Introduction
In July 2021 the Carriage
of Goods by Sea (Amendment) Act (2020) (the "Amendment Act") and its
supplementary Carriage of Goods by Sea (Amendment of First Schedule) Order 2021
(the "Order") officially came into force.
The Amendment Act and the
Order brought into effect the long-awaited changes to the Carriage of Goods by
Sea Act 1950 (the "Principal Act"), which has been in force since 23
May 1950.
Reasoning
Prior to the amendments coming
into force, the Principal Act regulated the carriage of goods by sea in
Peninsular Malaysia by adopting the International Convention for the
Unification of Certain Rules of Law Relating to Bills of Lading, which was
incorporated as the First Schedule in the Principal Act.
The main reason for
amending the Principal Act is to implement:
- the
"Visby Rules" – the Protocol to Amend the International
Convention for the Unification of Certain Rules of Law Relating to Bills
of Lading of 23 February 1968; and
- the
"The Hague-Visby Rules" – the Protocol (SDR Protocol) Amending
the International Convention for the Unification of Certain Rules of Law
Relating to Bills of Lading of 25 August 1924 (The Hague Rules), as
amended by the Protocol of 23 February 1968 (Visby Rules).
The Amendment Act
consists of four sections. This article focuses on the following changes:
- The
scope of documents relating to shipping transactions, which was limited to
bills of lading, has been expanded to keep up with the rapid evolution of
international maritime industry practices.
- The
First Schedule of the Principal Act has been amended in accordance with
the The Hague-Visby Rules.
Expanded scope of
documents
Prior to the amendments,
the Principal Act applied to bills of lading. This can be seen in section 4 of
the Principal Act, which states as follows:
4. Statement as to application of Rules to be included in bills
of lading
Every bill of lading, or similar document of title, issued in
Malaysia which contains or is evidence of any contract to which the Rules apply
shall contain an express statement that it is to have effect subject to the
said Rules as applied by this Act.
However, in section 2 of
the Amendment Act, the words "bills of lading" have been replaced
with the words "sea carriage document(s)".
Similar changes have also
been introduced to section 6 of the Principal Act. The original section 6 was
restrictive and encapsulated only the weight of any bulk cargo inserted in the
bill of lading. The original section 6 stated as follows:
Where under the custom of any trade the weight of any bulk cargo
inserted in the bill of lading is a weight ascertained or accepted by a third
party other than the carrier or the shipper and the fact that the weight is so
ascertained or accepted is stated in the bill of lading, then, notwithstanding
anything in the Rules, the bill of lading shall not be deemed to be prima facie
evidence against the carrier of the receipt of goods of the weight so inserted
in the bill of lading, and the accuracy thereof at the time of the shipment
shall not be deemed to have been guaranteed by the shipper.
Subsequent to the
alterations to section 3 of the Amendment Act, all references to "bill of
lading" in section 6 have been updated to "sea carriage document".
Therefore, the amendments
allow the Principal Act to recognize broader types of sea carriage documents
commonly used by seafarers when conducting maritime trade. This effectively
widens the substantive legal protection afforded to seafarers and maritime
traders, thereby boosting international maritime traders' confidence to do
business in Malaysia.
The Hague-Visby Rules
Section 4 of the
Amendment Act introduces a new section 6A to the Principal Act, which empowers
the minister of transport to amend the First Schedule to the Principal Act by
way of an order published in the Gazette.
Section 6A of the
Principal Act came into force on 15 July 2021. Pursuant to the power under
section 6A of the Principal Act, the minister of transport amended the existing
First Schedule in the Principal Act, which was based on the The Hague Rules.
In general, the
amendments have facilitated a universal substitution of references to
"bill of lading" to "sea carriage document".
Amendments to article I –
definitions
A new paragraph (aa) has
been added to article I.
The addition has amended
the Principal Act, providing a clearer definition of a "consignment
note". Under paragraph (aa), a consignment note means a non-negotiable
document that:
I. contains or evidences a contract of carriage by sea in
connection with which no bill of lading or similar document of title has been
issued;
II. clearly states that no liability for any loss of, damage to
or delay of the goods will be accepted by the carrier of the goods; and
III. is clearly marked as being non-negotiable.
Paragraph (b) of the
original article I was replaced with a new paragraph that defines a contract of
carriage as that it:
applies only to contracts of carriage covered by a sea carriage
document, in so far as such document relates to the carriage of goods by sea,
including a negotiable sea carriage document issued under or pursuant to a
charter-party from the moment at which the document regulates the relations
between its holder and the carrier concerned.
