1. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Specialist insurance products and services packaged for the international transport and logistics industry

2. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Your liability might sky-rocket This is how it could happen…

3. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 1 A forwarder assumes liability for the international carriage of 1,000 i-Pads, which are packed in 50 large boxes each containing 20 iPads. In each box of 20, each iPad is in an individual carton box. The forwarder subcontracts the road portion in Canada to a trucker who is involved in a road accident in which the entire consignment is destroyed. The forwarder’s house bill of lading lists in the column “Number of packages” the entry “1,000”. An iPad weighs 1.0 kilogram and has a value of CAD 500. The forwarder’s trading conditions limit his liability to CAD 4.1 per kilogram. What is the forwarder’s liability under the Rotterdam Rules (1 SDR equals around CAD 1.5)?

4. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Forwarder’s trading conditions - Weight limitation: 1000 kg * CAD 4.1 per kg = CAD 4,100 Rotterdam Rules: - Weight limitation: 1,000 kg * 3 SDR per kilogram = 3,000 SDR = CAD 4,500 - Package limitation: 1,000 packages * 875 SDR per package = 875,000 SDR = CAD 1,312,500, i.e. the terminal is exposed to full value liability for the 1,000 iPads of CAD 500,000

5. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Entry Into Force Requirement for entry into force Signing Ceremony on 23 September 2009 in Rotterdam List of states is updated on www.uncitral.org

6. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010

7. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Application and Scope Contract of carriage Sea carriage or multimodal carriage with a sea portion International character of the carriage contract The contractual agreement, not the mode(s) of carriage in fact used Excluded contracts and application to certain parties Agent or principal in relation to the carriage contract

8. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 2: Q: Road carriage from Moncton NB to Halifax NS, then sea carriage from Halifax to Antwerp and finally land carriage from Antwerp to Paris. (assumption: the Rotterdam Rules are in force in Belgium, but not in Canada or France).

9. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Moncton NB Antwerp ParisHalifax NS Example 2:

10. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Mandatory Character Principle of mandatory force of law Exceptions from the principle of mandatory force

11. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010

12. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Volume Contracts Greater or lesser rights, obligations or liabilities Definition Requirements for the validity of a “Volume contract” agreement

13. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Carriage Documentation Contract particulars Identity of the carrier Goods presumed to be in “apparent good order and condition” Qualifying information

14. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Liability of the Shipper Shipper’s liability fault-based, but unlimited Documentary shipper

15. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Dangerous Goods Definition Strict liability by the shipper and the “documentary shipper” Carrier’s measures on goods that are or become a danger

16. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Electronic Transport Records Electronic documents in the current transport/ shipping industry Electronic transport record under the Rotterdam Rules

17. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010

18. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Delivery Consignee’s obligation to accept delivery, goods remaining undelivered (uncollected cargo) Delivery under the transport documents provided in the Rotterdam Rules Negotiable transport document

19. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Transport Documents Surrender of transport documentation required for delivery Surrender of transport documentation not required for delivery Negotiable transport documentation Art 47 (1) RR (“Order” bill of lading) Art 47 (2) RR (New type “Order” bill of lading) Non-negotiable transport documentation Art 46 RR (“straight” bill of lading) Art 45 RR (Sea waybill)

20. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Rights of the Controlling Party Rights conferred on the controlling party Identifying the controlling party

21. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 3: A forwarder assumes liability for the carriage of goods from Canada to the UK. The forwarder concludes the carriage contract with the UK buyer. In the forwarder’s “straight” bill of lading, the Canadian seller is named as the “shipper” and the UK buyer as the “consignee”. Just before the goods are scheduled to arrive in the UK, the Canadian seller informs the forwarder that he has sold the goods to a party in France (because there was a problem with payment by the UK buyer) and instructs the forwarder not to deliver the goods to the original UK buyer. When the UK buyer is made aware of the seller’s latest instructions, it clarifies that it would sue the forwarder if the latter did not deliver the goods to it on arrival. What should the forwarder do (assumption: the Rotterdam Rules are in force in all the countries mentioned)?

22. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 CAN B/L Seller Example 3: Buyer A Buyer B UK Shipper Rotterdam Rules Consignee B/LRotterdam Rules ShipperDocumentary Shipper France

23. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Carrier’s period of responsibility Art 12(1) The period of responsibility of the carrier begins when the carrier receives the goods for carriage and ends when the goods are delivered Art 11 The carrier shall carry the goods and deliver them

24. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Seaworthiness Exercise due diligence to… Rotterdam …make and keep the vessel seaworthy Hague-Visby …make the vessel seaworthy

25. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Basis of Liability & Burden of Proof - Cargo damaged in carrier’s possession – 17(1) - Not the carrier’s fault – 17(2) - Defences apply – 17(3) - Carrier’s Fault – 17(4) - Unseaworthiness – 17(5)

26. transport insurance plus A Practical Guide to the Rotterdam Rules Thursday 5 November, 2009 List of Defences ROTTERDAMHague-Visby xxxxxxError in navigationAct of GodPerils of the sea War, piracy, terrorism, riots, civil commot’nAct of war xxxxxxAct of public enemies xxxxxxRestraint of princes; public process Quarantine; Interference by governmentsQuarantineStrikes Fire on the shipFire unless caused by actual fault or privity of carrierLatent defectsActs of shipper etc FIOS agreementxxxxxxWastage in bulkDefective packing/markingSOLASSaving property at sea Environmental damagexxxxxx Dangerous goods; Sacrifice for commonxxxxxx adventure

27. transport insurance plus A Practical Guide to the Rotterdam Rules Thursday 5 November, 2009

28. transport insurance plus A Practical Guide to the Rotterdam Rules Thursday 5 November, 2009

29. transport insurance plus A Practical Guide to the Rotterdam Rules Thursday 5 November, 2009 Limits of Liability Rotterdam Rules (whichever is the highest of) 3 SDR per kg 875 SDR per package Hague-Visby (whichever is the highest of) 2 SDR per kg 667 SDR per package

30. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Delay Compensation 2½ the freight – capped at SDR 875/SDR 3 Two Requirements Agreement Economic Loss What do they mean?

31. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Breaking Limitation “(…) a personal act or omission of the person claiming a right to limit done with the intent to cause such loss or recklessly and with knowledge that such loss would probably result.”

32. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Time Bar Two years Applies to claims by either party Indemnity claim similar to Art III(6bis) of the Hague- Visby Rules

33. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Misdelivery Probably within the scope of the Rotterdam Rules Is the carrier entitled to limit its liability?

34. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010

35. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Multimodal Transport Basic principle: Rotterdam Rules apply to a contract for sea carriage or to a contract for multimodal carriage with a sea leg First exception: international conventions which are already in force when the Rotterdam Rules enter into force (Art 82 RR) Second exception: occurrence solely before or solely after the sea portion (Art 26 RR)

36. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Art 26. Carriage preceding or subsequent to sea carriage When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay: (a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to the goods, or any event or circumstance causing delay in their delivery occurred: (b) Specifically provide for the carrier’s liability, limitation of liability or time for suit; and (c) Cannot be departed from by contract either at all or to the detriment of the shipper under that instrument.

37. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 4: A forwarder assumes liability for “door to door” carriage from China and subcontracts the performance of the ocean voyage and the final land portion. Will the Rotterdam Rules increase the forwarder’s liability if the goods are damaged during the final land portion: (4.1) Vancouver – Edmonton (4.2) Long Beach – Oklahoma City (4.3) Antwerp - Paris

38. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Art 26. Carriage preceding or subsequent to sea carriage When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay: (a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to the goods, or any event or circumstance causing delay in their delivery occurred: (b) Specifically provide for the carrier’s liability, limitation of liability or time for suit; and (c) Cannot be departed from by contract either at all or to the detriment of the shipper under that instrument.

39. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 5 Q.A carrier undertakes carriage of a chemical liquid in a tank container first by road from the Netherlands to Belgium, then by sea onwards to Canada. On arrival in Canada, the chemical liquid was declared a total loss as it got gradually polluted by the residues of the cargo that was previously in the tank container. Under which rules is the carrier liable (assumption: the Rotterdam Rules are in force in all the countries mentioned)?

40. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 5: BelgiumUSAThe Netherlands Pollution

41. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Art 26. Carriage preceding or subsequent to sea carriage When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay: (a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to the goods, or any event or circumstance causing delay in their delivery occurred: (b) Specifically provide for the carrier’s liability, limitation of liability or time for suit; and (c) Cannot be departed from by contract either at all or to the detriment of the shipper under that instrument.

42. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 6 A machine is carried first by lorry from France to Antwerp, then by sea from Antwerp to Halifax NS and, due to urgency, finally flown from Halifax to Boston. During the initial road haulage in Europe, rough driving weakens some bolts, but the machine remains in one piece. While being loaded on board an airplane at Halifax airport for its final leg to Boston, the machine is handled in a rough manner and, already weakened by the vibrations during the road haulage in Europe, falls to pieces. Under which liability regime is the carrier liable (assumption: the Rotterdam Rules are in force in all the countries mentioned)?

43. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Damage 1 France Example 6 CanadaBelgiumUSA Damage 2

44. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Art 26. Carriage preceding or subsequent to sea carriage When loss of or damage to goods, or an event or circumstance causing a delay in their delivery, occurs during the carrier’s period of responsibility but solely before their loading onto the ship or solely after their discharge from the ship, the provisions of this Convention do not prevail over those provisions of another international instrument that, at the time of such loss, damage or event or circumstance causing delay: (a) Pursuant to the provisions of such international instrument would have applied to all or any of the carrier’s activities if the shipper had made a separate and direct contract with the carrier in respect of the particular stage of carriage where the loss of, or damage to the goods, or any event or circumstance causing delay in their delivery occurred: (b) Specifically provide for the carrier’s liability, limitation of liability or time for suit; and (c) Cannot be departed from by contract either at all or to the detriment of the shipper under that instrument.

45. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Maritime Performing Parties Principle of “Same liability as the Carrier” Definition of “Maritime performing party”

46. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Defintion of “Maritime performing party” Article 1(7) “Maritime performing party” means a performing party to the extent that it performs or undertakes to perform any of the carrier’s obligations during the period between the arrival of the goods at the port of loading of a ship and their departure from the port of discharge of a ship. An inland carrier is a maritime performing party only if it performs or undertakes to perform is services exclusively within the a port area.

47. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Carrier Shipper RR RR Liability joint & several Not RR Terminal 1

48. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Defenses available to a “Maritime Performing Party” The Rotterdam Rules give the shipper a sword against the Maritime performing party, but they also give the Maritime performing party a shield against the shipper.

49. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 6 A forwarder assumes liability for the carriage of a machine “door to door” from the USA to Hong Kong and instructs a Hong Kong terminal to handle the goods on arrival at the Hong Kong port. A stevedore, who is employed by a subcontractor of the Hong Kong terminal, in an act of negligence, drops the containerised machine, which is deemed a total loss. Cargo insurers sue the forwarder in contract and the Hong Kong terminal, the terminal’s subcontractor and the stevedore in tort. Which of the four defendants can rely on Rotterdam Rules liability limits (assumption: the Rotterdam Rules are in force in the USA and in Hong Kong)?

50. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 6 Claim NVOCC (Rotterdam Rules: carrier) Rotterdam Rules Claim Shipper Terminal (RR: maritime performing party) Terminal’s sub-contractor (RR: maritime performing party) Stevedore “Himalaya” type protection under Art 4 RR

51. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Legal actions outside the Rotterdam Rules The Rotterdam Rules do not apply to Terminals which do not “perform or undertake to perform any of the Carrier’s obligations”.

52. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Carrier Shipper Terminal 2 Not RR RR RR Liability joint & several Not RR Terminal 1

53. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Legal actions outside the Rotterdam Rules The Rotterdam Rules do not apply to legal actions by the Terminal against the Shipper

54. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Carrier Shipper RR Not RR Terminal

55. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Legal actions outside the Rotterdam Rules The Rotterdam Rules do not apply to recourse actions between Carrier and Terminal

56. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Carrier Shipper Terminal 2 Not RR RR RR Liability joint & several Not RR Terminal 1

57. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Effects of Volume Contracts on “Maritime Performing Parties” Terminals as Maritime Performing Parties are not parties to Volume Contracts, but a volume contract between the Shipper and the Carrier can affect the Terminal indirectly

58. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Carrier Shipper RR Terminal Volume contract Act 19(2) RR Liability

59. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010

60. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Jurisdiction and Arbitration Jurisdiction Arbitration

61. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Example 7 A forwarder assumes liability for carriage “door to door” from Canada to the United Kingdom. The forwarder subcontracts the UK land carriage to a haulier who trades under the UK Road Haulage Association (RHA) conditions. After the UK haulier damages the goods, the forwarder is sued by cargo interests. Might the forwarder fall into the liability gap (assumption: the Rotterdam Rules are in force in Canada and in the UK)?

62. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Moncton NB Example 7 HalifaxLondonBristol UK Rotterdam Rules RHA London CMR Damage Bristol UKHalifaxMoncton NB

63. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 What amendments to transport documents and contracts will be required when the Rotterdam Rules become law? Freight forwarding conditions and framework contracts Sea carriage and multimodal transport documents Terminal operator conditions and service agreements

64. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 So – are the Rotterdam Rules good for forwarders?

65. transport insurance plus Rotterdam Rules – Your liability might sky-rocket Thursday, 13 May 2010 Thank you for your interest!