The Carriage of Goods by Sea Act 1992

AuthorFidelma White,Robert Bradgate
Publication Date01 Mar 1993
DOIhttp://doi.org/10.1111/j.1468-2230.1993.tb00955.x
lhe
Modern
Law
Review
[Vol.
56
LEGISLATION
The Carriage
of
Goods
by
Sea
Act
1992
Robert Bradgate* and Fidelma White*
Introduction
Almost unnoticed
-
except by specialists in the field of international trade law
-
the Carriage of Goods by Sea Act 1992 crept onto the statute book last summer.
The Act implements recommendations in the Law Commissions’ Report ‘Rights
of Suit in Respect of Carriage of Goods by Sea,” and owes its place on the statute
book to Lord Goff, who took up the Commissions’ proposals and introduced the
Commissions’ draft Bill as a private peer’s measure in the House of Lords. First
introduced in February, the Bill was lost on the dissolution of Parliament for the
General Election, but was reintroduced in June and, with Government support,
completed its passage in almost record time, coming into force on
16
September
1992. In just six sections the Act replaces the Bills
of
Lading Act
1855,
breaking
the link between the transfers of property and contractual rights, extending the
principle of transfer of contract rights to other carriage documents, resolving the
difficulties created by the decision in
Grunt
v
Norwuy2
and allowing regulations
to be introduced to deal with the introduction of electronic alternatives to transport
documents.
We propose to examine the reforms in the new Act against the background of
the weaknesses
in
the old law and alternative reforms which might have been adopted,
including the reforms of the doctrine of privity contemplated
in
the Law Commission’s
recent consultation paper.3
Motives for Reform
The primary motive for reform was the recognition that, as recent cases showed,
English law no longer dealt adequately with the problems created by modern trade
and carriage practices, especially where goods were lost or damaged in transit, and
that those problems were better dealt with by many other jurisdictions, including
those of the United States and some European states, creating a threat that lucrative
shipping and insurance business, litigation and arbitration might be lost to the City
and the national economy. With this in mind the legislation’s policy foundations
are immediately recognisable. First, the legislation should cure the perceived defects
in the existing law. Secondly, it should do
so
in such a way as to satisfy the commer-
*Unit for Commercial Law Studies, University of Sheffield.
I
Law Comm
No
196, Scot Law Comm
No
130 (HC 250) 1991, following Law Commission Working
Paper
No
1
12, ‘Rights
to
Goods
in Bulk’ and Scottish Law Commission Discussion Paper 83, ‘Section
16 of the Sale of Goods Act 1979 and Section
1
of the Bills of Lading Act 1855’: see Hudson, ‘Sales
from Bulk’ (1989) LMCLQ 420. The final Report was not unanimous: there is a note of partial dissent
from Dr E.M. Clive.
2 (1851)
10
CB 665.
3 Consultation Paper
No
121: ‘Privity of Contract: Contracts for the Benefit of Third Parties.’
0
The Modern Law Review Limited 1993 (MLR 56:2, March). Published by Blackwell
Publishers, 108 Cowley Road, Oxford OX4 1JF and 238 Main Street, Cambridge,
188
MA 02142, USA.
March
19931
The Carriage
of
Goods
by
Sea
Act
I992
cia1 community which uses the law.4 Thirdly, English law relating to sea carriage
should,
so
far as possible, be brought into line with the law of other jurisdictions
and internationally recognised rules governing carriage by other methods. Fourthly,
established law and trading practices should not be disturbed where they have been
found to work satisfact~rily.~ Clearly, this last policy is likely to appeal to users
of the law; however, one consequence is that, in a number of places in the Commis-
sions’ Report, objections to its proposals, including those in the note of partial
dissent,6 are brushed aside, not always convincingly.
To these policies we would add three general principles which, we submit, ought
to inform the law in this area.
(0
(ii)
(iii)
The law should allow the person who has suffered loss to recover compen-
sation from the person who caused that loss and, as a corollary, should not
allow a person who has suffered no loss to recover.
The law should discourage multiplicity of actions; this is likely to be
facilitated if the first principle is followed. In particular, the law should
prevent double recovery, so that a wrongdoer should not be held liable twice
for one item of damage.
Where the rights of parties
inter
se
are governed by a contract, or by a
network of contracts, the law should, wherever possible, allow damage to
be compensated in accordance with the parties’ contractual relationships
rather than in tort, since recovery in tort may circumvent legitimate
contractual allocations of risk and limitations on liability
.7
Although the Commissions’ Report suggests that they would, in general, share our
view that these are desirable principles, we would suggest that the new Act conforms
to them only partially and inconsistently.
Weaknesses
of
the
Old
Law
We are concerned with the position of the buyer of goods carried by sea in cases
where (i) the goods are damaged in transit, (ii) short delivery is made, and (iii) the
goods are lost.8 Under standard international sales contracts the buyer bears risk
of loss from the time of shipment, but although he may have transferred to him
a document of title representing the goods and, as a result, have constructive
possession or even ownership, since he
is
not privy to the contract of carriage, he
has no recourse in contract against the carrier. The Bills of Lading Act 1855 was
passed to solve this problem by conferring on the buyer a contractual right of
a~tion.~ As early as 1890, however, the Act received the first of many criticisms
in an article by Carver in the
Law
Quarterly
Review.‘O
4
As the Commission puts it, ‘reconciling the interests of all parties to a contract of
sea
carriage, in
accordance with
the
dictates of
good
sense and commercial certainty,’ Law
Corn
No
196,
at para
1.10.
5
Reform should be ‘evolutionary’ rather than ‘revolutionary’
(ibid
at para
2.34)
and should ‘build and
improve
on
the present law rather than providing a wholly untried technique’ (para
2.22).
6
By Dr
E.M.
Clive.
7
This view was reflected in the Commission’s Working Paper
No
112:
see
para
3.21.
8
Since goods are normally covered by insurance against
loss
and damage while in transit, the problems
of liability and title to sue are largely faced by insurers, not traders.
9
According to Carver, the objects of the Act include: ‘To give the holder of a bill of lading the right
to enforce the contract as shown by that document without reference to the shipper’; T.G. Carver,
‘On
Some Defects in the Bills of Lading Act
1855’ (1890)
XXIII
LQR
289.
10
ibid.
0
The Modern Law Review Limited
1993
189

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