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proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.
3. The shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising or resulting from any cause without the act, fault, or neglect of the shipper, his agents or his servants.
4. Any deviation in saving or attempting to save life or property at sea, or any reasonable deviation shall not be deemed to be an infringement or breach of this convention or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom.
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 beyond £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 the goods are shipped and have been 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 mentioned in this paragraph may be fixed, provided that such maximum shall not be less than the figure above named.
The rate of exchange shall be taken to be the rate ruling on the day of the arrival of the ship at the port of discharge of the goods concerned.
6. 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.
7. Goods of an inflammable, explosive, or dangerous nature, to the shipment whereof the carrier, master, or agent of the carrier has not consented with knowledge of their nature and character may at any time before discharge be landed at any place, or destroyed or rendered inocuous by the carrier without compensation to the shipper and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place. or destroyed or rendered inocuous by the carrier without liability on the part of the carrier except to general averahe if any.
A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities under this convention, provided such surrender shall be embodied in the bill of lading issued to the shipper. The provisions of the convention shall not be applicable to charter parties, but if bills of lading are issued in the case of a ship under a charter party they shall comply with the terms of this convention. Nothing in this convention shall be held to prevent the insertion in a bill of lading of any lawful provision regarding general average.
ARTICLE VI.-SPECIAL CONDITIONS.
Notwithstanding the provisions of the preceding articles, a carrier, master, or agent of the carrier and a shipper shall in regard to any particular goods be at liberty to enter into any agreement in any terms as to the responsibility and liability of the carrier for such goods, and as to the rights and immunities of the carrier in respect of such goods, or his obligation as to seaworthiness, so far as this stipulation is not contrary to public policy, or the care or diligence of his servants or agents in regard to the loading, handling, stowage, carriage, custody, care, and discharge of the goods carried by -sea, provided that in this case no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a receipt which shall be a nonnegotiable document and shall be marked as such.
Any agreement so entered into shall have full legal effect.
Provided that this article shall not apply to ordinary commercial shipments made in the ordinary course of trade, but only to other shipments where the character or condition of the property to be carried or the circumstances, terms and conditions under which the carriage is to be performed are such as reasonably to justify a special agreement.
LIMITATIONS ON THE APPLICATION OF THESE RULES.
Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to, or in connection with, the custody and care and handling of goods prior to the loading on, and subsequent to, the discharge from the ship on which the goods are carried by sea.
ARTICLE VIII.-LIMITATION OF LIABILITY.
The provisions of this convention shall not affect the rights and obligations of the carrier under any statute for the time being in force relating to the limitation of the liability of owners of sea-going vessels.
ARTICLE IX.-APPLICATION OF THE CONVENTION. The provisions of this convention shall apply to all bills of lading issued in any of the contracting States.
The CHAIRMAN. If you will give me your attention, I will outline the purpose of the bill as it is viewed by its proponents.
On July 18-20, 1921, the Subcommittee on Marine Insurance of the Committee on the Merchant Marine and Fisheries held hearings on the subject of ocean bills of lading, with particular reference to the problem of theft, pilferage, nondelivery, breakage, and so forth, of export and import shipments. The subject of ocean bills of lading is of vital importance to American ippers, ship operators, marine underwriters, and bankers. All of these interests appeared at the aforementioned hearing, through their accredited representatives, and presented their views fully and frankly. The testimony at this hearing clearly indicated that many American shipping and underwriting interests were totally out of sympathy with the usual forms of bills of lading used in our international trade.
Shortly following this hearing, the so-called The Hague Rules, 1921, relating to bills of lading, were announced. Later, a revision of these rules was announced under the title of The Hague Rules, 1922. On October 9–11, 1922, these rules were amended at the London Conference of the Comité Maritime Internationale, and on October 17-26 were further amended and passed at the Diplomatic International Conference held at Brussels.
H. R. 14166, the bill before us for consideration, is a copy of the rules as adopted at the Brussels Conference. It virtually follows the form in which the rules were announced to us, the language being changed but slightly in order to conform to our legislative usage. I should call attention, however, to one important printer's error; on page 8, line 12, the figures "$100” should read “100."
