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Entitlement to Sue in Maritime Law

Question:

Discuss about the Maritime Law for Property Damages.

There are two fundamental rights that have been addressed in relation to the Maritime Law that are faced quite often. These issues are that who will be entitled to sue the cargo when there is damage or loss. And the other issue is in relation to the carrier, who the carrier can sue when loss has been incurred.

The problem is seen in every case where there is claim made against the carrier. If the party cannot sue the shipper under the claims made against the carrier it will not be able to even if the cargo does not oblige by its duty and causes the loss or the damages. The other matter is often seen in the case when the carrier has suffered loss because of transportation of goods, if the freight has not been paid or the vessels were seriously injured during the transportation by the cargo of the harmful cargos. Such issues are particularly important in the case when the carrier is not able to recover the loss that has been made cannot be recovered from the shipper with whom the contract has been made for the carriage there is need to make the claims opposing the parties. There are two issues that are often brought up due to the party that wants to sue the cargo or the other party because of whom the cargo is made liable they are mostly the party in the contract of the carriage.

The main object of the party’s right and the liabilities in the cargo of the goods and services over the sea is often known as the “document” that has now been used over more than hundred years is the “bill of lading”. This “bill of lading” has been main scope by which the “third parties” such as the buyers or the banks who are usually not a party to the contract of the carriage that has been entered among the shipper and the carrier having the rights and the liabilities in the contract of the carriage. The most vital place of the bill of lading is in relation to the giving title to sue and be sued.

A ship was chartered by Wong Ting Fung Ltd in Hong Kong to Ernest Bart Shipping Pty Ltd in Adelaide to ship 7,000 steel coins to Mr. Yeung in Hong Kong. A contract was made between shipper and the shipping party including the bill of lading. In the port at Adelaide the master was not very familiar with them carriage of steel in such form although Bart Shipping Pty Ltd protested that the steel was normal the master wrote it to be rusted on the bill of lading. The bank that had financed Yeung under credit was instructed to only accept a clear letter in relation to the bill of lading. Thus, the bill of lading was disapproved but after certain negotiations Yeung agreed to accept the steel coins from Bart Shipping Company at a discounted price. But when the ship arrived Yeung was given the bill of lading which had only 6,000 coils due to some serious damage that took place before loading.

Carriers' Pursuit of Liability and Losses

Bart Shipping Pty Ltd and Yeung have to be advised regarding their rights and liabilities in relation to the rights and the liabilities of the shipper and the carrier along with the laws related to the bill of lading. Bart Shipping Company had chartered their ship from Wong Ting Fung Shipping Ltd to carry 7,000 steel coils to Mr. Yeung in Hong Kong.  All the clauses were mentioned in the contract which was agreed by both including the bill of lading.

With respect to the English position the two acts play a crucial role, “Carriage of Goods by Sea Act 1992” and the earlier on was “1855 Bills of Lading Act” along with the reports of the “Law Reform Committee” and the case laws (Ajaja 2015). The UNCITRAL Draft Convention, in relation to the Draft Convention itself will help in determining the right and liabilities of the shipper and the shipment. The “bill of lading” is an important document in the international trade.

The contract between Bart Shipping and Mr. Yeung can be explained  here, in the case of the international sales, the shipper that is the seller mostly makes a contract with the shipper to transport and delivery of the products to a third party (Baatz 2013). The person to whom the goods are sold are the buyers, there are times when the delivery has to made to the banks that have sponsored the buying of goods and the services when the goods are under the “bill of lading” and are given to the bank as a form of security. It becomes crucial for the third parties that are able to receive the obligations in the contract under the bill of lading as they are often those who bear the damage to the goods at the time of transportation period (Brodie 2014).

Under the common law of privity, the third parties are not able to sue the carriers under the contract of carriage. The rule states that the parties to the contract may sue or be sued on it. Although the shipper can sue the shipper is the party to make an agreement with the carriage, the common laws has not allowed them to get back the obvious damages if he has not incurred the loss. This has been considered very unsatisfactory in the state of affairs as the buyers would be often left without any solution in the contract when damage takes place in the cargo (Cai 2016). Although the buyer can sue the carrier by other means. In case of torts, there are other alternative which are very complicated and on the grounds of such claim it becomes difficult to establish it (Croucher 2016).

In the case, Dunlop v Lambert the problem was in relation to the common law the solution to the privities problem that was developed. In this case, court had allowed the shipper that had entered into a contract of carriage with the shipper who did not suffer any loss himself to get back  the “obvious damages” (Cooper 2016).

Third-Party Entitlement in Contract of Carriage Agreements

The consignee or the endorsee of the “bill of lading” needs the contractual rights under the bill when the property in the goods has passed to him upon or by the reason of such consignments (Jafari 2015. The link between the transfer of the property rights and the acquisition if the contractual rights however turned out to be a problem in certain cases. Under section 1 of the Bill of Lading Act, for a consignee to gain the rights of the suit and to acquire the contractual rights the property in the goods have to be passed to him either upon or by the reason of such endorsements (Schoenbaum 2015).

