Circular No. 12/99 - Contracts of Carriage



SEPTEMBER 20, 1999







Dear Member:




Members of International Group clubs have noted that, following the coming into force this year of the United States Shipping Reform Act, a number of United States shippers have sought to negotiate contracts of carriage with carriers which do not incorporate the Hague Rules, the Hague/Visby Rules, or similar rights, immunities and limitations in favor of the carrier.


Club cover in respect of the carriage of goods by sea is based upon the Hague/Visby Rules and the U.S. Carriage of Goods by Sea Act. This is because they constitute a uniform regime of rights and obligations of both carriers and cargo owners which is most widely accepted both by national legislation and through contractual terms voluntarily agreed by carriers and cargo owners themselves. The International Group clubs recognize that such regimes of rights and obligations need to be reviewed and modified from time to time to keep pace with changes and developments in international trade, but they, along with many other industry organizations, believe that change is best achieved through the process of international conventions rather than by other means.


Accordingly, subject to the exercise of directors' discretion in accordance with club rules, International Group clubs do not cover liabilities, costs and expenses arising from contracts of carriage by sea which do not incorporate the Hague Rules, the Hague/Visby Rules or similar rights and immunities in favor of the carrier.


A number of contracts currently proposed by shippers which may not impact upon cover do nevertheless exclude rights and immunities in favor of both the carrier and the cargo owner which have become widely accepted and successfully implemented by carriers and cargo interests alike. Elimination of these terms from contracts of carriage may create uncertainty and increase the risk of dispute or litigation.


If Members are concerned that the terms of proposed contracts may affect their cover, or if they require advice in respect of such contractual terms, they are invited to contact the Managers.


A similar Circular is being distributed by other member clubs of the International Group.


Yours faithfully,





Joseph E.M. Hughes, Chairman & CEO

Shipowners Claims Bureau, Inc., Managers for