STATUS OF THE BRUSSELS CONVENTION

On April 1, 1935, the Senate ratified the Brussels Convention for Unification of Rules Relating to Bills of Lading for Carriage of Goods by Sea, which had been submitted to it on February 26, 1927, making one reservation to fix the minimum liability limit of the shipowner for loss or damage to cargo at $500 per package or unit rather than at 100 pounds sterling or the equivalent in American currency.

Under its terms the convention does not take effect until 6 months after the notice of ratification has been deposited with the Belgian Government. This has not as yet been done, it having been urged upon the State Department that the preservation of American principals in certain further respects makes it important that legislation covering the subject matter of the convention be enacted before deposit of the ratification notice.

It is also believed by the members of the Conference on Uniform Ocean Bills of Lading that certain further modifications and clarifications, as contained in the bill before this committee, are needed to make the provisions of the convention applicable to American law and conditions.

CHANGES IN BRUSSELS CONVENTION

The pending bill, which the conference endorses without reservation, modifies the convention in the following particulars:

(1) The convention provides that the bill of lading shall be prima facie evidence of the receipt by the carrier of the goods. This is contrary to the Pomerene Bills of Lading Act which imposes absolute liability upon the carrier when the bill of lading is signed by his authorized agent, a provision which was found necessary to obviate abuses that had previously grown up under former provisions of American law. Section 3, paragraph 4, of the bill was therefore included, preserving in full force and effect the provisions of American law.

(2) The bill (sec. 3, par. 6) contains a provision not appearing in the convention, that the notice of loss or damage may be endorsed upon the receipt for the goods. This is desired by shippers and consignees in order to counteract the suggestion found in some opinions of the courts that a notice of loss or damage should be separate from the receipt for the goods.

(3) The bill (sec. 3, par. 6) clarifies the convention by providing that failure to give notice of loss or damage shall not bar the institution of suit within 1 year.

(4) The bill (sec. 3, par. 6), as amended by the Senate, restores a provision found in the convention but not in the original bill allowing 3 days in case of concealed loss or damage for giving the notice to avoid making removal of the goods prima-facie evidence of delivery in the condition described in the bill of lading.

(5) While the convention would relieve the carrier from responsibility for loss or damage arising or resulting from strikes or lockouts, etc., from whatever cause, the bill (sec. 4, par. 2 (j)) would limit such exemption so that the carrier would not be relieved from responsibilities for his own acts. The purpose is to make it clear and unquestionable that an ocean carrier, finding that a loss is being suffered through his negligence, may not conceal the loss and escape from liability by the device of bringing on a strike.

(6) The convention relieves the carrier from liability for loss or damage resulting from any reasonable deviation. The bill (sec. 4, par. 4) clarifies this provision by declaring that any deviation for the purpose of loading or unloading cargo or passengers is prima-facie unreasonable. Cargo interests are firm in their view that shippers of goods require the protection of this clause and their support of the bill is largely conditioned on its retention. Other American interests, formerly opposed to this addition to the deviation clause, appear now to recognize that it is in fact a clarification of, rather than a change in, the clause.

(7) As in the reservation attached to the Senate's ratification of the convention, the bill (sec. 4, par. 5) provides that the minimum liability limit per package or other customary freight unit shall be $500 lawful money of the United States. This change is appropriate on account of the departure of the pound sterling and the dollar from the former gold bases to which the convention figure as to value was related.

(8) For similar reasons, the former article 9 of the convention, which refers to monetary gold units, has been left out of the bill.

(9) The convention, in regard to excess valuation of goods, provides that the amount declared in the bill of lading shall constitute prima-facie evidence "but shall not be binding or conclusive on the carrier." The bill (sec. 4, par. 5) provides only that it shall not be conclusive, since the higher value agreed upon is effective as prima-facie evidence.

(10) The bill (sec. 4, par. 5), while providing a minimum liability limit of $500 per package or customary freight unit, as does the convention, clarifies the latter by assuring that the carrier can, in no event, be liable for more than the amount of damage actually sustained.

(11) In order that the wording of the convention may more accurately conform to American law, section 8 of the bill, which preserves the rights and obligations of carriers under statutes of their respectively countries, relating to limitation liability, includes specific references to the Shipping Act 1916, the five statutes, and all other provisions relating to limitation of liability.

(12) The convention allows a carrier, by contract with the shipper, to assume great responsibility than the convention imposes. This might result in discrimination as between shippers which would be contrary to long-standing American commercial policy and law. Section 9 of the bill therefore specifically prohibits discrimination.

(13) Section 10 amends section 25 of the Interstate Commerce Act, which deals with through bills of lading issued by railroad carriers when a shipment is to travel by railroad from the point of origin to the seaboard and thence by ocean carrier to a foreign port. Under existing law the form and conditions of through bills of lading are specified. Therefore, in order that the portion of the transportation of such a shipment that would be made on an ocean carrier would come under the provisions of this proposed act, it is necessary that the Interstate Commerce Act be amended accordingly.

