As per Section 1(5) of Carriage of Goods by Sea Act, its declaration allows the use of electronic data interchange to be inserted in the law of bills of lading as it becomes technically possible in due course Maritime trade has always involved various parties which include buyers, shippers, third party agents, banks as well as ports, which meant that a lot of paper documentation had to be sent to various parts of the world (Tan, Star and Wu, 2017).
Since the enactment in 1992, there has been a faster shift to promote paperless transactions for international trade due to globalization, as a result, the shift to electronic bills of lading has become an important aspect to consider. English common law states that a bill of lading serves as the receipt of a shipment of the goods, serves as proof of the terms set out in the contract of carriage and finally it also serves as a document of title. The case of Sanders Brothers v Maclean & Co. (1883) the court held that the bill of lading should allow the seller and buyer to deal in the documents as representing the goods which are the subject matter of sale; whereby a seller wants to be assured an overseas buyer will pay for goods before taking possession, i.e. by transferring the bill of lading on payment, and a buyer receives assurance that the goods have been shipped and that he will be entitled to possession of them. According to (Todd, 1990), electronic data interchange (EDI) is seen as the future for sea trade. Thus, EDI would replace the current bill of lading and information will be sent via computerised systems. Current developments in a paperless trade that have been approved by international P + I clubs are Bolero International Ltd and essDocs System which were approved in 2010. Additionally e-title ™, which was approved in 2015 (Stimpson, Wood and Barthe-Dejean, 2016).
Current paper bills of lading have raised problems of security risk, whereby the bills of lading could be easily forged or stolen. Furthermore, it may cause delays in ports, whereby ships may arrive in port before the paper BL is received, this may cause further costs such as demurrage. Finally, the costs associated with the bill of lading documentation is estimated to be up to15% of the physical transportation costs (Tan, Star and Wu, 2017).The development of Bolero and essDocs have been designed to imitate the roles that are executed by paper BL. Bolero is a system that was designed by TT Club and the international banking cooperative called SWIFT. Bolero has been accepted internationally as its eBL application has been able to provide both carries and the logistics industry the abilities to create and send bills of lading digitally at a much quicker time and accurate manner. This has enabled the reduction of potential fraud and has been cost saving and mistakes are reduced (Bolero, 2017). It should be noted that Boleros’ eBL has remained true to the legal framework and hence the digitization has simulated the fundamental purpose of traditional BL of being a receipt and evidence of the contract of carriage as well as a document of title.
The development of essDocs has brought with it trading solutions across the whole supply chain as trade documents may be created online via the Docprep+ module by the carrier, logistics companies and agents. Furthermore, these documents may be signed and exchanged online. Moreover, essDocs operates a certification module which provides the freight forwarders and authorizing bodies’ issuance of certificates of origin (essDocs, 2017). The module designed within essDocs known as Cargo Docs has allowed Banks to manage the financial communication with customers under supply chain financial solutions. essDocs creates this solution by “combining title, quality, condition, location” as well as key information to reduce risks (essDocs, 2017). Furthermore, these developments have increased creating and approval of shipping and export documents which further reduces delays and inaccuracies.
