From the perspective of the international shipping industry, the globe is divided into nations that own cargo and nations that own ships; the majority of nations fall into both categories. Among such differing interests exists great potential for conflict regarding damage to, loss of, or delay in the arrival of sea cargo and how the risks for such potentialities should be allocated among the parties.
The issues at the base of the potential conflicts include: which party bears the risk; which risk allocation rules apply; to what extent is the carrier or shipowner liable for damage or loss while the cargo is in its possession; and to what extent should government be involved in the regulation of private transactions between private parties in attempting to determine what the extent of liability is for each party. Sea-going societies have promulgated maritime laws regarding the carriage of goods at sea since before the birth of Christ.
As early as the Roman Empire, through the Middle Ages with the advent of the Law Merchant, the laws of Visby, Oleron and Hansa Cities, shipper and carrier were considered joint venturers, sharing in both the risks and the rewards of the cargo delivery. Shippers would travel on board during the journey to oversee the safety of their cargo, while carriers were obligated to provide a seaworthy ship and a competent crew.
In the event the of the ship being lost at sea, the shipper and the carrier shared in the misfortune. However, as long as carriers have accepted cargo on behalf of shippers, conflict over the economic allocation of risk and liability has existed. As early as the latter decades of the 17th century, shippers and carriers used Lloyd’s Coffee shop in London as a meeting place to hammer out the provisions for general maritime policies of insurance and the insured risks for loss or damage to the shippers’ cargo.
Eventually, during the 1800s, the interests further diverged as carriers formed organizations to protect against liability, such as the Shipowners Mutual Protection Society and the first modern protection and indemnity (“P&I”) club, the Steamship Owners Mutual Protection and Indemnity Association. As recently as the mid-20th century, shippers and carriers were still essentially joint venturers sharing the risks and rewards of their transactions.
This remained a logical arrangement in light of the vagaries of the sea and dangers such as natural disaster, incompetent crews and masters, attacks by warring nations and pirates, antiquated communications and navigational aids and equipment, or even volatile political situations. Operating in such an environment of constant peril, the risks to the interests of both the shipper and carrier were for all intents and purposes, equal. Even with centuries of conflict and attempts at uniform regulation, the law regarding the liabilities and rights of carriers and shippers for the loss of or damage to goods at sea remains largely unsettled.
As ocean shipping continues to grow as an industry, maintaining its importance to the global economy, uniformity of law regarding carrier liability remains elusive. With the first decade of the 21st century behind us, and much political instability across the globe, it is imperative that a uniform and consistent body of law be established by the world’s seagoing nations addressing the legal rights and liabilities of shippers and carriers.