(14) Section 11 of the proposed legislation refers to a practice frequently followed in the United States, where the weight of bulk shipments is determined neither by the shipper nor by the carrier but by a third party who is termed the weighmaster. This weighmaster, for instance, in the case of grain, is sworn and deputized by the board of trade, the grain exchange, or whatever body supervises transaction in grain in that locality. Therefore in such a case neither the shipper nor the carrier can be held responsible for the weight stated in the bill of lading. Under section 3, paragraph 4, of this bill the carrier is held prima facie liable for the receipt of the goods as described in the bill of lading. In order, therefore, to provide for the accepted method of weighing in the United States, it is necessary that section 11 be added to the bill.

(15) The convention provides that the carrier and shipper may be free to enter into any agreement concerning responsibility in connection with the care and handling of goods prior to the loading on or subsequent to the discharge from the ship. It is the purpose of the Convention that the application of the Harter Act shall not be disturbed before loading and after discharge but to avoid any possible misunderstanding on their point, section 12 was inserted in the bill expressly providing that the Harter Act shall apply so far as it relates to the periods prior to the time when the goods are loaded on the ship and subsequent to the time they are discharged.

(16) Without further reservation the convention would impose the uniform ocean bill of lading upon parties engaged in our coastwise and intercostal trade, which is restricted to American vessels and has its owen peculiarities. It is generally agreed that this should not be done but that the parties should have the option of using the uniform ocean bill of lading in cases where they so desire. Section 13 of the bill therefore defines the general scope of the act so as to exclude our domestic, shipping, except where the parties to a bill of lading expressly agree therein to have it come under the act.

(17) The bill contains a section (sec. 14) authorizing the President to suspend the operation of the act in case its provisions, or the laws of any foreign nation, are found to prejudice the foreign commerce of the United States in its competition with that of other countries. This section is included as a safeguard for our commerce in the unlikely, but still possible, eventuality of adoption of measures detrimental to our commerce by foreign nations which may or may not be parties to the convention.

SUMMARY

To summarize the views of the Conference on Uniform Ocean Bills of Lading, the bill, S. 1152, before your committee, is believed to be a satisfactory compromise of the interests of shippers, carriers, underwriters, and bankers in regard to uniform ocean bills of lading. The changes in American law to be effected by the bill will correct features of existing law which have proved unsatisfactory. The modifications and clarifications of provisions of the Brussels Convention, which the bill will accomplish, are necessary to adapt those provisions to American conditions and to make clear that essential features of American law are preserved. They will not interfere with the value of convention from the viewpoint of international uniformity.

As far as we are aware, all American interests concerned are in agreement in urging passage of the bill in the form now before your committee.

STATEMENT OF NORMAN DRAPER ON BEHALF OF THE INSTITUTE OF AMERICAN MEAT PACKERS

Mr. DRAPER. Mr. Chairman and gentlemen, the extract which you read from my letter accurately states the position of the packing industry, and I won't go into the details of this bill as it appears at present, because a gentleman here from the National Industrial Traffic League will discuss the bill in detail better than I could.

I would like, however, to comment on the deviation-clause matter, since I have been concerned with that for about 15 years.

The CHAIRMAN. Would you just at this point state the page and section or paragraph where the deviation clause appears?

Mr. DRAPER. The deviation clause appears on page 9, subsection 4, of Senate 1152, and I would like to read that language right here:

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 act or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom: Provided, however, That if the deviation is for the purpose of loading or unloading cargo or passengers, it shall, prima facie, be regarded as unreasonable.

Now, if you will observe from the remarks of Colonel Barber, in which we concur, there has got to be some loss or damage resulting from a deviation, a fact which he did not point out. In other words, a ship may sail around the seven seas anywhere, and, unless there is loss or damage, why the carrier has not been hurt, as nobody is going to come along and declare it was unreasonable when he so sailed

around.

Mr. HART. Do you mean the carrier or the shipper?

Mr. DRAPER. The carrier or the shipowner. Nobody has been

hurt.

The CHAIRMAN. Unless there is loss or damage?

Mr. DRAPER. Unless there is loss or damage. And if some ship wants to stop and get a case of beans, or something of that sort, and they are 7 miles off shore and go in and get them and nobody gets hurt, it does not make any difference.

But take the example the chairman referred to: We are shipping perishable meats to Europe and all over the world and are shipping the most of those meats from the Middle West. We do not see the ocean bill of lading at all until after the goods have left the United States. An agent for the steamship company comes in and says, "I have a boat that is going to go direct to Hull", for example, and he solicits our freight and it is perishable freight, and it is

probable in the summertime, it is stowed under steel decks. We give him some freight and then he has a little space left over and he finds some apples, oranges, or something else that are being shipped in the same sort of situation and this other fellow binds the ship with a contract and says, "Sure, I will give you some cargo, provided you will take it direct to Stockholm", and somebody at the seaport, who is the forwarding agent, signs a contract.

