Containerized carriage by sea and the package or unit limitation question

Abstract

There has been a container revolution! Container transport can indeed be considered the industrial revolution of our century, for it has affected the transportation industry like no one single phenomenon has ever done before. Container carriage is not a new mode of carriage of goods, but rather a more efficient method of using the existing modes of transport, namely sea, rail, road and air. This study is only concerned with. the effect of

containerization on one of the abovementioned modes of trans- port - shipping - and, more particularly, with the "package

or unit" limitation. The problem is one which is simply stated. Art.4(5) of the Hague Rules, 1924 - which certainly did not foresee the advant of containerization - limits the carrier's liability for loss or damage to £100 (or the equivalent in other currency) per "package or unit". Now, a 20ft. container may contain as many as 500 cartons, bales, boxes, etc. In case of loss or damage to the container, would the £100 per "package or unit" limitation apply to the container as a whole, or rather to the individual cartons stowed therein ? The problem, therefore, is one of solving this question on the basis of existing legal rules governing conventional carriage by sea.

The first chapter is divided into two parts. The former gives a brief historical outline to the drafting of the Hague Rules and the purpose thereof; the latter deals with the container revolution and the implications thereof on the shipping industry.The second chapter states the problem involved. It is noted that since both a carton and a container are packages, in the sense that they both enclose goods, the

real question is to determine which of the two, the con- tainer or the inner package, constitutes a "package" for

the purposes of art. 4(5) of the Hague Rules. Various

factors which may affec~ the determination of this ques- tion are considered.

The third chapter examines art. 4(5) of the Hague

Rules and seeks to establish its rationale. It is conc- luded that the purpose of the limitation of liability

was to prevent carriers, who are in a better bargaining position than shippers, from exculpating themselves from

liability altogether, by limiting such liability to a mini- mum amount of £100.

The fourth chapter outlines some early cases dealing with the package or unit limitation and with the effect of palletization, the precursor of containerization, on the matter.

The next three chapters deal with the decisions on this issue given by American, Canadian, French and German courts. It should here be noted that there are no English or Maltese decisions on the package or unit limitation, but, it is submitted, reference could be made to foreign case law if the need arose since all the legislations adopt art. 4(5) of the Hague Rules. This was what was in fact done by a Canadian court when faced with the problem for the first time.It is American case law which is by far the most voluminious. Various approaches to the problem have been taken by different courts. It will be seen that whilst American decisions start on the right tract, extraneous issues are introduced via the so-called ''functional economics test". This test is severely criticised by various writers, which criticism was ultimately taken up in a recent decision, which regards the container as a movable compartment of the ship and the inner cartons as the packages for the purposes of the Rules.

The eighth chapter discusses the effect of various practical and economic factors in attempting to arrive at an equitable solution. Among these factors are the knowledge of the carrier as to the contents of the container, the need for a uniform and predictable solution, the element of insurance and the intention of the parties.

The next two chapters outline the legislative efforts which have been made in recent years to solve the problem brought about with the advent of containerization. These efforts include the Brussels Protocol of 1968, which produced the Hague-Visby Rules, and subsequent draft conventions under the auspices of the United Nations, which culminated in Hamburg Rules in 1978, which in respect

of carriage in containers, are much the same as the Hague- Visby Rules. The problems left unresolved by these Rules

are considered at length.

The final chapter discusses cartain solutions which have been put forward, particularly the suggestion that thecarrier's limit of liability should be tied up with a stated percentage of the value of the cargo. Such a solution, it is submitted, is inflation-proof and would achieve a more

realistic and predictable amount of liability than the pre- sent per package or unit limitation, which tends to be somewhat artificial.