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HOUSTON JOURNAL OF INTERNATIONAL LAW
subsequent SDR Protocol, are now in force for most of our important trading partners.
Shortly after the completion of the Visby Protocol, the United Nations Commission on International Trade Law (UNCITRAL) began a complete revision of the Hague Rules." The result was the United Nations Convention on the Carriage of Goods by Sea, known as the Hamburg Rules. This treaty was completed in 1978 and recently went into effect for the countries that have ratified it."7
While all of these developments have been proceeding internationally, the United States has retained its 1936 COGSA substantially unchanged." This has created problems on two
13. Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Dec. 21, 1979, 1984 Gr. Brit. T.S. No. 28 (Cmnd. 9197) (entered into force Feb. 14, 1984), reprinted in 6 BENEDICT ON ADMIRALTY, supra note 2, at 1–32.2. This Protocol (SDR Protocol) and the Visby Protocol, supra note 10, amend the Hague Rules, supra note 2. Hereinafter, the Hague Rules as amended by both protocols shall be cited as the Hague-Visby Rules.
14. Countries that have ratified the Visby Protocol or have adopted the Hague-Visby Rules by domestic legislation include: Canada, Japan, Singapore, Hong Kong, Australia, and most of the nations of Western Europe. See, e.g., Examination of the Current Law Governing Cargo Liability in the United States as well as the More Recent International Treaties: Oversight Hearing Before the Subcomm. on Merchant Marine of the House Comm. on Merchant Marine & Fisheries, 102d Cong., 2d Sess. 43–45 (1992) (hereinafter 1992 Hearing] (presentation on behalf of the MLA).
15. Joseph C. Sweeney, The UNCITRAL Draft Convention on Carriage of Goods by Sea (Part I), 7 J. MAR. L. & COM. 69, 69 (1975).
16. Convention on the Carriage of Goods by Sea, Mar. 31, 1978, 17 I.L.M. 608, reprinted in 6 BENEDICT ON ADMIRALTY, supra note 2, at 1–32.6 (hereinafter Hamburg Rules). For the history of the process leading to the Hamburg Rules, see generally Prof. Sweeney's series of articles on the United Nations Commission on International Trade Law (UNCITRAL) process. Part I, supra note 14; (Part II), 7 J. MAR. L. & COM. 327 (1976); (Part III), 7 J. MAR. L. & COM. 487 (1976); (Part IV), 7 J. MAR. L. & COM. 615 (1976); (Part 1), 8 J. MAR. L. & COM. 167 (1977).
17. The 22 countries that have ratified the Hamburg Rules are: Austria, Barbados, Botswana, Burkina Faso, Cameroon, Chile, Egypt, Guinea, Hungary, Kenya, Lebanon, Lesotho, Malawi, Morocco, Nigeria, Romania, Senegal, Sierra Leone, Tanzania, Tunisia, Uganda, and Zambia. See, e.g., 1992 Hearing, supra note 14, at 43–45 (presentation on behalf of the MLA; Samuel R. Mandelbaum, Creating Uniform Worldwide Liability Standards for Sea Carriage of Goods Under the Hague, COGSA, Visby, and Hamburg Conventions, 23 TRANSP. L.J. 471, 484 n.98 (1996).
18. Section 10 of COGSA had amended section 25 of the Interstate Commerce Act (previously codified at 49 U.S.C. § 25), which was repealed in 1940. 1996)
PROPOSED AMENDMENTS TO COGSA
separate fronts. Most obviously, U.S. law has failed to keep pace with modern developments. In addition, U.S. law has become increasingly different from the comparable laws of our major trading partners.20 Indeed, the latter problem is worse than the legislative record on its face suggests. While Congress has left COGSA's text undisturbed, the U.S. courts have developed judicial doctrines that have brought COGSA, as it is applied, further and further from the international understanding of the Hague Rules. As a result, the United States today has a law governing the carriage of goods by sea that is different on its face from the laws of most of our major trading partners and different in application from the law of any country any. where.?
There are many possible explanations for this unfortunate situation, but all of them essentially reduce to one simple fact: Unless those affected by the rules in question can agree on the course of action that should be followed, Congress is unwilling to act in a complex and technical field where it has little expertise and sees no opportunity for political gain.23 This is hardly a new problem. Seventy years ago, the same kind of inertia was a principal explanation for Congress's failure to
See Act of Sept. 18, 1940, ch. 722, Title 1, § 14(a), 54 Stat. 919 (1940). A reference to The Philippines in section 13 was deleted in 1946. See Proclamation No. 2695, 11 Fed. Reg. 7517, 60 Stat. 1352 (1946).
