FUTURE OF INTERNATIONAL CONVENTIONS IN MARITIME AND AVIATION MATTERS

FUTURE OF INTERNATIONAL CONVENTIONS IN MARITIME AND AVIATION MATTERS <!--[if gte mso 10]> FUTURE OF INTERNATIONAL CONVENTIONS IN MARITIME AND AVIATION MATTERS By Aga Zafar Ahmed, Advocate High Court (LLM (Maritime Law) University of Southampton, UK.) 1. INTRODUCTION The importance of international conventions especially in maritime and aviation area cannot be ignored. These conventions give uniformity, predictability and certainty thus promotes international justice and international order2. The pace of ratifying international conventions, despite their numerous benefits is very slow. It is not unusual that many international conventions come into force after passage of six to ten years from the date they were adopted. In fact, many international conventions come into force for only a very few States or that they do not come into force at all. Even those conventions are considered as beacon light for future international convention or future national law. In this paper I would try to foresee the future of Limitation of Liability Conventions of 1924, 1957 and 1976, and the conventions governing carriage of goods by sea and air namely Hague-Visby, Hamburg Rules and the Warsaw Convention. I will first give a brief description of the conventions; highlight some of their important features and state how such laws are being modified through other international conventions. In the end, I will conclude by giving my opinion on the conventions and their fate. 2. Limitation of Liability Conventions The ability of the shipowners to limit their liability against a maritime action is now a well-recognized right. It was 1. This is a modified version of paper titled as 'In maritime and aviation matters, what future is there for the international conventions such as the Limitation of Liability Conventions, Hague-Visby and Hamburg Rules .and the Warsaw Convention?' which was submitted with International Bar Association for scholarship purpose. 2. William Tetley, (2000) 24 Tul. Mar. L.J. 775-856, 'Uniformity of International Private Maritime Law - The Pros, Cons and Alternatives to International Conventions - How to Adopt an International Convention'. originally designed to protect and encourage trade and shipping industry and was regarded as a matter of public policy. This recognized privilege given to shipowners (as well as salvors), is now codified in the following international conventions: The Brussels Limitation Convention of 19243, The Brussels Limitation Convention of 19574, as amended by the Protocol of 19795'. The IMO Limitation Convention of 19766 , amended by the IMO Protocol of 1996 to Amend the Convention on Limitation of Liability for Maritime Claims, 19767. (LLMC)6 The right of the shipowners/salvors to limit their liability is however, not absolute but fettered by law. Shipowners may lose such entitlement if they, what is known as 'break the limit', fail to qualify the test under the Conventions. Under the old limitation conventions like 1957 Convention, it was comparatively easier to break the limits. Under the LLMC 1976/1996 a test largely based on aviation law, has to be satisfied, which states that unless there is some intentional or quasi intentional act by the shipowner, the shipowner's privilege is not lost by mere negligence (Article 4). Amount of limitation is basically based on the tonnage of the vessel and nowadays calculated with reference to SDRs (Special Drawing Rights). Global limits? The limits that Limitation of Liability Conventions provides are sometimes called as 'global limits', in the sense that if a shipowner is facing numerous claims of different genres, the shipowner may ask for creating an overall maximum fund for all such claims regardless of their source. Such limitation fund is applied after the individual limits provided 3. 25th August, 1924, date of entry in force 2nd June, 1931. 4. 10th October, 1957, date of envy in force 31st May, 1968. 5. 21st December, 1979, date of entry in force 6th October, 1984. 6. 19th November, 1976, date of entry in force 1st December, 1986. 7. 2nd May, 1996, date of entry in force 13th May, 2004. 8. See Part XIII, Chapter 41, sections 534 to 548 of the Merchant Shipping Ordinance, 2001. under other international conventions9 and or national laws. As stated, Limitation of Liability Conventions provides 'global limit' as that is the maximum the shipowner is liable to compensate. The limits actually are not 'global'. For certain special regimes, there are separate limits. Global limits provided under the liability limitation conventions do not function at secondary stage. Conventions dealing with oil pollution10 and hazardous" substances are those special regimes where Limitation of Liability Conventions do not work. Certain conventions like 1969 Liability Convention12 are backed up with Fundsis. They provided a regime of strict liability of a shipowner committing oil pollution supported by a Fund with contributions from oil importers. 3. Carriage of goods by sea conventions There are currently two different sets of laws enforced in respect of carriage of goods by sea. The popular one (i) The Hague/Visby Rules, 1968/79 (The Bills of Lading Convention i.e. Hague Rules, 192414, as amended by the Visby15 Protocols of 1968 and 1979) and less accepted'6 (ii) The Hamburg Rules, 197817. Both the rules set minimum standards for the carriage of goods by sea to be followed by the carrier. Both the rules deal with the liabilities and the rights of the carrier and the shipper/consignee. The main difference between the two set of rules are that Hamburg Rules are considered fairer to the shippers while 9. e.g. Hague-Visby Rules, Athens Convention 10. International Convention on Civil Liability for 011 Pollution Damage, 1969. 11. Convention on Liability and Compensation for Damage in connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996. 12. International Convention on Civil Liability for Oil Pollution Damage, 1,969. 13. International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage; the 1971 Fund, the 1992 Fund and the Supplementary Fund. 14. See Carriage of Goods by Sea Act, 1925. 15. Protocol to amend the Bills of Lading Convention. 16. 29 states are party to it. 17. United Nations Convention on the Carriage of Goods by Sea. Hague-Visby Rules protect shipowners, as it is a fact that Hamburg Rules was motivated by shipper friendly bloc mostly representing developing countries, while the shipowning nations do not want Hamburg Rules and promoted Hague-Visby Rules. Even the language of the two rules differ with each other as the Hague-Visby Rules are written in common law style while the Hamburg Rules are drafted in civilian style. It is common that carriage of goods by sea involves an international leg. It is not only difficult but also harsh to proportionate the obligations and the rights between parties belonging to different countries when the international rules are entirely different at two different points of international carriage. For sake of uniformity and consistency, the UNCITRAL is currently undergoing assessment and revision of the rules relating to carriage of goods by sea. 4. Warsaw Convention18 The 1929 Warsaw Convention was amended at The Hague in 195519 and by Protocol No.4 of Montreal in 1975. The Convention's popularity can be gauged from the fact that there are more than 135 parties to the Convention, either in its original form or one of its amended forms. The Convention being old could not coupe up with the present day requirements and necessitated for drafting a complete new Convention for equitable balance of interests between the customers at one end and the air carriers at the other end. The Montreal Convention Amongst other, the notable reason for drafting a new convention for international carriage by air was the maximum amount of compensation that was allowed under the Warsaw Convention. The Montreal Convention20 imposes strict liability on the carrier for the first 100,000 SDR21. There is no upper limit if the carrier is found at fault. Other important features of the new Convention include the right to sue in relation to passenger death or injury in the 18. Convention for the Unification of Certain Rules relating to International Carriage by Air, Signed on 12th October, 1929 at Warsaw. 19. See Carriage by Air (International Convention) Act, 1966. 20. Done on 28th May, 1999. 21. Article 21. passenger's own country22, what is known as the 'fifth jurisdiction'. It also gives right to passenger and cargo consignors to recourse against both the contracting carrier and the actual carrier23 operating the flight24. The Convention requires all air carriers to carry liability insurance25. The Convention also preserved the benefits to the cargo industry allowed under Montreal Protocol No.4 amending Warsaw Convention. 5. The Future There is no hard and fast rule why an international convention should not be replaced or should be kept on the international statute. Amendments and replacement of international conventions are necessary with passage of time for reasons like modernization of the industry related, adequate compensation, and unfair attitude of one party taking unjust advantage of the rules. My conclusions with reasons in respect of the following international conventions in relation to maritime and aviation industry is as under: a. Limitation of Liability Convention (i) To see the future of Limitation of Liability Conventions, the question needs to be considered is; 'Is there any justification for limitation today?' (ii) As stated above, limitation conventions were introduced to foster shipping and trade and were regarded as matter of public policy. Its justification was its continued existence from the seventeenth century.26 The modern justification seems to be the need of obtaining insurance cover by the shipowners. Practically, it benefits shipowners, his liability insurer as well as the claimant. The certainty of the maximum amount to be paid in the event of maritime casualty makes the insurer to easily set insurance premium. Such helps the shipowner in fixing the freight and the fact that 22. Article 33. 23. e.g. code-share operations, freight consolidators. 24. Chapter VI. 25. Article 50. 26. Alexantra Towing Co. vs. Millet (The Bramley Moore) [1964], p.200. shipowner would be able to limit liability, gives certainty and predictability, which are constituents of modern law and justice. (iii) The Conventions do not have universal applicability for all types of claims as certain claims are explicitly excluded from limitation. Claims for salvage, oil pollution, nuclear damage, wreck removal, claims by crew including loss of life or personal injury are those claims in respect of which there is no right available to the shipowner to limit liability27. (iv) Conventions which are supported by second tier Funds and or other supplementary Funds have their own limits of liability. Those Funds are contributed by cargo interests. It is relatively easier to maintain the record of those importing, for instance oil for which specialized Funds under special conventions are available and to demand from those importers the contribution in case second tier funds are called for. (v) Such conventions have future and prospect, considering the fact that claims like oil pollution and nuclear damage are outside the scope of limitation of liability convention, which are dealt with specially designed international conventions and considering the applicability of the Limitation of Liability Conventions to only those claims which can easily be compensated if adequately insured by the shipowners. Anything against the public policy is also excluded from these limitations of liability conventions e.g. crew wages, salvors reward, advocating to keep the Limitation of Liability Conventions. The amount of limitation should however, be kept abreast with inflation. b. Carriage of Goods by Sea Conventions (i) As stated in the main body of this paper that UNCITRAL is currently undergoing assessment and revision of the rules relating with international carriage. The said law i.e. 'Draft Convention on the Carriage of Goods [wholly or partly] [by sea]' aimed to bring a uniform law on the subject of carriage of goods by sea. (ii) Apparently, the draft convention is a sign that the Hague-Visby and Hamburg Rules would disappear from 27. Article 3 of LLMC 1976. the international scenario in near future. It appears that the learned Judges have also formed this opinion. It would not be out of place to reproduce the following remarks of Lord Stern in House of Lords28: "31. The United Nations Commission on International Trade Law (UNCITRAL) is currently undertaking a revision of the rules governing the carriage of goods by sea. This exercise involves a large scale examination of the operation of the Hague-Visby Rules. It apparently extends to Article III, R.2. It will take into account representations from all interested groups, including shipowners, charterers, cargo owners and insurers." (iii) The draft law on which UNCITRAL is working was sent by the CMI in 2001. However, still now not all of the 17 Articles of the draft law have been reviewed by UNCITRAL. The law draft once reviewed shall take some more time to get the law adopted. (iv) The basic principles i.e. the scope of the draft convention is still undecided, which can be seen from the title of the draft law. The square brackets "[wholly or partly] [by sea]" creates doubt as to whether the law convention be door-to-door or port-to-port? Several other questions are still open, which are serious enough to adduce that the draft convention will not come into force at all. An optimistic approach would be on the contrary. (v) Whether the draft law gets its place in the list of international conventions is not material for my conclusions. If not this draft law by UNCITRAL, some other convention shall take place of the Hague-Visby and the Hamburg Rules. The reason is being the gap between the two prevalent rules, which cannot be filled except by some new law on the subject. c. Warsaw Convention (i) The Warsaw Convention has outlived its usefulness. The main purpose of the Warsaw Convention was to determine the liability of air carriers in the case of an accident, both in regards to passengers, their baggage and also air cargo. It provides, in today's perspective, an 28. Jindal Iron and Steel Co. Ltd. and others v. Islamic Solidarity Shipping Co. Jordan Inc., (The Jordan II); 120051 1 Lloyd's Rep. 57. main purpose of the Warsaw Convention was to determine the liability of air carriers in the case of an accident, both in regards to passengers, their baggage and also air cargo. It provides, in today's perspective, an insufficient amount of compensation. In 1929 and some decades after, that was tolerable. With factors like inflation, legal awareness and frequent use of air travel, compensation offered by Warsaw Convention and other issues underpinning in today's aviation industry, was considered inadequate and outmoded. (ii) It was the inadequacy of the Warsaw Convention that led to the need to modernize and unify the rules on liability. The new Montreal Convention was adopted in 1999 and within a short span of time; on 4th November, 2003 the Convention entered into force after United States became the 30th country to ratify it. At present more than 5029 countries are parties to it. It applies to flights between States that have signed and ratified it and in those countries it supersedes all other rules which apply to international air carriage30. (iii) The time, within which the Montreal Convention came into force, clearly 'shows sign that more and more countries will ratify it in near future. Though it will take some years (may be a decade), but with the increase in number of passengers and air carriage, it is imperative to set up new high standards for air carriage. That will not only ensure equitable compensation and protection air consumers but also organize international air transport operations. 29. European States are parties to the new regime see Official Journal of the European Communities dated 18.7.2001 L 194/39. 30. Article 55.