Academic journal article Texas International Law Journal

U.S. Participation in Private International Law Negotiations: Why the UNCITRAL Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea Is Important to the United States

Academic journal article Texas International Law Journal

U.S. Participation in Private International Law Negotiations: Why the UNCITRAL Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea Is Important to the United States

Article excerpt

I. INTRODUCTION

On July 3, 2008, the United Nations Commission on International Trade Law (UNCITRAL) approved the draft Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea.1 The Convention will be presented to the United Nations General Assembly for final approval in the fall of 2008. The United States delegation to this negotiation strongly supports the Convention, which will provide much-needed harmonization and modernization of the law in this area. When it goes into force, the new Convention will make the process of transporting goods by sea across international boundaries simpler, more efficient, and less costly.

This article will discuss why the new Convention is important to the United States and describe the United States' role in its negotiation.

II. BACKGROUND

Just about everybody agrees that the world needs a new carriage of goods regime. The two main problems with the current regimes - including the 1924 Hague Rules2 (in use in the United States and a few other countries), the 1968 Hague-Visby Rules' (in use by most of our major trading partners), and the 1978 Hamburg Rules4 (in force, but rejected by most major maritime and commercial powers)-are that they are outmoded and there are too many of them. They fail to address the astonishing changes brought about by containerization, multimodal transport, and ecommerce. Their mandatory nature, with no possibility for party autonomy, is out of step with today's commercial need for flexibility. But the fact that these rules are substantively inadequate is not the worst of it. It would be bad enough if there were one set of uniform, outmoded rules. After all, international uniformity in this field probably matters more than the substance of those rules. It is inevitable that there will sometimes be losses in the carriage of goods by sea. The law must allocate financial responsibility for these losses. Knowing in advance the rules that will apply to determine who is liable and for how much allows parties to make rational, efficient decisions about contract terms and insurance. If there is uniformity, each party involved in a transaction will know at the outset what its liability (or possible recovery) will be if there is a dispute, no matter where the dispute is resolved. Predictability and certainty will reduce transaction costs and minimize litigation. Ultimately, the consumer will benefit from lower prices. But there is no uniformity in the law governing the carriage of goods by sea. In addition to the three current regimes mentioned above, there are numerous national regimes that incorporate some or all the Hague, Hague-Visby, and Hamburg Rules, but with major variations.5

The situation in the United States is even less uniform and more outmoded than in most other countries. The Carriage of Goods by Sea Act (COGSA)6 is the U.S. enactment of the Hague Rules, which represents the oldest existing regime. COGSA differs from the Hague Rules in significant respects.7 Congress made some changes that were intended to be clarifications but actually turned out to be substantive, and it also added provisions to COGSA that have no counterpart in the Hague Rules.8

The United States is out of step with the rest of the world largely because of the U.S. courts. U.S. judicial interpretations of the Hague Rules differ from the generally accepted international interpretations on a number of issues.9 Moreover, judicial interpretations of COGSA are not even consistent within the United States.10

In addition to being outmoded and inconsistent, the current U.S. carriage of goods by sea regime - like all such existing regimes - is inflexible. Its provisions are "one-way mandatory," i.e., contracts under them cannot derogate from the convention to the detriment of the shipper, but derogation that increases the carrier's obligations is allowed." These mandatory regimes were developed for a commercial context that no longer exists, and they do not meet today's commercial realities. …

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