19. See, e.g., infra notes 136–140 and accompanying text.
20. See Michael F. Sturley, Uniformity in the Law Governing the Carriage of Goods by Sea, 26 J. MAR. L. & COM. 553, 560-68 (1995) (hereinafter Sturley, Uniformity).
21. See id. at 565–67. The "fair opportunity doctrine" is a particularly striking example of the nonuniform approach that U.S. courts have taken in applying COGSA. See generally Michael F. Sturley, The Fair Opportunity Requirement Under COGSA Section 4(5): A Case Study in the Misinterpretation of the Carriage of Goods by Sea Act, 19 J. MAR. L. & COM. 1 (Part 1) (1988) (hereinafter Sturley, Fair Opportunity) (describing and criticizing the doctrine). The proposal to eliminate the doctrine is discussed below. See infra notes 157-159 and accompanying text.
22. There is not even uniformity within the United States, as courts in one part of the country interpret COGSA differently than courts in another part of the country. See Michael F. Sturley, Observations on the Supreme Court's Certiorari Jurisdiction in Intercircuit Conflict Cases, 67 TEX. L. REV. 1251, 1265-69 (1989).
23. See Sturley, Uniformity, supra note 20, at 569. Others have also recog. nized Congress's unwillingness to act in the absence of an industry consensus. See, e.g., Peter H. Pfund, International Unification of Private Law: A Report on United States Participation, 1985-86, 20 INT'L LAW. 623, 625 (1986).
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ratify the Hague Rules promptly.24 Much like the situation seventy years ago, each commercial interest has an obvious solution. The Maritime Law Association of the United States (MLA), for one, has long advocated the U.S. adoption of the Visby Amendments,25 which would bring the United States into line with most of our major trading partners.26 On the other hand, the Transportation Claims and Prevention Council, formerly the Shippers National Freight Claim Council, has consistently called for the ratification of the Hamburg Rules, 27 which would both update U.S. law and make the Hamburg Rules more appealing for other industrialized nations.28 The trouble is that these two solutions are mutually inconsistent.29 Although neither the proponents of the Visby Amendments nor the proponents of the Hamburg Rules have the power to enact their favored regime, each group has the power to block the adoption of the other regime.30 Congress is simply unwilling to be caught in the middle of this dispute.
There have been attempts to resolve the deadlock. In 1987, for example, the American Bar Association called for the immediate ratification of the Visby Protocol and requested the government to consider four further changes. These changes were:
24. See Sturley, History, supra note 1, at 49.
25. See, e.g., 1992 Hearing, supra note 14, at 37-39 (presentation on behalf of the MLA); Report of the Comm. on Carriage of Goods, MLA doc. no. 661, at 8370 (May 3, 1985); Committee on Bills of Lading, MLA doc. no. 606, at 6667–68 (May 6, 1977).
26. See supra notes 13–14 and accompanying text.
27. See 1992 Hearing, supra note 14, at 98-106 (statement of William J. Augello, Executive Director/General Counsel to the Transportation Claims and Prevention Council, Inc.).
28. Id. at 101. A frequent criticism of the Hamburg Rules is that no major industrialized nation has adopted them. See, e.g., id. at 4 (statement of Ernest J. Corrado, President, American Institute of Merchant Shipping); id. at 55 (statement of American Institute of Marine Underwriters); R. Glenn Bauer, Conflicting Liability Regines: Hague-Visby v. Hamburg Rules-A Case by Case Analysis, J. MAR. L & COM. 53, 53 (1993). The United States could potentially influence the adoption of the Hamburg Rules by other nations. For example, U.S. adoption of the Hague Rules was significant in their achieving increased international acceptance. See Sturley, History, supra note 1, at 55–56.
29. See generally John O. Honnold, Ocean Carriers and Cargo; Clarity and Fairness-Hague or Hamburg?, 24 J. MAR. L. & COM. 75, 81-90 (1993) (noting similarities and differences between the Hague and Hamburg rules).