To add clarity to the
amended Principal Act, a new paragraph (ba) has also been inserted to provide a
definition of "data message". Under the new paragraph:
"data message" means information generated, stored
or communicated by electronic, optical or analogous means, including electronic
data interchange, electronic mail, telegram, telex or telecopy, even if the
information is never reproduced in printed form.
In conjunction with the
expansion of the scope of documents recognised and governed under the amended Principal
Act, new paragraphs – (f) and (g) – are now in service to provide definitions
for "negotiable sea carriage document" and "sea carriage
document". Under paragraphs (f) and (g), these terms are now defined as
follows:
(f) "negotiable sea carriage document" means-
(i) a bill of lading other than a bill of lading that, by law,
is not negotiable; or
(ii) a negotiable document of title that is similar to a
negotiable bill of lading and that contains or evidences a contract of carriage
of goods by sea;
(g) "sea carriage document" means-
(i) a bill of lading;
(ii) a negotiable document of title that is similar to a bill of
lading and that contains or evidences a contract of carriage of goods by sea;
(iii) a bill of lading that, by law, is not negotiable; or
(iv) a non-negotiable document including a consignment note and
a document of the kind known as a sea waybill or the kind known as a ship's
delivery order which either contains or evidences a contract of carriage of
goods by sea . . .
New article IA – sea
carriage documents
By virtue of the Order,
further and more comprehensive details have been given under the new article IA
on the applicability of sea carriage documents.
The new article begins by
affording equal legal protection to a digital sea carriage document as that of
a printed sea carriage document. Reading this amendment together with the newly
added paragraph (ba) under article I, it means that a sea carriage document
does not need to be printed to be afforded legal protection under the amended Principal
Act. Sea carriage documents presented in soft copies also enjoy legal
protection.
Paragraph 2 of the new
article IA provides for the time and manner in which a sea carriage document
should be issued and transferred. Paragraph 2 provides that:
a. a sea carriage document is issued when a data message is
generated in a way that constitutes issue of such a document within the system
being used by the parties to the relevant contract of carriage; and
b. a sea carriage document is transferred when a data message is
generated in a way that constitutes transfer of the sea carriage document
within the system being used by the parties to the relevant contract of
carriage.
Amendments to article II
– risks
The amendment also
introduced additions to article II. In particular, the following paragraphs
have been added to afford greater protection to carriers for goods carried on
or above deck:
2. For the purpose of paragraph 1, "goods includes goods,
except live animals, carried on or above deck".
3. Where the shipper has specific stowage requirements for goods
carried on or above deck, then, for paragraph 1 to apply, the shipper shall
tell the carrier in writing of those requirements at or before the time of
booking the cargo.
4. Notwithstanding Article IVbis, if a carrier carries goods on
or above deck contrary to an express agreement with the shipper of the goods made at or before the time of booking the
cargo, then, for any loss or damage to the goods that results solely from the
goods being carried on or above deck, the carrier is not entitled-
(a) to any exception or exemption under these Rules; or
(b) to any limit provided by these Rules to its liability for
the loss or damage.
Amendments to article III
– responsibilities and liabilities
The Order has not changed
the substance of article III but it has amended the original article 4 to
afford a negotiable sea carriage document (which has substituted the bill of
lading) greater evidential value in the event of a dispute.
Under the original
provision, it was declared that a bill of lading was prima facie evidence of
the receipt of the goods by the carrier, as described in accordance with:
- paragraph
3(a) (marks necessary for the identification of the goods);
- paragraph
3(b) (number of packages, price or the quantity or weight of the goods);
and
- paragraph
3(c) (apparent order and condition of the goods).
However, the Order has
introduced amendments that have increased the evidential value of a negotiable
sea carriage document. Now, not only is a negotiable sea carriage document
prima facie evidence of receipt of the goods by the carrier, but also any proof
to the contrary is inadmissible if a negotiable sea carriage document has been
transferred to a third party acting in good faith.
