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Insurance News - Rotterdam Rules

December 11, 2009 Advisory


Current regimes of liability for loss or damage to cargo carried by sea may soon be replaced by the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, known as "The Rotterdam Rules." The Rotterdam Rules are the product of many years of effort by many interested groups (including shippers, carriers and insurers of cargo), as well as a Working Group created in 2002 by the United Nations Commission on International Trade Law (UNCITRAL) to promulgate a uniform law that reflects the realities of modern sea-going trade, and in particular door-to-door container transport and the use of electronic shipping documents.

The U.S. delegation to the Convention played a major role in drafting the Rotterdam Rules, which reflect several important changes sought by U.S. shipping interests. Several major compromises were also key to reaching consensus.

The Convention, which was opened for signature in Rotterdam in September, requires the signature of 20 countries to enter into force. This milestone was achieved in November, with 21 countries (including the U.S.) signing the Convention.

It is expected that the signing countries will take at least 2 to 3 years to implement the Convention; in the U.S., implementing legislation will be necessary to repeal the Carriage of Goods by Sea Act.

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