Oritsematosan Edodo, Thorpe Associates

INVESTMENT CONFERENCES IN PUBLIC UTILITIES AND transport

HELD IN Addis - AbAba, ethiopia

from 7^th JUNE – 9^TH JUNE 2006.

NeW DEVELOPMENTS IN transport law AFRICAN PARTICIPATION

(UNCITRAL DRAFT CONVENTION ON CARRIAGE OF GOODS (WHOLLY OR PARTLY BY SEA) EFFECTS ON AFRICAN CARGO INTERESTs)

by

Oritsematosan EDODO – EMORE LLM (LONDON) BL

Oritsematosan Edodo, Thorpe Associates

Preamble

it gives me great pleasure to be given the opportunity to speak before such a distinguished audience, on a subject, which is the most topical in the transport industry today.

I thank the Input Project Team and other organizers of this event for inviting me to contribute in a practical way to the development of transport law in the.

HISTORICAL PERSPECTIVE

The African continent is made up of cargo owning nations. In the 70’s and 80’s many of these countries owned their own vessels and carried their sea borne trade aboard their national liners. Today the story is some what different. The continent is totally dependent on carriers from outside to transport its seaborne trade. For this reason the content of the United Nations Commission on International Trade Law (UNICTRAL) Draft Convention on carriage of goods (wholly or partly by sea) should be of special interest to the continent.

CURRENT DEVELOPMENT IN TRANSPORT LAW

The most current development in transport law today is the evolution of the United Nations Commission on International Trade Law (UNICTRAL) draft instrument on carriage of goods (wholly or partly by sea) into a draft convention which would ultimately transform into a United Nations Convention.

A United Nations Convention is binding on nations which are signatory to same.

It is at the point of preparing a convention that nations are able to make contributions which safeguard their interests however varied these may be.

It is for this reason that as regards transport law, the interest of carrier /s hip owning nations would differ from those of cargo owning countries.consequently if only ship owning nations are active and dominant in the preparation of a convention regulating the carriage of goods, (wholly or partly by sea) it would not be surprising, if such a legislation is worded heavily in favour of ship owners. It would take an altruistic nation to look out for the interests of others – that does not happen often.

Why should Africa participate in the preparation of the convention on the carriage of goods (wholly or partly by sea)?

A good starting point to answering this question would be to look at some of the terms currently being proposed in the draft convention and see how they affect the interest of the continent as cargo owners. An analysis of some of these terms would show the way Africa should go.

a. Limitation of Actions

Cargo Owners have perennially battled with the issue of time bar in maritime contracts and legislations.

Under the Uncitral Draft Convention, art 69 provides that a carrier is discharged from liability if arbitral or judicial proceedings are not instituted against the carrier within one year after the goods have been delivered or should have been delivered.

Under the second variant of the same article, all rights /actions under the convention are extinguished or time barred, if judicial or arbitral proceedings are not brought within one year.

From previous experience, it is clear that one year limitation period is insufficient for the cargo owner. This short period has proved onerous to cargo owners under previous regimes.the present proposition is a repeat of the provisions of the Hague - Visby rules which proved harsh to cargo owners. Under the Hamburg Rules the limitation period was two years.

For the interest of African Countries most of which are cargo owners, it is important to press for either a maintenance of the two years provided by the Hamburg Rules or an extension of it to say three years. One year limitation period will not work to the advantage of the continent.

b. carriers liability for loss caused by delay

It is not uncommon in International carriage of goods, to find that there has been delay in the delivery of the goods at the agreed destination. The question is, when there is physical loss or damage to the goods as a result of delay, how much compensation should the carrier pay the cargo owner?

What should be considered in calculating the carrier’s liability.Article 23 provides that the compensation payable should be calculated by reference to the value of such goods at the place and time of delivery. It adds that the value of such goods should be fixed according to the commodity exchange price, or their market price or the normal value goods of the same kind and quality at the place of delivery.

the cargo owner should have no problem with claiming compensation where there is physical loss or damage caused by delay.

However where the cargo owner suffers economic or consequential loss as a result of delay, the cargo owner faces a different challenge. This scenario occurs where, although the goods have not been physically damaged when same arrived at the port of destination, at a date later than the expected date of a arrival, the commodity price may have crashed, the market price may have dropped, and the cargo owner suffers economic or consequential loss.

Article 65 provides that the compensation payable for economic loss caused by delay is limited to an amount equivalent to [one times] the freight payable on the goods delayed.

Limiting the economic or consequential loss to the cost of freight is unfair to the cargo owner.

A cargo owner who has suffered loss or damage to the goods as a result of delay, suffers much economic loss. this loss is not limited to the freight he has paid. He has lost more. As a result of delay in delivery, the goods would no longer be competitive. They would not sell at the prevailing market price.