The transferee in not obliged by each terms and conditions of the agreement of the cargo and are just obliged to the rights and the liabilities in relation to the bill of lading.  This implies that the first contract that was made between the shipper and the bearer had distinctive terms that were highlighted in the bill of lading, these terms and conditions of the bill of lading will have an upper hand in deciding the extent the rights and the liabilities of the transferee. The outcome of the case Leduc v Ward, there was an agreement between the shipper and the bearer that allowed deviation of Glasgow. However it may look like, there was no such deviation that was allowed in the agreement between the transporter and the endorsee. Since there was no sign of the bill of lading allowing such deviation consequently, the endorsee had a real claim against the transporter.

the result of the case, Sewell v Burdick is that it had prevented the bank from being obliged under the agreement of the cargo, it additionally kept the bank from bringing the claim against the transporter under the agreement of the carriage. Under the validity of the caase, the products if the goods and the services were damaged there would be breach of contract causing the bank and its security to diminish and the bank would rather not sue the transporter as the bank had the exceptional property and not the general property. Under section 1 of the bill of lading act. In such kind of cases the bank will be left with no other option but to rely on the remedies of the common law.

Under section 1 of the 1855 Act it gives the endorsee the power to be liable in relation to the products in the contract and the bill of lading.

Conclusion

The rights and the liabilities that have to be advised to Bart Shipping Company and Mr. Yeung are mentioned under the 1992 Carriage of Goods by Sea Act and the common law, it can be seen that the parties that have the right to sue the cargo under and the party that the carrier is entitled to sue. The main object of the law in this area is to balance the commercial interest of the three parties that are mentioned in every bill of lading contract that are the carrier, the shipper and the consignee or the indorse. If the law does not properly protect the interest of the various parties or does not impose the other right and the duties on the specific parties, in that case the law usually becomes ineffective and the merchants will find another way instead of the bills of lading in order to meet their requirements.

The Importance of Bills of Lading in International Trade

The law will be ineffective if the parties and their rights and liabilities cannot be easily distinguished. Thousands of bills of lading are issued everyday and such bills will be considered useless if they have to be studied with the help of a lawyer or have to go to the court in order to know their rights and liabilities. Under the English law which highlights the 1992 Carriage of Goods by Sea Act as well as the common law have together provided an effective framework within which the carrier, the shipper and the transferee can function.

The intention behind the UNCITRAL Draft Convention is considered noble but there is need for uniform laws for the transfer of the rights and the liabilities under the bill of lading, the Draft Convention is presently not very effective and has not proved itself better than the existing English law.

Reference List:

Ahmadi, M.R.A., Elsan, M. and Noshadi, I., 2017. Comparative Study of Bill of Lading Function as Title Document. J. Pol. & L., 10, p.188.

Ajaja, O., 2015. Electronic Bills of Lading: An Easier Way to Sea Carriage.

Baatz, Y., Debattista, C., Lorenzon, F., Serdy, A., Staniland, H. and Tsimplis, M.N., 2013. The Rotterdam Rules: a practical annotation. CRC Press.

Bae, H.S. and Lee, Y.K., 2016. Role of Delivery Order in International Container Transportation.

Brodie, P., 2014. Commercial shipping handbook. CRC Press.

Bury, D.A., 2016. Electronic Bills of Lading: A Never-Ending Story. Tul. Mar. LJ, 41, p.197.

Cai, Q., 2013, August. Delivery of Goods without Original Bills of Lading: A Survey of Recent Law and Practice in China. In 2013 International Conference on Education, Management and Social Science (ICEMSS-13). Atlantis Press.

Cooke, J., Young, T., Ashcroft, M., Taylor, A., Kimball, J., Martowski, D., Lambert, L. and Sturley, M., 2014. Voyage charters. CRC Press.

Cooper, K., 2016. Shipping.

Croucher, T.M.S., 2016. Changing the Rules: An evaluation of whether the Norwegian Maritime Code should implement the Rotterdam Rules approach to transferring obligations and rights through the trading of bills of lading (Master's thesis, The University of Bergen).

Hu, J.Z. and Sun, S., 2016. A Study on the Updating of the Law on Carriage of Goods by Sea in China. Austl. & NZ Mar. LJ, 30, p.114.

Jafari, F., 2015. The concerns of the shipping industry regarding the application of electronic bills of lading in practice amid technological change.

Kim, S. and Kim, J., 2016. The Legal Effect of the Unknown Clause in a Bill of Lading under the International Rules. NCJ Int'l L., 42, p.75.

Kozolchyk, B., 2016. The Modernization and Harmonization of the Commercial Law in the Twenty-First Century: The Need for a New Research and Drafting Methodology. Ariz. J. Int'l & Comp. L., 33, p.25.

Lee, B.M., 2014. Causal and Stipulatory Attributes of Bills of Lading under Korean Law. Journal of Korea Trade, 18(4), pp.85-105.

Møllmann, A., 2016. Delivery of Goods under Bills of Lading. Routledge.

Schoenbaum, T.J., 2015. An Evaluation of the Rotterdam Rules. In The Hamburg Lectures on Maritime Affairs 2011-2013 (pp. 21-43). Springer Berlin Heidelberg.

Tang, O., Lau, Y.Y., Tam, K.C. and Ng, A.K., 2014. A critical review of the evolution of the Maritime Code in the People's Republic of China. Asian Geographer, 31(2), pp.115-127.

Weinmann, J., 2014. Identifying the carrier-The effect and validity of demise-and identity of carrier clauses in bills of lading-a comparative study (Doctoral dissertation, University of Cape Town).

Zhang, J., 2014. Transport documents and bank's security.

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