The latest development within the digitization of eBL system is e-titleTM, which was founded by ex-members of Bolero as a need to focus on a niche to support logistics companies and carriers through the releasing of eBL without making changes to the core purpose of the BL. The core focus of the e-ttileTM software is the secure transfer of the title of the EBL and the negotiable function of the document between parties (Tan, Star and Wun, 2017). All these software developments all operate under a legal framework called the Electronic Title user agreement which consists of a multi-lateral agreement by which all parties agree to treat the e-documentation equivalent to that of a paper document and thereby not challenging the validity of any transaction to facilitate through these systems (Tan, Star and Wun, 2017).The future, however, has already seen further developments emerging such as Blockchain Technology.” This technology consists of an online chain of blocks, with each block recording, using cryptology technology, a chain of transactions of coins” (Tan, Star and Wu, 2017, p.7). Blockchain provides a secure and permanent solution to recording electronic transactions. It provides unique encryption for each transaction. Due to eBL serving as unique documentation that only the holder of the Bill may exercise rights to claim the goods; Blockchain technology, therefore, guarantees that this uniqueness is equally applied to an EBL (Tan, Star and Wu, 2017). Moreover, (Tan, Star and Wu, 2017) mention that, Blockchain technology provides a decentralized system as opposed to the Bolero and essDocs which are centrally registered currently. Blockchain thus allows ease of access to all parties along the entire supply chain.Innovation and ground products and being launched continuously by eBL companies and thus the world is moving closer to a completely paperless trade which is saving time, costs and administrative matters. QUESTION 2 When looking at the issues in the case between George the shipper of the Greek lemons and the Carrier (Mersey Line). As per the Hague-Visby rules in Article 1, both the carrier issued the shipper enter into a contract of carriage which was covered by a Bill of lading. Furthermore, the Bill of Lading is seen accepted prima facie as per Hague Visby and therefore irrefutable evidence against the carrier of the shipment of goods and in favour of the person who is the rightful owner of the bill of lading. The carriers duties under Hague Visby stipulate that he or she shall properly and with care load, handle, stow, care and discharge goods that are carried. It can be argued that as per Article III rule 2. (Rodgers, Chuah and Dockray, 2016) mention that the carrier is implied to ensure that there is an expeditious delivery of the goods therefore for any delays, damage or loss of cargo the carrier is liable under the rule Hague Visby Article III rule 2. Additionally, the implied terms of deviation in a contract of carriage can also be argued by the shipper of the goods. In the Glynn v Margetson 1893 The House of Lords held that the carrier was to deliver perishable goods of oranges although the contract stated that they may call at other ports. The carrier, therefore, has a duty not to deviate as consequences thereof are severe as set out in Hague Visby Article IV. The court thus ignored this clause and carriers were thus liable. “Deviation from the proper route without lawful justification can be held against the carrier (Rodgers, Chuah and Dockray, 2016). This further implies that the carrier may not rely on exemption clauses although this is stated in the contract of carriage between Mersey Line and George. This may be seen as a breach of duty as the carrier needs to take proper care and to travel on the ‘usual route’ as per usual voyage plan… (cite). (Todd, 1990, p. 147) mention that “deviation is a condition of the contract” as outlined in Hague Visby Rules. Therefore any slight deviation allows George to reject the Bill of lading and claim damages. The cargo owner may further argue that they were not informed of the deviation of this route which could hold the carrier liable.However, the carrier may argue that as per Article IV rule 1 of Hague Visby by limiting his liability and neither carrier nor the ship helped liable for any losses or damages that arise. It can also be argued, what construes a ‘usual or proper route’? How can the proper route be defined? Purely on Prima facie from the contract between SS Citrus and George, the usual route is Piraeus to Liverpool, furthermore, the contract of carriage can be argued if it was a lawful port of call as per contract of carriage, however, extrinsic evidence of this needs to be shown as a normal commercial route usually undertaken. As in the case of Reardon Smith Line v Black Sea and Baltic General Insurance 1939 AC 562, HL. Lord Porter summed that it is the duty of the ship to sail between ports using the usual route, if there is no proof, however, that the route is a geographical route and it may be changed in some cases for other reasons in cases to save property or for business purpose. The carrier could thus argue that this is a usual port of call as well as for its commercial purpose as SS Olivia is detailed at the time of setting on this voyage. Cite rogers, the doctrine is appealed is when a ship needs to take on fuel or to load or discharge other cargo. Lastly the collision in Gibraltar provides to exclusion of the liability of the carrier are stipulated in Article IV r. 2 of Hague Visby, whereby the collision caused the carrier may argue no responsibility due to the loss or damage arising as result of acts of God, Act of war, perils of the sea or fire. The burden of proof is the onus of the claimant to show evidence that the