If a term such as this, is retained as proposed, it means that compensation for economic loss to the cargo owner, is limited to a refund of freight paid on the goods – because one times the freight payable on the goods delayed is really a refund of the freight. This is not beneficial to the cargo owner because once goods are lost or damaged as a result of delay the cargo owner losses more than freight.

This means that the cargo claimant may not be able to recoup his actual economic or consequential loss because the value of his delayed goods is likely to be more than the current market price at the place of destination.

In order to adequately compensate the cargo owner for economic or consequential loss, the compensation has to be a function of the market price at the place of destination – [xy times the market price at the port of destination]. Such a clause would serve Africa better.

Consequently, Africa has to wake up to the challenge of international in trade in order to protect its cargo interests.

c Loss Of Right To Limit Liability Article 66

The current provisions dealing with the right to limit liability should be of particular interest to our continent.

Under Article 66, the carrier, the performing party, the sub – contractors and agents of the performing party or any person who has been delegated to carry out the carriers obligations, may loose the right to limit their liability under following circumstances:

(a) Personal Act Or Omission

If it is proved that the loss or damage resulted from the personal act or omission of the person claiming the right to limit (which said act or omission was done with intent to cause loss) that person looses the right to limit their liability.

(b) Recklessness Of Party Seeking To Limit Liability

if the claimant proves that the damage or loss was caused, recklessly, and with knowledge that such loss would probably result then the person claiming the right to limit liability will loose that right.

Consequently under Article 66, personal act or omission, and recklessness negates the right of the carrier, the performing party or sub – contractors to limit liability.

Effect of hague – Visby and Hamburg Rules

The loss of the right to limit liability under the draft convention is a combination of similar provisions under the Hague – Visby and the Hamburg Rules. However, the provision in Article 66 connotes a stricter regime than what is found in Article IV (5) (e) of the Hague Visby Rules and Article 8 of the Hamburg Rules.

e.Cargo Claimants Dilema

the current provisions dealing with the loss of the carriers right to limit liability will pose great difficulties for cargo claimants in Africa

Under the draft convention, the cargo claimant must prove that the loss or damage to the cargo was as a result of the personal act or omission of the person seeking to limit his liability done with the intent of causing such loss or damage or done recklessly with the knowledge that loss or damage would probably result.

In our considered view, Art 66 would pose great difficulty to cargo claimants in Africa where goods are damaged while they are being loaded unto or being unloaded from a vessel by stevedores. How does a cargo claimant determine the personal act or omission of the stevedoring company. Does this mean the personal act or omission of the management staff of the stevedoring company or the personal act or omission of the individual stevedores physically loading or unloading the vessel? Added to this, is the requirement to prove that the loss or damage was foreseeable. This is an onerous task for the cargo claimant because if he cannot prove the personal acts or omission then the party seeking to limit their liability would be able to do so.

in our view, it would be extremely difficult for the cargo claimants to prove what it takes to cause a party seeking to limit its liability to lose that right.

The proof required of the cargo claimant in order to negate the right to limit liability is easier discharged under the Hague – Visby Rules and the Hamburg Rules, than under the Uncitral draft Convention.

conclusion

Finally the Uncitral draft convention on carriage of goods (wholly or partly by sea) is the physical expression of the intention of the transport industry to be governed by uniform rules. In doing this, the draft convention has borrowed tremendously from the Hague – Visby Rules and the Hamburg Rules although the convention leans heavily on the side of the Hague – Visby Rules.

Most countries of Africa are not signatories to the Hague – Visby Rules which appear more favourable to ship owners. They are signatories to hamburg Rules which appear to favour cargo owners. However like Nigeria many have not gone beyond signing the Hamburg Rules. The said rules have not been domesticated in many jurisdictions.

The UNCITRAL draft convention on carriage of goods wholly or partly by sea has gone beyond the Hague - Visby rules and Hamburg Rules – because whereas the latter two are concerned with maritime transport, the new convention governs all modes of transportation.

For this reason, it is not enough for Countries in the Continent, to sit by and passively watch the creation of a convention which will affect all areas of its transport business. The Continent must make positive contributions that would safe guard her interests.

What must be done to ensure that the continents contribution is impacted into this new transport law?

personal effort made by individual members of the National Maritime Law Associations to attend the comite maritime International Conferences and Seminars where the ground work is done is good, but not enough.

This is the time for the governments in the continent to set up committees on transport law, made up of Maritime Law experts, insurance experts and the Transport Parastatals to diligently follow the process of preparation of the law from its present stage to the realization of the convention. Africa must participate in the working groups.

So far, Nigeria and South Africa, seem to be the only active African voices in the CMI. When the convention comes into existence, it will not only affect the CMI member nations but will affect the whole World.Africa must actively participate in the creation of this convention. When the convention finally comes into being, the continent must take immediate steps to domesticate same to enrich her municipal laws. The days of simply signing conventions should be over.

Thank you for listening and God bless you.

Dated at Addis - Ababa this 7^th day of June 2006.