Numerous parties vitally interested in the subject, representing both proponents and opponents of the Brussels rules, have requested and urged that a public hearing with respect to these rules be granted by this committee at this particular time. H. R. 14166 was, therefore, introduced by request to serve as a basis for such a hearing, thus giving all interests an opportunity to express their views. I trust that the pros and cons of the rules in question may be thoroughly presented at this time. We want all the enlightment possible on this subject, and I trust that this hearing may serve, should vital differences of opinion arise, to enable conflicting viewpoints to be ironed out to the satisfaction of all who are interested in the welfare of American shipping and foreign trade.
In conducting this hearing, we will first have the supporters of the bill heard; then the opponents of the bill will have an opportunity to present their side. willing to devote all the time that is necessary, both day and evening, if necessary, to have this matter fully presented, so that nobody will be delayed here, as I understand a number of people have come from different parts of the country to attend the hearing Mr. BLAND. It is not expected to pass the bill at this session is it, Mr. Chairman? The CHAIRMAN, I did not catch that. Mr. BLAND. I say is it hoped to pass the bill at this session of Congress? The CHAIRMAN. I would not like to say it will pass; I can not tell you.
I would answer that probably we might get it through the House, but the Senate is an uncertain body, as everyone knows.
Mr. ROSENBLOOM. In other words, it is a deliberative body.
The CHAIRMAN. It takes the two branches of the legislature to make laws, with the approval of the President. After we do the work of getting legislation ready, then it has to go over to the Senate and they have to pore over it, and I would not like to say that there would be a law passed at this session.
Mr. Bland. It has to run the gauntlet of senatorial courtesy.
The ('HAIRMAN. I have nothing to do with that and do not undertake to, but I try to get along with this House as far as I can. . Sometimes, I find trouble over here, but that does not bother me.
I will call Mr. Beecher as the first witness on the bill.
STATEMENT OF MR. NORMAN B. BEECHER, SPECIAL ADMIRALTY
COUNSEL, UNITED STATES SHIPPING BOARD.
Mr. BEECHER. I have been asked to make a statement in regard to this bill, explaining the provisions, and to make some remarks in regard to what was done abroad and what we have put into this bill, and I am speaking entirely in my individual capacity and not as a representative of the Shipping Board, which though very much interested in the subject, desires to have the benefit of this hearing before expressing its official views to the committee.
Before the conferences abroad; to which the chairman has referred, the Shipping Board had hearings at which many of the gentlemen present attended, and had the benefit of much testimony and many suggestions, which were made at that time. It believes it will derive equal benefit from the present hearings, and, later, after considering everything that is presented, it will formulate its own views.
I am also not here to speak as a representative of the State Department, although appointed by the State Department to represent the United States at the conference at Brussels, I signed, together with Judge Hough (the other delegate of the United States) the protocol wherein we agreed, along with the delegates of the 23 other maritime nations, to recommend to our respective governments the putting into effect of the rules there adopted for the carriage of goods by sea, The State Department has as yet not made public the report of the delegates and the result of their action, and has not laid the matter before the Senate. I assume that will be done in due course.
My understanding is that all of the diplomatic documents are not yet even in the possession of the State Department. For example, the proces verbal or reporte de conference that was made a part of the protocol which we signed, has, I believe, not as yet arrived from Brussels. I mention that because I observe in some quarters a tendency to criticize the State Department. Although I have not been asked by the State Department to defend it, I think it is only fair to give that explanation.
Now this bill (H. R. 14166), in general, is simply taken from the language of the rules as adopted at Brussels, changing the words and the form, slightly, to conform to an ordinary piece of American legislation.
Just very briefly, for the record, although I imagine every one here is aware of it, these rules are the descendant of the original Hague rules, 1921, which were brought to America more than a year ago and have been the subject of much discussion and controversy ever since. There were a great many objections raised to those original rules, in which the Shipping Board shared and I personally shared and, as a result of the many American criticisms and of the criticisms of a certain group of the British shippers, certain modifications were made which went far to meet the objections that had been raised both here and abroad.
The original Hague rules, as thus modified, were the subject of the hearings which the Shipping Board held on September 20-21 of the past year. There were a great many suggested changes at that hearing. I think the general atmosphere was that of a desire to have such rules internationally adopted, with such amendments suggested as could be obtained; but the general sentiment was it was hoped that the delegates of the United States would not return without any rules whatever.