collision. In the case of The Xantho 1887, this burden of proof was shown by the plaintiffs to be purely collision, and thus the burden shifted back to the carrier to show that it was caused by excepted perils of the sea (Sherzhantov, 2017). Furthermore, it would have to be proved whether the Bill of lading contains excepted perils (Roger, Chua and Dockery, 2017). The carrier can also have limitations of liability through articles IV 2 (q) that no negligence occurred which possibly lead to a collision. The cargo owner would, therefore, need to ensure they have insurance in order to get coverage on the loss of cargo and carrier may further claim against P + I cover for cargo and ship loss. If the carrier is responsible for causing loss or damage, the P&I Club will pay; but if the carrier can avoid liability, say, via an exemption clause or via Article IV of the Hague-Visby Rules, the cargo-owner will have to make a claim on his own insurance. QUESTION 3 Due to an increasing bitterness on the rules among cargo owners as the contract of carriage of goods, the ship-owners were the stronger contracting parties, whereby adding exclusion clauses that left all risk to the cargo owners (Carr, 1999). “This lead to the implementation of Hague-Visby Rules in the UK with carriage of goods by Sea Act 1971 which repealed the Carriage of goods by sea act of 1924″ (Carr, 1999, p.138). The motivation to set up Hague-Visby rules were due to one of the important aspects as mentioned hereafter by (Todd, 2006) such as the package limitations as it the limitations did not work well with bulk shipments or cargoes that were consolidated. According to (Art. IV (5)), the original rules stated that Sterling 100 and was subsequently changed to 666.67 units per package or unit or per kilogram of gross weight of the goods lost or damaged, whichever is higher. This rule vastly more appreciated as multi-modal transport operations are used more now in this era than decades ago (Todd, 2006). Furthermore, changes in (Art. III (4)) statement to bills of Lading to protect carriers, servants and agents when actions are brought into tort, rather than in contract.” Additionally, deck cargo was insufficient in terms of container era. Also, it takes into account only one carrier and does not make provision for other contracting carriers (Todd, 2006). Moreover, Article X Applicability Hague Rules was restricted by the Carriage of Goods by Sea Act 1924 to bills of lading issued in respect of outward voyages from the U.K. Article X of the Hague-Visby Rules has extended it to a wider ambit. The wording of Art X clearly envisages an international contract of carriage ‘between ports in different states’ although Section 1 (3) of the Carriage of Goods by Sea Act 1971 extends the operation of the Rules. The Hague and Hague- Visby Rules were, however, the subject of much criticism over the years from representatives of shippers, who alleged that the Rules unduly favoured carriers. After Hague Visby, the Hamburg rules were adopted by UNICTRAL in 1978. “The Hamburg Rules differ from Hague Visby Rules as they apply to both inward and outward” (Girvin, 2007, p.190.)They have thus not been adopted by the United Kingdom as yet, they also support the cargo-owners more than the Hague Visby rules (Todd, 2006). As one of the major maritime nations such as the United Kingdom has not ratified the Convention (Girvin, 2007). This could perhaps be due to the great political issues dealt with during the convention. It was implied at the convention that the Hamburg rules were more a ‘political compromise’ than economic benefit for trading nations, and this is further substantiated in the use of vague language drawn up in the Hamburg rules (Girvin, 2007). Wilson (2010), mentions that the application of the HV rules as restricted to contracts of carriage between ports in different states (i.e. it does not apply to coastal trade). Whereas the Hamburg rules govern both import and export trades which is appreciated by ship-owners who trade with countries who have adopted the Hamburg convention. The Hamburg Rules (Article 2) apply to a contract of carriage by sea (other than a charter party) between two States if he contractual loading port is in a Contracting State the contractual discharge port is in a Contracting State; or the actual port of discharge is one of the optional contractual discharge ports and is in a Contracting State; or the document evidencing the contract of carriage by sea is issued in a Contracting State; or the document evidencing the contract of carriage by sea provides that the Rules shall apply or the choice of law clause selects the law of a State which gives effect to the Rules. Hamburg rules have applied to a small portion of maritime trade compared to its predecessors of Hague and Hague Visby rules. It was hoped that Hamburg rules would be internationally accepted and have uniformity in cargo liability, on the contrary, it seems Hamburg rules is entirely not a replacement for Hague/Visby Rules (Rodgers, Chua and Dockray, 2016). (Thomas, 2003) discusses that the Hamburg application of rules carries many similarities to that of the Hague/Visby. Both rules are based on fault applications with a reversed burden of proof as stated in Hamburg Rules Article 5, thus the carrier may escape liability for cargo loss or damaged if it meets the burden. Furthermore, Thomas 2003, explains that Hamburg rules “distinguishes between the carrier and the person who actually performs the carriage”. The hope is therefore that the Rotterdam Rules would be able to overthrow the regime of the Hague/Visby Rules. This notion is a vast ambition however, it should be a consideration in the scope of maritime trade regime.The Rotterdam rules Convention was implemented in 2010. The