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The delegates of several countries, including ourselves, also gave notice in London that we considered ourselves free to move at Brus sels to amend in respect of special matters the details of which will be found in subsequent exhibits.
Exhibit C contains the “Rules for carriage of goods by sea” as amended at London.
The only other subject considered at the London meeting was that of governmental immunity of Government-owned or Governmentchartered vessels. This subject was also considered by a subcommittee (on which the United States had place) and was subsequently fully discussed in plenary session.
The meeting had been prepared for this discussion by receipt of reports on the subject from the more important of the National Maritime Law Societies affiliated with the Comité.
Exhibit D gives the opinions so received.
The subcommittee recommended the adoption of the following resolution:
1. Sovereign States, in regard to ships owned or operated by them and cargo owned by them, and cargo and passengers carried in such ships, ought to accept all liabilities to the same extent as a private owner.
2. Except in the case of the ships and cargoes mentioned in paragraph 3, such liabilities should be enforceable by the tribunals having jurisdiction over and by the procedure applicable to a privately owned ship or cargo or the owner thereof.
3. In the case of (a) Ships of war;
(6) Other vessels owned or operated by the Sovereign State and employed only in governmental noncommercial work;
(c) State-owned cargo carried only for the purpose of governmental noncommercial work in ships owned or operated by the Sovereign State.
Such liabilities should be enforceable only by the like tribunals but only of the State by which the ship is owned or operated, and should be enforceable by action in personam against such State, and, in addition, by any other form of procedure permitted by the law of such State.
This resolution was unanimously adopted.
In our judgment the men attending in London very fully and fairly represented shipowners, cargo owners, underwriters, and maritime lawyers, and their unanimity in favor of some international set of rules regulating the carriage of goods between nations and in opposition to the maintenance of a sovereign's privilege in respect of commercial shipping was quite remarkable.
THE BRUSSELS CONFERENCE.
The Brussels Conference was organized on October 17 by M. Franck of Belgium, as president, who laid before us (on behalf of the Belgian Government, the matters of “Shipowners' limitation of liability," "Regulation of ship mortgages and liens," and the “Rules for the carriage of goods by sea” as amended at London.
Two sous-commissions were at once organized, one for limitation and mortgages, and the other for the rules for the carriage of goods. The United States was represented upon both sous-commissions.
Exhibit E sets forth the proceedings of the last sous-commission. It is the report as drawn, in English.
This report was fully debated in plenary session; the results appear in the protocol, and the steps by which that result was reached
1 Appendices A, III and B, III.
appear in the procès-verbal, or report of the proceedings of the conference, which is not yet available.
We draw attention to article III, 6, to which in its protocol shape Great Britain and Belgium finally agreed. While the language ultimately adopted is somewhat changed from that of the draft submitted to the London meeting, we think it represents a liberality to cargo owners not to be found in any heretofore used bill of lading.
We also especially note article IV, 1, which is plainly intended to modify the rule of absolute warranty of initial seaworthiness insisted on by the Supreme Court of the United States after the passage of the Harter Act; and also_article IV, 4, which is intended to change the present legal rule in English speaking countries that any deviation annuls the contract of carriage.
It will also be noted that the rules are applicable only to that period of time while the goods are on board ship. With respect to the liabilities and obligations of the carrier, either before or after this period, the Harter Act and other applicable legislation, national or state, remain in full force.
We regard the rules as finally formulated at Brussels a beneficial advance upon anything heretofore known in respect of bills of lading. The responsibilities of carriers are materially increased; they will be obliged to cover additional risk by additional insurance. Whether this diversion (in theory at least) of insurance from the cargo owner to the carrier will result in a corresponding increase in freight rates, or whether competition will keep freight rates down, is something that only experience can make certain.
But such increase in carrier's responsibilities represents the united and insistent desire of shippers and cargo owners as well as of underwriters notwithstanding the fact that the same underwriters will continue to insure the same risks whether the same are assumed by carriers or cargo.
In our judgment these rules are a response to the demand of American as well as other shippers; they are being insistently urged for legislative adoption, especially in Great Britain. We think that for business reasons the American shipowner will be wise to offer as good a bargain to the shipper as do his competitors.
The sous-commission having charge of limitation of liability and mortgages did not find it necessary to offer any other written report than to lay before the conference the results of their labors.
This was because the last Brussels Conference (1910) resolved that these two subjects were proper for international regulation, and appointed a committee to formulate avant-projets on the subject.
Although a place was reserved for the United States on this committee, no representative of this country ever served.
In 1913 that committee reported
Exhibit F; being the avant-projets suggested. The World War is the reason for taking up in 1922 the report of 1913.
The report accompanying Exhibit F (drawn by M. Lyon-Caen, of France) is already on the files of the Department of State.
The course of events above outlined produced the somewhat unfortunate result that no one acquainted with the maritime jurisprudence of the United States had taken any part in the drafting of Exhibit F.
It seemed to us that there were serious objections to each of the avant-projets, partly because of their radical departure from existing American law, and partly because we thought them unlikely to receive approbation from Americans interested in maritime business.
We therefore as to the limitation matter drafted and circulated
Exhibit G, which sets forth in detail our objections to the principle of the scheme of limitation proposed.
As to the ship mortgage projet, we orally explained in plenary session that it was so opposed to the theory of maritime liens as understood and enforced in the United States that we were unable to give our assent even to a tentative scheme which sought to abolish by legislative fiat most of such liens.
We also endeavored to explain the intended operation of so much of our Merchant Marine Act of 1920 as relates to preferred ship mortgages, and suggested that the United States would be interested in a scheme which gave international recognition to mortgages executed in due form and gave to such mortgages a rank or preference superior to most liens-without, however, abolishing or trying to abolish any lawfully arising maritime lien or privilege.
These objections and suggestions were duly considered by the souscommission which reported
Exhibit H, a limitation convention;
These reports having been considered in plenary session, certain changes in detail were made; the final results appear in the protocol.”
The convention on the limitation of shipowners' liability constitutes, even in the form finally adopted in conference, a somewhat radical departure from existing American law on the subject. In some respects it is more favorable to the shipowner; in some respects it is more favorable to the cargo owner; to personal injury and loss of life claimants it is much more favorable than existing law. Under the convention of the protocol the shipowner's liability is, speaking generally, limited to £8 per ton, except as to claims for personal injury or loss of life, with respect to which the shipowner is liable, in any event, up to £8 per ton in addition to any sum for which hé may be liable to other claimants. If the value of the vessel after the disaster, together with her freight and accessories, is less than £8 per ton, then the owner's liability in respect of claims other than those for personal injury and loss of life, is limited to that lesser value. Provision is made, however, that the freight shall in all cases be deemed a fixed sum of 10 per cent of the value of the vessel at the commencement of the voyage. Thus in all cases, even when the ship is totally lost, and even though there may have been in fact no pending freight, a limitation fund is created equal to 10 per cent of the vessel's value at the commencement of the voyage.
The results of this proposed treaty, from the viewpoints of the shipowner, cargo owners, and other claimants, we may summarize as follows:
The shipowner benefits because,
1. His liability is limited in any event to £8 per ton with respect to claims other than those for personal injury and loss of life, and an additional £8 per ton with respect to the latter class of claims.
2 Appendices A, I and II, and B, I and II.
2. A limitation proceeding in one country is given recognition in all other countries parties to the convention. All claimants benefit because,
1. Even if the vessel is a total loss, and although there was no pending freight, a limitation fund is provided equal to 10 per cent of the value of the vessel at the commencement of the voyage.
2. The limitation fund also receives any compensation for material damage sustained by the vessel since the beginning of the voyage and not repaired, and any general average contributions with respect to the same.
3. In the event of more than one accident on the same voyage the diminution of value so caused is not taken into account in considering claims connected with previous accidents.
4. The shipowner is not permitted to secure exoneration by the surrender of his vessel, but is compelled to prove its value.
