trade, without which may create dire difficulty in international trade as about 80% of internationally traded goods are carried by sea. The business of carriage of goods by sea can however be risky as the cargo may sometimes arrive late or not at all thereby resulting in financial loss. This paper will focus on the rights and obligations of the parties in a contract of carriage of goods by sea.
A contract of carriage of goods by sea is one which is made for transportation of a bulk or general cargo between a shipper (a seller or buyer) and a carrier (a shipowner or charterer) of the cargo.
It is an agreement made between a shipper and a carrier by which the carrier will, for a charge, undertake to transport the shipper’s cargo to a destination and deliver to a designated person (Consignee). There is usually an agreement between the parties further to which the carrier issues a bill of lading upon shipment of the cargo.
A bill of lading is a document which states that certain specified goods have been shipped in a particular ship and which purports to set out the terms on which the goods have been delivered to and received by the ship. It serves three main functions which include:
i. it is a conclusive receipt, i.e. an acknowledgement that the goods have been loaded; and
ii. it contains or evidences the terms of the contract of carriage; and
iii. it serves as a document of title to the goods, subject to the nemo dat non habet rule.
The rules that guides the contract of carriage of goods by sea is the Hamburg Rules,[1] it was ratified in Nigeria in 2005.[2]
We will now proceed to examine the rights and obligations of the parties.
OBLIGATIONS OF THE CARRIER
1. To provide a seaworthy ship: The obligation to provide a seaworthy ship is an absolute undertaking. Whether there has been a breach of the obligation does not depend on whether reasonable care was exercised by the shipowner. If the ship is unseaworthy and the unseaworthiness caused loss or damage, the owner is liable regardless of whether he exercised reasonable care. The ship must be seaworthy at the beginning of the voyage. Seaworthiness is relative to the nature of the ship, the particular voyage, and the cargo to be carried.
The undertaking requires that the ship be fit in all respects to carry her cargo safely to her destination having regard to the usual perils to be expected. There is a presumption of unseaworthiness when a ship sinks or leaks shortly after leaving port.
2. To deliver the cargo without delay: The carrier must prosecute the voyage and deliver with due despatch. The carrier is strictly liable for failure to deliver goods on time if a date for delivery has been agreed. If no date for delivery was agreed, the delivery must be made within a reasonable time. The carrier, in this case, will not be liable for delay caused by events beyond his control.
3. Not to deviate: The carrier is obliged to prosecute the voyage without unreasonable deviation or unreasonable delay. He must use either the agreed route, if one has been agreed, or the usual route.
Deviations to save life or to preserve the ship and cargo are justified. Deviations to save property are not.
4. Delivery to A Right Person: It is also the duty of the carrier that should deliver the goods to the right person. Otherwise, the carrier will be held responsible.
5. To care for the cargo: The carrier must deliver the cargo without loss or damage. The only exceptions are where the loss or damage is caused by Act of God; attack by enemies; and/or defective or insufficient packaging.
6. To issue a bill of lading: Article 14 of the Hamburg rules[3] provides that the carrier must on demand issue to the shipper the bill of lading.
Rights of the Carrier
1. Right of Reward: A common carrier has a right to charge a reasonable amount for his services.
2. Right to Retain the Goods: If the charges are not paid to him, he can exercise his right of lien on the goods and refuse to deliver the goods until the payment is made.
3. Right of Advance Payment: He has also right to demand advance payment before he accepts the goods.
4. Right to Recover Damages: If the goods carried are in dangerous nature and cause any damage then the carrier has a right to recover such damage.
5. Expenses Recovery Right: Sometimes consignee refuses to accept the delivery. Due to this refusal, he bears some expenses. These expenses can be recovered by the common carrier.
6. Right to Limit Liability: He has also a right to limit his liability by the special contract with the shipper.
7. Refusal Right: In some special cases a carrier can also refuse to carry the goods.
A carrier cannot be compelled to carry the goods in the following cases:
· If the goods are of a dangerous nature;
· If the goods are inadequately packed;
· If the goods belong to a class which he does not profess to carry;
· If the route through which the goods are to be carried is in a disturbed state.
8. Right to Recover Goods: Where a carrier delivers goods wrongfully to any person. He has a right to recover the goods or its value from that person.
9. Recovery of Loss Caused by Concealing: where the shipper conceals the facts about the goods which causes the carrier to suffer loss. The carrier has a right to recover such loss.
OBLIGATIONS OF THE SHIPPER
1. To deliver the goods ready for carriage: According to article 27.1 of the Rotterdam Rules,[4] the shipper is obliged to deliver the goods to the carrier in a “ready for carriage” condition, which implies to deliver the goods in such a condition that they will withstand the intended carriage, including their loading, handling, stowing, lashing and securing, as well as unloading; and they will not cause harm to persons or property.
2. To inform of the dangerous nature or character of the goods: The shipper is responsible for notifying the carrier of any dangerous goods and is liable for failing to do so. Such goods may include goods that are of “inflammable, explosive or dangerous nature”
3. To provide information, instructions and documents: The shipper is obliged to provide the carrier with information, instructions and documents relating to the goods, which are reasonably necessary for the proper handling and carriage of the goods, including the precautions to be taken by the carrier and a performing party; and for the carrier to comply with the law, regulations or other requirements of public authorities in connection with the intended carriage.
4. To share in general average:If a general average situation occurs the owner of the saved cargo and the carrier are obliged to jointly compensate the owner of the jettisoned cargo.
5. To Pay Freight: It is the shipper’s obligation to pay the freight agreed upon. The carrier has a lien on the cargo for unpaid freight.
RIGHTS OF THE SHIPPER
Right to Sue the Carrier for damages where there is a breach
There are three factors the shipper must prove in order to start a damage claim.
Firstly, it must be established that the shipment was picked up in “good” condition. It is pertinent that the bill of lading stating the condition of the goods, collect invoices, product descriptions, and item counts so that you have a leg to stand on in the case of any loss or shortage.
Secondly, the shipper must prove that the goods were delivered in damaged condition. It is expedient that a thorough inspection be done before endorsement of the bill of lading at the point of delivery, take pictures of everything for proof. Concealed damage, hidden and only discovered after the carrier has left, is a tricky area for claims.
Lastly, the shipper has to prove that the freight damage resulted in a specific amount of loss. It won’t work to throw an arbitrary number in a freight claim; thus, he should collect itemized receipts and quotes or bills for replacement or repair costs.
Conclusively, the importance of the rights and obligations of the parties under a contract of carriage by sea as provided by applicable laws cannot be over-emphasized in international trade. Parties are employed to fulfill their obligations to ensure a seamless transaction.
[1] United Nations Convention on The Carriage of Goods by Sea, 1978
[2] United Nations Convention on Carriage of Goods by Sea (Ratification And Enforcement) Act, 2005
[3] United Nations Convention on Carriage of Goods by Sea (Ratification And Enforcement) Act, 2005
[4] United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea