Bill of Lading – What’s your “Paramount Clause”?
- Wednesday, December 9, 2009, 20:24
- Freight Forwarders Liability, Freight Forwarders Liability
- 2 comments
Paramount Clause under “Bill of Lading” is very important to establish your Limit of Liability (Carriers Responsibility). Please check your reversed side B/L and see what’s your “Paramount Clause”.
In respect of carriage of goods by sea, there are currently four international conventions:
1. International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 15 August 1924 (Hague Rules 1924)
2. The Hague Rules as Amended by the Brussels Protocol 1968 (Hague-Visby Rules 1968)
3. The United Nations Conference on the Carriage of Goods by Sea, Hamburg 6 – 31 March 1978 (Hamburg Rules)
4. Protocol (SDR Protocol) amending the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading of 25 August 1924 (The Hague Rules) as amended by the Protocol of 23 February 1968 (Visby Rules), 21 December 1979 (SDR Protocol 1979)
Limits of Liability under the international conventions:
1. The limit under Hague Rules 1924 – Pounds 100 per package or unit, Pounds 100 being the amount to Pounds 100 gold value.
2. The limit under Hague-Visby Rules 1968 – 10,000 Poincare Francs per package or unit or 30 Poincare Francs per kilo of gross weight, whichever is higher
3. The limit under Hamburg Rules 1978 – 2.5 Special Drawing Rights (SDR) per kg or 835 SDRs per package or shipping unit
4. The limit under SDR Protocol 1979 – 2 SDRs per kg or 666.67 SDRs per package, whichever is higher
National Transport Law:
The national transport law of carriage of goods by sea depends on which International Convention the country enacts or ratify. For example:
1) The United States of America adopts the Hague Rules 1924 and calls it the United States Carriage of Goods by Sea Act 1936 with limit of USD 500 per package or per customary freight unit
2) Singapore enacts Hague-Visby Rules 1968 & SDR Protocol 1979 and calls it the Carriage of Goods By Sea Act 1971, as amended 1979 with limit of 2 SDR per kg or 666.67 SDR per package
3) Indonesia has their own national law on carriage of goods by sea which does not adopt any of the international convention with limit of Dutch Florens/Indonesian Rupiah 600 per package
4) PR China partly adopts the Hague-Visby Rules 1979 and Hamburg Rules 1978 into their transport law, Maritime Code 1993, with limits 666.67 SDR per package or 2 SDR per kg
5) Hong Kong ratify and enacts the Hague-Visby Rules 1968 with limits 666.67 SDR per package or 2 SDR per kg
6) Malaysia has their own national law which follows Hague Rules 1924 with limits Pounds 100 gold francs
7) Philippines follows the US COGSA with limits USD 500 per package
8) Thailand has their own Thai COGSA with limits Thai Baht 10,000 pe rpackage or Baht 30 per kg
In other words, as long as your bill of lading incoporates any of the international convention OR the national laws of the country or that the courts or jurisdiction in which the claim arises apply the international convention or national laws, That’s your Limit of Liability (Responsibility), including the limitation of liability incorporated or applicable therewith.
What consititute as one package or one customary freight?
The defintiion of “one package” has been interpreted differently by the courts.
v one box or crate or bag has been accepted as one package by some courts
v one pallet (although it has numerous cartons/boxes) has also been acepted as one package by certain courts
v with the invention of container to stow cargoes, some courts accepted one container as one package
Usually the number of packages stated on the face of the bill of lading would determined how the limits are being applied. For example, if the bill of lading states 10 packges, then obviously the quantity 10 is taken as basis. If the bill of lading states one container said to contain cargo of rice, then one container is the unit of package. However if the bill of lading states one conatiner said to contain 10 bags of rice, then the law usually intreprets the number of bags as the basis of limitation.
Please note that under the Hague-Visby Rules 1968 and the SDR Protocol 1979, the limitation is either by package or weight whichever is higher.
There is no specific definition of “freight unit”. At the time when COGSA was accepted worldwide, the customary freight unit for most cargo was the “revenue ton” i.e. the number of long tons (2240 lbs / 1017 kg) or measurement tons (100 cubic feet) that would produce the most revenue for the shipowners.
For example a cargo of aluminium ingots shipped bare would be heavy and dense so the customary freight unit would be measured in long ton which is a measurement by weight.
By comparison, a cargo of canoes shipped bare woudl be light but wouod take up a large violume of space, thus the customry freight unit is measured in measurement ton of 100 cubic feet (2.8 m3). If the canoe measures 2 feet (0.61m) X 2 feet (0.61m) X 10 feet (3.0m) long, its measurement would be 40 cubic feet which would be one measurement ton because it is within the 100 cubit feet unit of measurement. Thus the limitation for the canoe is USD 500.00 per canoe.
In interpreting the meaning of the words or clauses in bills of lading, the courts look at what was intended?. Thus one package is usually interpreted literally and apply to the mode of packing for the cargo.
In other words, what constitutes as one package or one customary unit would depend on the applicable law which hears the claim, regardless of which international convention or national law apply on the limit of liability.
Quoted from an advice by
Anwar Bin Saadan, Regional Risk Manager, Marine – Asia – QBE Insurance (International) Limited
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