Marine legislation sticks with 100-year-old rules regime
A move in June by the federal government to amend the Marine Liability Act is a change that likely pinged few people’s radar, as maritime law tends not to attract the same level of attention as some of the more glamours fields of law, such as criminal or constitutional law, but it is a subject matter that would benefit from a bit more attention—especially since it is so central to how the modern world operates.
“Maritime law is vital to our logistics and trade networks and, basically, to our entire economy,” says Simon Ledsham, a Montreal-based lawyer in the litigation and dispute resolution group at Stikeman Elliott.
“Container shipping is incredibly predominant. It’s the main form of transport of goods across the world and there has to be a legal framework to underpin that and determine, among other things, the liabilities of different parties and how those risks are allocated… all this melds into our economic reality and has wide-ranging effects on everything from going to the store and noticing the costs of certain goods that are imported from overseas…or the supply of raw materials.”
Given the international nature of shipping, maritime laws are slow to change. The process of adopting new rules takes decades, not years—if it happens at all. And the recent Canadian amendment demonstrates just how laborious it is to even attempt a change.
Until June, the Marine Liability Act had contained a framework related to what are known as the Hamburg Rules, and that framework stated that every five years, Transport Canada was required to consider whether or not to adopt the Hamburg Rules. The amendment eliminated the provision, essentially ending Canada’s consideration of adopting the new rules and keeping the country wedded to the Hague-Visby Rules that underscore how the carriage of goods by sea is regulated. The international convention that created the Hague-Visby was originally signed in Brussels in 1924 and was last updated in 1979.
As to what the Hamburg Rules (or more formally, the United Nations Convention on the Carriage of Goods by Sea) are, Ledsham describes them as a set of rules that determine liability for different parties in the carriage of goods by sea. He notes they were created in 1978 but only entered into force in 1992. Canada never ratified the rules; nor did it sign them. The US signed the rules but hasn’t ratified them yet.
While the Hamburg Rules and the Hague-Visby rules have the same foundations, Ledsham says there are some distinctions. “Some have considered that the Hamburg Rules are less favourable to carriers. They’re more favourable to cargo interests, shippers, consignees, than the current Hague-Visby framework,” he says.
“One of the things that the Hamburg Rules set out is joint and several liability between the contracting carriers and the performing carriers. The contracting carriers are the ones that will be entering into the contract for the carriage of goods. And the performing carriers are the ones that are going to be transporting or handling goods.”
Noting that there are complex networks of carriers and subcarriers and charters, he explains that “if you introduce joint and several liability between those different parties, that’s going to increase the overall risk for contracting carriers and performing carriers.”
There is another key difference he notes between the two sets of rules: “There’s the abolishment of a specific defence that was historically available to carriers, which was defence in error of navigation or management of the ship. What this means is under the Hague-Visby rules that the carrier can raise as a defence that the crew of the ship made an error in navigating, for example, and ran aground or used improper charts for managing the ship and its voyage, whereas under the Hamburg rules, that defence could not be raised by the carrier and the carrier could not disclaim liability on that basis.”
But even though the country has bypassed the adoption of the Hamburg Rules there is still a way that Canada can modernize its maritime laws in harmony with the international community and that possibility rests with the Rotterdam Rules. They originate from a 2008 convention and haven’t come into force yet, as not enough nations have ratified them. Twenty nations are needed. To date, only five have ratified the rules. Again, the US has signed the convention but not ratified it and Canada has done neither.
According to Ledsham, one of the most important aspects of the Rotterdam Rules is its focus on a more modern way of communicating.
“One of the things that’s at the forefront of discussion is the question of electronic documents, so electronic transport documents, electronic transport records. And this is something that’s addressed in the Rotterdam Rules,” he says. “What this is, is essentially moving away from paper documents, paper bills of lading, sea waybills, etc. and towards an electronic exchange of information, which, in theory, should be more efficient, should be faster, should be more economical.”
The Rotterdam Rules are also more expansive than previous rules sets and cover not just goods moved on water but also those same goods as they make their way across land.
“It’s a convention that’s multimodal. It’s going to apply not only to carriage by sea but also carriage that includes a sea leg along with other legs, for example, overland by rail, by truck, etc. What this aims to do is reflect the modern reality of multimodal carriage because nowadays it’s not simply a case of a consumer going to a port to pick up their goods from overseas. Those goods have to be transferred onto a truck and shipped to their door. The idea of the convention is to reflect that reality.”
Based on the history of the Hamburg Rules, it may seem like the Rotterdam Rules are a long shot to be ratified and an even longer one to be adapted into Canadian law, but Ledsham wouldn’t count them out.
“I think there’s an overall feeling that the Rotterdam Rules, eventually, will be implemented and accepted,” he says. “I think it’s a question of time… The framework we have right now is based in rules that originate from almost 100 years ago, 1924. It is eventually going to happen that we are going to modernize that framework, and there’s a good chance that the Rotterdam Rules could be that modernization.”