Rotterdam convention required ratification by at least 20 nations (Todd, 2006). The new convention seeks to legalize contracts for carriage of goods ‘wholly or partly by the sea’ through the port to port shipments as well as incorporate multimodal transportation with a sea leg. Thus Rotterdam rules apply for door-to-door shipments. It should be noted that even though this new development occurred, it also has its limitations and does not replace the UN Convention on International Multimodal Transport of Goods 1980 (Thomas, 2003). The Rotterdam Rules have been designed to apply to the modern maritime regime. As (Thomas 2003, p. 26) states “the goals was to update transport law for the twenty-first century.” Additionally, an updated law to expedite the electronic trade are covered largely by the Rotterdam rules. Both Shippers and carriers are likely to benefit from a modern convention such as Rotterdam rules due to the uniformity the rules provide. However most countries have through their national laws mainly incorporate Hague/Visby rules and Hamburg elements, therefore these counties are likely to see great major changes under the regime (Thomas, 2009) As Rotterdam rules are purely based on the fundamentals of the other conventions, the only evident changes are that to ‘navigational fault exception as per Article 17, however when the carrier has defense in this term he or she must be able to prove himself/herself under this ruling. (Rogers, Chuah and Dockray, 2016). Also, Rotterdam convention “made great changes to the change in the period of responsibly for door-to-door coverage” (Thomas, 2009, p.31). (Todd, 2006) mentions that although due to the drive and pragmatic reason for Rotterdam rules, this is perhaps why nations are slow to take on and ratify the rules such as the United Kingdom. When Rotterdam rules are to be ratified it would allow international regularity to occur according to (Thomas, 2009). Perhaps a ‘lighter’ version of the Rotterdam rules could be a more appealing way to get nations onboard. QUESTION 4 .The Sale of Goods Act was amended in 1995 to make provisions for bulk cargoes given the light of the issues in this case. The new Act introduces Section 20 A, Section 20B. This section in the action stipulates that contracts of sale where the specified quantity of goods that are unascertained and form part of bulk cargoes and the buyers have made payment for the goods that form part of the bulk. Unless the parties have agreed differently, the goods in an undivided share of the bulk will be transferred to the buyer and the buyer becomes an ‘owner in common’ of the bulk. The buyers are also not liable to other buyers who have received short delivery. This has been placed in constitutional form the doctrine of ‘ascertainment by exhaustion’.S 20A(1) states:”This section applies to a contract for the sale of a specified quantity of unascertained goods if the following conditions are met—(a) the goods or some of them form part of a bulk which is identified either in the contract or by a subsequent agreement between the parties; and(b) the buyer has paid the price for some or all of the goods which are the subject of the contract and which form part of the bulk.”The consequence of this section is that ownership passes to the buyer and the buyers become owners in common as soon as the conditions of the contract are fulfilled (Law teacher, 2013). Furthermore, it if the bulk goods “shrinks by natural wastage or destruction so that it is insufficient to meet the claims of all the co-owning buyers, the value of each co-owning buyer’s interest abates in proportion” (Law teacher, 2013, n.p). Therefore for matter in this case for Section 20A to apply the following must be fulfilled: a) the contract must specify quantity of goods to be sold; b) goods must form part of an identified bulk; c) the buyer must have prepaid; d) It does not apply where parties agree otherwise (Thomas, 2000).S 20B further states the person who has become an owner in common of a bulk by virtue of section 20A above shall be deemed to have consented to—(a)”any delivery of goods out of the bulk to any other owner in common of the bulk, being goods which are due to him under his contract;(b)any dealing with or removal, delivery or disposal of goods in the bulk by any other person who is an owner in common of the bulk in so far as the goods fall within that co-owners undivided share in the bulk at the time of the dealing, removal, delivery or disposal”The usual rule of ownership in common in property law does not apply here and each owner is deemed to have consented to deliveries to the other co-owners of the quantities due to them. The owners in common who take delivery from the bulk are not liable under the. Those co-owners who take delivery out of the bulk are not liable under the new law to account to the other co-owning buyers who may receive short delivery. Moreover, the Act also established the doctrine of ‘ascertainment by exhaustion’. This is to give effect to cases like Wait and James v Midland Bank, where English court held that there could be a transfer of property without unconditional appropriation by a process called ‘ascertainment by exhaustion’. S 18, Rule 5(3) “provides where there is a contract for the sale of goods from a bulk identified either in the contract or by later agreement and the bulk is reduced to, or to less than, the quantity due to the buyer under his contract, then provided that the buyer is the only buyer to whom goods are then due out of the bulk, the remaining goods are taken to be appropriated to the buyer’s contract and property in them passes to the buyer”. This is even so if it arises under separate contracts so long as he is entitled to the whole of the remaining bulk (Thomas, 2000).