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3 rd Global Sipping Summit 7-9 November 2008, Dalian, China International Multimodal Transport: A New Approach to Liability Regulation Dr. Mahin Faghfouri.

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Presentation on theme: "3 rd Global Sipping Summit 7-9 November 2008, Dalian, China International Multimodal Transport: A New Approach to Liability Regulation Dr. Mahin Faghfouri."— Presentation transcript:

1 3 rd Global Sipping Summit 7-9 November 2008, Dalian, China International Multimodal Transport: A New Approach to Liability Regulation Dr. Mahin Faghfouri International Multimodal Transport Association

2 International Multimodal Transport: A new approach to liability regulation I. Introduction and background II.Regulation of liability: Current liability framework III.The new Transport Convention: Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea - Impact on multimodal transport - Central features

3 I. Introduction and background What is multimodal transport? No single authoritative definition Carriage by two or more modes of transport Door-to-door transport Often under one contract with one party assuming responsibility throughout One document Terms also used: intermodal transport, combined transport

4 Recent developments Increase in containerization & multimodal transport Concentration of the Liner Shipping Market Emergence of “Service Contracts” in some trade E-commerce & transport: inadequate legal infrastructure Increasing proliferation of national/regional laws Increased regulatory burden to address security requirements

5 Recent developments Global credit crunch impending economic slowdown decline in trade volumes decline in freight rates, and decline in demand for transport services

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9 II. Regulation of liability Current liability framework: No international uniform regime in force to govern liability for loss, damage or delay Localized loss: International unimodal Conventions on carriage by sea, road, rail and air (if applicable) Some regional, subregional and national laws (if applicable) Standard term contracts: e.g. FIATA FBL 92, BIMCO MULTIDOC 95

10 Problems Liability varies depending on :Liability varies depending on : - Applicable regime - Stage of transport where loss or damage occur - Causes of loss or damage Current liability framework is fragmented and liability cannot be assessed in advanceCurrent liability framework is fragmented and liability cannot be assessed in advance It is too complex and may not be cost-effectiveIt is too complex and may not be cost-effective

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12 Previous attempts at achieving a uniform regime at international level UN Convention on International Multimodal Transport of Goods - Not in force UNCTAD/ICC Rules for Multimodal Transport Documents - Need to be incorporated into contracts - Application subject to mandatory law

13 III. New Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea By the end of 2008 a new Convention on Contracts for International Carriage of Goods Wholly or Partly by Sea will be adopted by the United Nations General Assembly Application to sea transport & MT including an international sea leg Based on maritime concepts and existing maritime liability regime, but with significant changes in structure and content Does not address specific issues arising from modern MT Extremely lengthy and complex: 96 articles But: only 2 relate to multimodal transport

14 Impact on MT: Will the new Convention improve the status quo? 1. Will same rules apply throughout? If loss is localized: only certain provisions of: (liability, limitation of liability, time for suit) any applicable unimodal convention apply plus remainder of the new Convention

15 And: If loss, damage or delay cannot be localized or if no international convention is applicable: Maritime liability rules of the new Convention apply Irrespective of how short the sea leg and how long the land leg may be

16 2. Will there be one party responsible throughout? Period of responsibility: receipt to delivery But carrier may - Contractually limit period of responsibility e.g. to “tackle-to-tackle” - Not be responsible for certain functions e.g. loading, stowing, discharging So: Carrier may not be responsible door-to-door

17 The new Convention: Central features A. Carrier’s obligations and liability Liability: fault based Long list of exceptions Extensive scope for contracting out

18 B. Shipper’s obligations and liability Detailed obligations: mandatory Fault based liability, but Strict liability for the provision of inaccurate information and dangerous goods No monetary limitation on shipper’s liability Arguments: Modern shippers more sophisticated (?) But special rules for sophisticated parties: “volume contracts”

19 C. Freedom of contract: “volume contracts” The Convention primarily establishes mandatory liability both for carriers and shippers But: “volume contracts” (= service contracts) are exempts from mandatory application of the Convention So: most of its provisions could be modified or contracted out Apparent rationale: “volume contracts” = “service contracts” are contracts between parties of equal bargaining power!

20 What is “ volume contract”? a contract of carriage for the carriage of specified quantity of goods in a series of shipments during an agreed period of time specification of quantity may be a minimum, a maximum or a certain rang No minimum quantity of cargo required.

21 And: Convention applies to: “volume contracts” in liner trade But: application is by default and not mandatorily Definition wide enough to cover almost any contract of carriage in liner trade

22 Special rules for volume contracts allowing derogation “volume contracts” may provide for greater or lesser rights, obligations and liabilities if it ….is individually negotiated, OR ….prominently specifies sections containing derogations

23 Potential consequences Volume contracts between parties of equal bargaining power: No general concern except for protection of 3 rd parties Volume contracts between parties of unequal bargaining power: Small shippers and large container carrier in liner trade: Freely negotiated? Or contract of adhesion? Potential for abuse! Marginal application of the Convention

24 Conclusions! Thank you

25 For further information see: UNCITRAL documents: Text of the Draft Convention (document A/63/17) and all working documents: UNCTAD documents: UNCTAD Commentary on Draft Instrument on Transport Law (UNCTAD/SDTE/TLB/4) Freedom of contract and carrier liability (UNCTAD/SDTE/TLB/2004/2) Multimodal transport: The Feasibility of an International Legal Instrument (UNCTAD/SDTE/TLB/2003/1) IMMTA submission to UNCITRAL: A/CN.9/WGIII/WP.97 See also Mahin Faghfouri, International Regulation of Liability for Multimodal Transport-In search of Uniformity, WMU Journal of Maritime Affairs, April 2006.


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