Legal and institutional obstacles

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Research Proposal EFG Ajayi Abstract It is settled that of all the modes of transportation, viz., air, land and sea, carriage of goods by sea is the most economical way to take sizeable quantities of cargo over long distances. The development of special vessels of immense sizes and propulsion to carry various cargoes has continued to make transportation by sea more attractive. The economic principle of comparative advantage and globalization has given impetus to international trade and commerce and carriage of goods by sea is the means towards the actualization of international trade which of course, is indispensable to mankind; despite the advantages attributable to sea carriage, there are international concerns regarding the multiplicity of legal and institutional hurdles faced by cargo interests with respect cargo loss or damage; the myriad of rules that are impediments to equitable cargo claims is the issue which this study shall critically examine as well as proffer recommendations to frontally reverse the extant inequality between cargo interests, carriers and other stake holders in the global contract of ocean carriage. 1. Title: Legal and institutional obstacles to marine cargo claims against shippers, consignees and parties claiming under their title. 2. Background and outline of the research problem: The fact that the exchange of goods and services is an important aspect of human life is beyond controversy; that activity dates back to history as attested by “trade by barter” during the stone ages; in modern times, countries of the world are not equally endowed with human and natural resources, more importantly, the economic principle espoused by comparative advantage on one hand, the free market economy and globalization on the other, has made international trade and inter-governmental commercial transactions, an indispensable aspect of human life. The maritime industry could aptly be described as the “gate-way to the global economy” due to volume of goods carried by sea which accounts for the bulk of trade and commerce between nations of the world. To lend credence to the above assertion, it is necessary to emphasize the fact that Trade and Commerce have become internationalized which of course makes carriage of goods by sea, indispensable. The sea transport industry plays a major role in world economy; the industry is an engine for growth and a generator of quality human life, a fundamental element to maintain the vitality of sea transportation in order to reap the immense benefits thereof, is to ensure equitable and a balanced terms of contract to the parties and stake holders involved in the global transaction. The extant inequality amongst the parties in ocean transportation transaction is the principal issue which this research sets out to critically examine. 3. Literature review and reasons for choosing the topic As highlighted above to the effect that comparative advantage and globalization has internationalized trade and commerce, carriage of goods by sea is the veritable vehicle or conduit pipe towards the actualization of international trade, however, there are concerns across the globe regarding the almost insurmountable legal and institutional hurdles faced by cargo interests when cargo loss or damage arises; the multiplicity of the rules militating against successful cargo claims either by litigation or through Alternative Dispute Resolution methods are diverse, nay, various jurisdictions apply various rules embodied in the contract of ocean carriage. More importantly, though it is an unassailable fact that international trade is facilitated through shipping but there is no uniform rule regulating the global contract of sea carriage, in effect, rather than have one rule applicable internationally, three carriage regimes namely the Hague, Hague-Visby and Hamburg are in operation depending on whichever of the rule a cargo carrier chooses; cargo interests thus have no choice than abide with the carriers’ choice, be that as it may, the practical application of the three rules concurrently had fettered and continue to do incalculable damages to free trade, it engenders uncertainty and prompts avoidable litigations worldwide. It is on this note that this research intends to embark on a beneath-the-surface analysis of marine cargo claims so as to bring to the fore the anomalous state of affairs, ipso facto, fill the knowledge interstitial and proceed to make recommendations which hopefully, would redress the shortcomings of the current global maritime law and practice. It is necessary to earmark at this juncture that the “Rotterdam rule” which is the latest international effort targeted at uniformity and in consonance with modernity and which to a large extent, addresses some of the apparent shortcomings of the outdated but extant international carriage regimes, that is the Hague, Hague-Visby and Hamburg rules is underway, but not yet in force. 4. Research questions In order to gain insight into the lopsided state of international carriage laws, the following questions shall be investigated in the course of this research: What is marine cargo claims, what warrants them, what is their nature, source, scope and complexities; why is the onerous burden of proof placed on cargo owners when most often, cargo is not in their custody but in the custody of carrier or port authorities; what is “documentation” “long room” “port congestion” and “port surcharge” in maritime transactions, does the foregoing concepts delay cargo shipping and delivery and do they add to the cost of shipping which are ultimately on-passed to hapless consumers and end users of shipped goods, what is “nautical fault defense” is it in the interest of cargo or the carrier, what is “physical” “fortuitous” and “external” loss or damage in marine policies, does the application of “utmost good faith” principle in marine insurance contracts engender a balanced relationship between the insurer and insured; it is settled law, that where there is a loss there is a claim, but does the practical application of restitio in integrum concept in marine insurance really effective and in the best interest of cargo owners? What are obstacles to marine cargo claims, does obstacles to marine cargo claims inhibits trade between persons, organizations and nation-states and if the answer is in the affirmative, what efforts are being made internationally to achieve a uniform rule with respect to mitigating the negative effect of obstacles to marine cargo claims on international trade and commerce, what is “carriers’ limitation of liability” and “package limitation” in whose interest were they inserted into contract of sea carriage and what is their effect on cargo interest, why is it that the carriers and insurers are not held liable for leakage and breakage or for any loss caused by rats or vermin and what is forum non convenience? What is the length of time allowed to initiate cargo claims; is there uniformity in the time frame allowed internationally, is the said time length equitable or justified in all circumstances warranting their continued imposition, and have they improved or worsen the economic and socio well-being of cargo interests; what is the meaning of pre-action notice, what is their purpose or utility in maritime transactions, do they frustrate genuine cargo claims and do they deny litigants of their constitutional right of access to courts, why is the economic loss occasioned by delay of ocean going vessels foreclosed to claims, is this the law or custom and practice and for whose benefit is this clause inserted into ocean carriage contracts? Are there other dispute resolution mechanisms aside from litigation to resolve marine cargo claims; if so, are the said mechanisms equitable and justifiable in all circumstances, are there situations where judgment debtors default in complying with court judgments and outcomes of arbitral awards especially when the offending party is out of jurisdiction, what is the meaning of “exclusive jurisdiction clause” and “choice of location for Arbitration sole determination by the carrier,” does the right of access to court of choice by cargo interest or Arbitration hampered by “exclusive jurisdiction clause” and “unilateral choice of location for Arbitration by the carrier”, does enforcement of arbitration clauses in support of bill of lading go against third parties claiming under the title of shippers and consignees especially where there are sub-bailment to which the concerned shipper or consignee is not a party ab initio, and does the time tested doctrine of law: verba fortius acci piuntur contra proferentem apply to maritime cases? 5. Research design The research is non-empirical; it shall be based on conceptual analysis and the review of relevant literature; and maritime trade by its nature being a cross jurisdictional transaction, the study shall majorly be premised on comparative and critical analysis of established legal principles, rules and doctrines. 6. Research methodology Qualitative research approach shall be used the research being a non-empirical one; for the requisite data and information, Conventions, Treaties, Case Law Reports, Journals, Internet, Articles, Historical records, and Textbooks on Maritime Law and global trade shall be used. The contents of the above materials shall be subjected to critical analysis. 7. Structure of Thesis Chapters Chapter 1 : Introduction Chapter 2 : Obstacles arising from carriers’ acts Chapter 3 : Obstacles attributable to port authorities, warehouses, cargo custodians etc Chapter 4 : Obstacles posed by insurance companies for shippers’ and consignees’ Chapter 5 : Obstacles for third parties claiming under shippers and consignees titles Chapter 6 : International trade and Maritime Law Chapter 7 : Steps towards unification of International Maritime Law Chapter 8 : Conclusion Delineations and limitations This research shall only consider cargo claims carried via the sea in containers and covered by the carrier’s Bill of Lading, in other words, the contribution will not consider cargoes carried in bulk or in any other form(s) even if such cargoes are covered by Bill of Lading. 8. References 8.1: Legislation Admiralty Jurisdiction Procedure Act, 1991 Laws of the Federation of Nigeria Admiralty Jurisdiction Procedure Rules, 1993 Laws of the Federation of Nigeria Athens Convention on the carriage of passengers and their luggage by sea 1974 and 1976 Protocol Convention on Limitation of Liability for Maritime Claims, 1976 Institute’s Cargo Clause (All Risks) International Convention for Safe Containers, 1972, as amended International Convention on Limitation of Liability 1957 Marine Insurance Act, 1906 Laws of United Kingdom Merchant Shipping (Liability of Ship-owners’ and others) Act 1958, Laws of UK New York Convention Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims, 1976 The Carriage of Goods by Sea Act Cap 44 of the 1990 Laws of the Federation of Nigeria The Nigeria Ports Act, 1999 The Hague Rules (1924) The Hague-Visby Rules (1968) The Hamburg Rules (1978) The Rotterdam Rules (2009) 8.2: Case Law Air-cool Metal Industries (Nig.) Ltd V. Nigerian Ports Authority (1974) NSC Vol. 1. Alluvials Mining Machinery V SStowe (1922) 10 L Rep. 265 Asia Trading Co. Ltd V Nigeria Ports Authority (1983) NSC Vol. II Bandrett V Hentigg (1816) Holt N. P. 149 British South Africa V. Compagnia De Mozambique (1893) A. C. 602- p. 17 Broadline Enterprises Ltd. V. Monterey Maritime Corp. (1995) 9 NWLR 1 Castellain V. Preston (1883) 11 Q B D 380 Commercial Union V. Lister (1874) 9 Cg. App 483 Container Trans Intl V. Oceanus Mutual Underwriting (CTI) (1984) I Lloyds Rep. 476 Demetraides & Co. V. Northern Assurance Co. (1926) 21 LL.L Rep. 265 Fireman’s Fund Insurance V Tropical Shipping (2001) CA Gulfstream Cargo Ltd. V. Reliance Insurance Co., The Papoose (1997) I Lloyds Rep.178 Mareva Compania Naveria S. A, International Bulk Carriers Ltd (1975) 2 Lloyd’s Rep. 509 Midland Railway Company V Local Board District of Withington (1882) Q.B.D.788 at 794 Nigeria Cement Ltd V. Nigeria Railway Corporation & Anor (1992) 1 NWLR Pt. 220) 747 Nigeria Ports Authority V Construzioni (1974) 12 SC 81 Pan Atlantic Insurance Co. Ltd. V. Pine Top Insurance Co. Ltd (1994) 3 All ER Provincial Ins. Co. V Morgan (1933) AC 240, contra proferentem per Lord Russel at p. 250 Sonnar (Nig) Ltd. & Anor. V. Patemereederi M.S. Norwind & Ors (1987) 9 11 S.C. 121 Spliethoff’s Bevrachtingskantoor B. V. V A.G of the Federation and Ors (1988) FHC Thames and Mersey Marine Ins. V. Gunford Ship Ltd (1911) A. C. 529 The Bold Buccleugh (1851) 13 ER 884 P. 890 The Fehman (1958) 1 W. L. R. 159 The River Rima (1988) 2 Lloyd’s Rep 193 The Tolten (1964) 2 All E. R. 370 West minister Bank Ltd. V. Edwards(1942) A. C. 529 Yorkshire Insurance Co. Ltd V Nisbet Shipping Co. Ltd. (1961) 2 All ER 408 8.3: Literature Books Brown, Robert H.: Marine Insurance Volume 2. Cargo Practice 5th Ed. ISBN 13: 978-1-85609-132-9 January 1996 Bernstein (1977): Handbook of Arbitration & Dispute Resolution Practice, 4th Edition, Sweet & Maxwell, 2003 Christopher Hill: Maritime Law, 4th Ed. Lloyd’s of London Press, 1995 E. R. Hardy Ivamy: General Principles of Insurance Law, 5th Ed. London: Butterworth & Co 1986 Halsbury’s Law of England 4th & 5th Edition, edited by Rt. Hon Lord Mackay, LexisNexis Butterworth, UK, 1991 Hare, J: Shipping Law and Admiralty Jurisdiction in South Africa. 2nd Edition 2009 ISBN 9780702179464 B. Harnett, The Doctrine of Concealment: A Remnant in the Law of Insurance, 15 Law & Contemporary Problems. 391-414 (1950) Prof C. M. Schmitthoff: The Export Trade 7th Edition, The Law and Practice of International Trade, London, 1980 Prof. Oyerokun: Insurance Law in Nigeria, IQRA Books, Nigeria 2001 Roberty Matthews & Paul Oliver: Marine and Aviation Insurance London, 1988 Shipping Law: Robert Grime Sweet & Maxwell (1995) William Tetley, Maritime Liens & Claims, 2nd Edition 1998 William Tetley: International Maritime & Admiralty Law January 2003 Editions Yvon Blais ISBN 9782894516126 Journals Admiralty and Maritime Law Guide: Circuit Court Admiralty Cases All English Report Australian and New Zealand Maritime Law Journal International Journal of Insurance Law Journal of Maritime Law and Commerce Lloyds Law Report Internet www.imo.org 1
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