LIMITATION OF LIABILITY Introduction Except for the exemption clauses foreseen in the Hague-Visby Rules, the carrier is liable

for the damage to the goods and will, in case of loss or damage to the goods, be obliged to fully compensate the receiver of the goods. Since most of the time, huge amounts of money are involved, the carrier has always tried to limit his liability as much as possible. Before the Hague Rules entered into force, the bills of lading contained provisions limiting the carriers liability to very low amounts. The Hague Rules which are of public order regulated this matter. A distinction should however be made between: 1) The Hague Rules 1924; 2) The Hague-Visby Rules; 3) The Protocol 1979. As mentioned before, it is necessary to make a distinction between the three development phases of the Hague Rules because not all countries ratified the Visby Amendment Protocol of 1968 and the Protocol of 1979. Please check whether your country ratified the above mentioned Rules and/or Protocols. According to the Hague Rules 1924 Hereunder, we give the limitation of liability according to the Hague Rules 1924 as provided in Article IV, par. 5: "5. Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with 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 inserted in the bill of lading. This declaration if embodied in the bill of lading shall be prima facie evidence, but shall not be binding or conclusive on the carrier. By agreement between the carrier, master or agent of the carrier and the shipper, another maximum amount than that mentioned in this paragraph may be fixed, provided that such maximum shall not be less than the figure above mentioned. Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with goods if the nature or value thereof has been knowingly misstated by the shipper in the bill of lading".

Note that above excerpt only refers to the Hague Rules 1924 and not to the Hague- Visby Rules or to the Protocol 1979. The amount of 100 represents 100 pound sterling. Every country that ratified the convention converted this amount into its own currency in its own legislation. For the calculation of the maximum amount of liability, a package represents each part of the cargo which is packed separately, or which at least is bound together for the carriage. A unit is what is described as a "unit" in the bill of lading. It can thus be a unit of volume or a unit of weight as used for the calculation of the freight. With regard to the 1924 Convention, the container represents a new form of packaging for goods which are dispatched by a single shipper to a single destination. (Note that one and the same container can group several consignments.) Must the container be considered as a unit or does the limitation of liability of 100 pound sterling refer to each consignment in the container ? The question has been resolved in Article 2, par. C of the Visby Amendment Protocol of 1968. When the bill of lading enumerates the number of packages or units contained in the container the limitation of liability refers to these units; otherwise the container is considered as a package or unit. A smaller amount than 100 pound sterling may not be agreed as a limitation of liability. By mutual agreement a higher amount than 100 pound sterling may however be fixed . If the nature and the value of the goods have been inserted in the bill of lading as declared by the shipper before shipment, only this value counts as limitation of responsibility and not the amount of 100 pound sterling (cf. Hague Rules, Article 4, par. 5). In case of a deliberate misstatement, the shipper would loose his rights. According to the Hague-Visby Rules The Hague Rules 1924 have been amended by the Brussels Protocol 1968 and known as the Visby Amendment. Hereunder follows the full law text of Article 2 of the Visby Amendment that deletes Article 4, par. 5 of the Hague Rules 1924 and that is replaced by the following: a) Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, 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 the equivalent of 10,000 francs per package or unit or 30 francs per kilo of gross weight of the goods lost or damaged, whichever is the higher.

b) The total amount recoverable shall be calculated by reference to the value of such goods at the place and time at which the goods are discharged from the ship in accordance with the contract or should have been so discharged. The value of the goods shall be fixed according to the commodity exchange price, or, if there be no such price, according to the current market price, or, if there be no commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality. c) Where a 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 are concerned. Except as aforesaid such article of transport shall be considered the package or unit. d) A franc means a unit consisting of 65.5 milligrams of gold of millesimal fineness 900. The date of conversion of the sum awarded into national currencies shall be governed by the law of the Court seized of the case. e) Neither the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result. f) The declaration mentioned in sub-paragraph (a) of this paragraph, if embodied in the bill of lading, shall be prima facie evidence, but shall not be binding or conclusive on the carrier. g) By agreement between the carrier, master or agent of the carrier and the shipper other maximum amounts than those mentioned in sub-paragraph (a) of this paragraph may be fixed, provided that no maximum amount so fixed shall be less than the appropriate maximum mentioned in that sub-paragraph. h) Neither the carrier nor the ship shall be responsible in any event for loss or damage to, or in connection with, goods if the nature or value thereof has been knowingly misstated by the shipper in the bill of lading. The main adaptations made to the Hague Rules are: 1. The limit of liability is put to 10.000 (gold) francs per package or unit, or to 30 francs per kilo; It is always the highest limit that must be applied. The monetary unit is the Poincar franc of 65.6 milligrams of gold of millesimal fineness 900'. 2. The notion of "package" or "unit" is defined: reference is made to the bill of lading. This brings a solution to the difficulty regarding the concept of "unit" with containers and pallets.

