It is a common industry practice in international trade for a carrier to fill out a bill of lading based solely on the exterior condition of the container or the quantity of goods reported by the shipper, and to utilise “unknown clauses” in the bill of lading to limit the liability of the carrier with respect to the quantity or quality of goods. The “unknown clause” is a clause or remark in a bill of lading which states that a carrier does not know the contents, weight, quantity, or other such qualities of cargo. This clause asserts that the document cannot be prima facie evidence of the receipt by the carrier of the cargo as therein described.
In liner shipping, a shipper packs the goods in a container, stuffs, seals and locks the container, and entrusts the shipping of that container to a carrier. The carrier often has no way of verifying the quantity of goods inside.
The phrases most commonly used in an “unknown clause” are: “said to contain,” “said by shipper to contain,” “weight and quantity unknown,” “contents or condition of packages unknown,” “shipper’s weight, load, and count,” and the like. The “unknown clause” has historically been inserted into bills of lading “to protect the carrier” from liability, because a carrier cannot check or examine the goods they are carrying once the shipper has stuffed, sealed and locked the container.
“Exemption” clauses that operate totally in favour of a carrier by transferring risks to a shipper or a consignee would be justified under the laissez-faire philosophy. English courts were very generous with exemption clauses because England once had the controlling market share in ocean transportation. The English courts have also long recognised the validity of an unknown clause.
For instance, if a carrier describes the number of packages, and adds “weight and quality unknown,” the unknown clause affords a carrier protection with respect to the “weight and quality,” but the carrier shall be liable for any discrepancy in the number of packages.
Many other jurisdictions are stricter with exemption clauses; in particular, the US enacted the Harter Act in 1893, and influenced the drafting of international rules, seeking to limit the carrier’s “freedom of contract” and to protect the shipper.
What is the effect of statements in the bill?
(a) Hague Rules 1924: Art III, Rule 4: Art III Rule 4 Prima facie evidence of their accuracy.
(b) Hague Visby Rules 1968: Art III, Rule 4: Art III Rule 4 Prima facie evidence in hands?of shipper, conclusive in hands?of third party, e.g. consignee to whom the B/L is transferred in good faith.
(c) Hamburg Rules 1978: Art 16: Prima facie evidence of statement in hands of shipper (whether shipped or received B/L). Conclusive?in hands of third party who relies on statements.?If freight is payable by holder of the B/L, failure to state this is evidence that no freight is payable.
(c) Rotterdam Rules 2009: Articles 40-42.
Art 40: Qualifications in contracts of carriage relative to description of goods, quantities:
The Hague Visby Rules have no provision in this respect but merely entitle the carrier to refuse to state marks, quantity or weight he has reasonable grounds for suspecting to be inaccurate or he has no reasonable means of checking: a right that is practically of no avail to the carrier.
Article 40 provides that a carrier may qualify the description of the goods in the contracts to a limited extent.
For non-containerised goods, if the carrier can show that it had no reasonable means of verifying the information furnished by the shipper, it may include an appropriate qualifying clause in the contract particulars.
For goods delivered to the carrier or received in a closed container, the carrier may include an appropriate qualifying clause in the contract particulars with respect to the marks on the goods inside the container, the number of packages or pieces or the quantity of the goods inside the carrier, unless the carrier in fact inspects the goods inside the container or otherwise has actual knowledge of the contents; i.e. the carrier may qualify any statement of the weight of goods or the weight of a container and its contents with an explicit statement that the carrier has not weighed the container; if it did not weigh the container and the shipper and the carrier did not agree prior to the shipment that the container would be weighed and the weight would be included in the contract particulars.
Art 41: Prima facie evidence of the carrier’s receipt of the goods as stated.?
Evidentiary effect of the contract particulars: Except to the extent that the contract particulars have been qualified in the circumstances and in the manner set out in Article 40:
(a) A transport document or an electronic transport record is prima facie evidence of the carrier’s receipt of the goods as stated in the contract particulars;
(b) Proof to the contrary by the carrier in respect of any contract particulars shall not be admissible when such contract particulars are included in:
(i) A negotiable transport document or a negotiable electronic transport record that is transferred to a third party acting in good faith; or
(ii) A non-negotiable transport document that indicates that it must be surrendered in order to obtain delivery of the goods and is transferred to consignee acting in good faith;
(c) Proof to the contrary by the carrier shall not be admissible against a consignee that in good faith has acted in reliance on any of the following contract particulars included in a non-negotiable transport document or a non-negotiable electronic transport record:
(i) The contract particulars referred to in article 36, paragraph 1, when such contract particulars are furnished by the carrier;
(ii) The number, type and identifying numbers of the containers, but not the identifying numbers of the container seals; and
(iii) The contract particulars referred to in article 36, paragraph 2.
If the carrier relies on one of the exemptions from liability under Article 17(3), the burden shifts to the claimant to prove that the loss or damage was “probably caused” by unseaworthiness of the vessel. Article 17(5)(a). The burden of proof then shifts to the carrier to prove that there is no causation between unseaworthiness and the loss, damage or delay [Article 17(5)(b)], or that it met its obligation to exercise due diligence to make and keep the ship seaworthy. Article 17(5)(b).
Art 42:?“Freight prepaid” conclusive vis-à-vis third parties (but not the shipper).
[Article compiled and contributed by Adv. (Capt.) Ashwani Jhingan, Director of Malaxar ShpgLogistix Law & Solutions Pvt. Ltd. He is an Advocate at Mumbai High Court and Member of Supreme Court Bar Association. Adv. (Capt.) Jhingan can be contacted at legal@malaxar.com. You can visit www.malaxar.com. Views expressed are his own.]