5. A separate fund for personal injury and loss of life claimants of £8 per ton in every case.
The outstanding features of the changes proposed in existing American law are:
1. The limitation of the shipowner's liability to £8 per ton, in respect of claimants other than personal injury or loss of life claimants.
2. The creation of a fund of 10 per cent of the value of the ship at the commencement of the voyage, even in cases of total loss.
3. The abolition of the right to surrender the ship.
4. The creation of a fund of £8 per ton to pay personal injury and loss of life claims. This not only insures compensation to such claimants, but benefits other claimants by decreasing the number of claimants with whom they must share the limitation fund available to them.
5. The establishment of a uniform system of limitation of liability to be internationally recognized and respected.
We recognize the difficulties that may arise in the practical administration of this convention, particularly in cases where claims are asserted in the courts of different nations; but we believe that these difficulties are not insurmountable, and may properly be left to be remedied as they arise, by subsequent conference.
The ship mortgage convention, as finally adopted, follows the general principles of our Merchant Marine Act, in so far as that statute relates to mortgages. It provides for the priority of certain maritime liens—in general, the same as the preferred maritime liens recognized by our Ship Mortgage Act—which are to have precedence over the mortgage.
Every nation is left free to establish such system of nonpreferred maritime liens as it may deem proper. Maritime liens, whether of the preferred or nonpreferred class in existence prior to the recording of the mortgage, take precedence over the mortgage if entered in å public register, either at the port of the vessel's registry or at a central office in the country to which the vessel belongs, within a period of three months after the lien arose. Furthermore, all maritime liens cease to exist at the end of one year from the date on which they become enforceable. The result of these last two provisions is to further increase the marketability of vessels and their
value as security without, as it seemed to the conference, unduly limiting the rights of claimants.
The importance of securing international recognition of ship mortgages is obvious. Without such recognition the value of ship securities is greatly impaired. While the ship mortgage convention can not be regarded as a complete and perfect document, we believe that supplemented by such national legislation as is permissible thereunder, it should commend itself to those interested in maritime affairs.
The subject of governmental immunity as to publicly owned ships was not formally laid before the conference by Belgium, because it became known that very few of the delegates had been instructed by their own Governments on this matter.
Informally, and with unanimity the members of the Brussels Conference recorded their sympathy with the spirit of the resolution herein above quoted, passed at London; all agreed that the subject was one proper for international agreement and regulation.
The conference then adjourned, having appointed a sous-commission (on which a place was reserved for the United States).
The object of this sous-commission is to carry forward the work of the conference, to receive and consider further suggestions as to the matters embraced in the protocol and to draft for future consideration a convention relating to governmentally owned ships.
In conclusion, it is our opinion that the "Rules for the carriage of goods by sea" is a thing finished; it lies with the maritime nations of the world to take it or leave it. We think it ought to be taken.
With respect to the question of governmental immunity, we think a fair beginning has been made, and believe that it should be followed by vigorous work in and through the sous-commission appointed at the close of the conference.
We point out that the protocol, signed by us, provides that the draft conventions therein contained are adopted as the basis of conventions only; the exact terms whereof are to be decided by a future meeting of the conference, or through the usual diplomatic channels; and also reference is made in the protocol to the official report of conference proceedings. This procès-verbal has not yet been received; and it must be considered in connection with this report.
It is our understanding that, possibly in conjunction with the souscommission, the officers of the Conference at Brussels have in course of preparation final conventions to carry out the terms of the protocol, and that these conventions will be in due course submitted to the several participants in the Brussels Conference.
Permit us to say in closing that the welcome extended to all delegates by the officers of the Belgian Government was both warm and genuine, while every effort was made to aid and further the objects of a meeting largely attended by men whose forbearing spirit of conciliation and reasonable compromise we recognize with deep appreciation. Very respectfully,
CHARLES M. HOUGH.
NORMAN B. BEECHER. December 20, 1922.
• Appendices A and B.