3. Not only in case of intention but also in case of a severe fault it is impossible to limit the liability. According to the Protocol 1979 The Hague Rules 1924 as amended by the Visby Amendment 1968 on the 23 rd of February 1968 have been amended for the second time by the Protocol of 1979 drawn up at Brussels on the 21st of December 1979. Regarding Article IV, par. 5 of the Hague-Visby Rules, only sub-paragraphs a) and d) have been amended. Hereunder follows the full law text of these two sub-paragraphs that replaces sub-paragraphs a) and d) of Article 5 of the Hague Rules 1924 as amended by the Visby Amendment 1968: a) Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, 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 the equivalent of 666.67 units of account per package or unit or 2 units of account per kilo of gross weight of the goods lost or damaged, whichever is the higher. d) The unit of account mentioned in this Article is the special drawing right as defined by the International Monetary Fund. The amounts mentioned in sub-paragraph (a) of this paragraph shall be converted into national currency on the basis of the value of that currency on a date to be determined by the law of the Court seized of the case. The main adaptations are: The limit of liability now amounts to 666,67 units of account per package or unit or 2 units of account per kilo; Its always the highest limitation that counts. The unit of account is the special drawing right as defined by the International Monetary Fund. The conversion into the national currency (i.e. the local currency) is on the basis of the value of that currency on the date to be determined by the law of the Court seized of the case. Usually this will be on the date that the goods were delivered or had to be delivered. Parties which are not a member of the International Monetary Fund, apply the Visby Amendment 1968, i.e. the Poincar franc of 65,6 milligrams of gold of millesimal fineness 900. As mentioned before, neither the carrier nor the ship are entitled to the benefit of limitation of liability if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probable result. (These acts or omissions are considered to be severe faults.)

Towards the Appointee of the Carrier Article III of the Visby Amendment 1968 added a new Article IV Bis in the Hague Rules 1924, whereby the defences and limitations of liability shall apply in any action against the carrier or against a "servant or agent of the carrier" in order to obtain compensation. Such servant or carrier shall however not be an independent contractor. It is remarkable and new that in an action against a servant or agent of the carrier, the latter, like the carrier, can invoke the exemptions and limitations of liability foreseen by the law (Hague-Visby Rules, Article IV Bis, par. 2). The same limitation apply in case of a severe fault (Hague-Visby Rules, Article IV Bis, par. 4). Prima Facie Evidence According to Article III, par. 4 of the Hague-Visby Rules, the bill of lading shall be evidence to the contrary (prima facie evidence) of the receipt by the carrier of the goods as therein described qua: marks, the number of packages or pieces, or the quantity or the weight as the case may be; the apparent order and condition of the goods.

According to Article III, par. 4 of the Hague-Visby Rules, proof to the contrary shall not be admissible when the bill of lading has been transferred to a third party acting in good faith. This provision is new and has been inserted in the Hague Rules 1924 by Article I of the Visby Amendments 1968. We can fully join this point of view given that according to Article III, par. 5 of the Hague-Visby Rules, only the shipper, and not the third holder of the bill of lading, can be held responsible towards the carrier for the accuracy of the marks, number, quantity and weight. Damages to the goods - Prescription The goods are presumed to have been delivered as described in the bill of lading and the removal of such goods without notice of loss or damage shall be prima facie evidence thereof. In case of loss or if the goods are damaged the receiver can file a protest (HagueVisby Rules, Article III, par. 6). Loss or Damage is Visible Externally at the time of the removal of the goods, give notice in writing of the loss or damage; a joint survey or inspection of the loss or damage by both parties at the time of their receipt; in that case, notice in writing need not be given (Hague-Visby Rules, Article III, par. 6, alinea 2). Loss or Damage is not Visible Externally

Notice within three days of the removal.

Prescription Subject to actions for indemnity (Hague-Visby Rules, Article III, par. 6 Bis), the prescription period for loss or damage to the goods is one year unless suit is brought within that year (Hague-Visby Rules, Article III, par. 6, alinea 3). The prescription period of one year can be extended by mutual agreement (Hague- Visby Rules, Article III, par. 6, alinea 3). An action for indemnity may be brought after the expiration of the year (or of the period mutually agreed between the parties). However, the time allowed shall be not less than three months (Hague-Visby Rules, Article III, par. 6 Bis). Burden of Proof If the loss or the damage has been determined at the time of the removal or within three days after the removal of the goods, the burden of proof lays with the master and he has to prove that the loss or damage is not due to a fault of the ship. If the charge regarding the loss or damage is reported within one year, the burden of proof is reversed and it is now the receiver who has to prove that the ship was at fault. Exoneration or Exemption Clause - Exceptions Article III, par. 8 of the Hague-Visby Rules prohibits explicitly to insert in the bill of lading, exemption clauses other than the legally admitted clauses. However, the authors of the Hague-Visby Rules had to make two exceptions on this: 1. When the carrier has reasonable grounds to suspect that the marks, number, quantity or weight given by the shipper do not represent the goods actually received on board. 2. When he has had no reasonable means of checking above mentioned. (HagueVisby Rules, Article III, par 3, last alinea.) In both above mentioned cases, the carrier is not obliged to enter the details regarding the goods in the bill of lading. Neither will he be obliged to acknowledge that these details are correct and he will have no responsibility as to that. Usually, the bill of lading will show the clause "Weight and quantity unknown".