Mr. HAMLIN. I suppose you are not claiming this cannot be questioned by the lawyers? For instance, we see here the word "reasonable", and that might be debated and might be questioned and there might be a difference of opinion and even suits on that, I suppose, in the event of loss.

Mr. DRAPER. That is right.

Mr. HAMLIN. Whether there is any loss, or not, or damage? Mr. DRAPER. That is right.

Mr. HAMLIN. But we cannot obviate all of those matters, especially when lawyers are concerned.

Mr. DRAPER. No. But in that proviso we have attempted there to define what is unreasonable.

Well, now, that same ship that goes sailing up there with a few boxes of apples, or something, has got our perishable stuff on it and, by the time it gets down to Hull again, it either is off condition and we have to sell at a loss; or, if this stuff has a promised delivery date, which is practically always the case, namely, it is sold on the basis of a contract that calls for delivery by or on a certain date, and we ship on a ship that is intended to get there on a certain date, and if the market goes down in the meanwhile, while the ship is sailing around up to Stockholm or some place, then we have the ship leaving the goods on the dock at Hull and the consignee refusing to accept them, and there you are. And you multiply that

Mr. HAMLIN. I suppose, on general principles, you would assert that in order for you folks to agree and it seems, according to your testimony, you have agreed that you have had to make concessions, we may say, in different ways in making this bill.

Mr. DRAPER. That is correct.

Mr. HAMLIN. And compromising on this and that, and the fact you folks have all agreed, as you state, would be pretty good evidence to me that it is good, at least, from the American standpoint, and that is my standpoint.

Mr. DRAPER. I think we all gave up a little something; everybody had different ideas about it. We had things we would like to see in this bill; others had different ideas, and we all gave up something in order to get something that would be beneficial for the American export business.

I would like also to comment that we have not been alone; that is, the packing industry has not been alone in insisting upon some protection from unlimited deviation. The same view has been held by other shippers of perishable and semiperishable products, or delivatives thereof, as well as some of the machinery groups.

The CHAIRMAN. That condition exists under the present law? Mr. DRAPER. It does, sir.

The CHAIRMAN. And this paragraph on page 9 would correct that condition?

Mr. DRAPER. Yes, sir; we think it would; because the present bills of lading, in almost all of them I have seen, simply state that the ship has a right to go in and out of any port in the usual manner, and the ship gets your goods on board and then proceeds to go to China, if it pleases, and you have not any recourse whatsoever.

I think that is all I have to say, Mr. Chairman. I would like to say, however, we would like to endorse everything that Colonel Barber has said and particularly everything that the representative of the National Industrial Traffic League will present to this committee.

The CHAIRMAN. Are there any questions? If not, I will call next Mr. Belnap, of the National Industrial Traffic League. State what your association represents Mr. Belnap.

STATEMENT OF NUEL D. BELNAP ON BEHALF OF THE NATIONAL INDUSTRIAL TRAFFIC LEAGUE

Mr. BELNAP. My name is Nuel D. Belnap. I am a lawyer of Chicago, a member of the firm of Walter, Burchmore & Belnap.

In this hearing I appear on behalf of the National Industrial Traffic League, which is an organization Nation-wide in scope, its membership being chambers or associations of commerce, boards of trade, similar organizations, and individual shippers, most of whom are exporters and importers through the various ports of the United States. I am also specially asked to support S. 1152 on behalf of the Association of Commerce of Chicago.

The National Industrial Traffic League for many years has protested vigorously against unsatisfactory rules which limited the liability of carriers of goods by sea. The lack of uniformity in ocean bills of lading caused much dissatisfaction among the owners of cargoes, as well as the carriers. Then, too, the underwriters and bankers found much difficulty. Our efforts were especially directed toward relief from the so-called Hague Rules, about which you have already heard, or will hear, considerable.

Frequently the National Industrial Traffic League went on record as favoring the adoption of the Hague Rules as a statute, with amendments, which secured certain rights not theretofore clearly established for its members. At a conference on uniform ocean bills of lading, November 14, 1930, practically all interested elements affected by the terms of ocean bills of lading agreed upon certain changes in the Hague Rules as desirable.

The CHAIRMAN. The Hague rules were the outcome of the Brussels Convention?

Mr. BELNAP. That is right.

The CHAIRMAN. And you agreed on certain changes in the Brussels Convention, and this bill carries out the changes in the Brussels Convention?

Mr. BELNAP. And I wish to call to your attention that at that conference the so-called White bill, H. R. 3830, was under discussion. This conference decided to recommend seven changes in the White bill, largely for purposes of clarification and to make the rules better applicable to American conditions without jeopardizing the rules from the standpoint of international uniformity. The agreement on these seven points was as follows: