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Malayan Law Journal Articles/1998/Volume 1/CARRIAGE OF GOODS BY SEA: HAGUE-VISBY FOR

MALAYSIA?

[1998] 1 MLJ i

Malayan Law Journal Articles

1998

CARRIAGE OF GOODS BY SEA: HAGUE-VISBY FOR MALAYSIA?

Jeremy M Joseph
LLM (Southampton)

A new era is beginning in the maritime sphere of South East Asia. Malaysia has awakened to the fact that it
has formidable strength in shaping the future of its maritime sector in line with its plans to be a fully devel-
oped nation by the year 2020. The aspirations of a developing country to be a maritime nation is remarkable
but the delicate balance of trade and law must also be projected in juxtaposition with the changing conditions
of the economy. There is little doubt that at least 90% of Malaysian trade is seaborne and the carriage of
goods by sea plays an enormous role in the future trends of economic prosperity. From a legal viewpoint, the
merchant shipping laws that govern the carriage of goods by sea have to be efficiently regulated to conform
with the international standards and any new directions proposed should be geared towards the best interest
of Malaysia and current international practice.
At present, Malaysia is still a captive of the Hague Rules as a result of the colonial influence of Great Britain
when the rules came into effect in 1924. During that time, Britain had the largest merchant fleet in the world
and was in an influential position to introduce private international law on merchant shipping. Since the in-
dependence of its colonies after the war, much of this influence was dissolved but Britain still remains a
dominant model in the development of maritime law and commerce.

Malaysia and COGSA

The governing statute on the law of carriage of goods by sea in West Malaysia is the Carriage of Goods by
Sea Ordinance 1950. The Ordinance in effect adopts the Hague Rules of 1924 in which the latter forms the
schedule to the former. The Rules also extend to the East Malaysian states of Sarawak -- by virtue of the
Merchant Shipping (Implementation of Conventions relating to the Carriage of Goods by Sea and to Liability
of Shipowners and Others) Regulations 1960 -- and Sabah by the Merchant Shipping (Applied Subsidiary
Legislation) Regulations 1961. The Malaysian Ordinance was revised in 1994 as the Carriage of Goods by
Sea Act 1950 ('the COGSA') and although moves were made to consider the position of the law, only minor
changes were made to the Ordinance.
There wasapparently discussions at Ministry level to repeal the Act and replace it with a consolidated legisla-
tion incorporating the Hague-Visby Rules and other maritime conventions1 The bill has not been put before
Parliament and since then there has been no significant development in this area. It is not untrue to add that
there has been a move to adopt the Hague-Visby Rules in Malaysia. Nearly three decades ago, the Carriage
of Goods by Sea Bill 1970 was tabled in Parliament to incorporate provisions of the Hague-Visby Rules alt-
hough not in its entirety. However, the bill was never passed and perhaps it is now best to examine the fea-
sibility of the Rules in Malaysia.
The purpose of this paper is to examine the current law on carriage of goods by sea in Malaysia and identify
areas that can be redressed by the new Visby amendments of 1968. The scope of the article is only limited
to three areas which will be given consideration in light of the changes made by the Visby Protocol to the
Hague Rules. The subject of discussion will include:
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(i) conflict of laws and the application of the Hague and Hague-Visby Rules;
(ii) bills of lading and non-negotiable receipts; and
(iii) limitation of liabilities and tort claims.
The writer will seek to introduce the problems associated with the current legislation in Malaysia which
adopts the Hague Rules and provide some guidance as to the prospects of adopting the Visby solution.
Where appropriate, some comparisons will be made with England and Singapore on its carriage of goods by
sea laws. As far as England is concerned, this is done because of the persuasive influence of judicial deci-
sions by the English courts on Malaysian law and in the words of a local commentator, 2 'there is much ben-
efit derived from keeping in harmony with British practice since such practice reflects at least conventional
standards of international practice'. This is also in addition to the fact that the COGSA is modelled on the
English COGSA 1924 which had adopted the Hague Rules. Singapore on the other hand, is Malaysia's im-
mediate neighbour and shares the same legislative history with Malaysia until she became an independent
state but Singapore has taken an accelerated move towards adopting the Visby amendments in 1972. Fur-
thermore, Singapore is a large trading partner of Malaysia which places the latter in a contingent position due
to an estimated40% of goods in Malaysia which are exported through Singapore, making the small island
state a transitional hub of the Far East.

CONFLICT OF LAWS AND THE APPLICATION OF THE HAGUE AND HAGUE-VISBY RULES
The Hague Rules were intended as far as possible to create an international regime for a set of standard
contract terms embracing most aspects of carriage of goods by sea but to this day there are still the unre-
solved problems that arise from conflicts of laws. The Visby amendments were meant to resolve most but not
all of these problems associated with the conflicts of laws.

The Hague Rules

The scope of application in the Hague Rules is stated in art 10 of the Convention:

The provisions of this Convention shall apply to all bills of lading issued in any of the contracting States.

When the Rules were enacted in Malaysia by virtue of the Carriage of Goods by Sea Ordinance 1950, art 10
was omitted (though the rest of the Rules were scheduled to the Act) and the scope of application was re-
stricted in the Ordinance itself under s 2. The Ordinance was revised in 1994 and s 2 of the Act now states:

Subject to this Act, the Rules set out in the First Schedule ('hereinafter referred to as the Rules') shall have effect in re-
lation to and in connection with the carriage of goods by sea in ships carrying goods from any port in Malaysia to any
other port whether in or outside Malaysia. 3

There is an obvious change whereas the Rules refer to the place of issue of the bill of lading but the Malay-
sian Act refers to the place of shipment. The wording in the Act secures the position of the Rules to be ap-
plied to designated voyages by the courts in Malaysia. However, commercial disputes especially in interna-
tional trade can often be seized by a court in a foreign country even if the shipment is from Malaysia. It is
unlikely that the courts in a foreign country would apply the laws of Malaysia unless the law of Malaysia is the
governing law of the contract between the parties. This is also provided by the Malaysian COGSA by a
'clause paramount' technique embedded in s 4, which states that every bill of lading or similar document of
title issued in Malaysia which contains or is evidence of any contract to which the Rules apply shall contain
an express statement that it is to have effect subject to the said Rules as applied by this Act.
The main problem with the Malaysian Act is that it does not provide for cases that omit the 'clause
paramount' or the express statement that it is to have effect subject to the Rules. Three points can be made
here.
First, if there is an outward shipment from Malaysia without a 'clause paramount' in the bill of lading, then it
does not comply with the requirements of s 4 which would mean no contractual incorporation of the Rules.
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The question is would that prevent the Rules from being applicable? If the breach of s 4 negates the opera-
tion of the Rules, or in simpler terms, if the Rules only apply on condition that it is expressly stated in the bill
of lading, then that would be a lacuna for carriers to escape the Rules by deliberately omitting to include a
clause paramount. But it is submitted that such a breach would be a toothless bite because the Rules would
apply anyway by virtue of s 2 provided, of course, there is an outward shipment from Malaysia.
Secondly, it was even arguable that the Malaysian court might not apply the Rules to a shipment outside
Malaysia under a bill of lading governed by the law of a foreign country. This is because s 2 is only strong
enough to incorporate the Rules into contracts governed by Malaysian law and was not strong enough to
incorporate the Rules containing an overriding policy. 4 Whilst this issue was never addressed in Malaysia, it
was considered by the Singaporean courts in the case of The Epar [1985] 2 MLJ 3 which will be discussed
later.
The final point would be the Vita Food's case5 scenario. This is an English case decided by the Privy Coun-
cil which held that bills of lading issued in Newfoundland was valid even though they did not contain a clause
paramount but contained a 'choice of law' which provides that English law is to govern the contract. The
courts gave primacy to the intentions of the parties. Although the Hague Rules did not apply, the shipowner
was still protected by an express term of the contract that freed him from liability. The Privy Council said that
if the intentions of the parties expressed was bona fide and legal, there is no reason for avoiding the choice
on grounds of public policy.6 The position would be the same in Malaysia if in the absence of a clause para-
mount, there is a choice of law selecting Malaysian law as the appropriate law governing the contract but it
must be clarified that the Vita Food principle would only apply if the claim was heard in a Malaysian court.
The Privy Council in the Vita Food's case admitted that the decision might well have been different if the
case had been tried in Newfoundland.

The Hague-Visby solution

The Hague-Visby amendments to art 10 has a much wider scope of application than its predecessor. Article
10 of the Visby amendments extends to:

Every bill of lading relating to the carriage of goods between ports in two different states if:

(a) the bill of lading is issued in a contracting state;

(b) the carriage is from a port in a contracting state;
(c) the contract contained in or evidenced by the bill of lading provides that these Rules, or legislation of
any state giving effect to them, are to govern the contract;
whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person.

The UK adopted the Visby amendments almost immediately when it came into effect by virtue of the English
COGSA 1971. The legislative technique used to adopt the Visby amendments has stronger wordings, for
example, the English COGSA 1971 states that the Rules 'shall have the force of law' which was plainly
stronger than 'shall have effect in relation and in connection with'. This imposes upon the courts the manda-
tory duty to apply the Rules to shipments out of or where the bill of lading is issued in the UK or a contracting
state and also in relation to any express incorporation. The requirement of a clause paramount was aban-
doned. 7
Anthony Diamond QC is of the opinion that if mandatory legislation is to be enacted, it is essential that the
provisions of any Rules be given the force of law in all contracting states. He says that far too little attention
is given to the legislative techniques available to incorporate the Rules into the laws of various contracting
states. 8 A classic example of a country that has a different legislative technique in adopting the Rules is
Singapore. The writer will now concentrate efforts on highlighting the problems that could exist when consid-
ering conflict of laws in a country that is very much similar with the Malaysian legal system. A detailed dis-
cussion of the Singapore experience would serve the purpose of illustrating the major issues that will affect
the Malaysian courts in construing old and new legislation9 that contains defects that could bring about con-
flict of laws.

The Singapore experience

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Prior to the 1995 amendments to the Singapore COGSA 1972, the legislative technique used to enact the
Hague-Visby Rules was nearly identical to the previous legislation which adopted the Hague Rules in 1927.
A very lucid account of this technique can be observed in the case of The Epar [1985] 2 MLJ 3 which was
considered by the High Court of Singapore. The facts of the case are very similar to The Morviken [1982] 1
Lloyd's Rep 32510 and concerned the claim for loss/damage to property shipped from Singapore to Indonesia.
The bill of lading contained a choice of law clause selecting Indonesian law and a choice of forum clause
stating that all disputes that arise out of this contract shall be referred to the courts of Djakarta. It was in the
carrier's interest that the case be dealt with in Djakarta because if the court had applied Indonesian law his
liability in monetary terms would be markedly less than had the Hague-Visby limitations applied by virtue of
Singaporean law. The Singapore court was faced with several issues to consider:

(1) Article 3 r 8 and of the Hague-Visby Rules had to be interpreted. Article 3 r 8 basically states
that there can be no clause or agreement between the parties to lessen the liability or relieving
the carrier from liability arising from his failure in duties than provided by these Rules. Such a
clause or agreement shall be null and void.
(2) The choice of law and choice of forum clause in the bill of lading.
(3) The reasoning in The Morviken case and the intention of the parties to the contract.
(4) The strict wording of s 3 of the Singapore COGSA 1972 and art 10 of the Hague-Visby Rules.
The courts in The Epar was undoubtedly influenced by the decision of The Morviken which is worth looking
at. The House of Lords in The Morviken held that:

... in so far as it (the bill of lading clause) purports to lessen the liability of the carrier as it expressly does ... it unques-
tionably contravenes art 3.8 and by that it is deprived of any English or Scots law. 11

The House of Lords also said that the choice of forum clause selecting the Amsterdam court which as a re-
sult, would apply Dutch law and consequently reducing the liability of the carrier to a sum lower than that
provided by the Hague-Visby Rules, does not offend against art 3 r 8 but was capable of having this effect
and English law by virtue of the 1971 Act shall treat the choice of forum clause as void. 12
Whilst the decision of The Morviken can be criticized for several reasons, the pertinent point to be made is
that the English Act and the Hague-VisbyRules are only applicable if English law applies. This applicability
would mean that the English Act had such mandatory authority that it overrides the intentions of the parties
to the contract who clearly had chosen Dutch law and jurisdiction. The House of Lords said that the policy
considerations of the Rules should prevail and if the contention of the carriers were to be accepted it would
be open for shipowners to avoid the Rules and the 1971 Act by inserting clauses selecting courts of conven-
ience in countries that do not apply the Hague-Visby Rules.
The courts in The Epar followed the reasoning in The Morviken but with respect assumed that the Singapo-
rean COGSA 1972 had the same effect as its counterpart statute in England. The courts missed an oppor-
tunity of resolving what appears to be a contradiction between the provisions in the Singaporean Act and the
application of the Hague-Visby Rules. 13 When looked closely at the Singapore Act, the wording 'force of law'
is absent and it is questionable if the words 'have effect and in connection with' could mandatorily override
the intentions of the parties. It may well have made no significant difference which wording in the Act is used
but it must be borne in mind that the courts in The Morviken had relied on this phrase to support their conten-
tion that the Hague-Visby Rules were mandatorily applicable. Furthermore, by following the authority of The
Morviken without considering the freedom of parties to contract and the differences in the two Acts only rais-
es doubt as to the validity of the phrase 'force of law'.
The second issue was the scope of application that is provided by s 3 of the Singapore Act which limits the
scope to outward shipments from Singapore and art 10 of the Rules which envisage a wider scope. Section
3 of the Act states:

Subject to the provisions of the Act, the Rules have effect in relation to and in connection with the carriage of goods by
sea in ships carrying goods from any port in Singapore to any other port whether in or outside Singapore.
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There appears to be a contradiction with the above section (which was never modified when adopting the
Hague-Visby Rules) and art 10 which makes the Rules applicable in cases of inward shipments from con-
tracting States.
Furthermore, the Hague-Visby Rules are scheduled to the Act and are subject to it which again raises the
question as to whether the Rules would apply as envisaged by art 10. Again, there is a difference between
the Singapore Act and its counterpart in England. These arguments which were submitted by various aca-
demics when The Epar was decided is now put to rest by the 1995 amendments to the 1972 Act. The legis-
lature recognized the fact that although the discrepancies in the 1972 Act may have been just a matter of
interpretation, it was nevertheless prompted to resolve the matter in order to hinder undesirable precedence
that would only make the law more difficult to apply.