The wording of paragraph
6 of the Principal Act has been amended. The former wording was as follows:
In the case of any actual or apprehended loss or damage the
carrier and the receiver shall give all reasonable facilities to each other for
inspecting and tallying the goods.
The new wording is as
follows:
Subject to paragraph 6bis, the carrier and the ship shall in any
event be discharged from all liability whatsoever in respect of the goods,
unless suit is brought within one year of their delivery or of the date when
they should have been delivered. This period may, however, be extended if the
parties so agree after the cause of action has arisen.
Further, a new paragraph,
6bis, has been inserted to allow for an action for indemnity against a third
party. Paragraph 6bis reads as follows:
6bis. An action for indemnity against a third person may be
brought even after the expiration of the year provided for in the preceding
paragraph if brought within the time allowed by the law of the court seized of
the case. However, the time allowed shall be not less than three months,
commencing from the day when the person bringing such action for indemnity has
settled the claim or has been served with process in the action against himself.
Amendments to article IV
– rights and immunities
Prior to the amendments,
paragraph 5 of article IV limited the liability of a shipper or carrier to any
loss or damage of goods shipped, unless the value of the goods had been
declared.
The Order overhauled this
approach and inserted a more commercially practical approach by calculating the
amount for which the shipper or carrier will be liable if the goods have been
damaged or lost and the value was not declared in the sea carriage document.
The Order has removed the
cap of £100 per package or unit for damages. The new system calculates damages
using:
- the
unit of account per package or unit; or
- the
unit of account per kilogram of gross weight of the goods that have been
lost or damaged.
The higher value of the
two options is used for the calculation. The total amount recoverable is
calculated by referring to the value of the goods at the place and time that
the goods were discharged, or should have been discharged, from the ship.
Article IVbis – defence and limit of liability
Article IVbis has been
inserted as a specific provision under the First Schedule of the amended
Principal Act, to govern the defences and limit the liability afforded to a
carrier in a sea contract.
This article provides
that the defences and limits of liability provided in the amended Principal
Act, as a whole, will be applicable to "a servant or agent of the
carrier", notwithstanding any potential actions resulting from the
contract or in tort. However, article IVbis expressly prohibits the carrier or
its servant and/or agent from relying on the defences or limits of liability
stipulated under the amended Principal Act "if it is proved that the
damage resulted from an act or omission of the servant or agent done with
intent to cause damage or recklessly and with knowledge that damage would
probably result".
Amendments to article VI
– special condition
Article VI, as amended,
still provides that notwithstanding the preceding articles, a carrier, master
or agent of the carrier, and a shipper will be at liberty to enter into any
agreement in any terms for the responsibility and liability of the carrier for
any particular goods. This is also the case as regards the rights and
immunities of the carrier in respect of such goods, or their obligation to achieve
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 following actions conducted for carrying goods by sea:
- loading;
- handling;
- storage;
- carriage;
- custody;
- care;
and
- discharge.
The amendments to article
VI introduced the following additional requirements:
a. the terms so agreed must be set out in a receipt or
consignment note; and
b. the receipt or consignment note must be, and must be marked
as being, non-negotiable; and
c. the receipt or note must state that no other sea carriage
document has been, or will be, issued for the carriage.
Article VI, as amended,
stipulates that any agreement entered into will have full legal effect.
However, article VI does not apply to ordinary commercial shipments made in the
ordinary course of trade; it applies 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 that
would reasonably justify a special agreement.
Amendment to article IX
The amendment to article
IX removed much of the original content. The original paragraph provided that
"the monetary units mentioned in these Rules are to be taken to be gold
value". However, it has been replaced with a paragraph that reads as
follows:
These Rules shall not affect the provisions of any international
Convention or national law governing liability for nuclear damage.
The Carriage of Goods by
Sea Amendment Bill was introduced in Parliament in 2019 to amend the Carriage
of Goods by Sea Act 1950, which contained procedures that were no longer in
line with global practice in the maritime trade industry. The provisions of the
The Hague Rules, as provided for in the First Schedule to the Carriage of Goods
by Sea Act 1950, were inadequate to meet the current conditions and practices
of carrying goods by sea.
The amendments to the Principal Act have occasioned changes that
have been welcomed by stakeholders in the maritime trading industry.
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