30. See supra note 23 and accompanying text.
31. See A.B.A. Section of Int'l Law and Prac., Report on Hague Rules Relating to Bills of Lading, reprinted in 22 INT'L LAW. 246, 246-48 (1988) (hereinaf1996)
PROPOSED AMENDMENTS TO COGSA
(a) Adopting the limits of liability set forth in the
liability limits as carriers.32 The MLA supported this proposal,33 but it collapsed when major cargo interests failed to support it.34
Government entities have also sought a solution. In 1988, for example, the Department of Transportation invited representatives of the various interests to a "one-day (sic) maritime cargo liability symposium” to “help resolve (the) differences of opinion and to reach an equitable solution.935 In 1992, the Subcommittee on Merchant Marine of the House Merchant Marine and Fisheries Committee held an "oversight hearing to “consider whether our Nation might be better served with the possible adoption of one of the more recent international conventions on cargo liability. 936 Both of these efforts simply confirmed that the industry was divided and that there was no consensus for Congress to follow.
ter Report on Hague Rules) (Reports to House of Delegate) (Robert Rendell, Chairman, Section of International Law and Practice).
32. Id. at 246.
33. See, e.g., 1992 Hearing, supra note 14, at 37; Formal Report of the Committee on Carriage of Goods, MLA doc. no. 676, at 9175 (May 6, 1988).
34. See Allan I. Mendelsohn, Why the U.S. Did Not Ratify the Visby Amend. ments, 23 J. MAR. L. & COM. 29, 52-53 & n.8 (1992).
35. Letter from Arnold Levine, Director, Office of International Transportation and Trade, U.S. Department of Transportation, to Symposium Invitees (Sept. 21, 1988) (on file with author). Prior this symposium, the Department of Transportation sought to achieve a compromise by developing a "trigger" mechanism, whereby the United States would ratify the Visby Protocol immediately and commit itself to ratifying the Hamburg Rules when a substantial proportion of U.S. trade was with countries that had adopted the Hamburg Rules. This approach was unacceptable to virtually all of the commercial interests. See generally Report on Hague Rules, supra note 31, at 250, 254–55 (discussing the proposed "trigger approach”); 1992 Hearing, supra note 14, at 127–28 (Department of Transportation background paper).
36. 1992 Hearing, supra note 14, at 1 (statement of Rep. Walter B. Jones, Committee and Subcommittee chair).
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II. THE STUDY GROUP PROCESS
In early 1992, George F. Chandler, III, then the chairman of the MLA Committee on the Carriage of Goods (CoCog), after discussion with Chester D. Hooper, currently the president of the MLA but then the second vice president, convened an Ad Hoc Liability Rules Study Group to attempt to reach a commercial compromise that could be presented to Congress with consensus support from the industry. Throughout the process, Study Group members participated in the work as individuals and not as formal representatives of the major segments of the industry with which they are associated.37 Thus, each member could express his individual views without obtaining authority from a larger constituency. Furthermore, one of the principal ground rules was that all discussions were “without prejudice": If compromise proved impossible, no one would be held to a position that he had taken during discussion in the hopes of reaching a compromise.
Although the Study Group members worked as individuals, it is important to note that, with one exception, they approached the project from the points of view of the principal participants in the relevant commercial transaction, including shippers, carriers, charterers, cargo insurers, Protection and Indemnity clubs, stevedores, and terminal operators. Mr. Hooper, for example, was one of the members who generally represents vessel owners and other carrier interests. Mr. Chandler, who chaired the Study Group, generally represents cargo underwriters and other cargo interests. William J. Augello, the Executive Director of the Transportation Claims and Prevention Council and a long-time proponent of the Hamburg Rules, ensured that the shippers' views were well-represented. I served as the Reporter and was the only member of the Study Group who does not regularly represent a particular segment
37. The members of the Study Group at the time of the Final Report (see infra note 47 and accompanying text) were: William J. Augello, Allan G. Bowdery, George F. Chandler, III (Chairman), David G. Davies, Chester D. Hooper, Paul M. Keane, Manfred W. Leckszas, Jon H. Roethke, Michael J. Ryan, Jerome C. Scowcroft, and Michael F. Sturley (Reporter). Ward L. Mauck (one of the seven original members), Geoffrey C. Jones, and Frank P. Reilly participated in earlier meetings of the Study Group, but were no longer involved in its work at the time of the Final Report.
38. I was also the only member of the Review Committee who does not