The new s 3 now states:

The provisions of the Rules, as set out in the Schedule to this Act, shall have the force of law.
Without prejudice to subsection (1), the provisions of the Rules shall also have effect (and have the force of law) in re-
lation to and in connection with the carriage of goods by sea in ships where the port of shipment is a port in Singapore,
whether or not the carriage is between ports of two different states within the meaning of Article 10 of the Rules.

The new amendment to s 3 brings it in line with the English COGSA 1971 which has the same provisions in s
1. It is evident that the changes made by Singapore illustrates a quick response to uniformity in enacting the
Hague-Visby Rules by virtue of local legislation.

What now for Malaysia ?

If Malaysia were to move in that direction, it may well learn from the experience of Singapore and adopt the
Visby amendments in conformity with the underlying purpose of most conventions which is the unification of
domestic laws of contracting states. It would save itself the time and effort in re-drafting its legislation when
faced with the problem of foreign courts interpreting the same convention and Malaysian law.

Tonnage legislation
The Hague-Visby Rules do not override all inconsistent provisions where it is given effect in a foreign juris-
diction clause. The Hague-Visby Rules preserves and respects the different considerations that arise in do-
mestic legislation especially in tonnage limitation cases. This is evident in art 8 of the Rules which states that
the provisions of the Rules shall not affect the rights and obligations of the carrier under any statute for the
time being in force relating to the limitation of liability of owners of sea-going vessels. An example of the ap-
plication of this Rule was achieved in The Benarty [1984] 2 Lloyd's Rep 244 where there was a claim on
damage to goods shipped from the UK to Indonesia. The relevant Hague-Visby limit was £217,000 and the
Hague limit was £4,000. However, the Indonesian Commercial Code provided for liability to be limited to a
figure even lower than the ship's tonnage.
In applying the provisions of art 8, the courts held that the provisions preserved the tonnage limitation stat-
utes, whether English or foreign, even if it produced lower figures than the package limits under the
Hague-Visby Rules. The courts also commented that the question of tonnage limitation was never raised in
The Morviken and distinguished it with The Benarty in that the provisions of art 8 was never considered in
the former case.

BILLS OF LADING AND NON-NEGOTIABLE RECEIPTS

Bills of lading
There is always the common problem in international sale of goods, where cargo is short delivered and it is
usually the bona fide purchaser for value who has suffered the loss due to the fact that the goods have ar-
rived lost or damaged during transit, or never been shipped at all. But bills that are governed by the Hague
Rules are only prima facie evidence of receipt and it is still open to the carrier to deny liability for the loss by
proving that he had not received the cargo in the first place.
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This led to the amendment of art 3 r 4 of the Hague Rules. The amended paragraph now reads:

Such a bill of lading shall be prima facie receipt by the carrier of the goods therein described in accordance with para-
graph 3(a), (b) and (c).
However, proof to the contrary shall not be admissible when the bill of lading has been transferred to a third party act-
ing in good faith.

Before delving into the nature of this change, it is necessary to regress to the old position at English common
law. The case of Grant v Norway (1851) 10 CB 665 establishes the fact that a ship owner could escape lia-
bility even towards a bona fide transferee of a bill of lading if he could prove that the goods were not shipped.
The courts said that the master had no ostensible authority to bind the ship owner to such statements in the
bill. This gives the carrier protection against third parties who claim on short deliveries of cargo. One of the
ways out for the carrier in short delivery claims is to argue that the goods had not been shipped at all despite
what appears on the face of the bill of lading as to the quantity. In practice, the assignee of a bill of lading will
rely on the purported figures in the bill of lading, especially after it has been signed by the master since the
latter is usually an agent of the carrier. Furthermore, the assignee is in the least possible situation to monitor
the cargo during shipment and would rely on the bill of lading as to the quantity as much as to its quality and
condition.

The conclusive effect of the bill of lading

The Visby amendment to art 3 r 4 of the Hague Rules applies in favour of a third party acting in good faith
which means that the holder must not have had actual notice at the time of receiving the bill that in fact the
goods did not correspond with the bill of lading statement. 14 There is also no requirement that the transferee
of a bill for value need to rely on the statement of the bill under the new rules. It has been suggested that art
3 r 4 of the Visby amendments is not only restricted to 'endorsees' and 'consignees' nor are these words
used, and so a 'third party acting in goodfaith' could include a pledgee who has taken a bill of lading as secu-
rity for a loan. 15 It must be noted that on the evidentiary value of the bill, the Hague-Visby rules follow the
common law position, that the bill of lading is prima facie evidence in the hands of the shipper but only when
it is transferred to a third party acting in good faith it becomes conclusive evidence against the carrier.
The carrier has a possibility to evade the prima facie effect of the statement in the bill of lading by describing
the quantity in words like 'weight unknown' or 'said to contain', then it will not amount to prima facie nor even
conclusive evidence. 16 Article 3 r 4 relates back to the wording described in art 3 r 3 which states that the
carrier or master or agent of the carrier shall, on demand of the shipper, issue to the shipper, among other
things, either the number of packages or pieces, or the quantity, or weight as the case may be furnished in
writing. 17 There is no compulsory duty or obligation on the carrier to issue a bill of lading containing the said
provisions unless it was demanded by the shipper. If no bill of lading is issued, then the third party or as-
signee would have no rights in any case. In practice, the carrier does issue bills of lading since the document
is also a negotiable document of title and a contract of carriage. The carrier may select one of the three
choices he is given in art 3 r 3(b) and disclaim the others. In the case of Oricon Waren-Handels GmbH v
Intergraan NV [1967] 2 Lloyd's Rep 82, the courts held that while the bill of lading is prima facie evidence of
the number of packages shipped, it is not prima facie evidence of the weight of cargo shipped. In conse-
quence, the consignee has to adduce evidence to establish the weight of the cargo to succeed in an action
for short delivery. 18

Bulk cargo
In Malaysia, the rule in Grant v Norway is still applicable and there are no provisions in the Act that provide
protection for third party holders of bills of lading. Perhaps, with the ratification of the Visby amendments, this
position is likely to change. In the case of bulk cargoes19 like coal, grain or oil in bulk, s 6 of the Malaysian
COGSA stipulates that where under the custom of any trade, the weight of any bulk cargo inserted in the bill
of lading is a weight ascertained or accepted by a third party other than the carrier or the shipper and the fact
that the weight so ascertained or accepted is stated in the bill of lading, then notwithstanding anything in
the rules, the bill of lading shall not be deemed to be prima facie evidenceagainst the carrier of the receipt of
goods of the weight so inserted in the bill of lading, and the accuracy thereof at the time of the shipment shall
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not be deemed to have been guaranteed by the shipper. This in effect modified art 3 rr 4 and 5 of the Hague
Rules in cases of bulk cargoes. At present in Malaysia, the consignee owner or purchaser for value of bulk
cargo, when suing the carrier in Malaysia for cargo damage or short delivery claims, have to prove the
amount of cargo received by the carrier and can no longer rely on the bill of lading as prima facie evidence of
receipt of the said cargo. 20
In England, art 3 r 3 of the Hague-Visby Rules which was given the force of law by the Carriage of Goods by
Sea Act 1971 provides the same in the case of bulk cargoes. There is forcible argument that in such cases, if
the weight has been ascertained by a third party, then it may be tantamount to 'weight unknown', destroying
the prima facie effect of the statement. The view is that the courts would tend to construe the statement
against the carrier. 21
A need for change is timely, in light of the fact that many countries have ratified the Visby amendments, for
example, neighbouring countries like Thailand and Singapore. 22 Consequently, bills of lading incorporating
the Hague-Visby Rules are a more welcome form of security in the world of international commerce espe-
cially among foreign importers. The undesirable provisions of the Hague Rules are being prejudiced because
purchasers of bills of lading are enjoying better legal protection under the Hague-Visby Rules and Malaysia
is not taking advantage of this. Secondly, the higher compensation rates offered by the Hague-Visby Rules
which is recoverable from the carrier would significantly reduce insurance coverage and in turn reduce the
prices of certain commodities. A further point would be the enhanced credibility of bills of lading which in turn
would encourage banks and financial institutions to extend their loan facilities to local traders. 23

Non-negotiable receipts
In recent decades, the use of container ships in international trade has developed the non-negotiable receipt
or sometimes referred to as a 'waybill' as a substitute for the bill of lading. Non-negotiable receipts are
notdocuments of title and has the advantage of being duplicated from the original copy to be used in speedy
electronic transmission. This is to ensure prompt delivery of documents and without fear of loss or theft.
Nowadays, non-negotiable receipts are supplanting the use of negotiable bills of lading because it is pre-
ferred by the industry.
There is a general view that the Hague Rules do not apply to non-negotiable bills of lading because the
Rules itself excludes it. The view is that the Hague Rules apply by art 2 under every contract of carriage and
by virtue of art 1(b), contract of carriage is defined as contracts covered by any bill of lading or similar docu-
ment of title. Since, non-negotiable receipts are not documents of title, thus the Hague Rules do not apply.
On the other hand, it must not be overlooked when the spirit and purpose of the Hague Rules is concerned.
The whole nature of giving effect to the Hague Rules was to provide a compulsory set of rules to regulate the
responsibilities of the parties especially the carrier such as his liability and limits and more importantly these
responsibilities cannot be lessened by the contracting parties. 24
Whilst it is true that the parties cannot contract out of the Hague Rules, this must be observed from the two
exceptions contained in art 6 of the Rules and the Malaysian COGSA. Article 6 of the Hague Rules allows
the carrier to escape liability only when three conditions are fulfilled:

(1) when the non-negotiable receipt is issued and marked as such;

(2) when ordinary commercial shipments are not involved; and
(3) when the character and condition of the goods justifies a special agreement of carriage.
Tetley25 argues that art 6 does encompass non-negotiable receipts and it is noteworthy that art 6 would make
no sense if non-negotiable receipts could be issued outside the rules for normal commercial operations. He
further argues that the provisions of art 2 by reference to r 1(b) of the Rules which apply only to bills of lading
and document of title contradict art 6 which covers non-negotiable receipts. Therefore, attention should be
drawn to the precise wording of art 2 which begins with the words 'Subject to Article 6 ... ', and it is clear that
art 6 is preponderant over art 2. 26 In summary, the whole purpose of the Hague Rules is to set out a binding
standard of care for carriers joined with a binding limitation of their responsibility. Under art 3 r 8, neither
standard nor limitation can be avoided by agreement. Secondly,art 6 specifically covers non-negotiable re-
ceipts and exceptions to the rules which is where it is preponderant to art 2.
 Page 8

Local trade
The only other exception aside from those provided by art 6 is s 5 of the Malaysian COGSA in relation to lo-
cal trade. 277 Section 5 states that art 6 of the Rules:

... shall in relation to --

(a) the carriage of goods by sea in sailing ships carrying goods from any port in Malaysia to any other port
whether in or outside Malaysia; and
(b) the carriage of goods by sea in ships carrying goods from any port in Malaysia to any other port in
Malaysia,
have effect as though the said Article referred to goods of any class instead of to particular goods and as though the
proviso to the second paragraph of the said Article were omitted.

This section replaces the effect of art 6 in relation to the two situations of (a) and (b) and basically foregoes
the two conditions in the second paragraph of art 6 (the fact that ordinary commercial shipments are not in-
volved and when the character or condition of the property justifies a special agreement of carriage) with the
effect giving the carrier and the shipper the liberty to enter into any agreement on any terms of responsibility
and liability of the carrier by issuing a non-negotiable receipt and the carriage of any class of goods as long
as it is used in local trade. This section can be criticized for two reasons. Firstly, this section was an adoption
s 4 of the English COGSA 1924 in relation to coasting trade. After the adoption of the Hague-Visby Rules
which was given the force of law in the United Kingdom by the COGSA 1971, the law relating to
non-negotiable receipts and local trade28 has been reformed. It must be borne in mind that the colonial days
are over and it is time for Malaysian legislation to impact upon legal developments in their own context.
Secondly, para (a) addresses the use of sailing ships in local trade carrying goods from any port in Malaysia
to any other port whether in or outside Malaysia. Two further points can be made here:

(1) The use of sailing ships is obsolete these days even in local trade. There is no definition in the
Rules nor the Act on 'sailing vessels' butit is submitted that sailing vessels are ships that are
powered by sail. For these purposes, when insurers calculate the tonnage of sailing ships, they
deduct the engine room space to assess the premium or in limitation of liability cases. 29 Sailing
ships are now a remnant of the trading market in the colonial days and with the use of ad-
vanced engine-powered vessels, sailing ships are now used for recreational purposes.
(2) Paragraph (a) states 'whether in or outside Malaysia' which means that it directly contradicts
the wording of s 5 in relation to local trade. In other words, 'outside Malaysia' is not local trading
and seems clearly an oversight in the drafting of this section. It is ironic that this only appears in
relation to sailing ships but there is no such indication in the English COGSA 1924 which the
section was adopted from.
It may also be that the Malaysian Parliament thought it redundant to repeal the section anyway and given the
opportunity to review their legislation in 1994 did not deter them to do so. But Singapore has certainly done
away with their local trade provisions because of the confusion that may arise in the intricate interpretation of
their legislation.30 Singapore's move to revamp their legislationis an indication that they are up-to-date with
their maritime laws and is also aware of the problems that may arise in future if Parliament does not rectify
the matter. Singapore's move brings into line their legislation with the English COGSA 1971 and as both na-
tions along with many have adopted the Visby amendments, perhaps it is time Malaysia move towards ex-
isting international practice.