We endeavored to carry out that policy as thus outlined, and we were successful, first in London, in securing a great many modifications of the rules on points which had been objected to, clearing up difficulties of one sort or another. For example, the prohibition of benefit of insurance clauses which we secured was one which' the shippers and possibly the underwriters, even more than the shippers, were extremely anxious to have secured. We also were able to secure some modifications in line with the criticisms of the shipowners.
At Brussels the rules, as thus amended at the meeting of the ('omité Maritime Internationale at London, were further considered and some additional modifications made in them. While it is true that all of the suggestions made by everyone interested in the subject were not carried out, it is of course also true that such a thing was not to be expected, and in an international meeting composed of representatives of 24 maritime nations to expect that the delegates of the United States could secure every amendment and have the rules read precisely as they would like was something that was, of course, impossible. We feel, however, that we were successful to a very considerable extent, and as a result, as I said before, the delegates of the United States, along with the delegates of all the other 23 nations, signed an agreement to recommend to their Governments the putting into effect of these rules.
Returning to the bill that has been introduced for that purpose, the first point I call attention to is on page 1, paragraph (b) of section 1. That paragraph provides that a "contract of carriage," as used in the act, shall apply to a bill of lading issued under a charter party from the moment at which such bill of lading governs the rights of the carrier and the holder of the bill of lading.
The purpose of that is to allow the charter party, where bills of lading remain only in the hands of the original charterer, to be unaffected by the rules. It is only when the bills of lading under charter parties have passed into other hands than those of the original charterer that the rules are to apply. We believe that that is the right thing to do. The Harter Act itself is not applicable to charters, but from the international point of view it was absolutely essential to agree upon this, because the Scandinavian countries were extremely anxious to preserve their rights of issuing their charter parties unrestricted by the rules.
Mr. BLAND. Would it be convenient for you to point out the changes in existing law as we go along the changes that are proposed to be made?
Mr. BEECHER. I will endeavor to do so; but I am afraid I will be rather imperfect, and must ask the indulgence of the committee as I have just gotten up from a sick bed and will have some difficulty.
I next call attention to paragraph e of section 1, lines 9 to 11, page 2, providing that these rules shall cover only the period while the goods are on board ship. It has been clarified from the language of the rules formerly under consideration. It has not, as was desired by many American shippers, been broadened so as to cover the entire period while the goods are in the possession of the carrier, as does the Harter Act.
Mr. ROSENBLOOM. Does that change the present law?
Mr. BEECHER. It changes the present law with respect to the period while the goods are on board ship.
Mr. ROSENBLOOM. That is the only thing it could change. Does the present law provide that when it is delivered at the dock the carrier becomes responsible?
Mr. BEECHER. Yes.
Mr. BEECHER. No; it does not relieve them from that responsibility; it leaves them under the same responsibility as they are to-day, prior to the lading on board, but proposes an additional and higher responsibility or liability when the goods are actually placed on board. So that the law as it is to-day is amended only so as to make it more stringent upon the carrier than under the existing law. What many American shippers desired (and at the time I sympathized with them and sought to have it carried out), was that these rules should apply to the entire period while the goods were in the hands of the carrier; but I found that was impossible if we were to secure international uniformity and the reasons given have convinced me that the objections of the other nations are well founded.
The point is this, that if these rules are made applicable to the period after the goods have been discharged from the ship or before they are loaded upon the ship, the steamship company, the carrier, which may have and frequently does have a large and elaborate system of warehouses, is placed at an impossible competitive disadvantage with his neighbor warehouseman who is under no such restrictions. In other words, if the warehouseman who is not also a carrier is able to do what is commonly the case,
issue a receipt at owner's risk and with a valuation, if you please, of 20 shillings per package, it is obvious he has a tremendous advantage over the steamship company if the steamship company is compelled to assume the obligations imposed by these rules—the higher degree of responsibility and the higher limit of liability. It may be thought strange that the shippers or the owners of the goods would prefer the other system, but apparently they do, and I can see a good reason for it, because the contract or the receipt of a well-run, responsible, warehouse company “at owner's risk” and at no liability may often be far more valuable than a receipt with the most stringent provisions issued by a company of less responsible character. And obviously, of course, the company that issues the receipt at owner's risk, and so on, can charge a much lower rate for storage than the company that issues a receipt subject to these obligations. For those reasons it was found impossible to have the rules cover any period other than while on board ship.
Mr. BLAND. What liability is not covered by the phrase “at owner's risk”?
Mr. BEECHER. In general, it would relieve the warehouseman of every liability. Of course in America we do not have that situation, because under the warehousing acts, I take it, "at owner's risk" is not permissible; I mean, our warehouses are liable for the exercise of reasonable care.
Mr. Bland. I suppose the warehouseman is relieved from everything except gross negligence.
Mr BEECHER. I suppose that would at least be true under your suggestion. At the hearings of the Shipping Board, before we went abroad, realizing the difficulties
there would be in attempting to secure what we were asked to secure, namely, the application of the rules to the entire period while the goods were in the carrier's hands, I asked the gentlemen who were especially urging that whether they would be. satisfied if it was entirely clear that the Harter Act remained in full force and effect as to all periods of time not covered by the rules, and they said they would Apparently they had a fear, if the rules were adopted in the form they were, thaj it might be held to amount to a repeal of the Harter Act as to the period before and after the goods were on shipboard. Now, in this bill it has been attempted to insure that the provisions of the Harter Act are unaffected, because there has been omittel that section of the rules or that article of the rules, article 7, which in terms gave the carrier and the shipper permission to enter into any agreement they saw fit as to the period before or after the goods were on board ship. We therefore have left the Harter Act in full force and effect, except as to that period of time while the goods are on board ship, as to which period of time the rules, in so far as they are in conflict with the Ilarter Act, would necessarily modify the Harter Act, as being the latest expression of the will of Congress.
Mr. Bland. The Harter Act limits the liability to the ship, does it not?
Mr. BEECHER. No; the Harter Act prohibits the carrier from inserting provisions relieving himself from liability for negligence. It is that particular portion that was important there.
I call attention next to the provisions of section 3, paragraph (F), line 12, on page 4, of the bill. This is the notice of claim clause and I think, as it has been modified at the meetings abroad, that it complies with every possible need or even desire of the shippers. From the viewpoint of the ship owner, I can see that it is subject to criticism as not affording the protection against fraudulent claims which perhaps he should have; but the modifications which have been made abroad only strike out, in the first line, the notice of claim of loss, so that it now reads "Unless notice of loss or damage,'' thereby making it not essential to give a formal notice of claim, and the change in lines 19 and 20, where the addition of the words, “If the loss or damage is not apparent, the notice must be given within three days of the delivery of the goods,' allowing the shipper, in cases of nonapparent damage, to have three days after he has removed the goods within which to investigate and to notify the carrier, if he finds any damage.
Mr. ROSENBLOOM. After the consignee removes the goods from the custody of the carrier-suppose he does not ascertain his damage within three days, is it intended here to estop any recovery for the damage he might have?
Mr. BEECHER. Not at all. That is the point in which this notice of claim clause is so valuable from the point of view of the shipper. So far as I know, under all previous bills of lading and claim clauses of this sort, the effect of the failure of the shipper to give the notice required has been, as you say, to estop him from recovery. All of that has been wiped out now in this clause.
Mr. BLAND. Suppose it is a concealed loss and not discovered until after the expiration of the three days?
Mr. BEECHER. All right; in that case, what is the result? He can recover just the same from the carrier. Under previous bills of lading, commonly in use, he could not recover with such a claim clause if he had failed to give the notice required; but here the only effect of his failing to give the notice of the claim is that the carrier has the benefit of a prima facie presumption that he has delivered the goods in good order. All the shipper then has to do is to prove the fact they were in bad order when the carrier delivered to him and he recovers, notwithstanding his failure to give the notice of claim.
Mr. ROSENBLOOM. I do not see how you reconcile that with the language "If the loss or damage is not apparent, the notice must be given within three days of the delivery of the goods. Would not that word “must" estop him from setting up a claim after three days?
Mr. BEECHER. No; I think not, Congressman; because that simply means he must give it within three days, otherwise what will happen, what this provides, is that such removal will be prima facie evidence of the delivery by the carrier of the goods as described by the bill of lading. That is the penalty of not complying with the “must.
Mr. PERLMAN. That is not quite clear, Mr. Beecher. I think you are giving practically
a statute of limitations of three days. Mr. ROSENBLOOM. Yes; you fix a limitation of three days. In other words, here is a jobber who receives large consignments from abroad; he may have no occasion to open any of them for six months, until they are sent on to the ultimate consumer, out in Kansas City, for instance, and then it is discovered they are damaged. This language, in my opinion, would estop him from making claim.