The Legal and Economic Impact of the Caspiana Clause under Bills of Lading and Charterparties

• Author: Qais Ali Mahafzah
• Position: Currently, Dr. Mahafzah is an Associate Professor of Maritime Commercial Law at the Faculty of Law / The University of Jordan. He holds an LL.B. in Law / The University of Jordan (1994), LL.M. in International Commercial Law / University of Aberdeen-United Kingdom (1997), Ph.D. in Maritime Commercial Law / University of Durham-United Kingdom (2...
• Pages: 25-38

(2018) 32 ANZ Mar L J 25

The Legal and Economic Impact of the Caspiana Clause under Bills of

Lading and Charterparties

Dr. Qais Ali Mahafzah

1 Introduction

Bills of lading and charterparties play an important role in many international commercial transactions. T erms and

conditions contained in charterparties determine the rights and liabilities of the charterer and the owner, while the

terms and conditions in bills o f lading are usually consid ered by various courts in many countries in determining the

rights and liabilities of the parties (carrier, shipper, consignee, or bill of lading holder) to the bill of lading. Many

charterparties are issued today as being subject to bills of lading, and m ost bills of lading issued today are subject to

national laws or international conventions: the Hague Rules 1924, the Hague-Visby Rules 1968 , the Hamburg Rules

1978, and the Rotterdam Rules 2008,1 which impose on the carrier minimum liabilities t hat cannot be lessened with

exclusion clauses inserted in the bill of lading.2

The current legal system concerning bills of lading, however, is a consequence of developments that started

approximately two-hundred years ago. In the early nineteenth century, a strict liability system protected cargo

owners, where carriers were strictly liable for the safe transport and delivery of the cargo to its destination.3 This

situation led various national courts and commentators to describe the carrier as the ‘insurer’ of the goods.4 By the

late nineteenth century, the sit uation changed. Carriers avoid ed strict liability by including exclusion clauses in their

bills of lading. The exclusion clauses included losses and damage from perils of the seas, jettison, frost, decay,

collision, strikes, benefit of insurance, deviation, unseaworthy ships, and the carriers’ own negligence.5 Those

exclusion clauses were absolutely in the carr ier’s favor and the cargo was transported entirely at the merchant’s

 Currently, Dr. Mahafzah is an Associate Professor of Maritime Commercial Law at the Faculty of Law / The University of Jordan. He holds an

LL.B. in Law / The University of Jordan (1994), LL.M. in International Commercial Law / University of Aberdeen-United Kingdom (1997),

Ph.D. in Maritime Commercial Law / University of Durham-United Kingdom (2002), and Diploma in Trade Policy and Multi Lateral Trading

Systems (WTO/AMF) (2003). He is a senior partner at Gedara for Legal Services & Arbitration (GLSA) Law Firm in Jordan. Dr. Mahafzah was

a Board of Trustee Member at Jordan University of Science & Technology (October 2009- October 2010), and was the Deputy Dean of the

Faculty of Law / The University of Jordan (2013-2014) and (2005-2007). Email: q_mahafzah@ju.edu.jo; Tel: +962 7 9999 4545; Fax: +962 6

5885889.

1 Those Rules are known as: ‘International Convention for the unification of Certain Rules Relating to Bills of lading. Signed at Brussels, August

25, 1924’, ‘Protocol to Amend the International Convention For the Unification of Certain Rules of Law Relating to Bills of Lading Signed at

Brussels on 25 August 1924. Signed at Brussels, 23 February 1968’, ‘Protocol Amending the International Convention for the Unification of

Certain Rules of Law Relating to Bills of Lading (21 December, 1979)’, and ‘United Nations Convention on the Carriage of Goods by Sea, 1978

(Hamburg Rules)’. See John F. Wilson & Charles Debattista, World Shipping Laws: International Conventions v. Carriage by Sea (October

1980) V/1/CONV-V/6/CONV. The above Rules were created to redress the imbalance which had existed between shipowners and cargo owners

regarding the loss or damage to goods. See Sarah C. Derrington, ‘A Piece – Neither A Package Nor A Unit: El Greco (Australia) Pty Ltd v

Mediterranean Shipping Co SA’, (2005) 68(1) Modern Law Review 111, 113. However, it should be noted that on December 11, 2008, the United

Nations adopted a new convention: ‘The United Nations Convention on Contracts for the International Carriage of Goods Wholly or partly by

Sea’, which is known as ‘The Rotterdam Rules’. For a detailed explanation of the later Rules, see Felix W.H. Chan, ‘In Search of a Global

Theory of Maritime Electronic Commerce: China’s Position on the Rotterdam Rules’, (2009) 40 Journal of Maritime Law & Commerce 185;

Michael F. Sturley, ‘Modernizing and Reforming U.S. Maritime Law: The Impact of the Rotterdam Rules in the United States’, (2009) 44 Texas

International Law Journal 427; Proshanto K. Mukherjee & Abhinayan Basu Bal, ‘A Legal and Economic Analysis of the Volume Contract

Concept under the Rotterdam Rules: Selected Issues in Perspective’, (2009) 40 Journa l of Maritime Law & Commerce 579.

2 It should noted that the Rotterdam Rules 2008 are not yet in force as twenty States are required for the Rules to come into force (The Rules will

enter into force twelve months after ratification by at least twenty States). See Article (94) of the Rotterdam Rules 2008.

3 Ocean carriers, whom were presumed to be dishonest, were also strictly liable under Roman law for the safe transport and delivery of the cargo.

See Adolf Berger, Encyclopedic Dictionary of Roman Law (2004) 668-69.

4 See, for example, the English case Forward v. Pittar d, 99 Eng. Rep. 953, pp. 956-57 (K.B. 1785) (per Lord Mansfield); Samuel Robert

Mandelbaum, ‘Creating Uniform Worldwide Liability Standards for Sea Carriage of Goods under the Hague, COGSA, Visby and Hamburg

Conventions’, (1996) 23 Transportation Law Journa l 471, 474; Michael F. Sturley, ‘The History of COGSA and the Hague Rules’, (1991) 22

Journal of Maritime Law & Commerce 1, 4-5.

5 Benjamin W. Yancey, ‘The Carriage of Goods: Hague, COGSA, Visby and Hamburg’, (1983) 57 Tulane Law Review 1238, 1240. For a details

explanation of the history of shipping policies see, Joseph C. Sweeney, ‘From Columbus to cooperation-trade and shipping policies from 1492 to

1992’, (1990) 13 Fordham Internationa l Law Journal 481.