The Hague-Visby Rules

The Visby amendments makes no change to arts 1(b), 2 and 6 and it is only by local legislation that these
rules can encompass a wider scope. The English COGSA 1971 which adopted the Visby amendments re-
formed the law relating to non-negotiable receipts and s 1(6) states that the rules shall have the force of law
in relation to:
 Page 9

(b) any receipt which is non-negotiable document marked as such, if the contract contained or evidenced
by it is a contract of carriage of goods by sea which expressly provides that the Rules are to govern
the contract as if the receipt were a bill of lading. 31

The effects of art 6 would still apply even though it does not provide that the Rules are to govern the contract
as if the receipt were a bill of lading. The Visby amendment made no change to this position which means
that the three conditions of art 6 would still have to be met. Tetley summarizes it as follows:

The English COGSA 1971 by virtue of s 1(6)(b) applies to non-negotiable receipts subject to the Act provided that it is:
(a) marked as a non-negotiable receipt; (b) it constitutes a contract of carriage; and (c) it contains an express provision
that the Rules are to govern as if the receipt were a bill of lading. If there is no express provision as such, the receipt
may avoid the application of the Act only if it complies with the three conditions of art 6 but in any other case the receipt
is subject to the Act. 32

Finally, some mention must be made about the fused nature of s 1(6)(b) which was considered in two Eng-
lish cases with different reasoning. First, in the case of McCarren & Co Ltd v Humber International Transport
Ltd and Truckline Ferries (Poole) Ltd, The Vechscroon [1982] 1 Lloyd's Rep 301, a consignment note that
sought to incorporate the Hague-Visby Rules but imposed a lower limit than that required by the Rules was
held void as it contravened the Rules. The argument, that the note which stated that 'this non-negotiable re-
ceipt shall be governed by the Rules' was different from 'this receipt shall be governed by the Rules as if it
were a bill of lading', was rejected by the courts because Parliament was clearly equating non-negotiable
receipt expressly governed by the Rules with bills of lading.
On the other hand, in The European Enterprise [1989] 2 Lloyd's Rep 185, the consignment note incorporated
the Rules but modified the limitation provisions. The note did not state that the Rules were to govern it 'as if it
were a bill of lading' but it was marked non-negotiable. The courts held that the omission of the above words
and the modification of the Rules which makes it partially incorporated is invalid by virtue of the statutory
provisions of s 1(6)(b). 33

LIMITATION OF LIABILITY AND TORT CLAIMS

Limitation of liability
The purpose of limitation of liability is fundamental to the business of shipping. It is important to the carrier
especially where he is carrying cargo of high value so he is privileged to limit his liability in circumstances
where he may be held liable or jointly liable for the loss or damage to such goods.
As a matter of fact, if there were no avenue for a carrier to limit his liability, then the cost of freight and insur-
ance would be very expensive and shipping would no longer be the cheapest mode of transporting goods.

The Hague Rules

In Malaysia, the disputes that arise from contracts of carriage are governed by the Hague Rules old limitation
of liability provisions. Article 4 r 5 provides that:

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with
the goods in an amount exceeding £100 per package or unit, or the equivalent of that sum in other currency unless the
nature and value of such goods have been declared by the shipper before shipment and have been inserted in the bill
of lading.

Two problems arise from the Hague Rules which are worth discussing. Firstly, there are differing views in
certain jurisdictions as to the £100 referred to in the Rules, whether it should be taken in nominal or paper
value or the gold value. 34 If the amount was taken in sterling value today, it would only fetch the equivalent of
RM620 per package or unit which is a very small figure and an unacceptable amount to cargo owners. Fur-
thermore, it is stated in art 9 that monetary units mentioned in the Rules are to be taken in gold value. In the
case of The Rosa S [1989] 1 QB 419, the learned Hobhouse J clarified that the provisions of art 9 are to pro-
vide a unified constant value for gold. Therefore, the sum of £100 in art 4 r 5 is taken to be the gold value of
 Page 10

the sterling pound and not it's paper value. The courts in The Rosa S also made reference to a Singaporean
case355 which provided the contrary view and his Lordship stated that Singapore is out of line with other
jurisdictions. But more recently in Singapore, the courts in The Thomaseverett [1992] 2 SLR 1068 gave
precedence to The Rosa S and accepted that the £100 was in terms of gold value. 36
The second problem concerns the interpretation of 'package or unit' which are stored in a container. There is
no definition in the Rules that provide for a package or unit. The US courts have attempted to solve this
problem, for example, in the case of The Mormaclynx [1971] 2 Lloyd's Rep 271, the circuit judge held that the
word 'package' is a unit which the shipper has packed the goods rather than the method used by the shipper
to pack it. The reasoning behind it is because a container is a part of the vessel which is contrary to a pack-
age used by a shipper to prepare hismerchandise. Whilst this case was accepted in a number of subsequent
American decisions, 37 it was also followed by an Australian court in the case of The Zhi Jiang Kou [1989] 1
Lloyd's Rep 413 where Carruthers J held that art 4 r 5 of the Hague Rules is part of a convention which must
come under the consideration of the Australian and foreign courts as well. His Lordship accepted the ra-
tionale of The Mormaclynx and said that it was not common sense that the carrier's liability should be limited
to £100 for each container.
In this regard, he concurred that the container is a functional part of the ship and the word 'package' is suit-
able for a carton or a unit of storage which would make up for the space in a container. 38

The Hague-Visby Rules

The Hague-Visby Rules have sought to remedy the unreliable provisions of its predecessor in the limitation
of liability provisions. An important change brought about by the Hague-Visby Rules are the new monetary
limits. The pound sterling value provided by the Hague Rules was replaced with the Poincare' franc. The
franc is defined in art 4 r 5(d) as 'a unit consisting of 65.5 mg of gold of millesimal fineness 900' and in 1979
as a result of currency exchange imbalances, the Visby amendments were further amended and introduced
the Special Drawing Right (SDR) system which again replaced the Poincare' franc gold standard. The SDR
Protocol increased the limitation of liability amount to 667 SDRs per package or unit or 3 SDRs per kilo. 39
As far as the package limitation is concerned, the Hague-Visby Rules have introduced a weight based for-
mula in addition to the existing package or unit concept, giving the shipper the option to choose whichever
produces a higher result. 40 This is particularly material to bulk cargo which can be assessed in gross weight
per kilo. There is nothing in the Hague Rules or case law to suggest that the package limitation provided by
the Rules was applicable to bulk cargo but it is certainly a step in the right direction by the Visby amend-
ments to provide for such goods. 41
Whilst on the subject of package limitation, the Hague-Visby has also taken a further step in solving the
'container test' by providing in the new art 4 r 5(c):

Where the container pallet or similar article of transport is used to consolidate goods, the number of packages or units
enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units
for the purpose of this paragraph as far as these packages or units areconcerned. Except as aforesaid such article of
transport shall be considered the package or unit.

The problem with art 4 r 5(c) is that the meaning of 'similar article of transport' is unclear. An academic 42 gave
the view that whilst a trailer may be a similar article of transport but a truck which has its own means of pro-
pulsion cannot be considered one. Secondly, art 4 r 5(c) does not clarify what is meant by 'units enumerated
in bill of lading.' Does it refer to those acknowledged by the carrier as stated in art 3 r 3(b) of the
Hague-Visby Rules ? 43 If units referred to are those acknowledged by the carrier, there is no need for him to
do so unless he has a reasonable opportunity to check it as provided by art 3 r 3(b). In such circumstances,
the carrier will often protect himself by endorsing the bill 'said to contain' or 'weight unknown' before delivery
by the carrier. 44 On the other hand, the carrier may be faced with the difficulty of limiting his liability to a cer-
tain extent where the goods are lost without inspection. But art 4 r 5(c) suggests that the units are enumer-
ated in the bill of lading and not the container in which the goods are stored and this is also evident from the
fact that the carrier has adjusted the freight value in response to such itemisation. 45
 Page 11

The United States on the Hague-Visby limitation of liability and package limitation
The limitation of liability and package limitation provisions is perhaps one of the reasons which makes the
Hague-Visby Rules acceptable to some countries and unacceptable to others. In a free trade country like the
US, the shippers and shipowners have enormous influence over the future of the merchant trade industry.
Shipowners argue that in the final result, all the costs is borne by the shippers of cargo because they pay
their insurance premiums and also ultimately the shipowner's premiums and liabilities through freight rates.
The new increased liability limits may benefit individual shippers but not when considering shippers as a
whole. Furthermore, as far as defining the package or units, shipowners point out that in the US the courts
have settled it through litigation. 46 On the other hand, shippers contend that higher limits will push down the
insurance premiums on cargo and prefer a specific provision defining 'package' in view of the containeriza-
tion age. 47

Tonnage limitation
In certain cases, the shipowner may wish to limit his liability in accordance with the tonnage limitation rather
than the limits provided by the Hague or Hague-Visby Rules. 48 A few years ago, s 360 of the Malaysian
Merchant Shipping Ordinance 1952 was amended to incorporate the limits under the 1957 Convention of
Limitation of Liability of Shipowners. The carrier may invoke this limitation provision provided the incident that
resulted in the loss or damage to property or merchandise happened without his actual fault or privity. This is
a unique feature which is directed at the carrier personally and unless the claim is in this regard, the carrier
will not hesitate to rely on this protection.
It is in the best interest of the carrier to rely on this provision only in certain circumstances. First, where there
are multiple claims on the limitation fund, although the shipowner can in effect limit his liability for one claim
too. Multiple claims can be very expensive and it is certainly a more economical method of limiting his liability.
Secondly, the provision is suitable for small vessels or ships with lower tonnage. Unlike personal injuries or
death claims, there are no requirements of minimum tonnage in cases of damage or loss. 49
In respect of loss or damage to property, the amount not exceeding 1,000 gold francs (which has been ga-
zetted to be the equivalent of RM203.07) 50 is allocated for each ton of the ship's tonnage. Therefore, it is
advantageous for shipowers to rely on this provision but bearing in mind that it operates only without his ac-
tual fault or privity. The burden of proving the absence of fault or privity is on the shipowner who is seeking to
rely on the provisions of the Merchant Shipping Ordinance 1952.

Actual fault or privity

There are a series of cases that serve the purpose of illustrating exactly who is responsible in terms of 'actual
fault or privity.' Some cases suggest that where a ship is owned by a corporation or company then it is the
directing will or alter ego of the company and not a servant or agent. For example, the directors or manage-
ment are the directing will or central personalitythat is responsible for the actions of the company. 51 In The
Garden City [1982] 2 Lloyd's Rep 383, it was an issue whether any of the senior officers who were operating
a fleet of vessels or even the chief navigator could be considered an alter ego of the company. The court
held that they could not be considered such persons and the director of technical services who may not have
been attributable to the fault could be considered an alter ego.
In the famous case of Arthur Guinness, Son & Co (Dublin) Ltd v The Freshfield (Owners); The Lady
Gwendolen [1965] 2 All ER 283, the learned judge made it clear that in a shipowning business, the man-
agement is to enjoy considerable benefits of limitation of liability and if he appoints a master and thereby
leaves matters relating to safe navigation, the procuring of navigational information and publications to him, it
is no longer a defence that he is not responsible or at actual fault or privy for the loss or damage concerned.
This new test was followed in The Marion [1982] 2 Lloyd's Rep 52 that concerned a managing director of the
management company who was held to be negligent in failing to ensure that its vessels was kept up-to-date
with the latest charts and sailing schedules. This again serves to illustrate that the courts have identified
high-level individuals in the company as the directing will or alter ego and the acts of mere employees of the
company do not satisfy the test. 52
 Page 12

The London Convention 1976

The Ministry of Transport in Malaysia is currently reviewing the present maritime laws in Malaysia and there
is a proposition that a consolidated legislation incorporating several conventions be introduced in the near
future. One of the maritime conventions referred to is the new London Convention on Limitation of Liability
for Shipowners 1976 which is already applicable in the United Kingdom by virtue of the Merchant Shipping
Act 1995.
Aside from the new higher limits, there are two highly relevant points which is apparent in the new Conven-
tion that will change the current position in Malaysia. First, art 1 r 1 of the Convention entitles shipowners and
salvors to limit their liability under the new limits provided by the 1976 Convention. The new extension of lim-
its to salvors is an interesting change brought about by the increasing use of salvage operations in marine
casualties and the demands of salvors to be protected when causing loss or damage to property whilst per-
forming salvage operations. Furthermore, insurers are able to limit their liability to the same extent as the
assured covered under the new Convention.
Secondly, the abolishment of the 'actual fault and privity' test is anticipated and will be replaced by a new
formula provided by virtue of art 4 of the 1976 Convention, which article states that a person shall not be en-
titled to limit his liability if it is proved that the loss resulted from his personal act or omission committed with
the intent to cause such loss or recklessly or with the knowledge that such loss would probably result. The
new test entails a number of substantive changes to the current position:

(1) The burden of proof shifts back to the claimant so that the shipowner can maintain his limit. The
claimant has to prove that the shipowner committed the loss with intent or recklessly as such
and this is also coupled with the fact that it must have been a personal act or omission on part
of the shipowner. 53
(2) The series of cases that identifies the directing mind and will of the company will have to be
re-examined. This is because the mental element involved is difficult to prove, especially when
the company in effect is acting through agents. The question as to where the buck stops is ar-
guable and, if positive knowledge is required on part of the shipowner, it is difficult to envisage
that the alter ego of a company like a managing director can be personally liable for a loss or
damage because he intended it as such.
(3) The shipowner will also be in a position to limit his liability in almost every case. He will only be
deprived of that benefit if he had realized the risk involved and taken it with prejudice to the
claimant which makes it almost impossible to prove. The standard of this test adopted in ship-
ping cases would be a great advantage to shipowners who are in a business that sometimes
pay out millions of dollars from small to large claims.
Arguably, there is a fair balance as to what that appears to be a new set of higher limits in favour of the
claimant and a difficult formula envisaged by the Convention in proving that the carrier was liable. 54 We will
have to wait and see what happens in the future development of this area.

Tort claims
The doctrine of privity of contract stipulates that a person may sue or be sued only if he is a party to the con-
tract. The Visby amendments introduced another important provision which gives rise to some discussion on
the fundamentals of the privity concept. Between arts 4 and 5 of the Hague Convention was inserted the fol-
lowing art 4 bis which basically states that the defences and limits of liability in respect of loss and damage of
goods shall apply whether the action be founded in contract or tort. Furthermore, if the action is brought
against the servant or agent of the carrier, the servant or agent is entitled to the same defences and limits of
liability which thecarrier is entitled to invoke for himself. Servants or agents do not include 'independent con-
tractors'.
Two questions sprout from this new extension of privity which needs to be considered. First, what is meant
by a servant and agent and why is an independent contractor excluded? Prior to the changes in art 4 r 2, it
was held in the case of Adler v Dickson (The Himalaya) [1954] 3 All ER 397 that a crew member of a ship
could not rely on an exclusion clause in the contract for his negligence in causing injury to the passenger
because he was not a party to the contract between the passenger and carrier. In consequence, the practice
 Page 13

grew to incorporate 'The Himalaya clause' to curb the rationale of the decision in Adler v Dickson on two
grounds. Firstly, to confer the benefit to all servants and agents (including independent contractors) of the
carrier and secondly, the carrier was contracting as agent or trustee of the servants or independent contrac-
tors and thus the latter must be made parties to the contract. 55
This rationale was cited with approval in the case of Scrutton v Midland Silicones [1962] 1 All ER 1 where the
House of Lords refused to allow a firm of stevedores (independent contractors) to invoke the same protection
of the Hague Rules limitation of liability when the stevedores had negligently damaged the cargo during dis-
charge. The provisions of art 4 r 2 bis now makes it clear that servants or agents can invoke the same pro-
tection as the carrier but not independent contractors.
A servant has been defined as 'a person subject to the command of his master as to the manner in which he
shall do his work ... an independent contractor is one who undertakes to produce a given result, but so that in
the actual execution of the work he is not under the order or control for whom he does it, and may use his
discretion for things not specified beforehand'. 56
Many shipping companies operate under a firm of ship managers for commercial reasons and usually the
managers undertake to employ the master and the crew and therefore they may be identified with the ship-
owner. The master and crew are for all purposes employees of the carrier which make them subject to the
same standards with the carrier in so far as the defences and limits are concerned. But the managers who
are also closely connected with the carrier but do not serve the carrier in an employee capacity will not make
the carrier vicariously liable for them unless there is a voluntary liability assumed by the carrier for the actions
of his managers. In any other event, they are acting independently as managers and are not, as far as art 4 r
2 is concerned, able to invoke the same protection as the carrier. Therefore, art 4 r 2 serves the purpose of
those who are under the direct employment of the carrier. 57
Secondly, how can an independent contractor protect himself from tort claims under the circumstances?
There are two avenues suggested by Prof Wilson58 for independent contractors to protect himself from tort
claims. First, he can insist on obtaining from the carrier an indemnity for this type of extended liability before
embarking on his work. The carrier could consult his P & I Club or insurers for this type of arrangement.
Secondly, he can request that the carrier makes him a party to the contract to accord him the same protec-
tion under art 4 r 2 as and when the carrier decides to invoke it for himself. A classic example is seen in New
Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd, The Eurymedon [1974] 1 All ER 1015 where the Privy
Council held that a stevedore could claim damages because he had been acting in the capacity of an agent
of the carrier and the bill of lading had included a clause stating that any agent, servant or independent con-
tractor employed by the carrier should be entitled with the same protection as the carrier. In fact, stevedores
are felt to come within the normal phrase of a 'servant or agent' in the bill of lading and it is irrelevant that
they were the parent company or partially owned by the carrier. 59

Conclusion
Malaysia is still at an infant stage of maritime development and the emergence of borderless trading, the
widespread use of Electronic Data Interchange and intermodal transport in Malaysia is not compatible with
the antecedent Hague Rules in preparation for the next century.
The next move for Malaysia is much awaited and the introduction of the Hague-Visby Rules will be a cardinal
hallmark in the present legal regime. The Hague-Visby Rules are now widely accepted in many countries and
it has also been partially incorporated in maritime codes of Asian countries like Japan, China and South Ko-
rea who are large trading partners of Malaysia. These countries have also created a balance with some pro-
visions in the Hamburg Rules of 1978 to suit its own interest. Malaysia still has an option to do the same but
it is submitted that adopting the Hague-Visby amendments would be in the best interest on a long term basis
because of the enthusiastic support it is receiving from many maritime countries, shipper and shipowner in-
terests, insurance companies and foreign traders at an international level.
Malaysia is not the only country that is still in the shadows of the Hague Rules at the turn of the century. The
United States, Malaysia's second largest trading partner, is also in the same position but moving in a wa-
vered direction towards the Visby Rules. Very briefly, the US have adopted the Hague Rules in 1936 by vir-
tue of the US COGSA 1936. There is much debate centred in the US as to whether they should ratify the
Visby amendments or even consider the Hamburg Rules but there is no change in the present status of law.
 Page 14

However, they have recognized the fact that alarge proportion of their trading partners are now Hague-Visby
nations and they are considering the prospects of ratifying it themselves. Many countries tend to wait for the
US response because it is the world's largest trading country and economy.
The writer supports the view that the Hague-Visby be adopted in Malaysia for the following reasons:

(1) There is continuity in the Rules being applied by the international maritime community. This is
important because many shippers and shipowners are used to the Hague Rules and would like
to see minimal changes to the existing regime.
(2) The Hague-Visby is also a measure used to control the uniformity of maritime laws which is
hoped to be achieved by the many countries. As a large proportion of Malaysia's trading part-
ners are Hague-Visby countries and much of the world is using the Hague-Visby in some form
or another, Malaysia would be taking a step in the right foot by promoting international uni-
formity in adopting the Rules.
(3) The Hague-Visby is more conducive to the shipper's interests especially in terms of its limita-
tion of liability provisions but it is not unfavourable to shipowner interests as well, which makes
it fairly acceptable to both sides. This is important for Malaysia especially now that the govern-
ment is encouraging shippers in Malaysia to use local ports instead of via Singapore which
produce higher limits under Singapore bills of lading incorporating the Hague-Visby Rules.
Furthermore, Malaysia is also acquiring more vessels through its state owned shipping compa-
nies and this would mean less reliance on foreign vessels carrying Malaysian goods in the near
future. As a result, Malaysia is also aspiring to possess a large merchant fleet in the next 20
years, so the Hague-Visby Rules is certainly a better alternative in the long run for Malaysian
shipowners as well.
Perhaps it was for the best that the Carriage of Goods by Sea Bill of 1970 was never passed which now en-
ables an entire revamp and a new chapter in the carriage of goods by sea in Malaysia. Now stands the test
of time for the Hague to give way to the Hague-Visby.

1 The proposed Act will revamp the maritime law in Malaysia and it is intended to replace the existing Merchant Shipping Ordi-
nance 1952. The consolidated Act will contain new provisions which will deal with registration and flagging of vessels and will
enable the registration of bareboat charters. The proposed Act will incorporate the Hague-Visby Rules, the 1976 Limitation of
Liability Convention and the York-Antwerp Rules including the amendments thereto and the possible incorporation of the Ath-
ens Convention. The Bill is not yet a public document and there is no indication as to when these reforms will take place. This
information is provided by courtesy of Mr Cecil Abraham, Shearn Delamore & Co, Kuala Lumpur 27 February 1997.

2 C Abraham, Carriage of Goods by Sea (Peter Koh, ed) (1986) Butterworths, see 'Proposed changes in Malaysian shipping
law' at p 147.

3 The provisions of the Malaysian Carriage of Goods by Sea Ordinance 1950 was modelled on the English COGSA 1924 prior
to the latter Act being repealed in 1971 after England had adopted the Hague-Visby Rules.

4 FMB Reynolds, 'Singapore and the Visby Rules' (1985) 6 SLR 163 at p 164.

5 Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277.

6 Ibid at p 289.

7 FMB Reynolds, 'Singapore and the Visby Rules', supra n 4 at p 164.

8 Anthony Diamond QC, Carriage of Goods by Sea supra n 2, see 'Responsibility for Loss of, Damage to, Cargo on Transit:
The Hague or Hamburg Conventions?' at p 114.

9 The Carriage by Sea Bill 1970 which never made it to the Malaysian statute books sought to incorporate the Hague-Visby
Rules in the exact manner Singapore had done so in 1972. If this had happened, the Malaysian Act would have contained the
same defects as did Singapore and would have to be amended in the same manner Singapore did in 1995. By analysing Sin-
gapore, it would be interesting for future drafters of the new legislation in Malaysia to avoid the defects that was present in the
past.
 Page 15

10 The facts of The Morviken [1982] 1 Lloyd's Rep 325 concerned the claim for cargo damage valued at £22,000 whilst being
carried from Scotland to the West Indies. The defendants had issued a bill of lading which provided that the law in application
was the law of Netherlands which the Hague Rules had adopted and the maximum liability per package is Dfl1250. All actions
under the contract of carriage shall be brought before the court of Amsterdam and no other court shall have jurisdiction to such
action.

11 Ibid at pp 565 and 573 (per Lord Diplock).

12 Ibid at p 575.

13 13G Rodrigo, 'Application of the Hague-Visby Rules in Singapore'[1985] MLR 197 at p 200.

14 A Diamond, 'The Hague-Visby Rules' [1978] LMCLQ 225 at p 253.

15 James Wong C Kee, New Legislation in Favour of Cargo Interests in Singapore (1978).

16 New Chinese Antimory Co Ltd v Ocean Steamship Co Ltd [1917] 2 KB 664.

17 Article 3 r 3(b).

18 J Wilson, Carriage of Goods by Sea (2nd Ed, 1994) Pitman Publishing at p 133.

19 'Bulk cargo' means cargo which is trimmed and not stowed (Hird v Rea (1939) 63 Ll R 261 at p 265, per Goddard J).

20 This section is a reproduction of s 5 of the English COGSA 1924 that was not retained in the 1971 Act. However, this modi-
fication for 'bulk cargoes' was a result of the British influence on the merchant shipping laws in Malaysia and Singapore during
the colonial days. Malaysia retained the provision in their 1994 revision and Singapore has also retained it in their 1995
Amendment Act.

21 A Diamond, 'The Hague-Visby Rules', supra n 14, at p 254. See n 80.

22 The Thailand Carriage of Goods by Sea Act BE2534 is substantially based on the Hague-Visby Rules and came into force
on 23 February 1992. Singapore has adopted the Hague-Visby Rules in 1972 which is now embodied in their COGSA 1972
(amended 1995).

23 C Abraham, Proposed Changes in Malaysian Shipping Law (Carriage of Goods by Sea), supra n 2 at p 151.

24 This is because of the strong effect in the provisions contained in art 3 r 8 which state:

Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for
loss or damage to or in connection with goods arising from negligence, fault or failure in the duties and obliga-
tions provided in this Article or lessening such liability otherwise than provided in these Rules, shall be null and
void and have no effect.

25 William Tetley, 'Waybills: The Modern Contract of Carriage of Goods by Sea' [1983] JMLC 465 at p 472.

26 Ibid at p 472.

27 This section was amended in 1994 by replacing the word 'Federation' in the 1950 Ordinance with 'Malaysia'. In part (b) ' ...
carriage of any goods from any port in the Federation to any other port in the Colony' is now read as ' ... carriage of any goods
from any port in Malaysia to any other port in Malaysia.'

28 Section 1(3) of the English COGSA 1971 states that ' ... the provisions shall have effect (and have the force of law) in rela-
tion to and in connection with the carriage of goods by sea in ships where the port of shipment is a port in the UK, whether or
not the carriage is between ports in two different States within the meaning of art 10 of the Rules'. The section also extends to
cover coastal or local trade.

29 Section 360(2)(c) of the Malaysian Merchant Shipping Ordinance 1952.

30 Section 5 of the Singapore COGSA 1972 was repealed in 1995. Although para (a) contained the same defect in wording as
in the Malaysian s 5, the Singapore para (b) was different from the Malaysian para (b). It stated that the carriage of goods by
sea in ships carrying goods from any port in Singapore to any other port in Singapore or to any port in Malaysia. This also rais-
es the question as to whether Malaysia is considered 'local' but this matter is laid to rest after the 1995 amendments.
 Page 16

31 Singapore adopted this provision in the 1995 amendments by virtue of the new s 4(b). Prior to this, the Singapore COGSA
1972 was very much the same as the Malaysian COGSA although the former had adopted the Hague-Visby Rules.

32 William Tetley, 'Waybills: The Modern Contract of Carriage of Goods by Sea', supra n 25 at p 472.

33 Jane Martineau, Hague, Hague-Visby and Hamburg Rules [1996] IJSL 12 at p 14.

34 In the UK, the British Maritime Law Association subtituted the limitation amount in 1950 to £200 and raised it again in 1977
to £400 and the gold value was waived.

35 Sarathi Co v Vishva Pratibha (Owners of) [1980] 2 MLJ 265.

36 See also Tan Lee Meng, Carriage of Goods by Sea in Singapore (2nd Ed, 1994) at p 386.

37 Mitsui & Co v American Export Lines [1981] AMC 311; see also AllState Insurance Co v Inversiones Navieras Imparca PA
[1982] AMC 945 and The Oriental Knight [1986] AMC 1724.

38 Tan Lee Meng, Carriage of Goods by Sea in Singapore, supra n 36 at p 388.

39 The article also provides that the amount of conversion shall be defined on the basis of conversion by the court seized of
that case.

40 Article 4 r 5(a).

41 J Wilson, Carriage of Goods by Sea, supra n 18 at p 199.

42 Tan Lee Meng, Carriage of Goods by Sea in Singapore, supra n 36 at p 381.

43 J Wilson, Carriage of Goods by Sea, supra n 18 at p 199.

44 The Esmeralda [1988] 1 Lloyd's Rep 206; see also J Wilson, Carriage of Goods by Sea, supra n 18 at p 199.

45 Ibid at p 199.

46 See Samuel Robert Mandelbaum, 'International Ocean Shipping and Risk Allocation for Cargo, Loss and Damage and Delay:
A US Approach to COGSA, Hague-Visby, Hamburg and the Multimodal Rules', [1966] Journal of Transnational Law and Policy.

47 Ibid at p 13.

48 Section 7 of the Malaysian COGSA states, 'Nothing in this Act shall affect the operation of ss 289 to 294, both inclusive, 359
and 360 of the Merchant Shipping Ordinance 1952, or the operation of any written law for the time being in force limiting the lia-
bility of the owners of sea-going vessels'.

49 AP Godwin, 'Carriage of Goods by Sea -- Carrier's Legal Position' [1982] MLJ lxxx at p xxxv.v

50 Section 360(2) states that: (a) a gold franc shall be taken to be a unit consisting of 65.5mg of gold of millesimal fineness 900;
and (b) the Minister may from time to time by order be published in the Gazette specify the amount equivalent to 3,100 gold
francs and 100,0 gold francs.

51 Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1914] 1 KB 419 at p 432.

52 The European Enterprise [1989] 2 Lloyd's Rep 185.vv

53 J Wilson, Carriage of Goods by Sea, supra n 18 at p 201.

54 Ibid at p 275.

55 Ibid at p 201.

56 Pollock on Torts (12th Ed). The definition was cited in the case of PRS v Mitchell & Booker (1924) by McCardie J, at pp 79
and 80
 Page 17

57 A Diamond, 'The Hague-Visby Rules', supra n 14 at p 251.

58 J Wilson, Carriage of Goods by Sea, supra n 18 at p 201.

59 The New York Star [1980] 2 Lloyd's Rep 317.